The shipping industry can be described as a successful example of foreign investment in Cyprus and a tool which attracts foreign investment and funds to the country, since the sector has proved its longstanding success, Cyprus Shipping Chamber GS Thomas Kazakos told CNA in an interview.
Currently, 80% of Cyprus’ shipping industry belongs to non-Cypriot companies, Kazakos said, pointing out that shipping is recognised worldwide and operates without any state grant or assistance.
Kazakos said that during the past four to five years, Cyprus shipping has been following a steady course and the Cypriot fleet has retained its place in the world ranking, 10th worldwide, and third place in European ranking, after Greece and Malta.
However, he admitted that compared to previous years, the Cypriot ship registry has lost ground in relation to the number of ships, noting that quality is more important than quantity. He pointed out that the drop in the number of ships registered was accompanied by an increase in safety standards and in sea environmental protection.
Asked about the reasons behind this decrease, Kazakos mentioned a number of reasons and mainly the Turkish embargo on vessels sailing under the Cypriot flag. “However, Turkey imposed its embargo in 1987 and Cyprus shipping still exists,” Kazakos stressed.
“The Turkish embargo affects only 10% of the Cypriot fleet”, he said and added that efforts have been made towards the solution of the problem “but the problem is connected to the solution of the Cyprus issue.”
Additionally, Kazakos said that the embargo is an illegal act that “concerns the European Union and international shipping.”
Turkey, whose troops occupy Cyprus’ northern part since 1974, does not recognise the government of the Republic of Cyprus.
One of the reasons related to the drop of Cyprus’ shipping in the world ranking is better quality and improved safety standards applied by ships of the Cypriot registry.
According to Kazakos, 2006 marked a significant development, the removal of Cyprus’ flag from the Paris MOU (Memorandum of Understanding) grey list and its ranking in the middle of the white list. This has subsequently led to the improvement of its image which until a decade ago had suffered because of poor safety standards in some ships.
The Cypriot fleet numbers less than 1000 ocean vessels of total tonnage of 19 million tones, but when the number of vessels represented by the Cyprus Maritime Chamber is added, the total reaches 2.100 vessels of total tonnage 43 million tones.
Cyprus shipping has a great potential to develop further under certain preconditions, he told CNA.
The industry needs first of all more support from the state and additional promotion through the creation of a Shipping Directorate under the Communication and Works Ministry. Apart from that, the European Commission will evaluate and assess the tax system in Cyprus, he explained.
Kazakos recalled that when Cyprus’ accession negotiations had started, the island was in the world’s avant-garde, introducing the term of “ship-mamagement”, unknown till then in EU.
The shipping companies based in Cyprus pay tonnage tax, whereas in other countries they pay corporate taxes, a fact initially considered by EU experts as state grant. “However, the arguments of Cyprus have convinced the EU to grant Cyprus a three-year derogation,” Kazakos said.
The Commission will reexamine this in a few months and CSC maintains high hopes that this taxation system will become part of the aquis communitaire.
“Such a positive development will create even better prospects for our shipping industry and the economy at large,” Kazakos said and stressed that according to Central Bank of Cyprus latest data, in 2006 shipping contributed 4% of GDP.
CSC in cooperation with the Department of Merchant Shipping has already prepared a study with legal and policy arguments, aiming to convince the Commission that tonnage tax system must be accepted and supported in line with the EU’s main goal to further develop its maritime infrastructure.
Kazakos points out that should Cyprus’ request be rejected, ship management companies are not likely to leave Cyprus for another EU country but they will opt instead for third countries such as Singapore, Hong Kong or Dubai.
Kazakos stressed further the need for political support to technocrats, saying this was crucially important.
In this framework, CSC requests the creation of a Shipping General Directorate under the Communication and Works Ministry. “This would constitute an act of political support and will definitely set shipping as a priority,” Kazakos argued.
Finally, invited to comment on the renaming of the Cyprus Shipping Council to Cyprus Shipping Chamber, Kazakos said this will enable Chamber to promote the full range of its activities.
“I believe renaming the Council will help attract more companies to Cyprus and increase the number of new vessels in the Cypriot registry,” he added.
As he told CNA, according to official data 90% of the world trade is being carried out by sea, widely believed to be the safest and cheapest means of transport of people and merchandise.
Shipping is the blood donor of international trade, he said and expressed the belief that the approval of Cyprus’ tax system, with a possible solution of the political problem on the island (divided since the 1974 Turkish invasion) and the subsequent revocation of the Turkish embargo, Cyprus could become the EU flagship in terms of the natural presence of shipping companies, the number of vessels on the island’s registry and ship-management companies based in the country,” Kazakos said.
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