ICS ‘very concerned’ by new Indonesian cabotage ruling

The International Chamber of Shipping (ICS) has urged Southeast Asia’s largest country, Indonesia, to ease its cabotage laws.

Peter Hinchliffe, the departing ICS secretary general, wrote an open letter to Indonesia’s minister of trade, Enggartiasto Lukita, in which he voiced concern at recent regulation changes that deny non-locally registered ships from competing for business in the giant archipelago.

On October 3 last year the ministry of trade issued a decree aimed at supporting ‘national maritime transportation companies’.

Hinchliffe wrote in the open letter that ICS was “very concerned” that the decree appears to require that transportation of specified products and goods on international voyages, to and from Indonesian territory, must be conducted using Indonesian vessels. The decree focuses on coal and crude palm oil exports

“If our understanding is correct, this would appear to be a form of discriminatory cargo reservation, which would be contrary to accepted international practice and maritime free trade principles that are adhered to by Indonesia’s trading partners, including those in Asia,” Hinchliffe wrote.  Cargo reservation is also contrary to the obligations which Indonesia has accepted as a member of the World Trade Organization (WTO), he also pointed out.

Hinchliffe maintained the decree, due to come into effect in April, could damage the Indonesian economy.

“Implementing  such protectionist  measures  would  also limit competition  in Indonesian  shipping  trades  and almost  certainly  lead to an increase  in shipping costs,” Hinchliffe wrote.

Indonesian officials have yet to respond to the ICS letter.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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