W

hen then presidential candidate Joko '€œJokowi'€ Widodo ushered in the term tol laut as one of his visions to tackle transportation complications, during a televised debate in the presidential campaign, eyebrows were raised.

The '€œmaritime highway'€ concept, known technically as short-sea shipping, is in essence an alternative to land-freight transportation, by moving cargo along the coastline between ports of close proximity.

Almost 40 percent of European freight movement is by short-sea shipping. This typically uses a vessel of 4,000 deadweight tonnage, which is equivalent to 100-200 trucks.

Would it be a good idea for Indonesia? Absolutely. With the ever-increasing congestion facing road-based transportation on the main island of Java, short-sea shipping would be an excellent idea.

And not just to reduce the strain of land-freight movement in Java; we could greatly benefit from being able to move products from one island to another.

Indeed, sea shipping is a key piece of transportation infrastructure that Indonesia very much needs to improve.

But can we make it happen? We could, but there are some areas that we need to work on first.

First, we need to have more public seaports. Yes, there are government projects that are in motion right now, and are expected to be completed in the next five years.

We have heard about the new Cilamaya terminal in West Java, expected to alleviate the burden on Tanjung Priok port in Jakarta.

We also understand that plans are underway for general cargo, container and bulk terminals to be completed in Ambon, Dumai, Teluk Bayur and Makassar to name a few.

However, in order for short-sea shipping to work, we will need more public ports in close proximity.

To do that, we will need capital. If there is not any available, or this is considered less of a priority, we then must consider pushing forward with public-private partnerships. We have actually laid out the groundwork for it.

Government Regulation No. 61/ 2009 has opened up such possibilities. Concession agreements can be entered by the so-called port authorities with private entities in order for the latter to operate a port and provide other services such as stevedoring.

But to date, the much-needed regulations regarding the requirements and procedures for granting and revoking concessions have not been issued.

Without it, the possibilities contemplated by the regulation are just a novel idea. It has been five years since the regulation was enacted and no concession has been awarded.

Aside from seaports, we would also need more ships. Short-sea shipping would be an inter-island service.

As such, cabotage rules would apply. As such, only Indonesian flagged ships are able to operate within Indonesian waters.

Therefore, Indonesian shipping companies will need to buy more freighters.

Vessels are expensive, as such financing is key. In turn, banks will require security. This is where we can and need to improve. In Indonesia, the security law that is applicable for ships above seven gross tonnage is hypothec, a security arrangement that was once dedicated to land, and is rooted deep within our Civil Code, a source of law inherited from the Dutch colonial era, first introduced in 1847.

Like security over land that was reconstituted into Hak Tanggungan (Security Titles) in 1996 in the shape of Law No. 4/1996, vessel mortgages could also use some freshening up.

Fast and easy registration, simplified enforcement procedures and the possibility of '€œship arrest'€ without needing to wait for the vessel to berth in a port are just a few of the things that are lacking in vessel-based security.

There are serious obstacles in achieving the above. By granting concessions to private port operators, it would somewhat impact the monopoly that state-owned port operator Pelindo has over business.

It may seem wrong to state this, but the monopoly is there for a reason. Port operation is a strategic industry, and thus there is room to argue that the business must be controlled by the state.

By granting concessions to private entities, we are also opening up the possibility of foreign direct investment, which is always a sensitive issue.

As for a new law for vessel security, one thing comes to mind. A lot of work. And with the current state that lawmakers are in, the two do not seem to be a good match.

As a business-legal consultancy working in Jakarta, we sometimes see differently to the government. By granting concessions, we see healthy competition for Pelindo '€” which would benefit its customers.

We foresee the influx of foreign and local joint-venture capital into key infrastructure pieces. The benefits will outweigh the concerns in the long run.

Private capital, proven experience and expertise, foreign or otherwise, would surely bring benefits to the table. If we want to, we could always set stiffer rules, such as a build-operate-transfer measure to ensure control and ownership after the end of a concession period, and foreign divestment rules that apply over time, for example.

As for vessel security, an implementing regulation issued by the line-ministry can also work for the time being '€” until we have a new law in place to accommodate the principles enshrined in our Civil Code.

There are already firm steps being taken by local and foreign investors for ports on the northern coast of Java.

A few even have plans to integrate the ports with industrial estates, warehousing, railway access and power plants. It would be a shame if we only heard the term tol laut during the presidential debate.

Port operation is a strategic industry, and thus [...] the business must be controlled by the state.