Cyprus Mail
Guest Columnist

Cyprus shipping: where will it sail in 2018?

Some 200 internationally known and recognised shipowning, shipmanagement and shipping related companies operate from Cyprus

By Thomas Kazakos

 

The Year of Salvation, 2018, has already arrived and in a few weeks, the presidential elections will take place, electing the Republic’s new president and government for the next five years.

When the Cyprus Shipping Chamber reviewed 2016 at this time last year the conclusion was that shipping had remained one of the most important ‘blood donors’ to the Cyprus economy especially over the last five difficult years.

So where does 2017 leave Cyprus shipping and what are the challenges and prospects for the year ahead?

The Cyprus Registry ranked as the 11th largest merchant fleet worldwide and the third largest fleet in the European Union. In addition, Cyprus is considered the largest shipmanagement centre in the EU and among the three largest globally.

Shipping’s contribution to the economy is estimated at around seven per cent of the Gross Domestic Product. Despite the unstable freight markets globally in recent years, maritime transport surpassed €1 billion last year.

Furthermore, 200 internationally known and recognised shipowning, shipmanagement and shipping related companies operate from Cyprus. The wider shipping sector employs around 4,500 employees and 55,000 seafarers. The national shipping industry is probably the only industry in Cyprus which supports the economy with no state investment and yet is a global success, controlling a fleet of 2,500 vessels.

The Cyprus Register is also considered one of the safest. The approval by the EU in 2010 of the special “Open Registry” regime considerably strengthened the image of the Cyprus flag.

Parliament’s recent unanimous decision to create an independent deputy shipping ministry from March will substantially assist towards the further development of Cyprus shipping and the economy.

This deputy ministry is expected to ensure the existing shipping industry remains in Cyprus and will also serve in attracting additional quality shipowners and shipping companies to Cyprus.

This will have a positive knock-on effect on reducing unemployment and strengthening other economic sectors that provide services to the shipping Industry as well as the close correlation between shipping and the emerging energy sector.

It is therefore urgent to fully utilise the remaining few months until the beginning of March when the deputy ministry will commence operations so that it is in a position to operate fully from the first day.

The approval by the European Commission of the fully upgraded Cyprus shipping taxation system in 2010, constitutes perhaps the industry’s most important success as it ensures the viability of the Cyprus Shipping Register.

Over the past five years there has been more than a 65 per cent increase in shipping companies that have registered for Cyprus’ specialised and competitive shipping taxation system and revenue from shipping has increased by 25 per cent.

The new taxation system must therefore be further promoted abroad to attract more ships to the Cyprus Register as well as expand the system by including additional shipping related activities or/and additional taxation incentives such as in ship-finance, commodities and shipyard/repair units.

Ever since 1987, the ‘Achilles’ Heel’ of the Cyprus flag has been the Turkish embargo, hindering the further development of the Cyprus Register. It is therefore imperative for the state to follow a multiple-level campaign both at EU and internationally to impose the maximum pressure on Turkey to immediately lift this illegal trade restriction. This can be done either via the forthcoming revision of the Customs Union between Turkey and the EU or as a confidence building measure in a new round of Cyprus negotiations.

The government must also continue to support public and private educational and maritime training institutions to attract youngsters into the marine and shipping related professions.

‘Setting sail’ into the new year, and making 2018 a true “Year of Salvation” for Cyprus shipping will mean the deputy ministry working flexibly and efficiently. The deputy minister must also set as main targets the immediate planning and implementation of a short-term and long-term shipping policy as well as a further upgrade of services offered to shipping companies.

In this way, the state will be ready to respond quickly and effectively to the tangible prospects for further development of the shipping industry, which not only makes a substantial contribution to the economy and society, but also enhances Cyprus politically.

 

Thomas A Kazakos is director general of the Cyprus Shipping Chamber

 

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