The Indonesian Interisland Shipping Industry: An Analysis of Competition and Regulation 9789814345576

Table of contents :
Contents
Tables
Illustrations
Preface
I. Introduction
II. Evolution of the Modern Interisland Shipping Industry
III. Market Structure and Competition
IV. The Impact of Competition
V. The Firm
VI. PELNI
VII. Infrastructure
VIII. Licensing and Controls
IX. Investment Policy
X. Freight Rate Regulation
XI. Conclusion
Appendices
Abbreviations and Glossary
Bibliography
Index
The Author

Citation preview

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INDONESIAN INTERISLAND SHIPPING INDUSTRY AN ANALYSIS OF COMPETITION AND REGULATION

The Institute of Southeast Asian Studies was established as an autonomous organization in May 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the multi-faceted problems of stability and security, economic development, and political and social change. The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer. The ASEAN Economic Research Unit is an integral part of the Institute, coming under the overall supervision of the Director who is also the Chairman of its Management Committee. The Unit was formed in 1979 in response to the need to deepen understanding of economic change and political developments in ASEAN. The day-to-day operations of the Unit are the responsibility of the Co-ordinator. A Regional Advisory Committee, consisting of a senior economist from each of the ASEAN countries, guides the work of the Unit. Research on shipping is one of the concerns of the ASEAN Economic Research Unit and several studies are usually under way in any one year. It is the Unit's intention to strengthen such work in the years ahead, both on its own and in collaboration with other organizations with similar interests.

_ _ _THE _ __

INDONESIAN INTERISLAND SHIPPING INDUSTRY AN ANALYSIS OF COMPETITION AND REGULATION

H. W. DICK

I5ER5

ASEAN ECONOMIC RESEARCH UNIT

INSTITUTE OF SOUTHEAST ASIAN STUDIES

Cover photo: Ogan (2196 grr/built 1948). One of a class of nine cargo/passenger ships built for the KPM for the copra trade from Eastern Indonesia. Sold in 1960 to Singapore owners, in 1962 she was bought back by P.T. Sriwijaya Raya Unes and for many years maintained a regular fortnightly service between Jakarta, Belawan, and Singapore. In january 1984 she was laid up to be scrapped.

Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Singapore 0511

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or tmnsmined in any form or by any means, electronic, mechanical, phococopying, recording or otherwise, without the prior permission o f the Institute of Southe-.tst A~lan Studies.

© 1987 Institute of Southeast Asian Studies Cataloguing in Publication Data Dick, 11oward Tile Indonesian interisland shipping industry: an analysis of competition and regulation. Based on his Ph.D. thesis, Australian National University, 1977. 1. Shipping- Indonesia. 1. Title. HE887 054 1986 ISBN 9971 988-29·1 ISBN 9971 ·988·30·5

(soft cover) (hard cover)

The responsibility for facts and opinions expressed In this publication restS exclusively with the author and his interpretations do not necessarily reflect the views or the policy of the Institute or its supporters. Typeser by lnregrared Graphics Pte. Lid, Singapore. Prillfed in Singupore hy Kim Hup Lee Pri11ti11g Co Pre l td

ToH WArndt

Silumba ( 1650 dwt/built 1978) One o f 10 'Si' class general purpose cargo ships buih in Norway under Norwegian aid and allocated via P.T. PANN to PEI..Nl. On this voyage the deck, designed to carry containers, is being used for passengers.

Conte nts List of Tables ix

List of Illustrations xi

Preface xiii

I

INTRODUCTION 1

u

EVOLUTION OF THE MODERN INfERISIAND SHIPPING INDUSTRY

4

Dl MARKET STRUCTURE AND COMPETITION

41

IV THE IMPACT OF COMPETITION

58

v THE FIRM

68

VI PELNI

83

VII INFRASTRUCTIJRE

96

vm

UCENSING AND CONTROlS 118 IX

INVESTMENT POUCY

140

X FREIGHT RATE REGUlATION 158 XI

CONCLUSION 181 Appendices

193 Abbreviations and Glossary

203 Bibliography

206

Index 210

viii

Tables Page

2.1 Shares of KPM and PEl.NI in Interisland and Shortsea Cargo, 1956 and 1957 2.2 Shares of KPM and Indonesian Firms in Main GovernmentControlled Interisland Cargoes, 1956 2.3 Shares of Main Firms in Singapore Cargoes, 1953-56 2.4 Interisland Fleet, Cargo and Productivity, 1957-64 3.1 Interisland Cargo by Shipping Sector, 1981 3.2 Size Distribution of Firms by Fleet Capacity, December 1982 3.3 Size Distribution of Firms by Tonnage of Cargo, 1982 4.1 Distribution of Firms by Productivity of Fleet, 1982 and 1978 4.2 Range of Observed Crew Sizes by Ship Size, 1973/74 4.3 Turnover and Staffing of the Medan/Belawan Branches of Eja and Srilines, 1973 4.4 Comparison of Overall Staffing, Eja and Srilines, 1973 4.5 Turnover of Nusantara Firms ( Dec. 1966 to Dec. 1982) 4.6 Capacity Shares of Growing and Declining Firms (Dec. 1970 to Dec. 1982) 5.1 Interis land Firms and Number of Ships, December 1982 6.1 Financial Results of P.T. PEINI, 1982-85 7.1 Output of-the Domestic Shipbuilding Industry, 1979-83 8.1 Ucence Categories and their Minimum Requirements 8.2 RlS System, December 1983 9.1 Distribution of Approved World Bank Rehabilitation Loans,

19 22 23 28 42 51 51 59 61 61 62 63

64 72

86

111 119 127 1~

1~1m

10.1 Commodity Differentiation of the Official Tariff 10.2 Commodity Group Classification in Force from November 1969 to February 1979 - Selected Items 10.3 Transport Cost Profile fo r Shipment of Sugar (300 tons) from East java Mill to Samarinda (November 1973) 10.4 Changes in Commodity Coefficients (1 March 1979) 10.5 Official and Actual Freight Rates for Private Firm, Surabaya/ Samarinda Service

ix

165 166 170 171 175

Illustrations Page Frontispiece

Silumba King Dragon Tampomas Karangraya Bidara Soemantri Brodjonegoro Babaduri Kota Silat Xi Bintang Mas Prahu Pinisi Prahu Layar Motor Lawandra Bengawan

20 20 21 21 44 45

46 47 48 49

88

89 106 107 107 112 113 132 133 142 143

Ujung Pandang Surabaya Ujung Pandang Sandangan Tapian Nauli Barau Pelita Pisang Iweri

AclmowledgemenJs Photographs on the following pages were reproduced by courtely ofAtrjoto, P. 0. Box 159, Malacca: cover, frontispiece, 20, 44, 45, 46, 47, 112, 113. 142.

