Chapter 1147 Flag of Convenience

Hua Chong explained to Kasin: "The shipping industry is an international one, operating in countries all over the world. This is why ships can have an 'open registry', and a country can implement an 'open registry' system."

"What does 'open registration' mean?" Kasin asked in confusion.

Hua Chong pointed at Kasin and said, "Use your brain. You should be able to guess what it means just by listening to the name. It allows for the registration of ships for non-citizens or legal entities. This system is called a 'flag of convenience.' Panama is a country that has implemented 'open registration.' 20% of the world's cargo ships are registered under Panamanian nationality. The 'Luna' was originally registered in Panama, too, but the owner only recently switched back to domestic registration."

"Then why do you do this?" Kasim became even more confused after hearing this.

Hua Chong explained, "Let's take the boss's Luna as an example. That ship cost about 350 million dollars, or even more, to build. If it were registered in the UK, he would have to pay 30% in taxes, which would be around 110 million dollars. But what if the Luna were registered in Panama? Only a few thousand dollars in registration fees and a very small amount of taxes would be charged. That saves over 100 million dollars. If it were you, where would you register this ship?"

Kasim was dumbfounded.

Hua Chong continued, "Registering a ship in a flag of convenience country with open registration also has another advantage: that country won't interfere with the ship's operation and management. For example, if Britain and France broke off diplomatic relations, British cargo ships wouldn't be able to deliver goods to France, and their government would regulate it. But if you register your ship in Panama, no one would regulate you, and you could make as much money as you want. That's what the Americans did back then."

Chen Cheng added, "Did you know about World War II? American law prohibited their ships from transporting weapons and supplies into the European theater. But you also know that Europe's resources at the time came mainly from the Americans, relying on shipping. The trick they used was to register their ships in Panama to circumvent legal restrictions."

After hearing this, Kasim suddenly realized: "So that's how it is!"

Hua Chong continued, "Besides Panama, many small countries and regions have also opened up the 'Flag of Convenience' system, such as Saint Vincent, Liberia, and Cyprus. Our Great Xia's Hong Kong Island also has a 'Flag of Convenience' system. The most amazing thing is Mongolia. That place doesn't even have an ocean, but it has opened up a convenient ship registration business to exchange foreign currency. The 'Flag of Convenience' system not only saves money, but also has many other convenient advantages."

"Anything else?" Kasim was stunned.

Hua Chong nodded and said, "Of course, the most important thing is hiring crew members."

"What's wrong with hiring crew members?" Kasim was puzzled.

"Let's use the United States as an example. It goes without saying how powerful the crew union is over there. If it's an American ship, then American crew must be hired. The wages are high and the welfare requirements are harsh. For the same crew, the salary of Indian crew is only one-third of that of American crew! As long as you hang a 'flag of convenience', you can hire crew from anywhere. So the 'flag of convenience' is still a good way to save costs; and it is more convenient to transfer the ownership of the ship. Look how easy it is for the boss to buy the 'Luna'? In addition, since Panama is a neutral country, it is often more convenient for ships of their nationality to enter other countries in many places." Hua Chong gave an explanation.

Chen Cheng added, "It was precisely because of this that the boss's decision to transfer the Luna to Daxia surprised William and the others. From the look on his face, it seemed like the boss was truly thinking of quitting."

Kasim suddenly realized: "No wonder every time I watch the news, every shipwreck is almost always Panamanian. It turns out it's because there are so many Panamanian-registered ships!"

Chen Cheng shook his head. "That's only one aspect. Another major drawback of the open registration system is that it lacks oversight. This can easily lead to low ship safety and poor crew quality, increasing the risk to ships. Look, wasn't the 'Ever Given' blocking the Suez Canal a Panamanian cargo ship? Why did it crash? Wasn't it just a problem with a bunch of idiotic Indian crew members? You've been to Africa before, and all of those shabby old ships there are flying flags of convenience. So it's not surprising that accidents happen. This also creates a situation where ships flying flags of convenience can sail freely on international routes, but in the waters of some sovereign states, such as inland coastal trade, they are not open to flag of convenience ships. Domestic trade only allows domestic ships to operate, and flag of convenience ships cannot participate in domestic trade. In addition, many countries also restrict the entry of older flag of convenience ships into their waters."

Hua Chong looked at Ka Xin and said, "Do you understand? This is all basic knowledge about the sea! You've been following the boss for so long and you don't even know this?"

Kashin's eyes widened: "I'm a bodyguard, not a crew member!"

Hua Chong looked disgusted and said, "How dare you repeat that again?"

This time Kasim got humiliated. He wondered how many of his colleagues envied his work as a "bodyguard".

Xiao Peng smiled and said, "Alright, you two will die if you don't bicker, right? Have you decided who Kambu will practice with?"

"Me!" Kaxin and Hua Chong shouted in unison.

The two of them were always at loggerheads, even over the Cambu matter. Mondays, Wednesdays, and Fridays were with Kasin, and Tuesdays, Thursdays, and Saturdays were with Huachong. So, Sundays off? Naive! They were together on Sundays!

Kambu is now making the two of them want to live but not die, and they are in ecstasy...

Xiao Peng shook his head. "I don't care about your mess. Chen Cheng, let all the crew members on board, except those on duty, rest and recuperate! We don't have time to waste on this salvage operation. Everyone should be prepared for a swift response!"

After hearing this, Hua Chong said, "Boss, are we really going to start working at night? We have no experience like this before!"

"You won't do it because you don't have experience?" Xiao Peng said, "After all, we're just stealing... Ugh! Shun! We should show them some basic respect! What? You won't do it at night?"

"How is that possible!" Hua Chong said, "Boss, just wait and see! When have we ever failed to complete the work you assign us? I can't say we're any better than others, but in this industry, we're the best!"

Xiao Peng smiled and said, "That's right! We are the best!"

But at this moment, Chen Cheng poured cold water on him: "Boss, I looked at the hydrological report and it predicts that there may be a surge of more than 1.2 meters in the sea area where we are working. I am afraid this ship can't withstand it!"

Hua Chong was stunned after hearing this. "One meter and two? Isn't this ship also DP3-class dynamically positioned like the 'Calypso'? A one meter and two meter surge should be no problem, right?"

Chen Cheng sighed and said, "Hua Chong, are the foreigners' DP3 and our DP3 on the same level?"