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Invest Cyprus 30/04-30/03/2019

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A Centre of Excellence for International Activity

A Centre of Excellence for International Activity

A Centre of Excellence for International Activity: This is the vision for Cyprus of Michalis P. Michael, the new Chairman of Invest Cyprus, which is the brand name of the Cyprus Investment Promotion Agency (CIPA). In this exclusive interview with GOLD, he looks back on the agency’s achievements during its first decade and forward to what he expects from it in the coming years.

By John Vickers


You have been appointed Chairman of Invest Cyprus as the agency marks its 10th anniversary. How would you describe its achievements to date?

Michalis P. Michael: For the past 10 years, Invest Cyprus has worked hard with commitment and determination, fully acknowledging the importance of its role as the lead agent in attracting and facilitating Foreign Direct Investment in key economic sectors, and maximizing it for the benefit of Cyprus and its people. FDI is a key tool and one of the safest elements in achieving and maintaining long-term economic growth, especially in the midst of a highly competitive and changing international environment. Invest Cyprus has on several occasions contributed significantly to enhancing Cyprus’ image abroad, especially during times of crisis, as well as to rejuvenating investor interest, manifested in a variety of investments in the last years. FDI inflows have recorded a significant rise; specifically, more than €9 billion was injected into the Cyprus economy between 2014 and 2016. Tourism is reaching record levels, with the first integrated casino resort being developed, and the property market is booming. The banking sector has been recapitalized, while Cyprus is fast developing into an attractive domicile for investment funds and asset management. Shipping, a traditionally strong sector is continuously growing, with the commercialization of Limassol port and the new Deputy Ministry of Shipping. In energy, leading international industry giants are active in Cyprus’ Exclusive Economic Zone. Several foreign companies have chosen Cyprus as their regional base, due to our many advantages. We will continue to do our utmost to ensure the further increase of FDI inflows, while intensifying our efforts to make the business environment truly welcoming to foreign investment, consulting with the Government with regard to reforms and the introduction of investment incentives. As regards investor facilitation, our staff are available to international investors for any kind of enquiries, always eager to offer assistance, guidance and support in all the steps of the investment cycle. Invest Cyprus also acts as a bridge between investors and government bodies, aiming at facilitating communication and putting forward investors’ needs and requests.


GOLD: What was your first message to the Members of the Board? 

M.P.M.: I expressed my excitement and honour at being given the opportunity and committed to work hard and continue our collective efforts towards establishing Cyprus as a world-class investment destination, eliminating all barriers to investment activity and helping the country move forward to a sustainable future.


GOLD: When Invest Cyprus was set up, one of its main aims was “To promote Cyprus as an attractive international investment centre in key priority growth sectors”. Is this still a key aim and, if so, what are these “key priority growth sectors” today? Have they changed over the last decade?


M.P.M.: Invest Cyprus operates on a threefold mandate, to promote Cyprus abroad as an attractive investment destination, to provide tailored investor facilitation and support and to advocate reform to improve the business and investment environment. We have introduced a new strategy for 2017-2020, redefining priorities and introducing new methods and tools, but remaining focused on our mandate and goal to achieve sustainable economic growth through FDI. With regard to the key growth sectors we focus on, we are continuously striving to diversify our economy, by driving new sectors with high potential, such as energy, education, investment funds, films, startups and innovation, while enhancing our competitive edge in areas in which we have traditionally excelled, such as tourism, shipping and real estate. Last but not least, Cyprus is an excellent choice for companies wishing to maintain an EU base with access to the Eastern Mediterranean region and Asia. By leveraging on a range of available incentives and benefits, we aim to encourage regional headquartering and increase the number of new and established companies which base their regional or global headquarters on the island


GOLD: What do you see as Cyprus’ competitive advantage over other jurisdictions that are trying to attract Foreign Direct Investment?

M.P.M.: Cyprus does not only have one competitive advantage but rather a package of compelling advantages as an investment destination. It is a dynamic and forward-looking business and investment centre, with a robust economy with forecasts for positive growth in the coming years. Here in Cyprus, we are committed to offering a high-quality, regulated service and a unique value proposition that ensures the best possible experience for investors and businesspeople worldwide. In a business-friendly environment, with a highly skilled and multilingual workforce, where doing business is simple, fast and efficient and life is of the highest quality, international businesses find the ideal environment to invest, prosper and grow. Moreover, we are committed to continuously improving the business climate, increasing competitiveness and ensuring a stable and robust economic environment. Cyprus has the whole package for an investor, as a place not only to work but to live in.


