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:
- coal and/or crude palm oil exports;
- rice imports; and
- 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.