Financial Daily from THE HINDU group of publications
Monday, Apr 01, 2002
`More should be done to build infrastructure' Mr Michael Everard. BIMCO President
Raja Simhan T. E.
Mr Michael Everard. BIMCO President
THE Baltic and International Maritime Council (BIMCO,) consisting of around 1,000 owner-members and controlling over 60 per cent of the world merchant fleet, 1,550 brokers and ships' agents, and 100 club and associate members, constitutes the world's largest shipping association.
In an environment characterised by increasing regulatory burdens, shipping is dependent on a strong industry body to make its views known. BIMCO represents shipping companies drawn from all trades and types of ships, making it ideally positioned to represent international shipping, in general, when new regulatory initiatives are being considered not only by international maritime organisations, but also by individual countries.
Mr Michael Everard is the President and Chairman and Board of Directors, BIMCO. He is also the Chairman of UK-based FT Everard & Sons, a family-owned coastal shipping company started in 1880 by Mr Frederick Thomas Everard.
The BIMCO President was in Chennai recently to participate in a two-day seminar organised by the Council in association with the Institute of Chartered Shipbrokers, Chennai chapter. He spoke to Business Line on various issues confronting the Indian shipping industry.
Excerpts from the interview:
What is BIMCO's agenda in India?
India has a strong coastline, and has a good presence in the international maritime trade. BIMCO is helping India to become an important player in the shipping trade.
A lot of changes have taken place in the industry in the last few years. However, a lot more needs to be done for the sector.
The changes should come right from the top for increasing productivity and efficiency. The changes should, in turn, help bring overall economic growth of the country
Could you elaborate on the changes required to help the Indian shipping industry?
Personally, I feel that the government should further liberalise the shipping industry. A lot more should be done in building infrastructure. The Government is already moving in that direction, but things need to be speeded up. While the Government can invest in infrastructure creation, the private sector can invest in building quality ships and bring advanced equipment. Private players can also form consortiums to fight competition.
Any specific issue that the Indian government should focus on?
The Indian Government should move to the tonnage tax regime, from the corporate tax structure. Shipping is a global business, and not linked to any single-country basis. The Indian shipping industry should move along with their global competitors. Most of the maritime countries have moved to tonnage tax (the tax paid per tonnage and not paid on the profit), and India should also do the same.
(It may be recalled that the tonnage tax panel headed by Dr Rakesh Mohan recently recommended that the Union Government make necessary provisions/amendments in the Income-Tax Act to give effect to the tonnage tax system. The panel recommended a tonnage tax rate of Rs 40 per day per net registered tonnage (NRT) for shipping companies with tonnage of up to 1,000 NRT, Rs 30 for NRT between 1,000 and 10,000, Rs 25 for NRT between 10,000 and 25,000 and Rs 15 for NRT of 25,000 and above.
While the industry was expecting the introduction of the tonnage tax, it was not part of the Budget.)
How bad is recession in the shipping industry?
Things cannot get worse than what they are today. The recession has been more prolonged than the industry had expected. However, things are expected to improve in a few months.
You have voiced your concerns on the quality of ships. Could you elaborate on the issue?
One of the most important issues confronting the shipping industry today is the quality of ships. The ship-owners should realise that, for running a quality business, they should have quality ships and an excellent crew.
There should not be any compromise on the two issues. The ships should be built to certain standards set forth by different classification organisations.
Isn't this a complicated issue?
Yes. It is a complicated issue. Some of ships built in the past by quality builders did not even last for 20 years.
The ship-builders alone cannot be blamed for this. The ship-owners put pressure on the builders to reduce the price resulting in poor quality of vessels.
While various ship classification agencies have taken up the issue with the shipbuilders, there should also be political pressure.
BIMCO believes that Japan, Korea and China, the three largest ship-builders in the world, can improve further on the quality of ships by having minimum quality standards. Recently, in a joint meeting with the ship-owners, BIMCO, along with such classification agencies as the Lloyds Register, emphasised this to the ship-builders.
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