Stephan Piazza, Senior Manager within the Shipping Team was recently interviewed by Ship Management International in their last issue called "Malta Cluster: The last piece of the jigsaw".
Stephan focused on key attractions of the Maltese shipping cluster and challenges the country is ready to take on in order to sustain its growth.
When you look at the Malta maritime cluster in general, it is clear it has come a long way in recent years.
As one of Europe's main transhipment hubs, Malta Freeport is flourishing, having handled a record 3.31 million TEUs last year, the super yacht boom is boosting services across the whole sector, it has a well-respected maritime legal support system, and the registration of vessels under the Malta Flag, undoubtedly one of the biggest success stories, is going from strength to strength.
However, many concede that there is a missing piece to the puzzle, in the form of thriving shipmanagement companies who, unlike in Cyprus and Singapore, have been absent from the cluster. That is until now.
The introduction of Malta's revamped tonnage tax system last May for a 10-year period means ship managers are now considering the island as an attractive place to do business.
"I see the future of the shipping industry here in shipmanagement and the insurance side," said Stephan Piazza, Senior Manager, Tax – Shipping & Aviation for KPMG in Malta and Executive Committee Member of the Malta Maritime Law Association (MMLA).
"They are starting to come here and from a legal perspective and tax perspective, the structure is there. The problem is that it is hard to find the technical staff, and so the challenge is to relocate people to Malta."
Matthew Attard, Senior Associate, Shipping at law firm GANADO Advocates and Vice-President of the MMLA said: "The physical presence of operators on the island is something that we are trying to achieve. There has been quite a lot of interest recently and we are seeing movement. The issue has always been that the technical -people aren't there. The market hasn't yet developed in a way that can provide the human resources that easily, so anybody who wants to set up shop here needs to bring their own human resources with them."
He said the benefits from either the tonnage tax system or a better tax regime was obviously instrumental in many companies looking to set up shipmanagement presence, along with a push from their own jurisdiction requirements, but it had taken longer than it should have "because nobody initially wanted to navigate through unchartered waters".
However, with more companies setting up shop, people are slowly realising that Malta is a viable option.
"There are people who want to set up crew management, there are people who want to set up commercial management, it really depends," said Dr Attard. "I think crew management seems much easier to set up and it is perhaps more attractive at this stage, especially for smaller operations."
His colleague, Jan Rossi, Associate, Shipping agreed saying: "I don't think there is one particular management type that has been attracted here and at this point in time we are seeing an interest from all segments, be it commercial, or crew or technical.
"Our tonnage tax system applies to third party ship managers too, so qualified ship managers can benefit from entry into Malta's tonnage tax system and that is primarily the key attractive feature within the programme for ship managers, particularly crew and technical managers to move their location to Malta. Essentially, it is very similar to the Cypriot system and indeed any other EU approved system on tonnage tax because there is a degree of similarity between them all, once they are approved by the European Commission."
Miriam Camilleri, Managing Director, MC Consult and Vice President of the Malta Maritime Law Association (MMLA), said: "I believe that the reputation Malta has earned as a maritime centre of excellence was achieved through years of hard work and dedicated service to the industry. Our strategic location, a 24/7 availability and a good command of English and other languages facilitate good communication and excellent service. Another plus is an all-round cooperation between the public and private sectors that also ensures an efficient one-stop-shop. Now that our legislation is in place and we can cater for shipmanagement companies, including tonnage tax regulations that clearly lay down how a ship manager may qualify to operate in Malta, we can go out and promote this."
Transport Malta also says it is making certain inroads with regards to attracting shipmanagement companies, as Ivan Sammut, Registrar General of Shipping and Seamen, Merchant Shipping Directorate, explained: "Malta was not very popular with regards to the establishment of shipmanagement offices but following a number of initiatives we have already seen about six major shipmanagement companies establishing offices in Malta. Malta is on its way to shipmanagement."