The photograph on page 2.1 was reproduced wtth the kind permimon ofW.A Schell All other photographs were taken by the author. xi

Preface

T

he aim of this book is to provide an economic analysis of the performance of and policy towards the vital interisland shipping industry since Indonesia's Independence. It represents the fruits of research which began in 1973 when I became a Ph.D. student at the Australian National University with the opportunity to carry out fieldwork in Indonesia, Singapore and the Netherlands. After the thesis had been submitted I obtained a somewhat different perspective as a consultant to the World Bank. Since then I have tried to keep in touch with recent developments on periodic visits to Indonesia. The advantage of this long gestation period is that my original approach and hypotheses have had to stand the test of time. I believe that analysis of the often conflicting forces of competition and regulation still provides rich insight into the industry's continuing poor performance. While circumstances have certainly changed over the past decade, in many respects it is the case that plus ~a change plus c'est Ia meme chose. Consultants' reports are typically ephemeral because they ignore the continuity arising from this historical dimen..c;ion. We all have our tools of trade and mine are unashamedly those of the economist. To self·styled "practical men", economic analysis often seems "too theoretical" and the deregulatory policy implications "too impractical" or "politically unacceptable". As has been said of History, however, so also of Economics: we ignore it at our peril. As the interisland shipping industry shows all too clearly, economic forces have an annoying tendency of asserting themselves one way or another and thwarting even the best·intentioned of regulations. By the time this happens, however, foreign advisers or bureaucrats have often moved on to greener pastures. For want of analysing the causes of the failure of past policies, their successors then often proceed to make very similar mistakes. Nevertheless, it is essential not to be too pure an economist. Through regulation and personal connections, "political" forces must also be taken into account. The whole point of analysing competition and regulation is that the performance of the industry can best be understood as the outcome of their interaction. The book does not aim to set forth a programme for policy reform. Over the past fifteen years or so the Indonesian Government has not lacked advice on what to do about the interisland shipping industry. Most of it has been taken with a grain of salt, which is probably about the right amount of seasoning. For better or for worse the Indonesian Government has shown itself well able to decide upon its own policies. My analysis of the impact of those policies suggests that the performance of the industry would be improved by a good xiii

xiv

Preface

deal of deregulation. With the package of reforms that have followed upon Presidential Instruction (lnpres) No. 4/ 1985 of April1985, the government has now implemented a major shift of policy in this direction. My main concern is not so much to argue the case for deregulation, however, as to suggest that the formulation and implementation of industry policy would benefit from some more careful economic analysis within government, as also from more consultation with the industry itself. Economic policy under the New Order has been very enlightened at the macroeconomic level, but the technocratic approach has yet to penetrate very far at the industry level. This reflects in part a desperate shortage of well-trained applied microeconomists .

•

•

•

Knowledge and ideas do not emerge from thin air, and I most gratefully acknowledge the assistance which I have received over the years from so many people. My greatest debt is to my teacher and supervisor, Emeritus Professor H. W. Arndt, founder of the Indonesia Project at the Australian National University. It was he who first suggested that I study the interisland shipping industry for my Ph.D. thesis and gently guided me towards its successful completion. From him I learned much, not just about Economics but also about the beauty of good English, and to him this book is most affectionately dedicated. My original fieldwork was undertaken with the kind patronage of Professor Dr Emil Salim, then Minister for Communications, and under the sponsorship of the Lembaga Ilmu Pengetahuan Indonesia (UPI). The collection of data would have been impossible without the assistance of officials of the Directorate-General of Sea Communications, both in Jakarta and in ports around the country. The Secretariat of the Indonesian National Shipowners' Assodation (INSA) also helped with data and kindly provided a letter of introduction to its members. Over the years 1 have been able to speak with the owners and/or managers of virtually all the interisland shipping firms, some no longer in business. I have also had invaluable discussions with members of the various foreign advisory teams which have served in Indonesia over the years. In the course of the research I have not only learned a great deal from all these people but also formed friendships. I regret that it would not be appropriate to thank people by name, though I would like particularly to acknowledge the assistance of the late Captain Harun Rasidi, formerly President-Director of PEL.NI and the late Mr]. C. Pattinasaranij of P. T. Eja. No doubt I have not listened carefully enough and too often been led astray by my preconceptions as an economist - this is a reflection upon no one but myself. The long historical chapter draws heavily on material co!Jected on two visits to the Netherlands. From September to November 1974 I was fortunate to be a

Preface

XV

visitor to the Stichting lnstituutvoorVerkeers- en Vervoerseconomie (SIVVEA) in Amsterdam and would particularly thank Professor K. Vonk and Drs C. Smits for this opportunity. During that time the KPM records were unfortunately inaccessible owing to the Nedlloyd Group's moving to Rij~'Wijk. In 1982 I was able to return to the Netherlands and work on that very rich material, now desposited in the Alg. Rijksarchief in The Hague. I am grateful to the Nedlloyd Group for permission to consult the material and to Mr E. Ooyevaar of the Tweede Afdeeling for helping me to find my way through the archive. Captain Peter Foxley, of Airfoto, Malacca has kindly allowed publication of a number of his excellent photographs. last but not least, I would like to thank the typists in the Department of Economics at Newcastle University, Joan Allridge, Maxine Zerafa and Elizabeth Williams for their patience and care in typing the manuscript. November 1985

H. W.

DICK

Newcastle, NSW Australia

I

Introduction A

s an archipelago, Indonesia is dependent upon shipping for much of its .t"\.internal trade. just how geographically fragmented the country is can readily be appreciated from the map. Population, however, is not evenly distributed. Two-thirds of the population is concentrated in the small but amazingly fertile islands of java and Bali. Of the remaining third of the population which is located in the Outer Islands, the large proportion is accounted for by Sumatra. Eastern Indonesia, which encompasses about half the country's total area of land and sea, contains barely 10 per cent of the total population. This distribution of population is reflected in the pattern of interisland trade. Most of the food production and manufacturing is located on java, and the largest proportion of interisland trade flows between Java and Sumatra. Because Java is overpopulated relative to its resource base while the Outer Islands are underpopulated, substantial real income gains could be expected to accrue from interisland specialization and trade. An efficient interisland shipping industry is essential, however, if those gains are to be realized. Any margin of inefficiency in the cost of providing shipping ser:vices resembles an interisland tariff over and above the natural level of protection involved in providing transport services at some unavoidable minimum cost. Such inefficiency frustrates economic integration and the economy sacrifices both current and future real income from interisland trade forgone. In the late colonial period a very efficient and extensive network of interisland shipping services was provided by a private Dutch company known familiarly as the KPM (Koninklljke Paketvaart Maatschappij or Royal Packet Company). By establishing a firm monopoly of the whole interisland network, apart from a few lines to Singapore, the KPM was able to use profits from the main trunk lines to cross-subsidize regular scheduled services to even the most remote corners of the Archipelago. By through-shipment arrangemenlc;, these interisland services were linked with deepsea lines to all parts of the world. The benefits of this system were seen in the opening up of the Outer Islands for export production and the consequent integration of the entire Archipelago into the world economy. The unique KPM system of interisland communications did not, however, long survive the recognition of Independence in 1949. After some years of uncertainty, the assets were seized and the company fo rced to suspend operations in December 1957. In the more than a quarter of a century since 1957, the Indonesian Government has struggled to devise an alternative system to replace that of the KPM. The state enterprise Pelayaran Nasiona.l Indonesia (PEI.NI) proved

