Regional Focus: Clear seas ahead – Maltese maritime cluster working together to attract new services to the island

Malta – a small island in the heart of the Mediterranean – is attracting more shipping companies to relocate to the area thanks to its beautiful coastlines, cluster of services, cost-effective tax-regime and skilled workforce.

Despite being a small island, the Malta Flag is ranked number one in Europe and is the sixth largest ship registry in the world, with many in the Maltese cluster praising the Flag for making the cluster the success that it is today.

But the ever humble Ivan Sammut, Registrar General of Shipping and Seamen Merchant Shipping Directorate at Transport Malta, which oversees transport services of the land, air and sea in Malta, insists the success of the Flag and the maritime cluster as a whole is down to the cohesive working relationship of all the different stakeholders and aspects of the maritime industry.

Just last year the Malta Maritime Forum was set up, which consists of  24 stakeholders from all different sectors of the industry who regularly meet to discuss what challenges could arise in the short-term and long-term and debate how best to overcome them.

Mr Sammut explained: “We are not just talking about the Flag here. There is a very long maritime tradition that you can feel all over the island. The focus of the administration in recent years has been the consolidation of the maritime cluster and identification of and development of new opportunities.

“We have realised that the maritime industry in Malta has a lot of potential for further development. We have already come a long way. We are not just a Flag, Malta is the main port of call for the cruise liners, the Malta Freeport is another success story, our shipyards have a very long tradition and the facilities here have a lot of vision.

“We are also aware that there is a lot of potential where we could develop further the maritime cluster. In recent years the focus has been more on this further development and consultation with the maritime cluster.”

Mr Sammut went onto explain that Malta has more recently seen more shipmanagement companies relocate their operations there.

He added: “This is something we are very proud of and is an area we focusing our stance on. We have been successful in developing the Flag on a number of pillars and principals. First and foremost is the good relationship that we maintain with our clients. We are not after numbers, we are after quality. Every owner and individual ship means an important client. We want to build on this very good relationship we have with our clients in order to attract services on the island that create an added value to the Maltese cluster.”

Malta was this year elected as President of the Council to the EU, which has been branded as a ‘good achievement’ for Malta. The positive move has resulted in a firm strategic vision for where the EU should go as a maritime nation.

GM International Services, also commonly known as GMI, has been offering consultancy services in the maritime and related corporate and financial service sectors since 1977.

Chairman John Gauci-Maistre said it has been his “life-long pride” to start the company and guide it through decades of changes, development and, most of all, hard work.

GMI is one of the largest and oldest firms in Malta registering ships under the Maltese flag. For many years it has provided for the formation and structuring of ship owning and shipmanagement companies, ship registration, and related services such as the clearing of vessels with customers, dry docking and other repairs, ship husbandry and bunkering.

Through the years it has also expanded to provide bespoke legal and accountancy services with regards to any issues clients may have in relation to shipping companies, vessels and crew.

Mr Gauci-Maistre counts the ship registry as one of Malta’s key strengths.

“Not withstanding the general climate in the financial world, our ship registry has continued to grow from strength to strength in the last five years.  The ship registry has also found its way in diversifying its services and focusing not just on ships and cargo vessels but also in the superyacht industry, for example.  In fact, Malta has become a leading luxury yachting hub in Europe with more than 600 registered superyachts to date, more than anywhere else in the continent,” he said.

“The Maltese ship registry cannot remain strong on its own merits.  In fact, the Maltese legislator has always sought through the years to invigorate the industry with tailor-made, transparent and beneficial schemes and regimes in order to facilitate investment in the industry within the Maltese islands.  A very beneficial fiscal regime together with the efficient and ship owner-friendly registry have majorly helped the development of the industry in recent years.,” he added.

The shipping industry worldwide has suffered considerably through the downturn in recent years. But Mr Gauci-Maistre believes these hard times have only made Malta stronger.

He said: “Considering that Malta was prudent and cautious in tackling its financial situation all through the recession, it seems to me that it has emerged stronger than ever in this regard.  Of course there are continually ways for improvement, however I firmly believe that with Malta’s tradition and constant investment in the maritime industry, it will continue to grow.  The numbers don’t lie; the gross tonnage registered in the Maltese registry continues to grow and diversification of services is heading towards new opportunities for growth as well. “

Despite Malta being praised for its strong Flag and cohesive working relationships, the GMI Chairman and well-respected member of the maritime cluster in Malta believes there are still challenges to overcome.

“Issues with financing remains a big headache for a lot of ship owners. Over-regulation may also become an issue, especially in the future with Malta being in the EU. Malta, as a shipping hub, is competing with third country giants of the industry, such as Panama or the Marshall Islands. These registries do not contend with the same amount and level of regulation in Malta. Of course, this is one of the advantages which Malta offers as a significant shipping registry within the EU,” he explained.

