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Flag of convenience scheme retired

An aerial view of the Cambodian-registered cargo ship East Sea taken in 2001. The crew abandoned the vessel after it beached on the coast of southern France with more than 900 illegal immigrants on board. Afp
An aerial view of the Cambodian-registered cargo ship East Sea taken in 2001. The crew abandoned the vessel after it beached on the coast of southern France with more than 900 illegal immigrants on board. Afp

Flag of convenience scheme retired

The days of cocaine smuggling, illegal fishing and human trafficking using ships bearing the Cambodian flag appear to have come to an end as government officials claim that, as of today, all foreign-owned ships operating through Cambodia’s “flag of convenience” scheme must be stripped of their designation, and the world’s ports should no longer grant them access.

Following a 2015 decision to close down the business loophole, which allows foreign-owned merchant ships to avoid restrictions and financial charges in their home countries, foreign-owned ships will no longer be allowed to fly the Cambodian flag, a Ministry of Public Works and Transport (MPWT) official said yesterday.

“The reason why we stopped the flag [of convenience scheme] was because it was not benefitting the country,” said Chan Dara, director-general of the ministry’s general department of transport. “We want Cambodia to govern its own ships.”

He said the Cambodian government had cancelled its contract with the South Korean ship registry firm that handled ship licensing procedures. The ministry has also notified the International Maritime Organisation (IMO) that “if they find [foreign] vessels with the Cambodian flag, they are illegal”.

According to Dara, the decision to cancel the lucrative long-running scheme was to avoid the scrutiny that comes with ships that violate the law, and because Cambodia lacked long-range enforcement capabilities to monitor them.

While he could not provide data on how many ships were still registered as Cambodian vessels, a maritime tracking website that keeps up-to-date information on shipping routes yesterday showed at least three dozen Cambodian-flagged ships operating in places as far flung as the Persian Gulf, inland Russia, South America and off the coast of Nigeria.

Nevertheless, the government appears to have made progress on persuading ships to voluntarily drop the Cambodian flag ahead of the ban.

In a meeting held this May between the MPWT and the International Ship Registry of Cambodia (ISROC), a private subsidiary of the South Korean Cosmos Group, the government was informed that as of last year, 194 foreign ships were operating under the Kingdom’s flag, according to the ministry’s website.

The Kingdom’s flag of convenience scheme has routinely come under scrutiny over the last 20 years, with Cambodian-flagged vessels implicated in illegal fishing activities and caught in a string of drugs and weapons busts in the early 2000s.

In perhaps the best-known of these cases, the Cambodian-registered North Korean ship Song Sang was intercepted in 2002 by American and Spanish naval forces in the Indian Ocean.

While the ship’s manifest stated it was transporting cement to Yemen, an examination revealed 15 Scud missiles, 23 tanks of nitric acid rocket propellant and 85 drums of unidentified chemicals hidden beneath the bags of cement.

Most recently, in November 2013, the European Commission formally banned all fisheries imports from Cambodia, citing that non-Cambodian vessels flying its flag were responsible for an increase in illegal fishing practices.

An IMO representative said that the organisation was not in a position to comment on the merits of Cambodia’s end of issuing flags, claiming flag registration and operation modalities were “solely at the discretion of the sovereign states”.

Paul Chambers, director of research at the Institute of Southeast Asian Affairs, said while Cambodia’s flag of convenience scheme had been useful in making money off of merchant ships, the policy creates ambiguity for which country the ship actually belongs to.

“I would assume that doing away with the policy, perhaps under international pressure, is an attempt to make clear the identities of all ships passing through Cambodian waters,” he wrote in an email.

Phay Siphan, spokesman for the Council of Ministers, the body that operated the flag of convenience program until it was transferred to the MPWT late last year, said Cambodia had steadily gained revenue from the practice through the South Korean brokers.

While he could not recall the total revenue figure, he told local media last year that since 2002 – the year the IRSOC was launched – the practice had earned $6 million for the state coffers.

Siphan said international pressure was the cause for scrapping the scheme. “We faced pressure from the European Union, which wanted us to have better maritime trade and control, but [to do so] we were required to provide better tracking procedures for Cambodian flagged ships,” he said. “But we were not able to do that.”

Instead, he said ending the flag of convenience scheme would lead to greater shipping transparency and improve the country’s image.

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