Marios Demetriades - Cyprus Profile

Insights | 31 January 2016

Marios Demetriades, Minister of Transport, Communications and Works

Privatisations, upgrading the infrastructure of Cyprus and promoting a digital economy are high on the agenda for 2016.

What are the key 2016 priorities of your ministry?

Our ministry covers a wide scope of activities ranging from transport and telecommunications to public works. The top priorities for 2016 are the promotion and restructuring of the shipping sector to give it a fresh push, the restructuring of the postal services sector, reorganisation of the Civil Aviation Department by separating out the operations of Air Traffic Control, and the commercialisation of Larnaca port. We are also looking at ways to boost the construction industry, which has suffered a lot during the crisis. A key goal which has already been completed is the commercialisation of Limassol Port. The concession for the commercialisation of the port is in three parts: container terminal, multi-purpose terminal and marine services. The successful bidders were Eurogate International GmbH, as the majority participant, along with Interorient Navigation Company ltd and East Med Holdings SA for the container terminal, and DP World Limited, as the majority participant, and G.A.P Vassilopoulos Public Ltd for both the marine services and the multi-purpose terminal. This project was not only about giving the operation of the port to the private sector, but also about improving the port industry operation at the island.

How would you describe the infrastructure of Cyprus and what is your ministry’s medium and long term strategy?

Over the last decades, the Government paid emphasis in developing a well-functioning and efficient transport and communications infrastructure in order to support all sectors of the economy, our citizens and of course the millions of tourists visiting our island. The high level of infrastructure in Cyprus is reflected by international reviews like the Global Competitiveness Report 2015–2016 of the World Economic Forum. In this Report Cyprus is ranked 44th among 140 countries in the Overall Infrastructure Quality. In the special category of Roads Quality, Cyprus is ranked 31st among 140 countries. Our primary vision is to establish Cyprus as a regional centre, providing modern and efficient infrastructure and services. In this respect, we intend to further develop the national transport and communications infrastructure as a prerequisite in order to convert Cyprus as a regional centre of excellence in business development and service provision. We are also focused on promoting a digital economy, sustaining Cyprus as an international shipping centre and further developing the island as a naval freight transhipment centre in the eastern Mediterranean region.

What key opportunities do you see for growth and investment in Cyprus?

Following the stabilisation of our economy, 2016 is a critical year in attracting significant FDI to Cyprus. For this purpose we announced an ambitious privatisation program which includes the state-owned telecommunication company, the now-privatised Limassol Port and the National Lottery. We have also announced a number of other projects such as the casino resort, the technology park, the port and marina of Larnaca, the marinas of Ayia Napa and Paralimni and a number of real estate projects – which all provide interesting opportunities for investors. Tourism and shipping also present a large number of opportunities and for this reason we are undertaking a number of initiatives to boost these sectors.

What impact will the current privatisation programmes have on Cyprus’ state-owned assets?

I believe state-owned assets are currently underperforming in Cyprus, despite the impression that some of these organisations are profitable. Through the process of privatisation we can significantly increase the return on those assets, both through better management as in the case of Limassol Port and the increase in their operating efficiency as in the case of the telecommunications authority Cyta. These programmes can bring additional investments to the island that will in turn generate new job and economic activity.

Connectivity is a crucial element in facilitating both international business and tourism, how is Cyprus looking to enhance transport and air links with more countries globally?

Air connectivity is extremely important for Cyprus, as being an island, there are no other alternative means of transport to connect Cyprus with Europe and the neighbouring Middle East and Gulf area. The Council of Ministers adopted a new Open Skies aero-political strategy in May 2014, which through bilateral negotiations aims to further liberalise all Air Service Agreements and MOU’s that Cyprus has signed with third countries. The goal is, wherever possible, to lift any restrictions in terms of the number of designated airlines, frequencies, types of aircraft operated, cargo flights and the operation of charter flights. Cyprus is also willing to offer on reciprocal basis 5th freedom traffic rights via Cyprus to European destinations. The air transport sector within the European Union is already fully liberalized. In addition, the Government in cooperation with the management company of the two airports has created a number of very attractive incentive schemes available to all airlines which reward airlines for growth, operation on new routes or operating year-round. Finally, the Department of Civil Aviation is currently examining the application for an Airline Operators Certificate (AOC) of new locally created airlines that can enhance Cyprus’ connectivity even further, if they fulfil all the regulatory requirements and acquire an AOC and a Commercial License. Already two such airlines have been approved, and two applications are pending. Additionally, three companies with a European Union licence have established a base in Cyprus.

Shipping makes a significant contribution to the economy, how can this sector be further developed to attract more business and regional shipping headquarters to Cyprus?

