The 2012/07/11 at 10:00
What can international businesses find in Cyprus?
P.L.: “Cyprus is an excellent business centre. We have many foreign businesses that select Cyprus for the development of their international centres, not only in maritime transport but also in trade and services. In all sectors of the economy, many businesses are setting up their business bases here due to the favourable environment, developed infrastructures, the banking, financial and legal systems. Cyprus is extremely competitive, particularly thanks to its tax conditions as we have very low company tax, at only 10 %. We also anticipate the implementation of a bundle of incentive measures in favour of investment ardently supported by the Chamber – measures encompassing tax incentives for businesses investing in the country and for foreigners buying property in Cyprus.”
How does Cyprus perceive the Greek crisis given the proximity of the two countries?
P.L.: “The problem with Greece is that our banks have invested in its debt, which today has a big effect on our banking system. We have three or four major banks in Cyprus. Three of them have resolved their problems by increasing their capital. One bank still faces problems. If it does not manage to get over them, the government will intervene.” (Since this interview, the Republic of Cyprus has made a request for financial aid from the Eurozone, as well as from Russia, to bail out its banking system, editorial note.)
In January, Standard and Poor's lowered Cyprus’ rating. Was this a hard blow?
P.L.: “This is a difficult topic. Agencies don’t take into consideration future projects. Of course we are encountering problems, like many countries today, but Cyprus has development opportunities such as the natural gas deposit discovered last year. In three or four years’ time, we will be capable of benefiting from these new resources and agencies should consider this. But they are unaware of this.
In addition, many projects in Cyprus are just getting started. There is a petrol export terminal in Limassol, a project worth two million euros led by a Dutch company. The Limassol marina is also underway, the one at Larnaka will get going very soon, and those at Paphos and Ayia Napa will follow. What I want to point out is that investment has begun in Cyprus and we have very big international companies that wish to invest here. The Chinese are interested, the Canadians are interested, there is movement. So we believe that in a short space of time, we will leave behind this year’s recession and that 2013 will be better.” (Since this interview, the agencies Moody’s and Fitch have also lowered their ratings for Cyprus, editorial note).
To conclude, let’s go back to negotiations with Turkey on Northern Cyprus that have taken a new turn now that the Republic of Cyprus is taking over presidency of the EU. What link can be made between the Turkish-Cypriot negotiations and economies?
P.L.: “If we resolve this problem, the economy’s progression will most certainly be much better. Of course, and thankfully despite this problem, our economy has developed enormously in the last thirty-eight years. We have transformed an economy based on agriculture into one based on services, for today 80 % of the Cypriot economy relies on services, while agriculture represents only 3 %. Our industry has gone down from a proportion of 20 % of the economy to 9 % as we have lost the country’s large industrial zones (Nicosia and Famagusta), now occupied zones. 70% of the country’s natural resources have been lost. The island’s main tourist poles were Famagusta and Kyrenia, both occupied, so we have had to develop new tourist zones such as Paphos or Ayia Napa. We have created new infrastructures for the Cypriot economy.
Today, I think that the problem will not find any favourable outcome without reunification. We are too small an island to have two States. The problem is visibly Turkish as Turkey continues to support cohabitation between two separate States. We have seen that even before the Republic of Cyprus took over presidency of the European Union, Turkey issued threats on the possibility of annexing the northern territory of Cyprus. This demonstrates that Turkey is not seeking a solution. This is my conclusion in any case.”