The number and range of companies choosing to locate their regional or global headquarters in Cyprus have risen steadily in recent years. The trend is set to continue because of growing demands from global regulators that companies have a physical presence and substance in the country where they are registered – and both are easily established in Cyprus.
It came as no surprise that Cyprus’ location played a leading part in their decision. In one direction, the island is the eastern gateway into the EU’s market of 500 million people. In the other, it provides an ideal springboard into the evolving markets of the Middle East and Asia and enjoys excellent relations with the oil and gas-rich Gulf states.
Cyprus’ location also means that it enjoys business-friendly time zones. Companies can do business with the East in the morning, Europe throughout the day and with the West in the afternoon.
But as companies told Investment Watch, there was more to their decision to base here than location, location, location. It’s the whole package that Cyprus offers. It has a business-friendly environment that is efficient, transparent and well-regulated. Operational costs are substantially lower than in mainland Europe and the island’s economy is growing at a faster rate than any of its EU partners apart from Ireland.
Cyprus’ corporate tax regime is highly favourable and there are tax breaks for expatriate executives. The island’s human capital is another major attraction. Cyprus has one of the highest per capita number of graduates in the world and most are multi-lingual.
Business executives that have chosen to live here with their families often say the low-crime rates played a part in their decision. Now they have added reassurance that their loved ones will be secure when they are on business trips abroad. Cyprus is the safest country in the world for young people, according to a list published by World Health Organisation in August which ranked 184 countries.
Finally, companies were keen to point out that they see themselves in a mutually beneficial partnership with Cyprus.
Cyprus is “the Mediterranean’s new energy hub”, says VTTI, a leading provider of energy storage facilities worldwide. The Rotterdam-headquartered company has ensured that the island lives up to that billing with a landmark €300m terminal in Vasilikos. Situated between Larnaca and Limassol, it opened for business in November 2014 after four years in development. VTTI described the terminal as a “historic development for the economy of Cyprus and Cyprus in general”.
The VTTV terminal currently comprises 28 tanks and has a capacity of 544,000m3, a 1.5 km-long deep water marine jetty and 4 berths that can accommodate vessels from 5,000 to 160,000 DWT, and a fully automated road tankers’ loading facility. A second phase is currently under evaluation which would create 13 more tanks and further capacity of 305,000m3.
Investment Watch spoke to George Papanastasiou, managing director of VTT Vasiliko Ltd.
Why did VTTI choose to locate in Cyprus?
The main reason that VTTI has chosen to invest in Cyprus is the advantageous geographical position. With large refineries operating and more being built in the Middle East, the international market expects more product vessels traffic through the Suez Canal, bound for the European and Mediterranean markets. These cargoes need to be re-sized and/or blended with other products to change specification and meet regional requirements. VTTV’s strategic location makes it the first terminal of its kind in the Eastern Mediterranean offering these services and connecting Europe and the Black Sea with markets in the Middle East and Asia.
Why do you find Cyprus a good place to do business – and are there any areas that you think need improvement?
Geographic location was not the only reason underlying VTTI’s decision to choose Cyprus for this terminal. The following comparative advantages were considered:
• Deep sea water close to shore
• Full membership in the European Union and the Eurozone (relates to Customs status)
• Liberal/modern economy
• Human talent and high academic/professional standard
• Excellent professional services, banking, telecommunications and transport infrastructure
• Entrepreneurial spirit
Acquiring permits and licenses for the construction and then operation of the terminal was a complicated task. Simplification of processes and the introduction of an updated petroleum legislation, were amongst the suggestions we put forward to the Republic of Cyprus.
Would you recommend Cyprus to other major companies as a place to headquarter or to establish a major regional presence?
Certainly, Cyprus is a place we will recommend to other major companies for investment or to place their head office to establish a regional presence.
Other than the advantages considered for the VTTI investment, the tax system, the legal and regulatory framework, the advanced infrastructure and high quality of life, constitute further reasons to consider Cyprus as a place to be.