Cyprus Shipping: ‘The Great Recovery’

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’.

‘Navigating