Cyprus & World News

EBRD should invest ‘wisely’ in Cyprus private sector, SMEs

11 June, 2014

 * OEV chairman says bureaucracy still a major problem *

By Kyriaki Demetriou, CNA
The newly-elected chairman of the Employers and Industrialists Federation (OEV) has called for an urgent investment by major funds to sustain the private sector which has the resources to be competitive with international peers and encourage innovation.
In an interview with the Cyprus News Agency, Christos Michaelides, who hails from the consultancy sector, said that external funding is necessary to support investments, including the upgrading and expansion of infrastructure to support private sector initiatives in fields such as renewable energy, natural gas and various forms of tourism.
“Many companies face serious financial problems and use all their forces to remain in the market,” he said, noting that “it is very important to utilise in a proper manner the European Bank on Reconstruction and Development, which will allocate funds to the private sector”.
The EBRD is expected to invest some 600-700 mln by the end of 2020 and has already appointed a Cyprus manager who will oversee investments and supervision of the allocation of funds.
Michaelides said that there is a “wide availability of young people with high educational qualifications, which paves the way to strengthen youth entrepreneurship, based on research and innovation. He sees “tremendous growth prospects” in the energy sector and opportunities for job creation in further developing various forms of tourism, such as religious, medical, sports and conference tourism.
Realising that that there are companies that can afford to, the OEV chairman urged those who can pay their loans, to do so without any further delay in order to generate liquidity back in the market.
He also called on the banks to accelerate the restructuring process of viable loans and do whatever they can to recover debts from whoever fails to repay their loans.
Michaelides said that the problem of non-performing loans (NPLs) would have been smaller, had Cyprus adopted the same definition as in other European countries.
He stressed that economic recovery and the solving social problems created by the economic crisis will eventually start from the businesses and therefore priority should be given in ensuring their sustainability, creating new businesses and formulating an environment for business development.
He said that OEV is focusing its efforts on three pillars: 1. to restart the economy and create conditions for growth, jobs and prosperity; 2. rebuild the forces of the economy, focusing on private initiative, along with redefining Cyprus’ economic model, attracting investments, accelerating privatisations and consolidating the banking system; and, 3. to promote innovative practices, incentives and effective measures for the enterprises to survive and develop.
“Strengthening entrepreneurship, helping Cypriot businesses to take over projects abroad and attracting investments, particularly foreign ones, will boost liquidity and alleviate problems caused by the economic crisis. To revive entrepreneurship we believe that the state’s contribution must be significant to support businesses by reducing bureaucracy and provide incentives for innovative and imaginative practices,” Michaelides said.
He noted that by facilitating Cypriot businesses to take over construction projects or parts of them, abroad, will also generate significant revenue for the economy and many jobs for Cypriots and called on the Ministry of Commerce to provide practical contribution toward that direction.
“The promotion of exports of goods and services can be done with the practical help of the Commerce Ministry and our ambassadors abroad,” he said.
The President of OEV said that “lending is perhaps the biggest problem faced by the banking sector, in particular the NPLs”.
“It is important to hold an honest dialogue between the banks and the enterprises as the banks’ ultimate goal is not to close down businesses but render them viable so as to recover the debts”.
Michaelides pointed out that OEV supports all measures to encourage the employment of Cypriots, provided that they are applied on a voluntary basis and do not violate the acquis communautaire. “We must keep in mind that we are a member state of the EU where employment discriminations are prohibited and we must not act contrary to our country’s interests” he said, as regards the employment of workers from other EU countries. Especially for the hotels industry, he noted that “a large part of tourists (who visit Cyprus) do not speak Greek and there are hotels fully booked by foreign visitors for the entire (tourist) season”.
He expresses the view that combating undeclared work is a sole responsibility of the state.
The liberalisation of shop opening hours is a successful measure, as it “has created thousands of new jobs”, describing as “excessive and unjustified” the reactions by the small and medium sized enterprises organisation, POVEK, against the implementation of the measure.
Michaelides concluded that “despite all efforts to fight bureaucracy, the problem remains serious and constitutes a major obstacle for the businesses”. Positive steps have certainly been taken but the economic crisis should have push for radical decisions, he said, adding that hopefully a new Commissioner for Public Service Reform will take over very soon to carry out the modernisation of the public sector.