articles | 22 December 2020 | EY Cyprus

EY presents the key findings and recommendations of the first EY Attractiveness Survey Cyprus 2020 in a Digital Event

EY Cyprus presented the findings and recommendations of the first Attractiveness Survey Cyprus 2020, during a digital event that took place on Wednesday, December 16. The report, which is part of the 19-year long EY Attractiveness program that surveys investor sentiment for different countries and regions globally, aims to measure the country’s attractiveness as an investment destination in the last years. It also records investors’ views with regard to the investment attractiveness of Cyprus, in terms of image, investor confidence and the country’s ability to provide competitive advantages for FDI. The survey was conducted in June 2020 based on a sample of more than 100 decision-makers from foreign companies, of which almost 50% have presence in Cyprus.

  • 56% of respondents expect the attractiveness of Cyprus as an investment destination will improve over the next three years, while 24% have plans to establish or expand operations in Cyprus
  • Supply chain and logistics (28%), sales and marketing offices (24%) and headquarters (18%) main types of investment considered
  • Quality of life (81%), telecommunication and digital infrastructures (63%), the level of local labour skills (63%), corporate taxation (46%) and transport and logistic infrastructure (43%) top the list as “very attractive” factors

The findings and recommendations of the survey were presented by Stelios Demetriou, Partner, Head of Strategy and Transactions Services, EY Cyprus. The presentation was followed by a discussion with Ms. Natasa Pilides, Minister of Energy, Commerce and Industry of the Republic of Cyprus, and a pre-recorded message from the Minister of Foreign Affairs of the Republic of Cyprus, Mr. Nikos Christodoulides, reflecting on the findings of the survey.

Cyprus remains an attractive investment destination, especially among established investors

One of the key findings of the survey is a clear differentiation between the perception of investors with a presence in Cyprus and those with no presence or ties to the country, with the former being much better informed about conditions and opportunities in Cyprus and more positive in their response to the survey’s questions. Surveyed investors are optimistic about the future with 56% of all respondents expecting the attractiveness of Cyprus as an investment destination will improve over the next three years, a figure considerably higher than other European countries surveyed. 

Almost one in four investors (24%, and 54% among established investors) report they have plans to establish or expand operations in Cyprus over the next three years. Only a minority among them (15%) say they have cancelled, decreased or paused their investment plans after the outbreak of the pandemic, while 49% say their plans have not been affected. The type of investment most frequently mentioned is supply chain and logistics (28%), sales and marketing offices (24%) and headquarters (18%). 

When asked which business sectors will drive growth in Cyprus in the coming years, respondents mentioned tourism (48%), financial services (21%), professional services (21%), real estate and construction (18%) and the digital economy (17%). 

Strengths and weaknesses of the country's attractiveness

Respondents were asked to identify the country’s key strengths and weaknesses as an investment destination. Established investors mentioned quality of life as a “very attractive” factor (81%), followed by telecommunication and digital infrastructures (63%), the level of local labour skills (63%), corporate taxation (46%) and transport and logistic infrastructure (43%). At the other end of the spectrum, research and development availability and quality (13%), the bureaucratic and administrative environment (13%), aid, subsidies and support measures from public authorities (13%), flexibility of labour legislation (12%) and Cyprus’ performance in sustainable development and policy approach to climate change (10%) were seen as less attractive elements. 

With regard to areas where Cyprus should concentrate its efforts in order to maintain its competitive position in the global economy, 49% of respondents mentioned support for high-tech industries and innovation, while 34% mentioned the need to invest in major infrastructure and urban projects. 

Two out of three respondents (66%) noted that the local banking sector is an important or critically important consideration when their company makes decisions on foreign investment, while 48% replied the same with regard to the presence of a strong and liquid local stock exchange market. 

Presenting the findings of the survey, Stelios Demetriou, Partner, Head of Strategy and Transactions Services, EY Cyprus, noted: “Foreign Direct Investment has contributed greatly to the rapid development of the Cypriot economy over the years. Our survey indicates that the international investment community continues to view Cyprus as an attractive destination and is optimistic about its future prospects. To remain relevant, and continue to attract FDI during the critical recovery phase after the pandemic, Cyprus must build on its comparative advantages, including a favorable tax regime, modern infrastructures and, above all, the high level of labour skills. At the same time, it must also focus on dealing with the drawbacks identified and improve the bureaucratic and administrative framework as well as flexibility of labour legislation.”  

Following the presentation, Minister of Energy, Commerce and Industry Ms. Natasa Pilides, congratulated EY for conducting the survey and commented at length on its findings. Both Minister of Foreign Affairs Mr. Nikos Christodoulides and Ms. Natasa Pilides agreed on the critical importance of FDI for Cyprus, especially in the aftermath of the current recession that was brought about by the pandemic. The Ministers pointed out that FDI may help transform and diversify the Cypriot economy and outlined the government’s strategy for improving the country’s attractiveness and removing obstacles that currently discourage international investors.

During the discussion that followed and in response to a question regarding the government’s strategy in attracting FDI, Ms. Pilides, referred to the Fast Track Business Activation of foreign companies, and announced that they are working on a plan to improve and expand this framework and further reducing bureaucratic procedures. Further improving the infrastructure is also necessary, referring to matters of electricity and renewable energies, as they will attract investment interest, as well as the tax reform developed by the Ministry of Finance in the context of green tax reform. Furthermore, she referred to the subsidy plans, accessible to all Cypriot companies, even those abroad with Cypriot shareholders, noting that "a lot of money will be given for energy upgrades, processing, wineries, women / youth entrepreneurship, circular economy and green growth in general."

In his message, the Minister of Foreign Affairs pointed out that the EY survey stressed the importance of communication policy in attracting foreign direct investment and noted that “the findings indicate that we swiftly need to act in this area.” He then announced that “the Ministry of Foreign Affairs has been developing a strategy for economic diplomacy which will be launched in early 2021, aiming to develop value for Cyprus and Cypriot businesses.” In his closing remarks the Minister stated: “I am confident that we will be able to effectively address the challenges identified in the EY Attractiveness Survey Cyprus 2020, and render Cyprus an even more attractive investment destination.”

For more information on the EY Attractiveness Survey Cyprus 2020, click here.


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