T

he implementation of the cabotage principle and the establishment of a special port authority should no longer be a problem for the new shipping law, which became fully effective on Saturday.

Transportation Ministry director general of sea transportation Sunaryo said in Jakarta on Saturday that the ministry had made certain revisions to ensure that the cabotage ruling would not impede activities in Indonesia’s oil and gas sector.

“We have amended the 2010 ministerial regulation on sea transportation through the issuance of the 2011 ministerial regulation, which still allows the use of foreign vessels to support offshore oil and gas operations,” he said in a statement, adding that it was part of the government’s commitment to support oil and gas activities in the country.

The prevailing shipping law issued in May 2008 includes a cabotage principle, under which all vessels operating in Indonesian waters must be domestically owned. The regulation for general shipping vessels applied beginning from Jan. 1 this year.

The government has allowed the use of foreign vessels for oil and gas drilling and production activities because there are not yet any local companies that are able to facilitate the high-technology apparatus and personnel necessary to profitably undertake such sophisticated extraction activities.

Sunaryo said that his ministry had also issued technical procedures to ensure that the establishment of a port authority, as stipulated in the new law, would not affect the business activities of state port operator PT Pelindo, which previously acted both as port regulator and operator.

“The existence of the port authority will end monopoly in port management, paving the way for local administrations and private firms to take part in the business,” he explained.

The new shipping law also allows foreign and domestic private firms to operate ports in Indonesia without having to join in or seek assistance from state port operators PT Pelindo I, II and III, which previously functioned partly as port regulators.

Henrianto Kuswendi, president director of domestic oil and gas shipping company PT Buana Listya Tama Tbk., a subsidiary of the country’s largest shipping company,
PT Berlian Laju Tanker Tbk., welcomed the full implementation of the law.

Henrianto said that the cabotage principle would help domestic transportation firms to gain a more significant share in the sea transportation industry. The regulation would also protect the strategic interests of domestic industry, he said in a statement Sunday.