The President of the Union of Greek Shipowners Theodore E. Veniamis, delivered a speech at the Shipping Industry Conference Gala in Limassol, Cyprus on the “Challenges, goals and prospects for Greek shipping”.
Mr. Veniamis stressed the critical role of shipping in the development of the Greek economy, adding that the Greek shipping industry remains a pillar of strength with international recognition of its achievements.
On the tax regime of shipping in Greece, the President of the Union of Greek Shipowners urged European policymakers to ponder the pros and cons of the Greek case regarding the future of the EU shipping sector in a worldwide context.
His speech follows in full:
Members of the Parliament,
Ladies and Gentlemen,
It is both a pleasure and an honour to be invited to address such a distinguished audience. I wish to congratulate the organisers of this event for their initiative.
I take this opportunity to convey to you the warm greetings from the Members of the Union of Greek Shipowners, the representative body of the Greek shipping community, which this year celebrates its centenary as it was established in 1916.
Our gathering today gives me the best opportunity to share with you, thoughts and concerns on pertinent issues facing the shipping industry in these challenging times. Shipping is going through one of its most interesting periods, facing many challenges, not only related per-se to shipping operations, but also, due to its globalised nature, influenced by political, economic and geostrategic developments worldwide.
During the last months of 2015, the freight rates of dry bulk carriers have plummeted, making this the worst period in their history. In particular, the decline of the Baltic Dry Index (BDI) has been dramatic, marking a historic record low of all time. Tectonic changes are being observed in the global economy, such as the turbulence and the hard landing in the Chinese economy, the sluggish growth in emerging markets, like Russia and Brazil, and in general the unexpected slowdown in trade. Globalization shows its teeth and finds shipping vulnerable because of the prevailing overcapacity and problems in liquidity, due to lending and financing difficulties. However, although forecasting in shipping is tantamount to gazing into a crystal-ball, there is no doubt that shipping will always provide its entrepreneurs with opportunities. And this is the charm of our business.
Unfortunately, the above depressing factors are aggravated for the Greek shipping community because of the economic crisis our country is going through. It is noteworthy that the Greek shipping industry was never part of the debt crisis of the Greek state. On the contrary, shipping has been a major and consistent contributor to the Greek economy and the Balance of Payments for the past 35 years. The contribution is substantial and irreplaceable and has had a steady growth since the 1980s when there was the first great wave of Greek shipping companies being repatriated from around the world and particularly London. It is important to note that the Greek shipping community in order to enhance the fiscal revenues the state receives from shipping, took a unique initiative with an unheard of voluntary agreement by which shipping shall be doubling its contributions to the State by doubling its tonnage tax obligations during these critical years. An initiative which demonstrates the responsibility, unity and collectiveness of our industry, for the support of the state when it is in need in difficult times.
Greek shipping is an export industry playing a critical role in the development of the Greek economy not only through the systematic bridging of the deficit of the balance of trade but also through the creation of added value for all productive sectors as well as the generation of employment on ocean-going vessels, in shipping offices and the maritime cluster of activities ashore. It is a real national asset providing multifaceted benefits to Greece, not only of financial but also of social and strategic importance. This is the reason why just as France fights tooth and nail for its agricultural interests, the UK for its financial services, Germany for its manufacturing industries, Greece fights for its shipping.
However, despite the highly adverse conditions in the global and national environment, the Greek shipping community remains a pillar of strength with international recognition of its achievements. Our performance in terms of healthy, free and fair competition expanded over the oceans where the Greek-owned merchant fleet maintains its world premiership amounting to around 20% of the world capacity in dwt and almost 50% of the EU fleet. Moreover, Greek owners control 30.14 % of the world tanker fleet (crude oil tankers), 21.18% of the world bulk carrier fleet and 16.61% of the world chemical and products tanker fleet as well as significant shares of other sectors. Our leadership is not only in numbers and size but also in the quality of services offered, with the Greek shipping community remaining a reliable partner in the provision of high level shipping services internationally with its modern and technologically advanced fleet. Indeed, this performance is testimony to the Greek shipping community entrepreneurship, expertise, policies and resilience.
