The Verkhovna Rada has adopted the draft law No. 2712 as the basis for the law on amendment of the Merchant Shipping Code of Ukraine, which is intended to facilitate development of shipping in the country.
The draft law is intended to introduce state support for development of shipping, which should lead to an increase in the tonnage of vessels operating under the flag of Ukraine, facilitate investment of capital in shipping businesses, and facilitate improvement of the investment climate in Ukraine in general.
Ukraine adopted its Merchant Shipping Code in 1995 and, as stated in the explanatory note to the draft law, some of its provisions are outdated. For example, Article 32 of the Code stipulates that only vessels owned by the state, citizens of Ukraine or legal entities that are 100% owned by residents of Ukraine can operate under the national flag of Ukraine. Article 131 of the Code imposes restrictions on performance of cabotage operations by vessels operating under foreign flags (such vessels can perform cabotage operations only with permission from the Ministry of Infrastructure).
"The current provisions create a serious barrier not only to attraction of foreign investors to the domestic shipping market, but also for Ukrainian ship owners, which are often interested in full or partial involvement of foreign partners in the performance of their economic operations," the explanatory note states.
The number of vessels operating under the Ukrainian flag reduces every year. According to the explanatory note, 375 vessels with 5,000 deadweight tons or more operated under the Ukrainian flag in 1991, 155 in 2000, 91 in 2006, 75 in 2008, 60 in 2012, and 46 in 2014. At the same time, more than 200 medium and large ships owned by Ukrainian companies operate under foreign flags.
