Cyprus’ Plan to Boost Shipping’s Role in Economy Within Reach, Ross Says

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December 24, 2015

By Paul Tugwell and Georgios Georgiou

(Bloomberg) — Cyprus’s target to increase the contribution that shipping makes to its economy by around two percentage points over the next three years is achievable, U.S. billionaire investor Wilbur Ross said.

The country needs to increase the share of the global fleet managed by companies on the island to 4.8 percent from 4 percent in order to push shipping’s contribution to gross domestic product to around 9 percent from 7 percent, “not such a heavy lift,” said Ross, who owns shipping interests and serves as vice chairman of lender Bank of Cyprus. Cyprus has structural and geographical advantages, “they just need to do more promotion,” he said by e-mail.

Revenue from ship management services alone rose to 464 million euros ($506 million), equivalent to 5.4 percent of GDP, in the first half of 2015 from 421 million euros in the second half of 2014, according to the central bank. Ship management companies based on the island include Bernhard Schulte Shipmanagement Cyprus Ltd, Columbia Shipmanagement Ltd and Interorient Navigation Co Ltd.

“Cyprus has a strong registry like Malta, but it also has a strong resident industry,” Transport Minister Marios Demetriades said in an interview in Nicosia. The government plans to be more aggressive in attracting new business by strengthening regional offices in shipping centers like New York, Rotterdam and Piraeus, he said.

Cyprus is already the world’s second-largest ship management center, with island-based companies controlling a merchant fleet of 2,200 vessels with gross tonnage of 50 million, according to the Cyprus Investment Promotion Agency. Cyprus also has the third-largest merchant fleet in the European Union, after Greece and Malta.

Right Conditions

Cyprus has the right conditions to attract more shipping companies and quality ships to its registry, according to Thomas Kazakos, director general of the Cyprus Shipping Chamber. The requirements include a competitive EU-approved tax system coupled with a business-friendly maritime administration ready to work with the private sector, and “we have this in Cyprus,” he said in an interview.

Cyprus also has the potential to become an eastern Mediterranean base for shipping companies offering services to the oil and gas industry following recent discoveries in countries including Egypt and Israel, Ross said. As a stable country in an unstable part of the world, Cyprus is “perfectly positioned” to be the entry point to Europe, North Africa and the Middle East, he said.

Reunification of the island, which would see Turkey lifting its embargo on Cyprus-flagged ships, would further boost demand for Cypriot shipping services given its proximity to Turkey and could promote development of ports to service the Turkish market, Demetriades said.

©2015 Bloomberg News

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