Sister company Gauci Maistre Xynou (GMX) is a boutique Greco-Maltese firm in the legal/assurance sector, which was formed with the main scope of bridging the gap between the legal and assurance services sectors, particularly within the maritime and financial services industries.

The company, which is a relatively new venture being launched two years ago, was the brainchild of Jean-Pie Gauci Maistre and Desponia Xynou.

Managing Partner Dr Gauci Maistre said: “The maritime industry is very much at our core, with both Desponia and myself specialising in ship and yacht registration, ship finance, mortgages and international taxation, with a main focus on international tax treaty agreements.”

Dr Gauci-Maistre believes Malta’s strengths in the cluster lie in the “strong and safe maritime jurisdiction” that has constantly grown over the years.

“Malta has a flag administration which is always on the go and ready to accommodate the various needs of all stakeholders as they evolve, but always within the rules and in respect of the various conventions. In addition, Malta caters for efficient corporate and tax structures with regards to the shipping industry, as well as in other sectors due to industry demands for more sophisticated financial solutions. Malta’s ship arrest legislation and procedures have increased Malta’s prominence in the maritime industry. Probably some 30 to 40 ships are arrested each year in Malta without any fuss or fanfare,” he explained.

“Five years ago we used to speak of how Malta was beginning to be considered a safe jurisdiction for international investors. Today, we can very proudly say that Malta is continuously being regarded as a strong and safe jurisdiction. Whilst this may seem a slight distinction to many, for Malta it means that as a financial services centre, we can begin to be relied upon for larger and more complex structures and licensing requirements,” he added.

Malta has a vibrant maritime legal sector with many lawyers graduating from the island. The International Maritime Organization (IMO) invested in Malta by housing its International Maritime Law Institute at the island’s only university.

The cohesive working relationship of all the different aspects of  the Maltese cluster is one of  its major strengths. This was echoed by leading maritime lawyer Ann Fenech, Managing Partner of  law firm Fenech & Fenech Advocates.

Talking about the success of the maritime cluster in Malta, Dr Fenech said: “Ever since Malta appeared on the map, our position in the centre of the Mediterranean has meant that we have had an infinity with anything to do with the sea for literally thousands of years. When you think of the first settlers in Malta and go forward particularly to the Phoenicians, who were the main traders of the entire Mediterranean region. Malta was bang in the middle of the Mediterranean so Malta has always depended to a great extent on what the sea provided, in terms of food as well as commerce. The Maltese have always depended on sea trade, so the maritime industry is an incredibly important one to us.”

She added: “The British period saw our ship repair industry flourish and from 1988 onwards the Maltese maritime dimension exploded. There was an unprecedented effort to introduce appropriate legislation and grow the maritime Flag. Today we are the largest flag in Europe.  However, a lot of people think that is where shipping begins and ends in Malta, but there is so much to our industry than just the Flag. Every aspect of the maritime sector operates here and thrives.  From transhipment to ship registration, from ship repair to yachting, from maritime education to offshore supply services and cruise line operations. I think one of the great things about Malta is that as far as the maritime sector is concerned successive Governments have been totally supportive. The industry works very well together.”

The industry as a whole is in firm agreement that the Flag has catapulted the maritime cluster to success with its ability to attract high quality clients. As Mr Sammut firmly insisted: “One thing I will never compromise on is safety.”

GANADO Advocates, the largest law firm in Malta, has a dedicated shipping practice focused on assisting ship owners, ship operators and their financiers with all transactions concerning ships, on the registration of vessels and of mortgages under the Malta Flag and on all related legal and technical aspects.

Lawyers at the firm Karl Grech Orr, Matthew Attard and Jan Rossi believe now is the time to take the next step to encourage more operators within the shipping and general maritime industry to physically set up shop in Malta.

Dr Attard said: “Now that ship and yacht registrations have reached an all-time high in Malta, we should start promoting a physical presence within the local industry to build a stronger maritime cluster. We have realised that the more traditional ways of promoting the industry are dying out due to new technologies – the traditional way of registering ships will eventually be replaced by electronic means.  In order to adapt to this new reality, us lawyers need to continue promoting Malta as a jurisdiction of choice for its various maritime services, not just for its flag administration services. In the next five to 10 years, we hope to achieve more varied type of work and a solid community in Malta made up of ship managers, operators and financial institutions.”

Specialist shipping law firm Dingli and Dingli believes the secret to Malta’s success is its tolerance and acceptance of people from outside the island, indicating this is where more investment and growth within the sector will come from.

Dingli and Dingli is a family-run business dating back to 1982 after it was set up by current Managing Partner Kevin Dingli and his late father Benedict Dingli. It currently has 13 lawyers, five of whom work in the shipping department.