2

7be Indonesian lnterisumd Shipping Industry

unable to inherit the KPM's monopoly, which by 1957 was already becoming fragmented between PELNI and a large number of small private firms. Over the next few years the efficiency of the industry declined drastically in line with the disintegration of the entire modem secror of the economy. By the mid-1960s the industry had been reduced to a parlous condition. Since 1966 the New Order government has achieved a great deal in terms of physical rehabilitation and modernization of both the interisland shipping fleet and port facilities. Compared with performance levels which ought to be attainable, however, the margin of inefficiency remains high. This vital industry remains an impediment to national economic integration and to realization of the country's export potential. The government's concern with the impact upon the "high cost economy" Wcl.S signalled by the package of reforms introduced by Presidential Instruction (Inpres) No. 4/ 1985 dated 4 April 1985. This study attempts to explain the continuing inefficiency of interisland shipping in terms of the complex interaction between competition and regulation. Since the industry now contains a large number of firms, competition could be expected to be a powerful force for eliminating inefficiency. Yet although more efficient firms have increased their market share at the expense of the less efficient, many inefficient firms remain. At the same time, the government through the Director-ate-General of Sea Communications has actively sought to promote efficiency through licensing, routing controls (the Regular Uner Service [RIS] system), tariff-setting, investment subsidies and the provision of infrastructure. But licensing has not, as intended, reduced the fragmentation of the industry, the RLS has not proven to be especially effective, official tariffs have been widely ignored, and investment subsidies have led to persistent excess capacity, which is now being remedied by compulsory and wasteful scrapping of o lder ships. The explanation for the ineffectiveness of both competition and regulation seems to be that they have not reinforced but frustrated each other. Competition bas been frustrated because inefficient firms have continued to receive subsidized access to public facilities (primarily port terminals) and investment credit on the grounds that they are disadvantaged pribumi (indigenous) firms. Regulation has been frustrated by the number of firms remaining too large for proper central control and by the incentives to evade government measures through personal connections and outright corruption. The outcome has therefore been nor the best but the worst of both worldc;. The general approach of the study is explicitly economic, with a primary concern for economic efficiency. Such an approach is obviously not value-free, and is liable to particular distrust within the Indonesian bureaucracy, where tradition is to be suspidous of the impersonal workings of market forces. In Indonesia there is no a priori acceptance of the virtues of the "invisible hand". Refusal to undertake econo mic analysis no more prevents the working of

Introduction

3

market forces, however, than throwing away the barometer will stop it raining. Even if deregulation is eschewed as a policy option, it is still essential to the ctiagnosis of problems and the proper formulation and implementation of policy that the problems of an industry be subjected to rigorous economic analysis. In the process, however, it often becomes clear that a given policy objective can be attained more ctirectly and with fewer unintended distortions by utilizing market forces rather than trying to ignore or to oppose them. If nothing else, economic analysis can help to sort out the confusion of ends and means which so often plagues policy formation by officials who have become too dose to the problem. The rest of the book falls into four main parts: History, the Market, the Firm, and Regulation. The extended historical chapter shows how the industry has evolved since the late colonial period with particular attention to the development of government policy since Independence. "The Market" encompasses two chapters, the first on the structure of the industry and the nature of competition and the second on the impact of competition in terms of the turnover of firms and the redistribution (transfer) of market shares. "The Firm" also encompasses two chapters, the first providing a generalized portrayal of the private firm and the second a detailed view of the state enterprise PEINI. "Regulation" extends the review of the historical chapter into a detailed investigation of policy with regard to infrastructure, licensing, freight rate regulation, and investment policy and shows that over the long-term, regulation, both in general and in particular, has failed to achieve its avowed objectives. In view of the ineffectiveness of regulation, the final chapter considers the reasons for its persistence and the prospects for change.

II Evolution of the Modern Interisland Shipping Industry

O

n Independence the new Indonesian Government did not begin with a clean slate. In the case of interisland shipping the old slate was actually re-endorsed. Under the Round Table Agreements the new government had to concede, as a condition oflndependence, the continued rights of the Dutch flag KP M which held the virtUal monopoly of modem interisland shipping. Breaking that KPM monopoly thus became almost an obsession of Indonesian nationalists. The result was a protracted stalemate, not broken until the end of 1957, when an attempted nationalization threw the industry into chaos. The nature of the industry today, and the government's regulation of it, can be understood only in the light of these historical circumstances. This chapter therefore attempts to sketch the background to the development of the industry both before and after Independence. The first section shows that, as early as 1850, a monopoly of interisland steam shipping was virtually concomitant with government contracts for the subsidized carriage of passengers and mail. In 1891 the contract was taken over by the KPM. The second section considers the impact of the KPM upon the industry. The rest of the chapter deals with the evolution of government policy after Independence in three sections: Indonesianization (1949-58), Guided Economy (1958--66) and the New Order (since 1966). PRELUDE TO THE KPM

Three events profoundly affected the pattern of shipping and trade in the Indonesian Archipelago over the course of the nineteenth century: the foundation of Singapore in 1819, the opening of the Suez Canal in 1869 and the commencement of services by the KPM in 1891 . Geographically strategic, exempt from customs duties and secure from the depredations of Dutch and Malay rulers, Singapore acted as a catalyst o n long· depressed regional trade. Preoccupied with the exploitation of Java through the Cultivation System, the Dutch were slow to develop economic interests in the Outer Islands, where, in the mid-1830s, there were still only fifteen Dutch settlements. 1 Virtually the entire trade of this vast area was drawn towards Singapore, the spread of whose influence Scheffer vividly describes: Already long before Dutch authOrity had brought law and order to the many selfgoverning kingdoms along the east coast of Sumatra, in Riau and partly also in the West of Borneo, enterprising Chinese traders from Sing-.1pore, often in danger to the point of being murdered, ventured to penetrate these regions and carry on their trade. Initially

4

Evolution ofthe Modern Interisland Shipping Industry

5

they established their sho ps o r stalls in the immediate vicinicy of the place where the Native prince bad his capital, but gradually, as securicy impro ved, they swarmed out over more and more of the islands, travelling up rivers, visiting the most remote Kampongs .... And all these thousands of traders are connected with Chinese importers in Singapore, for whom they are in most cases only agents, a sort of branch office manager with a business o n their own account alongside. Fro m Singapore they receive on credit everything which the Native population needs. In the first place rice but further all kinds of small wares, paraffin, tobacco, cigarettes, tinned milk, Chinese jams, salt, matches etc., and.these trade goods are paid fo r with products from the land such as sago, copra, fresh and salt fish, rartan, wild rubber, resin, and other producLc; fro m the jungle.2 !autho r's translatio n]

Shipping consisted partly of junks, schooners and brigs owned by rhe Chinese traders themselves and partly of Malay prahu. It WtiS highly profitable but extremely risky. Pirates mercilessly plundered tf'.tde routes throughout the Archipelago, to the very approaches of Singapore itself. Although the first steamship in Indonesian waters, the Vander Cape/len, y.ras assembled at Surabaya as early as 1825, inJtial government efforts to operate steamships for the carriage of passengers and mail met tittle success.3 The first regular service dates from 1850 when the government, discouraged in its own efforts, awarded a subsidy to a Rotterdam syndicate, which in 1851 opened one service from java to Sumatra and another fro m Java to Makassar and Maluku."' In 1860 the subsidy was trebled under a new five-year contract but dissatisfaction with the high outlay caused the government to reopen tenders. In August 1863 a revised contract valid until 1875 and at less than half the previous subsidy per sea-mile was awarded to an Englishman, H.O. Robinson, who transferred it to and became managing director of the Netherlands Indies Steam Navigation Company (NISN), a new company registered in April1864 and owned by the same Scottish interests that controlled the British India Steam Navigation Company.5 In 1865 the NJSN gained the mo no poly of interisland steam shipping by taking o ver the Rotterdam ships. The opening of the Suez Canal in 1869 precipitated the replacement of sail by steam. Between 1869 and 1879 the tonnage of steamships entering Singapore increased fivefold while that of sailing vessels (excluding Malay c raft) declined by more than one quarter.6 The impact upon the pattern of shipping and trade in the Archipelago was complex. On the one hand, the doubling over the same period in the value of Singapore's exports and imports stimulated the demand for feeder shipping.7 After 1869, Chinese shipowners, helped by the increased availability of small second-hand steamships at much reduced prices, were quick to switch to steam and thereby greatly strengthened trading links between Singapore and the Outer Islands. On the other hand, the establishment of regular steamship services between the Netherlands and java by the Stoomvaart Maatschappij Nederland (SMN) in 1870, and soon afteiWards by the Rotterd.amsche Uoyd or R.L. (Willem Ruys & Zonen), brought

