Cyprus Chamber of Commerce: ‘significant reforms necessary to attract foreign companies’

The Cyprus Chamber of Commerce and Industry (CCCI), in collaboration with a number of economists, has prepared a study on the Cypriot economy and what policies can be implemented in order to improve its prospects.

The study deems the performance of the Cypriot economy over the past few years as satisfactory, noting that living standards had been on the rise until the emergence of the coronavirus pandemic.

“Recent developments, however, require the adoption of a modern development model,” the study said.

“The response to the socio-economic crisis brought about by the pandemic confirmed that in an economy there must be balance, with the special interests of social groups on one hand and the interests of society as a whole on the other,” it added.

The chamber of commerce also noted that the pandemic brought to the surface significant distortions in the way the economy functions, citing ‘the opaque interconnections of organised groups with centres of power and decision-making’ as the cause.

The study also notes that the pandemic facilitated positive action. This includes the elevated role of scientists and experts and their increased involvement in policy-making, as well as the broader utilisation of technology in the private and public sectors.

Among the recommendations made by the chamber of commerce, particular emphasis is given to the improvement of the justice system and the general administration of the public sector.

“Important changes need to be made if we really want to create a modern and effective rule of law, one that provides quality services to its own citizens and consequently gains the trust of foreigners who choose to base their business here,” the chamber said.

To this end, the chamber asks for the strengthening of institutional, regulatory and supervisory frameworks, with targeted interventions in the fight against corruption and the modernisation of existing laws.

In terms of the public sector and local administration, the study states that significant reforms are needed.

“The elimination of bureaucracy, the modernisation and speeding up of the justice system, the creation of a more efficient and citizen-friendly state with quality infrastructure and services can no longer be delayed,” the study said.

“Only in this way will we achieve the goal of attracting foreign companies with a real presence,” it added.

Regarding the measures enacted by the government to support the economy and mitigate unemployment during the pandemic, the study says that these should be gradually scaled back and only once the pandemic’s effects have truly subsided.

The study adds that these measures should subsequently be become much more targeted, both for businesses and households.

The chamber of commerce also touched on the issue of startups and helping develop Cyprus’ entrepreneurial ecosystem.

“The proper institutional framework for the development and empowerment of startups must be formed by creating incubators and seed funding schemes, promoting the green economy and in particular the circular economy model,” the chamber said.

The chamber added that there is a serious problem in promoting collaboration between universities and both private businesses and the public sector.

Finally, the study also stressed that the Cypriot banking system is an equally important factor and requires continuous monitoring.

“The problem of non-performing loans (NPLs) remains a significant risk to financial stability and public finances and should not be a matter of political exploitation,” the chamber said.

“Special arrangements must be made to deal with NPLs of truly vulnerable groups, with fair pricing, in order to also help the banks, while also reducing the burden on the taxpayers,” the chamber added.