Red tape and slow state ser­vices still trou­ble for­eign in­vestors

Financial Mirror (Cyprus) - - FRONT PAGE -

Bu­reau­cracy, the lack of con­fi­dence in the bank­ing sys­tem, the fi­nan­cial cri­sis and long de­lays in the com­ple­tion of pro­ce­dures by the state sec­tor are the four main dis­ad­van­tages for for­eign in­vest­ments in Cyprus, ac­cord­ing to the re­sults of a sur­vey for 2014 con­ducted by the Cyprus In­vest­ment Pro­mo­tion Agency (CIPA) for the sec­ond con­sec­u­tive year.

The four main ad­van­tages of Cyprus are, ac­cord­ing to the re­sults, the tax regime, lo­ca­tion, the good pro­fes­sional ser­vices and the level of hu­man re­sources.

The sur­vey was car­ried out for CIPA by Noverna An­a­lyt­ics and Re­search with the par­tic­i­pa­tion of 119 for­eign-owned com­pa­nies in Cyprus, pri­mar­ily in ship­ping, con­sult­ing and fi­nan­cial ser­vices, en­ergy and an­other 15 sec­tors of the econ­omy. The sur­vey’s main aims were to ap­praise Cyprus as a busi­ness cen­tre and in­vest­ment des­ti­na­tion, the ex­tent to which for­eign in­vestors are sat­is­fied with Cypriot ser­vices, but also to eval­u­ate the Cyprus econ­omy more gen­er­ally.

The sur­vey concludes that there is room for im­prove­ment for Cyprus as a des­ti­na­tion for in­vest­ments and busi­nesses. Ac­cord­ing to the find­ings, im­prove­ment is needed in the bank­ing sec­tor which 4 out of 10 com­pa­nies de­scribe as re­stric­tive for the busi­nesses, the public ser­vices which one out of three de­scribe as slow and re­stric­tive, speed in de­ci­sion mak­ing which four out of ten de­scribe as slow and re­stric­tive, in­cen­tives for com­pa­nies as more than 3 out of 5 com­pa­nies say th­ese are not enough for in­vestors and the cost of living, which 6 out of 10 com­pa­nies de­scribe as par­tic­u­larly ex­pen­sive.

An at­trac­tive cor­po­ra­tion tax, the fact that Cyprus is an EU mem­ber state, pro­duc­tive hu­man re­sources at a rea­son­able cost, a high-level of pro­fes­sional ser­vices, the legal frame­work for com­pa­nies and the living stan­dard and low crim­i­nal­ity rate are among the pos­i­tive char­ac­ter­is­tics which de­scribe Cyprus as a busi­ness cen­tre, ac­cord­ing to the the sur­vey.

The poor­est sat­is­fac­tion of for­eign in­vestors which par­tic­i­pated in the sur­vey, as re­gards state ser­vices, con­cerns the Depart­ment of the Reg­is­trar of Com­pa­nies, the Migration Depart­ment, the Ur­ban Plan­ning Depart­ment, the Land Reg­istry, the Cus­toms Depart­ment and the Depart­ment of Labour.

As re­gards Troika’s con­tri­bu­tion in achiev­ing pos­i­tive re­forms in Cyprus, 26 de­scribed it as very pos­i­tive, 27 as pos­i­tive, 26 as mod­er­ate, 9 not so pos­i­tive and 7 not pos­i­tive at all.

Pre­sent­ing the re­sults of the sur­vey, CIPA Direc­tor Gen­eral Charis Pa­pachar­alam­bous said for­eign in­vestors had voiced op­ti­mism about the course of the econ­omy, recog­nis­ing the growth prospects.

He said that for­eign in­vestors con­sider that Cyprus has room for im­prove­ment in forg­ing a na­tional eco­nomic/in­vest­ment strat­egy and in of­fer­ing in­cen­tives to in­vestors.

As the sur­vey shows, for­eign in­vestors are mon­i­tor­ing the changes tak­ing place in the econ­omy and wish to see the speed­i­est pos­si­ble im­ple­men­ta­tion of the planned strate­gic re­forms and the struc­tural changes which aim to make Cyprus more hos­pitable to for­eign in­vest­ments.

Ad­dress­ing the event, CIPA Chair­man Christodou­los An­gas­tin­i­o­tis re­ferred to the re­sults of the sur­vey, not­ing that “although in the last two years Cyprus has taken sub­stan­tial steps to­wards fi­nan­cial con­sol­i­da­tion, some­thing which is re­flected in for­eign in­vestors’ ex­pec­ta­tions on the econ­omy un­til 2020, a lot re­mains to be done. Im­prov­ing the busi­ness cli­mate and deal­ing with bu­reau­cracy re­main the chal­lenges that we must over­come over the next few months.”

“For CIPA it is es­sen­tial and ex­tremely im­por­tant to hear what for­eign in­vestors have to tell us. This in­for­ma­tion, com­ing as it is from those who have a di­rect in­ter­est, con­sti­tutes a very use­ful tool for bet­ter plan­ning and in or­der to im­prove,” he added.

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