Insights | 29 September 2022

Polly Ioannou , Ambassador of the Republic of Cyprus to the Arab Republic of Egypt

The energy sector presents significant potential to further strengthen cooperation between Cyprus and Egypt, however, shipping, retail, financial services, health, and technology also offer many opportunities to attract higher levels of Egyptian investment to Cyprus, says Ambassador Ioannou.

Cyprus and Egypt have a long-standing historical and cultural relationship, how would you define the current bilateral relations between the two countries?

Due to the strong cultural and historical ties between the two nations, Cyprus and Egypt enjoy a very close and friendly relationship today. Currently, relations between Cyprus and Egypt are at their highest level, as their traditional partnership has now become a strategic one, united in the purpose of ensuring peace and security in our region. The security and stability of both countries is vital to one another. Our objective is to enhance these relations further, harnessing their upward trajectory. Our relations are, of course, multifaceted and entail close political, security, economic and energy cooperation at all levels of government. They are permeated by common interests and objectives for our region, such as honesty, good faith and mutual respect. Our peoples enjoy close and warm ties, as well as a mutual understanding deriving from their similar idiosyncrasies. All these are elements of a lasting partnership and drive us to seek ways continuously and tirelessly to further enhance our relations, notwithstanding their current, excellent level.

Energy cooperation has become a strategic component in the relations between Cyprus and Egypt. What kind of joint projects are currently underway in this sector and what new business opportunities are emerging from these developments? 

Energy cooperation between Cyprus and Egypt has a bilateral and a regional character. You are right in pointing out that this component is strategic, even more than it is economic. Egypt was the first country with which Cyprus delimited its maritime zone in the early 2000s, paving the way for the cooperation we have today. On the regional level, the creation and establishment of the Eastern Mediterranean Gas Forum (EMGF) has been for us the logical outcome of our progressive partnership and its teleological purpose of enhancing stability in the region. The Forum not only consults on areas relating to gas, but also serves as a model for peaceful and constructive regional cooperation and defining the future aspects of how regional interaction should be carried out.

Currently, the licensee of the Cypriot gas field ‘Aphrodite’ (Chevron, NewMed Energy, Shell), using the consortium’s extensive experience in the oil and gas industry, is working on the optimisation of the Development and Production Plan, through possible synergies with other facilities in the region, i.e. the liquefaction plants in Egypt. According to the existing, approved Development and Production Plan of ‘Aphrodite’, the natural gas will be processed in a floating unit, which will be located above the field and transported to Egypt through a submarine pipeline. At the same time, the work of the joint committee established to implement the intergovernmental agreement for the construction of an undersea natural gas pipeline from the ‘Aphrodite’ field of the Cypriot Economic Exclusive Zone (EEZ) to Egypt is progressing.

Moreover, the two countries have established a technical working group to examine all technical, economic and regulatory issues concerning the construction of an electricity interconnection. This interconnector will not only enhance energy security but will also allow much higher penetration of renewables in the energy mix of Cyprus and Egypt. In addition, it will encourage further investment in renewable energy projects in both countries, as this interconnector will have access not only to the electricity markets of the two countries, but also to the European market.

Cyprus is a strong hub for international business and offers many advantages for companies engaged in cross-border activities. What advantages does Cyprus offer specifically to Egyptian business?

Cyprus is a well-established and reputable international business centre. Its competitive advantages include its EU membership, offering access to a 500 million consumer single market, a strong regulatory framework based on common law, an attractive and transparent corporate tax system, an extensive network of double taxation treaties, a well-educated and experienced workforce, the low cost of doing business for high-professional services and of course, the high quality of life on the island.

In addition, in the beginning of 2022 the Cyprus government adopted a New Strategy for Attracting Business and Talent to the country. It established a Business Facilitation Unit, which supports the formation of businesses through a single point of contact and facilitates procedures, such as company registration and name approval, registration with the Social Insurance Registry, the Employers Registry, the VAT Registry and Income Tax.

Most importantly, the strategy introduced a new policy for the employment of highly skilled third-country nationals in the sectors of shipping, high-tech and innovation, pharmaceuticals, biogenetics and biotechnology. The policy includes the provision of work permits for spouses, as well as for supporting staff.

It is therefore now easier and faster to establish a company in Cyprus and to re-locate the necessary staff, and I believe that the geographical proximity of the two countries offers great opportunities for cooperation in this respect. Last but not least, Cyprus offers a number of personal tax incentives which have established it as an attractive financial base for High-Net-Worth Individuals and for key personnel of international companies.

Cyprus has seen significant foreign direct investment from Egypt in the past, what noteworthy projects in Cyprus have had Egyptian backing and what type of investment would you like to see from Egypt in the future?

Major investments from Egypt to Cyprus have been focused mainly on tourism infrastructure, like the Ayia Napa Marina project, and the energy sector, including energy storage projects.

As a service-based economy, Cyprus offers many opportunities which could attract even higher levels of foreign direct investment from Egypt, for example in sectors like shipping, retail, financial services, health, and high technology. Also, the strides that Egypt is making in green energy production offer an additional area of possible investment to be explored.

What sectors or niche segments in Cyprus do you think have untapped potential in terms of attracting more Egyptian investment and cooperation?

Energy is one of the sectors that presents significant potential for growth. Some of the world’s top international oil companies are active in Cyprus’ EEZ and Cyprus is optimistic about its natural gas potential.

Regarding the electricity interconnection between Egypt and Cyprus, the two Ministries of Energy signed a Memorandum of Understanding of Energy in October 2021. The MoU recognises that the Egypt-Cyprus Electricity Interconnection Project will build a strong and well-connected network between the two countries in order to enhance security of supply, promote regional cooperation and prosperity, as well as to create a highway for the transmission of significant amounts of electricity generated using renewables and gas from the fields in the Eastern Mediterranean.

Furthermore, Cyprus has adopted a long-term Strategy for Sustainable Development with a time horizon of 2035, called ‘Vision 2035’. It focuses mainly on the green and digital transition of the country, but also on emerging sectors such as light manufacturing, agriculture, agritech and e-health. I believe that these are the sectors that will present the most opportunities for cooperation between Cyprus and Egypt.

Cyprus can be attractive as a gateway to Europe for Egyptian investment funds and asset managers as well as for tech and tech-related companies that would like to expand in the EU. There are advantages such as competitive cost, proximity, tax and other benefits that Egyptian businesses, executives and employees can enjoy with a presence and operation in Cyprus. These benefits and incentives, in combination with a fast-track facilitation to foreign investment, has contributed to Cyprus attracting significant investments over the last three years.

In addition to energy and related projects, there are investable projects in the private sector across sectors such as healthcare, education, tourism among others. Invest Cyprus, the national investment promotion organisation of the country, maintains an updated and modernised database of projects that are open to investment and can showcase them to interested Egyptian investors and help them with realising their investment plans in Cyprus.

What new prospects do you see to further strengthen relations with Egypt, and how do you see the relationship of the two nations developing in the future?

Cyprus and Egypt are bound by their common interest and vision to see security, stability, and sustainable prosperity in the Eastern Mediterranean. Our partnership and structured cooperation allow us to adapt our responses to existing and emerging challenges across the board. At the same time, we will continue to look for ways to go beyond what we have already achieved because this is a natural calling and we genuinely want to strengthen one another through our cooperation, which is done on an equal footing, with mutual respect and in full respect of international law. The consequence of this could only be more stability and predictability in our restive region. I am convinced that we can take our relations even further, building on the course we have charted, and that there is a lot of potential for us to still explore.

September 2022

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