Manufacturing and Industry
A Renaissance in Manufacturing
Manufacturing is central to innovation and economic growth, and Cyprus is now focusing on advanced high-tech products. The country’s leaders believe value-added activities could facilitate a resurgence of productivity and protect the island’s production heritage. Cyprus’ strategic location enables companies to easily reach multiple markets.
Cyprus is the perfect base for the small-to-medium-sized manufacturer seeking access to both the European customer base and the burgeoning markets of the Middle East, North Africa and Asia. Its strategic location, coupled with its sophisticated transport and logistics infrastructure, offers considerable advantages to producers planning expansion into new markets. Companies forming links with Cyprus are able to benefit from the country’s EU and Eurozone membership and from numerous tax advantages. Businesses located in Cyprus are superbly placed to supply new and existing markets in the region while benefiting from the well-developed infrastructure and highly skilled labour force.
Cyprus is radically restructuring its manufacturing base and actively seeking to attract new high-tech and knowledge-based industries. The sector is emerging from a particularly challenging time when it was squeezed between high-wage producers in the west, who utilised cost-efficient modern production techniques, and low-wage mass producers in South-East Asia. In response, Cypriot manufacturing is now focusing on higher-value production, more appropriate to Cyprus’ modern-day economy and its highly educated workforce, while the government is encouraging capital-intensive foreign investment, which will bring with it advanced technology, knowledge and expertise.
The main industrial products are: pharmaceuticals, food, beverages, chemicals, mineral products, machinery and equipment. Of these only pharmaceuticals and non-metallic minerals have experienced growth in recent years. Today manufacturing contributes approximately 6.5% of GDP and accounts for 9% of people in employment. The main destination for Cypriot manufactured exports is the European Union, which constitutes over 50% of the market. Exports to the Middle East make up around 15%.
The majority of manufacturers are small and medium-sized enterprises (SMEs), which employ less than 10 workers. This makes the sector flexible and open to innovation. The government is seeking to improve SME’s access to finance and overseas markets, while seeking to maximise the commercial potential of local research and development in order to open up untapped areas of productivity. The adoption of modern production technologies has already created new opportunities for traditional enterprises to compete globally and the sector is attempting to secure its future by establishing itself afresh in specific niche markets.
The pharmaceutical and non-metallic mineral sectors have already succeeded in making this transition towards the provision of value-added products for a specialist market. Since 1999, both areas have shown consistent growth. Now food and beverage manufacturers are attempting to do the same, with halloumi cheese, cooking oil, fruit and vegetable juices and wine all appealing to a loyal, specialist customer base. The recent discovery of natural gas is expected to further facilitate innovation within the manufacturing sector. The existence of the island’s own energy supply will not only provide local industry with an economic boost, it will also stimulate rapid technological development.
Updated July 2013