Fund to finance the upkeep of Straits of Malacca and Singapore Straits

Star Maritime 19 March 2007

By SHARIDAN M.ALI
 
THE shipping fraternity has welcomed the proposal to voluntarily collect one cent per dead weight tonne (dwt) from users of Straits of Malacca and Singapore Straits to finance the expensive upkeep of the busy shipping lane.
 
Nevertheless, some questioned on the viability of the voluntary scheme to raise the fund while some are puzzled by the fact that the “voluntary scheme” has a price tag attached to it.
 
Based on the amount of cargo that moves through the Straits each year, the move would raise about US$40mil annually, said Yohei Sasakawa, the chairman of Japanese non-governmental group The Nippon Foundation.
 
“This is such a small amount that it would not impact freight rates but it would help alleviate the excessive burden borne by the littoral states,” Sasakawa said.
 
This was stated in a consensus document produced at the Symposium on the enhancement of safety of navigation and the environmental protection of The Straits of Malacca and Singapore Straits in Kuala Lumpur last week.
 
He said the Nippon Foundation would be willing to set up a fund for navigational safety and environmental protection in the straits if his proposal was accepted by international shipping companies.
 
United Arab Shipping Agency Co (UASAC) Malaysia Sdn Bhd country general manager Desmond Yong said although the proposal was good, there should be practical framework to collect the fund.
 
“I am afraid that the voluntary work may be futile. There must be some enforcement to make sure all users contribute. I understand that the proposal is still in its preliminary stage but this voluntary system should be re-examined.
 
“However, based on the number of ships going through the straits, one cent per dwt will generate to a huge sum,” he said.
 
On the same note, Jardine Shipping Services country manager Thum Hoong Yip questioned the viability of the voluntary contribution.
 
“There must be a mandate for all users to contribute then I believed that the fund will work.
 
“It will unfair to those who contribute while the others do not and there must be a convention to regulated it.
 
“The Straits of Malacca is an important waterway and we have to safeguard it through enhancement of safety of navigation,” he said.
 
Federation of Malaysian Shipping Agencies (Fomsa) president V. Muthiah said the idea was commendable but there must be a mechanism on how to collect the fund.
 
“It will be some sort of compensation for the industry to the shipping lane.
 
“But, I wonder how they are going to pull together the fund if many of the vessels transiting there do not call at our ports,” he said.
 
Another industry player was puzzled by the fact that the “voluntary contribution” has condition of one cent per dwt.
 
“If that is the case, it is not voluntary anymore. And as an industry representative, we support the voluntary scheme but dismiss the idea of a mandatory levy,” he said.
 
The fund, according to Sasakawa would be useful as the traffic volume in the congested lane was increasing.
 
“By 2020, we can expect 60% increase in traffic from the current four billion dwt to 6.4 billion dwt.
 
“The number of vessels will rise by 50% from the present total of 94, 000 to 141, 000. Thus, various safety measures need to be implemented to cope with greater safety risk due to the swell in traffic, size of vessels and diversifications of the goods transported.
 
“It is estimated that the introduction of these measures will cost about US$300mil over the next decade and it is much greater than can be borne by littoral states alone.
 
Other than the littoral states of Malaysia, Indonesia and Singapore, only the Nippon Foundation from Japan had contributed US$150mil enhance aids to navigation in the Straits over the last 35 years.

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