Indonesia will delay until 2020 trade rules requiring exporters of coal and crude palm oil to use only Indonesian-flagged vessels, government officials said, putting off efforts to develop local shipping and save foreign exchange reserves.
The decision to postpone the rules by two years may come as a relief to the coal, palm oil and shipping industries, which had raised concerns over the availability of local vessels. Indonesia is the world’s biggest exporter of thermal coal and the top producer of palm oil.
The rules, that were due to take effect this month and intended to boost the archipelago’s shipping industry, were initially postponed in February.
“The trade ministry regulation will be revised,” Oke Nurwan, director general of foreign trade at the Trade Ministry, told Reuters by text message on Wednesday, adding that there was a “high probability” the policy will be postponed for two years as announced on Tuesday.
“Hopefully next week it will be complete,” Nurwan added, referring to the revision.
Ministers and government officials on Tuesday had met to discuss the regulation, and had decided “the timing will be adjusted,” Industry Minister Airlangga Hartarto told reporters after the meeting.
“A special two-year period will be given for shipping (industries),” he said.
The government will push for so-called cost, insurance and freight (CIF) shipping contracts, allowing exporters to choose transportation, whereas most shipments are currently made on a free-on-board (FOB) basis, Airlangga said.
“We can save foreign currency and at the same time develop our national shipping industry,” he said.
Rules mandating the insurance of shipments by Indonesian insurers would still be imposed with an additional grace period of three months from when the trade rules were initially due to come into effect in May.
“This is a matter of readiness. As long as national shipping companies are ready, we’ll support this,” said Hendra Sinadia, executive director of the Indonesian Coal Mining Association.
“As long as there’s clarity going forward and this doesn’t burden exporters in principal, it’s no problem,” he said.
Sea News, April 5