Indonesia’s shipping industry has been increasing its contribution to the country’s GDP during recent years. Its economic clout within the country is also expected to increase. Therefore, many have become interested in starting a shipping company in Indonesia.
Shipping companies serve as companies which connect businesses all over the world, especially if the products involved are bulky. In Indonesia, water transport is the predominant means of transport because two-thirds of its territory is surrounded by water. The country serves as a transport hub for Southeast Asian countries and therefore receives large volumes of shipment on a daily basis. The shipping industry is protected by a list of restrictions imposed by the Indonesian government. While these restrictions are intended to protect local businesses in the Indonesian maritime industry, they also provide opportunities for foreigners to enter the Indonesian shipping business.
Why One Should Start a Shipping Company in Indonesia
According to the latest statistics, the shipping companies of Indonesia contributed approximately 11% of the country’s GDP, a figure which is generally increasing. This rate of growth presents prospective business owners with an opportunity to undertake business activities in the shipping industry in the anticipation that the market conditions will improve. In its attempts to facilitate the growth of the industry, the Indonesian government has initiated many port development activities in its major ports in order to improve freight handling as well as the time taken to clear out goods from ports.
Indonesia is set to become an important country in the world’s maritime industry. This fact is evidenced by the heavy investment which has been given to the shipping industry. This capacity for economic growth has done much to facilitate the transport of goods across ports as well as all ship-building activities which take place in Indonesia. Furthermore, the Indonesian government’s restriction of foreign companies’ involvement in ship-building activities has created an incentive for locals to enter market. In its attempt to improve the investment climate related to shipping in Indonesia, the Indonesian government has been reviewing its level of control over the shipping industry. Such controls have also done much to create favorable investment opportunities in the shipping industries of other countries which are located in Southeast Asia.
Information About Starting a Shipping Company in Indonesia
Indonesia’s shipping laws allow for complete local ownership of shipping companies. However, any foreigner who is interested in starting a shipping company is only allowed to own up to 49% of the shares of the company. The reason for this is to retain as much local control over shipping companies as possible in order to secure local investments. The same laws apply to shipping companies which operate within the oil, gas, and coal sectors. Although foreigners are permitted to undertake oil and gas exploration, they are required to explicitly use local shipping vessels in moving their products unless stated otherwise while doing so. In summary, the Indonesian shipping laws are focused on promoting local growth by establishing and implementing restrictions which are imposed on all foreigners who enter the industry.
Before any foreigner may start a shipping company in Indonesia, the government requires a foreigner to partner with a local firm when seeking opportunities in the shipping industry. Foreign vessels are banned from participating in local transportation of both goods and people. However, in high-value industries like oil and gas, the Indonesian government allows an increased degree of foreign participation. Starting a shipping company in Indonesia as a foreigner requires the foreigner to register and incorporate a company by following the regulations stipulated by Indonesia’s company laws.
Investors from other Southeast Asian countries, however, are allowed to actively participate in shipping ventures by owning not more than 70% of the shares in public limited liability shipping companies. Although other sectors of the Indonesian economy provide flexible ownership schemes for foreign seeking entry into the Indonesian economy, the Indonesian government restricts nominee ownership of shipping companies. The only legal way to start a shipping company in Indonesia is by starting a company which uses the share distribution schemes stipulated by the shipping laws.
Should you have developed an interest in starting a shipping or any other company in Indonesia, we at Paul Hype Page & Co will be willing to serve any needs which you might have. By working with our incorporation team, your Indonesia-based company will be established with as few problems as possible because we have a wealth of knowledge and experience pertaining to the registration and incorporation of any company in Indonesia.
Licenses Which Are Required by Shipping Companies in Indonesia
Licenses serve as authorizing documents which legitimize a business entity’s actions in a country. Therefore, all companies are to obtain any necessary licenses before beginning to conduct any business operations. For shipping companies in Indonesia, a Sea Transportation Business License (SIUPAL) is required. This license is electronically generated after the issuance of a temporary business license upon the registration of a shipping company.
