The Maritime Industry Authority has released rules covering Philippine-registered vessels applying for temporary suspension of registry to operate overseas
A suspension effectively paves the way for local shipping companies to lease or bareboat charter out their ships overseas
The MARINA order was issued amid clamor from exporters to allow shipowners to get into bareboat chartering arrangements that would plug vessel space shortage for exports
Companies/entities that intend to bareboat charter out must secure a consent from MARINA in accordance with the rules prescribed under MARINA Memorandum Circular DS-2021-02
The consent will be valid for the duration of the charter period not exceeding five years and can be renewed for another five years
Philippine shipping companies now have an opportunity to lease their ships overseas following the issuance of Maritime Industry Authority (MARINA) Memorandum Circular (MC) DS-2021-02.
The circular contains guidelines on Philippine-registered vessels applying for temporary suspension of their registry for the purpose of operating overseas through a bareboat charter out arrangement.
MC DS-2021-02 said it aims to provide Philippine shipping companies commercial opportunities to lease out their ships overseas. The circular takes effect 15 days after its publication on October 1 and will be reviewed after two years of effectivity.
The circular was issued amid clamor from exporters to allow shipowners to get into bareboat chartering arrangements that would plug vessel space shortage for exports. Exporters are suffering from supply chain disruptions caused by COVID-10, including lack of vessel space, soaring freight rates, and container shortage resulting in shipment delays and huge losses.
Philippine Liner Shipping Association president Mark Matthew Parco earlier told PortCalls there may be interest among its members in chartering vessels for overseas deployment as feeders.
Bareboat charter refers to the arrangement of hiring a vessel without administration or technical maintenance included in the agreement. The charterer obtains possession and full control of the vessel along with the legal and financial responsibility that comes with it. Because of MC DS-2021-02, a Philippine vessel may be bareboat chartered out and registered outside the Philippines in the name of the bareboat charterer. During the charter period, the vessel’s Philippine registry has to be suspended.
Companies or entities that intend to bareboat charter out must secure consent from MARINA in accordance with rules prescribed under MC DS-2021-02. MARINA’s consent effectively authorizes the temporary suspension of Philippine-registered ships from the registry.
The consent is valid for the duration of the charter period not exceeding five years. It may be renewed for another five years, but the aggregate total of the extensions should not exceed 10 years.
The fee for the consent depends on the number of years: P100,000 for one year, P150,000 for two years, P200,000 for three years, P250,000 for four years, and P300,000 for five years.
Renewal of consent starts at P200,000 for one year, P300,000 for two years, P400,000 for three years, P500,000 for four years, and P600,000 for five years.
The shipping company is also required to pay the annual tonnage fee of the ship for the duration of the bareboat chartering out arrangement or while the temporary suspension of the Philippine registry is still in effect.
The temporary suspension of registry of Philippine-registered ships will be lifted once the application of reversion to Philippine-flag is filed and the Deletion Certificate from the current registry is submitted.
Pre-termination of the bareboat charter contract may be allowed upon written notice and submission of the documentary requirements indicated in MC DS-2021-02. The company must also immediately notify MARINA in writing when the charter party has terminated the arrangement or when the shipowner has otherwise retaken the possession of the vessel.
Violation of any provisions of MC DS-2021-02 will be subject to administrative fines and penalties. For bareboat charter out of a ship without securing the required consent, a penalty of P1 million will be imposed. Submitting fraudulent documents in the application for approval of the consent to bareboat charter out ships is also fined with P1 million. For non-compliance with the post-approval conditions of the consent, P200,000 per condition will be imposed. – Roumina Pablo