Govt to propose amendment to shipping law

The government will propose an amendment to Shipping Law No. 17/2008 as the cabotage principle stipulated in the law is impossible to implement, particularly in the oil and gas sector, Coordinating Minister of the Economy Hatta Rajasa said on Wednesday.

Under the law, all vessels that carry goods from one island to another or operate in Indonesian territory should carry Indonesian flags starting May 2010. Oil and gas industry players however complain that the cabotage principle is impossible to implement in the oil and gas sector given that many types of vessels used to support oil production are foreign-owned and thus carry foreign flags.

"We shall talk about this with the House of Representatives (DPR). We shall probably review the law. Otherwise, we shall be stuck. We shall continue leasing the vessels (from abroad) because none of them carry Indonesian flags," he was quoted by Media Indonesia's website.

Furthermore, he said, the use of foreign-flagged vessels in Indonesia has continued to decline. In 2010, there were only 56 foreign-flagged vessels operating in the country. "Indonesia-flagged vessels amount to 500 or 90 percent of the total fleet operating in the country," he said. In 2011, the number of Indonesian-flagged vessels is projected to increase to 582, while foreign-flagged ones will decrease to 24 or 4 percent of the total fleet operating in the country.

"There are however several types of vessels that will remain difficult to supply by local companies, that is floating storage and offloading (FSO), LPG FSO Gas Concord, warebarge, tender assist rig, jack up rig, anchor halding tug and supply, PMPV," he said.

Demand for such vessels is projected to reach 235 units over the period of 2011-2015. (*)