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his letter refers to an article titled '€œPresident to ban purchase of foreign boats,, (The Jakarta Post, June 21).

There are two points that I would like to highlight.

Law No. 17/2008 sets out to protect the local shipping industry against foreign competition. This will of course depend on the sector but for the shipping of containerized goods there has been little foreign competition and many of the domestic players were using foreign flags as the Indonesian flag is not a very business-friendly flag in terms of closed register and taxes, but also surveying and crewing.

Cabotage is applied in many countries as you correctly refer to the Jones Act in the US. Forcing the flying of the domestic flag on domestic-shipped goods should not be an issue as long as the flag is supportive; it could even support the use of the Indonesian flag for the import and export of goods.

The container shipping industry has been heavily shaped by cascading, the introduction of ever larger ships. The result is that the market is particularly positive for buyers of ships of 1500-3000 TEU.

As many Indonesian container ports have not been seriously upgraded for decades the result is that these ships are too big to enter even though trade volumes would allow them too.

The small vessels currently in use are becoming extinct due to cascading and if president Joko '€œJokowi'€ Widodo wants to really pursue port development the domestic container shipping lines (all private players no SOE'€™s) can find well maintained second-hand ships from outside of Indonesia for a sound price.

The improvement of the shipbuilding industry as such is not a bad idea, but should be set out along a clear strategy. Indonesia will not likely buck the global trend of economies of scale and the size of the population and hence the domestic consumption is a sign the scales cannot be avoided, unless the ship-building industry keeps on supplying small vessels that are the only option as ports are too small and inefficient to bring in larger tonnage.

I suggest setting out with strategy development of the overall shipping network and choice of modality, improve matters on the soft side regarding the disadvantage of the Indonesian flag and only then perhaps consider a ban on the import of certain types of vessels if and when local production is both sufficient and up to international quality.

Daniel van Tuijll
Jakarta