Speech by the Director of the Office of the President, Republic of Cyprus, Mr. Michalis Sophocleous, on the occasion of Celebration Event for the Launch of “CYhere” held in Limassol on Thursday 21st September 2017.
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Ladies and Gentlemen,
It is a great pleasure to be here today, to celebrate the launch of the Cyhere platform, and at the same time reaffirm Cyprus commitment to deepening the ties with the important and true friend that China is.
This new platform provides a wonderful opportunity for Cyprus to present to the Chinese business community the business and investment prospects it has to offer in various economic sectors. It will also familiarize the Chinese people with Cyprus as a tourism destination.
Cyprus and China enjoy excellent long-standing bilateral relations. The Cyprus Government is committed to facilitating cooperation between our two countries and, of course, also our business communities in every possible way. We are placing utmost importance on broadening our economic relationship with China and we are confident that both our peoples will benefit as a result.
Ladies and gentlemen,
Four years after our country had immersed in a deep financial crisis, everyone can acknowledge radical change of direction for Cyprus.
Today, our Government is now concentrating on maintaining conditions of macroeconomic stability and enhance the competitive edge of our economy.
It is an established and acknowledged fact, that our government’s approach is to maintain sound public finances, preserve a stable and competitive tax regime, and provide incentives for new business and investments.
Foreign investments have been at the centre of our policy to attain these targets. Bold but essential reforms have been introduced in the management of public finances and tax administration and in the banking sector.
That is exactly the reason we devote much of our energy and resources to these objectives. We have successfully consolidated our public finances not only without raising a single tax, but achieving to even cut taxes.
We have been promoting hundreds of major, important and minor structural reforms and we shall continue to do so, in order to ensure that our public institutions and procedures become more business friendly, leaner, less costly and more efficient.
Our ambitious reform programme will undoubtedly transform every aspect of Cyprus upon its full implementation. A structural reform programme which includes:
· A wide ranging civil service reform including a reform of the wage-bill of the civil servants and establishing mobility in the public service.
· The major radical reforms in social welfare, healthcare, institution transparency and our justice system
· The commercialisation of the Limassol and Larnaca ports
· An institutional reform including the establishment of 3 major Deputy Ministries directly attached to the Presidency and accountable directly to the President.
· The Deputy Ministry for Shipping has already been approved by Parliament and will come into effect in 2018, while the creation of Deputy Ministries for Growth and Competitiveness, as well as Tourism will be considered by Parliament this autumn.
· A wide ranging Tourism sector reform, including a new comprehensive Tourism Strategy which if implemented will lead to doubling the real Revenue from Tourism by 2030.
· A new Funds policy framework was introduced, in close collaboration with the Cyprus Investment Funds Association. The legislative acts we have implemented, have succeeded in tripling funds under management since 2013.
· New incentives for innovative companies and start-ups, as well as the start-up visa program were recently introduced, and further reforms regarding university spin-offs are in the pipeline.
· Solid investors have access to programmes for the acquisition of Cypriot Citizenship and Immigration Permit programmes, that allow them to enjoy the benefits of living in Cyprus and enjoying the high quality of life our island has to offer.
· In collaboration with the Government of Estonia, we are implementing an e-government reform and efforts to tackle bureaucracy as well as a local government reform are already providing results. We are fully digitizing our tax processes, our justice and our healthcare system amongst others.
· An incentives package for the filming industry is also in the pipeline.
Ladies and Gentlemen,
Cyprus has emerged from the crisis stronger than ever and is steadily reinforcing its position as a competitive, innovative, stable and fully transparent destination for business and investment. Attracting investments in the productive sectors of the economy is the Cyprus Government’s top priority, as we recognize their catalytic effect on economic growth, job creation and prosperity.
Despite the economic difficulties that we have faced, our country’s comparative advantages not only remain intact, but have been further enhanced to include a significant network of Agreements for Avoidance of Double Taxation, a highly qualified workforce, and a fully EU-harmonised tax and legal system. Cyprus continues to be a highly competitive center for international businesses.
