Law No. 17 of 2008 regarding Shipping (Shipping Law) has initiated the use of cabotage principle which is the activities of domestic shipping conducted by national shipping company using Indonesian flag vessel and Indonesian crew members. Since the implementation of cabotage principle, the use of national commercial vessels has increased from 6,041 units in 2005 to become 14,064 units in 2013 or marked a 132,8% increase. The success of cabotage principle coupled with the Nawa Cita (nine priority agenda of the current administration) initiated by Jokowi JK which focuses on strengthening the identity as a maritime country obviously lead to the increase of procurement of national commercial vessels. The massive procurement of commercial vessels requires huge amount of financing from the banking sector. On the other hand, the banking sector requires security assets to ensure the repayment of loan and interest. Hypothec over vessels has been regulated under Commercial Code (Kitab Undang-Undang Hukum Dagang – KUHD).
“For easy procurement of commercial vessels, Shipping Law allows a vessel to be secured by more than one hypothec”
Hypothec is defined as a repayment of a credit agreement which derives from immovable assets by way of substitution mechanism. Hypothec over vessels is also regulated in Shipping Law which sets out that a vessels registered at Indonesian Vessel Register can be secured for loan repayment. The encumbrance of security is conducted by way of hypothec over vessels through deed of hypothec over the vessel and the issuance of hypothec deed (Grosse Akta Hipotek). For easy procurement of commercial vessel, Shipping Law allows a vessel to be secured by more than one hypothec. The existence of hypothec as mentioned above is the easy way that can be used by commercial vessel business players to meet the demand of national commercial vessels. This is necessary to be conducted considering the growth of national cargo volume which is at 15% to 25% annually. Therefore, if there is no obstacle in procuring commercial vessels, such volume can be accommodated by national commercial vessels.