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Shipping
Maritime
transportation became the focus of a major investment
program and a series of regulatory reforms during the
1980s because of its importance in international trade.
Like many areas of government policy, shipping and port
policies had become increasingly restrictive and
bureaucratic during the 1970s and early 1980s, before
being dramatically liberalized during the midand late
1980s. The Indonesian National Shipping Company (Pelni)
was established in 1952, and by 1965 with eighty-four
ships accounted for 50 percent of the tonnage of the
interisland domestic merchant fleet. Pelni's share began
to erode thereafter, declining to around 18 percent of
interisland capacity by 1982, although it maintained a
virtual monopoly on passenger travel.
Government
policy also required that shipping companies established
after 1974 be majority-owned by pribumi businesses and
mandated firm size and freight charges. Restrictions on
new entrants were imposed through five classes of shipping
license: interisland shipping, with a minimum capacity of
175 gross tons; local shipping, with 35 to 175 gross tons;
traditional shipping, which included perahu pinisi, the
two-masted sailing vessels originating among the Buginese
in Sulawesi Selatan Province, and small motorized craft;
ships chartered by the government to serve remote ports;
and special vehicles engaged in carrying bulk freight such
as crude oil, fertilizer, and other industrial cargos.
Foreign vessels were required to obtain a special license
to enter Indonesian ports, and a policy to reduce
transshipment through Singapore designated four gateway
ports for international shipments from Indonesia. A US$4
billion investment plan was launched in 1983 to expand the
domestic shipping industry and port facilities. Almost
US$1 billion was earmarked for upgrading the four gateway
ports--Tanjung Priok (Tanjungperiuk) Subdistrict in North
Jakarta (Jakarta Utara), Surabaya in Jawa Timur Province,
Belawan near Medan in Sumatera Utara Province, and
Ujungpandang in Sulawesi Selatan Province--together with
fortythree collector ports and trunk ports that fed the
gateway ports in a routing hierarchy.
In
1985 a major deregulation that included the suspension of
local customs operations greatly simplified shipping
regulations, permitted market-determined freight charges,
and abolished the special license for foreign vessels,
which were by then permitted to dock at about 100 of
Indonesia's approximately 300 registered ports if they had
a local Indonesian agent. In 1988 the five licensing
categories were simplified into two--oceangoing and
regional shipping and interisland shipping. New entrants,
including foreign joint ventures, were permitted with no
restrictions on size of fleets, and some categories of
commercial businesses were permitted to operate their own
fleets with no additional license. The investment program
to expand the domestic fleet, which since 1984 had
mandated the elimination of vessels older than thirty
years, was suspended indefinitely, and the gateway
hierarchy was effectively undermined by more liberal route
permits, although investment in port infrastructure still
centered on the four gateway ports.
By
1989 the entire domestic merchant fleet included 35
oceangoing vessels with a capacity of 447,000 deadweight
tons; by the earlier licensing categories there were 259
interisland vessels with a capacity of 466,000 deadweight
tons, over 1,000 modernized local ships with a capacity of
158,000 deadweight tons, almost 4,000 traditional ships
with a capacity of 200,000 deadweight tons, and 1,900
special bulk carriers with a capacity of more than 2
million deadweight tons. About 60 percent of the total
cargo shipped was on special bulk carriers, dominated by
crude oil and natural gas; of the general cargo carried by
ship, which in FY 1989 totaled about 40 million tons,
about 80 percent was carried on oceangoing or interisland
class vehicles, with the remainder split evenly between
local and traditional craft. The importance of the
traditional craft may have been underestimated by official
figures, since independent estimates ranged up to 10,000
such craft, although sailing vessels were largely replaced
by motorized craft. Additionally, there were some 21,600
kilometers of inland waterways on which goods might be
carried, 48 percent of which were in Kalimantan and 25
percent in Sumatra.
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