Red tape still main ob­sta­cle in at­tract­ing in­vest­ments, says CIPA sur­vey

Financial Mirror (Cyprus) - - FRONT PAGE -

Bu­reau­cratic de­lays at the high­est level in govern­ment con­tinue to ham­per po­ten­tial for­eign in­vest­ments, with in­ter­na­tional com­pa­nies based in Cyprus trou­bled by the end­less red tape for per­mits, ac­cord­ing to a sur­vey com­mis­sioned by the Cyprus In­vest­ment Pro­mo­tion Sur­vey shows.

“In­vestor con­cerns are mainly struc­tural vul­ner­a­bil­i­ties and not co­in­ci­den­tal chal­lenges, such as the i mpact of the fi­nan­cial cri­sis,” CIPA Pres­i­dent Christodou­los An­gas­tin­i­o­tis said at an event where the re­sults of the sur­vey car­ried out by Noverna An­a­lyt­ics & Re­search and 111 for­eign ex­ec­u­tives, were dis­cussed.

With the bank­ing sys­tem caus­ing still a worry, the tax regime, the pro­fes­sional ser­vices sec­tor and the mea­sures taken aim­ing at stabilising the econ­omy have left pos­i­tive im­pres­sions on in­vestors, An­gas­tin­i­o­tis added.

Ac­cord­ing to the sur­vey, the main rea­sons for­eign in­vestors chose Cyprus for their busi­ness ac­tiv­i­ties were the favourable tax regime (23%), the political and so­cial sta­bil­ity (27%), lo­ca­tion (8%) and the le­gal frame­work.

On Cyprus’ ben­e­fits, the tax regime was the most pop­u­lar re­ply with 49% of the re­sponses, fol­lowed by geo­graphic lo­ca­tion with 21%, lo­cal hu­man re­sources with 20%, pro­fes­sional ser­vices (19%), the ca­pac­ity as an EU mem­ber-state, the political, eco­nomic and so­cial level, the fair weather and hos­pi­tal­ity (all 5%).

Con­cern­ing the com­pany sat­is­fac­tion score, 83% of the re­spon­dents had a very pos­i­tive or pos­i­tive view of the low crime rate, fol­lowed by low cor­po­rate tax rate with 72%, telecom­mu­ni­ca­tions with 58.5%, lo­cal hu­man re­sources with 55.8%, pro­duc­tiv­ity with 49.4%, the ge­o­graph­i­cal lo­ca­tion with 47.7%, whereas the qual­ity of life se­cured 45.9% of the re­sponses, cur­rency 39.6% and 37.8% of the re­spon­dents had a very pos­i­tive im­age due to low pro­fes­sional ser­vices cost.

On the other hand, 38.7% of the re­spon­dents had a very neg­a­tive im­age of the is­land’s civil ser­vice, with 11.7% lit­tle neg­a­tive, whereas 42.3% of the com­pa­nies had a neg­a­tive im­age on the in­cen­tives of­fered to pri­vate busi­nesses.

Ac­cord­ing to the sur­vey, a to­tal of 92% of the per­son­nel of for­eign com­pa­nies op­er­at­ing here are Cypri­ots, 4% are na­tional of other EU mem­ber states and third coun­tries (non-EU) na­tion­als ac­counted for the re­main­ing 4%.

On the com­pa­nies’ ex­pec­ta­tions 19% of re­spon­dents said the sit­u­a­tion con­cern­ing the tax regime was bet­ter than an­tic­i­pated, fol­lowed by mea­sures to con­sol­i­date the econ­omy with 13%, pro­fes­sional ser­vices with 12%, the bank­ing sec­tor sta­bil­i­sa­tion with 9%, hu­man re­sources with 8% and in­cen­tives aim­ing at at­tract­ing for­eign in­vest­ments with 5%.

Red tape was worse than ex­pected ac­cord­ing to 43% of re­spon­dents, the bank­ing sys­tem with 21%, strate­gic plan­ning with 16%, the political sys­tem with 5%, pro­duc­tiv­ity with 5% and cor­rup­tion also with 5%.

A to­tal of 79% of the par­tic­i­pat­ing com­pa­nies said they had no in­ten­tion of mov­ing their base else­where, slightly down from the 81% re­sponse in the 2014 sur­vey. Also, 15% of the re­spon­dents said they were not sure whether they would move their com­pany base to an­other coun­try, com­pared with 12% in 2014, while 6.3% said they will move their base com­pared to 4% in 2014.

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