Ship­ping needs ‘evo­lu­tion’

Financial Mirror (Cyprus) - - FRONT PAGE -

What Cyprus needs to get out of the, ad­mit­tedly, stag­nant situation of the ship­ping sec­tor, is to evolve and re­form all pub­lic sec­tors, while changes are also nec­es­sary in the pri­vate sec­tor as well, pan­elists at a con­fer­ence in Li­mas­sol said on Mon­day.

But Ankara’s em­bargo on Cyprus-flag ves­sels call­ing on Turk­ish ports and the po­ten­tial of over­com­ing this ob­sta­cles through a po­ten­tial so­lu­tion to the Cyprus prob­lem was em­pha­sized by all present.

The key­note speaker at the event, “Cyprus Ship­ping – The Fu­ture Prospects” or­gan­ised by the Demo­cratic Rally (DISY) party at the Traka­sol train­ing and con­ven­tion cen­tre, was Trans­port Min­is­ter Mar­ios Deme­tri­ades, who said that there were four pil­lars of nec­es­sary re­forms.

“First, we need evo­lu­tion (ev­ery time we try to change things in Cyprus, it is painful). We need to up­grade the Depart­ment of Mer­chant Ship­ping (DMS) with an open agenda.

“Sec­ond, we need to con­tinue of­fer­ing the good level of ser­vice that we have today, both by the state ser­vices and the pri­vate sec­tor, fis­cal achieve­ments are re­quire and will re­main in place, but sta­bil­ity is of out­most im­por­tance.

“Third, we need to con­tinue to strengthen our (state) co­op­er­a­tion with the pri­vate sec­tor, some­thing that once again in­di­cates sta­bil­ity, re­gard­less of ad­min­is­tra­tion changes, which is crit­i­cal to for­eign in­vestors.

“And fourth, we need to pro­mote more ship­ping sec­tor, at home and abroad.”

Deme­tri­ades said dur­ing his speech and re­spond­ing to ques­tions later from the au­di­ence that the gov­ern­ment’s pol­icy on ship­ping is of ut­most im­por­tance to the present ad­min­is­tra­tion, which is why Finance Min­is­ter Haris Ge­or­giades has pledged to pro­vide as much funds as nec­es­sary, as this is a sec­tor that gen­er­ates steady rev­enue for the econ­omy and the state purse.

In this con­text, the DMS has hired five more staff, se­conded from other ser­vices, but will look to hire more, while the Cyprus Registry will also seek to open a rep­re­sen­ta­tive of­fice in Asia, prob­a­bly in 2017.

“We rank tenth as a registry, and one of largest ship­man­age­ment cen­tres in the world. Our ship­ping clus­ter re­volves around ship man­age­ment and a strong res­i­dent


the ship-own­er­ship com­mu­nity, while other clus­ters evolve around their ports (Rot­ter­dam, Pi­raeus, Sin­ga­pore) and only on ship-own­er­ship (Greece, Malta, Liberia, Panama).

“This,” said Deme­tri­ades, “can im­prove by at­tract­ing more ship own­ers to es­tab­lish a res­i­dent base on the is­land.” But this, he cau­tioned, can only achieved by main­tain­ing the cur­rent at­trac­tive tax regime.

His con­cerns were echoed by Themis Pa­padopou­los, Pres­i­dent of the Cyprus Ship­ping Cham­ber, one of two in­dus­try groups that in­cludes own­ers and ship-man­agers among its ranks.

Pa­padopou­los said that the sec­tor is based on two main el­e­ments – the flag registry and the res­i­dent in­dus­try.

“It has been a great achieve­ment that we have kept the (Cyprus) flag where it is today, de­spite the Turk­ish em­bargo (on Cyprus ves­sels) and other prob­lems. We need to at­tract more com­pa­nies and res­i­dent ship-own­ers. This would re­ally com­plete the pic­ture.”

But, he said that there were other is­sues as well, ly­ing out­side the scope of the ship­ping in­dus­try, such as bet­ter air trans­port links for ex­ec­u­tives and sea­men, as well as a po­ten­tial so­lu­tion to the Cyprus prob­lem.

