The Minister of Transportation of the Republic of Indonesia issued Minister Regulation number 38 of 2018 on Second Amendment to the Regulation of the Minister of Transportation number PM 71 of 2013 on Salvage and/or Underwater Works (“Minister Regulation No. 38/2018“) back in May 2018. The issuance of this new regulation marks the second amendment on the regulatory framework regarding salvage and underwater works in Indonesia that previously regulated under the Minister Regulation number 71 of 2013 and the Minister Regulation number 33 of 2016.
Highlighted Changes
The key changes in the Minister Regulation No. 38/2018 are as follow:
1. Definition of underwater obstacles or other objects
The previous regulation defines underwater obstacles or other objects of salvage as objects that are not permanently installed in the water and valuable objects from cargo of a sinking ship. Under the Minister Regulation No. 38/2018, the latter definition is changed to other objects which are originated from non-shipping related activities.
2. Procedure to obtain salvage activity license
The procedure to obtain salvage activity license is now regulated in more detail under the Minister Regulation No. 38/2018. The amended provision stipulates that the performance of salvage activities must be done by salvage companies and/or underwater workers that have secured relevant business license from the Head of Investment Coordinating Board after being granted salvage activity license from the Director General of Sea Communication (“Director General“). In addition, the amended provision also requires ship deletion certificate and cooperation/contract with business entities that collect the result of cutting and scrapping in order to obtain a salvage activity license that using cutting or scrapping method.
3. Responsibility of ship owners
It is set out under the previous regulations that in the event ship owners have yet to perform their obligation to remove a shipwreck, such obligation shall be borne by the Head of Technical Implementation Unit (locally known as Unit Pelaksana Teknis or “UPT“) at the nearest port. Under the Minister Regulation No. 38/2018, it is further regulated that ship owners must coordinate with the nearest UPT to conduct supervision upon the shipwreck and/or cargos that have not yet been lifted. Therefore, any form of damage or loss to the shipwreck and/or her cargo and any cost incurred from the supervision of the shipwreck and/or her cargo shall be borne by the relevant ship owners.
4. Discovery of shipwreck or cargo which owner is unknown
Aside from making announcement in the event of discovery of shipwreck or cargo which owner is unknown, the new regulation also obliges the Director General to notify the relevant government institutions. If upon the announcement no claim for ownership arises, the shipwreck and/or cargo must be removed by the Director General subsequent to a coordination meeting between relevant ministries and government institutions.
5. Ownership of shipwreck which removal is funded by the state
With regard to shipwreck’s removal, the amended provision under the Minister Regulation No. 38/2018, among others, states that shipwreck and/or cargo which removal activity is performed using state’s fund, the result of that removal belong to the state and shall be auctioned in accordance with the prevailing laws and regulations. Further, it is also stated that if the removal is performed using the fund of salvage and/or underwater works business entities, the operational cost of the shipwreck and/or cargo removal is calculated from the result of the removal after deducted with the mandatory disbursements of Non-Tax State Income.
In addition to the changes highlighted in the above, the new regulation also provides other minor changes such as the obligation to produce a power of attorney for ship owners who wish to apply for salvage activity license but unable to directly submit the application. Besides that, the requirements for salvage and/or underwater works business entities who want to apply for delegation of shipwreck removal now includes some additional administrative and technical requirements.
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