Local vessels ‘to dominate’ offshore sector: INSA

Local ship owners are upbeat that national-flagged vessels will dominate the offshore sector, which is mostly still served by foreign vessels, by 2015 in line with the country’s cabotage program.

Indonesian National Shipowners Association (INSA) chairperson Carmelita Hartoto said on Thursday night that the cabotage principle had helped local shipowners compete with foreign-flagged vessels after the latter were no longer allowed to transport goods or passengers in Indonesian waters as stipulated by Presidential Instruction No. 5 on national shipping industry improvements and the 2005 Shipping Law.

“Ten years ago before the government enforced the cabotage principle, foreign vessels dominated our sea transportation, serving 44.5 percent of domestic [passenger] transportation and 90 percent of import and export activities,” she said during the commemoration of the ninth anniversary of the cabotage implementation.

“Nine years after the cabotage principle took effect, around 359.67 million tons of cargo out of 360.95 million tons in total, or 99.65 percent, are transported by national-flagged ships,” she continued.

She added, however, that national-flagged ships did not yet dominate the offshore sector. “At least by the end of 2015 we will start dominating that sector,” Carmelita said.

Separately, INSA head of offshore division Nova Y. Mugijanto said that in 2005 there were only around 350 national-flagged vessels serving offshore activities, but this number had since doubled.

“National-flagged vessels already lead offshore supporting activities, but foreign ship owners still dominate the seismic, drilling and dredging vessels in the offshore sector,” Nova said. “We are optimistic that [those sectors] will all be operated by national flagged vessels by the end of 2015.”

He said that 10 percent of around 1,000 INSA members already operated in the offshore sector, but limited human resources remained a challenge to further growth in the sector. “A lot of Indonesian offshore-vessel crews work on foreign vessels due to the limited domestic demand. By the time the demand picks up, I think they will opt to work on local vessels,” Nova said.

Transportation Ministry secretary-general Leon Muhammad said that the ministry was cooperating with the Energy and Mineral Resources Ministry to boost the presence of national-flagged ships within the sector.

“The cabotage principle only applies to cargo and passenger ships, therefore, we want to apply the regulation in stages to offshore vessels, too,” Leon told reporters.

INSA data shows that the number of Indonesian vessels rose to 12,774 in last October, from 11,628 in October in 2012. The rising number of vessels has also increased volume or capacity from 16.08 million gross tonnage (GT) in October 2012 to 18.20 million GT in October 2013.


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