Ministry gives more time for cabotage implementation
Tuesday, January 19 2010 - 02:26 AM WIB
Cabotage is the principle of reserving the privilege of navigating and trading along the coast between two or more ports within a country?s territory only to vessels that are duly registered in that country.
Transportation Minister Freddy Numberi said Monday that the obligation to implement the policy was actually due to be implemented no sooner than May 2011, and not on Jan. I as stipulated earlier by a presidential instruction issued in 2005.
He based his argument on the shipping law, which was enacted in 2008.
Article 341 in the law stipulates all foreign vessels involved in sea transportation in Indonesian waters may continue to do so as they currently are doing until three years after the law comes into force, after which they must operate under the Indonesian flag.
?When the law was passed, it automatically annulled the presidential instruction,? Freddy said in a press gathering, meaning that the full requirement would not come into force before May 2011.
He was quick to add however that anyone operating foreign vessels must be committed to implementing the principle by the due date. He said however that there were indications that the local shipping industry was pushing for an immediate implementation of the cabotage principle, despite the fact that many ships trading currently operated under long-term contracts.
"We have to be aware if there are [any interests] wanting to gain benefits by building cartels or by monopolizing [the market],? he said.
Some stakeholders in the shipping industry have said the full implementation of the cabotage principle this year would boost the revenues of local firms by around US$ 2.2 billion.
"Local sea transportation service in 2005 transported 110 million tons out of a potential 200 million tons. After the implementation of the principle, we will see Indonesia-flagged ships transporting 220 million tons, or 85 percent of all sea transportation, from January to September last year,? chairman of the Indonesian national Ship-owners Association, Johnson W Sucipto, told the The Jakarta Post.
The local shipping companies have also grown from 6,000 vessels in 2005 to 9,000 vessels in 2009, he added.
This also means a growing work force,?he added.
Most shipping orders for local companies come from state oil and gas firm PT Pertamina, which spends around $400 million annually to rent more than 100 tankers, of which about 75 percent are provided by foreign shipping firms.
Johnson acknowledged that the shipping law now gave more time for the full implementation of the cabotage principle. (*)