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 said at a conference in Limassol.
But Ankara’s embargo on Cyprus-flag vessels calling on Turkish ports and the potential of overcoming this obstacle 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 actively the 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 ship-management centres in the world. Our shipping cluster revolves around ship management and a strong resident 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.
Source: Financial Mirror