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