News

As reported in the press, the Indonesian Ministry of Trade’s Regulation
no. 82/2017 on the Utilisation of Indonesian Sea Carriage and Insurance for
Export of Certain Goods will come into effect from 31 April 2018.

The regulation is aimed at promoting Indonesia’s domestic shipping and
insurance industries by obliging importers and exporters to use only vessels
which are “controlled by Indonesian shipping companies” and Indonesian insurers
for:

1.     
coal and/or
crude palm oil exports;

2.     
rice
imports; and

3.     
the import
of goods intended for government procurement.

Under Article
5 of MR no. 82/2017, exemption may be possible if no suitable vessel is
available from an Indonesian shipping company or if no suitable insurance is
available from an Indonesian insurer, but the precise definition of what “unavailable”
will mean in this context has yet to be announced.

Importers and exporters will have to make an online declaration to the
Director General of International Trade by the 15th day of the month following
a port call, specifying the use of the ship, and its Owners and Insurers.

Failure to
comply with any of these requirements will result in administrative sanctions
in the form of suspension and/or revocation of permits.

Pending publication of the guidelines promised by the Director General
of International Trade, this regulation raises numerous queries in the international
and local shipping and trade communities.

Among them, what precisely is meant by a vessel which is “controlled by an
Indonesian shipping company”.  Does it
include not only vessels which belong to an Indonesian company but also chartered
vessels?

If it does apply to chartered vessels, would all or only some types of
charter party meet the criteria?

As for the
insurance requirements, although it is generally thought that the regulation would
apply only to cargo insurance, the regulation itself does not clearly state that
it will not include H&M or P&I cover.

While
Indonesian shipowners hope that the new regulation will open new markets for
them, importers and exporters have expressed fears that the uncertainty
surrounding the new regulation will put new contracts on hold.

The
International Chamber of Shipping has pointed out that the Regulation no. 82/2017 may be contrary to accepted international
practice as well as Indonesia’s obligations as a member of the World Trade
Organisation.

We thank Budd Indonesia for
bringing this information to our attention.

budd.indonesia@budd-pni.com