The government has rescinded a regulation making it compulsory for coal exporters to ship their coal on Indonesian-registered vessels.
In a response, Mr Dody Achmad Sudiyar Dalimunthe, executive director of the Indonesian General Insurance Association (AAUI) said that the move would affect marine hull insurance business in Indonesia.
AAUI data show that the total premiums obtained by the general insurance industry from ship hull business in 2019 reached IDR1.64tn ($102m). This represented an increase of 3.1% over IDR1.59tn in 2018.
The Indonesian Coal Mining Association, which lobbied for the regulation to be withdrawn, warned previously that local coal miners might lose buyers because of the regulation. Many overseas buyers would choose to import coal from other countries if they are forced to use Indonesian flagged ships. The reason is that there is a lack of Indonesian ships that meet international shipping standards to ship coal overseas, he said. Less than 2% of the coal exports is carried on Indonesian vessels.
The ‘use Indonesian-flagged ships’ regulation was initially set to take effect in April 2018 but the government delayed implementation until May 2020.
A government regulation issued in August 2018 requires Indonesian exporters of coal and palm oil to use local insurers from 1 June 2019 and to use local shipping companies from May 2020. The regulation had been issued to create more opportunities for national shipping companies and national insurance companies.
The insurance industry is hoping though that coal exporters will still be required to insure with local insurers, he told the local media.