T

he Transportation Ministry has assigned the management of 52 ships on pioneering routes to state-owned ship operator PT Pelayaran Nasional Indonesia (Pelni) to support the distribution of goods and people in the country'€™s remote areas.

The 52 ships plying pioneering routes are part of the 96 state-owned ship routes, an increase from 86 routes last year, which was previously entirely managed by the private sector through a tender process.

'€œWe have given the rest to Pelni because these [ships] are government owned. We tried our best so there would be no gaps [in ship management],'€ the Transportation Ministry'€™s sea transportation director general Bobby Reynold Mamahit said, adding that the responsibilities would be legalized through a presidential regulation.

The routes will be focused on the eastern part of Indonesia, where logistics costs are still higher than in the western part, due to the lack of reliable and on-time transportation.

However, he reiterated the importance of the role of the private sector, as the management of the 44 routes was still up for bidding for private companies.

Bobby said that the ministry had even held a non-binding bid as early as December last year.

He said that the ministry had allocated as much as Rp 900 billion (US$64.8 million) for the subsidy for the routes this year, an increase from Rp 870 billion last year.

The increase in the budget, as well as the number of routes, was also spurred by population growth in the country, which created a greater burden on existing transportation.

According to its five-year strategic plan, the ministry plans to operate 196 routes by 2019.

Pelni was previously assigned by the government to run scheduled sea freight voyages over six routes, included those which reached remote areas such as Timika in Papua and Tual in Maluku, as part of President Joko '€œJokowi'€ Widodo'€™s maritime axis vision to reduce logistics costs in remote areas of the country.

The ships were planned to carry staple goods like rice and cement.

Pelni has been operating the ships, which serve three routes, with a government subsidy of Rp 27 billion in the form of a public service obligation (PSO) as of December last year.

The government is also committed to disburse Rp 257.9 trillion in PSO spending next year to help Pelni operate six routes.

The ministry also aimed to build around 188 ships last year by allocating Rp 11.8 trillion from the state budget. Among the 188 ships, 100 ships have been earmarked to serve the routes.

The ships are aimed to add to those currently in operation and to keep up with the increasing number of routes.

However, Pelni'€™s direct assignment of the routes also faced criticism, with the influential Indonesian National Shipowner Association (INSA) saying that the party that operated the ships should be decided via a tender process.

'€œI am very much in support of a tender process and I personally don'€™t agree with a single operator. [...] We urge the government to keep us involved and help develop [our members],'€ INSA chairwoman Carmelita Hartoto said.

Transportation Minister Ignasius Jonan has previously criticized the private sector'€™s operational standards and said that he would prefer that Pelni set a common standard for the industry.

The ship operator will receive a subsidy of around Rp 17 million a day to serve each of the routes, according to the association.