Cyprus ship­ping grows on ton­nage tax

Financial Mirror (Cyprus) - - FRONT PAGE -

The rate of growth of the Cyprus ship­ping sec­tor, due mainly to the at­trac­tive ton­nage tax regime, is very en­cour­ag­ing, Trans­port Min­is­ter Mar­ios Deme­tri­ades told the is­land’s vi­brant com­mu­nity of ship own­ers, ship man­agers and mar­itime ser­vice providers.

Ad­dress­ing the an­nual gen­eral meet­ing of the Cyprus Ship­ping Cham­ber, an um­brella or­gan­i­sa­tion that in­cor­po­rates all pro­fes­sional groups linked to the mar­itime sec­tor, Deme­tri­ades said that the ton­nage tax sys­tem, unique to Cyprus since it was ap­proved by the Euro­pean Com­mis­sion in 2010, “has seen an in­crease in the num­ber of com­pany reg­is­tra­tions, and this is ex­pected to con­tinue in the next few years.”

“The sus­tain­able growth of Cyprus ship­ping is one of the main pri­or­i­ties of the govern­ment. The Min­istry will do its ut­most to en­hance the com­pet­i­tive­ness of our flag and our mar­itime clus­ter,” he told a packed au­di­ence at Li­mas­sol’s For Sea­sons ho­tel.

The num­ber of ves­sels reg­is­tered un­der the Cyprus flag may have dropped from 1769 in 2014 to 1704 last year, yet the out­put of these ships (on which they are taxed) has grown from 22.7 mln tonnes in GRT terms in 2014 to 22.87 mln last year, ac­cord­ing to data from the Depart­ment of Mer­chant Ship­ping. Hence, de­spite the de­com­mis­sion­ing or de-reg­is­tra­tion of 65 ships last year, rev­enues earned have ac­tu­ally increased year-on-year due to a big­ger out­put by 170,000 tonnes.

Deme­tri­ades told the CSC mem­bers that “President Anas­tasi­ades is com­mit­ted to the re­form of the mar­itime clus­ter over the next few months,” for which plans have been con­cluded in close part­ner­ship be­tween the public and private sec­tors of the mar­itime com­mu­nity.

One of these re­forms is the re­struc­tur­ing of the DMS, as well as the Min­istry it­self, in or­der to help Cyprus ship­ping be­come more com­pet­i­tive, he said, adding that the Cyprus registry has the third largest mer­chant fleet in the EU.

He had ear­lier com­mented that with the re­forms un­der­way, the cri­sis in Greece and the prospects of a so­lu­tion of the Cyprus prob­lem (hence, the re­moval of Turkey’s em­bargo on Cyprus-reg­is­tered ves­sels) are all fac­tors that will con­trib­ute to the growth of the ship­ping sec­tor’s con­tri­bu­tion to the econ­omy from 7% of GDP to about 8.5%.

“And the three con­tract agree­ments to be signed with the two part­ners for the com­mer­cial op­er­a­tions of Li­mas­sol port next week (with Ger­many’s Euro­gate and DP World) is an ad­di­tional con­tribut­ing fac­tor that will en­hance the ship­ping sec­tor.”

Re­spond­ing to the min­is­ter’s speech, CSC President Themis Pa­padopou­los said he was “very pleased to see that the DMS is on a fast-track for re­form” and that Cyprus is slowly but steadily com­ing out of the fi­nan­cial dif­fi­cul­ties it ex­pe­ri­enced in the last few years.

The ship­ping sec­tor was left rel­a­tively un­scathed by the eco­nomic cri­sis in 2013 that saw the col­lapse of a ma­jor bank over the pur­chase of toxic Greek govern­ment bonds and the con­se­quent bailout of the econ­omy, a pro­gramme that cost ?7.3 bln of the ini­tial ?10 bln ear­marked by the EU, the ECB and the IMF. A sec­ond bank needed the bail-in of its de­pos­i­tors and sought new in­vestors, while a third bank was res­cued by a ?1.5 bln re­cap­i­tal­iza­tion by the state.

“It was very grat­i­fy­ing to see that dur­ing these dif­fi­cult times, the ship­ping op­er­a­tional and tax­a­tion in­fra­struc­ture in Cyprus and the Cyprus flag re­mained in­tact and very com­pet­i­tive,” Pa­padopou­los said, point­ing out that “most im­por­tantly, Cyprus flag users re­mained loyal, sup­port­ing at the same time the ef­forts to re­in­force Cyprus ship­ping in or­der to con­tinue and en­hance more its sig­nif­i­cant con­tri­bu­tion to the Cyprus econ­omy.”

He added, how­ever, that long-term plan­ning and in­vest­ment in es­sen­tial in­gre­di­ents such as the in­tro­duc­tion of new mech­a­nisms to safe­guard this im­por­tant sec­tor, as well as to de­velop and re­in­force it fur­ther is there­fore re­quired.

“To that end the Cham­ber strongly be­lieves that if cer­tain mea­sures and poli­cies that the Cham­ber has ad­vo­cated for are im­ple­mented and re­solved the soon­est, the prospects for a sub­stan­tial and sus­tain­able growth of Cyprus’ ship­ping is both tan­gi­ble and achiev­able,” he stressed, adding by achiev­ing this aim the ship­ping sec­tor will also be able to play a lead­ing role to­wards new eco­nomic growth in Cyprus.

Dur­ing the meet­ing, the CSC coun­cil hon­oured Capt. Eu­gen Adami, who presided over the Cham­ber for the pre­vi­ous six years.

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