THE 2008 SHIPPING LAW: DEREGULATION OR RE-REGULATION?

Abstract

The restoration of democracy since 1998 has been accompanied by a revival of economic nationalism in Indonesia. This can be seen clearly in the field of shipping and ports. In the 1980s the government deregulated the highly protected and inefficient shipping industry to facilitate a non-oil export drive. Since 1999 a rising tide of economic nationalism has seen a gradual process of re-regulation that has restored some of the old protectionist devices. This new protectionism is likely to frustrate government policies to improve logistics and facilitate trade. At the same time, there has been a mild liberalisation of state control over the ports sector. This paper addresses the key economic regulations embodied in the new Law 17/2008 on Shipping and assesses their potential impact. It highlights an ongoing confl ict in government between protectionism/rent-seeking and development.

Acknowledgements

I am grateful to David Hawes, David Ray, Thee Kian Wie and three anonymous referees for their advice on previous drafts. Research was assisted by an Australia Research Council (ARC) grant. Those who gave advice and the ARC bear no responsibility for the final version

Notes

¹Thee (2003) provides a good insight into the role of these economists as ministers.

²Instruksi Presiden Republik Indonesia No. 4 Tahun 1985 Mengenai Kebijaksanaan Kelancaran Arus Barang untuk Meningkatkan Kegiatan Ekonomi [Inpres 4/1985 on Policy on the Flow of Goods to Boost Economic Activities].

³Undang-Undang No. 21 Tahun 1992 tentang Pelayaran [Law 21/1992 on Shipping], 17 September.

⁴Peraturan Pemerintah [PP] Republik Indonesia No. 82 Tahun 1999 tentang Angkutan di Pengairan [PP 82/1999 on Sea Transport], 5 October.

⁵Instruksi Presiden (Inpres) Republik Indonesia No. 5 Tahun 2005 tentang Pemberdayaan Industri Pelayaran Nasional [Inpres 5/2005 on the Development of the National Shipping Industry], 28 March.

⁶Undang-Undang No. 17 Tahun 2008 tentang Pelayaran [Law 17/2008 on Shipping], May.

⁷There is some difficulty in directly comparing the various items of legislation because of the sometimes wide gap between the general principles of law and the detail of implementing regulations. For example, the regulatory principles of Law 21/1992 on Shipping came into force while the deregulation of PP 17/1988 still applied. The new Law 17/2008 is much more explicit on economic regulation than Law 21/1992, but PP 82/1999 continues to apply until new implementing regulations are promulgated.

⁸More detail can be found in Dick (1985, 1987).

⁹Peraturan Pemerintah No. 2 Tahun 1969 tentang Pe nyelenggaraan dan Pengusahaan Angkutan Laut [PP 2/1969 on Organisation and Operation of Sea Transport], 18 January.

¹⁰Indische Scheepvaartswet (Staatsblad Tahun 1936 No. 700) [Indies Shipping Law].

¹¹Peraturan Pemerintah Republik Indonesia No. 17 Tahun 1988 tentang Penyelenggaraan dan Pengusahaan Angkutan Laut [PP 17/1988 on the Organisation and Operation of Sea Transport], 21 November.

¹²PT Meratus Line, <http://www.meratusline.com>; Temas Line, <http://www.temasline.com/index.php?act=home>; accessed 21 July 2008.

¹³Berlian Laju Tanker Tbk, <http://www.blt.com.id/index.jsp>, accessed 21 July 2008.

¹⁴‘MoU signed to keep domestic shipping industry above water’, Jakarta Post, 29/3/2006.

¹⁵Inpres 4/1985 was effective because of the authority of President Soeharto; its weakness was that it was not a legislative instrument but merely a presidential directive.

¹⁶‘Indonesian ships increase domination of domestic cargo transport’, Asia Pulse, 18/7/2008.

¹⁷The same logic applies to official and unofficial levies on inter-district trade.

¹⁸‘Draf RUU Pelayaran kembali protes [Draft Shipping Law brings more protests]’, Bisnis Indonesia, 14/5/2007.

¹⁹The prosecutions that followed upon the heavy loss of life from the sinking of Pelni's passenger ship Tampomas II in 1981 remain exceptional (Dick 1987: 150–1).

²⁰‘Perbaikan kapal belum penuhi standard [Ship repair not yet up to standard]’, Bisnis Indonesia, 9/5/2008.

²¹When PP 17/1988 was criticised for benefiting foreign-fl ag shipping, the Ministry of Communications seized a dubious foreign-fl ag ship. As expected, the next day an Indonesian national turned up to protest against the seizure (S.B. Joedono, interview, May 2007).

²²PT Arpeni Pratama Ocean Line, <http://www.apol.co.id>; Berlian Laju Tanker Tbk, <http://www.blt.com.id/index.jsp>; Samudera Indonesia Group, <http://www.samud-era.com>; Temas Line, <http://www.temasline.com/index.php?act=home>; PT Meratus Line, <http://www.meratusline.com>; accessed 21 July 2008.