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Our View: We need to embrace foreign investment not put obstacles in its path

Construction at the VTTI project

EVERYONE seems to agree that the only way to put the economy on the road to recovery is by attracting investment from abroad. The state has no money to invest in big development projects – a synonym for road-building of which there is no real need – and the banks are more concerned with recovering their loans than giving out new ones.

Some money is being secured from EU structural funds, but most of this goes to public projects that are plagued by delays and bad management and therefore do not have a big impact on the economy. The granting of citizenship to individuals who invest three to five million euro in the economy has had limited success, but the government will not be able to rely on this policy for much longer because it is under pressure from the EU to put an end to it. And the numbers – probably less than a hundred individuals since the plan was introduced – are too small to make much difference to a struggling economy.

In a nutshell, only substantial direct investment from abroad could kick-start the economy. Business organisations, the government and the political parties regularly pay lip service to the need of attracting foreign investment but the words are rarely translated into action because of bureaucracy, vested interests or political expediency. Reports of foreign companies being turned away because civil servants were placing unnecessary obstacles in their way is nothing new nor is public opposition by political parties, protecting local interests.

On Thursday at the legislature we were given a demonstration of this reckless attitude by the political parties which passed legislation aimed at imposing new environmental requirements on the US oil services company Halliburton, which had secured all the necessary permits to build factories and large warehouses in the Aradippou industrial zone. The company did everything by the book – it secured permission from Town Planning, after studies commissioned by Aradippou and Larnaca municipalities, which showed the factories would pose no risk to residents, were submitted to the Environment Department of the agriculture ministry and given the green light.

Deputies on Thursday approved a bill imposing additional environmental requirements on the company and were furious when they realised the law would not apply to Halliburton because Aradippou municipal council had issued a building permit two days earlier. The bill, proposed by Giorgos Perdikis, was another example of mindless populism. It pandered to residents of the surrounding area who were claiming that ‘hazardous and radioactive material’ would be processed and stored in the Halliburton facilities posing a health risk. The populist Perdikis ignored the fact that the company had secured all the necessary licences and permits from the state services and wanted to impose new rules.

Is this how we plan to attract foreign investment – by changing the rules and requirements once a foreign company has made a decision to set up operations here? There could be no worse advertisement for investment in a country than this. What company would spend millions to set up operations in Cyprus when it could be at the mercy of populists like Perdikis, whose primary concern is pandering to a few hundred residents?

If we want foreign investment our politicians and officials need to change their attitude. It is Cyprus that needs the big companies and not the other way round. There is acute competition for foreign investment with countries offering many incentives to attract big companies to their shores. And Cyprus, which is desperate for the injection of cash from abroad that would create jobs and boost demand, is going out of its way to alienate investors.

Elsewhere in today’s paper there is a report about a UK-based company that is run by a Cypriot and has developed innovative waste management technology that turns waste into energy. The company, which recently landed a multi-million pound project in Wales, was turned away by our government despite its offer to manage Cyprus’ landfills at zero cost to the taxpayer. The bureaucrats and politicians chose to carry on paying millions every year for waste management – money that could have been used for other projects – rather than opt for innovative technology at zero cost.

Next month the big oil storage facilities set up at Vassiliko by the international company VTTI, at an estimated cost of €300 million, will start operations. The 28 oil depots have a capacity of 544,000 cubic metres and will serve more than 500 tankers a year. This was a big foreign investment that, somehow, was allowed to happen and Cyprus will be reaping the benefits for many years to come. Hopefully it will help our politicians, bureaucrats and officials abandon their negative mindset and recognise the importance of encouraging rather than placing endless obstacles to foreign investment.

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