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By Christodoulos Angastiniotis
President, Cyprus Investment Promotion Agency (www.cipa.org.cy)
Cyprus is currently at the crossroads of fundamental change as the effects of the global financial crisis have also created a number of challenges. The Cyprus government is proactively taking the necessary economic measures to lower the public debt and to strike a manageable balance that will provide economic stability and ensure a moderate growth on a sustainable path that will enhance future growth prospects and attract further foreign investments.
One of the ways to achieve financial prosperity is to attract foreign investors. The Cyprus Investment Promotion Agency (CIPA) is acting within its mission and strategy to enhance the investment environment and promote the country as a robust and even more attractive investment destination. The promotion strategy involves the creation of a modern institutional and legislative framework which allows Cyprus to be preferred to other competitive destinations and enhances the ease of doing business on the island.
The island has established a reputation as a springboard for international investors accessing the large EU markets as well as the emerging economies of the Middle East, Eastern Europe, North Africa, India and China.
Joining the EU in May 2004 and the Eurozone in 2008, was a landmark for the Cyprus economy, as the process of harmonization to the European rules and regulations has brought forward many significant reforms that contributed to a more attractive business environment. Cyprus provides a plethora of opportunities for investors. Its thriving market-oriented economy operates within a transparent regulatory and legal system predicated on the Common Law of the United Kingdom, and fully harmonized with the collective framework of laws and regulations of the EU. Cyprus provides many advantages to the corporate sector, including the lowest corporate taxation rates in the EU (10%) and double taxation agreements with 44 countries.
Foreign investors are able to utilize an advanced transport and telecommunications infrastructure, a highly educated, skilled and multilingual human capital base as well as a high standard of specialist professional services. Moreover, Cyprus offers relatively lower operating costs with high quality services, including banking, tax, accounting, auditing, business administration, legal, investment and funds management. All these paired with the island’s enviable quality of life are the key ingredients that have made Cyprus stand out in the Global Investment Map.
Cyprus economy is mainly based on the services sector which is about 80% of the Gross Domestic Product (GDP) and is expected to remain the main driver of growth in the country. International business activities will continue to contribute significantly to the GDP, while at the same time key priority sectors are among the prime movers of the economy. The most attractive sectors that offer a wide range of investment opportunities include:
Cyprus is an attractive Financial centre combining low costs and flexibility features while complying with EU regulations and international best practice. The country offers a regional platform for a variety of banking products and financial services including investment funds business ranging from funds setup, management, administration and distribution. The commercial banks and specialized financial institutions offer full local, national and international services on a personal and corporate level.
Shipping, which has established Cyprus as an internationally renowned centre provides extremely attractive investment options. Based on the register of ships, the merchant fleet of Cyprus is the 3rd largest in the European Union and the 10th largest in the world. More than 130 ship owning, ship management and shipping related companies maintain offices in and conduct international activities from Cyprus. The European Union’s approval of a fully revised and upgraded legislation (‘New Tonnage Tax System’) providing a favorable tax regime and covering the basic shipping activities offered today, opens new perspectives for investments in Cyprus.
The Energy sector with the massive stores of natural gas in the exclusive economic zone of Cyprus has brought the country to the forefront of the global energy market and a key player in the EMEA region. Proven discoveries may transform Cyprus and its energy grids as self sufficient for decades. Many foreign investors have already expressed interest in undertaking energy activities in Cyprus, focusing for the development of the necessary infrastructure concerning the exploitation of natural gas.
Moreover, the opportunities for domestic and foreign investment in the development of Renewable Energy Source (RES) and Technologies also result in a throng of new investors to the country.
Information and Communication Technologies (ICT) is of strategic importance. The sector offers the potential for Research and Development (R&D), innovation and optimal utilization of human resources in activities to produce goods and services of high added value in knowledge and expertise.
Due to its strategic location, Cyprus can easily be utilized as a platform for investors focusing on Warehouse, Logistics, Distribution and Headquartering activities with the aim to reach either the European, Asian or African markets.
A number of large Development Projects, such as marinas, golf courses, as well as more integrated development projects which include residential, commercial as well as high-quality educational and health services, are currently available for foreign investment. Some of these projects have already begun construction and others are in the final stages of licensing.
Furthermore, Cyprus is offering attractive investment opportunities in the Health Tourism and Education sectors, both in collaboration with the local institutions, as well as for Greenfield projects.
An essential prerequisite for further development of Cyprus is the implementation of drastic restrictive policies to reduce the public finance and debt monitoring. All EU countries must take all the necessary measures to regain their competitiveness as well as their economic stability and predictability. Moreover, the reduction of investment risk as well as the safety and security for investments plays an essential role that will contribute towards the country’s economic recovery.
CIPA is working closely with the government, the regulatory and supervisory bodies, as well as industry experts in Cyprus to enhance even more the investment environment and to promote the country as an attractive platform and destination for foreign investors.