GOLD: Are there things that Cyprus can learn from its competitors?

M.P.M.: At Invest Cyprus, we closely monitor developments in competitive jurisdictions, as well as the actions of other Investment Promotion Agencies.  We always try to be up to date with global developments, to learn and introduce global best practices into our strategies and consult the Government on necessary reforms to improve the business and investment environment. There is also a lot to learn from others’ mistakes as well as from their success. We frequently do benchmarking exercises, both on a general and a sectorial basis, to see what others are offering and to try to improve and enrich our product and be able to establish our country as an ideal destination for international business and investment, opening up new markets from where we can attract new investments.


GOLD: In the 2018 Doing Business Report, Cyprus was ranked 53rd overall and, in two categories, was listed in the last quarter of 190 countries. What can be done to take the country up these global rankings?

M.P.M.: The Doing Business Report is definitely a key point of reference for international investors. Therefore, Invest Cyprus places great emphasis both on efforts to improve Cyprus’ ranking, as well as on identifying weak areas and liaising with the responsible government authorities to promote suggested reforms for the improvement of the country’s ease of doing business climate. In the Doing Business Report for 2018, Cyprus’s position deteriorated, dropping to 53th from 45th the previous year. However, this does not mean that Cyprus has not taken any measures to improve its business and investment environment. The results of the report are relative to the progress made by other economies as well and an indication that we need not only to act but to act fast and efficiently.


GOLD: Five years ago, the Government made reform of the public service one of its priorities. How far do you believe it has succeeded? Are potential investors still being discouraged due to the bureaucracy and inefficiency they used to face when wanting to set up business here?

M.P.M.: Legislative reforms definitely play an important role in both modernizing the state and attracting investment. Some of the horizontal, cross-sectoral level measures which have already been adopted include the reform of the Office of the Registrar of Companies, a new framework for Alternative Investment Funds, and the promotion of e-government within the civil service. Recent reforms have tackled bureaucracy and simplified procedures, resulting in a solid, modernized and restructured state, that ensures speed and ease of doing business. There are also specific incentives and actions which are being developed to enrich and diversify Cyprus’ offering in key economic sectors. These include tax incentives for investment in innovative companies, a comprehensive programme for the development and promotion of the film industry, as well as an enhanced framework for investment funds. One major development is the creation of the Deputy Ministry of Shipping, a strong indication of the Government’s dedication to further advancing and developing this sector, which represents one of the main pillars of the Cyprus economy. Several other initiatives are in the pipeline, such as a Deputy Ministry of Growth and Competitiveness and a Deputy Ministry of Tourism. It is evident that a lot has been achieved but the momentum must be maintained in order to ensure that Cyprus remains on a steady path of positive economic growth. The Government is committed to continuing with its reform programme, to further enhance Cyprus’ competitiveness and achieve the highest possible economic and social benefits for its people.


GOLD: In your address to last month’s Invest Cyprus CIPA International Investment Awards ceremony, you said that Cyprus should take advantage of the UK’s forthcoming exit from the EU and noted that Invest Cyprus has allocated a budget for work in this area. How do you plan to use that money?

M.P.M.: Invest Cyprus has allocated a specific budget to develop and implement an effective strategy, aimed at attracting activities and investments from UK-based entities that are looking to either relocate or expand their business into other EU jurisdictions due to Brexit or for other commercial reasons. In this regard, we are cooperating with international agencies and consultants to promote a strong positive image for Cyprus, raise awareness of the country and its advantages as an alternative EU base for foreign investors, as well as to identify and approach potential investors in key target sectors and industries and pitch Cyprus to them as an ideal regional headquartering destination. We are organizing roadshows and events in the UK to this end. In this regard, we will be hosting a business and investment Forum at the new Bloomberg headquarters in London in September this year, in the presence of the President of the Republic, as well as the Ministers of Energy and Finance.


GOLD: Are you in favour of Invest Cyprus continuing to use the same methods to attract investors to Cyprus that it has employed during the past 10 years or do you have new ideas?

