Licensing is the basis of all regulation of the shipping industry by the Directorate-General of Sea Communications. Since Regulation No. 5/1964 the aim of licensing has been twofold. Firstly, the Directorate-General has tried lo divide the industry into several non-competing sectors. Secondly, within each sector licensing has been used to control the entry and exit of firms with a view to avoiding overcapacity, reducing the number of operators and increasing efficiency. In the case of the nusantara (interisland) shipping sector, licensing has also been the basis for controls over routing and the shipment of essential commodities. By such means the government has tried to guide or direct the allocation of resources rather than leave it to market forces. This chapter looks in some detail at how this has been done and whether or not it has been successful.

LICENCE CATEGORIES

Since 1969 the Directorate-General has distinguished eight sectors with separate licence categories (Table 8.1). The categories are more or Jess self-explanatory. “Special (Carrier)” (Khusus) applies to the shipment of angkutan sejenis (homogeneous consignments) and loosely approximates the designation of “bulk carrier”. The sub-category of “industrial carrier” applies to the manufacturing, mining, forestry, agriculture or fishing industries in which firms may provide their own ancillary shipping services without being common carriers — the oil company PERTAMINA, the fertilizer producer PUSRI and several coconut oil mills are good examples. The “offshore” sub-category is meant to be restricted to servicing of the oil industry. Lokal (local) shipping is restricted to the operation of vessels of less than 175 gross tons, while prabu shipping refers to sailing or auxiliary sailing vessels of less than 175 gross tons. No firm may hold more than one licence — a company wishing to be involved in more than one sector must set up a separate subsidiary.

Although on paper the licence categories appear to be mutually exclusive, in practice overlapping has been impossible to prevent. This has been most evident in the interisland trade. Nusantara (interisland) firms compete with the three domestic special carriers in the shipment of basic commodities and even containers.