Despite the lack of credit and some rising costs, many foreign businesses are committed to staying in Cyprus, nearly two thirds of whom are looking to expand their operations in the medium- to long-term, a survey has found.
The general fear had been that following the Eurogroup decision last March to impose a haircut on all unsecured deposits above 100,000 euros in order to bail out the island’s two banking giants, would have pushed many firms to move out of Cyprus to other jurisdictions.
This is why the Cyprus Investment Promotion Agency (CIPA) commissioned the University of Nicosia to conduct a special benchmark survey of about 120 foreign-owned companies, ten of whom employ an average of 600 staff, to find out why they have stayed and what will keep them here in the longer run.
CIPA Chairman Christodoulos Angastiniotis told a gathering of stake holders that “this information, originated from those directly involved and from people who, despite the problems, continue to show trust in the Cyprus economy, will prove to a be a very useful tool for us, to help better design and implement our strategic plan”. He said CIPA’s intention was to establish this survey and carry it out annually, although the stakeholders present urged the Agency to increase the frequency of the survey and widen the audience in order to getter a clearer pulse of the economic situation.
Angastiniotis said that Cyprus had started to convince even the most sceptical of observers that it has turned a new page. At the same time he stressed that despite the various steps in the right direction, “we must not ignore the fact that there are still serious weaknesses in certain areas”. He said Cyprus still had a long way to go. “Some problems did not just appear today. They date back decades.”
Former CIPA chairman and currently president of the Cyprus Chamber of Commerce KEVE, Phidias Pilides, said that the findings of the survey were “surprisingly better than expected” and that he was pleasantly surprised with the feedback from some foreign executives.
Reading into the survey, CIPA Director General Charis Papacharalambous highlighted the foreign investors’ expression of optimism over the medium and long-term course of the economy, acknowledging the prospects Cyprus has for growth, but also noted the obvious current challenges.
He said that almost 40% of participants were planning to expand their investment activity over the next three to five years, while 72% said they were “satisfied” or “very satisfied”, with the quality of life in Cyprus. And 59.9% replied that the return on their investment was what they had expected, while 19.6% said it was better than expected.
Roughly seven out of ten investors deem Cyprus’ investment environment as moderate to good. There were some interesting answers in regards to the factors which could improve Cyprus’ investment environment. The top positions were held by influences such as economic, political, and banking stability, refomr of government services/procedures, transparency and combating red tape. Cyprus’ image projection abroad is also considered important. Almost all participants said they want to see more empowerment of CIPA.
Angastiniotis said that the Ministry of Trade is already considering removing the “one-stop-shop” facility from the government and handing it over to CIPA. Responding to the complaints about red-tape in labour issues that Securities and Exchange Commission (CySEC) chairman Demetra Kalogirou very often receives from investment management and forex companies regulated by her office, Angastiniotis said CIPA wants to press ahead with a “red carpet” service for top-level managers from third countries to receive better and faster service at the immigration departments and not be treated the same as casual or low-skilled workers employed in households or in farms.
The conclusion from the survey is that key factors influencing investment decisions have deteriorated over the past 12 months, but that foreign investors observe developments in the Cypriot economy with great interest and anticipate the reforms and structural changes that will make Cyprus more competitive, less bureaucratic and generally more hospitable to investments.
It is a common observation that if Cyprus continues to work in an organised and methodical manner, based on a strategic plan, it will quickly correct the incongruities and return to growth, CIPA’s Papacharalambous said at the end of his presentation.
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