Cabotage exemptions for Indonesian offshore to continue

The government is set to extend contracts with foreign vessels which are mainly involved in the offshore construction, dredging and salvage segments in Indonesian waters.

According to reports, Transportation Ministry sea transportation director general Bobby Mamahit said that the ministry was currently holding discussions with the related ministries and stakeholders on how many years extension would be given.

“We realize that we do not have enough domestic players to work in this specific area so we plan to extend contracts with foreign players,” Bobby said. “We have to do this because we need to support offshore activities in the country and make sure their businesses run smoothly.”

Exemptions from Indonesia's cabotage rules for the offfshore sector are set to end in December 2013. With the contract extension, a number offshore support and salvage type vessels such as derrick, subsea umbilical riser flexible (SURF), laying barge, heavy floating crane, heavy crane barge and heavy salvage, which belong to foreign shipping companies would continue to operate across the archipelago.

Bobby said that the new contract was expected to be signed between the government and foreign players before the Christmas holiday.

The Indonesian National Shipowners Association (INSA) added that its members were ready to further explore the sector next year but were daunted by the typically short-term contracts in the sector and the high capex involved.

“Some of our members are set to establish joint venture companies with foreign shipping firms to better develop this sector next year. We believe that if the government, and every related department, fully supported us, we would not need foreign players,” chairwoman Carmelita Hartoto said.