In this light, the Government is committed to the implementation of a series of specific incentives, aiming to further facilitating investment, establishing a business-friendly environment. Towards this an important step is the new legal framework that is being developed, which establishes the procedure of direct licensing of large investments.
Our efforts have been delivering results:
- Cyprus is now one of the fastest growing economies of the EU, currently just with a GDP growth rate above 3% and most importantly this growth rate is expected to stay at this level for the next few years.
- Employment levels are on the rise, recording a notable 3.1% increase compared to 2016.
- Our banking sector now stands on a much healthier footing, having undergone ambitious restructuring, while the restructuring of nonperforming loans has gained momentum.
- We are operating with a balanced budget for a fourth consecutive year, while the primary surplus reached a sizable 3% in 2016, supported by reforms undertaken in previous years.
- Foreign and local investment has been channelled into various big projects ranging from sea-ports to Marinas, and in the largest integrated casino resort in Europe which was licensed just a few months ago. Indicatively, Foreign Direct Investment witnessed a 9.1% rise in 2016, compared to the previous year, which was the second largest increase at EU level.
Most importantly, opportunities for growth exist in the majority of economic sectors.
The professional services sector turned out to be remarkably resilient during the economic crisis. This sector was also key in the turnaround of the Cyprus economy and is expected to remain important in future years, especially in the area of investment funds management.
The tourism sector also constitutes one of the main drivers of economic growth in Cyprus, proving to be a resilient and adaptive industry. Recent investment in the hotel industry has resulted in a 20% increase in bed-capacity. Last year, tourism exhibited a record number of tourist arrivals (increase by 19.8%), with a continuing increase for 2017. Our commitment to “open air” policies has helped achieve this performance.
It is worth mentioning here, that we have taken measures to simplify procedures of visa application so as to make it easier for Chinese tourists to visit our island. To this end, we have as of March 2016 started cooperating with an External Service Provider, currently with 6 visa application centers in the main Chinese cities where there is consular presence or a representation of Cyprus. The aim is to eventually extend it to 15 cities.
The real estate sector is once again enjoying a revival, not only due to Cyprus offering a high quality of life, but also as a result of tax incentives such as the reduction of property transfer fees, the elimination of property tax and the implementation of the programme for Citizenship acquisition by investment.
The shipping industry has been one of the most successful export services of our country, offering competitive ship registration costs and favourable tax regime for ship management. With the 10th largest merchant fleet in the world, a Ship management Centre amongst the top three in the world, and the largest third party Ship management Centre in the EU, Cyprus is one of the most influential global hubs for ship-owning and ship management services.
The education sector, attracting foreign students from all over the world, has the capacity of becoming another significant area of collaboration between Cyprus and China, whereas another area of co-operation which could be actively exploited is that of renewable energy.
And of course, natural gas brought a significant presence of global energy groups from Europe and the US, adding a new dimension to the prospects of Cyprus’ economy.
All these areas offer an excellent potential for further deepening our cooperation in the years to come for mutual benefit.
Trade and business are part of the Cypriots DNA. Being an island in this strategic geographical location, we’ve learned to be outward looking and business friendly since the ancient times.
We welcome investments. And every policy we followed until now has been geared towards the investor. That’s why we saw the economic crisis of 2013 as an opportunity.
We have not tried to shied away from the problems, but instead we have chosen to move on all fronts.
And the results so far have been positive, consistently outperforming forecasts and expectations.
The transformation of our island’s economy has been a successful project, but one that is not yet complete; our efforts are ongoing, and will remain ongoing.
We our committed to ensuring that Cyprus is always in a position to protect and enhance its competitive advantages, and to offer investors the opportunities they are looking for within a business-friendly, advanced, and transparent environment.
Cyprus is and will always be a small, flexible economy, with proven resilience and adaptability. And this is particularly important for all investors, all important business and services.
We hope that this Summit will be useful to you in finding out more about investment opportunities available in Cyprus, not only in the real estate and leisure sector, but across all sectors of the economy.
In closing, I would like to thank you for promoting Cyprus and showcasing its potential as an excellent place to live, do business, invest and prosper. I wish you every success in this project.
Thank you for your kind attention.
(Source: Office of the President, Republic of Cyprus)