In celebration of its Annual General Meeting, AmCham Cyprus organized a business dinner entitled USA and Cyprus: Business and Economic Developments” on the 4 September 2019 in Nicosia
Recent regional developments and alignment of interests are drawing Cyprus and the US closer, the closest they have ever been. How would you describe the current relationship between the two countries?
The current relationship between Cyprus and the USA is at its best, since the time the two countries commenced to have diplomatic relations. In December of 2019, President Trump signed the East Med Act with the intention to promote security and energy partnerships in the Eastern Mediterranean, emphasizing at the same time the decision by the USA to remain engaged in our area.
Back in 2018, a statement of intent was signed between the representatives of the two countries to serve as a framework for further and deeper cooperation in security matters. Secretary Pompeo referred to Cyprus as a key partner in the area for prosperity and security, where Cyprus can have a key role in the Eastern Mediterranean energy supply.
In the very near future, we also expect that Cypriot citizens will be eligible to apply for an ESTA (Electronic System for Travel Authorisation) visa waiver to travel to the USA. All these evidently serve as solid evidence that our partnership is growing and pursuing to maintain a stable, safe and trustworthy environment.
“Cyprus is also working very hard in reducing the governmental red tape significantly, so that US and other investors can proceed with their investments and other initiatives promptly and without delays” Mr. Haris Kakoullis, President of the American Chamber of Commerce in Cyprus
What can be done to encourage more trade andbusiness?
Cyprus is doing a lot in the last few years trying to establish itself as a regional player by strengthening its diplomatic and economic ties with almost all the countries in the region. It is a country that fully believes in regional cooperation, economic stability and security and this should be highlighted continuously to the US investors.
Get a more proactive approach in promoting Cyprus by communicating to the US business community the significant progress made by Cyprus in the fight against money laundering, the robust legal framework that has been put in place and the continuous monitoring and the culture now in place focusing on compliance.
Cyprus is also working very hard in reducing the governmental red tape significantly so that the US and other investors can proceed with their investments and other initiatives promptly and without delays. We further believe that we should work in finding ways to increase the transportation connectivity between the two countries, meet the objective of putting in place a VISA waiver (ESTA), definitely updating our Double Tax Treaty and pursuing to have a Totalisation Agreement that would improve Social Security protection for people who work or have worked in both countries.
Which sectors have gained the attention of USinvestors?
During the last few years, we have noticed US investors investing in a variety of sectors in Cyprus such as:
- Energy (ExxonMobil, Noble Energy, Halliburton)
- Banking (Bank of Cyprus by Wilbur Ross and Hellenic Bank by Third point)
- Hotels and tourism
- Information management services
The Covid-19 pandemic has been handled very well by the government and the people of Cyprus. What changes will we see in post-pandemic Cyprus (business-wise)?
We would have never believed 4 months ago that Cyprus citizens would have to face this unprecedented situation and would experience a complete lockdown. We are extremely satisfied with our overall behavior and its outcome, where many lives were saved.
Cyprus is now acting to protect and support the backbone of its economy, which is the small and medium-sized businesses, but also larger companies that employ several hundred and in some cases thousands of people.
The successful handling of the Covid-19 pandemic gives a strong message to the citizens of other countries, that Cyprus is a safe environment, where it can give them the opportunity to enjoy their vacation.
Cyprus is taking strategic decisions and has made progress toward the country’s digital transformation. This is evidenced by the establishment of the newly formed deputy-ministry of research and innovation. We are transitioning to a digital economy and digital society, with the aim to provide to people and our business community the ability to sign electronically and carry out their transactions without physical presence in either government departments or businesses.
It is no secret that we look upon successful countries in the startups and innovation sector, such as the neighboring Israel, and we look forward one day to get into that path and establish the required ecosystem where startups will flourish and bring to life new businesses and further grow our economy. Such startups will require capital to grow and the US is among the countries that we would very much hope to see being attracted to invest here.
Cyprus is expected to have certain energy developments during the next few years. Cyprus Parliament is expected to be soon ratifying the intergovernmental agreement to build the EastMed gas pipeline, which will carry natural gas from the East Mediterranean to Europe through Cyprus and Greece. The EastMed gas pipeline is a good option, among others, to use for the exploitation of Cyprus’ natural resources, with the final investment decision to be taken in 2022. Such investment decision will depend on the identification of specific demand in Europe and the price that such gas could be sold. Based on this plan, the pipeline is expected to be functional and delivering gas by 2025.
Also, through the EuroAsia Interconnector project, Cyprus will be connected to Israel and Greece, discontinuing its energy isolation. This would further mean lower electricity costs for homes and businesses.
Through the EastMed Act, the US may establish a joint US-Eastern Mediterranean Energy Center to leverage the experience, knowledge, and expertise of institutions of higher education and the private sector, in offshore energy development to facilitate cooperation among the four countries (US, Cy, Gr and Israel). We are excited about this possibility and hope that this plan materialize as soon as possible, as we also believe that such a center would play a very important role in our wider strategic plans in the area.
Overall, Cyprus will continue as an EU member to improve its economy by further strengthening its banking sector, seek regional partnership and cooperation, promote security and stability and facilitate commerce.
What new opportunities will arise for US businesses and investors?
Besides our superb location, our highly educated workforce, our educational system and the fact that the English language is widely spoken, we believe that Cyprus is a stable and secure environment with a tax and legal system that can successfully support almost any business and most industry sectors. Multinationals and other businesses unavoidably will soon or later identify this potential and start following other companies that have already placed their reliance in Cyprus, setting up headquarters or regional presence in Cyprus.
Cyprus, with the enactment of its Alternative Investment Funds Law, has modernized and significantly enhanced its ability to offer investment options to international fund managers, including those in the US. US Fund managers can utilize Cyprus AIFs, UCITS and take advantage of various structuring opportunities. Fund promoters and managers can further utilize Cyprus as their hub for entering the EU.
We believe that in the long term, energy will continue to attract more American interest. Banking is also an area that has shown attraction, but we would like to see American Banks setting up local presence in Cyprus. We further think that there is tremendous potential for investments in the hospitality industry by international hotel chains, since Cyprus’ location, excellent weather, sandy beaches, culture and history proved to be able to attract tourism from all over the world.
Due to its location and its highly educated workforce, Cyprus has been strengthening its education and healthcare sectors. Both sectors have attracted international investments and further US interest could fuel much further their growth, always having in mind the inherent advantages from the strategic location and hundreds of millions of populations from the surrounding countries.
The film industry has also been in the spotlight during the last couple of years. We have seen increasing interest from the US, and it seems that such interest will continue.
As already explained, Cyprus has strategically been placing a lot of importance on start-ups and innovation and this has been evidenced recently by the establishment of the research & innovation deputy ministry. The intention is to gradually bring to life startups that would attract the attention of American capital.
As Cyprus and the US celebrate the 60th anniversary of diplomatic relations, what message would you like to send to our readers in Washington DC and worldwide?
We want to build a long-term trusting relationship. We believe that such relationship will reap a lot of benefits from both countries. Cyprus, as a member of the EU in the farthest southeastern part of the Mediterranean basin and literally in the center of three continents, aims to serve as a pillar of stability, promoting business and cooperation among the surrounding countries.
Cyprus has a predictable and stable environment that could attract more American investments, including American corporations that would decide to create local regional presence. I strongly believe that Cyprus is an untapped option, that once discovered, it would prove to be an exceptional choice because it combines an excellent low-cost business environment, a capable English-speaking labor force that is highly educated and superb quality of life.