Investment in energy, special interest tourism and innovation are set to take Cyprus forward, as the country returns to growth, says Minister Yiorgos Lakkotrypis
Your ministry has a large portfolio of sectors that significantly contribute to the economy of Cyprus, what key priorities have you set for 2016?
We cover a number of sectors and have a set of key priorities for 2016. For tourism, we want to maintain the momentum for growth that we have seen in 2015, both in terms of arrivals and revenue for the country. We also want to promote the large infrastructure projects that we have embarked on, especially the integrated casino resort – the tender of which has attracted major international players – and we expect the license will be awarded to a successful bidder by mid-2016. We also look forward to seeing the completion of other major projects, such as the Ayia Napa Marina and the Paralimni Marina, which is also out to tender at the moment. In addition, we are launching the Science and Technology Park, which is sure to garner much interest from investors as well. Instrumental to our efforts is to complete the structural reforms currently underway at the Registrar of Companies and we will be putting out a tender for a turnkey ICT solution to create a more efficient Registrar. In the field of commerce, we also want to build on the positive momentum we have achieved in 2015 in terms of exports – between January and July 2015, we saw a significant 14% increase in export activities.
Cyprus has significant deposits of natural gas in its Exclusive Economic Zone (EEZ), with the fluctuating global energy market and recent geopolitical developments , what is the current strategy for exploiting these reserves and what kind of international cooperation do you see Cyprus developing with its neighbours?
It’s not just a matter of exploitation, but also exploration. We are continuing our strategy of exporting our gas regionally, which will also enable us to bring our gas to our shores for electricity production. We expect to make solid progress with our commercial agreements in 2016, and to see more exploration activities as well as discoveries in the Cyprus EEZ. There is certainly great momentum at the moment with the recent decision of British multinational oil and gas company BG Group to acquire a 35% stake in Cyprus’ offshore Block 12, following an agreement with concession holder and operator Noble Energy – who made the initial natural gas discovery in 2011. For the time being the plan is to build regional pipelines, but if and when there will be more discoveries in Cyprus’ EEZ, further onshore installations and a liquefaction plant could be possible in Cyprus. The excellent relationships that we have with all our regional neighbours establish solid foundations for further cooperation in energy issues in the Eastern Mediterranean. We are expecting to see deepening relationships with Egypt, Israel, Jordan, Lebanon and Greece, as well as other Mediterranean countries such as Italy, who are engaged in these issues.
How do you see Cyprus’ renewable energy sector developing in the near future?
In regards to renewables we have already exceeded our intermediate 2020 targets, and are at about 8.75% right now, when the threshold for 2015-2016 was 7.45%. We continue to promote renewable sources of energy in Cyprus, and recently approved the new plan for net-metering using photovoltaic installation, which will allow households to go from 3kW to 5kW. In addition, for the first time we are allowing net-metering to be used for commercial buildings as well. Cyprus is also seeing more development in terms of solar energy parks, but more importantly we are seeing individuals being able to generate their own power through renewable energy sources. This is a trend we expect will follow an accelerated growth rate with the maturing of energy storage technologies.
Tourism has been one of the key drivers of the Cypriot economy for decades , yet the number of tourist arrivals has not significantly risen over the years. How is Cyprus developing and upgrading this sector and what segments are showing growth and investment potential?
It is true, the numbers of arrivals to Cyprus over the past 15 years vis-ΰ-vis the international growth trends have been quite stalled, primarily because more and more markets were coming in with the sun and sea concept and Cyprus found it increasingly harder to differentiate itself. This is why we have embarked on an agenda to diversify our offering by promoting special interest tourism, lengthening the tourist season to attract more visitors in winter months, and by introducing large tourism infrastructure projects – a highlight of which will be the integrated casino resort. There will be only one licence awarded, with 15 years exclusivity in order to attract serious investors to Cyprus. We will also continue developing nautical tourism with our new marina developments as well as golf tourism with the operation of more courses in Cyprus.
The professional services sector is another key pillar of the Cypriot economy , how is this sector doing at the moment and with increased international regulation how do you see it developing in the near future?
Undoubtedly this sector will continue to be very important for the Cyprus economy. We offer services of the highest standard in the accountancy, legal and financial fields. Promoting this sector is a top priority for us and we will continue to expand the network of double tax treaties with other countries and our structural reforms with the Registrar of Companies. In 2015, we managed to further cut down the time to set up a company in Cyprus, and today it is from one to three days. Naturally, there is always room for improvement and we are consistently looking at ways to make the business environment more attractive and efficient.
What key investment opportunities do you see in Cyprus at the moment?
We except to see more investment in the oil and gas industry, as despite the momentum we have been gaining we are still in a stage of infancy. Cyprus is a strong operating base for companies with activities in the Eastern Mediterranean and we have put in place a transparent and solid legal framework aligned with EU directives, be it in the up-, mid- or downstream. Cyprus also offers a beneficial base for auxiliary services to this industry and we have already seen much interest from international companies in setting up here. Our island could also become a significant fuel hub in the region, evidence of which is the already successful operation of the sophisticated oil storage terminal in Cyprus by Netherlands-based global oil terminal company VTTI. Also the widening and deepening of the Suez Canal will significantly increase the traffic in this region and could bring more opportunities to Cyprus, which is the last landmass before entering and the first coming out of the Suez Canal. In regard to tourism infrastructure projects, we are looking for more hotels of all categories, as we are making concentrated efforts to extend the season. Another area where we would like to see more investment is in technology, research and innovation projects. This is a sector that we expect will be boosted by the upcoming Science and Technology Park – moreover, its additional development can be amply supported by the various prestigious academic institutions in Cyprus.
How do you see Cyprus developing in the next two years?
Cyprus has undergone a difficult period, but we have already come a long way with our robust structural reforms and have beaten all expectations. Now we must keep our sights focused on what needs to be done after we exit the programme in 2016. We must continue to be prudent, strengthen our growth potential and keep improving our framework to attract more investments in the country. I would advise international investors to keep a keen eye on what we are doing and to discover the competitive advantages of our country.
Before assuming office as Minister of Energy, Commerce, Industry and Tourism in March 2013, Yiorgos Lakkotrypis was Managing Director for Microsoft Cyprus and Malta, and subsequently Public Sector Director at Microsoft Central & Eastern Europe. A Fulbright scholar, Lakkotrypis also holds a Mathematics and Computer Science (BSc) degree from the University of Keele and completed his MBA at the University of Colorado. In 1991 he joined Joannou & Paraskevaides overseeing the company’s IT systems in Benghazi, Libya, and later worked in sales at IBM Cyprus for six years. Lakkotrypis was a member of the Board of Directors of the Cyprus Investment Promotion Agency (CIPA) from 2008 to 2011, and was appointed a member of the Board of Directors of the Natural Gas Public Company (DEFA) in 2009, a position he held until his appointment as Minister of Energy, Commerce, Industry and Tourism.