6

7be Indonesi an interisla nd Shipping industry

java into closer competition with Singapore for the trade of the Outer Islands. During the 1880s this commercial competition became a political issue. By the mid-1880s the directo rs of the two Dutch homeward lines had decided that they would remain heavily disadvantaged in competition with the British and German lines out of Singapore until they controlled the interisland trade. The British and German lines had already established their own feeder services between North Sumatra and Singapore to cater to the lucrative tobacco trade and gained much additional cargo by transhipment from Chinese steamship lines serving the rest of the Archipelago. The NISN, which held the contract for providi ng interisland mail and passenger services, operate d its large fleet under the Dutch flag but was owned almost entirely by British interests, manned (except for Dutch captains) by British officers, and docked in Singapore. The directors of the Dutch lines accused the NISN of focusing its non-contract routes upon Singapore and of charging arbitrarily high rates for non-contract cargo shipped betwee n java and the Outer Islands. These accusations were hardly fair. The NISN did not determ ine the pattern of trade. Shipping between the Outer Islands and Singapore was dominated by Chinese firms and the NISN obviously had to match their rates if it was to compete. Nevertheless, the compan y had been energetic in developing non-con tract routes within the Netherlands Indies as well as to Singapo re and had continu ed to build new ships for its fleet. 8 The Dutch lines were not inclined, however, to give credit where it was due. With the old mail contrac t due to expire at the end of 1890, the two Dutch lines waged a vigorous and skilful campaign which shamelessly exploite d patriotic sympathies. The NISN was denoun ced in public propaganda while the government was lobbied intensively in both the Netherlands and the Indies. The ettorr had the desired effect. Tenders were called in Octobe r 1886, in June 1887 the Dutch syndicate put in its bid, and nine months later the Governor9 General was empow ered to accept it. In July 1888 a formal agreement was signed between the Netherlands Indies Government on the one hand and Mess rs. Boissevain and Tegelberg (directors oftheSM N) and Ruys (director of R.L.) on the other. Two months later the N.V. Koninklijke Paketvaart Maatschappij (Royal Packet Company), bener known as the KPM, was floated and soon after, orders were placed for a fleet of thirteen ships to be comple ted by 1 January 1891. The owners of the NISN had good ground s for feeling that they had been unfairly treated since their tender of t3.90 per ron-mile had been less than half the f6.92 of the Dutch syndicate! (This embarrassing detail has been conveniently overlooked by subseq uent Dutch writers, who have taken the KPM's propag anda at face v.Uue.)H> Nevertheless, the NISN had to bow to the inevitable. Over the remaining two and a half years of its contract, the compan y cut back its non-contract services and reduced the size of its fleet. After much hard bargaining, in November 1890 it sold the last sixteen

E'voluJton Q{ the Modern Interisland Shipping Industry

7

interisland ships to the KPM and went into voluntary liquidation. The KPM was therefore able to commence operations with an uncontested monopoly of the interisland trades- as opposed of course.to the Singapore trades- and a fleet of twenty-nine ships, almost as large as the NISN fleet at itS peak of thirty-two ships in the mid-1880s. THEKPM

from the beginning the KPM identified its interests with the growth of Netherlands Indies trade and its diversion from Singapore. The primary means of this diversion was the "through bill of lading", whereby cargo transhipped between the KPM and the Dutch lines was charged a lower through freight than would have applied for each separate stage. The original agreement of October 1891 between the KPM, SMN and R.L. was later extended tO the Batavia Freight Conference (BVC) and to trades other than the European. 11 Initially the KPM concentrated its throughshipmem efforts upon the lucrative Deli tobacco trade and, over time, export cargo continued to be easier than import cargo to organize on this basis. According to the KPM figures, by the 1920s throughshipment seems to have been roughly equal to the tonnage of export cargo shipped via Singapore. In the case of import cargo, it seems normally to have been rather less, mainly because of the large tonnages of rice and fish brought in from Singapore. For Outer Islands cargo shipped via Singapore, the KPM competed directly with Chinese, German and _British shipowners.12 As late as 1914 Singapore was still the terminal for Chinese and German lines extending as far as the remote east of the Archipelago. The outbreak of World War I caused the suspension of all German services, however, and the Chinese lines beyond Java soon after dwindled away. Apart from the jorce majeure of World War I, the main cause of the KPM's success against its competitors was the Dutch "pacification" of the Outer Islands, a process which began with the ending of the long-running Aceh War and the conquest of Lombok in 1893-94. After the conquest of South Bali and Sulawesi in 1906, there remained just a few isolated pockets of resistance. Once Dutch rule had been firmly established, the KPM was able to exercise much more leverage over its Chinese competitors. Moreover, once pacification had been completed, the Netherlands Indies Government invested heavily in the construction of deepsea transhipment ports. Makassar, where the new wharves were completed in 1918, became the entrep6t for the Great East (Groote Oost) while Belawan, which was opened in 1922, served as a deepsea port for the great export economy of North Sumatra. Works completed between 1917 and 1920 transformed Surabaya from a roadstead into a modern port, while extenstons were also carried out at Tanjung Priok, which before World War I had been the colony's only modern port. This

8

The Indonesian Interisland Shipping Industry

massive investment programme was decisive in shifting transhipment, sorting, storage and financial functions backwards to Indonesia, thereby greatly facilitating throughshipment. By the 1920s the entrep6t role of Singapore was more or less confined to the adjacent rubber-producing areas of the east coast of Sumatra, the west coast of Kalimantan and around Banjarmasin. From the outset Singapore had been the focus of the rubber trade and the KPM never seriously tried to challenge its supremacy. Instead of trying to divert the trade to Dutch ports the KPM sought to control the trade through pool agreements with British and Chinese competitors. Singapore became in fact as busy a KPM port -albeit for the company's smaller ships- as Tanjung Priok or Surabaya. Although by the end of 1914 the KPM held a virtual monopoly of the interisland trade as such and, east of Surabaya, could virtually ignore competition from Singapore, this monopoly was a matter about which the company was always very coy. Much play was made of competition from small Chinese vessels (the "mosquito fleet") in the west and from indigenous sailing prahu in the e-ast of the Archipelago. The reality was bluntly described by Scheffer: In the time of the NlSN litde mention was made of the mosquito fleet, relatively insignificant in comparison with the great might of the KPM, but after 1890 it was very quickly made use of against those alleging that the KPM held virrually absolute sovereignty in the Archipelago. When recently [Minister Pleyte) argued with respect to the newest extension of the KPM contract that in re-ality the company holds no monopoly power, the mosquito fleet was ag-ain brought out as the main trump card and it was evidently not appredated that this cargo fleet operates in a very limited are-.1 in the western Archipelago and that the competition is thus very localised.U (author's translation]

