Investment will only come with proper incentives

2 mins read

The visit to Germany this week by Elon Musk to check out his futuristic plant, went largely unnoticed in Cyprus because we are so obsessed with corruption, conspiracy theories and selling passports that we often do not see the bigger picture.

The visionary who brought us, Tesla, SpaceX and Neuralink concluded on the ‘GigaBerlin’ site because several countries had entered a bidding war to clinch the deal, offering an amalgamation of environmental concerns with financial incentives and job creation.

It is not just the sea, sand and sheftalia.

What companies need are lucrative incentives.

Investors want to know what they will get out of moving their business to Cyprus while existing enterprises need to know how they can stay afloat and survive the current pandemic-driven downturn, by retaining their staff as best as possible.

Foreign investors need security and unhindered operations without delays and ensuring they get their permits promptly, not dozens of months later.

But are we doing enough?

The cabinet this week approved the creation of a Fast Track Business Activation Mechanism for setting up a company in Cyprus by third-country nationals to attract more foreign investment.

This is the same old “one-stop-shop” we have been hearing about for two decades, with a new nameplate on the door.

As much as we want this mechanism to work (for the umpteenth time), there are serious doubts if this will be the clincher to attract foreign investors.

Setting up a techno-park at Pentakomo was a blundering failure because there was no realistic incentive, making it more suited today as a studio setting for a dusty Western movie than a high-tech incubator site.

The incentives for relocation of executives and managers have largely been ignored as this does not line the pockets of the few who benefit from kickbacks when selling million-plus homes to stateless entrepreneurs.

The only incentives we offer are the ones provided under the alleged Investment for Citizenship Programme, revised to include a clause whereby some of the money, breadcrumbs, end up in low-cost housing or as investments and grants in research.

We say ‘alleged’ because the programme has not produced the desired investment, apart from making property developers and their lawyers richer, with few, if any benefits trickling down to the average construction worker or shop-owner.

Some of the billions pumped into Cyprus have ended up in state coffers, but that money has not been reinvested into developing the economy, rather it has ended up enhancing the state payroll.

The government, that initially tried to gag Al Jazeera before revealing all in the ‘Cyprus Papers’, has now decided that it wants to open all naturalisation cases for review, dating back to 2007.

A task that aims to confuse rather than clarify, by setting down very vague criteria.

The aim is to prevent the independent Auditor General from doing the job, which he would have done better and faster, as his purpose is to protect taxpayers’ funds.

Instead, the administration is opening a Pandora’s Box that could jeopardise its already unreliable reputation.

Not the best atmosphere when trying to attract foreign investors.

Perhaps we need to go back to the drawing board and learn from the French, who unveiled a €100 bln package to restart the economy based on three pillars: greening the economy; promoting economic sovereignty and relocating businesses to France; and funding “solidarity and skills” through social expenses.

If we cannot make up our minds on the right incentives, we should at least admit we have failed and copy others.