The Cyprus economy is heading towards a hopeful future thanks to a record tourist influx, a recovery in the real estate sector and constant credit rating upgrades, says CCCI President Angastiniotis.
How would you assess the economic situation of Cyprus at the moment?
Cyprus has managed to reverse the adverse climate, improving in all economic indexes. During 2017, all sectors of the economy demonstrated satisfactory performance, driving the economy to a higher level than expected. The country’s growth is currently around 3.9%, setting Cyprus in fifth place among the countries with the highest growth rate within the Eurozone.
As a result of responsible budgetary policy, the focus on reform and the offering of incentives, we have managed to escape the vicious circle of recession and enter on a course of development. Thanks to our persistence Cyprus has managed to achieve an improvement in public finances, a primary surplus, a balanced budget, a record in tourist influx and income, a recovery in the real estate sector, as well as constant upgrades by foreign rating agencies. These developments demonstrate that the Cyprus economy is heading towards a more hopeful future.
The country’s fast exit from recession and the Troika program has been used as a positive example and a reference point by both European officials and foreign rating agencies. In their reports, they all note the rapid and successful response of the Cyprus economy, which managed to leave the deep recession behind and reach high growth rates within a short period of four years. The most significant aspect of our economy’s recovery is the trust, which has been regained after many sacrifices.
At the same time, the positive general development of the Cyprus economy is the outcome of the highly performing productive sectors of the economy. In 2017, we witnessed significant investments and openings of quality job posts. This is an example of what private initiative can achieve when the state provides the correct business environment. The year 2018 has found our economy in a much better position, and the Cyprus Chamber of Commerce and Industry (CCCI) is optimistic with regards to the future economic prospects of Cyprus.
How is the private sector doing today, five years after the financial crisis? Are some sectors doing better than others?
In order for an economy to move forward, a resourceful, flexible and dynamic private sector is of vital importance. It is clear that certain sectors have recovered completely and perform very highly. For example, the tourism and real estate sectors, despite their dramatic collapse in 2013, have recently managed to improve substantially. Entrepreneurs have started to make new endeavours, which were impossible in the past due to the crisis. This indicates positive movement in the market. In addition, the field of energy is expected to attract foreign investments in the future. Furthermore, authorities should pay special attention to the shipping sector, which does not seem to have been significantly influenced by the crisis. In addition, the services sector should be constantly updated, and more attention should be given to it in order to maintain and further increase its significant contribution to the economy.
The CCCI considers the protection of a free market and private initiatives of vital importance. The rewarding of productive business endeavours, the expansion of innovation and entrepreneurship prospects and the investment in youth are critical areas where we need to invest more.
It is worth mentioning that the business sector has had a valuable role in economic development, in bringing foreign investments, in the creation of new jobs and in driving the economy to a new path. With the contribution of the CCCI, and by working together with the government, we have managed to overcome the unprecedented economic crisis and lead our country towards growth.
What new opportunities do you see emerging in Cyprus for foreign investors and international business?
At the moment, the energy sector, along with its auxiliary sectors, is worth observing, as well as the sectors of technology, research and innovation. There are also promising opportunities for potential real estate buyers, taking into account that the sector has started recovering. Other areas offering good investment opportunities are the Collective Investment Schemes, in which companies from Russia, Luxemburg and Greece have already expressed interest. Finally, there seems to be an interest from European and Middle Eastern countries in investing in tourism, real estate, medical tourism, education and banking in Cyprus.
As far as the emerging sectors, our energy resources may change the situation of both our geostrategic position and our country’s economic significance. Other evolving sectors are the film industry, industrialised farming and start-ups, taking advantage of the recent tax incentives for investing in these sectors. The production of ecological products is another sector that can be further developed in the next years.
Cyprus has successfully attracted foreign direct investment into its energy and banking sectors, what kind of FDI would you like see coming into the country in the future?
Investors will be attracted by several sectors in the future. We do not believe that we should pursue only big investors and ignore the smaller ones. At the moment, there are various large-scale and small-scale investments with multiple benefits to the economy.
