Source: Bussiness Daily
Shippers are campaigning for the inclusion of the open registry system in the new Merchant Shipping Act to help the country attract more vessels operating in foreign countries.
Experts say that failure by the drafters to include the provision in the Act was an oversight that needs to be corrected if the country is to stand a chance in harnessing maximum benefits of global maritime industry.
Open registries are legal mechanisms used to attract merchant ships from countries with more stringent safety regulations and higher operating costs to countries offering more flexibility and lower registration fees.
Attract shipowners
The provision enables a country to attract shipowners to invest, while its citizens have an opportunity to buy ships that would fly its flag.
Failure by the Act, signed into law by President Kibaki last June, to explicitly stipulate provisions on open registry means that local investors interested in acquiring ships would have to search for a country with such provisions and register their vessels there.
The Act is yet to be operationalised as the Kenya Maritime Authority (KMA) is still working on related subsidiary legislation.
Only one vessel (cruise ship MV Royal Star which was recently sold to African Marine by African Safari Club) calls Mombasa a home port.
It is registered in the island of Antigua & Barbuda.
“It is unfortunate that the drafters of the Act left out this important provision. We expected the law to clearly talk of open registry and the benefits in it so that Kenya could attract vessels to fly our flag. The provision could have also attracted Kenyans who have registered their vessels elsewhere back home,” said Captain Fredrick Wahutu of Kenya Ships Agents Association.
The benefits for the open-registry countries include additional tax revenues and employment opportunities, especially for seafarers.
In other countries, the provision has contributed immensely to their respective economies.
In Panama, for instance, the fees charged contribute over five per cent of the national budget.
In Liberia, the ship registry constitutes one-sixth of the country’s total revenue.
These are the benefits the country was expected to fetch if the Act had provide incentives to either local or international investors interested to register their vessel in Kenya.
The incentives include a tax holiday for spare part imports for the repair of vessel registered in the country.
The shipping industry was optimistic that the new Merchant Shipping Act would have opened the country’s register to entice shipowners to register their vessels in the country and fly the country’s flag.
This could have also seen vessels registered in the country fly Kenyan flag hence fulfilling the country’s dream of acquiring vessels following the Kenya National Shipping Line’s failure to deliver one as required during its formation in 1984.
“There are Kenyans with vessels, but they have registered them in different countries. The Act offered an opportunity to magnetise them. But it seems that we would have to restart another process,” said Mr Wahutu.
He said that the oversight would lock out the country’s maritime sector from harnessing the full benefits that come with open registry.
Section 109 to 116 of the Act give a special provision for Bareboat chartering registration.
The provision means that vessels registered pursuant to a bareboat charter would fly Kenya’s flag, upon consent of the original registry, for a limited period of time.
The provision does not, however, offer incentives that would be given to Kenyans who would be interested to engage in bareboat chartering.
Bareboat chartering is also guided by international law, as reflected in the International Convention on Maritime Liens and Mortgages, 1993, and provisions of the UN Convention on the Law of the Sea.
Existing mortgages
This means that the laws of both the State of bareboat charter registry and the State of underlying registry should contain provisions for maintaining the status of existing mortgages during the period the vessel is subject to bareboat registration
Currently, the country’s shipping industry relies on either time chartering (hiring a vessel for a specific amount of time) or voyage chartering (hiring a vessel for a single voyage).
Though Kenya Maritime Authority (KMA) director-general Nancy Karigithu could not say why the act had ignored that important provision, she said that no stakeholder had formally complained.
“We are surprised that no stakeholder has raised the issue with us now or even during the stakeholder consultations,” said Mrs Karigithu.
She told Business Daily that KMA would give a detailed response on the issue later.
“Open registry is very important. Other than seafarers, other Kenyans would have secured jobs in liners that would have set their offices here. We cannot chest-thump that Kenya is the region’s shipping hub without open registry,” said Seafarers Assistant programme officer Andrew Mwangura.
