KARACHI, April 11: Port and shipping experts have urged the government to allow private shipowners to opt for second or parallel registry on the pattern of many European countries. This will discourage national ship-owners from going for open registry or Flag of Convenience (FOC).

According to private estimates presently around 50 ships belonging to Pakistani shipowners are registered under the Flag of Convenience in Panama, Liberia, Cyprus and Bahamas. Once allowed to go for second or parallel registry the ship-owners will be able to reduce crew cost, which constitutes 33 to 50 per cent of total operating cost.

Another irritant, which discourages shipowners from coming under the national flag, is the first right of refusal given to the Pakistan National Shipping Corporation (PNSC) with regard to transportation of national cargo.

This does not only deprive the private sector shipping companies from having a level-playing field but also disallow them from the haulage of crude oil, which comes to around 10 to 11 million tons per annum.

According to these experts the World Bank has also been asking the government to scrap the PNSC if the country wants to see the private sector ship-owning to flourish and come under the national flag. The bank has also suggested that the government could least do is to ensure a level-playing field so that all the players get equal opportunity for the haulage of all categories of national cargoes, including the liquid bulk cargo.

Despite the fact that the government in 2006 made many attractive changes and also allowed concessions through amendments made in the Shipping Policy of 2001, but this too has failed to attract private sector shipping companies to come under the national flag. Only one container carrier — Mega One — was registered.

Most of the European countries went for second or parallel registry in 1980s to discourage rising trend of “flagging out” which means that shipowners seeking reduction in operating cost of a ship switch over from a high cost registry (national flag) to a lower cost registry or Flag of Convenience.

Those European countries, which spearheaded the move of second or parallel registry included Norway, Denmark, Germany, France, Portugal and Netherlands. Though shipowners flag-out their ships for a number of reasons but the major and principal reason is to reduce the crew cost.

Open registry throws a major challenge to the countries which want to encourage national flag shipping companies because incentives offered by the countries like Panama and Liberia are so attractive that investors world-wide opt for them.

According to some estimates presently over 13,000 ships are registered under FOC with Panama followed by Liberia, Cyprus, Bahamas, Malta and Marshall Island.Captain Anwar Shah, former director general Ports and Shipping told Dawn that it was necessary for the maritime authorities of Pakistan to study the administrative systems of other countries, which are successfully conducting their maritime affairs and learn modern trends of regulating shipping and analysing the merits and de-merits of flag of convenience.

He said that the private sector in Pakistan had shied away since nationalisation of 1970s. Though as a result of continued efforts, the Ministry of Ports and Shipping has been successful in registering one container vessels under Pakistan flag in the private sector.

However, more efforts are required to attract many other local and foreign investors to register their vessels locally.

He said it were not only the concessions, which would attract the ship owners but at the same time the essential perquisites such as continuation of policy, tax concessions, economic free zones, no regulatory control on manning of vessels and relief for shipping operation need to be appropriately addressed.

Mr Shah strongly recommended that instead of Pakistan opting for open registry or FOC, must now seriously consider for second and parallel registry by offering the same facility as offered by these countries.