Coal Mining Companies Warn of Losing competitiveness over Mandating the Use of National Carriers

Indonesia coal mining companies warn that Indonesia’s coal export will lose competitiveness if the regulation on mandating the use of national carriers to carry export of coal if the Trade Ministry Regulation (permendag) Number 82/2017 will come into effect in May 1, this year (2020).

Many overseas buyers will choose to import coal from other countries, said head of marketing and logistics department at the Indonesian Coal Mining Association (APBI) Hendri Tan.

“Some of our buyers told us they would buy coal from other countries,” Hendri said as quoted by thejakartapost.com

Most of Indonesia’s coal exports are based on Free on Board (FoB), in which the buyers are responsible for shipping and insurance costs. According to Hendri, many importers feared the lack of Indonesian ships would hamper the transportation of coal to their countries.

In addition, Indonesia has few ships that meet international shipping standards to ship coal overseas, he said.

“If the regulation is enforced without any exceptions, then our exports could fall 99 or even 100 percent,” Hendri said.

As reported earlier, Ministry of Trade has confirmed that there will be no more delay, the regulation will be effective according to its timeline.

“Up to now there is no plan yet for revising its timeline. The regulation will come into effect, meaning that since May 1, all export of coal should be carried by national vessels,” Oke Nurwan, General Secretary of Trade Ministry told the press last week (Friday 21, 2020).

Oke said that the Ministry has postponed it for two years, giving appropriate times for business players to do preparation. “We have postponed for 2 years,” he said.

Currently, approximately 90 per cent of Indonesia’s commodity exports are carried by foreign vessels, with the remaining 10 per cent transported by national ships.

Indonesia exported around 380 million tons of coal last year, using an FOB scheme. If the government forces the implementation of the ruling, it could interrupt coal exports.

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