But Cyprus has the potential to become the Singapore of the Mediterranean

Increasing numbers of IT and FinTech companies are relocating to the island, bringing with them thousands of professionals eager to choose Cyprus as their new home, but housing shortages, lack of school places and visa complications remain obstacles.

Statistics show that between January and September 2022 the Civil Registry and Migration Department received 9,090 applications for work permits from foreign companies, compared to the 5,475 applications submitted in 2021. In the same period, the department received 4,654 applications for family reunification (up from 2021’s 4,242).

The “golden passport” debacle may have been laid to rest, but the government is now selling Cyprus as a place for skilled third country nationals to get work and residence permits quickly and easily.

But leading Cyprus-based IT and FinTech business owners suggest that much more needs to be done if the housing and other service demands of incoming professionals are to be met.

Despite the fact that these sectors are becoming major contributors to the Cypriot economy, the country’s infrastructure is bursting at the seams, according to Alexey Gubarev, an owner of Servers.com, one of the top five hosting providers in Europe, and of Palta, a health and well-being technology company.

“In 2020 the IT companies’ contribution to Cyprus GDP was 8.5 per cent – this year it is 12. Within the last couple of years over 8,500 new IT and FinTech professionals have settled in Cyprus and their numbers are still growing,” he told the Best Invest Congress in Limassol last week.

“But Limassol doesn’t have suitable properties available anymore. Flats, schools, even office buildings are completely full. Paphos is also pretty full. Nicosia is quickly filling up and in a few months it too will experience a shortage of apartments. People really cannot find flats anymore. Already there are waiting lists. The only city that still has apartments is Larnaca,”

A resident of Limassol for 20 years, the businessman assessed that unless the government focuses on building thousands of new apartments all over Cyprus, the island won’t be able to accommodate the demands created by the two growing sectors.

And the same situation applies to the island’s education system. The professionals relocating to Cyprus are bringing their families with them, and there are not enough places in the island’s private schools to meet their needs.

“There are waiting lists for schools as well,” Gubarev said. “We need not one new school, but at least three or four – and we need them yesterday.”

Petr Valov, a founder of Exness, one of the world’s leading online brokerage companies with headquarters on the island, believes that Cyprus has the potential to become the Singapore of the Mediterranean.

The many advantages its location affords make it worthwhile for IT experts to consider relocating to the island, Valov said. However, there are also drawbacks which the government needs to address promptly, keeping in mind that these professional newcomers represent a spending power of up to two billion euros a year.

Lack of the requisite infrastructure is a problem, but other difficulties can arise even earlier – visas.

“The majority of nationalities cannot easily move to work here,” Valov told the Economist conference last week.

Instead, they have to apply for special visas, “a terrible process” that takes about a year to complete, during about half of which, he noted, “you live apart from your family”.

Other issues his company struggles with, Valov said, include difficulties associated with arranging business visas (“we have a lot of partners worldwide but it is very difficult to bring them to Cyprus”); applying for Schengen visas to facilitate travel from Cyprus to Europe (“when our employees come here they think they have come to Europe but it is not true because it takes six months to arrange for such a visa and it deters many businesses”), and finally the overall lack of assurances from government authorities that by moving to Cyprus new tech employees and their families can enjoy the prospect of a secure future.

“Entrepreneurs choose countries where they can provide a future for their people,” Valov explained. “Here, if your job is terminated you have one month to find another, otherwise you have to leave. Professionals discuss such things, they compare notes. Of course, it is better for them to go to a country where if you lose one job you have enough time to find another that would suit you professionally and offer similar salary.”

The same is true of the naturalisation process, he went on. It simply takes too long.

“If you calculate all the requirements and waiting time, it can take up to 15 years” for a professional to get Cypriot citizenship.

Co-founder of the Navigator Consulting Group Philip Ammerman also underscored the banking and legal systems as major areas needing reform. “I have rarely experienced such a range of incompetence, poor technology, high costs, inexplicable delays, errors and mistakes,” he said of the banks.

And he was equally scathing of the courts. “It can take two-to-three years to receive a first court appointment and seven-to-eight years to resolve a case,” he said, while company registration and management systems are “paper-based rather than digital — the total speed of processing is low; the total cost of ownership is high”.

But speaking at an event in Paphos this week, Interior Minister Nicos Nouris said that the Interior Ministry has decided to expand the scope of the fast-track planning permission process to include larger and more complex developments to facilitate and speed up investment.

“Our intention is to establish Cyprus as a successful, reliable and competitive destination, ready to provide the conditions under which any investor can thrive,” he said.

And the Civil Registry and Migration Department director, Maria Adamidou, told the same event that the new strategy has led to an “impressive increase in interest from foreign companies to relocate to Cyprus”.

Adamidou said that the increased interest from businesses wishing to relocate or expand their activities in Cyprus is reflected in the number of applications for residence and work permits from foreign companies submitted to the department over the past two years.

“The number of applications submitted has more than doubled in the first nine months since the adoption of the new strategy,” Adamidou said.

She said 97 per cent of those applications have already been processed.

In addition, she said that there is considerable interest in the government’s digital nomad visa.

As a result, the government has altered its initial plan of issuing a maximum of 100 such visas, instead revising this number upwards to a cap of 500 visas.

The digital nomad visa is applicable for a single year, however, holders can extend them for a further two years.

Adamidou said that in collaboration with the deputy ministry of research, the plan for talented entrepreneurs from outside the EU, referred to as the Cyprus Startup Visa, has been renewed until May 31, 2024.

Speaking at the Economist Conference at Nicosia’s Hilton last week, Deputy Minister of Innovation Kyriacos Kokkinos said the ministry was establishing a unit to speed up visa applications for foreign professionals, which should be fully operational within four-to-six months.


Deputy Innovation Minister Kyriacos Kokkinos

“It is still a work in progress, but I believe that even without it the process has already improved because about four months ago we decided to change the visa application process for professionals who earn above certain level [2,500 euros monthly],” he stated.

Another change that the government is in the process of introducing is the so-called Business Facilitation Unit programme — a one-stop shop at the Ministry of Commerce for investors wishing to invest in Cyprus.

According to former transport minister Marios Demetriades, the government has already taken many of the right steps, but he acknowledges that much more needs to be done.

“Major opportunities have been created for Cyprus arising from the big crises within recent years. We need to exploit them. The private sector can solve many of these issues but first the government needs to sit down and come up with the right strategy,” he told a conference last week.

“Regarding the IT and FinTech sectors, we have to understand that we are not alone in the world. Everybody is competing for these kinds of companies, so what we need to do as a country is to end any weaknesses we have compared to other jurisdictions and a lot of that entails the simplification of procedures.”

One example Demetriades cited is how the island has been slow to implement the use and recognition of electronic signatures. One still has to go to the relevant offices and do things manually.

As to the lack of affordable accommodation, Demetriades suggested the authorities provide incentives such as making government land available to developers.

He also cautioned about “not to make ourselves too expensive “, noting that the kind of professionals Cyprus needs “earn

60 thousand a year so we need to create an affordable environment for them”.

Valov also stressed how it’s not just revenue these companies bring to Cyprus, but employment. For roughly every two-to-three foreign professionals, the IT companies relocate to Cyprus they employ one local person.

This means that to date some 3,000 Cypriots have found jobs with the incoming new firms. In other words, the more IT FinTech businesses relocate to Cyprus, the greater the demand for local IT experts as well.

“We create local jobs and at least 30 per cent of our employees are Cypriots. This will create an opportunity for the education sector as well since IT graduates will be able to find jobs with good salaries in our companies.”