KPMG's Mr Piazza is hoping this in turn will attract the P&I Clubs. He suggested they might be tempted to Malta because of the regulatory framework in terms of insurance. "Insurance regulations are based on European laws so it wouldn't be too difficult for them to adapt that to the Maltese regulatory system," he said. "Obviously, one must not forget the advantages from a tax perspective. Those are all points which could attract insurance companies such as P&I Clubs to Malta."
He also stated that with Brexit looming, there was never a better time for P&I clubs to come to Malta, saying: "We need to take advantage of this now."
But what about the lack of technical expertise on the island?
"The reality is that the resources come once the business environment settles and matures," said GANADO Advocate's Dr Attard. "In other words, if you are offering people of that skill level an attractive environment to work from, they will come. You can't expect them to be around the market when there is no demand for them."
Dr Rossi said that the main reason for the lack of expertise was probably because in terms of technical management, many of those working in this sector were ex seafarers.
"Malta doesn't have, at this point in time, a large population of ex mariners – this was more of a reality a couple of decades ago," he added. "Unfortunately, it no longer is an attractive career in today's world."
Dr Attard believes the best way to deal with the shortfall in technical expertise is to continue incentivising people to go to Malta. "People bring people," he said.
His point was echoed by Tonio Fenech, Managing Partner at Fenech Farrugia Fiott Legal, who believes Malta can be as attractive as other clusters such as Cyprus, if not more.
"The only problem we have is the fact that we are so small. It is important that, as we have done in other sectors, we invite people who are technical in the sector to come and make this their home."
"I think they need to nurture more home-grown talent," he said.
"The training of seafarers is something which Malta is now investing in," said KPMG's Mr Piazza. "But there is much more to be done. We have many good contacts with our ship register."
However, Mr Sammut said education was seen as vital in ensuring Malta's future as a key maritime centre and an area which Malta was developing very quickly with the recent establishment of MaritimeMT – the maritime academy, which provides the whole array of maritime education.
"We are not saying we are there yet but we are taking the right steps in order to consolidate Malta as a centre of excellence," he said.
Michael Callus is CEO & Board Member, Malta Maritime Forum, a non-governmental organisation which was set up in 2016 to provide a common platform for Malta-based entities involved in the maritime, logistical and transport sector in Malta. It has a wide spectrum of 55 members from a varied field of industries such as ship repair, ship owners and operators, shipping agencies, maritime lawyers and towage operators to name but a few.
Its key objectives are to promote the interests of the Maltese maritime sector, to assist in the development of new maritime activities, to act as a body which consults with the Government, and to promote research, education and training within the Maltese maritime sector.
"We are very active in education and we have created our own course – the marine induction course, which is very much focused on personnel who are already in the business, to give them an insight on health and safety for those people who go onboard vessels," explained Mr Callus.
Of course, the success of the Registry has played a huge part in strengthening Malta's credentials as a cluster. "The Registry is a big, big part," said Mr Callus. "Today they are very much focused on the quality and not on the quantity."
Mr Sammut said the Flag's notable achievements – it is the biggest in Europe and sixth in the world – had been born from its continued stable and concrete vision which gives peace of mind to the industry. A Greek office was recently opened – the Register's first foreign office – the rationale behind it of having people on the ground to listen to clients.
Boasting a current gross tonnage of 87.2 million, it has registered a growth of just over 7% since last year across many different sectors. These include cruise liners – one in every four cruise ships being built are intended to be registered under the Flag – while the superyacht registration is also booming.
"We have made some huge inroads and now have over 800 super yachts. We have seen statistics stating we are the largest superyacht jurisdiction at the moment."
He added: "Also, when it comes to new, innovative ships, we are leaders and you see some of the world's biggest container ships are being registered under the Malta flag. LNG carriers is another sector that is booming and we have over 50% of that market as well."
He said another factor in the Flag's success was that it continued to reflect the voice of the industry, in what it brings to the table both internationally at the IMO and within the EU.
