Address by the Minister of Commerce, Industry and Tourism at the 14th Annual General Meeting of the Cyprus International Business Association

Jun 15, 2007

It is a great pleasure for me to have the opportunity to address the Open Session of your Annual General Meeting. The Cyprus International Businesses Association has been the meeting point of all international companies in Cyprus with an excellent track record of contribution to the economic life of our country.

All of us in the Government very much appreciate the good work you are doing for Cyprus, not only through the promotion and the protection of the interests of your members but also through the constant communication with the various authorities.

Nowadays, Cyprus offers international investors the core competitive advantages that they seek before opting for an operational or business base. Such advantages include its strategic location, favorable business climate as well as fiscal regime, stable macroeconomic environment, high educational level of labor force in conjunction with the comparatively low level of graduates' remuneration, modern legal, banking and financial systems, excellent infrastructure with advanced transport and telecommunications network, as well as the widespread knowledge of English.

Cyprus has performed well in attracting foreign direct investments. It ranks among the front-runners of the world indicating both high FDI performance as well as high FDI potential, based on the latest World Investment Report of UNCTAD published in 2006. Based on the latest statistics, the FDI inflows for 2005 were above 1.1 billion dollars showing an upward trend in the range of 8% from the previous year, and indicating the country's attractiveness as an international investment centre.

Foreign investments in Cyprus are directed to all sectors of the economy i.e. services, trading, tourism, manufacturing, banking and insurance with the services sector holding by far the majority of Foreign Direct Investments in the country. Cyprus' Foreign Direct Investments originate mainly from the European Union (59%) followed by other European countries (35%), America (4,23%) and Asia (1,5%).

Most of the international companies based in Cyprus, are engaged in trade and marketing, shipping management as well as in information technology activities, predominantly serving the markets of the Middle East and the Central and Eastern Europe.

Cyprus already enjoys a healthy and attractive business and investment climate and we are confident that the very good record of FDI inflows that Cyprus already has will persist and develop over the years.

Attracting more foreign investments is amongst the primary objectives of the Cyprus Development Policy, since it contributes to the transfer of know-how, the introduction of new technology and facilitates further the expansion of exports. Towards this end and in an effort to encourage the inflow of foreign direct investment, the Government has recently taken various initiatives such as:

- The establishment of the Cyprus Investment Promotion Agency (CIPA), which will operate as a private non-profit organization dedicated to promoting the country as a business and investment centre. CIPA will be committed to providing extensive and professional assistance to foreign based companies as well as individuals who wish to investigate the possibility of investing in Cyprus. CIPA will also be entitled to provide after care service, aiming at anchoring existing investors and encouraging them to upgrade and further develop their operations and activities in Cyprus.

- The establishment of the "One-Stop-Shop" which aims at facilitating, accelerating and simplifying the process of setting up a business. Consequently, from now on the investor will have to be in contact with one single point to obtain almost all the required permits in one streamlined coordinated process rather than having to go through different governmental services. This will reduce considerably the average time of acquiring the basic permits and completing all the procedural formalities for setting up a business with the objective of being able to do this within one week from the initial application.

- The authorization of the Foreign Investors Service Centre to assess, according to predetermined criteria, investment proposals of more than £ 1 million pounds, and to recommend thereon to the appropriate governmental authorities the acceleration of the required licensing procedures for those investments that are deemed beneficial for the Cyprus economy.

Cyprus is a lucrative country offering a wide range of investment opportunities in various sectors.

Indicatively, in the tourism sector, plans include the construction of new marinas, theme parks, football stadiums, and the reconstruction of the island's two international airports with the Government promoting and maintaining favorable investment conditions for entrepreneurs to participate directly in this process of economic development.

As far as the high technology sector is concerned, plans include the launching of a Cyprus Science Technology Park, thus facilitating the creation of new ventures, especially in developing and commercializing innovative products and methods. Along these lines, the School of Engineering has been established within the University of Cyprus, while new initiatives include the Cyprus Technology University and the Cyprus International Institute on the Environment and Public Health, which has been established in cooperation with the Harvard School of Public Health.

Undoubtedly, the targeted participation in the Eurozone on 1st January, 2008 will lead to further integration with the euro area, leading to more opportunities but also more challenges for our economy. We are highly conscious of those challenges and opportunities as well as of the vital role we are called upon to play. We, therefore, extent our invitation for your continuous support and assistance in promoting Cyprus as an ideal place for international businesses as well as your active contribution to this effort.

I thank you for your kind attention, and wish that this Open Session of your Annual General Meeting will be a productive one.

Mr. Antonis Michaelides
Minister of Commerce, Industry, and Tourism