Faroe Business Report — The International Review of Faroe Islands Industry and Trade - Faroe Business Report — The International Review of Faroe Islands Industry and Trade

The Faroese open ship registry, the FAS, could grow quickly and substantially to enlist hundreds of merchant vessels, if it were to be made more competitive in the global marketplace — at last, an action plan in the works with a clarified vision.

What started back in 1992 as a means to stop the then Faroese merchant fleet from flagging out, could finally now be on track toward becoming an international, open ship registry in the competitive sense of the word. In its coalition agreement, the new Faroese Government makes a revamp of the open ship registry, known as the FAS (Faroese International Ship Registry), one of its clearly stated objectives.

Admitting the inadequacy of the current shape of the FAS, the Minister of Trade and Industry, Björt Samuelsen, said that it’s “necessary to change the registry radically in order to make it competitive.”

The Minister told a gathering of shipping professionals at a March 2008 conference: “When the new Government was formed, the administration of the FAS was transferred (…) to the Ministry of Trade and Industry, which immediately commenced work on developing the registry.”

Ms Samuelsen quoted what this government has outlined in its plan, “(…) to develop a new source of revenue within the maritime sector, where we are more experienced than most others. Therefore, the Faroese International Ship Registry is to be reformed so as to make it competitive with other similar registries throughout the world.”

Before the current government took office, there was talk of change forthcoming as a task force report was handed in early 2006 to the last administration. Based on the now widely known findings of that report, as well as other documents produced since then, there seems to be little doubt as to the bulk of the reform underway: reduction of red tape and taxes combined with the formation of a permanent agency to manage and market the FAS.

A round of legislative changes was to be tabled in the Faroese Parliament early in the second quarter of 2008, preparing the way for an urgent revamp of the registry.

“I think it’s becoming clear that this registry has reached a crossroads,” Ms Samuelsen told the Annual Business Report. “We’ll either be watching it go down, or we’ll have to face up to the challenge of making it truly competitive. The Government has made a conscious decision in regard to this, and some of the changes in the taxation code will be tabled after Easter.”

According to industry sources, the registry could be headed for rough waters unless its fiscal regime changes. After modest progress brought the total number of ships registered in the FAS to 38, signs of stagnation have appeared in recent years with clouds gathering on the horizon — fears that the small but important segment of Faroese merchant ship operators could be about to move away because of comparative disadvantages in the fiscal regime.

“The current fiscal regime for the FAS discriminates improperly between Faroese and foreigners, and between crews working under the FAS and those working under competing registries,” Ms Samuelsen duly noted at the ‘Shipping Föroyar’ conference.

She echoed industry sentiment.

Meanwhile in the cards is the continuance and consolidation of a strategy to position the FAS as a quality registry that adheres to international standards while shunning substandard vessels. This shouldn’t be too difficult for the Faroese — after all, their experience from their own stringent national registry, with hundreds of rigorously regulated commercial fishing vessels, doubtlessly provides relevant insights. With 3,400 trained navigators and marine engineers — more than 12 percent of the Faroe Islands’ entire workforce — the Faroese are naturals in the maritime industry, invariably brought up in touch with the sea.

Ms Samuelsen said: “We want to build a registry that is competitive and therefore the existing tax refund system will have to be improved and competition-distorting fees abandoned — we are currently looking at this together with the Ministry of Finance. Additionally, the administration of the FAS is to be arranged in accordance with the ‘one-stop shopping’ principle. It is to be very simple to register ships and receive the necessary service, all in one place.”

A representative for the organizers of the Tórshavn shipping conference said that a follow-up group was being formed to liaison between industry and government.

“One of the objectives is to have 500 vessels registered in the FAS by 2015,” he said.

As to the total ship registry market, an estimated 31,000 merchant ships with a gross tonnage of 1,000 and above roam the world’s oceans.

Link to pdf presentation...

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