Talking about how the cluster has evolved Partner at the firm Tonio Grech said: “I would put the success down to the Maltese people. We are very open to foreigners as a nation. We have always been like that and even more so nowadays. I think that is the key. In Europe there is a lot of politics going on against immigration and so forth, but in Malta we are open to foreigners, we cannot live without them. In Malta, shipping has always kept out of politics, political parties have not made it a point of debate. By creating debate in politics all you do is create instability. Businessmen do not want instability, they want stability.”

Partner Suzanne Shaw added: “It helps that we are a small island. We have the Maritime Law Association here in Malta which is quite active compared to some other foreign maritime law associations. But here, we are small and we just converge and meet, you can have discussion much better face-to-face rather than over email. I think our size helps us in that respect. I’ve seen the Maltese Flag grow a lot as well. Malta’s Flag is number one in Europe and it is ranked sixth in the world. This is a sign of confidence in the Maltese Flag, not only by ship owners and managers but also by banks and financiers.”

The Maltese cluster is one that is thriving and growing year-on-year with an increasing number of new companies relocating or opening an office in Malta. In addition to this, a huge multi-million-pound project has opened up in the heart of Malta which will provide more shipping companies with a reason to relocate to the island.

The Mediterranean Maritime Hub is a 42-acre port facility established with the aim to deliver reliable, cost-effective marine and oil and gas industry support services across the whole Mediterranean region. Working in the strategic port location of Valletta, the Hub is a Freezone/Customs Bond Facility offering 1,200 linear metres of quaysides, external equipment laydown, storage areas and extensive covered warehousing and fabrication sheds to handle, maintain, and store a range of cargo.

MMH Malta, the company that operates the Hub, offers a range of support from vessel maintenance and repair to inspection and certification, global logistics services, provision of personnel and training; all designed to speed up turnaround time and improve cost efficiencies for shipping companies.

MMH Chairman Paul Abela said: “We are developing this site whilst keeping in mind that this is a national asset, so we feel a big responsibility in that respect. This is something that Malta needs to benefit from. We want this to be a project to be a facilitator for operators in the industry to grow their business.”

Malta also has a thriving shipyard business with Italy-based Palumbo Shipyards taking on a former loss-making Government-run facility
and turning it into the success that it is today.

As a fully equipped shipyard, Palumbo Malta Shipyard has a strong workforce ready to accommodate any of its customers’ requests, from short notice for a quick unforeseen repair – up to 20% of the yard’s work is unplanned – to a long-planned dry-docking and complete overhaul or refit for all kinds of floating vessels and yachts.

Palumbo Shipyard also operates as a dedicated superyacht facility to cater for Malta’s growing yachting sector.

General Manager at the Malta shipyard Joseph Calleja said: “The success of the company is based on one key statement – ‘We will do all our best irrespective of the extent of the repair.’ In turbulent and unpredictable times for shipping, the yard recognises the challenges faced by its customers, and goes out of its way to support them with flexible, safe, high-quality and cost-effective services.

The success of Palumbo Malta Shipyard speaks for itself, as just recently it was ranked third worldwide for cruise ship refitting, beating off stiff competition from Marseille and Barcelona.

“Placing third worldwide in just six years gives us immense satisfaction. This ranking would never have been achieved without everyone’s dedication and hard work. It positions us as one of the top shipyards worldwide in this growing industry and we are working very hard to attract more business to the island. We are far from complacent and keep on investing in equipment, facilities and personnel training,” Mr Calleja added.

Malta’s current tax regime is a huge pulling point for companies relocating to the island. Aside from shipping, Malta has seen a huge boom in the gaming sector, with companies taking full advantage of the tax regime.

Malta provides a favourable climate for shipmanagement operations and, the current legal regime with its system of tax refunds provides the right fiscal incentives. New regulations in the pipeline that are hoped to come into force soon will provide an even more attractive environment for ship managers. A new tax regime will be linked to the size of the shipmanagement operation.

Maritime expert and consultant Miriam Camilleri, who runs her own business as a maritime services provider, MCConsult, believes the attractive tax regime together with other benefits will encourage more companies to relocate to the island. 

She said: “We have been providing an efficient and 24/7 one stop service to ship owners and ship managers alike. What is important for them is that they have an extremely high level of service, coupled with professionalism and dedication; we are very proud of this achievement.”

“Maltese shipping organisations benefit from a wide range of advantages and enjoy the benefit of a favourable financial regime depending on the activity of the company. Malta already has a number of shipmanagement companies that deal, inter alia, with crew relocation, operations, manning etc. The new regulations are very advantageous and we augur that these may be put into force sooner rather than later.  Malta has the necessary infrastructure in place and we look forward to furthering our maritime horizons to welcome shipmanagement companies in the very near future. “

Anton Buttigieg, Projects and Logistics Director at Medsea Shipping Agency (MSA) believes that Malta has a lot to offer companies passing through and firms who want to set up shop on the Island.

