REPORTAGES from previous events

The future of the global and Cyprus' economy as well as Cyprus oil, gas and renewable energy sources sectors was the topic at the opening session of the Best Invest Congress at Limassol's Four Seasons Hotel on Monday, October 17.

The keynote address opening the Congress dealt with recent developments in the Cyprus' and global economy and was delivered by Evgenios Evgeniou, Chairman of Invest Cyprus. Highlighting the current difficulties of the global economy, Evgeniou declared that Cyprus «is again proving to be resilient».

Despite the impact of the pandemic and the war in Ukraine on «vital sectors of the country's economy such as tourism, retailing and professional services the expectations remain favourable for a significant economic growth in 2022 and 2023» he said. He noted that the IMF had upgraded its forecast on the growth rate of the Cypriot economy in 2022 to 3.5 per cent from the 2.1 per cent that had been expected a few months earlier, adding that it had downgraded its 2023 estimate from 3.5 to 2.5 per cent.

«Personally I remain optimistic that the growth rating for Cyprus in 2023 will be higher than the current IMF estimate» he commented. He pointed out that international rating agencies recently upgraded «our economy's outlook based on the resilience» shown to date. «Apart from prudent and targetted fiscal policies, a resilient financial system, an adaptive tourist sector, the foreign direct investments are also of paramount importance for Cyprus,» he said.

In an address entitled «The New Normal: Managing in an Age of Continual Crises and Instability», the co-founder of the Navigator Consulting Group Philip Ammerman offered a visionary analysis of the current situation with regard to Cyprus.

Ammerman, who is himself an investor in the island, made clear that while his remarks focused on market instability, that wasn't «necesarily negative», although it could be negative «for companies who are not prepared to adapt to it». Ammerman spoke of how «in the 'Old Normal' we had this concept that in the business cycle we have about six decades of positive GDP growth, followed by two to three years of recession; then the cycle resets and growth restarts».

Since Cyprus joined the EU and the «tremendous wave» of technology changes taking place from about 2000 onwards meant that «we are in something of a 'New Normal'», he asserted. «What we are seeing now and [will see] in the future, both in small economies like Cyprus and larger economies like the United States, is that this is really the change point in the international economy and in our technology and that this fundamental change will last to at least 2040 and that it is going to be characterised by fundamental instability and volitility.»

The salient question that he and many other analysts are asking is what is going to be the role of a nation state in an economy that is increasingly global», where the yields are increasingly shared by a relatively smaller group of beneficiaries. He was certain that the changes «we are going to see until 2030 or 2040 would be unlike anything we have seen in our history». Examples he cited included fundamental climate changes and technologies that would alter the human life cycle, such as gene splicing. This would be fundamental «to every issue of how our society and economy is organised».

The discussion on energy issues was moderated by Iacovos Ghalanos, Cyprus' KPMG COO. Other experts participating included: former Cyprus' Minister of Energy Yiorgos Lakkotripis, Imperio Group co-founder Yiannis Misirlis, former DEFA and ETYFA Chairman Symeon Kassianides, Cyprus Hydrocarbon Company (CHC) Board member and Natural Gas Engineering Programme Director Panos Papanastasiou and Cyprus Association of Renewable Energy Enterprises Secretary Nicos Trikkis.

According to Papanastasiou, the Ukrainian war and the current dire situation prevailing in the energy markets has resulted in increased interest in the East Mediterranean gas resources.

«The fact that Europe is desperately looking for new suppliers of gas might provide Cyprus with a great opportunity to develop its own gas field discoveries. With an appropriate investment, «Cyprus would be able to provide up to 15 per cent of Europe's gas needs,» Papanastasiou indicated.

Kassianides reminded participants of two important events that took place in recent weeks, namely the agreement between Israel and Lebanon to end their long-running dispute over their maritime border, and the inauguration of the EuroAsia Interconnector project.

The former will open the way to offshore energy exploration in the Mediterranean and enable Cyprus to finalise its own maritime border agreement with Beirut.

The latter will connect the Cypriot, Greek and Israeli power grids via what will be the world's longest submarine power cable totalling over 1,200 kilometres. It will have a 2,000 Megawatt capability and allow Cyprus to export or exchange any excess of renewable energy.

«That means Cyprus will be not only an energy user but also an energy exporter which will provide it with an additional incentive to invest in renewables,» Kassianides declared. «It means it is a good time to invest in the energy sector on the island, both in gas and in renewables.»

Reviewing Investment Opportunities in the Cyprus Electricity and Renewable Energy Sources, Cyprus Association of Renewable Energy Enterprises Secretary Nicos Trikkis spoke of the promising results inherent in the recently inaugurated EuroAsia Interconnector project. «The potential for renewables in Cyprus has changed. Now we can focus more and produce for export as well. This is good news since the cost of producing energy in Cyprus, especially through photovoltaics, is the cheapest in the Europe.»

Former Cyprus' Minister of Energy Lakkotripis was quick to point out that while it was appropriate to welcome the inauguration of the interconnector project there remained the pressing issue of the need to balance the grid.

«The grid has reached its limits. There is no more capacity. That is why you see fewer and fewer permits issued unless they carry storage as well.» The interconnector, he reminded participants, while undoubtedly a significant development, is not expected to complete the connection between Cyprus and Israel until 2027, at the earliest. «That is why something needs to be done about the grid long before that. This is our priority now.»

Property developer and Imperio Group co-founder Misirlis cited the need for green financing to help accomplish more of the improvements needed while spelling out some of the recent measures taken to upgrade airconditioning and heating systems, lighting and so on. «We definitely need green financing, something that we can find in most European countries but not yet in Cyprus. The Central Bank also needs to change provisions for commercial banks so they can introduce less expensive mortgages when they relate to green housing. Only then can we move further in this direction.»

