Gov't of Indonesia to Delay New Shipping and Insurance Regulation?
After receiving criticism from various stakeholders, the Indonesian government reportedly decided to postpone the implementation of a new regulation that requires all domestic coal, palm oil and rice exporters to use ships that are owned by local sea shipping companies and requires them to use domestic insurance.
This regulation - Trade Ministry Regulation No. 82/2017 on the Terms of Use of National Shipping and Insurance Companies for the Export and Import of Certain Goods - was originally planned to be implemented in May 2018. However, it ignited fierce criticism and concern whether the new regulation would have a negative affect on Indonesia's export industry as domestic shipping capacity remains insufficient.
For example, Hendra Sinadia, Deputy Executive Director of the Indonesian Coal Mining Association (APBI), said Indonesian coal exports average 30-35 million metric tons per month. However, shipping capacity of Indonesian-flagged vessels can only cover slightly over 4 million metric tons per month, hence around 95 percent of Indonesia's coal exports are depended on foreign-owned vessels.
He added that Indonesian vessels are less competitive compared to their foreign counterparts as exporters have to pay higher fuel costs as well as a higher premium for local shipping vessels. That explains why few exporters select an Indonesian-flagged vessel.
Therefore, the Indonesian government reportedly decided to delay the regulation by one year to give the Trade Ministry the necessary time to revise the regulation and add more details.
For more details about the original regulation, read the following article:
• Gov't Orders Local Shipping Services to Handle Coal & CPO Exports