INDONESIA Trends and Developments Contributed by: Emir Nurmansyah, Ulyarta Naibaho, Muhammad Muslim and Adithya Lesmana, ABNR Counsellors at Law
of the exemption will eventually have to com - ply with the new requirements as soon as they adjust their shareholding structure or acquire a new vessel. Accordingly, as it may not be feasi - ble to comply with both requirements, compa - nies outside the shipping industry might choose to give up vessel ownership entirely. Moreover, the government’s efforts to curb price disparities and logistical issues between various archipelagic regions in Indonesia may be ham - pered by the new barriers to FDI in the shipping sector. One of the factors contributing to the high cost of logistics in Indonesia is the shortage of vessels. Unfortunately this new amendment may close off opportunities for foreign investors to contribute to the expansion of the domestic fleet. It remains to be seen whether the imple - mentation of the Third Amendment will boost the investment shipping industries by Indonesian In addition to strengthening the cabotage poli - cies, the Third Amendment introduces several other significant changes. Development of sea transportation in remote areas The Third Amendment establishes two new cat - egories of sea transportation services for under - developed and remote areas. They are: • Pioneer Lines ( Pelayaran Perintis ); and • Public Service Water Transportation ( Angku- tan Laut Pelayaran Rakyat ). domestic investors. Other key changes These categories are now recognised separate - ly, unlike in the past when they were grouped together under the broader category of water transportation in underdeveloped and/or remote areas.
Although the legislation does not provide detailed distinctions between Pioneer Lines and Public Service Water Transportation, it outlines the following general differences. • Pioneer Lines are intended for transporting passengers and/or cargo, whereas Public Service Water Transportation specifically target economy class passengers. • National Sea Transportation Companies operating Pioneer Lines will receive govern - ment compensation (from either central or regional authorities), while Public Service Water Transportation providers will receive a government subsidy (from either central or regional authorities). Further regulations will clarify the specifics of The Third Amendment strengthens traditional marine transportation by specifying that it will now be funded through the State revenue and expenditure budget (a nggaran pendapatan dan belanja Negara ), the provincial revenue and expenditure budget ( anggaran pendapatan dan belanja daerah provinsi ), and the district/city rev - enue and expenditure budget ( anggaran penda- patan dan belanja daerah kabupaten/kota ). Tra - ditional marine transportation ( pelayaran rakyat ) refers to small-scale sea transportation opera - tions run by individuals or communities using traditional boats, mainly in remote and under- developed regions. Changes to port management responsibilities Before the Third Amendment, port manage - ment responsibilities were divided between the Port Authority ( Otoritas Pelabuhan ) for com - mercially operated ports and the Port Manage - both compensation and subsidies. Source of funds for traditional marine transportation
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