It was up to the state to provide developers with a clear set of the relevant criteria, he said. These should spell out «what is green and what is not» and they should include «a clear set of checks so we understand clearly what we need to deliver.»

Once these parameters are in place, he added, the market will move towards green housing. Moreover, the state, he concluded, should also «provide incentives for investors.»

Cyprus is rapidly becoming a dynamic global tech hub. Increasing numbers of IT companies are relocating to the island. But is the country prepared for this influx of new businesses and people? And what does the government have to do in order not to miss this big chance to become a New Tech Industry hot destination?

These were the main questions asked during the second plenary session of the Best Invest Congress. The session, entitled «Cyprus: a Fast Growing Global Tech Hub» brought together expat business leaders already established on the island and local business community experts. It consisted of two panel discussions and was organised in collaboration with TechIsland, the non-profit IT association established in 2021 charged with turning Cyprus into a world-class destination for world-class IT talent.

The two key discussions were moderated in turn by Tasos Yiasemides, Head of GCMS services of the KPMG and Natalia Kardash, Founder of the Successful Business Leaders' Club.

Other experts participating included Alexey Gubarev, Co-Founder of Palta, Stylianos Lambrou, Co-Founder of Reflect; Petr Valov, CEO, Exness; Yannis Matsis, Managing Director of MUFG Investor Services, former minister of transport and public works Marios Demetriades, Andreas Athinodorou from CIFA, Yiangos Hadjiyannis from Invest Cyprus and Angelos Paphitis of the AGP Law Firm managing partner.

«Cyprus can be the Singapore of the Mediterranenan,» declared Petr Valov, founder of Exness, one of the world's most successful online brokerage companies, headquartered in Cyprus.

He cited the island's great location at the «crossroads of three continents», noting that it is already considered to rank high among IT destinations, albeit «not as popular as for example London, but much more popular than a couple of years ago». The many advantages offered by the country make it worthwhile for IT experts to consider relocating to the island, he said, while conceding that there are also some disadvantages.

«Rents are expensive, there are not enough private schools,» Valov allowed. Given that all these professional newcomers to the island spend up to a half a bilion a year, a «constant quality income for Cyprus, coming from abroad and spent locally», it is important for the government to look to further infrastructure development, he argued.

Palta's co-founder Gubarev agreed. «Thousands of new apartments have to be built on this island. And at least three-to-four new schools. Right now, Limassol is already full - there is no accommodation, no offices, no space in schools here. Paphos is also full and Nicosia is filling in. Soon the only place left will be Larnaca,» he indicated. He also pointed to a huge shortage of local IT talent on the island. «There are no local IT experts. With all the companies that moved to the island in recent years and months there is a shortage of local IT talent. This also has to be solved.»

Others agreed, urging better coooperation between the government and the IT companies. «The government needs to understand better what has to be done to satisfy their needs in order to attract them to Cyprus, Reflect's Lambrou said. It was up to the government and the IT companies concerned «to work together for the future of Cyprus,» he said.

Matsis, the Head of the Cyprus office of MUFG Investor Services [the global asset servicing arm of Mitsubishi UFJ Financial Group] sounded a bit more optmistic. His company chose Cyprus as the location for its office in the EU time zone having investigated various other options in Europe. „The Japanese are long-term thinkers and they chose Cyprus because it did offer the best quality of life", he remarked.

Ticking off the the pluses of Cyprus as a business hub, Matsis listed the beneficial corporate tax rate, low income tax, the relative ease of hiring non-EU nationals, the affordable cost of doing business, the lowest cost of living outside Greece plus the fact that English is widely spoken.

So what are the possible solutions?

This next discussion was about improvements and changes that have to be made to transform Cyprus «into Singapore of Medinerranean», as Petr Valov CEO of Exness mentioned. Marios Demetriades, former minister of transport, communications and public works told participants that the government had been addressing some of the issues raised by previous panel and admitted that much more needs to be done. Opportunities had been identified as they emerged from the crises Cyprus has had to face within recent years, he said, and must now be exploited and built upon. «The private sector can solve many of the issues but first the government needs to come up with the right strategy. »

Others agreed, urging better coooperation between the government and the IT companies. «The government needs to understand better what has to be done to satisfy their needs in order to attract them to Cyprus, Reflect's Lambrou said. It was up to the government and the IT companies concerned «to work together for the future of Cyprus,» he said.

Yiangos Hadjiyannis, Board Member of Invest Cyprus was of a similar mind, saying that the authorities need to pay close attention to the companies' concerns. «Bureaucracy hinders development". he opined. «We have to step up our game. We have to listen to investors. We all need to work together and have a clear vision of how we can do better.»

Angelos Paphitis of the AGP Law Firm said that while the private sector is doing its best, the onus was on the government to adapt and transform. He called on the state «to invest more into the system and change its ways», noting that the already massive gaming industry would triple in a few years. «Gaming companies are interested in coming to Cyprus but are we prepared to welcome them?», he asked. Properly developed, it is a growth market, he declared, but even now with the foundations set up, «much more has to be done.» He pointed out that gaming, currently a 200 billion euro industry, is expected to grow to 600 billion.

Andreas Athinodorou, Board Member of the Cyprus Investment Funds Association concurred, «We have to be ready [for it], and we have months, not years. We have to train people, improve banking, change regulations, provide accommodation… I don't want Cyprus to be again too little too late,» he cautioned. Answering the question about the new role of the Fund Sector in the emerging Digital Economy – in Cyprus and globally, Athinodorou reminded that there is massive number of startups and IT tech companies each individually with a high risk of success/failure. Investors are better off investing into this new world via a vehicle that evaluates correctly and pulls risk together to maximise the risk/return.