Head of Irish Maritime Development Organisation Glenn Murphy tells Lorna Siggins, Marine Correspondent, that the introduction of tonnage tax is a boost for the industry
The Republic could re- claim its historical trading position within the "Atlantic Arc" of west European states if it supports a new maritime and port strategy for the region.
The demise of Irish Shipping remains strong in the memories of those who believe no government in the past three decades has been seriously interested in the marine sector - in spite of its strategic importance in terms of trade.
This is the main finding of a report completed last month for the Institute of International Trade in Ireland. The study, by the Nautical Enterprise Centre in Cork, was published even as the Minister for Finance, Mr McCreevy, was signing off a new measure aimed at giving a fillip to a flagging sector.
The tonnage tax for merchant shipping announced in the Minister's Budget has been welcomed as a "huge psychological boost" for the industry. Under the scheme, shipping companies can opt for taxation based on the size/ tonnage of their vessels, rather than on their profits or losses.
For Dublin-born Mr Glenn Murphy (33), chief executive of the Irish Maritime Development Organisation (IMDO), this is a sweet victory after what has been a long lobbying campaign.
Spearheaded by the chairman of the IMDO advisory group, ex-IDA chief Mr Padraic White, the campaign worked tirelessly to highlight the positive impact which more benign tax measures could have on a sector with significant growth potential.
In the past 10 years, there has been a 50 per cent drop in the number of merchant vessels registered here, which has also been reflected in a fall-off in the number of Irish seafarers serving on board Irish vessels.
Arklow Shipping, which has 22 vessels under the Irish flag, had 13 ships on the Dutch register.
Irish Ferries had warned that it might have to look elsewhere if the tonnage tax scheme was not introduced.
The signalled change has had an immediate impact - a new Arklow Shipping vessel launched in the Netherlands on December 8th will join the Irish register, along with a sister ship due for completion this year.
The Republic's failure to introduce tax incentives earlier was out of step with the European norm. Since 1997, the European Commission has been encouraging member-states to take such measures - partly for economic and partly for safety reasons.
Currently, merchant shipping is dominated by states such as Norway, Denmark and Greece, and others such as Japan, China Taiwan and Korea in the Far East, which have rapidly built up fleets in recent decades.
Two years ago, the British government introduced tax breaks following a lead taken by the Netherlands, Germany and Spain.
Mr Murphy says the IMDO may now be able to attract some "major players" in the shipping business to the Republic and develop a shore-based shipping services sector similar to the International Financial Services Centre (IFSC) for the financial services industry.
The establishment of the IMDO under the aegis of the Marine Institute two years ago was the first step in this direction, and Mr Murphy sees no reason why the Republic cannot become a significant European centre for an expanding industry.
The IMDO chief knows what he is talking about, with 15 years' experience in international shipping markets. Having qualified with a degree in maritime studies, he worked as a shipbroker and spent six years in London before returning to the Republic to take up the newly created job.
"We are looking at companies in the US, the Far East and in the European economic zone, such as Norway, and emphasising that Ireland is strategically placed between Europe and the United States," Mr Murphy says. "Shipping is a growth industry, expanding at an annual rate of 8 to 10 per cent before September 11th. That has been revised to between 5 and 6 per cent, which is still considerable."
However, the IMDO is also seeking to boost the size of the indigenous fleet. There are 45 vessels on the Irish register, compared to 80 in 1980.
As Mr White said recently, Irish companies are "minnows" in European terms, with the registered fleet comprising one-fifth of 1 per cent of the European trading fleet (0.02 per cent).
The demise of Irish Shipping still remains strong in the memories of those who believe no government in the past three decades has been seriously interested in the marine sector - in spite of its strategic importance in terms of trade.
Therefore, much work still remains to be done, including updating the commercial registration system and increasing investment in ports.
"Some 99 per cent of goods in Ireland go through ports and over 75 per cent of bonded trade is export-oriented, so it is vitally important to have an effective and efficient port system," Mr Murphy says.
"When you compare the £1 billion \€1.27 billion\ spent on airports with the investment in port infrastructure, it puts it into perspective."
The IMDO has just completed a review of the existing mercantile legislation, and has submitted this to the Department of the Marine and Natural Resources.
"We'd like to ensure that ship registration is made more attractive for owners," he says.
"We also have an excellent safety record, which is something that needs to be stressed."
The Mercantile Marine Acts were last revised in any substantial way in 1955, he says. The review will bring the Irish register up to speed with best practices worldwide. "It should encourage owners both Irish and non-Irish to register their vessels here.
"There is a mandatory condition attached that any owner operating under the Irish flag should have a clear and definite economic link in Ireland."
The Government is committed to opening a new maritime college at Ringaskiddy, Co Cork, at a cost of €38 million and discussions are under way in relation to public-private partnership involvement.
"Again, the tonnage tax has direct relevance here. It would have been ridiculous to train cadets without having the fleet for them to work."
The new college will provide a vital link between seafarer training and Irish owners, he says.
The IMDO has also drawn up a revised training grant scheme, the Irish Seafarer Education Allowance Scheme (IS EAS), which it has submitted to the Government. The scheme is aimed at increasing seaboard training grants for Irish cadets.
Mr Murphy sees potential for developing ship financing from an Irish base. This could encourage growth of a marine services "cluster", given that financing banks need to draw on experts in marine law, insurance, surveying and vessel valuation.
In January 2001, a delegation from the IMDO advisory group travelled to Hamburg, Germany, to view German efforts in this area. Significantly, the trip was facilitated by the Dresdner Bank, which has a specialist ship financing arm and was also the first German bank to locate in the IFSC in Dublin.
The Institute of International Trade in Ireland report published last month notes the Republic's trade with a significant part of the euro zone - France, Spain and Portugal - is well below normal and says unitised trade with these states could increase three- to fourfold.
It recommends measures to close the gap including creation of an efficient sea motorway, which could save an estimated €60 million a year in transport costs.
It also examines the negative effects of having to transship to North America through Britain and Continental Europe, and recommends that this could be remedied by introducing a direct service, whereby transatlantic vessels could call at Irish ports.
The IMDO is examining the report with interest. "We know that several of the larger port companies are working towards attracting this sort of business," Mr Murphy says.
The tonnage tax breakthrough is "only the beginning" as far as his office is concerned, Mr Murphy says. "We will not be standing still and will persevere to seek legislative and fiscal reform to encourage growth and development. It may be one small step for international shipping but it is one huge leap for the Irish shipping industry."
The IMDO has a website (www.imdo.ie), which was established to promote and market the Irish shipping and shipping service sector, and to provide a one-stop shop.
