Cyprus Ship­ping: ‘The Great Re­cov­ery’

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Cyprus suc­cess­fully ex­ited its eco­nomic adjustment pro­gramme on 31 March 2016, and is stand­ing again on its own two feet, hav­ing re­gained its cred­i­bil­ity as a coun­try and as an econ­omy. Through the im­ple­men­ta­tion of cred­i­ble poli­cies and re­li­able su­per­vi­sion and reg­u­la­tion, the re­build­ing of the foun­da­tions of a solid econ­omy has be­gun with the in­tro­duc­tion of some new tax in­cen­tives and a sys­tem for bal­anced public fi­nances, which al­low the State to do well in the var­i­ous com­pet­i­tive­ness in­dexes.

But, there is no room for com­pla­cency as Cyprus’ “story of eco­nomic re­cov­ery, of op­ti­mism and prospect” must be main­tained and man­aged cor­rectly in or­der to safe­guard and pro­mote the im­age of Cyprus as a re­silient and com­pet­i­tive econ­omy and an at­trac­tive des­ti­na­tion for new busi­ness, and es­pe­cially in­vest­ment in high-value added sec­tors, such as ship­ping.

The above not­with­stand­ing though, we would like to humbly re­mind you that, through­out this dif­fi­cult pe­riod for the Cyprus econ­omy, the op­er­a­tional and most of all tax­a­tion leg­isla­tive frame­work for Cyprus ship­ping re­mained in­tact and thus, man­aged to pro­vide a se­cure and in­ter­na­tion­ally com­pet­i­tive venue to con­duct ship­ping ac­tiv­i­ties.

As some of you know, Cyprus ship­ping re­mains as one of the most im­por­tant blood donors of the econ­omy, with tan­gi­ble prospects for fur­ther de­vel­op­ment. So, let us quickly re­view Cyprus ship­ping since our AGM last year.

The ship­ping in­dus­try main­tained its con­tri­bu­tion to the Cyprus econ­omy for an­other year, at around 7% of GDP. This high level of fi­nan­cial con­tri­bu­tion, es­pe­cially when this is mea­sured in terms of value added, be­comes even more im­por­tant when we con­sider that dur­ing the past eight years, freight rates have been ex­tremely chal­lenged and in many sec­tors re­main so still to­day. As you all know, ship­ping is a chal­leng­ing in­dus­try at the best of times, but I be­lieve no pe­riod has tested us this much and for so long.

De­spite this, the res­i­dent ship­ping in­dus­try has re­mained faith­ful to Cyprus and to the Cyprus Reg­is­ter, some­thing which con­sti­tutes a re­peat ‘vote of con­fi­dence’ for Cyprus as a ship­ping cen­ter. Not­with­stand­ing the in­tense in­ter­na­tional com­pe­ti­tion that it has to deal with on a daily ba­sis, the Cyprus res­i­dent ship­ping in­dus­try, con­tin­ues to em­ploy thou­sands of highly qual­i­fied shore staff and sea­far­ers as well as sup­port­ing many other eco­nomic sec­tors in Cyprus.

For this im­pres­sive fi­nan­cial con­tri­bu­tion to be sus­tain­able in the fu­ture, it is of paramount im­por­tance for the Cyprus ton­nage tax sys­tem not only to be main­tained but fur­ther ex­panded wher­ever pos­si­ble, al­ways within the rel­e­vant frame­work of the EU ship­ping tax­a­tion pol­icy frame­work. One look at what has re­cently been hap­pen­ing in other EU Mem­ber States with sub­stan­tial mar­itime in­fra­struc­ture, should only ver­ify this self-ex­plana­tory statement.

This is per­haps the most im­por­tant area for the fu­ture of Cyprus ship­ping where the mar­itime ad­min­is­tra­tion and the ship­ping in­dus­try must work hand-in-hand in or­der to achieve the best pos­si­ble re­sult. The suc­cess­ful prece­dent of the 10 year-long very close co-op­er­a­tion be­tween the public and the private sec­tor, which re­sulted in the com­pet­i­tive Ship­ping Tax­a­tion of Cyprus ap­proved by the EU in 2010, speaks louder than words.

