Several perahu pinisi--indigenous trading vessels--moored in the old harbor of Sunda Kelapa, Jakarta
Courtesy Harvey Follender

Maritime transportation became the focus of a major investment program and a series of regulatory reforms during the 1980s because of its importance in international trade. Like many areas of government policy, shipping and port policies had become increasingly restrictive and bureaucratic during the 1970s and early 1980s, before being dramatically liberalized during the midand late 1980s. The Indonesian National Shipping Company (Pelni) was established in 1952, and by 1965 with eighty-four ships accounted for 50 percent of the tonnage of the interisland domestic merchant fleet. Pelni's share began to erode thereafter, declining to around 18 percent of interisland capacity by 1982, although it maintained a virtual monopoly on passenger travel.

Government policy also required that shipping companies established after 1974 be majority-owned by pribumi businesses and mandated firm size and freight charges. Restrictions on new entrants were imposed through five classes of shipping license: interisland shipping, with a minimum capacity of 175 gross tons local shipping, with 35 to 175 gross tons traditional shipping, which included perahu pinisi, the two-masted sailing vessels originating among the Buginese in Sulawesi Selatan Province, and small motorized craft ships chartered by the government to serve remote ports and special vehicles engaged in carrying bulk freight such as crude oil, fertilizer, and other industrial cargos. Foreign vessels were required to obtain a special license to enter Indonesian ports, and a policy to reduce transshipment through Singapore designated four gateway ports for international shipments from Indonesia. A US$4 billion investment plan was launched in 1983 to expand the domestic shipping industry and port facilities. Almost US$1 billion was earmarked for upgrading the four gateway ports--Tanjung Priok (Tanjungperiuk) Subdistrict in North Jakarta (Jakarta Utara), Surabaya in Jawa Timur Province, Belawan near Medan in Sumatera Utara Province, and Ujungpandang in Sulawesi Selatan Province--together with fortythree collector ports and trunk ports that fed the gateway ports in a routing hierarchy.

In 1985 a major deregulation that included the suspension of local customs operations greatly simplified shipping regulations, permitted market-determined freight charges, and abolished the special license for foreign vessels, which were by then permitted to dock at about 100 of Indonesia's approximately 300 registered ports if they had a local Indonesian agent (see Aid and Trade Policies , this ch.). In 1988 the five licensing categories were simplified into two--oceangoing and regional shipping and interisland shipping. New entrants, including foreign joint ventures, were permitted with no restrictions on size of fleets, and some categories o9e0 of commercial businesses were permitted to operate their own fleets with no additional license. The investment program to expand the domestic fleet, which since 1984 had mandated the elimination of vessels older than thirty years, was suspended indefinitely, and the gateway hierarchy was effectively undermined by more liberal route permits, although investment in port infrastructure still centered on the four gateway ports.

By 1989 the entire domestic merchant fleet included 35 oceangoing vessels with a capacity of 447,000 deadweight tons by the earlier licensing categories there were 259 interisland vessels with a capacity of 466,000 deadweight tons, over 1,000 modernized local ships with a capacity of 158,000 deadweight tons, almost 4,000 traditional ships with a capacity of 200,000 deadweight tons, and 1,900 special bulk carriers with a capacity of more than 2 million deadweight tons. About 60 percent of the total cargo shipped was on special bulk carriers, dominated by crude oil and natural gas of the general cargo carried by ship, which in FY 1989 totaled about 40 million tons, about 80 percent was carried on oceangoing or interisland class vehicles, with the remainder split evenly between local and traditional craft. The importance of the traditional craft may have been underestimated by official figures, since independent estimates ranged up to 10,000 such craft, although sailing vessels were largely replaced by motorized craft. Additionally, there were some 21,600 kilometers of inland waterways on which goods might be carried, 48 percent of which were in Kalimantan and 25 percent in Sumatra.

Data as of November 1992