Minister of Transportation (“MOT”) has issued Regulation No. PM 100 of 2016 regarding Procedures and Requirements for the Granting of the Foreign Ship Use Permits for Other Activities which are not included in Passengers Transportation Activities and/or Goods in Domestic Sea Transportation Activities (“MOT Regulation 100/2016”). MOT Regulation 100/2016 is effective as of 6 September 2016.
MOT Regulation 100/2016 revokes previous MOT Regulations, namely MOT Regulation No. 10 of 2014 which amended severally and lastly by MOT Regulation No. PM 200 of 2015 (altogether, “MOT Regulation 10/2014”).
- Activities which are not included in Passengers Transportation Activities and/or Goods in Domestic Sea Transportation Activities
MOT Regulation 100/2016 regulates activities which are not included in passengers transportation activities and/or goods in domestic sea transportaton activities that can use foreign ships (“Permitted Activities”) as follow:
- oil and gas surveys;
- offshore construction;
- offshore supporting operation;
- dredging; and
- salvage and underwater works.
- Use of Foreign Ships
MOT Regulation 100/2016 stipulates foreign ships to perform the Permitted Activities shall meet the following requirements:
- Indonesian flag ships are not available or insufficiently available to perform the Permitted Activities; and
- foreign ships shall be operated by domestic sea transportation companies.
In addition to the foregoing, a domestic sea transportation company must obtain a foreign ship use permit from the Ministry of Transportation (“Permit”). The procedure and requirements to obtain the Permit will be further explained in Point C below.
Previously, MOT Regulation 10/2014 provides more limitations on the Permitted Activities that can be performed by foreign ships, especially related to specification type and gross tonnage of the aforesaid ships. Under MOT Regulation 100/2016, such limitations are no longer applicable.
Further, there are different periods for foreign ships to perform the Permitted Activities under MOT Regulation 10/2014. The longest period is for drilling activity whereby foreign ships can perform such activity up to the end of December 2016. This drilling activity consists of:
- jack up rig/jack up barge/self elevating drilling unit;
- semi submersible rig; and
- deep water drill ship.
Other Permitted Activities such as oil and gas surveys, offshore construction, dredging and salvage and underwater works, foreign ships can perform such activities up to the end of December 2014.
On the other hand, MOT Regulation 100/2016 no longer stipulates different periods for foreign ships to perform the Permitted Activities as previously regulated in MOT Regulation 10/2014. MOT Regulation 100/2016 only regulates period for foreign ships to perform drilling activity up to the end of December 2017. No change on the drilling activity under MOT Regulation 100/2016.
Pursuant to MOT Regulation 100/2016, the Permit (excludes for drilling activity) is issued for maximum of one year and can be extended subject to evaluation from a Team (as explained in point C below). While, MOT Regulation 10/2014 does not provide any extension to the Permit.
- Procedure and Requirements to Obtain the Permit
MOT Regulation 100/2016 stipulates that to obtain the Permit, the domestic sea transportation company or the applicant is required to submit an application to the Directorate General of Sea Transportation (“DGST”) of the MOT along with the following documents:
- work plan which includes activities schedule, scope of work, work area marked with geographic coordinates;
- charter party between the domestic sea transportation company and the owner of the foreign ship and work contract and/or Letter of Intent (LoI) from the party that provides the work;
- copy of a valid and legalized Sea Transportation Company Business License (Surat Izin Usaha Perusahaan Angkutan Laut or SIUPAL);
- copy of certificate of registration of the ship;
- copy of certificate of safety and security of the ship;
- copy of certificate of the ship pollution prevention;
- copy of ship classification certificate;
- copy of the list of crew members of the ship; and
- copy of certificate of safety management.
The above documents shall be submitted to the DGST within 7 working days before the foreign ship is operated. Further, prior to submitting the application above, the applicant must be able to prove that the owner of the foreign ship and/or the party that performs the work has procured an Indonesian flag ship at least one time in accordance with type and ship technical specification required. Further, such procurement must prioritize:
- Indonesian flag ships;
- foreign ships that will be converted into Indonesian flag ships and owned by Indonesian legal entities which majority of their shares owned by Indonesian citizens and accompanied by commitment letters for converting foreign ships into Indonesian flag ships; and
- foreign ships that are to be bought by Indonesian citizens or legal entities and/or their subsidiaries which majority of their shares owned by Indonesian citizens and financed by leasing companies.
The evidence of such procurement is in the form of announcement or procurement document that must be presented within 5 working days prior to submitting the application. MOT Regulation 100/2016 also stipulates that in the event of emergency and urgently needed (i.e. use of foreign ships to overcome the effects of accidents or incidents that interfere with the safety of shipping), evidence of procurement will no longer be required.
The procedure to obtain the Permit is as follows:
- The applicant submits the application along with all required documents mentioned above to the DGST;
- The DGST will assess the application documents and the procurement evidence within 4 working days after receiving complete application documents;
- If the application does not pass the assessment process, the DGST will return the application and the applicant can revise and resubmit the application;
- If the application passes the assessment process, it will be evaluated by a Team which consists of at least Directorate of Traffic and Sea Transport, Directorate of Ports, Directorate of Shipping and Seamanship, Directorate of KPLP, Directorate of Navigation, Legal Bureau, Legal Affairs and KSLN Setditjen Sea Transportation and can involve DPP INSA and/or the relevant associations and stakeholders;
- Based on analysis result from the Team, the DGST will submit the complete and correct application to the MOT; and
- The MOT will issue the Permit within 3 working days.
Further, MOT Regulation 100/2016 stipulates that the MOT has the discretion to issue a policy of use of foreign ships for Permitted Activities and if types of ships are different from types of ships as stipulated in Attachment I of MOT Regulation 100/2016. Such discretion can be provided under the following conditions:
- there are no Indonesian flag ships with type and ship technical specification required are available or insufficiently available, which must be evidenced with analysis result from the Team;
- activities that will be conducted is in line with national interests, which must be supported with recommendations from the relevant Ministries/Institutions; and
- permit for a very limited period.
The procedure and requirements to obtain such policy is similar with procedure and requrements to obtain the Permit. The policy is issued for maximum of one year and can be extended subject to evaluation from the Team.