Ladies and gentlemen,
A lot of ink has been spilt in the European circles in respect of the taxation regime of shipping in Greece. It is a grave misconception and one cultivated by the media in some EU member states that taxation of Greek shipping companies and shipowners is very low or even non-existent. In fact, it is well above any free flag and very much in line with other European states that have adopted a tonnage tax regime. Furthermore, it has seriously increased in recent years to unprecedented levels and overall is probably amongst the highest worldwide.
At the end of 2015 and after a long-winded informal investigation into the Greek taxation regime for shipping the European Commission has concluded that it contains aspects that, in their opinion, are incompatible with the EU competition law, specifically, with the EU State Aid Guidelines for Maritime Transport which they claim to set down the level playing field for shipping in the European Community.
Unfortunately, the Commission’s opinion seems to disregard the fact that the Greek tonnage tax system was the model that inspired the emergence of tonnage tax regimes in other states of the EU and worldwide. This is not a mere issue of competition law but goes quite beyond it: it is an existential issue for the Greek shipping sector which safeguards maritime tradition and know-how in Europe today and through the centuries. It is noteworthy that the Greek shipping sector comprises more than 50% of the EU fleet whilst the EU accounts for 40% of the world fleet by gross tonnage. These major achievements should not be taken for granted.
Moreover, the decision seems to disregard the political context of the issue and the strategic character of the EU fleet. This decision will set a precedent for the treatment of similar provisions mutatis mutandis in other EU member states tonnage tax regimes. If the decision on the Greek case is used to set the “standard” for the future, its repercussions will be felt all over the EU and beyond. Thus, whilst initially affecting only Greek shipping, it will ultimately affect EU shipping and curtail its worldwide competitiveness.
At this point, I would also like to refer to recent handling of competition cases by the European Commission in other business fields (notably the cases of Gazprom, Google, Amazon and Qualcom) concerning giant global corporations. The European Commission has stated that “access to the market shouldn’t be closed by the big companies, the established ones or the ones with the deep pockets”. However, we are afraid that the proposed decision on the Greek tonnage tax system will bring about such a closure to the market in the shipping sector which is one of the last remaining truly entrepreneurial sectors of the global economy and a textbook example of perfect competition. It will indeed drive small and medium size shipping companies out of the EU market. As a result, contradictory messages are sent by Commission decisions and policies.
This decision occurs at a moment when the EU is at a crossroads: EU politicians face dilemmas regarding its future direction but shipping operators face dilemmas as well. In this context, the Greek shipping community will have to reassess its commercial presence in Greece. And this, at a time when Greece urgently needs growth prospects. Fortunately, the Greek state has espoused the concerns of its shipping community and it has taken a firm stance to safeguard its legitimate interests in order to maintain its worldwide competitiveness, in other words, its sustainability.
For all the above reasons, I strongly wish that the European policymakers will ponder the pros and cons of the Greek case regarding the future of the EU shipping sector in a worldwide context. This will entail prioritizing the strategic, commercial and international dimension of the EU shipping industry and its potential mobility rather than concentrating on the nominal or juridical aspects of compliance with the letter of the current Guidelines within the EU.
Shipping carries more than 90% of world trade and is a vehicle for world prosperity and welfare. Therefore, as an essential part of world trade, it is irreplaceable and shall never cease to exist. The question therefore is, who control and operate it, who will be involved in it and from which parts of the world will it be operated. The answer is a simple one: in those parts of the world that maintain a competitive and sustainable shipping sector. History is full of examples of nations which lost their influence, even their prosperity, as a result of losing their shipping capability.
