Cyprus Mail

Clunky bureaucracy makes foreign investment a nightmare

Buses will run from Polis Chrysochou

 By Ajay Goyal

PRESIDENT Nicos Anastasiades is talking about a complete overhaul of government and financial institutions. His agenda goes further – he is asking for a change in how Cyprus functions.

After the March knockout in which European powers punched Cyprus beneath the belt, Cyprus is as dysfunctional as a clunky old computer running an outdated operating system. Cyprus’ economic model needs new thinking and a new operating system. There isn’t a day to waste. There are dire estimates of economy shrinking up to 30 per cent within the year following the botched bank job by the European Union and IMF lenders. It is difficult to imagine when and how international capital can trust Cyprus’ financial system again. Even if it does, European powers have made it clear they will not allow another bubble in the banking sector and will attack foreign (read Russian) capital if it accumulates in Cyprus.

Cyprus has no choice but to find a new, innovative economic model that is based on its internal intellectual and natural capital.

Our company ZENING is investing in an ambitious, sustainable hospitality project in Latchi village on the Polis Chrysochous bay that will create nearly 100 jobs and bring round-the-year visitors to the area. There are dozens of innovations in our project. We are an eco-enterprise that focuses on a unique Cyprus experience. We aim to be a resort with a zero carbon footprint by 2015. We are committed to investing in the renewal of the whole area, aiming to build miles of walking and cycling trails and educating anyone willing in sustainable tourism. We will focus on energy conservation, renewable energy generation and organic farming. We will promote muscle-powered sports instead of engine power, seek to end the use of plastic water bottles, create a eco-business incubator and more.

I believe this is the future for Cyprus. Much like resource-rich Norway, Cyprus should be a leader in renewable energy development and research, conservation, sustainable tourism and software technologies to draw on its innate resources. Instead of attracting shady individuals shopping for real estate and passports, Cyprus needs to attract foreign direct investment in real enterprises. Cyprus needs more entrepreneurs in 21st century intellectual enterprises, not bubble-makers that only create disparity and delusions of prosperity.

So it is perplexing to us investors in real business, creating real sustainable jobs, as to why we are treated with such hostility by Cyprus government machinery. The population of the area of Polis Chrysochous has embraced us with open arms. Not a week goes by – two years since we started the project – that someone does not force a free meal on us. The goodwill of people -general public, small business owners and indeed the mayor and municipality – is heart warming. Their attitude should make Cyprus a showcase in attracting foreign direct investment.

But all that is undone by a state machinery that views investors with hostility and suspicion. We have lost count of how many times how many different government departments – labour, social insurance, migration, police, health and safety and tourism have been to inspect us. They have found nothing wrong. They do not come to ask how they can help, or provide us relief in these times of catastrophic economic crisis when we cannot access our bank accounts.

Ninety per cent of losses from the haircut have been borne by foreigners and they are being punished even more for investing in Cyprus by a hostile government apparatus. As if capital controls, expropriation of private monies and all the numerous problems, delays, loss of revenue are not enough, government apparatus works in an adversarial role rather than as a facilitator. Instead of soothing the investors, the system seems to be functioning only to intimidate and harass them.

As a corporation, we are investing heavily in the Polis area in a new-age enterprise. We are bearing the brunt of the haircut and capital controls and yet there is no relief or empathy from the government. Cyprus needs to ensure it does not become known as a country where “no investor shall go unpunished”.

Here, it gets worse. Mother Nature herself is being punished for being so kind to Cyprus. Two years in a row this area of Latchi has suffered devastating floods causing millions in damages. Despite repeated surveys and requests nothing has been done to clean the river beds. This neglect of nature – rivers used as dumping grounds, illegal quarrying and beheading of whole mountains – is having a devastating effect on the economy of this area. No effort has been made to clean up or fix the damage from floods. Instead, hold your breath, in the most beautiful seaside spot by the river bed, a paved parking lot is being built! Instead of a hundred other possible uses – an open air cinema, a culture or culinary park, an artisan’s market, a children’s playground – it will be a paved parking lot with rusted old ships and containers dotting the view.

National priorities and local focus need to be reset and realigned towards sustainability, eco-friendly development and facilitation of real investment in sustainable economy. The government need not create a paradise for dodgy money. Instead it needs to give tax breaks to new enterprises, innovative and sustainable businesses that can employ the highly educated Cypriot workforce.

Rather than copying the decade-old models of the cheap-all-inclusive sweatshop tourism models of Egypt and Turkey, Cyprus should provide quality and unique service, immersion in its culture and develop value added services that enrich its natural and cultural heritage. Real investors and entrepreneurs should be given a “sherpa” to navigate the byzantine labyrinths of government and who can seek and provide every possible support from every state and EU agency to investors.

I have nearly 22 years’ experience in Cyprus, and my faith and trust in this country is unshakeable. There is no need for Cyprus’ financial services sector to be on the defensive either. There is a great reservoir of professionalism in Cypriot business services, but countries like Cuba cannot be the model for the island’s economy with its oppressive labour laws and monopolies. Cyprus has to see the United Kingdom, Singapore and Hong Kong as examples, countries which open up and welcome entrepreneurial capital. The goal should be to turn the island into a model of sustainable and green development and aim for a new kind of enlightened, aware and sophisticated investor, visitor and tourist. Construction should be eco-friendly, farming organic, energy renewable and business conducted with the spirit of openness and transparency. There is no reason why Cyprus cannot take a giant leap forward with this new thinking and a new economic model and reshape its destiny as an ultra-modern, progressive, prosperous and secure European nation.


Ajay Goyal is owner of ZENING (, a luxury wellness resort, scheduled to open July 1 this year in Latchi, Cyprus

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