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R&D vs. Innovation: Cyprus politicians don’t have a clue

20 December, 2013

R&D vs. Innovation: Politicians don’t have a clue
High electricity cost is killing Cypriot entrepreneurs

Cypriot entrepreneurs who are trying to innovate in order to compete with their international peers are facing an uphill battle, made worse by the ignorance of politicians and the red tape in civil service when it comes to providing aid for research and development.
Cyprus lags at the bottom of the EU league table when it comes to per-GDP spend on innovation, but ranks higher in the case of research, especially in the case of grants generously provided to academia, a workshop organised by the employers’ federation OEV concluded. But if you calculate the grants in terms of head-count and the real impact this funding would have on the economy, private enterprises, too, seem to be rising up the ladder.
The latest figures show that only 0.48% of GDP or about 86 mln euros was spent on research and on innovation in 2011, half the target for Cyprus and a quarter of the EU average. But the trend from 2009 to 2011 showed that there was a reduction in funded projects from the private sector and an increase in higher education projects, the opposite of the EU norm.
There are hundreds of prospective innovation projects, but none have access to funding because of exhausting bureaucratic procedures, or simply, academia seem to be getting the lion’s share of grants, with little of the results trickling back to the economy, either in the form of applied results or even in job opportunities.
“Politicians and decision makers, unfortunately, seem to link research and innovation only with higher education, which is why private sector projects that will contribute directly to the economy, are often left out,” said one attendee at the workshop.
The only good news is that President Anastasiades has appointed a committee that will advise him on entrepreneurship and, hopefully, draft a new policy and guidelines in order to make Cypriot companies and the economy as a whole much more competitive, while pushing universities to cooperate with large companies and SMEs.
“Cyprus is no longer competitive, in any sector,” former OEV chairman and the founder of Medochemie, Dr Andreas Pittas said at the workshop.
“Innovation should undergo a new process or adopt a completely new method of operation, in order to cope with the problem of rising operating costs,” Pittas said, bringing his own pharmaceutical company as an example.
“How can we compete with our international rivals when we spent about 4 mln euros on research and development, but also 4 mln on our electricity bill? According to our calculations, our electricity bill would have been 1.3 mln euros, had we been based in Lyon and only 1 mln in Bulgaria. Imagine the money that is being wasted that could have gone to research,” Pittas said.
“As Cypriots we are very creative. We have survived many crises and we will survive the present one as well. This creates an urge for greater creativity and innovation.”
Dr Pittas said that what many industries or SMEs need more, apart from direct funding, are incentives such as tax breaks, or the better utilisation of EU funds, closer cooperation and understanding from the Ministry of Commerce and the Planning Bureau, where, he says, things move extremely slowly with tremendous bureaucracy.
Tasos Kounoudes, CEO of SignalGenerix and a past winner of the OEV Innovation award, suggested that Cyprus follows the guidelines from the EU as discussed at a DG Region conference in Brussels, where the main conclusion was “re-industrialisation” as too many services and manufacturing have been outsourced to the Far East and Asia, and very little being produced within the EU itself.
“There also has to be a clear definition of innovation projects and how these grants are awarded,” he said, suggesting that any funds given to university projects should have a requirement that individual companies or organisations from the wider economy are involved, to ensure that job opportunities are also created through such grants.
Dr Pittas gave the example of the Cyprus Institute, which, he said, has cooperated with OEV and other groups on numerous projects, while he said that incentives should also be given for research projects to become spin-offs or startups that would have commercial value after development, making them attractive to investors.