Flags of Convenience
Flags of Convenience are flown by vessels that have registered in a given country to obtain special incentives designed to encourage registration of foreign vessels (offered by country of convenience). Such countries, including Panama and Liberia, typically (1) approve foreign ownership of vessels, (2) are small countries with political stability, (3) have low taxes, and (4) impose no restrictions on the assignment and boarding of crew. Japan, on the other hand, imposes restrictions on crew assignments, etc., which creates higher expenses associated with vessel ownership (especially expenses for crew). For this reason, the number of vessels registered with Japan is on the decline. Currently, less than a quarter of Japans commercial fleet (by tonnage) is registered in Japan.
In Japans international marine transportation industry, Japanese crew have lost competitiveness due to the strong yen and other factors. An increasing number of Japanese ship owners are transferring their registration overseas, so the number of Japan-registered vessels and Japanese crews is on the decline. In response, the government has set up a ship modernization program with the objectives of securing the employment of Japanese crew and keeping the industry in the forefront of technological innovation. A modernized vessel is a ship with improved equipment that requires a smaller crew. In 1993, a modernized ship (Type 4) requiring only 11 crewmen was developed, becoming the worlds most labor-efficient vessel. Another recent development is the mixed-modern vessel, a modernized ship manned by a non-Japanese crew under the MARU ship system.