Marios Demetriades - Cyprus Profile

Insights | 30 January 2017

Marios Demetriades, Minister of Transport, Communications and Works

Port and marina development, as well as strengthening shipping activities and air connectivity through incentives are key goals for Cyprus in 2017, says Minister Demetriades.

What important goals or reforms were achieved in 2016?

A key goal which has already been completed is the commercialisation of the Limassol Port. The signing of the contract in April 2016 marked a new era for the port of Limassol and Cyprus, as a commercial hub. I strongly believe that the agreement would prove to be a major asset for our economy, in the years to come. 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 Ltd for both the marine services and the multi- purpose terminal.

Regarding the telecommunication and satellite communications sectors, our Ministry signed a European Cooperation Stage Agreement in July 2016, to cooperate with the European Space Agency (ESA).  The overall objective of the new agreement is to associate Cyprus with ESA programmes and activities and to prepare Cyprus in the most efficient manner for possible future accession to the ESA Convention.

As far as the promotion of marine works we proceeded with the construction of several breakwaters in various regions of the country in an effort to protect the beaches. At the same time a number of projects, of a total value of €115 million are in progress. In addition, the Merchant Shipping Department in cooperation with the Ministry and the private sector has begun to implement a number of measures suggested by a study regarding the development of a holistic strategic plan for the Cyprus shipping industry.

During 2016, draft legislation was prepared by the Ministry and submitted to the House of Representatives of Cyprus for approval, regarding the creation of a new company called Cyprus Air Navigation Services. The company, whose operation is expected to begin in 2017, will provide on behalf of the Republic of Cyprus a high level of air navigation services.

What are the key priorities for your ministry for 2017?

One of our main priorities for this year is the redevelopment of the Larnaca Port and Marina area. Our aim is to transform the existing port into a functional harbour, which will be in a position to host large cruise ships and yachts. The invitation for expressions of interest was publicised on 23 November 2016 and we look forward to the completion of the selection process before the end of 2017.

Equally important is the smooth takeover of Limassol Port by the consortiums, which were awarded in 2016, the concessions for the container terminal, the multi- purpose terminal and marine services.  The process will hopefully be completed by the end of January 2017. A major challenge for our Ministry is also the restructuring of the Department of Merchant Shipping. Cyprus shipping is one of the main pillars of our economy and we will promote measures to strengthen our merchant fleet and shipping cluster. Such measures include the strengthening of regional offices, and incentives for business development. A bill for the creation of a Deputy Ministry for Shipping is also pending at the Parliament.

The addition of new air routes to and from Cyprus also represents a major challenge for the Ministry of Transport. Under the new strategy to enhance connectivity, we will promote a number of actions that include the modification and improvement of existing aviation agreements and conclusion of new agreements with Lebanon, Saudi Arabia, Australia and other countries.

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

During the last three years we have witnessed large growth in tourism, which is partly due to the instability of the region around Cyprus. We expect this to continue creating a lot of opportunities for investment. We also believe that as the oil and gas sector develops, it will create many opportunities for investment including the use of local infrastructure for supporting regional needs.

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 2016–2017 of the World Economic Forum, which ranked Cyprus 54th among 138 countries in Overall Infrastructure Quality. In the special category of Roads Quality, Cyprus is ranked 34st among 138 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 into a regional centre of excellence in business development and service provision. We are also focused in 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.

Ηow is Cyprus looking to enhance transport and air links with more countries globally?

As an island, a tourist destination and an aspiring business centre, Cyprus depends heavily on air connectivity, whether that concerns business or leisure travel between Cyprus and Europe, neighbouring Middle East and Gulf areas and beyond.  The Government of Cyprus maintains a firm policy of open skies as adopted by a relevant decision of the Council of Ministers in May 2014. Based on this, it aims to continue liberalising Air Service Agreements and MOUs that Cyprus has signed with third countries through ongoing bilateral negotiations.

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 between third countries and European destinations via Cyprus. The air transport sector within the EU is already fully liberalised and flights between Cyprus and EU countries operate without any restrictions. In addition, the Government in cooperation with Hermes Airports, the operator of Larnaca and Paphos airports, has introduced a number of very attractive incentive schemes available to all airlines, which reward air carriers for growth, operation on new routes or year-round operations.