By the middle of 1939, among all interisland trades the K.PM faced direct competition from only one ship larger than 100 gross tons. 14 In the Singapore trades, competition from thirty-seven ships larger than 100 gross tons appeared much greater. Actual competition, however, was very much less. One-third of the ships and 45 per cent of the tonnage were owned by the Heap Eng Moh S.S. Company, formerly a strong Chinese competitor which the KPM had secretly taken over in 1928, and by the Soon Bee S.S. Company, which had become a Heap Eng Moh subsidiary in 1935. 15 In other cases, the KPM was happy to co· operate in a pool agreement with friendly single-ship Chinese firms whose presence and trade relations would deter more aggressive competitors. The means of controlling aggressive competition were various. Besides simple rate-cutting there was the use of contract and non-contract rates with deferred loyalty rebates. The latter could be very effective if applied jointly with a Chinese pool partner against a new entrant. If dual rates proved ineffective, shippers were sometimes offered generous cash advances, which could not be matched by small companies with little working capital. As a last resort against

Evolution of the Modern Interisland Shipping industry

9

an intractable competitor mere was at least once a combination to deny fadlities. Thus, in Lhe case of the Daiichi Tora Maru at Cirebon in 1934, Under pressure from the KPM various organizations took up a position against these japanese coastal o perators. Although 100 tons we re booked and lay ready for shipment, the several lighterage companies refused to carry the cargo from the wharf to the ship while the banks appeared unwilling to finance bills on this cargo, whereby it wds practically impossible for the traders to transport their cargo with the ship."' [author's translation]

The ship was forced to sail without its cargo. Political hostility to Japan may have made such discrimination easier. A most unusual mechanism was employed in the Palembang·Singapore trade. Under the pool agreement concluded in 1927 the KPM and the Loen Tjoen Kongsi agreed to transfer freight rebates on rubber exports to the Chinese trade association and Chinese schools in Palembang. Thus, whenever a freight war broke out, as for example in 1937, the withdrawal of rebates would quickly lead to public pressure for negotiations. 17 A different instance of KPM power was provided by the mtempt of a firm to established a soap factory in Ternate (North Maluku). Asked the cause of the sudden dedine in soap shipments from Java, the KPM agent in Ternate informed the head office of the new factory. The freight rate on the caustic soda input was sharply increased, the factory was forcmpas. 4 May 1984 ). 14. Kompas, 24 August 198'5. 15. R. E. Beals, "Over Capacity in !he Inter Island Uncr Fleet.: Investment. Scrapping and the Meanlng of Productiviry", mimeographed. (Jakarta,' 1978).

X

Freight Rate Regulation

T

his chapter looks in detail at the determination of official freight rates. 1 The first pan reviews the evolution of the official tariff since Independence. The next two parts examine the commodity structure of the tariff and the relationship between the official tariff and actual freight rates. The final part considers the policy implications. EVOLUTION OF THE OFFICIAL INTERISLAND FREIGHT TARIFF

Interisland freight rates were regulated originally by the Netherlands Indies Government as a check upon the monopoly of the KPM. Proposals for rate increases had to be submitted to the Department of Economic Affairs for approval and, since increases meant greater government expenditure for shipment of the large tonnage of official cargoes, this was no mere formality. Submissions were carefully scrutinized and negotiations were tough. After Independence the concern to regulate the now "foreign" KPM was very much greater. Yet in some ways the KPM found negotiations easier with the Indonesian Government. 2 The new officials lacked their predecessors' economic and commercial expertise. Less capable of attacking submissions on the basis of their cost and revenue estimates, they relied instead on social and political arguments: the KPM had made excellent profits before Independence, it had accumulated good reserves and its ships were in fine condition, therefore the company ought to carry essential consumption items at low rates without regard to profits. In effect, the KPM won the battles, because the government accepted its cost and revenue estimates, but not the war, because the government refused to admit that these were the decisive considerations. Unable to fight on moral terrain, the company had to stand finn on the position that as a private firm it could not carry on business in Indonesia without an acceptable return on shareholders' funds. As long as the Indonesian Government remained unwilling to accept the dislocation which would be caused by the departure of the KPM, this was a powerful argument. Even so, by the mid-1950s, freight rate increases were lagging well behind wage increases and inflation. After a 10 per cent increase in November 1955, the next increase was delayed until March 1957. Application by the KPM for a further increase had been awaiting consideration for some months before the seizure of the company's assets in December 1957. 3 The withdrawal of the KPM after December 1957 meant that the original rationale for freight rate regulation no longer applied. Henceforth the dominant shipping enterprise was the state-owned corporation PEI.NI. Nevertheless, the government was not prepared to allow PEI.NI tariff autonomy. The power to set 158

Freight Rare Regulation

159

tariffs was taken over by the newly established Ministry of Shipping. Moreover, in setting tariffs the Ministry saw itself as under no obligation to maintain PELNI's commercial viability. Its deficits would continue to be met from the public purse. Consequently, although the government had bargained with the KPM, it told PELNI what freight rates were to he charged. Socio·economic considerations now came to the fore. Without regard to commercial principles, the government could impose obligations upon PELNI which the KPM had been able to resist. Nevertheless, the case of PELNI was not atypical. The introduction of Guided Economy in 1959 involved price controls becoming widespread throughout the economy and the prices of most public services were held down as a welfare measure.• The first tariff increase after the expulsion of the KPM was in August 1958. In 1959 an Ad Hoc Tariff Committee was set up to review the tariff and, as a result of its report, a new tariff was introduced on 1 December 1959. 5 This resulted in a 100 per cent increase over previous rates - the magnitude of the increase indicated the extent to which freight rates had been held down since 1957 in the face of quite rapid inflation. The PEI..Nl tariff, as it became known, also consolidated cargoes into five classes, bearing surcharges of 0, 15, 25, 40, 50, per cent. On 2 January 1960, however, PELNI had to notify its agents that the Prices Control Body of the Department of Commerce had entirely exempted from the increased rates the basic commodities of rice, sugar, salted fish, kerosene, copra, coconut oil, flour and cambrics (which had constituted 40 per cent of PELNI cargoes in 1958), and required smaller than recommended increases to be applied to cement, fertilizers, paper, cigarettes and several other goods. If it is assumed that the Ad Hoc Tariff Committee recommended a tariff level which enabled shipping firms to earn no more than a small net profit, then subsequent exemptions would have caused the revised tariff to be far too low for viable commercial operations. Details of all tariff revisions between 2 January 1960 and 1966 are not available but it is clear that the official tariff ceased to correspond at all with underlying costs. According to the 1964 PELNI annual report, there was a fourfold tariff increase on 1 June 1%3, which is unlikely to have done more than make up lost ground, but this tariff remained unchanged throughout 1964 over the eighteen month period from June 1%3 to December 1964. the Jakarta cost of living index rose about 3.5 times. The 1%6 PELNI annual report recorded a threefold tariff increase on 1 November 1966 but complained that at least a fivefold rise was required. In the hyperinflation between June 1%5 and December 1966 the Jakarta cost·of-living index had risen more than thirty-fold. In preparation for the First Five-Year Plan (REPEUfA I), towards the end of 1968 steps were taken to develop a new tariff structure. A committee was formed with representatives from the Directorate-General of Sea Communications and shipowners. In a briefing held in November 1968 the

