Cyprus is fast becoming one of the top emerging international business hubs in Europe, due to its continuous efforts to upgrade its legislative and regulatory framework as well as its strong network of professional and financial services, says Marios A. Klitou, CEO, Baker Tilly South East Europe.
What are the key strategic advantages of Cyprus as an international business centre, and why should companies choose Cyprus over other jurisdictions?
Cyprus is fast becoming one of the top emerging international business hubs in Europe, due to its continuous efforts to upgrade its legislative and regulatory framework as well as its strong network of professional and financial services. The government, over the past few years has managed to push through a number of initiatives, such as improving the tax environment, granting Residency Permits and Passports which has attracted foreign companies and investors to the island. The significant number of multinational companies and international banking units already operating in Cyprus is proof of this.
For me Cyprus managed to survive an unbelievable banking crisis due to the hard work and endless efforts of the professional business community.
This professional community is the biggest asset of Cyprus because the Cypriot professional understands international business. This is our big difference from other countries which although their tax rates now are lower than Cyprus they have not managed to succeed in attracting international business. This, in combination with the development of new service lines, the transparency and the further expansion in shipping will ensure that the professional sector will have many more successful years in the future.
Maintaining best practices and investors’ protection, promoting growth, investing in renewable energy, enhancing our tourism product and improving our infrastructure should be the core values of both business and government efforts for ensuring that Cyprus remains a competitive jurisdiction and continues to attract foreign companies and investors to the island.
Which countries traditionally seek services from Cyprus and which markets are presenting new opportunities?
Cyprus over the last twenty years has been relying mainly on the Russian market and the countries of CIS. The concentration and dependency on this market is increasing our risks as a country. In view of this in the last few years we have seen significant efforts from the professional service providers to look into other markets such as India, China, Greece, the countries of the EU and even the US. The indications from these new markers are positive and I believe that as time goes by the flow will increase and will give Cyprus the opportunity to reduce its dependency on the Russian market.
What new trends and patterns do you see emerging in your sector that could attract more business to Cyprus?
I sincerely believe that the transparency that is required to operate in any international business centre will change, and is already changing, the professional sector in Cyprus.
We have seen in the last few years a significant reduction of the number of companies registered in Cyprus but at the same time we have seen a huge increase in the large companies that are transferring their operations to our island requiring services of higher quality and of more complexity.
What niche services should Cyprus focus on to become a stronger player, and in what other ways can the country improve its status as an international and regional business centre?
I believe that Cyprus has a lot to learn from the successes and failures of our competitors.
I believe that the development of the fund market will greatly assist the expansion of the professional sector in Cyprus. At the same time the provision of services to the shipping industry is crucial for the economy of the country and every effort should be made to support the industry.
What key challenges are facing your industry at the moment and how is Baker Tilly attempting to tackle them?
The key challenge that the industry is facing is the change in the approach by the Cyprus banks and the stricter enforcement of AML legislation. This enforcement is welcome and we strongly support every effort made by the Central Bank and the banks in implementing this legislation. Unfortunately, the banks do not have enough sufficiently trained personnel which can handle the new way of thinking. This causes severe problems in our effort to attract large international companies in Cyprus. This has to be addressed as a matter of urgency as to a large extent the future success of Cyprus as a business centre will depend on the ability of the banks to handle the day after the crisis of 2013.
Looking to the future, what is Baker Tilly South East Europe’s growth strategy?
Our main focus is to further establish and expand our firm in the countries that we are already operating in with a view to increasing and constantly improving the range of professional services we are offering to our clients. Also we are currently looking into different merger possibilities with other offices both in Cyprus and abroad. We believe that as Baker Tilly South East Europe we have managed to achieve a unique position in the region in being able to service an increasing number of mini multinational companies operating in the area. Certainly one of our main strategic targets is to further develop the operations in Greece which although we started as a greenfield operation we are now employing more than 50 people and constantly expanding in terms of the range of services we are offering.
In terms of economic growth and development, what are your expectations for Cyprus in the coming years? Which sectors or segments would you personally like to see flourish?
Cyprus has seen a tremendous growth in the tourist industry as well as the services related to Permanent Resident Permits and the passport scheme. I believe that this will continue in the years to come and at the same time I do believe that the professional services sector will continue to play an important role in the economic environment in Cyprus. The big unknown factor is the issue of the non-performing loans which is a huge burden on all banks but at the same time a huge risk for the system in Cyprus. Failure to address this crucial issue will result in new problems in the Cyprus banking system and the Cyprus economy.
The House of Representatives will have to take brave decisions by changing the legislation in order to give to the banks the right tools that will help them tackle this issue. We are aware that there are social issues which should be addressed, in order to find the correct way in handling the problem.
The non-repayment of loans by the strategic defaulters for me is an outrageous event and this sort of behaviour should be recognised by society as an unacceptable way of some people trying to benefit on the back of the people that lost their deposits and other assets during the crisis of 2013.