Lack of finance for local vessels inhibits growth of SA ships’ register

ADDING HIS support to the call for “more to be done” following last week’s announcement by government of its tonnagetax proposal, is maritime law partner Gavin Fitzmaurice of Webber Wentzel .“It’s a step forward in encouraging foreign operators and owners of vessels using our ports to consider registering their ships on South Africa’s ships’ register,” said Fitzmaurice, who is also chairman of the Cape Chapter of the Maritime Law Association. However, as Andrew Robinson of Deneys Reitz told FTW last week, it is only one of a raft of changes and issues that still need to be addressed in order to make it an attractive proposition. Although the growing of an SA ships’ register is desirable – and will result in significant benefits to both the fiscus and the local shipping industry – Fitzmaurice said that, until the rest of these issues is addressed, foreign vessel operators and owners are unlikely to shift the registration of their ships to this country. “The lack of readily available ships’ finance for local vessels is a matter for concern,” he added. “Foreign and local banks and financial institutions are reluctant to offer finance to SA ships. This is because, while they are accustomed to being preferred creditors in respect of fixed property such as houses over which they register a mortgage, currently SA maritime law relegates banks behind several other categories of creditors in respect of a ship.” As an example, Fitzmaurice indicated that ship repairers and suppliers of goods and services to ships were accorded preferred creditor status – meaning their claims would be settled ahead of a bank’s claim. “It is obviously important to safeguard the interests of local industry, including ship repairers and suppliers, whilst at the same to balance these interests with those of banks and financial institutions,” he told FTW. “This is the challenge which government now needs to address.” He also pointed out that a draft bill, called the Admiralty Regulation Jurisdiction Amendment Bill, has been awaiting enactment since 2003 – and addresses precisely these concerns, and seeks to improve the security given to banks and other financial institutions. There are also concerns around local labour legislation. “The endgame, which commences with registration on the SA ship’s register, is the development of a local merchant fleet,” said Fitzmaurice, “and with vessels being crewed by SA seamen. “It is the opinion of many in the international shipping fraternity however, that SA local labour laws present a hurdle to achieving this.” Nonetheless, Fitzmaurice said he was optimistic. “Treasury and the SA maritime industry appear to be on the correct path."