New Regulation on Registration and Nationality of Vessel

On 19 May 2017, the Minister of Transportation of the Republic of Indonesia (“MoT”) issued Regulation No. PM 39 Year 2017 regarding the Registration and Nationality of Vessel (“MoT Reg 39/2017”). MoT Reg 39/2017 replaces the previous Regulation No. PM 13 Year 2012 by providing comprehensive requirements and timelines for the completion of applications on vessel registration, transfer of ownership, transfer of hypothec over the vessel as well as vessel historical documents.

In this alert, we discuss some of the key highlights of these changes.

1. Restriction on foreign ownership of shares

For vessel registration, MoT Reg 39/2017 requires the foreign ownership of shares for Indonesian joint venture companies to be as follows:

2. Additional documents required for vessel registration and transfer of ownership

MoT Reg 39/2017 requires additional documents to be provided for vessel registration and transfer of ownership as follows:

3. Additional circumstances to prove vessel ownership

MoT Reg 39/2017 also provides for additional circumstances where vessel owners can prove their ownership as follows:

4. Vessel deregistration basis

Vessels may be deregistered by way of an application from the vessel owner that the vessel:

• is not operated anymore
• is deprived by pirates or enemy
• is lost in accordance with Article 667 of the Indonesian Commercial Code, in which there is no news of such vessel after certain period, namely 6 months lost within Indonesian territory, 12 months lost from Indonesia to Australia, Asia south beach, Africa east beach, Tanjung Harapan, and islands between those countries and Indonesia and vice versa, or 18 months lost for other voyages outside Indonesia to other worlds territory and vice versa, as from its departure date or the date when the latest news received.
• is scrapped
• is transferred to a foreign citizen and/or legal entity
• will be registered in another country.

Alternatively, a final and binding court decision may be obtained for the vessel deregistration on grounds that the owner has a criminal conviction.

5. Vessel nationality document required

An Indonesian registered vessel must obtain the Vessel Nationality Document as proof of vessel nationality. The Vessel Nationality Document consists of the following certificates:

1. Marine Certificate (Surat Laut) for the vessel as measured Grosse Tonnage (“GT”) 175 or more;
2. Large Vessel Pass (Pas Besar) for the vessel as measured from GT 7 up to GT 175; and
3. Small Vessel Pass (Pas Kecil) for the vessel as measured less than GT 7.
4. River and Lake Pass (Pas Sungai dan Danau) for the vessel that only sails on rivers and lakes.

The above certificates shall be validated by the Harbour Master/Syahbandar on an annual basis.

The following documents are required for the validation of the Vessel Nationality Document of the Marine Certificate, Large Vessel Pass, and Small Vessel Pass:

For the River and Lake Pass validation as mentioned in item (d) above, MoT Reg. 39/2017 does not stipulate what documents are required.

6. Online document submission

All relevant documents for registration and nationality of vessel must be submitted electronically through Electronic Vessel Registration System/Sistem Pendaftaran Kapal Elektronik ( “SPKE”).

7. Timeframe for application of vessel registration

MoT Reg 39/2017 also provides specific timeframe of vessel registration as follows:

8. Hypothec of vessel

A registered vessel may be used as security for a loan by encumbering the vessel with hypothec. The hypothec security can be done through a hypothec deed made before the registration of the vessel and the hypothec receiver can be, among others:

1. Indonesian citizens or foreign citizens;
2. National or international banks;
3. National or international financial institutions;
4. National or international non-financial institutions.

In conclusion, MoT Reg. 39/2017 provides more certainty to business players in the shipping sector when it comes to registering or applying for licences for their vessels within a specific timeframe. The introduction of the SPKE has facilitated this process further.

If you have any questions or require any additional information, please contact Afriyan Rachmad, Evi Pasaribu, Gabriel Cahya Anugrah or the ZICO Law Partner you usually deal with.

This alert is for general information only and is not a substitute for legal advice.