Shippers are campaigning for the inclusion of the open registry system in the new Merchant Shipping Act to help the country attract more vessels operating in foreign countries.
Experts say that failure by the drafters to include the provision in the Act was an oversight that needs to be corrected if the country is to stand a chance in harnessing maximum benefits of global maritime industry.
Open registries are legal mechanisms used to attract merchant ships from countries with more stringent safety regulations and higher operating costs to countries offering more flexibility and lower registration fees.
Attract shipowners
The provision enables a country to attract shipowners to invest, while its citizens have an opportunity to buy ships that would fly its flag.
Failure by the Act, signed into law by President Kibaki last June, to explicitly stipulate provisions on open registry means that local investors interested in acquiring ships would have to search for a country with such provisions and register their vessels there.
The Act is yet to be operationalised as the Kenya Maritime Authority (KMA) is still working on related subsidiary legislation.
Only one vessel (cruise ship MV Royal Star which was recently sold to African Marine by African Safari Club) calls Mombasa a home port.
It is registered in the island of Antigua & Barbuda.
“It is unfortunate that the drafters of the Act left out this important provision. We expected the law to clearly talk of open registry and the benefits in it so that Kenya could attract vessels to fly our flag. The provision could have also attracted Kenyans who have registered their vessels elsewhere back home,” said Captain Fredrick Wahutu of Kenya Ships Agents Association.
The benefits for the open-registry countries include additional tax revenues and employment opportunities, especially for seafarers.
In other countries, the provision has contributed immensely to their respective economies.
In Panama, for instance, the fees charged contribute over five per cent of the national budget.
In Liberia, the ship registry constitutes one-sixth of the country’s total revenue.
These are the benefits the country was expected to fetch if the Act had provide incentives to either local or international investors interested to register their vessel in Kenya.
The incentives include a tax holiday for spare part imports for the repair of vessel registered in the country.
The shipping industry was optimistic that the new Merchant Shipping Act would have opened the country’s register to entice shipowners to register their vessels in the country and fly the country’s flag.
This could have also seen vessels registered in the country fly Kenyan flag hence fulfilling the country’s dream of acquiring vessels following the Kenya National Shipping Line’s failure to deliver one as required during its formation in 1984.
“There are Kenyans with vessels, but they have registered them in different countries. The Act offered an opportunity to magnetise them. But it seems that we would have to restart another process,” said Mr Wahutu.
He said that the oversight would lock out the country’s maritime sector from harnessing the full benefits that come with open registry.
Section 109 to 116 of the Act give a special provision for Bareboat chartering registration.
The provision means that vessels registered pursuant to a bareboat charter would fly Kenya’s flag, upon consent of the original registry, for a limited period of time.
The provision does not, however, offer incentives that would be given to Kenyans who would be interested to engage in bareboat chartering.
Bareboat chartering is also guided by international law, as reflected in the International Convention on Maritime Liens and Mortgages, 1993, and provisions of the UN Convention on the Law of the Sea.
Existing mortgages
This means that the laws of both the State of bareboat charter registry and the State of underlying registry should contain provisions for maintaining the status of existing mortgages during the period the vessel is subject to bareboat registration
Currently, the country’s shipping industry relies on either time chartering (hiring a vessel for a specific amount of time) or voyage chartering (hiring a vessel for a single voyage).
Though Kenya Maritime Authority (KMA) director-general Nancy Karigithu could not say why the act had ignored that important provision, she said that no stakeholder had formally complained.
“We are surprised that no stakeholder has raised the issue with us now or even during the stakeholder consultations,” said Mrs Karigithu.
She told Business Daily that KMA would give a detailed response on the issue later.
“Open registry is very important. Other than seafarers, other Kenyans would have secured jobs in liners that would have set their offices here. We cannot chest-thump that Kenya is the region’s shipping hub without open registry,” said Seafarers Assistant programme officer Andrew Mwangura.
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