MSA was set up in 1999 as a liner and tramp agency with the prime objective of promoting Malta as a hub for container, general bulk and liquid cargoes. At the same time the agency started offering services to ship owners/managers calling at Malta for services, both alongside berths or at anchorage inside or outside territorial waters, as well as those vessels going into its shipyards for repairs and upgrades. Today, Medsea is also actively offering logistical support from Malta to oil and gas companies working offshore in Libya & Tunisia.

Mr Buttigieg said: “Malta has always had a vast range of maritime services. It has been a maritime nation from day one. I believe we have the full range of services that any ship owner would require. Of course, the language is a very important issue, most people speak English, even the workforce, so there is no issue of communication.

“Malta has a very fast track system when obtaining crew visas. This is a visa that allows a crew member to arrive at the airport and then join the ship. Malta has a very straight forward process when it comes to reporting a vessel’s arrival. We report our ships coming in and everything moves quickly as long as everything is okay with the vessel. We also have quite a high level of crew changes in Malta, people see the benefits doing this in Malta, which are efficiency and costs. The efficiency of the operation itself and the cost because you don’t have a big distance to travel for the crew. “

Financial services company Deloitte says the downturn in shipping has not had a considerable impact on Malta’s maritime cluster and the Maltese merchant fleet has continued to grow over the past several years. However, it has seen a number of vessels in lay-up due to owners struggling to find work for the vessels. 

Tax Director at Deloitte Malta Nick Captur said: “Investment in Malta primarily comes from the EU. Malta is well positioned to attract new investments due to numerous reasons; Malta is an EU member state and is strategically located in the centre of the Mediterranean between Europe and Africa and on major shipping routes, Malta offers competitive tax incentives and has a strong financial sector, amongst other reasons.

“As Malta’s maritime economy grows so has maritime businesses. All types of marine businesses have been set up over recent years. Malta has been offering a competitive tax environment combined with an attractive operating environment and location for the shipping industry.”

Deloitte Malta’s main scope of work in relation to the maritime industry is mainly providing tax advice and tax structuring to a wide range of shipping companies that have both local and multinational ownership.

Following the news that Britain will be leaving the EU, the maritime industry in Malta was left with mixed feelings over the issue, Mr Captur says.

“Many international companies are still deciding or have decided to relocate their businesses to other jurisdictions. Malta is being seen as a viable alternative to relocate to by some industries and has the advantage of English being an official language on the island,” he said.

Malta Freeport Terminals (MFT) has been branded as a huge ‘success story’ for the island after it opened in 1988 making it the first transhipment hub in the Mediterranean region.

Malta’s geographical location plays an important role in its transhipment business. Being strategically located on the main trade routes in the Mediterranean, vessels can call at MFT, with a minimal deviation of just six nautical miles between Gibraltar and the Suez Canal, whilst carriers calling at MFT are able to serve both east and west Mediterranean markets with a single mainline call. Besides its transhipment business. MFT also handles around 80% of the local imports and exports.

When looking to the future Alex Montebello, CEO Malta Freeport Terminals, said: “MFT is facing very tough competition from other Mediterranean transhipment terminals. In view of this, it is crucial that the Terminal continues investing heavily in its facilities to ensure that it is in an optimum position to offer its clients an efficient and effective service in line with their increasing demands. It is also imperative to take timely decisions to rapidly respond to the clients’ requests.

“The Mediterranean shipping industry has witnessed terminals disappearing as in the case of the transhipment terminal of Taranto, whereas on the shipping carrier side we have also recently seen the bankruptcy of Hanjin. Within this scenario, MFT’s vast expertise in the transhipment business together with its strong shareholder structure have brought with it many advantages which clearly demonstrate to its clients that MFT has in place the necessary resources to continue operating successfully within the Mediterranean transhipment market.”

Latest figures from Valletta Cruise Port state there were 34 cruise liner calls during the first quarter of 2017, which is 17 more than last year. At 99.8%, transit passengers accounted for the absolute majority of total traffic, reaching 85,009. A total of 344 passengers spent at least one night onboard their berthed cruise liner. On average, every vessel that berthed in Malta carried 2,506 passengers, 190 more than last year.

Talking about the booming industry CEO OF Valletta Cruise Ports Stephen Xuereb, said: “The cruise line industry has been growing year on year and is increasingly contributing towards Malta’s economic growth and prosperity. A total of 682,222 passenger movements were recorded in 2016, meaning an increase of 2% on 2015.”

In 2016, the Malta Cruise Network Forum was formed – a committee made up of interested parties which serves to promote Malta as a cruise destination of excellence and come up with recommendations on how to strengthen the industry further.