160

Tbe Indonesian Interisland Shipping Industry

Minister, Frans Seda, asked that the new tariff be based upon a rate of US$0.01 per ton-mile (including aboard stevedoring) and laid down various other guidelines.6 The tariff was promulgated on 28 February 1969. Converted at the bo nus export (nE) exchange r-.:tte of US$1.00 = Rp326 the basic rate of $0.01 per ton-mile was only a 10 per cent increase upon the February 1967 rate of Rp3 and all but cancelled the two increases of 50 per cent during 1968. With its task completed, the Interisland Sea Tariff Committee was dissolved and r~placed by a new committee known as Komisi Tetap Tarip Angkutan Laut or KO'ITAL (Permanent Sea Transport Tariff Commission) which was charged with reviewing the new tariff. KOTTAL fount! this makeshift tariff had two serious flaws. firstly, whether by accident or design, the basic rate recommended by the Minister - which purported to have been calculated on the basis of shipping costs - was omitted altogether from the tariff formula fo r distances of more than 250 miles. 7 Secondly, the tariff increased linearly with distance, whereas costs per ton-mile in fact -27, 30, 36, 40 n.62, 159, 167, 184 Habib ie, J.E. (Director-General of Sea Communications), 97 Harbour master: see Syabbandar Harvard Advisory Group, 97 Hasan, Moh, 70, 81 n.lO Heap Eng Moh S.S. Company, 8, 38 n. 15 "1-Ugh cost economy", 115; see also lnpres No.4/19R5 Hongkong, cattle trade tO, 85, 90 Hughes, D., 43 Immigration, 98 Import of ships, restrictions on, 31, 114, 144-45, 149- 52, 155, 172 Independence, 1, 4, 14-15 Indobaruna Bulk Transpon, P.T., 80 n.7 Indonesian Classification Society (PTKI): see Klasifikasi Indonesia, P.T. Indonesian National Bulk Carrier, P.T., 80 n.7 Indonesian National Corpor.ttion (INACO), 17 Indonesian National Shipowners' Association (INSA), 30, 33, 35, 54, 75, 82 n.25, 115 n.7, 123-24, 126-27, 136-37, 147, 163-64, 173, 176-77, 187 Indonesian Oriental Unes (IOL), P.T., 81, 149, 157 n.9-l0 indonesian S.S. Company, proposals for, 14-15 Indonesianization, 18, 29 " Industrial carrier", li.cence category of, 118 Inflation, 26, 29, 144, 147, 150, 158-59, 161 lnggom, P.T., 116 n.32 INKOPAL group, 70 lman Sekunyit, P.T., 116 n.32 Integrated Uner System (II.S), 129-30, 188 lntegrated Uner System Team (II.S), 32, 125, 129-30, 192 n.13 Integrated Sea Transport Study (ISTS) Te-.un, 129, 192 n.13 Interest rate subsidies, 114, 120, 141, 144, 146, 149-52, 189; see also Financing, cost of Interisland Sea Tariff Committee (1968), 159-60 Interisland shipping, definition of, 43 lnvoerpas, 168; see also Customs IPERlNDO (Shipbuilders' Association), 110 IPPA G-.1ya Baru, P.N., 114 n.27

213

Index Irian Jaya, provincial government of, 122 Iskandar Muda lloyd, P.T., 39 n.48 Jajasan Kopra, 110, 141 Jakarta, 99; see also Tanjung Priok Japan, foreign aid from, 24, 87, 108, 149 Japanese Occupation, 12 Japanese shipping, 9-10 Java-China-Japan line, 15, 115 n.9 Jayawijaya Shipping, P.T., 71, 122-23, 139 n.4 Joint Operations Board, 136 Kali Baru, 114 n.20 Kalimantan, P.T., 16 Kambuna, m.s., 86 Karana lines, P.T., 70, 81 n.10 Karimata, P.T., 70, 157 n.4 Kayu Lapis, P.T., 80 n.7 Kebijaksanaan, meaning of, 187 Kedapel (navigation district head), 67 n.3, 97-99, 121, 136 Kelompok (groups), 124-25 Kerinci, m.s., 86, 94 n.19 Khusus shipping, 41--42, 50, 118, 121 Kie Hock (Shipping Co.), 22-23, 74 Klasifikasi Indonesia, P.T. (PTKl), 60, 98 Kodja, P.N./P.T., 114 n.27 Komodo Marine, 15G-51 Kongsi, 69, 72-73, 80 n.2; see also Firm Kongsi Tiga, 37 n.ll Konperensi Segi Tiga (1954), 17-18, 141 Korean War boom, 22, 171 KOTTAL, 160 KPM (Koninklijke Paketvaart Maatschappij), NV., &-19, 22-25, 30, 36, 38 n.15, 79, 91, 110, 115 n.9, 125, 140, 142, 177; competition with PELNI, 17-19, 22-23, 39 n.51, 84; takeover of, 23-25, 39 n.58, 39 n.60; tariffs, 158, 164-65, 167, 172 Krakatau Steelworks, scrap monopoly of, 153

Laissezfaire capitalism, 183 I.asem, 116 n.25 Leasing of ships, 150 lian Soon Shipping, 74 licensing of shipping, 27, 29, 41--43, 50, 62, 67 n.3, 97, 118-23, 137-38; rationale for, 185-86 life cycle of the firm, 75-79 lighterage, Indonesianization of, 18 Lijnenstelsel, 18, 29, 30, 126, 141

liner shipping, definition of, 42 Uoyds of London, 24 Load factors, 26, 59, 162-64, 178 Loen Tjoen Kongsi, 9 Lokal Shipping, 29, 38 n.21, 42--43, 50, 53, 56 n.6, 62, 67 n.3, 97, 108, 116 n.20, 118-19, 121, 123, 128-29, 134, 153, 160 Long-Term Fleet Development Team (LTFDT), 30, 71-72, 108, 129, 192 n.13 Mahakam, P.T., 39 n.45, 70, 122 Mail contracts, 5-6; see also Great Archipelago Contract Makassar: see Ujung Pandang Maluku, communications in, 25, 82 n.20 Management, weaknesses of, 72-74, 146, 152, 155; inPELNl, 91-93 Managment Advismy Team (MAT), 192 n.13 Management training, need for, 189 Marabunta, P.T., 81 n.12 Market Failure, 182, 191 Market power, 5G-52, 55, 185, 191 Maskapai Kapal Sulawesi Selatan (MKSS): see PPSS Maskapai Pelayaran Nusantara (MPN), 13, 39 n.45, 122, 147, 157 n.10 Maskapai Pelayaran Sumatra (MPS), 37 n.45, 122 Medan, 99; see also Belawan Menado, 10, 13, 108, 116 n.25; see also PERINDO Menado Produce Company, 10 Menara Bachtera lines, P.T., 7G-71, 74 Menunda Kapal Tunda Bara, P.N.: see Bahtera Adhiguna, P.N./P.T. Meratus, P.T., 61, 157 Mergers, forced, 29, 32, 124, 189; see also Government of Indonesia, Regulation No. 5/1964 Minister of Communications, 27, 83, 87, 9&-97, 137, 161, 172, 177 Minister of Trade, 177 Ministry of Communications, 31, 9&-98, 100, 161-63, 178, 187 Ministry of Research and Technology, 111, 114, 156 Ministry of Shipping, 25, 36, 126, 141, 159,

190

Mobil Tambang I, m.s., 82 n.25 Modernization of interisland fleet, 148-49, 152, 155-56; see also PANN, P.T. Moges Shipping, P.T., 80 n.7

