Cyprus: Sailing to the next port of growth
Next weekend marks the first anniversary of the creation of the junior ministry tasked with raising the standard of shipping to another level. It may have taken President Anastasiades six years to implement his pre-election promise, but at least he delivered, so let’s give him credit for that.
The Deputy Ministry of Shipping has been upgraded from the governmental office of the Department of Merchant Shipping, at a most crucial time for the maritime community, especially the Cyprus cluster.
No matter how many times we say this, we need to repeat it until it gets through the thick skulls of some politicians who believe selling passports is a quick-fix solution to reviving the economy. The shipping sector currently contributes more than 7% of GDP by way of management fees, services, employment and, more recently, communication technologies.
Three-quarters of this revenue comes from ship management, where Cyprus has found its niche, thanks to the envious tonnage tax system, employing 9,000 ashore and 55,000 seafarers. Throughout the banking crisis of 2012, shipping was the steady contributor, paying wages where others lost jobs, and paying into state coffers, with little in the way of acknowledgement in return.
Perhaps, it is better that politicians remain clueless about the workings of the maritime industry, preventing them from meddling and probably demolishing yet another sector of the economy. Fortunately, it is the shipping industry that determines policy in Cyprus and is one of the few areas where collegial action has produced tangible results.
But major challenges lie ahead, and this is where the Deputy Ministry needs to step in and be proactive, perhaps even the standard bearer for others to follow.
World trade, 90% of which is carried by ocean-going vessels, is watching in awe the China-US tariffs war that could impact their business, while shipowners are under constant strain to invest in more efficient and cleaner carriers.
LNG-fueled, hybrid and electric engines are on our doorstep and no longer something from a sci-fi film, as the shipping community also seems to have embraced the fintech payments technologies with blockchain and smart invoicing.
The influence of financing hubs is also shifting, as is the competition among ports to become kings in cargo and transit trade.
Clean emission controls, such as the sulphur cap being introduced at different levels of implementation around the world, should be welcomed and embraced by Cyprus-based shipowners and ship managers, so that we do not have to go back to the dreaded old days of the late 1990s when the Cyprus flag was synonymous with rusty old tubs.
At the time, Cyprus suffered from the bad reputation, but conformed well, overcame the harsh restrictions of various strict regulating MoUs, forced owners to renew their fleets and got rid of sub-standard ships.
Now, our flag flies proud and has become an envy of many, apart from Turkey bullying its way with the embargo, and the EU just a bystander.
Source: Financial Mirror