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‘Little upturn on foreign investment without reforms’

By Angelos Anastasiou

A steady economic environment and combating bureaucracy are the two prerequisites to effectively attracting foreign investment to Cyprus, the House commerce committee heard on Tuesday.

Addressing the committee, investment promotion organisation CIPA’s chairman Christodoulos Angastiniotis informed the committee that since March 2013, foreign direct investment in Cyprus exceeded €3 billion, including €1.2 billion raised for the recapitalisation of Cypriot banks, and investments in Limassol hotels like Le Meridien (75 per cent investment), Amathus (50 per cent) and Alexander the Great (100 per cent).

He also noted an interior ministry announcement of €1.5 billion in revenues to the government from the issuance of permanent resident cards and naturalisation of foreigners who wished to invest in Cyprus.

Angastiniotis added that the agency’s efforts continued unabated, noting that an Investors’ Summit would be held in Limassol from February 9 to 11, presenting potential investors with 14 major projects. “Resounding names” will participate in the summit, “including Goldman Sachs, Bank of America, Societe Generale, HSBC and at least 15 funds from the Arab world”, he said.

Cyprus International Businesses Association (CIBA) chairman Frixos Savvides called on deputies to “try and address the huge psychological issue that has come up in the public sector due to the recent scandals”.

“There is an enormous aversion to initiative”, he claimed.
Savvides opined that the reason local banks have not yet started investing the capital they have raised lies with the uncertainty caused by the issue of foreclosures and insolvency legislation.

“That is the first thing investors look at”, he said, adding that “until these issues are settled we will not see any serious moves by the banks”.
A representative of the Undersecretary to the President Constantinos Petrides’ office said a team has been put together to improve the business environment.
Acknowledging that the “one-stop-shop” – a department set up to simplify government bureaucracy – is not yet fully functional, he said the undersecretary’s office was working with the department to improve it.

He noted that a study is being prepared on legislation that would govern strategic investment in Cyprus, which would include the benchmark for amounts invested, and how the licensing procedure for strategic investments could be simplified.

An action plan, but more importantly “many practical measures”, are in the works, the representative said.
Speaking to reporters after the session, committee chairman Zacharias Zachariou said that the “main reason we are unable to attract more [foreign direct investment] is the instability presenting itself to the economic environment on a daily basis”.

“When investors are scared off by the uncertainties in the banking sector, when the public service causes them pain, at the end of the day they will find more stable environments and simpler procedures, and we will be stuck looking at models of projects”, he added.
AKEL deputy Costas Costa said his party’s view is that the only way out of the downward spiral created by tough austerity policies is growth.
“We ask the government to upgrade one-stop shops immediately”, he said.

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