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Disappointed Foreign Investors

18 December 2016

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It is tragic that even the President of the Republic must get himself involved in order to encourage answers from the Civil Service and provide a more friendly procedure to foreign and local investors of large scale and this with a most efficient Minister of Interior. Clear instructions is then needed to the Civil Service and if they cannot respond timely, the Government to consider to appoint third parties in private practice to examine (the cost that will be occurred will be a fraction of the benefits).

We spent a lot of time and effort as well as money in order to promote Cyprus as an attractive place for foreign investments. The various plusses for attracting foreign investors are known, but regarding projects which include real estate development (including hotels etc) carrying out the development from the theoretical part to actual execution there is a huge difference.

This country is governed by some people who do not necessarily love Cyprus and its people, but are looking after themselves. Whereas on the one hand we have a Government which is all for attracting investors and bends backwards in order to facilitate them, with the various relaxations and incentives, we have other political parties who are governed by small politics and even having psychological problems.

  • Parliament – if one is to attend the meetings of the various parliamentary committees he will realize that it involves a lot of talk and dealings, since with this minority Government whatever are the suggested measures they are blocked or cut down by various small politics.

    One example is the shopping hours which is still at bay, notwithstanding the problems and the wish of the consumers.

  • The casino, which almost failed due to the lack of land (Parliament excluded the hiring of Government land) and now due to the psychological problem of one person ex party leader objecting to the casino as an investment his party is trying to exclude smoking within it, notwithstanding that the various interested investors stressed the importance of having the casino excluded it will be a problem. And this notwithstanding the benefits that this project will bring to Cyprus ignoring the fact that thousands visit the Turkish occupied areas for the same purpose of casino (with smoking allowed mind you).

  • The Auditor General - Not sure if on balance he is for Cyprus or not. Any decision taken by Government/Civil Service is scrutinized and his opinion is given with extensive publicity, not necessarily at the end of any investigation but at the start. End result is that nobody in Government/ Civil Service takes a decision in fear of being “exposed” as being crooks etc.

  • Insufficient Civil Service - A shock to any newcomer to Cyprus with inexcusable delays on decisions and response to enquiries and proposals. See the Eden development project which took 2 years to get a reply from the Lands Office on the rental required for the Governmental land to be used, the Troodos adventure project where the investor having waited for a whole year to get an answer (he did not) and having reached a preliminary agreement on the rent subject to review, the rushed opinion of the Auditor’s General blocked the whole agreement.

  • Ministries inefficiencies are involved in a marina project which cost the foreign investors more than €30 mil. and due to differences on the contract we asked and asked the Ministry of Commerce for a meeting. It took a whole year in order for the Ministry to respond to a meeting in order to clear the differences. During the meeting the Gestapo style people (Auditor General) were present for reasons which we could not understand. It reminds us of the Commissars of the Red Army were the army officers could not give an order if not approved by the commissars.

  • Press - The press is playing a most important role in the whole investment procedures, but some media are governed by politics having no freedom of an independent judgement.

  • Archaic Laws – The statutory tenants who are offered security of tenure is a huge problem. See the Larnaca Phoenicoudes hotel/mall development with an investment of €120 mil. by a foreign investor which is now blocked because the tenants’ eviction will take 2-5 years’ time to go. The law is there for the eviction but the unfortunate foreign investor did not count for the inexcusable delays. He thought that “Cyprus being an E.U. country we could have resolved this problem within a year’s time”. How misinformed he was!!

  • Governmental instructions - It is tragic that even the President of the Republic must get himself involved in order to encourage answers from the Civil Service and provide a more friendly procedure to foreign and local investors of large scale and this with a most efficient Minister of Interior. Clear instructions is then needed to the Civil Service and if they cannot respond timely, the Government to consider to appoint third parties in private practice to examine (the cost that will be occurred will be a fraction of the benefits).

  • Yes of have CIPA (a body whose job is to attract foreign investors) but if one is to study the agonizing reports of its Chairman Mr Angastiniotis, he will realize that he is as frustrated as the rest of us are.

  • The decentralization of public and semi-public authorities, a condition by the Troika/E.U. funders came to a halt. We have so far privatize the Limassol port only, having paid almost €30 m. to 50 employees!! Imagine what we will need to privatize CYTA (telephone Authority), EAC (public electricity) and others. Even public bodies which have a loss of around €5.0 mil. p.a. we are facing difficulties in shutting them down.

  • The Banking sector is another problem. The Co-Op must be sold as soon as possible. A bank which has been bought by the Government after subsidizing it by almost €2.0 bil. We still have problems to get it in the market (small politics again).

  • The Larnaca port is still there with no decision because of a small pressure groups which managed to exclude the port from being industrial and retain it only as a tourist port, but then, another Larnaca group insists that it should be industrial as well. So after 20 years we are back to square one. At least in this case, it is the Larnaca’s people fault who just do not know what they want – an embarrassment to Cyprus.

  • The various theme parks suggested e.g. the dolphin park, the crocodile farm and others, where having encouraged foreign investors to go ahead the environmentalists and others are objecting. For the first, the dolphins would have come from the U.S.A. and cannot survive in the “wild”, the second, the crocodile farm, having the locals sold their land to the foreign investor they, the same people, turned round and objected to the project (a con job we say).

Is it then Cyprus the centre of the foreign investors attraction? We doubt it.

  • The Pentacomo Technological Park notwithstanding its 3 years of waiting and having spent some millions for the infrastructure we have no interest.

  • The ex-Nicosia football ground destined to become a hotel that there is no interest.

  • The Larnaca port - We expect no interest at all.

  • The Pafos desalination plant having completed by a foreign investor and notwithstanding the shortage of water we cancelled it. Now we will need to build another one!!

Etc etc

To all these unacceptable state of affairs we have the various foreign consultants to the Government, whom we take for granted as being a bible on their opinion. Some of their reports are simply shocking in errors. See the last report on disposing Governmental land in order to reduce public debt.

  • The plot destined for the new Nicosia Museum their suggestion is to be earmarked for a shopping mall (are they serious?).

  • The ex-football ground to be used as a hotel (Nicosia hotels are shutting down due to lack of business - are they serious?).

  • Various beach and non-beach plots to be divided into building plots for sale (at a time that building plots are in abundance for sale – Not a serious suggestion).

These and others are disappointing foreign investors and giving a picture to the international market for a country (Cyprus) that does not know what it wants.

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