M.P.M.: Invest Cyprus continuously modifies and enriches the methods it uses to achieve its goals and mandate. We, of course, continue to enforce measures and methods, which have proven to be successful and productive, such as participating in and organizing various events, roadshows, B2B meetings abroad and in Cyprus. However, we do employ new and innovative methods to strengthen our efforts and enhance our capabilities. The impressive recovery of the Cypriot economy, global developments such as Brexit, as well as technological advancements, all create the need to redefine priorities and redesign our strategy to optimize the opportunities that emerge. Being adaptable is one of the most crucial characteristics of an organization in today’s constantly changing environment. For example, we are currently implementing an innovative and comprehensive digital marketing and communications strategy, utilizing digital tools, channels and social media for the targeted promotion of Cyprus abroad and the projection of a positive image for the country. Moreover, we are focusing on strengthening our relationship with existing foreign investors by introducing systematic communication to discuss and solve problems but also to ensure a positive word-of-mouth on their experience in Cyprus, which could lead to further investment by the same individuals or companies, or to new foreign investment and contacts. We are also redesigning our strategy, opening up to new sectors of the economy as mentioned earlier, as well as new markets in various parts of the globe that we did not target before but where we know there is interest to promote Cyprus.


GOLD: How successful do you believe the Cyprus Investment Programme (previously the Citizenship by Investment Scheme) has been? Do you believe that it is sustainable or are you in favour of ending it at some point?

M.P.M.: The Cyprus Investment Programme has contributed significantly to the recovery and stabilisation of the Cyprus economy and is also a valuable instrument for developing key economic sectors and particularly the real estate sector, at a time of economic distress. It is a not a “passports for sale” scheme but an effective investment programme that contributes significantly to economic growth. It concerns investors who have forged real ties with the country, have permanent residence and made actual investments. The Programme does not only concern the real estate sector but also promotes investment in other economic sectors with equally strong prospects, including financial services, investment funds, shipping, start-ups and innovation, education, energy and films. It has been severely criticized but, if one sees the numbers, it is clear that investor naturalisations in Cyprus do not exceed 0.3% of the overall naturalisations at European level. The programme has therefore been very successful in enhancing the prospects of the Cyprus economy and it is essential to safeguard and maintain it as long as it serves its purpose. Recent amendments have introduced strict control mechanisms and screening procedures, which ensure investor protection as well as the protection of the programme and its value.


GOLD: We all saw what happened to the real estate market in 2013. Do you think we should be concerned about the current boom in high-rise luxury properties?

M.P.M.: Indeed, luxury property sales as well as prices have increased, with construction activity and property sales of all kinds booming in the past years. The Cyprus Investment Programme made a significant contribution to reviving and boosting the real estate sector from 2014 onwards. Even though the programme, as described above, promotes investment in a variety of areas and not only property, the element of maintaining a €500,000 property for life has been a key support tool for the real estate sector. Specifically, during 2017, the total number of high end residential transactions reached 260, an increase of 45% from 2016 (179 transactions), while the number of properties sold to foreigners increased by 33%. Large-scale developments such as Limassol Marina have spurred interest and further development in all major cities. High demand equals increased transaction volumes, increased construction activity and increased sales. Of course, we shall all try to avoid a potentially unsustainable increase in construction activity and ensure a long-term impact of the real estate sector and high-end property on the real economy of the island. Taking into account that most of the investments are now growing from own equity capital and not by borrowing, it is a much better safeguard that there is no real fear of repeating the mistakes of the past.


GOLD: How confident are you in the ability of Cyprus – and Invest Cyprus – to continue to attract foreign investment to the island?

M.P.M.: Cyprus has traditionally been a highly attractive investment destination, resilient in turbulent times. Especially in today’s highly volatile and extremely competitive business environment, the country’s ability to constantly adjust, reform, modernise and innovate are key elements for establishing sustainability and reinforcing competitiveness. We don’t say that there are no problems but with the Government’s support and the private sector’s strong collaboration, we all work closely together to further enrich Cyprus’ portfolio and position in the global investment map. Invest Cyprus is at the forefront of these efforts, committed to establishing Cyprus as a centre of excellence for international activity. By further expanding and diversifying our economy, improving our business and investment environment and providing investors with multidimensional incentives of both a generic and sectorial nature, we aim at attracting substantial investments which lead to job creation, advanced know-how and, of course, a further injection of funds.


The interview was first published in GOLD Magazine (July 2018 issue)


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