214 Molukken Kustvaart Maatschappij (MOKUMIJ), 11, 38 n.23 "Mosquito Fleet", 8-12 Myrdal, G., 93, 183 Nadjamoeddin Daeng Malewa, 38 n.32 Naga I..aut, P.T., 33, 71, 74, 81 n.15 Navigation aids, 108 Navigation districts (dapel): see Kedapel NEDECO, 30, 1Q0-101, 105, 192 n.13 Nederlandsch Stoomvaart Maatschappij 'Oceaan' (NSMO): see Alfred Holt & Company Negara Indonesia Timur, 13, 38 n.32 Netherlands Maritime Institute, 192 n.13 Netherlands Indies Steam Navigation Company (NISN), 5-7, 9 Netherlands Shipping Team, 30, 129, 144, 152, 192 n.13 Netherlands Trading Society (NHM), 38 n.15 New Order government, 2, 27-37, 84, 93, 99, 178, 184--85 Nimpuno, Rear·Admiral Haryono, 97, 121, 136, 185 NISHM, 81 n.16, 115 n.9 Noord Celebes en Molukken Kustvaart Maatschappij (NOCEMO ): see PERINDO North German Uoyd (NDL), 37 n.12; see also German shipping Nmway, foreign aid from, 31, 87, 149-50 Nurimba, Adil, 70, 80 n.6 Nurjadin, Air Marshal Roesmin (Minister of Communications), 97 Nur/ina VII, p.l.m., loss of, 115 n.3 Nusa Tenggara, P.T., 70, 147 Nusantara shipping, competition in, 54-56; definition of, 50; licensing of, 12Q-125; performance of, 58-67; see also RI.S Oei Tiong Ham, 38 n.15 Oil industry, 41-42; see also PERTAMINA Old Order government: see Guided Democracy; Guided Economy; Soekarno Oligopoly, 52, 55 OPS ( Organisasi Perusahaan Sejenis), 184 Outer Islands, 1, 4-8, 168; see also Eastern Indonesia; "Gateway" Policy; Transhipment Outport services, 189;8ee also Perintis Overtonnaging: see Excess capacity Pacific International lines, 74 "Pacification" (of Outer Islands). 7

Index Padang, 99, 101, 108, 116 n.23 Pahoka, P.T., 81 n.9 PAKIN (Pabriek Kapal Indonesia), P.N./P.T., 110, 116 n.26 PAL (Pabrik Kapal Indonesia). P.T., 114 Palembang, 9, 99, 109, 116 n.25 PANN (Pengembang an Armada Niaga Nasional), P.T., 31, 32, 66, 68, 76, 79, 11Q-11, 114, 145, 148-56, 157 n.IO, 173, 186, 190, 192 n.13 Pantja Bakti, P.D.: see Pelsutra, P.D. Panurjwan, P.T., 70, 74, 81 n.9 Parliament, 17 Partai Komunis Indonesia (PKI), 184 PASMINDO, P.T., 176-77 Passenger trade, 18-19, 51-52, 87, 90--91, 98-99, 134, 146-47; safety of, 98-99; tariff, 179 n.l Paternalism, 183-84 Patronage, powers of, 186 Pejaka, P.T., 122 Pelabuhan, P.N., 99 Pelita Bahari, P.N}P.T., 116 n.27 PELNI, P.T./P.N., 25-27, 36, 5Q-51, 83-87, 90-95, 110, 116 n.13, 116 n.29, 126, 134-35, 169, 178; competition with KPM, 18-19, 22-23, 39 n.51; financial situation, 32, 39 n.42, 84-86, 90, 93, 94 n.4; fleet, 30-31, 63-64, 87, 14Q-141, 144, 146-47, i48-49, 153; formation of, 16-17, 83-84; freight rates, 158-59, 167, 172, 177, 179 n.1, 179 n.18; legal status, 68, 84-85 Pelpn, P.T., 154 Pelsutra, P.D., 71, 82 n.20, 139 n.4 Pelumin, P.T., 74, 81 n.14 Perna! (Pelayaran Maluku), P.T., 23, 39 n.45, 70, 122, 147, 157 n.4 Penang, 18, 43 Penny, D.Il., 183 Pepalba, P.T., 70, 74, 80 n.6 Pepana, P.T., 122 PEPUSKA, 16-17, 18, 36, 39 n.39, 39 n.46, 84, 140-41 PERINDO (Pelayaran Rakyat Indonesia), 13, 23, 25, 38 n.33, 39 n.45, 69, 123, 139 n.4, 157 n.4 Perintis line, P.T., 70, 74, 80 n.6, 122 Perintis services, 90, 111, 131, 134-35, 190 PERMESTA, 25, 75, 139 n.4 Perpelin, P.T., 16, 39 n.45 Personal connections: see Political connections PERTAMINA, P.N., 33, 41, 50, 56 n.3, 71, 75, 81 n.15, 85, 111, 116 n.32, 118, 144,172

Index

215

Pertamina crisis, 152, 155, 172 Perum Pelabuhan, 99--100 Planning, 184; see also Dirigisme PMKL (pernsahaan muatan kapallaut), 31, 115 n.10, 120, 124; see also Government of Indonesia, Regulation No.5/1964; Stevedoring Political connections, importance of, 2, 53, 75, 120, 122, 141, 182 Pontianak, 109, 116 n.25 Pool agreements, 8--9; see also KPM Population, 1 Porodisa Raya Shipping Unes, P.T., 70, 75, 81 n.11 Port turnaround, 26, 6o-61, 73, 78, 108 Ports, 7-8; administration of, 34-35, 98--102; facilities of, 104-105, 108--109; tariffs forsennces in, 99-100,108, 163; see also Adpel; Customs; "Gateway" Policy; Stevedoring PPSS (Pernsahaan Pelayaran Sulawesi Selatan), 13, 23, 25, 38 n.32, 39 n.45, 69, 141, 147 PPUD (Pemberitahuan pemuatan barang untuk dipakai), 103; see also Customs Prahu shipping, 5, 8, 9, 10, 12, 25, 42-43, 98, 108, 116 n.20, 118--19, 134-35 Prahu layar motor (auxiliary prahu), 115 n.3, 118--19 Pribumi policy, 31-32, 65--{)6, 76, 138, 140, 149-52, 155, 186, 189 Price controls, 26, 178, 184 Probosutedjo, 71 Productivity of fleet: see Utilization of Capacity; Efficiency Protection, 110, 114-15, 168, 171, 188 Pulau Baai, 101 PUSRI, P.N., 56 n.4, 118, 136-37 Quality of sennce, 10, 54-56, 77-78; of KPM, 12, 22 Quarantine, 98

5~.

