APBI ICMA's Press Conference on the Obligation to Use National Vessels

In the midst of increasing demand for coal export from various countries such as Japan, India, and China due to this corona virus as well as continuing requests from ASEAN countries, APBI is worried that the decline in coal exports will occur in May 2020 due to law issued by the Ministry of Trade which regulates the use of national vessels for coal export (Permendag No. 80/2018), which would be effective on May 1st, 2020.

This provision was felt to be one of the important issues and a priority scale for members to discuss in regard to market their coal abroad. Therefore, APBI held a press conference (20/2) at the APBI Secretariat office.  During this conference APBI was represented by Richard Tampi (Secretary General), Hendri Tamrin (Marketing & Logistics Chair), Haryanto Damanik (Deputy Secretary General), Febriati Nadhira (Public Relations Committee), Tulus Situmenag & Johnny Djajadi (Logistics Committee) , and Hendra Sinadia (Executive Director) and attended by journalists from both print and online media, including Kompas, Kontan, The Jakarta Post, Tempo, Bisnis Indonesia, CNBC, Kumparan, Bloomberg, Reuters, Mining World, Coal Asia, etc.

APBI-ICMA's Press Release is as follows: 

"The Potential of Indonesia's Coal Export being Hampered as The Result of The Obligation to Use National Vessels"

The coal export has become Indonesia's core for foreign exchange export for several years and the future ahead as well as for reducing the current account deficit which is feared to be hampered not only by the uncertainty of global economic and the spread of the corona virus (COVID-19) but also by the implementation plan of the obligation to use national vessel set forth in the Regulation of the Minister of Trade (Permendag) No. 82 of 2017 concerning Utilization of National Sea Transportation and Insurance for the Exportation and Importation of Certain Goods.

As it is well-known, the government in this case the Ministry of Trade had issued Permendag 82/2017 which has been amended for the second time to Permendag 80/2018 which among others requires that the effective use of insurance and national vessels will take on May 1st, 2020. The obligation was initially supposed to be enforced In 2017, it was postponed due to the very limited capacity of national vessels to transport coal shipping, which commonly using the free-on-board (FoB) scheme where importers are required to seek the insurance and vessels.

Since the beginning of issuance of the Permendag 82/2017, APBI-ICMA, an association for coal mining companies and business professionals related to the coal industry sector as well as government partner, expressed support to the government as long as the implementation of the regulation does not hamper the coal export process, does not incur additional costs, keep the long-term export contracts remain respected, and do not conflict with international trade cooperation agreements. However, with the increasingly limited time and the lack of implementation of the technical guidelines that could guarantee the precision of export and no additional cost burden, we are worried that coal export could be disrupted. Such concerns have become even more reasonable with the cancellation and postponement of several coal export shipments to several countries in the period of May 2020.

ICMA, as the government partner, have raised these concerns from the beginning both through meeting forums and official letters. Our members are worried that some coal importers will divert their purchases to other sources amid the current oversupply condition in the global market. In addition, the impact of the spread of the corona virus that made ship procurement especially to China increasingly difficult and expensive will increasingly add to the burden of exporters in marketing and exporting coal which has been the core of our state revenue and foreign exchange exports. In the midst of international trade competition as a result of the current global trade tension, the policy to use national vessel is feared to be able to trigger reaction from our coal importing countries to other commodity exports which will ultimately harm the national export.

In connection with the current situation, we have submitted complaints and requests to the government to reconsider the implementation of the policy because the potential impact would actually weaken the competitiveness of national coal export and create the climate for investment to be unattractive that is counterproductive to the government's efforts to encourage a decent investment’s climate.

 

Jakarta, February 20th 2020

 

Pandu P. Sjahrir Chairman

Indonesia Coal Mining Association (APBI-ICMA)

For further info and questions please contact Hendra Sinadia (Executive Director of f APBI-ICMA) +62-821-25365869

 

 

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