Indonesia, an archipelagic state with high maritime connectivity requirements and a strategic position along international trade routes, has an interest in ensuring that its shipping legal framework remains adaptive and able to provide legal certainty. The regulatory changes in the shipping sector not only affect the domestic industry, but also business actors, operators, and international partners that interact in, among others, carriage and port-related activities in Indonesia.
Within a period of less than five (5) years, Indonesia has amended the provisions of Law No. 17 of 2008 concerning Shipping (“Shipping Law”) several times, the most recent being the enactment in October 2024 of Law No. 66 of 2024 concerning the Third Amendment to Law No. 17 of 2008 concerning Shipping (“Law 66/2024”). These amendments to the Shipping Law were carried out to address developments and challenges in the shipping sector, particularly in the legal field.
The matters regulated under Law 66/2024 are, intended to reaffirm the application of the cabotage principle, to realise effective and efficient logistics costs, to empower people’s shipping (pelayaran rakyat), to enhance competitiveness in the conduct of Indonesian shipping, to improve the logistics performance index in the organisation of port activities in Indonesia, and to clarify institutional arrangements in the field of shipping.
In 2025, the implementing regulations derived from Law 66/2024 are currently being discussed by the Government through the relevant ministries, such as the Ministry of Transportation. The Ministry of Transportation has prepared several implementing regulations draft derived from Law 66/2024, so that, in time, the implementation of Law 66/2024 may be carried out in accordance with the intent and objectives of the enactment of Law 66/2024.
One of the important provisions highlighted under Law 66/2024 concerns joint venture companies, whereby the establishment of a joint venture company for carriage activities in Indonesian waters may be carried out by an Indonesian shipping company whose shares are wholly owned by Indonesian citizens, together with a foreign sea transportation company. A significant change that can be observed from the new provision above is that a joint venture company in the shipping sector may no longer be established by a company together with an individual person.
The majority of the shares in such a joint venture company must be owned by the Indonesian shipping company, which means that foreign ownership in the joint venture company may not exceed 49% (forty-nine per cent).
Furthermore, the relevant joint venture company must own and operate Indonesian-flagged vessels with a minimum size of GT 50,000 per vessel and be manned by crew members of Indonesian nationality. This provision constitutes a significant increase compared to the previous regulation under the Shipping Law, which stipulated a minimum size of GT 5,000.
Another important matter that should be highlighted is the authority of the Maritime Court (Mahkamah Pelayaran), which reflects a strengthening of law enforcement and accountability aspects within the shipping sector. Under the Shipping Law, the Maritime Court has the function of conducting further examinations of ship accidents and enforcing the professional code of ethics and competence of masters and/or ship officers after a preliminary examination has been conducted by the Harbourmaster (Syahbandar). The expansion of the Maritime Court’s authority demonstrates a strengthening of enforcement and accountability mechanisms. However, in practice, the exercise of authority to conduct examinations and impose administrative sanctions will be highly dependent on further regulation in the implementing regulations, including standards of proof, examination procedures, coordination with other institutions, and guarantees of due process for the parties under examination.
Under Law 66/2024, these functions have been expanded by granting the authority to: (i) conduct examinations of operators, shipowners, and authorised officers/officials in relation to ship accidents; (ii) impose administrative sanctions on masters, ship officers, operators, shipowners, and/or officers/officials who are proven to have committed errors and/or negligence resulting in ship accidents; and (iii) conduct mediation in the settlement of disputes arising from maritime employment agreements.
The amendments under Law 66/2024 demonstrate an effort to strengthen Indonesia’s shipping legal framework through the reaffirmation of national principles, adjustments to the structure applicable to business actors, and the strengthening of enforcement institutions. During this implementation period, attention should be focused on the consistency of the regulatory framework and the certainty of implementation mechanisms in practice. Accordingly, the development of implementing regulations and their practical application are important matters for industry participants, both domestic and international.