Especially, as it could not only further stifle the banking sector, but could herald a far-reaching overhaul of the country’s approach to taxing the industry.
Capital controls have began to affect the operations of ship owners. And as readers of Seatrade Maritime News are aware, the tax threat has owners looking at alternative tax regimes, including Cyprus. Interest is also being shown in London, Singapore, Dubai and even Switzerland.
Thomas Kazakos, director general of the Cyprus Shipping Chamber, has confirmed Greek companies are contacting local maritime service providers asking about tax and other shipping administrative questions.
Kazakos has stressed the shipping industry in Cyprus is not expected to be affected by any negative developments in Greece and that already Greek shipping companies own around 40% of the Cypriot registered fleet. Indeed, at least two substantial Athens-based owners with Cypriot connections have obtained licences to operate out of the island.
Further, shipping people have frequently pointed out over the past couple of weeks that today’s IT enables companies to simply install a server and then run their ships from almost anywhere.
Relocating accounting and financial departments abroad and operating out of Greece as agents only is also an option.
Exiting the Euro would create economic chaos for all Greek industry, but especially shipping, though some owners, including Michael Bodouroglou see benefits in paying local expenses in a national currency.
The capital restrictions have already hit shortsea and passenger shipping, two sectors vital to the economic and social wellbeing of Greece.
The Hellenic Shortsea Shipowners Association says the situation is “a huge problem and it will get worse if nothing is done about it”.
Some 700 Greek-controlled ships make-up the shortsea fleet with operators obliged to keep large part of their funds and reserves with local banks to meet cash needs.
Unlike oceangoing shipping which takes on voyages lasting weeks, the shortsea owner is regular a visitor to the bank and has been struggling with the capital controls. The Finance Ministry has given little guidance to companies wishing to transfer money abroad, and having established a new Bank Transactions Approval Board, at best adds to the red tape involved.
Prospects for the passenger ship and ferry sector is once again dire. The main employer of Greek seafarers, dozens of vessels involved in the country’s ferry network are currently laid-up and scores of seafarers unpaid for months, leading to strike which have disrupted services.
The first quarter of 2015 saw leading players in the market report their first operational profits after five years of hardship which has seen an accumulated loss of over EUR1.5bn.
Bank exposure to the ferry sector alone tops over EUR1.2bn, of which 60% is written on the portfolios of Greek banks. Further, their day-to-day business in conducted through local banks.
Dimitris I. Dimitriadis, a leading Piraeus-based analyst of passenger shipping, commented: “Though the general situation in Greece appeared to be stabilising, Greek pockets have long been empty and the situation for the ferry operators is again looking grim.”
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