The Department of Civil Aviation is currently examining applications for Air Operators’ Certificates (AOC) of new, locally registered airlines that can enhance Cyprus’ connectivity even further, provided they fulfil all the regulatory requirements and acquire a Commercial License. Two such airlines have already been approved and have commenced operations, whilst two more applications are under examination. Additionally, three air carriers with a European Union license have established here as their operational base.

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. Cyprus is a fully fledged maritime centre, combining both a sovereign flag and a resident shipping industry, which is renowned for its high quality services and standards of safety. Cyprus shipping offers a wide range of fiscal and economic incentives, including competitive ship registration costs and annual tonnage taxes, ensuring the fleet´s worldwide competitiveness. We strongly believe that this can be further enhanced therefore we have introduced a number of additional horizontal incentives in order to attract additional companies to the island. Furthermore, we developed a holistic strategic development plan and recently we have completed a study which includes a numberof 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.

Limassol Port was privatised in 2016, what does this mean for Cyprus and how would you like the ports role to be developed in the near future?

The successful commercialisation of the Limassol Port has been a strong indication of the renewed dynamism of the Cyprus economy and the recovery of investment extroversion of the country. The agreements achieved will not only be a source of revenue, but will also upgrade Cyprus’ role in the South-Eastern Mediterranean promoting it as an important regional centre of maritime commerce in the area. That is exactly the role that the government envisages to be developed in the near future, through modern and efficient ports delivering excellent services to their clients. To this end, albeit with focus primarily on tourism, the government is proceeding with the redevelopment project of the Larnaca Port and Marina area. This poses an excellent investment opportunty, combining port commercial and passenger activities, with leisure, tourism and real estate development. The invitation for Expressions of Interest has been announced and it is with great excitement that we await the relevant submissions in the beginning of February 2017.

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?

An excellent telecommunication infrastructure has been established in Cyprus. Over the years, Cyprus has managed to exploit its strategic location at the crossroads of Europe, Asia and Africa, and acts as a telecommunication hub between three continents. A state of the art satellite and submarine cable infrastructure, connecting the island with its neighbouring countries and the rest of the world has been developed.

The progress of satellite communications sector is one of our main objectives. We have constructed a simple, flexible and competitive licensing model resulting in one satellite in operation and more satellites are expected to be placed in new orbital positions during the next two years providing cutting edge telecommunication services for niche technologies. Investments of companies in the sector reached €300 million in the last five years.

In terms of our national telecommunication infrastructure we have reached our main targets and fixed broadband coverage is provided universally. Competition among various cable and DSL operators resulted in offering high speed broadband access services throughout the island. Our mobile operators offer high speed 3G and 4G broadband mobile access technology and are constantly updating and evolving their networks investing in new technologies. During 2016 we authorised additional frequency bands (800/2600 MHz), which will allow our current mobile operators to further enhance their networks in terms of speed, capacity and quality of 4G 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. Moreover, we introduce soft measures to increase energy efficiency by training and educating public officers, installing smart meters, office automation systems, 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. Some examples are the recent public procurement for energy performance contracting to install LED lighting fixtures to the Limassol-Paphos motorway and the complete renovation of the Ministry of Commerce building with thermal insulation, energy efficient air-conditioning systems, led and office automations.

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. We are taking all necessary steps to adopt a National Policy Framework for the development of the market in regard to alternative fuels in the transport sector and the deployment of the relevant infrastructure.

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 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. It also promotes the digitisation of all data involving the archaeological heritage of the island to increase protection, management and research.

Part of the management of the archaeological heritage of Cyprus is also the creation, on one hand, of management plans for archaeological sites and monuments, including UNESCO World Heritage Sites, and, on the other, of museological studies for museums. Furthermore, the Department of Antiquities is responsible for updating the infrastructure of archaeological sites, monuments and museums to attract more visitors. We do our best to ensure that monuments and sites are protected and promoted and also investigate online auctions and sale of cultural goods in order to identify missing objects. Finally, we have already taken the first step for the construction of the new Cyprus Museum. The international architectural competition, which was launched in September 2016, is expected to be completed by 2021.

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

The growth of the economy accelerated in 2016 reaching levels close to 3%. We expect that this growth rate will continue for at least the next two years and we invite the international community to benefit from investment opportunities in the island. During the last three years we have witnessed large growth in the aviation sector, which we expect to continue as traffic increases and the restructuring of the port sector through the commercialisation of the largest commercial port of the island, which is expected to improve the efficiency of running port operations.

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.

Cooperation Partners