"We also try to implement practically, the impact of what any new legislation might be, such as the sulphur cap."
Miriam Camilleri said Malta had worked very hard to be where it is today, primarily as a maritime centre and as a flag, providing services to owners and financial institutions.
"Last year new regulations were published that further improve the legal regime. The changes were for the better, making Maltese legislation in tune with current international law and practices and the needs of the industry. This enhances the reputation of the flag, thus giving owners more protection with financiers, charterers and the ports their ships visit. Serious owners want a serious flag and this is what kept us gaining momentum gradually but steadily. It is crucial that we maintain the record of quality that we have so painstakingly required."
She said the Malta Maritime Law Association had established a good rapport with the Authorities as a whole, but obviously particularly with the Maritime Administration and, with the industry. This rapport was crucial. She pointed out that the MMLA is a non-profit making, voluntary organisation set up in 1994 with the aim of promoting the study and advancement of Malta's maritime Law and its administration.
"Malta has developed a strong shipping specific legal and regulatory platform that has enabled the Maltese Flag to become an established, reputable international ship register which is now one of the largest in the world," said Fenech Farrugia Fiott Legal's Tonio Fenech. He said his law firm was organised a bit differently to the way the financial services world worked in that it openly encouraged and promoted multi-disciplinary work not by employing people from different disciplines within the law firm but by creating its own cluster. Branded as ARQ Group, it basically represents an organisation which is wider than pure legal services.
Like many, Dr Fenech believes Malta could one day be in the top five ship registries in the world.
"We always look at the success of the Flag as a community because it is one of the advantages of being small and this is how we grew it," said GANADO Advocate's Matthew Attard.
"What we do successfully is that the industry and the authority are always with each other to ensure that we can continue delivering a good product whilst ensuring compliance with the law and remaining on the White List."
Dr Attard added: "We are seeing a stream of work coming in and we are very excited about it. If in the next three to five years we see a substantial growth relative to our mission on that front, I think we will be very satisfied."
One of the main draws for Malta is the island's mild weather all year round and this all ensures a steady stream of cruise ships. Valletta Cruise Port is averaging 350 vessels calling each year and Senior Business Development Officer Anna Maria Cardona Schranz said 2019 was shaping up to be a record year with an estimated 900,000 passenger movements.
"Valletta Cruise Port has experienced a 75% actualised growth rate between 2013 and 2019 and with far-reaching aspirations, the success of Valletta Cruise Port parallels that of the Mediterranean cruise market," she said. "2020 is also a positive year. It will not be the record year that 2019 has been but there are plenty of exciting things in store in terms of improving and sustaining our core operations."
She said there were many reasons why Valletta was such an attractive place on cruise itineraries including the port's fully modernised facilities, and efficient transfers from the airport to seaport, along with the natural beauty of the historic Grand Harbour, with Valletta also classed as a UNESCO World Heritage Site, boasting over 300 places of interest.
How is Valletta's infrastructure coping with the growth in passenger numbers?
"We strongly feel that the destination is managing the numbers well, with the coordination of all involved," said Ms Cardona Schranz. "Key stakeholders meet monthly as part of the Malta Cruise Network Forum. This synergy allows stakeholders to respond as a unified team, efficiently and effectively, and to pre-empt any challenges and turn them into opportunities."
She said they did believe in sustainable growth and Valletta Cruise Port had signed the UNWTO Private Sector Commitment to the Global Code of Ethics for Tourism.
The booming cruise market is also providing growth for Medsea Shipping Agency, which was set up 20 years ago and today employs 25 people. As well as cruise lines, the company's client portfolio includes major container carriers, Oil & Gas operators, global agency networks and international freight forwarders.
"This year will close favourably for Medsea with increased vessel calls and import and export containers," said Commercial and Projects Logistics Director Anton Buttigieg.
"Developments and growth areas were registered in the cruise ship agency and transhipments and cross trade business."
