Cyprus FDI in 2005 at USD 1.16 bln

Cyprus has performed well in attracting Foreign Firect Investments (FDI); indicatively, Cyprus is classified among the front-runners of the world ranking high both in FDI performance as well as in FDI potential, based on the latest World Investment Report of UNCTAD published in 2006.

The FDI inflows for 2005 were above $1.1 billion continuing an upward trend for second

consecutive year, showing an increase in the range of 30,8% from 2003; indicating the

country’s attractiveness as an international investment and business centre, according to The Foreign Investors Service Centre.

Cyprus’ Foreign Direct Investments to Cyprus originate mainly from European countries

with a percentage of approximately 94%, out of which European Union countries (EU 25) account for 58,90%. Moreover, the majority of the Foreign Direct Investments to Cyprus are directed towards the services sector (accounting for approximately 85%) and especially in the financial services, banking, shipping, trade and real estate business.

The Foreign Investors Service Centre operates under the auspices of the Ministry of Commerce, Industry and Tourism, for foreign based companies interested in investigating direct investment opportunities in Cyprus. It constitutes the central agency of information, support, and foreign investors’ relations.

According to World Investment Report 2006, published by UNCTAD, foreign direct investments (FDI) in 2005 grew for the second consecutive year; exhibiting a worldwide phenomenon.

Inward FDI increased by 29%, reaching at $916 billion in total. Inflows of FDI to developed countries demonstrated an increase of 37% in 2005, while developing countries reported the highest level ever recorded ($334 billion).

The United Kingdom was the world’s largest recipient of FDI in 2005 (with a total of $165 billion), followed by the United States of America. Among developing economies, China and Hong Kong (China) remained the largest recipients, followed by Singapore, Mexico and Brazil.

Remarkably, the European Union (EU-25) was the world’s favourite destination for 2005, with inflows of $422 billion corresponding to almost half of the world’s total. Notably, West Asia reported the highest inward FDI growth rate, of 85%, amounting to $34 billion while Africa received $31 billion, the largest ever FDI inflow to that region.

Developed countries remained the leading sources of FDI in 2005, with Netherlands being the leader, followed by France and the United Kingdom, Nevertheless, remarkable increases have taken place in outward investments by developing economies, led by

Hong Kong; indicating a rising role of the developing and transition economies in FDI sourcing.

Services continued to receive most of the FDI inflow, particularly finance, telecommunications and real estate; however, the sharpest rise in FDI was in natural resources primarily the petroleum industry. On the contrary, the manufacturing sector is reporting a further and sharp decline in FDI inflows.