The Ministry of Transportation has indicated that it is currently finalizing a revision to Regulation No. KM 71 of 2005 on Domestic Inter-Sea Ports Good Transportation (‘Regulation No. KM 71 of 2005’), which importantly will extend the deadline for full implementation of the cabotage principle from 1 January 2011 until approximately 1 May 2011.
Although the regulation will continue to require that only Indonesian-flagged vessels be used for shipments within Indonesian waters, the shipping industry now has more time to comply with KM No. 71 of 2005.
There are several types of oil and gas shipping vessels that Indonesian ship producers cannot produce yet; 200,000 ton deadweight oil and gas transportation vessels - which are used by PT Pertamina - for example. Pertamina has no choice but to keep using foreign-flagged vessels of that size for such quantities of oil and gas transport within Indonesia, at least for now (Investor Daily, 2 March 2010).
Apart from Regulation No. KM 71 of 2005, the cabotage principle is regulated under Presidential Instruction No. 5 of 2005 on the Empowerment of the National Shipping Industry, and Law No. 17 of 2008 on Shipping (See ILB No. 818 10/4/2008, and ILD No. 90 21/4/2008). There had previously been some confusion due to the fact that the timeline given by Regulation No. KM 71 of 2005 contradicted that of Article 341 of Law No. 17 of 2008 (a higher-ranking, newer regulation), which stated that foreign-flagged vessels could still be used for domestic shipping activities until three years after the date of its 7 May 2008 issuance; that would put the deadline squarely around 7 May 2011.
The finalized draft revision is waiting for the approval of the Secretariat General of Ministry of Transportation, and after approval at that stage, it will be forwarded to the Minister of Transportation for final approval and subsequent issuance.
For further reading on cabotage principle, please see ILD No. 133 30/10/2009 on Ship Financing: A Key Problem to the Implementation of the Cabotage Principle.
This ILB is based on research conducted by the hukumonline team.
The Ministry of Transportation has indicated that it is currently finalizing a revision to Regulation No. KM 71 of 2005 on Domestic Inter-Sea Ports Good Transportation (‘Regulation No. KM 71 of 2005’), which importantly will extend the deadline for full implementation of the cabotage principle from 1 January 2011 until approximately 1 May 2011.
Although the regulation will continue to require that only Indonesian-flagged vessels be used for shipments within Indonesian waters, the shipping industry now has more time to comply with KM No. 71 of 2005.
There are several types of oil and gas shipping vessels that Indonesian ship producers cannot produce yet; 200,000 ton deadweight oil and gas transportation vessels - which are used by PT Pertamina - for example. Pertamina has no choice but to keep using foreign-flagged vessels of that size for such quantities of oil and gas transport within Indonesia, at least for now (Investor Daily, 2 March 2010).
Apart from Regulation No. KM 71 of 2005, the cabotage principle is regulated under Presidential Instruction No. 5 of 2005 on the Empowerment of the National Shipping Industry, and Law No. 17 of 2008 on Shipping (See ILB No. 818 10/4/2008, and ILD No. 90 21/4/2008). There had previously been some confusion due to the fact that the timeline given by Regulation No. KM 71 of 2005 contradicted that of Article 341 of Law No. 17 of 2008 (a higher-ranking, newer regulation), which stated that foreign-flagged vessels could still be used for domestic shipping activities until three years after the date of its 7 May 2008 issuance; that would put the deadline squarely around 7 May 2011.
The finalized draft revision is waiting for the approval of the Secretariat General of Ministry of Transportation, and after approval at that stage, it will be forwarded to the Minister of Transportation for final approval and subsequent issuance.
For further reading on cabotage principle, please see ILD No. 133 30/10/2009 on Ship Financing: A Key Problem to the Implementation of the Cabotage Principle.
This ILB is based on research conducted by the hukumonline team.
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