Dur­ing 2015, we also noted with sat­is­fac­tion that the Study for the ‘Fu­ture of Cyprus Ship­ping’ com­mis­sioned by the Min­istry of Trans­port, was com­pleted and a num­ber of its rec­om­men­da­tions have al­ready been im­ple­mented or partly im­ple­mented. The Study con­sti­tutes a pos­i­tive driver which should be used as a ref­er­ence tool for set­ting a ‘Na­tional Ship­ping Pol­icy’, some­thing that the Cham­ber has called for many years and which has been miss­ing from past Govern­ment pol­icy.

In ad­di­tion, we sup­port the in­ten­tions of the Govern­ment, as part of the over­all Civil Ser­vice on-go­ing re­view, to pro­ceed with a re­struc­tur­ing of the Ship­ping Depart­ment, so as to be­come op­er­a­tionally more flex­i­ble and ef­fi­cient in the ser­vices it pro­vides. Most of all, we be­lieve that it needs to be made fit for pur­pose in to­day’s chal­leng­ing global com­pet­i­tive en­vi­ron­ment.

In Septem­ber of last year, we wel­comed the long-awaited per­ma­nent ap­point­ment of a new Di­rec­tor at the Depart­ment of Mer­chant Ship­ping which brought sta­bil­ity in the lead­er­ship and run­ning of this im­por­tant Gov­ern­men­tal depart­ment. As it ap­pears that once again the post is go­ing to be va­cant very soon, and free from any troika im­posed re­stric­tions, we urge the Govern­ment to fill this vi­tal po­si­tion the soon­est pos­si­ble.

We be­lieve that the Ship­ping Depart­ment, which is re­spon­si­ble for look­ing af­ter the tenth largest fleet world­wide and the third largest in the Euro­pean Union, should not re­main too long with­out a ‘Captain at the Helm’.

In 2015, we also noted with plea­sure, the pos­i­tive cli­mate of the on-go­ing ne­go­ti­a­tions for the so­lu­tion of the ‘Cyprus prob­lem’, and the en­cour­ag­ing views still be­ing ex­pressed about a pos­si­ble set­tle­ment within this year.

We can only imag­ine what a great boost a suc­cess­ful con­clu­sion to the ne­go­ti­a­tions could bring to a united Cyprus, both in fi­nan­cial and so­cial terms, for all res­i­dents of the is­land.

In this spirit of re­newed hope for rec­on­cil­i­a­tion, we strongly be­lieve that there is now a good mo­men­tum that may act as a cat­a­lyst to­wards the lift­ing of the Turkish em­bargo on Cyprus ships and ports, which will cer­tainly pro­vide a strong im­pe­tus to­wards the fur­ther de­vel­op­ment of our clus­ter.

In this con­text, and within the frame­work of the man­date of the spe­cial tech­ni­cal com­mit­tees that have been set-up to as­sess the dif­fer­ent pa­ram­e­ters as part of the ne­go­ti­a­tion process, it is our opin­ion that the lift­ing of the Turkish em­bargo will tan­gi­bly as­sist in cre­at­ing an even more pos­i­tive cli­mate be­tween the two com­mu­ni­ties. In turn, this will boost tan­gi­bly the over­all process for a com­pre­hen­sive set­tle­ment of this long-stand­ing prob­lem that pre­vents Cyprus as a whole, to ad­vance united into the fu­ture chal­lenges of our po­lit­i­cally trou­bled re­gion and as a united coun­try, to ben­e­fit from its full mem­ber­ship of the Euro­pean Union.

We en­vis­age that a po­ten­tial so­lu­tion will con­trib­ute to sub­stan­tial busi­ness growth for the whole of a re-united Cyprus, for Turkey and the East­ern Mediter­ranean, as well as the EU as a whole.

De­spite the re­cent ap­par­ent ‘slow down’ of talks that is be­ing ob­served dur­ing the last cou­ple of months, we sin­cerely hope that the ne­go­ti­a­tions mo­men­tum will ‘pick-up speed’ im­me­di­ately af­ter the forth­com­ing Par­lia­men­tary elec­tions.

An­other im­por­tant area for the fur­ther de­vel­op­ment of our in­dus­try, is that of the pro­mo­tion of Cyprus ship­ping abroad.

