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Govt applies cabotage principle for offshore vessels

The Transportation Ministry has applied the cabotage principle for several types of offshore vessels in a move that is expected to boost Indonesia-flagged ships within the sector

Nadya Natahadibrata (The Jakarta Post)
Jakarta
Wed, April 16, 2014

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Govt applies cabotage principle for offshore vessels

T

he Transportation Ministry has applied the cabotage principle for several types of offshore vessels in a move that is expected to boost Indonesia-flagged ships within the sector.

Director general for sea transportation Bobby Mamahit said on Tuesday that Transportation Minister regulation No. 48/2011 on cabotage principle had been revised into regulation No. 10/2014, which was signed in March and eliminated offshore support vessels (OSV) from the list of vessels foreign companies were allowed to operated.

'€œAHTS [anchor handling towage supply] vessels are no longer allowed [to be operated by foreign operators],'€ he told reporters.

Foreign dredging ships with a capacity of less than 5,000 gross tonnage (GT) were previously allowed but under the new regulation, foreign companies are only allowed to operate ships over 5,000 GT, Bobby added.

According to Bobby, foreign OSV and dredging vessels with a capacity of less than 5,000 GT would have to change the vessel'€™s flag and cooperate with Indonesian firm.

'€œSeveral foreign companies have changed their flags with the Indonesian flag. It doesn'€™t matter how they undergo the process as long as the majority of the vessel'€™s operator shareholders are Indonesian,'€ he said.

However, he said that due to its limited availability, the country would still have to rely on foreign operators to provide other types of offshore vessels including those for drilling and survey.

'€œBy revising the regulation we aim to encourage local shipping companies to provide these vessels to the offshore sector,'€ Bobby said.

'€œHowever, we are still limiting the type of the vessels, so that the regulation will not hamper economic activities,'€ he said.

The Shipping Law issued in May 2008 covers a cabotage principle that requires all vessels operating in Indonesian waters to be domestically owned. The regulation for general shipping vessels has been in effect since Jan. 1 this year. several types of foreign vessels used in oil and gas drilling and production activities are exempted from the regulation and allowed to operate until 2014, as no local companies can provide the technologically advanced facilities and personnel necessary to profitably conduct such sophisticated extraction activities.

Meanwhile, Indonesian National Shipowners Association (INSA) chairperson Carmelita Hartoto said that the revision was a positive response to the improving availability of national-flagged vessels in the offshore sector. '€œThe change is for the better and the association is certain that the number of sophisticated offshore vessels will continue to grow following the issuance of the regulation,'€ Carmelita said.

She said that over the last nine years national flagged off shore vessels had increased 104 percent to 768 units. The type of the vessels also increased from 9 to 19 types. '€œINSA members now have large-scale off shore ships, as well as high-tech vessels and investments in large AHTS, diving support vessels, FSRU, DP2 platform supply vessel, offshore tankers, pipe laying barges and even rigs. Thanks to the cabotage principle and the cooperation of all parties,'€ she said.

INSA head of offshore division Nova Y. Mugijanto previously said that 10 percent of around 1,000 INSA members already operated in the offshore sector, but limited human resources remained a challenge to growth in the sector, as a lot of offshore-vessel crew worked on foreign vessels due to the limited domestic demand. INSA data shows that the number of Indonesian vessels rose to 12,774 in last October, from 11,628 in October in 2012.

The rising number of vessels has also increased volume or capacity from 16.08 million GT in October 2012 to 18.20 million GT in October 2013.

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