EBRD should i nvest ‘wisely’ in pri­vate sec­tor, SMEs

Financial Mirror (Cyprus) - - FRONT PAGE - By Kyr­i­aki Demetriou

The newly-elected chair­man of the Em­ploy­ers and In­dus­tri­al­ists Fed­er­a­tion (OEV) has called for an ur­gent in­vest­ment by ma­jor funds to sus­tain the pri­vate sec­tor which has the re­sources to be com­pet­i­tive with in­ter­na­tional peers and en­cour­age in­no­va­tion.

In an in­ter­view with the Cyprus News Agency, Chris­tos Michaelides, who hails from the con­sul­tancy sec­tor, said that ex­ter­nal fund­ing is nec­es­sary to sup­port in­vest­ments, in­clud­ing the up­grad­ing and ex­pan­sion of in­fra­struc­ture to sup­port pri­vate sec­tor ini­tia­tives in fields such as re­new­able en­ergy, nat­u­ral gas and var­i­ous forms of tourism.

“Many com­pa­nies face se­ri­ous fi­nan­cial prob­lems and use all their forces to re­main in the mar­ket,” he said, not­ing that “it is very im­por­tant to utilise in a proper man­ner the Euro­pean Bank on Re­con­struc­tion and De­vel­op­ment, which will al­lo­cate funds to the pri­vate sec­tor”.

The EBRD is ex­pected to in­vest some 600-700 mln by the end of 2020 and has al­ready ap­pointed a Cyprus man­ager who will over­see in­vest­ments and su­per­vi­sion of the al­lo­ca­tion of funds.

Michaelides said that there is a “wide avail­abil­ity of young people with high ed­u­ca­tional qual­i­fi­ca­tions, which paves the way to strengthen youth en­trepreneur­ship, based on re­search and in­no­va­tion. He sees “tremen­dous growth prospects” in the en­ergy sec­tor and op­por­tu­ni­ties for job cre­ation in fur­ther de­vel­op­ing var­i­ous forms of tourism, such as re­li­gious, med­i­cal, sports and con­fer­ence tourism.

Re­al­is­ing that that there are com­pa­nies that can af­ford to, the OEV chair­man urged those who can pay their loans, to do so with­out any fur­ther de­lay in or­der to gen­er­ate liq­uid­ity back in the mar­ket.

He also called on the banks to ac­cel­er­ate the re­struc­tur­ing process of vi­able loans and do what­ever they can to re­cover debts from who­ever fails to re­pay their loans.

Michaelides said that the prob­lem of non-per­form­ing loans (NPLs) would have been smaller, had Cyprus adopted the same def­i­ni­tion as in other Euro­pean coun­tries.

He stressed that eco­nomic re­cov­ery and the solv­ing so­cial prob­lems cre­ated by the eco­nomic cri­sis will even­tu­ally start from the businesses and there­fore pri­or­ity should be given in en­sur­ing their sus­tain­abil­ity, cre­at­ing new businesses and for­mu­lat­ing an en­vi­ron­ment for busi­ness de­vel­op­ment.

He said that OEV is fo­cus­ing its ef­forts on three pil­lars: 1. to restart the econ­omy and cre­ate con­di­tions for growth, jobs and pros­per­ity; 2. rebuild the forces of the econ­omy, fo­cus­ing on pri­vate ini­tia­tive, along with re­defin­ing Cyprus’ eco­nomic model, at­tract­ing in­vest­ments, ac­cel­er­at­ing pri­vati­sa­tions and con­sol­i­dat­ing the bank­ing sys­tem; and, 3. to pro­mote in­no­va­tive prac­tices, in­cen­tives and ef­fec­tive mea­sures for the en­ter­prises to sur­vive and de­velop.

“Strength­en­ing en­trepreneur­ship, help­ing Cypriot businesses to take over projects abroad and at­tract­ing in­vest­ments, par­tic­u­larly for­eign ones, will boost liq­uid­ity and al­le­vi­ate prob­lems caused by the eco­nomic cri­sis. To re­vive en­trepreneur­ship we be­lieve that the state’s con­tri­bu­tion must be sig­nif­i­cant to sup­port businesses by re­duc­ing bu­reau­cracy and pro­vide in­cen­tives for in­no­va­tive and imag­i­na­tive prac­tices,” Michaelides said.

He noted that by fa­cil­i­tat­ing Cypriot businesses to take over con­struc­tion projects or parts of them, abroad, will also gen­er­ate sig­nif­i­cant rev­enue for the econ­omy and many jobs for Cypri­ots and called on the Min­istry of Com­merce to pro­vide prac­ti­cal con­tri­bu­tion to­ward that di­rec­tion.

“The pro­mo­tion of ex­ports of goods and ser­vices can be done with the prac­ti­cal help of the Com­merce Min­istry and our am­bas­sadors abroad,” he said.

The Pres­i­dent of OEV said that “lend­ing is per­haps the big­gest prob­lem faced by the bank­ing sec­tor, in par­tic­u­lar the NPLs”. “It is im­por­tant to hold an hon­est di­a­logue be­tween the banks and the en­ter­prises as the banks’ ul­ti­mate goal is not to close down businesses but ren­der them vi­able so as to re­cover the debts”.

Michaelides pointed out that OEV sup­ports all mea­sures to en­cour­age the em­ploy­ment of Cypri­ots, pro­vided that they are ap­plied on a vol­un­tary ba­sis and do not vi­o­late the ac­quis com­mu­nau­taire. “We must keep in mind that we are a mem­ber state of the EU where em­ploy­ment dis­crim­i­na­tions are pro­hib­ited and we must not act con­trary to our coun­try’s in­ter­ests” he said, as re­gards the em­ploy­ment of work­ers from other EU coun­tries. Es­pe­cially for the ho­tels in­dus­try, he noted that “a large part of tourists (who visit Cyprus) do not speak Greek and there are ho­tels fully booked by for­eign vis­i­tors for the en­tire (tourist) sea­son”.

He ex­presses the view that com­bat­ing un­de­clared work is a sole re­spon­si­bil­ity of the state.

The lib­er­al­i­sa­tion of shop open­ing hours is a suc­cess­ful mea­sure, as it “has cre­ated thou­sands of new jobs”, de­scrib­ing as “ex­ces­sive and un­jus­ti­fied” the re­ac­tions by the small and medium sized en­ter­prises or­gan­i­sa­tion, POVEK, against the im­ple­men­ta­tion of the mea­sure.

Michaelides con­cluded that “de­spite all ef­forts to fight bu­reau­cracy, the prob­lem re­mains se­ri­ous and con­sti­tutes a ma­jor ob­sta­cle for the businesses”.

Pos­i­tive steps have cer­tainly been taken but the eco­nomic cri­sis should have push for rad­i­cal de­ci­sions, he said, adding that hope­fully a new Com­mis­sioner for Pub­lic Ser­vice Re­form will take over very soon to carry out the mod­erni­sa­tion of the pub­lic sec­tor.

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