Peter Hinchliffe, secretary general at the International Chamber of Shipping (ICS) has written to HE Enggartiasto Lukita, Minister of Trade in Indonesia, expressing concern at a recent ministerial regulation which contains cargo reservation provisions “that we believe would contravene the spirit of customary international practices and may lead to considerable market distortion”.
A ministerial decree no 82/2017 issued last October 31st on ‘the provision of the use of sea transports and national insurance for the purpose of export and import of certain goods’ (specifically coal and palm oil) is scheduled to enter into force on April 26th.
Hinchliffe noted that ICS represented more than 80% of the world merchant fleet, with a membership comprising national shipowners’ associations from 37 countries.
The Decree has the avowed aim of supporting ‘national maritime transportation companies’. He said that the global shipping industry was “very concerned” that the Decree appeared to require that transportation of specified products and goods on international voyages, to and from Indonesian territory, would have to be conducted using Indonesian vessels.
As part of a long letter, he said that, if ICS’s understanding was correct, this would appear to be a form of discriminatory cargo reservation, “which would be contrary to accepted international practice and maritime free trade principles that are adhered to by Indonesia’s trading partners, including those in Asia.”
Cargo reservation would also be “contrary to the obligations which Indonesia has accepted as a member of the World Trade Organization (WTO) and the commitments that governments have made under the ‘Model Maritime Schedule’ as part of the ongoing Doha Round.
Hinchliffe warned the Indonesian Trade Minister that if the Decree were implemented as drafted, it was likely to have damaging impacts on the wider Indonesian economy and those industries whose cargoes would be directly affected. He added that “implementing such protectionist measures would also limit competition in Indonesian shipping trades and almost certainly lead to an increase in shipping costs”.