FDIs exceed € 2 bln
Foreign direct investments (FDIs) into Cyprus are expected to have exceeded 2 bln euros in the past year, boosted by the mega-capital raising by Bank of Cyprus in September and Hellenic Bank earlier this year, as well as a record number of immigrant visas granted to non-European residents who have invested in property or in bank deposits.
According to Financial Mirror calculations, the Ministry of Interior has granted long-term immigrant visas or implemented fast-track procedures to 1979 from March 2013 to the end of October this year, many of whom have bought properties worth at least 300,000 euros (excluding VAT) and secured a permanent residency permit.
Some have also opted to deposit 5 mln euros in long-term facilities of at least three years, thus jumping to the head of the queue when it comes to immigrant visas and fast-tracking procedures with the Civil Registry and Migration Department (CRMD).
However, the number of applicants seems to have dropped from a total of 1259 from March to December 2013 to 720 so far this year, with only two months remaining.
The best months that attracted record applicants were April and July last year with 178 and 117 cases, respectively, soon after the March 2013 Eurogroup decision that resulted in a bailout for the bankrupt economy and the bail-in by depositors to rescue Bank of Cyprus, that in turn was burdened with the huge debts of now-defunct Laiki Bank.
Interior Minister Socratis Hasikos told the House Finance Committee on Monday during a review of his department’s budget for 2015 that since coming into office in March 2013, the country has attracted some 1 bln euros in investments related permanent residence visas and immigrant applications.
“It is a fact that the present administration’s policy to encourage naturalisations, but also by providing permanent residence visas (immigration applications) to persons who buy properties worth at least 300,000 euros, brought in ‘fresh money’ of about 1 bln euros.
“This is all within the similar legal parameters laid down by other EU member states. It is not only Cyprus that has such programmes in place and it is not only Cyprus that attract foreign investors,” Hasikos said.
FDIs into Cyprus reached 965 mln in 2008 and peaked at about 2.5 bln euros in 2009, before dropping to 578 mln in 2010 and then picking up a bit to 987 mln in 2011, according to the Cyprus Investment promotion Agency (CIPA).
The drop, say analysts, was due to the global financial crisis and developments. However, according to revised Central Bank data, FDIs remained steady at 979 mln euros in 2012.
“Both amounts (bank investments and property/immigrant visas) will boost FDIs to beyond 2 bln euros this year,” a CIPA official told the Financial Mirror, adding that further road-shows being planned by Hellenic Bank to secure its 200 mln euro capital raise to cover its stress test shortfall, will help breach that amount.
Efforts are also underway with the new-established Cyprus Investment Funds Association (CIFA), a CIPA umbrella organisation of fund managers, seeking to list funds on the Cyprus Stock Exchange or at least secure an EU-wide passport through prospectuses approved by the Cyprus Securities and Exchange Commission (CySEC), the financial sector regulator.
What is left now is for fast-rack procedures to be introduced and implemented both by the CSE and CySEC, in order to diversify the range of Cyprus-listed funds or companies, while the somewhat favourable outcome of the bank stress tests and upward revisions by rating agencies may also lead to improving the image of Cyprus in international fund markets.