As Cyprus moves to close its institutional gap and align with the EU framework for Foreign Direct Investment (FDI) screening, shipping industry leaders are calling for a balanced approach that safeguards national security while preserving competitiveness.

“Cyprus shipping is a pillar of the economy and one of the most internationalised and competitive sectors,” said Sophoclis Constantinou, debuty director general and legal affairs manager of the Cyprus Shipping Chamber (CSC).

Speaking to Economy Today, he emphasised the need for “targeted regulation, flexibility and adaptation to the specificities of the sector” to ensure Cyprus continues to thrive as an attractive global shipping centre.

While the Chamber supports the inclusion of shipping within the FDI screening framework, it insists this must be under certain conditions.

“These are the conditions that will improve the legislative framework for the screening mechanism, which will work positively and not deterrently in attracting investments,” Constantinou explained.

Moreover, he noted that the Chamber had urged the Ministry of Finance to carry out an impact study to guide the implementation of the mechanism.

“In the absence of such a study, our effort is focused on improving the text of the Bill for a realistic and sustainable screening mechanism,” he added.

On the proposed 20 per cent threshold defining “control,” the Chamber has suggested raising it to 25 per cent plus one share to align with anti-money laundering legislation.

Constantinou pointed out that “legal clarity through harmonisation of different but interrelated laws improves consistency,” which, in his view, would help create a more favourable business environment while still preserving oversight.

In addition, the Chamber has raised concerns about the low notification threshold of €2 million, calling for its revision.

Rather than adopting a uniform approach, Constantinou advocates for a categorisation system with thresholds tailored to critical sectors and sub-sectors, including water transport.

“A one-size-fits-all approach is wrong,” he warned, adding that thresholds should reflect current market data to avoid unnecessary bureaucracy.

Particular attention, he said, must also be paid to shipping investments, which often involve high-value transactions and multiple investors through special purpose vehicles.

“An investment for the construction or purchase of an LPG carrier can reach between $300 million and $400 million,” he explained. Requiring notification for such investments, he argued, would risk deterring participation.

The Chamber further proposes excluding investments on board ships from the scope of the law, in line with EU Directive 2022/2557.

Constantinou stressed that the Deputy Ministry of Shipping shared the view that failing to adopt these recommendations would seriously harm the competitiveness of the Cyprus registry.

To strengthen institutional representation, the Chamber suggests that the advisory committee foreseen in the Bill be empowered to invite sector-specific authorities, such as the Deputy Ministry of Shipping, whenever maritime-related investments are under review.

Looking ahead to Cyprus’ EU presidency, Constantinou said the country must act swiftly. “Our primary goal should be the immediate implementation of the legislative framework for a realistic and sustainable control mechanism,” he said.

This, he added, would allow Cyprus to “maintain and strengthen its credibility as a modern and competitive investment centre without jeopardising the shipping sector’s trajectory.”