Shipping currently contributes, directly and indirectly, around 7% to our GDP. We believe this can be further enhanced as our country currently has a great number of advantages for the sector. We have introduced a number of additional horizontal incentives that we believe will attract additional companies to the island and recently commissioned a study, which includes a number of recommendations to further enhance the sector and have now began to implement them in cooperation with the private sector. We also intend to introduce a number of measures aiming to improve service to our clients and become more aggressive in promoting the shipping sector worldwide.

What role can public-private partnerships (PPPs) play in Cyprus’ infrastructure development?

In recent years, the increasing need for the development of infrastructure and budgetary constraints has led Cyprus’ Government to seek new and innovative ways of financing public infrastructure. Cyprus, just like many other countries, has chosen to involve the private sector in developing public infrastructure projects through PPPs.  The main political motivation for this path of infrastructure development is to seek out value for money, technical efficiency, postponing costs, acceleration of works, short-term decrease of governmental debt and risk transfer. Through joint ventures with the private sector over the last two decades, the Government has provided tax payers with airports, desalination plants, solid waste treatment facilities, an integrated public bus system, a marina, government buildings and many other vital facilities.

How would you describe the telecommunications infrastructure of Cyprus and what key investments are being made to ensure it is on par with other developed nations?

We are very proud of successfully maintaining an excellent telecommunication infrastructure. Over the years, Cyprus has managed to exploit its strategic location at the crossroads of Europe, Asia and Africa, for telecommunication purposes. We have developed an excellent satellite and submarine cable infrastructure, which is not only used to connect the island with its neighbouring countries and the rest of the world, but also to transfer traffic between continents. The sector of satellite communications is an important part of our business. We have developed a simple, flexible and competitive licensing model with a successful outcome, and have already issued three authorisations resulting in one satellite in operation and four new satellites expected in the next two years. Investments of companies in the sector in Cyprus reached €300 million in the last five years.

In terms of our national telecommunication infrastructure we have reached our main target, and fixed broadband coverage is provided for the whole island. We have various cable and DSL operators offering high speed broadband access services throughout the island and have secured significant EU structural funds for the deployment of step-change technology, for example for the roll-out of Fibre-To-The Home networks.

Our mobile operators offer high speed broadband mobile access through 3G and 4G tech and are constantly updating and evolving their networks and investingin new technologies. We are also proceeding with the authorisation of new frequency bands (800/2600 MHz), which will give the opportunity for current and new providers to further enhance their networks in terms of speed, capacity and quality of service.

How is your ministry ensuring sustainable development in terms of protecting the environment?

Public buildings are undergoing an energy efficiency upgrade and renovations at a rate of 3% of total area per year, in order to reduce their energy consumption and carbon dioxide footprint. We introduced soft measures to increase energy efficiency by training and educating public officers, installing smart meters, distributing circulars and guidelines for the equipment usage and specific maintenance of the machinery. We have also implemented green public procurement in all of our tenders in order to purchase high efficient equipment with less energy consumption and emissions. One fine example is the recent public procurement to install LED lighting fixtures to the Nicosia-Larnaca-Famagusta motorway. We are also preparing the procurement for Energy Performance Contracting for the LED lighting for the Limassol-Paphos motorway. Regarding the transport sector, the Ministry is promoting sustainable development in many different aspects, such as installing a fleet management system to the Government fleet that will improve maintenance and reduce fuel consumption. Other initiatives include the legislation to permit Liquid Petroleum Gas (LPG) usage as a fuel for vehicles and public consultation regarding the electric car with stakeholders regarding national policy formulation and market regulation.

The rich archaeological heritage of Cyprus attracts many visitors to the island, how is the sector being protected and developed?

The Department of Antiquities’ specialised staff, which includes archaeologists, conservators and technicians, is dedicated to ensuring that the island’s cultural heritage is protected, preserved, promoted and studied in the best possible way. The Department conducts systematic and salvage excavations, conserves movable and immovable cultural heritage found both on land and in the sea, ensures the safe storage of cultural goods and organises educational and other events with the aim to promote cultural heritage and enhance the public’s important role in the preservation and protection of cultural property. We do our best to ensure that monuments and sites are protected and promoted and also investigate online auctions/sale of cultural goods in order to identify missing objects. We cooperate with the Cyprus Police and the Department of Customs and Excise in order to combat the illegal import and export of cultural objects.

How do you see Cyprus developing in the next two years and what message would you like to relay to the international community?

The last year has seen much stabilisation and a return to growth for the Cyprus economy. We believe that through the structural changes we are introducing as a government, the economy will be boosted over the next few years and for this reason presents a lot of investment opportunities. What I would like to emphasise is that we are fully committed to the restructuring efforts in order to reach our full potential and ensure continuous and sustainable economic growth.

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