Understanding Indonesian Maritime Law: Key Considerations for Ship Owners

For any ship owners looking to operate within Indonesian territory, the most critical regulation to understand is the Cabotage Principle. Under Law No. 17 of 2008 on Shipping, all domestic sea transportation must be carried out by Indonesian-flagged vessels manned by Indonesian crews. While there are specific exemptions for specialized offshore activities (such as oil and gas drilling), the general rule remains strict: if you are moving goods or passengers between two Indonesian ports, the vessel must be locally registered.

How Indonesia’s Shipping Regulations Are Changing

Indonesia’s Shipping Law has entered a new phase following the enactment of Law No. 66 of 2024. This third amendment reflects a clear policy direction toward stronger governance and greater transparency across the maritime sector. Regulatory expectations are now framed more precisely, leaving less room for informal interpretation.

For ship owners, this shift signals a regulatory environment that prioritises structure over flexibility. Licensing requirements, operational accountability, and ownership clarity are being reinforced to align maritime activity with national objectives. Legal awareness has therefore become a practical part of operational planning rather than a secondary consideration.

Rules on Foreign Shipping Companies

Foreign participation in Indonesia’s shipping sector is still permitted, though it now follows a more structured framework. Shipping joint ventures may only be established by corporate entities, removing the ability for individuals to hold shares directly. This adjustment aims to ensure transparency in ownership and reduce arrangements that obscure actual control.

Partnership composition is also clearly defined. Foreign shipping companies are required to partner with Indonesian entities holding valid shipping business licences, with majority ownership retained by the Indonesian partner. For a ship owner assessing long term engagement in Indonesian waters, these requirements influence investment models, governance arrangements, and fleet deployment decisions from the outset.

Vessel Size and Licensing Requirements

One of the most tangible regulatory changes concerns vessel size thresholds. The minimum gross tonnage requirement for Indonesian flagged vessels under foreign joint ventures has increased significantly. This change directly affects feasibility assessments for operators who previously relied on smaller vessels to enter the market.

The impact extends beyond traditional shipping activities. Offshore energy, mining, and marine construction sectors that operate vessels under special operational licences are also affected. Ship owners active in these sectors may find that charter structures and asset allocation strategies require reassessment to align with current licensing standards.

Transition Period and Ongoing Compliance

Although a formal transitional period has been introduced, regulatory application is already taking place in practice. New licence applications are being reviewed under the updated framework, reflecting an early enforcement posture by authorities.

Existing operators may continue operating under previous arrangements provided ownership structures and vessel portfolios remain unchanged. Even so, licence renewals and endorsements present opportunities for compliance verification. For ship owners with ongoing operations in Indonesia, consistency in corporate structure has become increasingly important.

Oversight by the Admiralty Court

The Third Amendment also expands the authority of the Admiralty Court, extending oversight beyond accident investigation. The court may now examine ship operators, owners, and officers in connection with incidents, employment disputes involving seafarers, and operational conduct within Indonesian waters.

Sanction recommendations have broadened accordingly. Administrative consequences may include warnings, suspensions, or licence revocation proposals submitted to the Ministry of Transportation. Although final decisions remain with the Ministry, the expanded advisory role reinforces the importance of operational discipline and regulatory alignment.

Changes in Port Management

Indonesia’s port management framework has been restructured to improve clarity and coordination. Previously divided responsibilities have been consolidated under a unified port management institution system. Central authorities now oversee major commercial and collector ports, while regional governments manage non commercial feeder ports.

This restructuring simplifies jurisdictional boundaries and reduces administrative uncertainty during port calls. For ship owners operating across multiple Indonesian ports, clearer governance supports smoother coordination and more predictable engagement with authorities.

Ship Arrest and Legal Process

Procedural ambiguity surrounding ship arrest has long been a concern within Indonesian maritime practice. The revised law addresses this by confirming that ship arrest procedures follow existing legal frameworks rather than relying on unissued regulations.

This clarification strengthens enforcement consistency and limits procedural challenges that previously complicated arrest actions. Ship owners benefit from improved predictability when assessing contractual exposure and dispute resolution scenarios within Indonesian jurisdiction.

Using Legal Knowledge to Support Operations

Indonesia’s maritime regulatory environment is moving toward firmer structure and clearer enforcement. For ship owners, this evolution rewards preparation and informed engagement rather than reactive compliance. Legal understanding supports smoother port interaction, stronger commercial positioning, and more reliable operational planning.

Rather than viewing regulation as a constraint, many ship owners now approach Indonesian maritime law as a framework that supports stability and long term engagement. In one of the world’s most active maritime regions, informed compliance strengthens both confidence and credibility.

References:

• New Amendment to Shipping Law: Indonesian Government Tightens Shipping Business Requirements. (2025, February 27). Retrieved from Assegaf Hamzah & Partners Indonesia: https://www.ahp.id/clientalert/AHPClientUpdate-27February2025.pdf#:~:text=Recently%2C%20Indonesia’s%20shipping%20sector%20experienced,Law%20No.%2066%20of%202024.
• Shipping Laws and Regulations Indonesia 2025-2026. (2025, August 11). Retrieved from ICLG: https://iclg.com/practice-areas/shipping-laws-and-regulations/indonesia