In this re­spect, we note with sat­is­fac­tion the pro­mo­tional vis­its of Min­is­ter Deme­tri­ades to mar­itime cen­tres and ship­ping com­pa­nies in Lon­don, New York, Ham­burg, China and Greece. For the Ship­ping Cham­ber, there is an ex­plicit need to con­tinue pro­mot­ing Cyprus abroad, based on an agreed strat­egy, in close co-op­er­a­tion be­tween the Mar­itime Ad­min­is­tra­tion, the Cyprus In­vest­ment Pro­mo­tion Agency and other rel­e­vant or­gan­i­sa­tions. This way, Cyprus will be able to at­tract more qual­ity ships to its Reg­is­ter and more ship­ping com­pa­nies to es­tab­lish their of­fices in Cyprus, re­sult­ing in a pos­i­tive im­pact on the econ­omy of Cyprus. It is vi­tal though that these ef­forts are con­tin­ued and are not hap­pen­ing on a one-off ba­sis. If we want to show we have a se­ri­ous propo­si­tion to make, this has to be done in a

con­tin­u­ous and or­gan­ised man­ner.

Dur­ing the past year, the Cham­ber con­tin­ued its co­op­er­a­tion with the Govern­ment in the fields of mar­itime train­ing and education, as well as tech­nol­ogy and in­no­va­tion. As you are also aware, we strongly sup­port the im­ple­men­ta­tion on a na­tional ba­sis, of the EU In­te­grated Mar­itime Pol­icy. On this lat­ter is­sue, and based on the de­lay we are ob­serv­ing, please al­low us to en­cour­age you to give the nec­es­sary po­lit­i­cal ‘push’ in or­der to ex­pe­dite this mat­ter. We be­lieve that all these fields are cru­cial not only for the ship­ping in­dus­try it­self but for the en­tire Cyprus mar­itime clus­ter, which in turn is vi­tal to the eco­nomic and so­cial in­ter­ests of Cyprus.

With to­day’s un­em­ploy­ment rate at such a high level, we must look to an en­er­getic de­vel­op­ment of ‘blue growth’, which has al­ready proven in other EU coun­tries to cre­ate em­ploy­ment op­por­tu­ni­ties for highly skilled and ed­u­cated per­sons, of which Cyprus has an abun­dance.

De­spite the cur­rent trou­bled ship­ping mar­kets in­ter­na­tion­ally, it is clear that the prospects of fur­ther de­vel­op­ment for Cyprus ship­ping are very real in­deed and are strength­ened even more in view of the de­vel­op­ment of the en­ergy sec­tor and the hy­dro­car­bons in­dus­try due to its di­rect re­la­tion with the trans­porta­tion of nat­u­ral gas and/or oil to be found in the Ex­clu­sive Eco­nomic Zone of Cyprus.

In­deed, the strong in­ter­con­nec­tion of these two sec­tors has set a ‘SEA-NERGY in Mo­tion’ and it is clear that in­tel­li­gent plan­ning and strate­gic al­liances through these spe­cial and very im­por­tant in­dus­tries, will play a lead­ing role in the ef­forts to­wards the cre­ation of a new, more ef­fi­cient and sus­tain­able model for our econ­omy.

The ship­ping sec­tor con­tin­ues to op­er­ate in an evolv­ing, highly com­pet­i­tive global en­vi­ron­ment, which in turn re­quires sta­bil­ity. It is im­por­tant for the State, both in terms of the Govern­ment and Par­lia­ment, to ac­knowl­edge now, more than ever, the im­por­tant and lead­ing role that the Cyprus ship­ping sec­tor has played in the sta­bil­i­sa­tion and fur­ther growth of the econ­omy.

It is clear that ship­ping is a spe­cial and very im­por­tant in­dus­try, which not only con­trib­utes to the econ­omy and the so­ci­ety at large, but also re­ally en­hances the po­lit­i­cal clout of our coun­try. As we have re­peat­edly shown over the last 27 years, the Cyprus Ship­ping Cham­ber is al­ways more than ready and will­ing to co-op­er­ate with the State, of­fer­ing its ex­pert tech­ni­cal know-how and ex­press­ing its views for im­prov­ing and fur­ther en­hanc­ing our in­dus­try.

Look­ing ahead, de­spite the chal­leng­ing and un­pre­dictable freight mar­kets, we re­main op­ti­mistic that the over­all ship­ping land­scape will im­prove.

New re­al­i­ties have now be­gun to be un­der­stood and if cor­rectly man­aged Cyprus is well po­si­tioned to be­come a sus­tain­able ship­ping and en­ergy cen­tre with real growth po­ten­tial.

To that end, the Cham­ber strongly be­lieves that if the struc­tural 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.

Join us in our com­mit­ted aim to con­tinue Cyprus World­wide’.


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