Red tape and slow state services still trouble foreign investors
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.