Procedure in acquiring the Cabotage Principle waiver Permit

The Minister of Transportation Regulation No.PM 48 of 2011 on the Procedure and Requirements to Grant Permit on the Use of Foreign Flagged Vessels for Activities other than to Transport Passengers and/or Goods in the Domestic Sea Transportation Activities (“Regulation”) was recently issued.

Serving to implement Article 206a paragraph (4) of the Government Regulation No. 22 of 2011 on the Amendment of Government Regulation No. 20 of 2010 on Water Transportation (“GR 22”) which enables foreign flagged vessels to engage in activities other than the transportation of passengers and goods in Indonesian territory when the availability of Indonesian flagged vessels are insufficient..

Article 2 of the Regulation provides that foreign flagged vessel are permitted to operate in Indonesia after securing a permit from the Minister of Transportation (enlist in the first Appendix). The permit draft form (first appendix) suggest that a permit will be granted for a three months period (stipulated also in Article 10 (3)), intended for a specific vessel operating within a specified area marked by geographical coordinates.  

In conformity with GR 22, activities which are considered as “other than the transport of passengers and/or goods”, pursuant to Article 2 (3) of the Regulation are (1) oil and gas survey; (2) drilling; (3) offshore construction; (4) offshores operations supporting activities; (5) dredging; and (6) salvage and underwater  activities.

The permit will be granted by the Minister after a single bid to charter an Indonesian flagged vessel to perform works as stated in Article 2 (3) failed to result in a winner, as confirmed by an auction notification (Article 10 (2)).   

The time period for which using foreign flagged vessels for different purposes are permitted is stipulated in the second appendix of the Regulation, being as follow:

Pursuant to Article 13, a quarterly periodical evaluation will be held by the Directorate General of Sea Transportation, where it will serve to ensure the availability of Indonesian flagged vessel to perform works as listed in Article 2(3). The evaluation will involve coordination between relevant institutions and associations representing service providers and consumers.  

Previous ILBs on Cabotage rule exemption for foreign flagged vessels can be read in ILB No. 1645 19 April 2011 and ILB No.1621 16 March 2011.

The Regulation was issued on 18 April 2011 and came in to force on the same day.