Chairman of the Business Council for Cooperation with Cyprus Mikhail Kuzolev is determined to maximise business opportunities between Cyprus and Russia
The relationship between Russia and Cyprus has always been very good politically and economically. What was the objective of setting up a Business Council for Cooperation with Cyprus?
Former Russian President Dmitry Medvedev visited the Republic of Cyprus in autumn 2010. His official visit and the agreement on cooperation between the Chambers of Commerce and Industry of Russia and Cyprus accelerated the idea of creating a Business Council of the two countries. A founding meeting of the Business Council for Cooperation with Cyprus was held on 16 March 2011 and I was elected Chairman of the Business Council.
The Business Council for Cooperation with Cyprus (BCCC) aims to promote the strengthening and expansion of trade and economic, scientific, technical and other business ties between Russian and Cypriot businesses, as well as their associations and unions. In September 2011, the BCCC signed memoranda of cooperation with the Cyprus Investment Promotion Agency (CIPA) and the Cyprus-Russia Business Association.
What makes the Business Council for Cooperation with Cyprus unique and why should entrepreneurs be interested in it?
The main task of the Business Council is to maximise opportunities for establishing direct business contacts between the companies of the Russian Federation and the Republic of Cyprus and there are plenty of opportunities. For example, the Council can assist in the registration of companies and offices in Cyprus, help in the search for investors as well as verify the existence and solvency of Cypriot businesses. There are also often many questions concerning double taxation and we can help answer them.
The Business Council has its own website and its interactive application enables colleagues to share their questions and unsettled issues in relation to Cypriot businesses. We have the relevant staff and try to keep track of all the problems they might be facing. The Business Council is an important tool for lowering administrative barriers and allowing mutual benefits from the international economic cooperation between Russia and Cyprus.
The gross investment volume between Cyprus and Russia reached US$100 billion dollars over the last 20 years, while the value of economic and financial ties between the two countries reached US$1.3 billion in 2011. What, in your opinion, has facilitated the close business relations between the two countries and for which activities do Russian companies use Cyprus?
As a member of the European Union since 2004, Cyprus is a very attractive investment destination with a solid reputation as a business centre. According to the 2011 World Bank report, of 183 countries Cyprus ranked 37th on favourable conditions for business. Over time, Cyprus has turned into a successful and respected international financial, business and investment centre.
Today, particularly because of the debt crisis in Greece, the Cypriot economy and its banking sector are under serious pressure. Cyprus has faced a difficult situation with a budget deficit of over 3 per cent GDP and the need for re-capitalisation of the banking sector. However, I don’t believe the decision of the Government of the Republic of Cyprus on the financial aid from the European Commission will significantly affect the business climate for Russian business in Cyprus.
In general, the BCCC positively appraises the steps by the Government of the Republic of Cyprus to raise funds within the EFSF mechanism. Allocation of financial aid will help to stabilise the banking system, balance the budget and give a new boost to the development of the Cyprus economy.
With the recent discovery of natural gas, Cyprus’ energy sector is currently offering exciting growth opportunities, and the government plans to develop Cyprus into a key energy hub. What role can Russia, as an established energy giant, play in assisting Cyprus to turn their vision into reality and what opportunities do the recent gas finds offer for Russian businesses?
The discovery of huge reserves of natural gas makes Cyprus one of the global players of the energy market in Europe, the Middle East and Africa. This will only promote further development of relations between Cyprus and Russia. Russian companies will undoubtedly show interest in the development of the field and will tender for them.
On the other hand, Russia has plans to develop Moscow into an international financial centre. Do you believe Cyprus’ experience in the financial sector might help Russia in this regard and what opportunities would this offer to Cypriot and Russian businesses?
One of the key tasks for Russia is to transform Moscow into an international financial centre. And the Business Council for Cooperation with Cyprus will definitely become one of the tools for achieving this.
Apart from financial services, what areas of opportunity do you see for Cypriot businesses to invest in, or transact business through, Russia?
For Russia, Cyprus today is not only a major trading partner, but also one of the main partners in the investment area. Cyprus is firmly placed as one of the leading foreign investors into the Russian economy. The figures are impressive: almost US$70 billion in accumulated investments and what is more important, almost US$40 billion in direct investments in various Russian industries – manufacturing, raw production, trade and infrastructure.
Russia is one of the major world powers and has strong trade links with Cyprus, which, by contrast, is one of the smallest countries in the European Union. Can you describe the current trade connections between Cyprus and Russia, what is the volume and value of trade, both ways, and how does this compare with figures from the last several years?
Trade is currently the basis of cooperation between our countries. Since 2009 the foreign trade turnover has roughly doubled – this is mainly due to Russian exports to Cyprus. Of US$1.3 billion trade turnover Russian exports accounted for US$1.2 billion last year. It is only US$100 million less than what we import from Cyprus. This is why Cyprus has great interest and opportunities in further promotion of their goods in Russia. For example, we buy agricultural products and light industry goods from Cyprus.
Russian companies operating in ship repairs and ship-building may also be interested in Cyprus, which is considered a major shipping center.
Cyprus is recording growing numbers of Russian tourists as well as Russian nationals relocating to the island. What makes Cyprus so attractive to Russian holidaymakers and expats?
The number of Russian tourists visiting Cyprus is significant. Cyprus is one of the oldest established tourist destinations for Russians. The increase of the tourist flow occurred when many countries began to introduce Schengen visas. Cyprus’ authorities proved wiser after having joined the European Union and did not introduce Schengen visas. Moreover, year by year it is becoming easier for Russians to get a Cyprus visa as all you have to do is fill in a pro-visa application form online. These are some of the reasons why our tourism ties are becoming increasingly stronger. Last year 320,000 Russian tourists visited Cyprus and the number of tourists is rising up to 50 per cent annually.
Cyprus is now in first place in terms of the growth rate of the tourist industry and increase in tourist flow from Russia compared to other countries. Today, Russia ranks second in the number of tourists on the island. Additionally, with a total population of almost 840,000 on the island, there are 10,000 permanent Russian residents. This also guarantees the presence of Russian-speaking employees in many companies, simplifying communication with our Mediterranean partners.
What are your expectations for the future – for both the BCCC and for the Russia-Cyprus relationship?
The Russia-Cyprus Business Council is a convenient platform for exchanging opinions. The fact that the governments of Russia and Cyprus give much attention to business relations between our countries is highly important.
One of the possible forms of further cooperation is holding joint conferences to discuss the investment climate in Cyprus and Russia. For instance, in February 2012, the Business Council together with the Chambers of Commerce and Industry of Russia and Cyprus and the Cyprus-Russia Business Association held the first Russia-Cyprus Investment Business Forum in Limassol. The fact that the President of Cyprus, Demetris Christofias, attended the forum proved the high level of preparation of the event itself. We hope that such events will continue to attract great interest among all parties interested in developing bilateral relations between our countries.