Although it is not a license, the general vessel certification for each shipping vessel owned by a shipping company is also required. This certification is issued following the adherence of the vessel to safety, tonnage, and load line rules stipulated by the Indonesian authorities. The shipping company must also obtain a pollution prevention certificate which confirms the company’s willingness to adhere to pollution standards. For every shipping vessel owned by the company, there should also be a ship radio station certificate which states the communication channels to be used by the vessel during the vessel’s operation. Should any shipping company based in Indonesia intend to export or import any products, it must obtain an export and import business license. Export and import business licenses which are owned by shipping companies based in Indonesia may be renewed at any time through the proper legal means.
These as well as several other certification requirement constitute the licensing requirements for shipping vessels in Indonesia. The Sea Transportation Business License is issued to a shipping company after all of the necessary certification requirements have been fulfilled.
Laws in Indonesia Which Are Related to Shipping Companies
The shipping industry in Indonesia is replete with laws which have been created to regulate the industry and all activities therein. These laws have been integrated into a collective shipping law which is applicable to all shipping ventures within Indonesia’s shipping industry.
One of the most important shipping laws in Indonesia is Law No. 17 of 2008. This law stipulates that any costs or damages which have been suffered as a result of a collision between two or more vessels due to a force of nature are to be borne by the respective owners of the vessels. If the collision is the fault of a single vessel, the costs of the accident will be placed upon the owner of that vessel. If two or more vessels are considered to be at fault during a collision, the owners of the vessels will proportionately and collectively bear the costs of the collision.
The cabotage policy is also an extremely important piece of legislation which exists within Indonesia’s shipping industry. This shipping law originally stated that only vessels which have been registered under the flag of Indonesia were allowed to carry passengers and goods across Indonesia’s domestic ports. This policy implied that only Indonesia-based shipping companies were allowed to participate in local shipping services except when certain permissions which permitted a degree foreign participation were in force. An amendment of the cabotage policy would be created in order to restrict the importation of vessels from outside Indonesia. As such, foreign shipping companies which were allowed to operate within Indonesia were therefore required obtain their vessels from Indonesian ship-builders. The cabotage policy has been cited by some as one of the Indonesian government’s most notable efforts to increase the shipping industry‘s GDP contribution to the country from 11% to 25%.
There are several other laws related to Indonesia-based shipping companies. Marine casualty laws, for example, are in force to remove ambiguities in solving marine casualty cases when they occur. The Indonesian shipping laws also state requirements related to pollution; they state that it is the responsibility of crew members to prevent and mitigate pollution which is or would be emitted from their vessels. Vessel owners and operators are also required to insure their vessels against pollution and its effects. A further law also requires vessel owners to insure their vessels against wreck removal.
If you are having any trouble with the application for any business license in Indonesia, we at Paul Hype Page & Co will be able to be of service to you. We will work with you in order to ensure that you will not commit any errors while applying for a business license to be used by your Indonesian company. Should you happen to encounter any legal troubles, we will also contact government or other authorities on your behalf so that the problems faced can easily be resolved.
The shipping industry of Indonesia possesses tremendous potential for industrial growth. The government’s commitment to improvement of the industry in the country has created a suitable business climate. The growth potential of the shipping industry of Indonesia will therefore lead to an increased need for and purchase of shipping services by various people, businesses, and other entities from within Indonesia as well as from abroad. The need for transportation services to and from Indonesia’s ports has also increased tremendously. Therefore, starting a shipping company in Indonesia is clearly a viable business option.
Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.
Paul Hype Page & Co. have 3 physical offices in Singapore, Malaysia and Indonesia
Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.
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Step 5- Assist as your company to hire staffs and handle all HR matters
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Starting a Shipping Company in Indonesia FAQs
A share distribution scheme is a company policy which dictates how a company’s shares are to be divided among its shareholders. Share distribution schemes are created for the benefit of a company’s shareholders.
The two busiest ports in Indonesia are the Port of Tanjung Priok and the Port of Tanjung Perak. In 2018, the Port of Tanjung Priok saw 7.64 million twenty-foot equivalent units (TEUs) pass through the port, while the Port of Tanjung Perak had 3.866 million of the same.