Government pledges to clear up industrial zones mess

The government on Tuesday pledged to create a dedicated agency to help sort out the chaotic situation relating to industrial zones and areas, where the rents paid to the state by the tenants – businesses – vary wildly. 

In parliament, MPs heard how in some cases the rent paid to the state went up tenfold once lease contracts expired and came up for renewal. 

Commerce Minister George Papanastasiou and Interior Minister Constantinos Ioannou asked for time – until early autumn – to submit a proposal for establishing a central agency managing all zones designated for industrial activity or the crafts. 

“There exists confusion concerning industrial zones and small-business areas, and things need to be put in order… it’s extremely important to have an agency monitoring these areas related to industry,” Papanastasiou said. 

“We have land plots which have been on lease for several years, others leased more recently, and others still which come under a formula through an arrangement made by the ministry of industry, and some others which the auditor-general has advised that they should go at the market rate.” 

Referring to the rent increases observed, the minister spoke of state land where the rent is calculated based on the land’s market value – something which “causes problems and reactions.” 

He noted cases of industrial facilities which, upon the expiry of the lease, were asked to pay 10 times more. 

Papanastasiou spoke of “a state of anarchy” relating to the different rents charged. 

Ioannou said a cross-ministerial committee would study the issue, invite a public consultation, and that by September or October it would deliver a blueprint on how to proceed. 

Addressing the concerns of businesses and local government authorities, Papanastasiou said the ministry wants to help industry, “and we are very careful when it comes to anything that raises costs for these industries.” 

But, he added, “the state also has to get a fair shake in terms of its income [from rent].” 

Chair of the House commerce committee Kyriacos Hadjiyiannis said the perpetuation of this state of limbo, and the non-signing of new lease contracts, amounts to “maltreatment of businesses in the most violent way, as a business risks getting bogged down, it will not be worth its while to invest and it will have to shutter.” 

A representative of the Employers and Industrialists Federation proposed that rents in industrial zones be determined according to use, irrespective of the market rate. 

Stefanos Koursaris, head of the small shopkeepers association, stressed the need to set up a dedicated government agency, which will come out with a broad strategy, and then deal with the minutiae. 

He said that currently around 40 per cent of small artisan businesses operate illegally within urban areas or large communities. 

Stella Michaelidou, the Commissioner for State Aid Control, pointed out the need to distinguish between lease contracts struck before and after Cyprus’ accession to the EU, because different rules applied.