Overhaul of UAE’s ship registration law will help boost national income

(REUTERS)   

Ship registration in the UAE could become a major national income earner if a proposal to overhaul an existing law obtains the required approval from authorities.

The National Transport Authority (NTA), through its Marine Affairs Department, has finalised the draft of a new law to make registering a ship under the UAE flag a faster and easier process.

The draft law also seeks to revise the current ship registration fees, which have not changed since 1981 when the existing Federal Law No26 was enacted. The move is aimed at making ship registration a more lucrative venture for the government.

“The current ship registration process is out of step with the pace of development in the UAE. We need to overhaul the entire system to also meet current international standards,” Badreya Ahmed Al Dhahri, Director of Marine Affairs Department at the Abu Dhabi-based NTA, told Emirates Business. “We hope to have a new maritime law by the end of this year where all the necessary changes in the system will be addressed. We have completed the draft of the law and it is only awaiting approval,” she added.

Al Dhari said the current law does not cover a number of fleet and maritime operations that have come into existence as a result of new international maritime conventions signed since 1981.

While currently only UAE nationals can have commercial ships registered under the UAE flag, the new law will seek to relax this condition to extend this service to UAE residents and to make it less of an obstacle for foreign shipping interests. Under the current law, residents can only register their commercial ships through a joint venture with a UAE national, who should have not less than 51 per cent share in the enterprise.

“We are thinking of changing this in a phased process. The first phase would enable only GCC citizens to have rights equal to UAE nationals regarding the registration of commercial ships. Based on the success of the first phase, we will seek to make it open for all other nationalities,” she said.

Al Dhari said the move would help to increase fleet size in the UAE especially with the Middle East shipping industry growing at 20 per cent annually due to increased trade.

The current requirements for ship registration tend to push many prospective UAE flag-flyers to the large open registers such as Panama, Liberia and Marshall Islands.

Al Dhari noted that control standards and monitoring process would be effectively streamlined if the draft law is implemented and fees related to ship registration are revised upwards.

Currently, commercial ships pay Dh4.5 per tonne for new registration and Dh2 per tonne for annual renewals. Leisure vessels currently pay between Dh100 and Dh10,000, while foreign registered ships pay Dh6.5 per tonne to obtain navigational licences in UAE.

“The current fees are low compared to prevailing circumstances and also compared to what is being charged in many other countries. The new fee structure will help to create efficiency in the system,” said Mustafa Issa El Wazani, maritime consultant at NTA.

Without giving a specific figure, El Wazani said currently millions of dirhams are earned annually from ship registration and that the figure would increase significantly once the proposed changes in the fee structure are implemented.

He said in some countries, such as Singapore, ship registration is a major national income earner and that the same could apply to the UAE.

The Marine Affairs Department is responsible for the registration of all new or under construction ships, pleasure boats and seamen.

Ships registered in the country fly the UAE flag while foreign ships wishing to sail in UAE waters have to obtain a navigational licence.

Last year, a total of 313 new commercial ships and 1,896 pleasure boats were registered in the UAE.

According to Sharfuddin Sharaf, president of UAE Ship Owners Association (UAESOA), the number of new registered ships would increase if the current registration process is replaced with an improved and more efficient system.

“Ask any ship owner or operator in the UAE and they will tell you that their biggest turn-off is the slow and cumbersome process of having their ships registered. If this system is changed, it will be a big leap in the shipping industry,” said Sharaf.