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Cyprus: Europe's New Economic Hub

By Jordan Clifford

On March 25, 2013, the Eurozone agreed to a $13 billion bailout package to assist Cyprus through a difficult economic crisis. In the nearly two years since that deal took effect, “Cyprus has really turned the page on its way to full recovery,” says Christodoulos Angastiniotis, Chairman of Cyprus Investment Promotion Agency. 

With the Cypriot economy expected to surpass growth indicators for the second year in a row, the crisis that began fours years ago is beginning to look and feel like a distant memory. Thanks to the increased confidence, investments are also expected to grow exponentially based on recent, and quite optimistic, projections, says Minister of Energy, Commerce, Industry, and Tourism (M.E.) Yiorgos Lakkotrypis.

With financial disarray behind Cyprus, as well as greater investment incentives in place, Secretary General of the Cyprus Chamber of Commerce and Industry Marios Tsiakkis insists that there is very little reason to question the country’s future prosperity.

After all, the government offers a corporate tax of 12.5 percent—the lowest in the European Union. Cyprus is also a signatory member of 54 double tax treaties, including one with the U.S., which reduces the risk for being taxed in two separate countries while investing. Other investment and protection laws further reduce risk and ensure investor security, and the island has some of the best anti-money laundering legislation and numbers around. The Basel Anti-Money Laundering Index ranks Cyprus 125 of 162 countries, with lower rankings signaling less risk.

Cyprus offers a wealth of investment opportunities, Lakkotrypis tells World Policy Journal, including tourism, renewable energies, hydrocarbons, and shipping. Current projects underway in these sectors include the building of a massive casino set to be completed next month; increased oil drilling, with the prospect of a pipeline to Egypt; further development of the island’s already substantial shipping fleet; and increased tourism.

Nearly 5 million tourists arrive in Cyprus a year, with most coming from the U.K. and Russia. Tourism accounts for 12.5 percent of GDP and 7.8 percent of employment, which makes for quite a lucrative industry on the island. To further increase its tourism base, Cyprus is working with Israel to develop a dual package for travelers in each country looking to experience different shades of the Byzantine heritage shared by both cultures.

Aside from economic and investment incentives, Cyprus also offers a first-rate business experience. With 300 days of sunshine, a mild and temperate climate, a friendly population, and nearly 11,000 years of cultural history, there is little doubt why investors find the island nation so attractive.

Cyprus’s sunny disposition and climate also allows the Mediterranean island nation to be an environmentally conscious one. The Cypriots are enthusiastically committed to the EU’s 20-20-20 initiative wherein by 2020, 20 percent of every country’s energy production must come from renewables. Thanks to the island’s substantial annual sunshine exposure and southern location in relation to the rest of the EU, solar and wind industries are expected to grow exponentially.

Meanwhile, large oil fields have been discovered off of the southern coast of Cyprus, and companies like Total, ENI, and Noble Energy are among the many buying up territories for drilling. These fields offer a full 25 years’ worth of energy for the island, as well as a steady flow for exports. 

And Cyprus is more than prepared to meet increasing foreign demand for its goods since it houses not only the 10th largest shipping fleet in the world and the third largest in the EU, but one that is administered by the largest management center in the EU, also situated on the island. Transportation and shipping are also projected to constitute an increasingly larger part of the island’s GDP, providing a significant platform for investment.

Cypriot Minister of Energy, Commerce, Industry, and Tourism Lakkotrypis

Lakkotrypis points to Cyprus’s strategic location between Europe and Asia, and describes the country as a segue to the 500 million-strong market in Europe. As a member of the EU and the Eurozone, the island acts as a transfer hub between markets in Europe, North Africa, the Middle East, and even China.

“Cyprus’s geographic position between three continents; its stability and democracy in an area of great business opportunities and dynamic political landscape; steadfast commitment to the rule of law, including investment protection; and easy access to markets abroad are some of the benefits of using Cyprus as a base,” said Tsiakkis. 

However, Lakkotrypis is quick to point out that these features are not the main reasons that Cyprus was able to overcome its economic woes: “the rebound was not because of a bubble, but because of the human talent and manpower Cyprus posses.” 

Indeed, Tsiakkis and Lakkotrypis both point to the highly skilled labor force available in the country, along with its foreign direct investment regime, as being key to its economic vitality. On an island of 1 million, Cypriots not only holds the manpower necessary to further grow its economy, but also the intellect. Armed with a highly specialized population, Cyprus is restructuring its manufacturing base and looking to attract knowledge-based employers. Business Development Manager and Vice President of AmCham Cyprus Phanos Pitiris, a tech guru with experience in high-tech startups across the U.S., Europe, and Israel, is among those aspiring to bring Cyprus to the front of the tech world.

With the knowledge-based industry growing in a country with already extraordinary investment incentives, and a strategic location at the nexus of all of the markets in the East, Cyprus once again represents a stable platform for investors. From tourism to oil and renewable energies, to the third largest shipping fleet in the EU, there is no shortage of opportunities to be found. 

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Jordan Clifford is an editorial assistant for World Policy Journal.

[Photo courtesy of Wikimedia Commons]

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