By Maria Panayiotou
At the peak of the financial crisis in Cyprus, the decision to promote the investment funds sector has proven to be particularly successful within a short time frame.
Within five years, Cyprus has attracted a significant amount of Collective and Alternative Investment Funds.
Today, the total assets under management within the Cyprus investment funds sector have exceeded €8 bln.
The benefits generated from the licensing of Investment Funds affect the economy as a whole.
That includes an increase in tax revenue, new specialized job positions, the attraction of high-income employees from overseas, as well as promoting the country’s name as a professional services hub during a period of challenges and investments in the real economy.
We fully appreciate that it is not easy to be comparable to traditional investment fund jurisdictions within a short period, such as Luxembourg, Ireland, the Netherlands, and the UK.
It takes time, a proven track record and comparative advantages.
However, we are particularly satisfied with the current status quo since Cyprus’ legislative and regulatory framework aligns with all other major jurisdictions.
Both the Cyprus Investment Funds Association (CIFA) and business leaders in the private sector closely monitor developments in the investment funds industry.
And in cooperation (as permitted by law) with the Cyprus Securities and Exchange Commission (the competent regulator) and the Ministry of Finance, we have constantly been updating the local regulatory framework without stepping outside EU common rules.
After all, this close regulation and oversight provide a safety net for investors and investment fund managers.
Within this context, we hope that in 2021 we will witness the approval of new important legislation, such as the simplification of the tax framework and the legislation which regulates fund administration services.
An important comparative advantage of Cyprus as an investment funds jurisdiction is its low operating cost.
Small and medium-sized investment funds attach particular importance to operating costs, and this is the main reason why many of them choose Cyprus.
This specific advantage is further enhanced by the existence of local highly skilled human capital, the widespread use of the English language, and in more general terms, the advantages of Cyprus as a destination, such as safe living conditions, favourable weather, and its hospitality.
With these tools at hand and the advantages mentioned above, we continue our efforts to attract investment funds, despite limited resources.
We are pleased with the progress we have made so far, and we are optimistic about achieving the medium-term target we have set as CIFA, which is to increase the assets under management in Cyprus to €25 bln.
We are pleased to see investment fund managers and investment funds from the UK choosing Cyprus as their new domicile following Brexit.
About 10-15 investment fund managers and 20 investment funds actively consider moving their headquarters/base to Cyprus.
Simultaneously, our proximity to the Middle Eastern and North African markets has had a positive effect since these are markets offering significant financial reserves and investment opportunities to investment funds.
We are also pleased to see investment funds investing in the local economy, in sectors with significant potential for sustainable growth such as shipping, education, health and renewable energy.
We welcome this development, especially in these difficult times caused by the pandemic, as investment funds worldwide are becoming a systemic pillar for financing the real economy.
We aspire that investment funds will soon constitute one of the main pillars of contribution and financing of Cyprus’ real economy.
To this end, we undertake every possible action to best explain to both public and private stakeholders the best ways to multiply the sector’s contribution, either through co-investment facilities or through the simplification of the taxation system and other similar incentives.
Considering all of this, we believe the investment funds sector is now an integral part of Cyprus’ development policy, and it must be promoted and treated as such.
Maria Panayiotou, Board Secretary, Cyprus Investment Funds Association (CIFA)