Shipping industry gets 2 new regulations next year

By Er Audy Zandri

The Directorate General of Sea Transportation, Ministry of Transportation of Indonesia recently stated that they are currently in the process of preparing a revision to the Ministerial Decree No.33/2001 regarding Sea Transport Management.

One of the key revisions is concerned with foreign majority shareholding in IDX listed companies related to their SIUPAL (Surat Ijin Usaha Perusahaan Angkutan Laut or Business License for Sea Transportation Company) ownership.

?The market dynamics have changed, and listed companies can not be bound by the 49 percent and 51 percent share ownership principles anymore, as their share ownership is fluctuating not just in weeks, but by the hour. This is why in the draft that we are currently preparing, IDX listed companies will need to be considered as a joint venture company, in which their only requirement to be able to keep their SIUPAL is to comply with the 5,000 GT requirements,? Deputy Director for Shipping Business Development of the Directorate of Sea Traffic and Transportation of the Directorate General of Sea Transportation, Ministry of Transportation Merassabessy Haekal Dachlan said to CoalAsia in Singapore on Oct. 3.

According to the Indonesian Presidential Regulation No. 36 Year 2010 on List of Business Fields Closed and Open with Conditions to Investment, the share limitation for foreign capitals in a joint venture shipping company is 49 percent, in which foreign investments from ASEAN countries can have up to 60percent share with business scopes outside of the cabotage area, namely international passenger transport and international goods transport.

This is the regulatory item Dachlan referred to, in which the 5,000 Gross Tonnage requirements he stated pointed out to the technical requirement of pursuing SIUPAL, which is having at least 1 (one) unit of seaworthy Indonesian flagged vessel with the smallest size of 5,000 Gross Tonnage and operated by crews of Indonesian nationality.

The decision, he said, is the government?s response to the many growing shipping companies that have now gone public, questioning the validity of their SIUPAL as their share ownerships have changed.

?In addition, the idea of being a listed company is to acquire alternative funding sources, gradually cutting bank loan dependency. Because acquiring loan from banks for vessels is not as easy as acquiring loan for, say, houses, there are risks that they aren?t willing to take, so this is a form of supports from us,? he said.

The revision is expected to be enacted next year.

In addition, Dachlan said that the Directorate General has also prepared a regulation that will abolish the subjecting of port services VAT on international vessels conducting activities in Indonesian ports.

?So foreign vessels entering Indonesian ports will no longer be subjected to port services VAT, including VATs for freighter services, guide services, container loading and unloading services and so on. Because according to our survey, at least 41 countries in the world are subjecting foreign vessels with 0 percent VAT or even not subjecting them with any VAT,? he said

According to Dachlan, the decision is made under the base of reciprocal treatment. Where Indonesian vessels enjoy such facilities abroad, foreign vessels should also enjoy the same facilities here. ?It?s also based on equal treatment. If international airplanes landing on Indonesian airports can be free from it, international vessels should too,? he said.

A letter has been sent to the Directorate General of Fiscal Policy of the Ministry of Finance, awaiting a go.

Dachlan also expects to introduce the decision next year. ?Let?s hope so,? he said, targeting the multiplier effects, where more vessels entering the Indonesian seas without fear of paying a fortune.

?The government might lose some tax potential, but it?s basically the same as abolishing fiscal for trips to ASEAN countries, now more Malaysians fly to Bandung, and the tourism industry is not fighting to survive on its own, but supported by many aspects outside of the industry,? he said, adding that the directorate has appointed the University of Indonesia to work on a research investigating the micro and macro economic results possibilities if such decision is put into place.

Editing by David Mustakim