“We, as a Cham­ber, are strong believ­ers of uni­fi­ca­tion” and the ben­e­fits this would bring to the ship­ping sec­tor and the econ­omy in general.

“But we must not be com­pla­cent. Pro­ce­dures need to be sim­pli­fied and the one-stop-shop must fi­nally be in­tro­duced,” Pa­padopou­los said.

Trans­port Min­is­ter Deme­tri­ades, whose port­fo­lio in­cludes land and sea trans­port, as well as over­sight of the ports which will be com­mer­cialised later this year, said that “we are an im­por­tant coun­try in the ship­ping com­mu­nity. We are co­op­er­at­ing with Greece and Malta in our need to pro­mote the EU ship­ping clus­ter.

“Cyprus is the only open registry with an ap­proved ton­nage tax regime within the EU, while Greece’s and Malta’s adop­tion of the sys­tem are still pend­ing.

“The fis­cal regime is not enough. Our fleet saw a small in­crease in the last 3-5 years in the range of 5-6%, but the re­al­ity is that we are still lag­ging be­hind other reg­istries.”

Deme­tri­ades said that with the right in­vest­ment, the ship­ping sec­tor’s con­tri­bu­tion of GDP could grow by up to 20%, thus from the cur­rent 7% to about 8.5%.

Cleo Pa­padopoulou, Chair­woman of the ship­ping com­mit­tee of the In­sti­tute of Cer­ti­fied Pub­lic Ac­coun­tants of Cyprus (ICPAC) and Pres­i­dent of the as­so­ci­a­tion of pro­fes­sional women in the ship­ping in­dus­try (WISTA) said that main rea­son of Cyprus’ suc­cess is the sta­ble frame­work, that the pol­icy on ship­ping has been con­stant.

She gave the ex­am­ple of the Nor­we­gian registry, where ship-own­ers are com­ing to Cyprus be­cause they don’t trust their gov­ern­ment that it will main­tain its ton­nage tax regime in the next four years.

“But we have reached stag­na­tion. We need to move for­ward. Once the tax trans­parency and full re­port­ing sys­tems kick in, ju­ris­dic­tions such as the Marshall Is­lands and Liberia will no longer be at­trac­tive to ship own­ers,” Pa­padopoulou said.

Christodou­los An­gas­tin­i­o­tis, Chair­man of the Cyprus In­vest­ment Pro­mo­tion Agency (CIPA), in charge of pro­mot­ing Cyprus as a busi­ness cen­tre in overseas mar­kets, said that ship­ping is the big­gest con­trib­u­tor as re­gards for­eign di­rect in­vest­ments, “and this re­sult in a mul­ti­ply­ing ef­fect in the lo­cal econ­omy.”

“Our in­fra­struc­ture will be bet­ter with the pri­vati­sa­tion of ser­vices at Li­mas­sol port, but what will boost the sec­tor is re­solv­ing the Cyprus prob­lem.”

In his clos­ing, DISY Chair­man Averof Neo­phy­tou said that Cyprus has a good trans­port min­istry, “but let’s re­solve the Cyprus is­sue which will boost the econ­omy and in turn the ship­ping sec­tor even more.”

“We have a good in­ter­na­tional base, for ship man­age­ment and ship own­ers, “thanks to the poli­cies in our moth­er­land” where the cur­rent Greek ad­min­is­tra­tion has proven to be un­friendly to busi­nesses and fears of higher tax­a­tion have al­ready pushed many ship own­ers and ship man­agers to seek a base here.

“But as with var­i­ous sec­tors of our econ­omy, we need to make a real ef­fort on brand­ing, a real pro­mo­tion, which is im­por­tant for ex­ec­u­tives to be lured here on the premise that they will en­joy a good qual­ity of life here.

“We need more re­forms, but let’s not for­get that the sta­bil­ity of our ship­ping tax sys­tem is of vi­tal im­por­tance. Let’s cher­ish it,” he con­cluded.

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