Indonesia’s shipping industry is expected to grow by around 7% in 2014, compared with its 10% growth reported in 2013, according to Indonesian National Shipowners Association (INSA).

The fall in growth is primarily due to the global economic situation and heavy tax burdens.

INSA chairman Carmelita Hartoto said that the Indonesian shipping industry reported a 25% decrease in traffic to Europe and the US compared with the same quarters in 2012.

“We are basically still optimistic that the domestic shipping industry will still grow this year at 6% to 7% despite the crisis,” Hartoto said.

According to INSA’s data, the number of Indonesian vessels has increased from 11,628 in October 2012 to 12,774 in October 2013, and the capacity of the vessels has also increased from 16.08 million gross tonnes in October 2012 to 18.20 million gross tonnes in October 2013.

However, the industry struggled to compete in the export-import market, which was mainly dominated by foreign competitors.

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Hartoto stated that the government’s 10% VAT for loading and unloading services led to the failure of the export-import market.

Hartoto also urged Indonesian exporters to switch from the free on board system for exporting goods to the new cost, insurance and freight system, as it would help the country to gain a greater market share.