The state-owned interisland shipping company Pelayaran Nasional Indonesia (PELNI) is a national institution. Its importance is rather greater than indicated by its 18 per cent share of nusantara capacity in 1982. Since the expulsion of the KPM, PELNI's share of interisland capacity has usually been rather larger and was for a period as high as 50 per cent. As late as mid-1981 the Minister of Communications and the President-Director of PELNI were still publicly referring to this as a target. Moreover, PELNI continues to hold a virtual monopoly of the interisland passenger trade. In 1982 PELNI carried 90 per cent of RLS passengers. For most Indonesians sea travel still means a PELNI ship. Finally, notwithstanding its reconversion from a state enterprise to a public company, PELNI is still treated by the Directorate-General as an alat pemerintah (arm of government) which can be called upon to carry out special tasks regardless of profit. To this extent private firms are cushioned against government regulations. If PELNI then makes a loss the government ultimately foots the bill; market sanctions do not apply.

A further reason for studying PELNI is its uniqueness to the industry in size and organization. As seen in Chapter 5, most firms are small. Moreover, even in the case of subsidiaries of larger groups, the personal element in management often remains important. By contrast, PELNI was established as a Weberian-rational bureaucracy organized along civil service lines and staffed by civil servants. Whether the company's official legal status has been that of a public company or, as from 1961 to 1975, of a state enterprise has made little difference to the civil service attitudes of management or to the resultant financial performance.

This chapter begins with a review of PELNI's financial performance since 1952. Some of the excuses put forward by PELNI management for this poor performance are then considered, most notably the unsuitability of the fleet and the burden of “civic mission” responsibilities.