NewsObligation to Use National Sea Transportation And National Insurance

The Government of Indonesia has issued regulations related to the obligation to use national vessels for certain commodity export and import activities. The obligation is regulated under Regulation of the Minister of Trade No. 82 of 2017 on the Provision of the Utilization of National Sea Transportation and Insurance for Export and Import of Specific Goods (“MR 82/17”), which has been amended from to time and lastly amended by Regulation of the Minister of Trade No. 80 of 2018 on the Second Amendment of MR 82/17.

However, in 2020, the Government of Indonesia through Regulation of the Minister of Trade No. 40 of 2020 on the Provision of the Utilization of National Sea Transportation and Insurance for Export and Import of Specific Goods (“MR 40/20”) revoked MR 82/17 and its amendments. MR 40/20 is Indonesia’s new regulation regulating the obligation to use national sea transportation and national insurance for export and import of specific goods. The specific goods include coal, Crude Palm Oil (CPO), rice and/or goods for government procurement (“Specific Goods”).

 

Obligation to Use National Sea Transportation

National sea transportation means sea transportation owned or leased by national sea transportation companies in the form of bareboats, time charters, voyage charters, contracts of affreightment or other vessel rental contracts. Meanwhile, national sea transportation companies are sea transportation companies incorporated in Indonesia conducting sea transportation activities in the territorial waters of Indonesia and/or from and to overseas ports.

Based on Article 3 of MR 40/20, Obligation to use national sea transportation applies to:

  1. exporters exporting coal and/or CPO using sea transportation with a capacity of up to 15,000 (fifteen thousand) deadweight tonnage; and
  2. importers importing rice and/or goods for government procurement using sea transportation with a capacity of up to 15,000 (fifteen) deadweight tonnage.

National sea transportation companies that provide sea transportation services for the above export and import activities must submit data on the utilization of national sea transportation electronically to the Director-General of Foreign Trade (“DGFT”) through the Ministry of Trade’s online system called Inatrade. The data submitted by national sea transportation companies at least include the following:

  1. name of the vessel;
  2. number of the International Maritime Organization; and
  3. term of contract/rental/charter of the vessel.

 

Obligation to Use National Insurance

After the issuance of MR 40/20, export and import activities for these Specific Goods must also use national insurance. National insurance is held by national insurance companies or export finance institutions that are established by the government, and have obtained registration number (tanda daftar) from the Minister of Trade.

Under Article 10 of MR 40/20, exporters and importers of such these Specific Goods using sea transportation with a capacity of up to or more than 15,000 (fifteen)  deadweight tonnage must mention the cost and freight in the Export Declaration (Pemberitahuan Ekspor Barang) or Import Declaration (Pemberitahuan Impor Barang).

Exporters and importers that have had an insurance policy issued by a national insurance company or export finance institution established by the government and registered in the Ministry of Trade must mention: (1) number of the policy; (2) date of the policy; (3) number of premium insurance; and (4) name of the insurance company/export finance institution in the Export or Import Declaration..

Verification Requirements

MR 40/20 also regulates verification as a requirement to carry out coal exports and rice imports. Such this provision is regulated under Article 14 of MR 40/20. Verification or technical search is carried by a surveyor before loading goods. To have a verification process, exporters or importers must apply verification to the surveyor. Verification results are made in the form of surveyor reports. Surveyor reports must be attached as the customs supplementary document when submitting notification of coal exports and rice imports in the customs office. Surveyor reports will only be issued if in the administrative check such export or import activities use national insurance.

 

Reporting Obligation and Administrative Sanctions

Exporters and importers of the Specific Goods must submit a report on the utilization of national sea transportation and national insurance. The report is submitted through Inatrade to the DGFT. The report must include at least:

  1. name of the national sea transportation company;
  2. number of the International Maritime Organization;
  3. name of the national insurance company and export finance institution; and
  4. number and date of the policy or certificate of the insurance.

Article 17 of MR 40/20 provides administrative sanctions for exporters and importers of the Specific Goods, as follows:

  1. exporters and importers are subject to administrative sanctions in the form of a recommendation for freezing Business Identification Number if exporters and importers:
    • do not use national sea transportation and national insurance;
    • do not submit the report on the utilization of national sea transportation and national insurance.
  1. exporters and importers are subject to administrative sanctions in the form of suspension of export or import activities if exporters and importers:
    • do not mention the cost and freight in the Export Declaration or Import Declaration; and
    • do not mention the national insurance details in the Export Declaration or Import Declaration.

 

Exception in the Regulation

Article 22 of MR 40/20 provides exceptions for export and import of the Specific Goods. The following export and import activities are not subject to the obligation to use national sea transportation and national insurance:

  • Exports of coal and/or CPO that are:
    1. for sample, not for trading;
    2. for research and science development;
    3. rejected by domestic buyers, then such goods are re-exported with the maximum number equal to the number mentioned in the Import Declaration; and/or
    4. exported through land borders.
  • Imports of rice or goods for government procurement that are:
    1. for sample, not for trading;
    2. for research and science development;
    3. grant goods, prizes or gifts for charity, social or cultural purposes; and/or
    4. imported through land borders.

To obtain the above exceptions, exporters and/or importers must obtain approval from the DGFT by submitting a written application to the DGFT.

 


ADCO Law earns the trust to represent clients from multinational companies to emerging entities across a wide range of industries to achieve their business objectives in Indonesia.

By combining commercial sensibilities and legal expertise, ADCO is Law Firm Jakarta who assists the clients to structure, organize and implement their business ventures and investments, including structuring, financing and securing investments as well as establishing new foreign companies in Indonesia. Should you have more queries regarding this matter, please do not hesitate to contact us.

Dendi Adisuryo
dendi.adisuryo@adcolaw.com

Endah Sulastri
endah.sulastri@adcolaw.com

@2020 ADCO Law. All rights reserved.
This publication has been prepared for general informational purposes only to provide clients with information on recent legal developments and is not intended as legal advice or opinion.

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