Mr Buttigieg believes that investment in the infrastructure is key to Malta's maritime hub.
"There is always need for more investment but the recent Government's plan for the €35 million investment plan in the Valletta Grand Harbour is welcome news as is investment in the construction of breakwaters in some of the smaller ports plus other private investments in the yacht marinas."
Another major part of the island's maritime cluster is Palumbo Shipyards, which takes advantage of the island's perfect position in the centre of the Mediterranean Sea, in close vicinity of all sea routes for both cargo and passenger vessels.
Drydocking and general repairs remain the yard's core business, however Andrea Sabbion, Sales Manager – Commercial Ships Department, says it has seen strong demand from the market for the installation of scrubbers, in compliance with the global sulphur cap coming into force on 1st January, not just in Malta but across the Group's three other yards in Italy and Croatia.
"Palumbo Shipyards completed at Malta facilities, installations of several scrubbers on a series of Ro Ro Pax vessels belonging to Grimaldi (Minoan Lines)," said Mr Sabbion.
"Many other vessels are already contracted for a similar programme of retrofit over the last months of 2019 and throughout 2020 and this includes the already acquired Corsica Linea vessels fleet programme."
The Group also keeps a strong focus on the cruise vessel market having acquired the extensive refit project of Silversea's Silver Shadow and three Marella Cruises vessels, Marella Celebration being carried out in Malta.
The Mediterranean Maritime Hub, operated by MMH Malta, is coming into its own, transforming the old Shipbuilding site in the inner Grand Harbour into a full service 170,000 square metres maritime hub with 1.2 km of quayside, servicing the marine oil and gas servicing industries by providing logistics base services, technical and maintenance services, recruitment and crew logistics and training.
The hub is purpose-built to provide the industry with an array of facilities including new quaysides, freezone/Customs bond area, engineering and fabrication workshops and storage areas, intended to cater for vessels of all sizes. MMH also recently invested in two travel lifts of 300 tons and 700 tons to lift yachts and commercial vessels out of the water, making it an important player in the region.
Angelique Maggi, Deputy Chairperson, MMH Malta, said that in just three short years the site has already seen a sizeable €28 million investment out of an intended €55 million injection over a 10-year period. "The growth has been very fast and we are already half way there," she said. The growth of the hub has exceeded expectations all round. "We forecast 156 employees over the 10 years but three years down the line we already have approximately 100."
The biggest driver of the Hub's growth, she opined, is its collaborative approach. "Our vision is not to carve the market, but to drive it's growth, and penetrate into new sectors and niches to the benefit of all operating within the local Industry" she said. "MMH's infrastructure has ensured that no opportunities are lost as had to happen many a time In the past".
"We understand we have a national asset with the responsibility towards the development of this national asset and we see ourselves as catalysts to bring this change in the maritime industry," explained Ms Maggi.
MMH's vision is leading to the budding of smaller companies servicing niche markets, through the use of the workshops and spaces available on the site and other partnerships with MMH.
The final piece of the puzzle is the MMH Academy. The Academy today already offers a wide range of programmes focused on the oil and gas sector such as drilling/technical courses. Further collaborations within the sector, both locally and internationally, allows for the further fostering and development of the maritime tradition in Malta, ensuring that industry can meet new and emerging challenges and demands.
"There is a lot more we can do, but considering all we have achieved in just three years we have much to be proud of," exclaimed Ms Maggi.
Though Malta has come a long way in positioning itself as a strong maritime centre, like others around the globe one of the biggest challenges it is currently facing is reducing the environmental impact of its shipping industry.
Speaking about the sulphur cap, Transport Malta's Ivan Sammut: "I call it the fourth revolution of shipping because this will change the whole industry – how it operates and how it works. We are proud that we were at the forefront as a flag administration to also start discussing and considering alternative means of compliance to this requirement and we remain committed to continue close cooperation with the industry to find alternative means to comply.