Shipping should be placed at the centre of the vision of European politicians for a strong and prosperous EU and this means essentially the enhancement of its international competitiveness. Otherwise, there shall always be the risk that the sector shall deflag or relocate its operations or disappear altogether. Shipping as a globalised sector cannot be seen in the strict context of Europe, it needs to be seen in the perspective of global competition. Shipping centres in Asia and the Far East are rapidly expanding and pose a formidable threat. Our Greek mythology gives us an example to be avoided where Saturn, a Titan and the father of Gods, devoured his own children. We hope that the EU will not do likewise and destroy one of its own long-standing success stories. We should not forget that the demise of the EU shipbuilding industry some years ago was due to the lack of appropriate support by the European Union to deal with international competition. A disastrous policy which offered a generous gift to the Far Eastern economies.
The establishment of a sustainable long-term shipping policy based on stable principles and high standards of safety and performance is a necessary prerequisite for the continued viability of shipping. Our message to EU legislators is clear: “Do not fight us but co-operate with us because we should have a common goal: a sustainable and efficient shipping sector”. And sustainability means first of all competitiveness.
There is another facet in shipping which plays an even greater role in this industry and is of major concern and importance, that of the human element. Officers and seamen on board and ashore are the bearers of the specialized maritime know-how and remain the industry’s most valuable asset. The maintenance of Greek marine and maritime expertise that has grown out of history, tradition and seamanship, which any Greek shipping office appreciates and trusts for the operation of its fleet, remains a high priority. The maritime profession opens up career opportunities, especially now that the Greek society is plagued by unemployment, particularly among young people.
It would not be an exaggeration to describe the above goals as a “self-protecting shield” to the vital interests of the European shipping industry. Our ancestor Themistocles said: “we have a land and a homeland as long as we have ships and seas”. Likewise we believe that “Europe will have a future as long as it has ships and seas”. Therefore, we have the duty to convey this historical message to the European centres of decisions.
Concluding my speech, I would like to welcome the impetus for further co-operation and development of synergies between the Cypriot and Greek shipping communities and our respective administrations enhanced by initiatives like the gathering today. Cyprus and Greece are two relatively small European countries with an age-old tradition in shipping. Although we may be keen business competitors in the international arena, we see eye to eye on most shipping policy issues. The combination of our knowledge and common approach on shipping matters of high importance can yield further valuable political and economic results for both nations at European and international level.
Our respective shipping communities will further enrich their maritime heritage and continue to be forerunners in the international maritime arena, thus, contributing to the welfare of our two nations. Our dynamic presence is a guarantee for the future. In this context, we should pursue our co-operation both at governmental and commercial level in order to achieve our common goals and mainly the competitiveness of our shipping industries which are closely connected with the welfare of our nations. We also look forward to a united front regarding the ongoing examination by the European Commission of various tonnage tax regimes vis-à-vis the Guidelines on State Aid to Maritime Transport.
Traditionally, the Greek shipping community has kept its options open concerning the issue of flag and centre of activities. All the more so, in difficult times like the present ones. Cyprus has always been a major such option for Greek shipowners. Apart from its well-functioning maritime legislation and cluster, it offers the vicinity to Greece in geographical terms and mentality. The figures are impressive: 290 vessels, representing about 35% of the Cypriot registry in terms of number of vessels or about 59% in terms of dwt belong to Greek-owned interests.
Due to these close ties we follow with great interest the achievements of the Cyprus shipping industry: For instance, the approval of the Cyprus tonnage tax by the European Commission and the recent tax initiatives offered to non-national investors, create a positive climate for entrepreneurship in Cyprus and give new impetus to the competitiveness of your shipping sector.
We also understand that there are positive developments in the ongoing dialogue between the two communities in Cyprus. A solution of the maritime embargo would give a major boosting to trade by sea in the Eastern Mediterranean and Black Sea as well as to the prospects of the Cypriot flag.
Finally, we congratulate you for the constructive cooperation between the government and the shipping industry in the crucial field of maritime education and training and aiming at creating employment opportunities for youngsters and, thus, pushing the economic and social benefits of Cyprus from its shipping cluster.
Ladies and gentlemen,
Dear friends and colleagues,
I must admit I have really enjoyed my participation in this gathering. From this podium, I would like to thank all our colleagues in the Cypriot shipping community for their long-lasting excellent co-operation and support to the benefit of both, Greek and Cypriot shipping industries.
Thank you for your attention.