COVID19: Passport scheme provides a crisis exit

3 mins read

Now that we are facing serious financial difficulties, some want to bring back the passports/visas incentive scheme.

It is a bit odd that the same political parties and individuals who were critical of the government on this, are now all for it, to the extent they want the government to re-examine the situation as a matter of urgency.

Regrettably, foreign investors do not flow from a tap, which we can turn on and off whenever we want.

The cancellation of already-issued Cyprus passports has caused great damage to our reputation and uncertainty among potential investors who do not trust the Republic.

To date, we have collected from such investors some €6.5 bln and we now want to raise another €1 bln, based on some 100 pending applications and 700 others waiting in the queue.

This investment scheme was reconsidered because of the lax examination of about 30 applications from among 1,500 passports already issued, and the intervention of the EU.

Yet those who have caused this problem are none other than the developers with the shocking advert by a Paphos developer offering an open invitation to anyone who can introduce foreign buyers for passports “will earn a considerable income”.

The pending new regulations, expected to be approved by the House within the next 2-3 months, should address the concerns of the EU and others.

These new regulations must include penalties for those provocative advertisers who are misleading and should impose a hefty fine of €500,000 per case.

If we manage to restart the Cyprus Investment Programme (be it with far less interest, because of increasing competition from Greece/Bulgaria, as well as the global economic situation), it will be a step in the right direction.

The situation is quite serious since limited property sales will cause serious financial problems not only for developers but cause a chain reaction affecting those who cannot pay-off their bad debts and financiers getting into trouble by increasing their non-performing loan portfolios.

Banks in trouble

Trying to protect the banks is a major issue and the 2013 bail-in, as well as the Co-op bank rescue, is still fresh in our minds.

The newfound hostility of the political parties against the banks, more for populist reasons than anything else, will weaken the banks further.

This new economic reality, which is more dangerous than that of 2013, raises serious concerns for depositors who do not know what to do with their cash.

So, should private companies build vaults and stash their cash in safe boxes?

The tourism sector, the lifeline of the Cyprus economy, heard Deputy Minister of Tourism Savvas Perdios predict that arrivals will be reduced “at best” by 60%, which is most worrying.

Surely, his suggestion of local holidays (a scheme existing for the last 30 years which is heavily subsidised for low-income Cypriots) is an idea to explore.

Although the scheme started in an effort to support the mountain tourist resorts, this was subsequently extended to cover the beach hotels as well.

Beneficiaries preferred beach hotels, leaving the mountain resorts in the cold once again.

Since beach hotels had a most profitable period over the last three years, the government should place a limit on the social tourism for beach hotels with at least 40% to be directed to the mountain resorts, giving them a chance to survive.

We have “lost” Mr Papadouris, a businessman who was placed in charge of the mountain resorts development, who was working without pay, plus he contributed over €1 mln of his own money towards expert studies.

For reasons of petty politics, he was replaced by a teacher who has never been involved in business and only God knows how this will work out.

In terms of the tourist industry, I would like to congratulate Perdios for his work and the results he has produced, although he has been unlucky due to the prevailing situation.

I may add that we are lucky that the Minister of Commerce and Industry is no longer responsible for tourism, considering the mess that his ministry has with the Halloumi debacle and other disasters.

I would also like to congratulate Natasa Pilidou who is in charge of the Deputy Ministry of Shipping which in a year has increased shipping revenues by more than 30%.

Just as well we have young people in government who have shown worthy results.

We need to have more young people in government with an appetite for work.

I have already suggested the establishment of a Deputy Minister for the Interior responsible for ending the problem of permits, title deeds, Lands Registry procedures etc.

There are also the “greens” who have no problem placing the Cyprus government in conflict with the EU, as a result of which the Famagusta golf course is a no-go, as is the unfinished road between Paphos airport and the town, the Shacolas golf course in Polis and the never-ending Paphos-Polis highway.

Similarly, the Personal Data Protection Commissioner’s stance is most strange, giving rulings as did Pythia, regarding the placing of security cameras and other matters, while the Commissioner on Insurance Companies is another mess, judging from the Bulgarian motor insurance saga.

On a positive note, another worthy young man is Minister of Health Constantinos Ioannou who is doing, by general opinion, a very good job.

The future is in the hands of (some) of these recent appointments who provide a glimmer of hope.