73,

Rational Bureaucracy, 83, 93 Rayonvaart, 17-18, 141 Regulation, political economy of, 182-88 Rehabilitation, of ports, 2, 30, 105; of ships, 2, 30-32, 65, 145-49 REPEUTA I, 30, 108, 146, 159 REPEUTA II, 31-32, 110, 148-49, 152 REPEUTA III, 32, 116 n.21, 156 REPEUTA IV, 33, 97, 105, 109, 111 Repelita tariff, 164, 172 Republik Maluku Selatan (RMS), 25 Riasco, P.T., 39 n.45

Rice distribution crisis (1973), 136, 144; see also Essential commodities Rinjan~ m.s., 86 RLS (Regular Uner System), 2, 30, 33, 42-43, 51-52, 74-75, 110, 124, 126-30, 134, 136-37, 157 n.l3, 176, 188-89; deviations from, 128; replacement by II.S 129-30; see also Lijnenstelsel Road transport, competition from, 52, 190 Rotterdamsche lloyd (R.L.), 5-7, 115 n.9 Round Table Conference, 4, 14 Royal Interocean Unes, 15, 39 n.60 Rubbertrade,8-10, 22;during Confrontation, 40 n.72 Ruys, Willem, 37 n.4 Sabang, 116 n.25 Sadikin, Ali, General and Minister of Shipping, 27, 29, 36, 120-21 Sail shipping, replacement by steam, 5; see also Prahu shipping Salam Sedjahtera, P.T., 154 Salim, Dr Emil, 96, 137, 161 Salt, shipment of, 42; see also Garam, P.N. Samapta, P.T., 70, 74, 81 n.11, 122 Samudera Indonesia, P.T., 70, 75, 81 n.9 Samuderajaya, P.T., 148 Samudera Perdana, P.T., 81 n.9 Samudra (deepsea) shipping, 29 Sandangpangan commodities: see Essential commodities Sang Saka, P.T., 122 Sastroamidjojo, Ali, Cabinet of, 18 Satuan Harapan, P.T., 81 n.9 Scheepvaart Verordening, 38 n.21 Scheffer, P., 4-5, 12 Scrapping policy, 2, 32, 114, 152-56, 186, 188 "Screening" of licences, 121-23; see also licensing Seaworthiness, 98--99, 154, 191 Seda, Frans, 160 Semarang, 99, 105 Serikat Buruh Karyawan Maritim Indonesia (SBKMl), 102 Share capital, 69-70; see also Financing Ship Repair, 26, 60, 109-10, 146 Shipbuilding (domestic), 32, 110-11, 114-15, 141, 149, 155-56, 188; see also "Caraka jaya" class Shipping, sectors of, 41-43; licence categories of, 118 Shortsea trades, 43 Singapore, 4-10, 18--19, 22, 34, 43, 75, 188; and Confrontation, 24, 26, 29, 30 n.72,

216

Index

168;Doc~ngin,6o, 109-10, 146; and RLS 32-31, 43, 126-27; Shipping firms of 5-8, 74, 154, 157 n.l3; see also Singapore Shipowners' Association; Transhipment Singapore Shipowners' Association (SSA), 33, 35, 43, 126 Sirontalo, P.T., 80 n.S SKFA (Surat keterangan jiskal antarpulau), 103-104 SKU (surat keagenan umum), 33, 35 Smit, Fop, 37 n.4 Societe Generale de Surveillance, S.A, 34 Soedarpo, Sastrosatomo, 75, 81 n.9; see also Samudera Indonesia, P.T. Soedarpo Corporation, P.T., 81 n.9 Soekarno, lr. (President), 24-25, 27, 40 n.62,

184

Soerapoetra, R. Soenar, 17 "Soft state", 93 Soon Bee S.S. Company, 8 South Pacific Une, P.T., 39 n.45 Spare parts, shortage of, 26, 30, 146 Sriwijaya Raya Unes, P.T., So---51, 6o---62, 144, 154, 157 n.10 Staffing levels, 61, 91-92 State enterprises, 68, 71, 84, 94 n.7, 99; see also Angkutan Pertambangan; Bahtera Adhiguna; Garam, P.N.; Pelabuhan, P.N.; PELNI; PERTAMINA; PUSRI Stevedoring, 18, 29, 34-35, 98, 10o---10s, 108, 115 n.lO, 125, 157, 189; tariffs, 54, 179 n.1 Stichting Gemeenschappelijk Schepenbezit (SGS), 13, 16, 69, 140 Stoomvaart Maatschappij 'Nederland' (SMN), 5-7, 115 n.9 Stowage factor, 165--66, 176 Straits S.S. Company, 22-23, 38 n.12, 38 n.lS Subsidies, 5-6, 90, 114, 125, 148, 155; see also Cross-subsidization; interest rate subsidies; Perintis service Sudharno, Mustafa, 86 Suez Canal, impact of opening of, 5 Sugar, shipment of, 174-75; see also Essential commodities Sulawesi, 1o---11, 13, 139 n.4, 141 Sumadipradja, Moh. Ma'Moen, 17 Sumber Sakti, P.T., 80 n.S Sumendap, ).A, 70, 75 Sunda Kelapa, 43, 108, 116 n.20 Surabaya, 7-8, 33, 99, 101, 105, 108-10, 116 n.20 SUSINMA, P.T., 80 n.S

Sutowo, Ibnu, 75, 81 n.14, 116 n.32 Syabbandar (harbour master), 93, 98

Tampomas, m.s., 87, 9o---91, 141 Tampomas II, m.s., loss of, 32, 85, 87, 90, 99, 15o---51 Tandjung Bunga, P.T., 157 n.4 Tando family, 81 n.14 Tanjung, P.T., 70, 74, 81 n.12, 122 Tanjung Perak: see Surabaya Tanjung Priok, 7, 33, 34, 99-102, 105, 109-10, 116 n.13 Tanjung Selatan, P.T.: see Wasaka, P.T. Team Shipping Kerjasama Teknik (TSKT), 30, 103, 192 n.13 Teluk Bayur: see Padang Terminals: see Stevedoring Ternate, 9 Through bill of lading, 7, 22; revival of, 33, 168; see also Transhipment Timber, shipment of, 42--43 Tong Djoe, 33, 71, 81 n.15 Trade unions, 101-102; and seizure of KPM, 23-24, 39 n.S8 Tramp market, 128, 137, 179 Transfer mechanism 58, 62--67, 80, 157, 186 Transhipment, 6-8, 10, 29, 33-34, 37, 43, 74, 168, 188 Trans-Sumatran Highway, 52 Tri Usaha Bakti group, 70, 81 n.12, 122 Trikora, 25 Tripartite Conference (1954): see Konperensi Segi Tiga Tug/barge shipping, 42, 118 Tunas group, 71, 81 n.15 Ujung Pandang, 7, 10, 12, 13, 33, 99, 108, 116 n.25; see also PPSS Umsini, m.s., 86 Unie Perusahaan Pelajaran Indonesia (UPPI), 17 United Nations, defeat in, 23; withdrawal from, 30 United Shipping Organisation (U.S.O.): see SUSINMA, P.T. Utilization of capacity, 26-27, 50, 58--61, 79; see also Efficiency

Van der Capellen, s.s., 5 Vegetable oils, shipment of, 41--42, 137 Vehicle ferries, 52, 90, 104, 190 Vereenigde Prauwen Veren, N.Y.: see PAKIN Wage structures, 73 Waiame Dock, 147

Index

Walters, AA, 182 Wapoga, P.T., 122 Wasaka, P.D., 81 n.19 Wasesa, P.T., 70, 74 Wilopo Cabinet, 17

217 World Bank, 3G-31, 65, 97, 100, 105, 122, 145-50, 154, 156, 186-87, 192 n.13 YUKA (Yayasan Usaha Kacya), 35, 101-102

The Autho r H.W. DICK is Senior Lecturer in the Departm ent of Economics at Newcastle University (NSW) and is currently on three-year second ment to the Department of Pacific & South East Asian History at the Australian National University. He has written widely on aspects of the Indones ian econom y and econom ic history and is presently working on a study of the modernization of Surabaya since the late colonial period.