Cyprus, the third largest island in the Mediterranean, is more than an ideal spot for sun worshipping tourists. Its favorable climate, good infrastructure, and taxation laws have also attracted many ship management companies, creating one of the largest ship management centres in the world.
A former British colony, Cyprus gained its independence in 1960. It’s mostly known as a tourist destination, but has worked consistently since the early 1970’s to establish itself as a centre for business and commerce. Its geographical position, in-between Europe, Africa and the Middle-East, has proven to be an important asset, as has favourable taxation laws and a good infrastructure.
In particular, Cyprus can claim a success with the shipping industry, as ship management and other shipping related companies have taken to Cyprus and enjoy the political and other aspects of the its climate.
“Ship management flourishes in Singapore, Hong Kong, and Cyprus. Of these, only Cyprus is in the EU, and we are convinced that the ship management activities here are conducive to the competitiveness of the European fleet,” says Serghios Serghiou, director of the department of merchant shipping in the Republic of Cyprus.
He feels that the activities of shipping must be supported, with competitive taxation and an efficient administration. “If not supported, these activities would leave and go to other places where there is fast growth and little or no taxation.”
EU for better or worse
On 1 May 2004, Cyprus entered into the EU. This has had both positive and negative effects on the shipping community on the island.
The family owned Reederei "Nord" Klaus E. Oldendorff, has the largest fleet flying the Cyprus flag. Says Capt. Keith Obeyesekera, general manager; “We are proud to fly the Cyprus flag and we do for our entire fleet, which we operate and own. However, some of the flexibility that Cyprus had outside the EU has now been lost. But as part of the EU we work actively with the Cyprus Shipping Council to influence decisions,” says Capt. Obeyesekera.
The Columbia Ship management company established base on the island in 1978, as one of the first. Capt. Dirk Fry, managing director of Columbia Ship management, is pleased with the recent progress the Cyprus flag has made.
“The flag is now out of the so-called black list, and we are confident that the Cyprus flag will continue to improve its standing and quality,” says Capt. Fry.
He is, however, concerned with all the new regulations hitting the industry. “The increasing number of rules and regulations makes it difficult to keep track. Any measures to improve quality are welcomed, but these regulations should be international, and not regional or national,” says Capt. Fry.
“The good thing about being a member of the EU is that now Cyprus gets a say on EU regulations. It’s difficult to change the European machinery, but we believe we can make a difference. All we need are someone who dares to speak up, and the people that represent Cyprus like to do that,” says Capt. Fry.
The Cyprus Shipping Council is one of the largest national shipping councils in the world. It’s first and foremost responsibility is to represent the legal interests of members, which means lobbying, and representing shipping in Cyprus.
“We are doing very well and the shipping companies on the island are expanding, but not all smells of roses. After Cyprus joined the EU in May 2004, there has been an aftermath of sorts, with new regulations and requirements and an increased price level. However, we have regular meetings and a good relationship with the ministers, to lobby and influence the EU. These close-knit relations are part of the beauty of being small,” says Thomas A. Kazakos, secretary general of the Cyprus Shipping Council.
Lack of qualified people
Capt. Peter Bond, general manager for Interorient Navigation Co., has long roots in Cyprus. “We were established 27 years ago on the island, when there were very few ship management companies here. The Cyprus flag is the flag of choice for us.”
Capt. Bond sees the lack of qualified people as a big challenge for shipping; “Crewing is difficult. No ship has yet had to be stopped because of lack of officers, but retaining officers is a big concern. We’re seeing a spiralling of salaries and people jumping to another ship for 100 dollars.”
Because of this, Interorient is pouring efforts into training. “We have established cadet programmes, and we are placing masters on ship to train crew onboard. A full mission simulator for training is being built in Riga, Latvia, and will be operational in a few months.
One burning issue for seafarers is the social insurance issue, in which seafarers in the EU have to pay to the flag country of the ship and sometimes in addition to their own respective countries. “This must be solved by Cyprus”, says Capt. Bond. “Another important issue that must be resolved is the Turkish embargo of Cypriot ships.”
The Turkish embargo of Cyprus ships is a unilateral policy by the Turkish government, and it’s a headache for Cyprus-based shipping companies. So also for Unicom, which established base on Cyprus in 1992. “The island has changed a lot since then,” says Robert Thompson, fleet director and deputy managing director of Unicom. He gives praise to the island’s infrastructure, favourable taxation regime and the quality of the Cyprus flag.
“Unfortunately, the major obstacle to the Cyprus flag is Turkey. The lack of ability to trade to Turkey with a Cyprus flag is a real concern. However, Turkey is trying to join the EU, and one of the conditions of the talks is that this problem shall be lifted. But I’m not too optimistic that it will happen this year,” says Thompson.
|Serghios Serghiou, director of the department of merchant shipping in the Republic of Cyprus.|
|Capt. Keith Obeyesekera, general manager for the family owned Reederei “Nord” Klaus E. Oldendorff.|
|Capt. Dirk Fry, managing director of Columbia Ship Management.|
|Thomas A. Kazakos, secretary general of the Cyprus Shipping Council.|
|Capt. Peter Bond, general manager for Interorient Navigation Co.|
|Robert Thompson, fleet director and deputy managing director of Unicom.|