Cyprus is not what the label says

4 mins read

We spend a lot of time, effort, and money to promote Cyprus as an attractive place for foreign investments.

The various pluses for attracting foreign investors are known, but the execution is complex for real estate development projects (including hotels).

This country is governed by some people who do not necessarily love Cyprus and its people but are looking only after themselves.

On the one hand, we have a government that is all for attracting investors and bends over backwards to facilitate them; with the various relaxations and incentives, we then have political parties governed by petty interests which place all sorts of obstacles.

  • Parliament – since with this minority government, suggested measures are blocked or cut down by small politics.

One example was regulating shopping hours which disregarded the wish of the consumers. But, just as well, a legal solution was found, and shops now operate over weekends.

  • The casino (City of Dreams) almost collapsed due to the lack of land (parliament prevented the leasing of state land). Now, a former party leader who objected to the casino investment is trying to ban smoking within it. And this notwithstanding the benefits that this project will bring to Cyprus and ignoring the fact that thousands of foreign and local gamblers visit casinos in the Turkish occupied areas where smoking is allowed.
  • The Auditor-General – Any decision taken by the government/civil service is scrutinised. His opinion is given with extensive publicity, not necessarily at the end of any investigation but at the start. The result is that nobody in government/ civil service decides for fear of being “exposed” as being crooked.
  • Insufficient Civil Service – A shock to any newcomer to Cyprus is inexcusable delays in decisions and response to enquiries and proposals. See the Eden project, which took two years to get a reply from the Land Registry on the lease required for government land. In this Troodos adventure project, the investor having waited for a whole year for an answer that never came and having reached a preliminary agreement on the land lease, the Auditor General blocked the whole deal.
  • Ministries’ inefficiencies were evident in a marina project in Limassol that cost the foreign investors more than €30 mln due to differences in the contract. We asked for a meeting with the Ministry of Commerce. It took a year for the Ministry to respond to a meeting to clear the differences. Moreover, during the meeting, the Auditor General’s office people were present for reasons that we could not understand. It reminds us of the Commissars of the Red Army, where the officers could not give any order if not approved by the commissars.
  • Media – The media plays a key role in the whole investment procedure. Still, some media are governed by politics having no freedom of independent judgement, and their indifference does not help put right the situation.
  • Archaic Laws – The statutory tenants who are offered the security of tenure is a huge problem. See the Larnaca Phinikoudes hotel/mall development with an investment of €12 mln by a foreign investor, which was abandoned because the tenants’ eviction will take 2-5 years. The law is there for the eviction, but the unfortunate foreign investor did not calculate the inexcusable delays. He thought that “Cyprus being an EU country could have resolved this problem within a year”.  How misinformed he was.
  • Governmental instructions – It is tragic that even the President of the Republic must get involved for answers from the civil service and provide a more friendly procedure to foreign and large scale local investors and this with a most efficient Minister of Interior at any time. Clear instructions are needed for the civil service, and if they cannot respond timely, the government should appoint third parties from the private sector to review. The cost that occurred will be a fraction of the benefits.
  • The decentralisation of public and semi-state authorities, a condition by the Troika/E.U. funders came to a halt. We have so far only privatised the operation (not land) of Limassol port, having paid almost €30 mln to 50 employees. Imagine what we will need to privatise telecom Cyta, the EAC electricity utility and others.
  • In the case of various planned theme parks, e.g. the dolphin park, the crocodile farm and others, where we encouraged foreign investors, the environmentalists, and others are objecting. For the first, the dolphins would have come from the U.S. and cannot survive in the “wild”, we were told, while for the crocodile farm, the locals sold their land to the foreign investor, and the same people turned around and objected to the project in the biggest con job.

The Pentakomo Technological Park, after six years of waiting and spending millions on the infrastructure, has had no interest and is now abandoned.

To this unacceptable state of affairs, we have various foreign consultants to the government, whom we take for granted as being ultimate experts.

Some of their reports are shockingly full of errors, as was the last report on disposing of government land to reduce public debt.

For the plot destined for the new Nicosia Museum, their suggestion was for a shopping mall. Are they serious?

The old GSP football ground was to be used as a hotel, despite Nicosia hotels shutting down due to lack of business.

Another suggestion by these ‘experts’ was the various beach and non-beach plots to be divided into building plots for sale (when building plots are in abundance. This was not a serious recommendation).

These and others are disappointing foreign investors and showing that Cyprus is a country that does not know what it wants.

To this end, we remind you of the international conference in Limassol in November, part of the government’s effort to attract foreign investors, where foreign investors in Cyprus brought up their own experiences in disappointment, including the unfortunate Indian investor with an existing Cyprus base with 400 employees, who eventually moved his business to Norway.

He explained that after months of waiting to get a reply for his employees’ permits, he “arranged” it using the services of a “third party,” but it was too late.

Antonis Loizou Real Estate Valuer, Estate Agent & Property Consultant