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By Paul Tugwell and Georgios Georgiou (Bloomberg) — Cyprus’s first-ever shipping minister is setting her sights high.
The country’s location and tax system have made it a shipping magnet — drawing maritime companies from Norway, Greece, Dubai and South Korea — and prompting the creation of a ministry for the industry. Natasa Pilides, who heads it as the newly appointed shipping deputy minister to the president, says she has big plans.
“While a small country, we are already a major player in international maritime affairs, but we want to be even bigger and better,” the 37-year-old, who was appointed to the role in February, said in an interview in Nicosia.
The east Mediterranean island, strategically located at the crossroads of Europe, Asia and Africa at the intersection of international and regional shipping lanes, is the world’s third-largest ship management center and accounts for one fifth of the global third-party managed fleet. Ships flying the country’s flag represent the 11th-biggest fleet globally. The shipping industry accounts for around 7 percent of total Cypriot economic output.
There has been an increase in the number of shipping and maritime-related companies opening offices in Cyprus in recent years, many attracted by a tonnage tax system that allows vessel owners, managers and charterers to pay tax on the carrying capacity of a ship rather than on the income it generates, Pilides said. The measure also applies to owners of foreign-flag vessels and charters.
The number of companies using the system rose to 168 in 2017 from 53 in 2010, when the legislation was introduced, Pilides said. Some U.K. shipping companies are looking at Cyprus as a potential base, either because they want presence in the eastern Mediterranean or because of Brexit, with one already making the decision to come and another close to deciding, she said, declining to name them as the information isn’t public.
Revenue from ship-management services rose to 476 million euros ($567 million) in the second half of 2017, equivalent to 4.8 percent of gross domestic product, from 458 million euros in the second half of 2016, according to the Central Bank of Cyprus.
Ship-management companies based in Cyprus include the recently merged Columbia Marlow, one of the world’s largest, Bernhard Schulte Ship management Cyprus Ltd and Interorient Navigation Co Ltd. The more than 150 island-based companies control a merchant fleet of 2,300 vessels with gross tonnage of 50 million employing around 4,500 personnel and 55,000 seafarers, according to the Cyprus Investment Promotion Agency.
The Cypriot government gave a clear message of political support to its maritime industry when it launched the new shipping deputy ministry in February, the first time its shipping sector has had a cabinet position of its own, Pilides said.
Shipping was previously a department within the Transportation ministry. The use of “deputy” in her title and in the ministry’s name merely reflects Cypriot constitutional restraints on the number of ministers.
Pilides, previously director-general of the Cyprus Investment Promotion Agency, heads her portfolio and reports directly to Cyprus President Nicos Anastasiades.
Among her priorities are expanding web-based services, introducing a one-stop shop, which will serve as a contact point for shipping companies and their needs, drafting an effective plan to promote Cyprus shipping and completely automating processes such as ship registration and digitalizing certification of seafarers. She will also oversea the expansion of Cyprus’s network of shipping offices abroad, with a new one planned in Asia.
Cyprus has the potential to become an eastern Mediterranean base for shipping companies offering services to the oil and gas industry following natural gas discoveries in Cyprus itself and neighboring Egypt and Israel, which requires specialized ships and equipment and the provision of specialized supporting services, she said.
“We want to consolidate Cyprus’s position as a world-class maritime center and make sure that our maritime cluster is a more complete one,” Pilides said. “This means ensuring that the cluster is widened to cover all the ancillary services that shipping companies need, such as shipping IT, insurance, finance, management and chartering, as a means to attract even more shipping companies and to strengthen the fleet so it moves into the world’s top 10.”
© 2018 Bloomberg L.P
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