The Cyprus economy has both short and long-term gains from foreign investment, which bring fresh money to the market and enhance various economic sectors. Moreover, through investments and development projects by foreigners, the job market is enriched with new job posts, pushing the unemployment rate down. This has a positive effect on large agencies, law firms, banks and business consultants. These new job positions address qualified, highly paid personnel and raise the standard of living on the island.
The economy also benefits from foreign investments from the various fees and taxes paid by foreign companies. The fact that foreign investors come to our country and live here with their families, either temporarily or permanently, is a significant contribution to the economy.
Finally, it is important to bring foreign investments to our country as this indicates that we have managed to regain their trust, after three years of austerity measures. This says a lot about our country, which is considered a success story, as well as an exceptionally attractive destination.
Nevertheless, we should not stop trying. We need to be determined in order to complete all the reforms and introduce the modernisation processes that will bring our country high on the list of the most competitive business destinations.
I should mention that the creation of a real ‘One Stop Shop’ for large investments will boost our country’s competitiveness. It will create solid foundations for a new, reliable, modern and dynamic development model, which will respond to the need for flexibility, effectiveness and a high level of services.
I consider that the creation of a real ‘One Stop Shop’ for large investments and a single licensing authority as the only contact point between the investor and the state, will turn out to be substantially helpful, as the growth will lead to further economic upgrades, reliability will increase, and our potential will improve even further. Therefore, now is the right time for investments which will create new jobs and will bring fresh money to the country.
What would you say are the most attractive incentives today for foreign companies and investors in terms of attracting them to Cyprus, and are there any new ones in the pipeline or that should be introduced to boost interest?
We need to be determined and brave in order to implement all the reforms that will bring our country high in the list of the most competitive business destinations. Cyprus has a lot to offer to a potential investor and the prospects are vast. We believe that the Government should continue its tax reduction policy since this enhances entrepreneurship. Additionally, the CCCI believes that we should look into consolidation of taxes, simplification of taxation and faster introduction of technology in the public sector to reduce bureaucracy.
Of course, when we speak about incentives we should not only think of tax and monetary incentives. Personal and family safety, quality of life, weather conditions, the standards of education and health services available are equally important parameters when deciding to invest and live in a country.
What kind of activities is the CCCI planning for 2018 to support the business community and raise the image of Cyprus beyond its borders?
The CCCI is active on two pillars: a national and an international one. We keep developing our network internationally with the Chambers’ network and other important economic fora and we strive to promote Cyprus and its interests, building new international relations.
As far as CCCI priorities are concerned, I would like to point out that the current aim for Cyprus is to continue its growth, reduce unemployment, significantly reduce its public debt, and successfully address the problem of non-performing loans. At the same time, we aim at exploiting our energy resources and highlighting the crucial geostrategic role we can play in our area. Efforts are also made in the direction of maximizing the benefits of Brexit and creating new potential for sustainable progress and prosperity.
These are the main priorities of CCCI on which our course of action is set. We will focus on the promotion of reforms and the implementation of fundamental infrastructure projects, including the need to go ahead with the privatisations of semi-government organisations, on the improvement of the business environment, the fight against bureaucracy as well as to make sure there is always a productive and positive understanding between the executive and legislative powers when discussing crucial legislative reforms.
What are your expectations for Cyprus and its economy for 2018?
CCCI sees 2018 as a key year for our future development. We should make the most out of it in order to fully turn our back on the crisis and heal from the wounds completely, while creating potential for continuous future development. Building on everything we have achieved together in 2017, we can move forward with new innovative policies and targeted moves in order to succeed our future goals.
This year we ought to give impetus to the new course of the economy and the country. The business world, which has made a great contribution towards positive change, will always do what it takes for the benefit of the economy.
The CCCI, with its member companies in Cyprus and abroad is going to undertake initiatives to promote the Cyprus economy and its competitive advantages, to increase exports and to attract more investments – and take the lead in the necessary changes. We are ready to cooperate with everyone with responsibility, uniformity and joint efforts in the best interest of the economy and the country. In this context we express our optimism for the economy and the country in 2018. We are sure that we can make it if we work together, setting milestones for new accomplishments.