"We are very actively involved, as Malta, in the discussion of the measures that will be taken – short term and medium measures but the reality is that we need to think a bit out of the box in order ensure that the targets we have set are met. It is not going to be an easy task but we are confident that within the industry there is realisation and commitment that we have to do it."
He believes the industry needs to give more visibility to what it is doing "because actually shipping is doing a lot".
"Yes, it is true that emissions from shipping are on the increase but one also has to understand that trade is also on the increase and that means more vessels are on the market so that will result in an increase in emissions," he said. "We are proud of being part of an industry that is taking concrete action."
He said environmental challenges were high on the agenda and the Register had some of the most environmentally friendly ships registered. "That is a clear indication of the commitment Malta has towards the sustainable development of the maritime industry."
Maria Camilleri said pollution was a huge area Malta needed to address particularly with the big cruise liners which were calling: "We have to see how to reach the 2030 sustainable goals and we have to aim to reach those goals. We are slowly addressing them."
Valletta Cruise Port's Mr Schranz said the port was in the process of implementing an Environmental Risk Management System (ERMS). The environmental and conservation policy is in compliance with ISO 14001:2015 which is a baseline requirement for almost all national and international 'green port' accreditations.
"An Environmental Committee or 'green team' made up of leadership team members and employees will be set up to assist and support the environmental direction of Valletta Cruise Port plc," she said. "The next steps in Phases 2 and 3 are to build on the basic ERMS that has been established."
Another area Malta is working on, according to MMF's Mr Callus as part of decarbonisation, is targeting cruise liners to have an electric connection while in port.
"It's not an easy thing but through my membership we are trying to make a paper on the issues going forward. With Transport Malta'sw €35 million investment in the port with breakwaters and other entities, they are also ensuring that ducting is being made in the quay so these big cables can pass so there can be electricity and power. Hopefully by 2021 we will have the facility available and this will be a big plus for the environment."
He said decarbonisation was one of the three 'Ds' which are the main challenges at the moment, the others being digitalisation and diversity.
Mr Sammut said as well as helping make the maritime industry safer and more efficient, digitalisation could also have an impact on environmental protection because it would increase efficiency "drastically". He added that Transport Malta has launched a project of €250,000 to come up with ideas on how the maritime administration could actually do the digital transformation. The project is supported by the EU. Other initiatives include the Single Window – Transport Malta has signed a contract with Actual IT, a Slovenian IT firm, for the development of a new National Maritime Single Window. The new web-based portal will improve the interface and facilitate reporting between local maritime stakeholders, including Government agencies, ship operators, ship agents, service providers and terminals.
The topic of diversity is also one which has come to the fore in recent times and in Malta it is no exception.
Miriam Camilleri said in principle she did not agree with quotas, as she viewed them as basically discriminatory, adding however, there was still the "need for a push".
"I have never really felt any kind of issues being a woman, even when I decided to set up my own business," she told SMI. "Yes, there are cases at certain institutions and companies where women are not treated so fairly, although I am not aware that we have any kind of such institutions in Malta. I believe it is a matter of capability and qualification, nothing to do with being a woman or a man."
She added that, however, it was still regretful that even in Malta women were still in the minority on practically all boards.
"I believe that having women sitting on boards and committees brings a different sense and a different aura," she said. "We need education and women to discuss this and bring it out in the open. I guess that is how we will promote diversity."
She said Malta was associated with professionalism, transparency
and respect. Regulations that have been
put in place and new ones being discussed institutionalise and entrench these attributes with the local service providers.
Summing up Malta as a maritime centre, she said: "A maritime Malta is a natural vocation that we cannot forsake. Over these last 30 years we have really come a long way. Quite a deal of credit goes to the Authorities who worked together with the industry to find the best way forward to create a robust legal regime and a sound infrastructure and to bring this to the attention of the international industry. We are proud of the very good response we have received and it is now our responsibility to maintain this progress to ensure sustainability and further progress.
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