VESSEL REGISTRATION PROCESS IN INDONESIA

Based on Law number 17 on Shipping (“Shipping Law”) the legal status of a vessel is determined after going through the following process:[1]

1. Vessel measurement;
2. Vessel registration; and
3. Vessel nationality

What is the purpose of a vessel registration? Why is it necessary?

Vessel registration is the process to register the ownership title of a vessel. This means that if a person or entity wishes to have a proof of ownership over a vessel that it owns then said vessel must go through the registration process. Whereas the registration process is performed by registration to the Registrar and Recorder of Transfer of Ship Title appointed by the central government of the Republic of Indonesia specifically from the Directorate General of Maritime Transportation.

Based on Article 158 of Shipping Law vessels that can be registered in Indonesia are vessels of the following criteria:

1. Vessels with the gross tonnage of at least 7 GT;
2. Vessels belonging to Indonesian citizen or legal entity established under the law of Indonesia and domiciles in Indonesia; and
3. Vessels belonging to an Indonesian legal entity that is a joint venture with the majority of the shares owner by an Indonesian citizen.

It is further regulated in Minister of Transportation Regulation number PM 39 of 2017 on the Vessel Registration and Nationality (“PM 39/2017”) specifically Article 5 paragraph (3) that the joint venture company above means:

1. Vessels owned by an Indonesian legal entity that is a private company with the shareholding composition of Indonesian majority shareholder;
2. Vessel owned by an Indonesian public company with the following provision:
   1. Direct foreign (individual or legal entity) ownership no more than 49% (forty nine percent); and
   2. Shares ownership by foreign individuals or entity through the capital market in the form of portfolio shall not exceed more than 49% (forty nine percent).

The vessel registration themselves shall be carried out by the drawing up of the deed of registration and recorded in the Indonesian ship registry and as a form of evidence of the ship having been registered the first authenticated copy of the deed of vessel registration shall be given to the owner that will serve as proof of ownership of the vessel that has been registered. Furthermore the registration mark shall also be placed directly on the vessel that has been registered.

Under Article 2 of the PM 39/2017 the vessel registration process covers the following item:

1. Registration of ownership rights;
2. Hypotec/ship mortgage encumbrance; and
3. Registration of other property rights over the vessel

Whereas the registration of other property rights shall encompass the following:

1. Bare boat charter; and
2. Leasing.

Registration steps:

Based on PM 39/2017 the steps to process the vessel registration is as follows:

1. First Stage - Registration

The vessel owner submits the registration application to the Registrar and Recorder of Transfer of Ship Title with the following documents:[2]

