Domestic ships still prefer to fly foreign flags

In recent years, Vietnamese ship owners are expanding their fleet size and investing in more large-tonnage ships.

However, the proportion of foreign-flagged fleets owned by Vietnamese shipowners tends to increase sharply. This reduces competitiveness and makes it difficult to upgrade the domestic fleet.

Foreign flagged ships are mostly large in tonnage.

In early 2025, Vietnam Maritime Transport Joint Stock Company (Vosco) officially received the handover of the Dai Quang oil/chemical tanker with a capacity of 13,500 DWT in Singapore.

The new ship helps increase the size of Vosco's fleet to 14 ships with a total tonnage of 447,174 DWT. Notably, the new ship is flagged by Vosco under Panamanian nationality to facilitate international operations.

To attract businesses to register ships to fly the Vietnamese flag, many solutions are needed with tax and financial incentives...

Previously, in 2024, Hai An Transport and Stevedoring Joint Stock Company completed the project of building 4 new container ships with a capacity of 1,800 Teus. Of which, 2 ships are flying the Vietnamese flag and 2 ships are flying foreign flags.

Also in the year, Hai An completed the investment in a toro container ship (built in 2007) with a capacity of 3,400 Teus, flying the Panama flag and leasing it abroad.

In fact, many Vietnamese ship owners are gradually expanding their fleets and increasing their competitiveness. However, many ship owners decide to fly foreign flags.

According to statistics from the Vietnam Maritime Administration, in recent years, the proportion of foreign-flagged vessels owned by Vietnamese shipowners has tended to increase. Foreign-flagged vessels accounted for 17% of the total Vietnamese-flagged fleet in 2021 and increased to 22% in 2023.

In terms of tonnage, in 2021, foreign-flagged ships accounted for 31% of the total tonnage of the national fleet, while in 2023, the ratio increased to 45%. Most foreign-flagged ships are large tonnage ships serving international transport.

Need financial incentives

Explaining this, Mr. Hoang Hong Giang, Deputy Director of the Vietnam Maritime and Waterways Administration, said that according to current regulations on buying and selling and building new ships, businesses that buy foreign ships that are over 15 years old will not be eligible to register Vietnamese ships.

At the same time, many ship owners buy ships and fly foreign flags because they do not have to go through import procedures and reduce taxes and fees. Many foreign cargo owners also require ships to fly foreign flags to facilitate international routes.

According to experts, not all businesses have enough resources to buy a ship outright, so they can lease it. Therefore, there are cases where they have to fly a foreign flag under contract to make it easier for ship owners to manage.

Mr. Tran Manh Ha, Deputy General Secretary of the Vietnam Shipowners Association, said that the State always encourages shipowners to fly the Vietnamese flag on their ships to increase the tonnage of the national fleet.

However, many factors are needed for businesses to register ships to fly the Vietnamese flag. "The most important thing is to have financial incentives for ship owners," said Mr. Ha.

Proposal to amend ship age limit

According to Mr. Nguyen Dai Hai, Deputy Director of Tan Cang Shipping Joint Stock Company, investing in purchasing ships requires a huge amount of capital, and businesses often have to borrow from banks.

However, VND loans always have high interest rates of over 10%, while USD loans are only 2-4%. If VND loans also have the same incentives as USD loans, Vietnamese businesses will have a competitive advantage in using international infrastructure to generate profits.

In addition, the collection of 8% VAT (previously 10%) when businesses register ships flying the Vietnamese flag is also one of the reasons why many domestic ship owners do not want to register.

"This VAT tax accounts for 20-30% of the profit for the project of purchasing and operating the ship for 7 years. In fact, the business can deduct VAT but it takes a long time, affecting the business's cash flow," Mr. Hai shared, adding that when doing the procedures to import the ship, the ship must also be brought to a port in Vietnam.

This causes ship owners to suffer a lot of damage because the time for import procedures is quite long, while ship owners operate not only in the Vietnamese market but all over the world.

According to Mr. Hai, many countries such as Panama, Liberia, Valletta... have powerful fleets thanks to favorable regulations for foreign ships flying their flags. If Vietnam has appropriate regulations, it will improve the national fleet and can also attract more foreign ships.

One of the immediate issues that need to be amended is to remove the age limit on ships registered in Vietnam or increase the age limit to 20 years.

According to current regulations, the age of used foreign-flagged ships, submarines, submersibles, floating storage units, and mobile platforms registered in Vietnam must not exceed 10 years for passenger ships, submarines, and submersibles; and must not exceed 15 years for other types of ships, floating storage units, and mobile platforms.

"If the current regulations remain, not many businesses will be able to invest in new, modern ships," said Mr. Hai.

Currently, the Vietnam Maritime and Waterways Administration is implementing the Project to develop Vietnam's maritime fleet.

According to the project, in the period of 2026 - 2030, a suitable maritime transport management model will be built to improve State management of maritime transport and maritime services. In particular, it will continue to perfect policy mechanisms and legal documents in accordance with international treaties that Vietnam has recently joined or is a member of.

In particular, continue to exempt import tax and reduce 50% of tonnage fee when ship owners purchase and operate container ships of 1,500 Teus or more or ships running on clean energy such as LNG, H2... and LNG carriers until the end of 2030.

Source: https://www.baogiaothong.vn/tau-noi-van-sinh-trèo-co-ngoai-192250317231425563.htm