8 March 2013

Tanzania: Cheating Rife Among Shippers

THE days of domination of foreign shipping liners and managers in the local industry are numbered as stakeholders have proposed that tough regulatory provisions be incorporated in the amended 2002 Shipping Agency Act.

Debating amendments presented by Surface and Marine Transport Regulatory Authority (Sumatra) Director of Legal Services, Tumaini Silaa, stakeholders said cheating in the industry is rife with shipping line owners making windfall profits much of which is repatriated abroad.

"The shipping agency law has been abused because most of the local shareholders at the time of liberalization had no capital to pay for their shares as required by law," said Tanzania Taxpayers Association Chairman, Otieno Igogo.

Mr Igogo argued that most locals opted to sell their shares to multinational shipping companies which have since been illegally running agency businesses, while local shareholders pretend to be majority shareholders. The former Tanzania Freight Forwarders Association (Taffa) president argued that because of domination of foreign shipping liners, managers have also been recruited from abroad sometimes with no professional knowledge in shipping.

"But the most serious thing is that these foreign shipping companies are making a lot of money which does not get taxed by TRA (Tanzania Revenue Authority)," Igogo pointed out while naming some fees and revenues being collected as container cleaning fee, agent's fee which former National Shipping Agencies Company (Nasaco) used to earn from shipping liners.

Stakeholders said that other duties paid include administrative fee for processing of manifests and container deposit fees. But Maersk Tanzania Managing Director, Mohamed Ahmed, dismissed much of the stakeholders' arguments, saying that foreign shipping liners are paying all requisite taxes as required by law.

"Let's not only show that foreign companies are here to take away money. Last year Maersk paid 3.8bn/- to TRA as taxes," Mr Ahmed pointed out. He also defended the introduction of fees such as container cleaning, saying many local shipping personnel lack professionalism delaying the returning of containers while others get lost in the process.

Ahmed further warned that local stakeholders should not see Tanzania as an island, saying that if regulations are stringent, some multinational shipping companies may leave. "As for employment, we at Maersk employ many locals in senior positions like our Finance Manager, Safmarine Country Manager are all Tanzanians," Ahmed argued as local stakeholders grilled Sumatra over armies of expatriates employed by multinational shipping companies.

Speaking during the same hearing, the session Chairman, Bernard Mbakileki, challenged Sumatra to flex it's muscles once a tough law is in place, saying the industry needs to be regulated effectively as in other countries. "In business, you don't earn what you deserve but what you negotiate," said the former Sumatra board member who pointed out that in countries such as Singapore and Hong Kong, shipping business is highly regulated.

Among other things, Sumatra's proposed amendments seek to curb cheating in ownership, employment and tax payment in shipping agency business. "Shareholders will now be required to have knowledge of shipping industry and submit a copy of their shareholding proof with us before being licensed," Ms Silaa said.

The 2002 Shipping Agency Act liberalized the industry which was once dominated by state owned Nasaco, but loopholes have given foreign elements enough room to control the industry which many stakeholders feel has been neglected by the government.

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