1. Vessel proof of ownership, in the form of:
   1. Vessel is newly constructed by a shipyard:
      1. Vessel construction contract or agreement;
      2. Minutes of vessel handover;
      3. Builder certificate; and
      4. Vessel full payment proof.
   2. Vessel is newly constructed traditionally by a craftsmen:
      1. Statement letter of the craftsmen acknowledged by the relevant head of subdistrict (Ind: Camat);
      2. Statement letter with the statement of ownership letter issued by the relevant head of subdistrict (Ind: Camat).
   3. For vessels that have previously been registered in another country:
      1. Bill of sale legalized by a notary who witnessed the bill of sale signing or by the authorized government official from the country of vessel of origin; and
      2. Protocol of delivery and acceptance.
   4. For vessels acquired through grant or the government (foreign or domestic) shall be done in accordance with the prevailing Indonesian law (depending whether the grantee is private enterprise, private individual, or state entities).
   5. For vessels acquired through a sale and purchase transaction shall be proven by a deed of sale and purchase drawn up into a notarial deed.
   6. For vessels acquired through a capital injection shall be proven with:
      1. Deed of capital injection through asset (inbreng) drawn up before a notary for Indonesian legal entity;
      2. In accordance with the laws concerning state capital contribution for government institutions/State Owned Enterprise/Local Government Owned Enterprise.
   7. For vessels acquired through individual grant or grant from legal entities shall be proven by a deed of grant drawn up by a notary.
   8. For vessels acquired through inheritance shall be proven by an heir stipulation from the relevant court.
   9. For vessels acquired from dispute settlements between Indonesian individuals/legal entities shall be proven by a final and binding court verdict. Or
   10. For vessels acquired through auction by a government institution shall be proven by the auction report.
2. Identity of the vessel owner. Can be in the form of the following:
   1. Indonesian Identification Card for individual owners; or
   2. Deed of establishment and/or its subsequent amendment  made before a notary that shows the structure of the board of directors and/or latest shareholders composition and have been approved by the relevant government authority for owners in the form of a company including the company profile from relevant institution; or
   3. Deed of establishment and/or its subsequent amendment for foundations and cooperatives made before a notary that shows the latest administrators and have been approved by the relevant government authority; or
   4. Any relevant identification relevant to state entities or institutions based the relevant Indonesian laws.
3. Indonesian Tax ID/NPWP
4. Measurement letter
5. Ship safety inspection report from the ship safety inspector official
6. Power of attorney (only if processed through proxy). Said power of attorney shall only be applicable if:
   1. The owner is an individual or a group of people;
   2. The owner is a legal entity;
   3. The owner place of residence is in a different area as the registration area; and
   4. The owner is a ministry and/or state institution.
7. Proof of payment of ship transfer duty
8. Recommendation from the Minister of Maritime and Fisheries (only for fishing vessel).

In addition to the above the registration of ownership of a former foreign flagged vessel must also include an original statement letter on the deletion from the ship registry from the country of origin issued by the relevant state institution of the country of vessel origin.

1. Second Stage - Application Assessment

Under Article 8 of PM 39/2017 the registration of the vessel shall be performed by applying for the registration application to the following registration area that has the Registrar and Recorder of Transfer of Ship Title:

Whereas the registration itself shall be performed through the Electronic Vessel Electronic Registration system or the SPKE (Sistem Pendaftaran Kapal Elektronik).

Upon receiving the application documents the Registrar and Recorder of Transfer of Ship Title shall assess the completeness of the requirements at the latest within 3 (three) working days from the date the complete application is received.

If based on the assessment there are documents or requirements that are still incomplete, then the Registrar and Recorder of Transfer of Ship Title will reject the registration application and will provide a maximum of 2 (two) working days for the applicant to complete the missing requirements.

If the application is accepted then the Registrar and Recorder of Transfer of Ship Title shall draw up the minutes of deed (the original deed) and deed of vessel registration at the latest 3 (three) working days. The minutes itself will be kept by Registrar and Recorder of Transfer of Ship Title for their filing.

1. Final Stage - Examination Result

As mentioned previously, once the application is accepted the Registrar and Recorder of Transfer of Ship Title will issue the minutes of deed and deed of vessel registration.

The minutes of deed and deed of vessel registration must state the following information:[3]

1. Number and date of deed;
2. Number, date and issuance location of the measurement letter;
3. Vessel data consisting of:
   1. Vessel name;
   2. Length;
   3. Width;
   4. Depth;
   5. Total vessel length;
   6. Gross tonnage;
   7. Nett tonnage;
   8. Tonnage measurement number;
   9. Brand and engine power of main engine;
   10. Main material;
   11. Ship type.
4. Vessel registration category;
5. Name and location of the Registrar and Recorder of Transfer of Ship Title;
6. Name and domicile of the owner; and
7. Summary of vessel ownership.

The deed shall be signed by the Registrar and Recorder of Transfer of Ship Title. While the minutes of vessel deed will be kept by the Registrar and Recorder of Transfer of Ship Title, the ship owner will be provided with the grosse vessel deed as a proof of ownership.[4]

Subsequently after the completion of the registration process the vessel itself must have the registration mark by the ship owner. The marking of the vessel registration shall also be issued a minutes of vessel registration marking by the harbor master.[5]

Author:

Ryanshah Akbar Putra - Senior Associate of RH Consulting