INDONESIA Trends and Developments Contributed by: Emir Nurmansyah, Ulyarta Naibaho, Muhammad Muslim and Adithya Lesmana, ABNR Counsellors at Law
Consultation with government officials on the inter - pretation of these provisions has revealed significant inconsistencies. For instance, statements that an Indonesian shipping company with foreign sharehold - ing (Foreign Investment Company/PT PMA) qualifies as a National Shipping Company, despite the relevant Shipping Law stating otherwise. Similarly, in the con - text of a JV National Shipping Company, the interpre - tation that only one domestic shareholder needs to be a shipping company (and the remaining domestic shareholder can be a non-shipping domestic compa - ny) diverges from the apparent intent of the legislation. Similar interpretational ambiguities arise in other are - as, such as cargo-handling activities. Under Article 4 (1) of Minister of Transportation Regulation No PM 59 of 2021 on the Operation of Service Businesses Related to Water Transportation, loading and unload - ing activities conducted by a National Shipping Com - pany are limited to certain goods for vessels operated by that company. However, despite this restriction, officials have confirmed that, in principle, a National Shipping Company is also permitted to provide load - ing and unloading services for third parties. When faced with broad and/or inconsistent interpreta - tions, the common practice is to submit a formal writ - ten request for clarification to the relevant government authority and/or departments. This is often followed by an invitation to consult or meet with such officials. However, even after such engagements, the inter - pretations provided by different officials may remain inconsistent with one another in practice, largely due to the broad and ambiguous nature of the regulatory provisions. Compounding this issue is the absence of a clear and uniform solution from the government. Despite repeated consultations and requests for clari - fication, no definitive guidance or formal mechanism has been provided to resolve these interpretational gaps.
These inconsistencies highlight a systemic issue in the regulatory framework governing shipping and related services in Indonesia: the lack of precise definitions and clear implementing guidelines. While the legis - lation sets out broad principles, it leaves significant room for discretion at the administrative level, which can lead to divergent interpretations among officials. This uncertainty may lead to legal and operational risks for parties conducting shipping activities, which require predictability to structure their investments and ensure compliance. As a result, businesses are often left to navigate regulatory uncertainty on a case- by-case basis, relying on informal confirmations that may not be legally binding.
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