Cabotage Principle, which restricts foreign flagged vessel which are manned by foreign crews, is a key feature in maritime and transportation policies across the globe. Many countries such as Indonesia, use cabotage laws to safeguard their national shipping industries and to reduce dependence on foreign ships carrying out Indonesia’s maritime territory.
For example, Article 8 of Law No. 17 of 2008 on Shipping, as lastly amended by Law No. 66 of 2024, obligates domestic marine transportation to be conducted by national marine transportation companies, using Indonesian flagged ships, and manned by Indonesian crews.
Does this mean foreign flagged vessels can’t operate in Indonesian waters? Ministry of Transportation Regulation No. 2 of 2021 (“MoTR 2/2021”) provide exceptions on cabotage principle, making foreign-flagged vessels able to conduct the several activities in Indonesian waters outside of carrying passengers and/or goods:
- Oil and gas survey;
- Drilling;
- Off-shore construction;
- Offshore operations support;
- Dredging; and
- Salvage and underwater works.
Further, MoTR 2/2021 has specified the permissible types of vessels for each of the abovementioned activities:
- Drilling, such as: Jack Up Rig, Semi-Submersible Rig
- Offshore Construction
- Oil and Gas Survey
- Dredging
- Salvage and Underwater Works
- Offshore Operations Support
- Power Plant
- Wharf Construction
However, it is worth noting that such vessels must be operated by National/Indonesian Sea Transportation Company in order to carry out the above activities.