Ship register proposals could hurt exporters

Proposed new legislation
that will reserve 40% of SA
cargoes for SA-flagged ships
(See FTW September 25,
2015) – along with hints that
more ships could be joining the
two Capesize bulkers that have
just been registered under the
SA Ship Register – have once
again brought the issue into
sharp relief.
The register has always
been accused of being so
uncompetitive that it is
deemed unlikely that any
merchant vessels will ever be
registered under the SA flag –
despite the new shipping tax
regime introduced last year
providing financial incentives
to local and regional ship
owners.
“There is no doubt that the
changes to the SA tax regime
for foreign-going ships make
the register more attractive,”
Captain Malcolm Hartwell,
former master mariner and
now director of the legal firm,
Norton Rose Fulbright SA,
told FTW. “This brings it in
line with other jurisdictions,
like Singapore, that is seeking
to attract ships to its register.”
But he questioned whether it
was appropriate for a country
with such pressing social and
other economic needs to be
providing financial incentives
to attract ship owners. “That,”
he added, “is a purely political
question.
“If we are to be globally
competitive, SA-flagged ships
need to be exempt from SA’s
socialist-inspired labour
legislation. And the regulatory
regime needs to be modernised
as a matter of urgency.”
As far as attracting ships
to the SA register for local
cargoes was concerned,
Hartwell stressed that, of
course, different considerations
applied.
“If government decides to
impose regulatory restrictions
on the identity of ships that
carry SA cargoes,” he said,
“then it may well be that ship
owners will be prepared to flag
their ships in this country in
order to carry SA exports.
“Those ship owners will
then have to carry the costs
and administrative burden
of dealing with SA’s labour
legislation and its long
outdated Merchant Shipping
Act and regulations.
“The burden of that
additional cost will of course
initially have to be borne by the
SA tax payer and by
SA exporters.”
Hartwell even
went so far as to
hint that
the current buyers of SA’s raw
materials would elect to rather
buy in Brazil or Australia
where the same additional
costs were not imposed by
government. “This,” he added,
“is purely a function of market
forces.”
But he was adamant that, as
things currently stood, there
was no doubt that flagging a
ship in SA led to additional
costs and an additional
administrative burden.
And those costs would be
passed on, ultimately, to the
consumer. “Whether that is
to the benefit of the consumer
and to the SA economy, is an
issue that will become clearer
in due course,” he said.
INSERT & CAPTION
If we are to be
globally competitive,
SA-flagged ships need
to be exempt from
SA’s socialist-inspired
labour legislation.
– Malcolm Hartwell