Indonesian Shipping Law: Updates and Developments

Legal Updates
Indonesian Shipping Law: Updates and Developments
18 October 2018

By Dyah Soewito and Stephen Igor Warokka

There are a number of developments and current trends in Indonesian shipping law worthy of note.

Vessel registration

The Indonesian Shipping Law (Law No. 17 of 2008 regarding Shipping) states that an Indonesian vessel\'s legal status can only be valid if the vessel has already been registered in a jurisdiction.

To implement the provisions of the Indonesian Commercial Code (\"ICC”) and the Shipping Law, Minister of Transportation (\"MOT”) Regulation No. PM 39 of 2017 regarding the Registration and Nationality of Vessels (\"MOT Reg 39/2017”) states that vessel registration includes registration of: (i) ownership right; (ii) granting of mortgage; and (iii) other proprietary right, such as by way of bareboat charter and leasing. Vessel registration can be done with a Vessel Registrar, a government official appointed by the Director of the Directorate General of Sea Transportation (\"DGST”).

However, it should be noted that according to the ICC, as further regulated in the Shipping Law and MOT Reg 39/2017, a vessel may only be registered if it has a gross tonnage of at least 7 tonnes, is owned by an Indonesian citizen or a legal entity established under Indonesian law, or is owned by an Indonesian joint venture company in which at least 51% of the shares are owned by an Indonesian citizen.

Cabotage principle

The Shipping Law requires that domestic sea transportation be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and Indonesian crew. These provisions are broadly interpreted to cover most vessels, including different types of vessels operating in Indonesian waters that are not engaged in domestic sea transportation.  However, pursuant to MOT Regulation No. PM 100 of 2016 regarding Procedure and Requirement to Obtain License to Use Foreign Vessels for Other Activities Not Included within the Carriage of Passenger and/or Goods in Domestic Transportation, as amended by MOT Regulation No. PM 115 of 2017 (\"MOT Reg 100/2016, as amended‚Äù), specific types of foreign-flagged vessels operated in Indonesian waters for specific types of activities may be exempted from cabotage rules.

Such foreign-flagged vessels may be operated in Indonesia by a holder of a Shipping Company Business License (Surat Izin Usaha Perusahaan Angkutan Laut or \"SIUPAL”) after meeting the requirements provided in MOT Reg 100/2016, as amended. The cabotage exemption is granted in the form of a permit to use foreign vessels (Izin Penggunaan Kapal Asing or \"IPKA”), which can only be issued to SIUPAL holders.

Under MOT Reg 10/2016, as amended, an IPKA is granted for a maximum period of one year and may be extended with a recommendation from an evaluation team appointed by the DGST, if the applicant has exhausted all efforts concerning the procurement of an Indonesian-flagged vessel and provides proof of its latest procurement or tender offer.

A list of foreign-flagged vessels that can conduct drilling activities in Indonesian waters up to the end of December 2018 is provided in Annex I to MOT Reg 10/, as amended. These vessels include:

  1. Jack-up rigs/jack-up barges/self-elevating drilling units.
  2. Semi-submersible rigs.
  3. Deepwater drill vessels.

MOT Reg 10/2016, as amended allows for foreign-flagged vessels not included in Annex I to MOT Reg 10/2016, as amended to be used in Indonesian waters. However, these foreign-flagged vessels may be used in Indonesia only at the discretion of the MOT, rather than through the typical IPKA. The MOT shall approve the use of such vessels in Indonesian waters after taking into account the following:

  1. The availability of Indonesian-flagged vessels that have the specifications required by the applicant, as confirmed by the evaluation team.
  2. Whether the activity of the foreign-flagged vessel is to support Indonesian national interests, with a recommendation confirming such from the relevant ministry and/or institution.
  3. The limited time period of the permit.

This is an excerpt from The International Comparative Legal Guide to: Shipping Law 2018. You can see the full chapter here.

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user\'s own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

For More Information, Please Contact
Back to Indonesia Law Blog
Related Articles