INSA: Frontier Vessels Do Not Need Subsidized Fuel

INSA: Frontier Vessels Do Not Need Subsidized Fuel

JAKARTA – Shipping employers asked the government to revoke subsidized fuel allocation for the vessels of Indonesian National Shipowners’ Association (INSA)’s members serving frontier routes. However, INSA asked for vessel fuel purchase tax revoke.

“INSA does not need subsidized fuel but INSA needs vessel fuel purchase tax revoke so the price of vessel fuel can be equal with which implemented in Singapore or other countries,” INSA Chairperson, Carmelita Hartoto, told Investor Daily in Jakarta on Sunday (12/14).

She said the demand to revoke subsidized fuel allocation for frontier vessels was also one of the recommendation points in 2014 INSA national work meeting (Rakernas) which ended on Thursday (12/11). The other recommendations were to create of Maritime and Coast Guard Agency, to urge the government to build proper ports/infrastructures, and to review Pelindo II’s roles from profit-oriented to public service.

Carmelita said currently, the price of vessel fuel in Indonesia is more expensive up to USD 100 per metric ton than in Singapore and Malaysia. Besides value-added tax (PPN) implementation, vessel price is also imposed with vehicle tax for 5-10%, oil and gas fees, income tax (PPh), and delta.

Due to high vessel price, national vessels find it difficult to compete with foreign vessels. “Indonesia draws loss from it. Indonesia’s export-import cargo potential is dominated by foreign party so Indonesia loses foreign exchange and economic potential up to IDR 120 trillion from shipping cost,” she said.

She explained subsidized fuel must be allocated well and hit the right target, not be allocated for trade shipping. In addition, since 2012 INSA Rakernas, INSA has proposed to revoke subsidized fuel allocation for trading vessels. In 2014 Rakernas, INSA asked to revoke subsidied fuel allocation for frontier vessels.

“Trade shipping needs more fiscal and monetary policies as occurred in international shipping sector,” she said.

Prior to that, Maritime Coordinating Minister, Indroyono Soesilo, said the government planned to increase frontier shipping subsidy up to IDR 1 trillion in 2015 State Budget or a two-fold increase than in 2015 State Budget Draft of IDR 585 billion. Frontier shipping subsidy in Indonesia will be added to improve regional connectivity and to lower logistic cost. Currently, he said, there are 86 frontier vessel routes which will be subsidized in 2015.

Guard Agency

On the other hand, Surabaya INSA Chairman, Stevens H. Lesawangen, added his office also urged the government to immediately form Sea and Coast Guard Agency (PLP) no later than April 2015. This agency must be immediately created since authority overlapping occurs among governmental institutions or law enforcer institutions to monitor the safety and security of Indonesian maritime transportation.

Before March comes, this institution must have run its tasks. We realize in creating PLP, the government needs time to prepare human resources and facilities. We have predicted the time duration is sufficient for the government to prepare it,” he said.

Transportation Ministry’s Maritime and Shipyard Director, Sahat Tua Simatupang, explained the discussion about governmental regulation draft over PLP is still being held with some stakeholders in ministry level and state secretariat.

He added in several years later, the draft will be discussed by several related ministries so there will be similar understanding about who will have direct authorities over this institution. “The problem is in Article 1. Will it be placed directly under president’s position or in ministry?” he explained. (Investor Daily)