The regulation, The Trade Ministry Regulation (permendag) Number 82/2017, which makes mandatory for coal exports to use national carriers will come to effective in May this year (May 1, 2020), after it has been delayed twice in view of criticism from national coal producers and exporters.
The Permendag said that all exports of certain commodities, including coal, must use national carriers. This regulation later was criticized as it poses threats to disrupt shipment of coal as national shipping industry is not ready to meet a sharp jump in demand for their services should foreign vessels are banned.
In responding the critics then Ministry revised it and issued a revised version of Permendag No 80/2018, which it schedules to make it come into effect by May this year (May 1, 2020).
But, approaching its effective date, Indonesia Coal Producers Association APBI has again voiced their disagreement over the implementation of the ruling, reasoning that it will disrupt shipment of coal.
But, 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 today (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.
As reported earlier, the rule obliges exporters and importers of certain commodities to exclusively use national vessels national insurance companies. The rule applies to the import of rice as well as exports of coal and crude palm oil, the main contributors to the country’s commodity export revenues.
The government delayed implementing the rule which makes it mandatory for all exports and imports activities to use national vessels for twice amid criticism from the local business community.
This regulation was criticized by domestic coal and CPO producers, and some importers who consider Indonesian shipping companies are not capable, be it from the quality or quantity to serve the entire export and import activities.
Executive Director of Indonesia Coal Producers Association Hendra Sinadia also mentioned how coal producers have voiced their disagreement over the implementation of the ruling, reasoning that the capacity of domestic vessels to export coal in large volumes is still insufficient.
The decision is likely to affect the country’s coal and CPO exports, given that so far some of those commodities have employed foreign vessels. Exporters have argued that they have to use foreign vessels for certain commodities, due to lack of domestic capacity.
Unlike exporters, domestic shipping operators welcome the government’s decision, arguing that the ruling will support the growth of the national shipping industry.
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.