Inside a small office in Mongolia’s capital Ulan Bator, Banzaragchaa Altan-Od fields calls from ship captains and ports around the globe — an unusual job for someone in a landlocked nation.
The Mongolian Maritime Administration, based in a city located about 1,400km from the nearest ocean port, has registered more than 1,600 ships since it opened its doors in 2003.
For shipping companies, using the Mongolian flag of convenience is a good bargain, as registry fees are between 5 percent and 10 percent lower than the going market rate, administration chief Altan-Od said in an interview.
For the poor Asian country, the office is an unlikely moneymaker, raking about US$350,000 into state coffers a year.
“This is only the beginning of our business operations. We are going to expand our operations and focus on offering quality services,” said Altan-Od, who studied maritime law for two years in Sweden.
Shipping companies that fly Mongolia’s red, blue and yellow banner enjoy special tax breaks and reduced tariffs, the registry office says. More than 300 ships from over 40 countries are currently on the books after others dropped off for various reasons, including failing to meet safety standards or being scrapped or sunk.
The operation is headquartered in Ulan Bator, but registries are handled by the Singapore-based classification company Sovereign Ventures. Altan-Od says his ultimate goal is to open a duty-free area in the eastern Chinese port of Tianjin— 800km from the Mongolian border.
“We are doing business with the Chinese to expand our maritime methods,” he said. “Hopefully this new port will be open by 2012.”
Such an arrangement would also allow resource-rich Mongolia to send its own exports — coal, copper and other minerals — to markets around the globe. The port would also allow Mongolia to import oil from overseas. Mongolia’s biggest shipping client so far is Japan, with 54 ships registered. Other important clients include Singapore with 42 vessels, Indonesia with 24 and Cambodia with 23. The list includes 23 oil tankers.
Mongolia’s unusual relationship with the distant sea is nothing new. It once had a massive navy when Kublai Khan ruled the Mongolian empire more than 700 years ago, and Marco Polo sailed from China back to Europe on a ship with the Mongolian seal.
The imperial navy came to a quick end in 1281 when a typhoon wiped out almost the entire fleet of 4,000 ships as they attempted to invade Japan. About 100,000 Mongolian soldiers perished in the storm. It has not been all smooth sailing for the ship registry either, with two ships lost last month. In both incidents, one off the coast of India and the other in the Malacca Straits, overloading was cited as the cause.
It also is battling an image problem, with rampant allegations that Mongolia-flagged ships were involved in trafficking illegal goods, and the seizure of a ship in Malaysia in 2007, but Altan-Od rejects the claims.
“There are a lot of stories in the news saying that Mongolia is involved in smuggling. But we are not involved in any illegal acts. All our agreements specifically state that we do not tolerate smuggling on our crafts,” he said.
The ship registry is responsible for ensuring the sea worthiness of vessels and is also supposed to enforce maritime treaties to ensure they are not polluting the oceans, smuggling goods or conducting any other illegal activities.
Altan-Od said that his office earlier this year axed its one and only North Korean ship over political and commercial concerns.
“We had one ship from North Korea but we decided to drop it. We want to avoid any political confrontations,” he said.
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