Flags of Convenience Halted
Cambodia’s troubled status as an issuer of flags of convenience, which allow a company to register ships in a country different to their own, is on hold, with the government announcing yesterday it is seeking support from the EU to nationalize the process.
Until recently, South Korean firm Cosmos Group had been contracted to run the registration process, but the contract was canceled on August 17, 2015, according to a statement posted to the Facebook page of Minister of Public Works and Transport Sun Chanthol.
“Cambodia will no longer be a Flag State Administration, but a Port State Administration and Coastal State Administration,” wrote Mr. Chanthol.
He said that by the end of the month, no ships would be flying Cambodian flags of convenience.
International vessel tracking website FleetMon.com lists 827 ships now registered in Cambodia.
The move is not a halt to the controversial process, which potentially allows firms to avoid regulations and paying taxes in their home countries, but rather to allow for suitable training to bring the operation back under the government, ministry spokesman Chan Dara told Khmer Times.
He said Mr. Chanthol had asked the EU to help in the matter at a meeting at the ministry with EU Ambassador George Edgar on Wednesday.
“We need the European Union to help in this sector because it is very important,” Mr. Dara said. “Mr. Edgar responded that he is very happy because he had never heard a request from Cambodia on this topic and he will report this to the EU community for discussion.”
He added that Mr. Chanthol did not expect the registration of ships to start again for at least 10 years, by which time Cambodia would have a suitably trained team to run the operation.
Mr. Dara confirmed that since 2003, South Korean company Cosmos Group had partnered with the government to form “The International Ship Registry of Cambodia,” to oversee the registration and monitoring of ships flying the Cambodian flag and to train Cambodians to eventually take over the process.
It was the failure to perform the latter requirement, and repeated issues with how they ran the registration, that led the government to cancel their contract last year, he said.
Similar problems had led to the cancellation of the contract of the Singapore-based Cambodia Ship Cooperation in 2002, which had previously done the work, he said.
In January, the Cambodian flagged Saint George was escorted out of Russian controlled waters off the coast of Crimea after a “violation of the Russian Federation’s state border regime.”
In 2011, another Cambodian flagged ship, the Harmony Wish, was involved in transporting military hardware for North Korea.
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