As a maritime nation we should be looking for opportunities to see the marine services industry grow and prosper in Malta. At present there are various favourable global economic conditions that should spur us into taking action to attract marine services companies to Malta. Unfortunately, the government is suffering from inertia when it comes to promoting the maritime industry.

Over the past several years, Malta has built a reputation of being one of the more important flag nations with ship registration becoming a major economic activity even if, so far, it has not helped to attract other ancillary maritime activity.

Cyprus's success in this sphere should serve as an example to be followed by us. It has not only been successful in the financial services sector, but is today recognised as being one of the most successful international maritime centres.

Similarly, our long established ship repair facilities, as well as our Freeport, should have acted as a magnet for other maritime services that lend themselves naturally to an island which already offers core skills in some areas but fails to provide a one-stop shop for the maritime industry.

Third party ship management is a growing industry because it offers solutions to ship owners, many of whom are interested in reaping financial benefit from their investment in shipping but are less adapt at managing their ships successfully in an increasingly complex regulatory environment.

The sheer amount of regulations and recommendations being thrown at ship owners is indeed frightening for most ship owners who own a few vessels and lack the administrative and logistic support to fulfil their obligations effectively. These owners are therefore becoming increasingly interested to pass on the responsibility of managing their ships to third parties.

It is estimated that only 20 per cent of the world fleet is under third party management. Ship management companies lure owners to entrust them with managing their ships with clear evidence that their bargaining power when dealing with providers of essential services will add on value to owners by offering discounted costs for repairs and maintenance, purchase of spare parts, bunkers, and lubes, insurance and P&I cover and the recruitment of crews. Ship management companies also offer IT ship management services that would be too expensive for owners of one or a few ships to afford.

One can thus imagine the economic benefits that will accrue if we manage to attract a critical mass of ship owners to Malta. It is estimated that ship managers charge about $130,000 per annum to manage a tanker on behalf of an owner. But, perhaps more important, this kind of activity generates demands for other services.

The list of ancillary services provided by ship managers is impressive. It includes spare parts, stores and provisions supply, preparation for drydock specifications and work supervision, insurance cover, crew supply, bunker supply, negotiations with banks for ship purchase loans, advise on ship registration, survey inspections, and commercial management. All these activities necessitate large numbers of technical and administrative staff with a medium to high level of education and skills: not a bad prospect for our hundreds of young, and not so young workers, looking for employment.

While we have some natural advantages, investment in maritime services will not flow to us automatically. The opportunities are there. Our location near Italy and Greece, two major locations for ship owners, could prove to be distinct advantages. But we need more than that.

Dubai, for instance, is trying to attract the maritime services players by building a Maritime City. They are building on the reputation of their established Dubai drydocks as one of the leading repair yards in the Middle East to attract other maritime services to the area.

Dubai's Maritime City is being built on reclaimed land that will have an area of 216 hectares. When this project is completed in 2010, DMC will serve the needs of a multitude of global marine and maritime industry operators and will include industrial areas, showrooms, commercial towers, research and educational facilities, marinas and hotels.

By offering purpose-built locations to prospective investors, we could achieve our aims more rapidly than leaving it to such investors to decide where to operate. A visible and clearly identified location will make it easier for potential investors to weigh the advantages of locating in Malta, especially since some of our competitors would already be offering this advantage.

There is no reason why Malta cannot emulate such forward thinking for attracting investment. Admittedly, all such projects demand financing, but maritime business, despite its ups and downs, is here to stay as the world economy continues to grow and development banks are always willing to consider financing feasible projects.

We do have to be careful, however, to ensure that inflation does not discourage potential operators from Malta. In Dubai, for instance, the consistent average property inflation of 15 per cent per annum is persuading some maritime services companies to look elsewhere from where to operate.

With the right political will, all these challenges can be managed. The maritime services industry, even if perhaps less glamorous than the financial services industry, can fill a gap in the foreign direct investment area and create much needed employment to propel the growth of our economy.

Dr Mangion is deputy leader of the Malta Labour Party for parliamentary affairs.

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