25 August 2021
By Adonis Adoni
Photo by TASPHO
One strategy frequently employed to support ICT ecosystems relates to the creation of technology parks where industry and research meet to produce sustainable ideas for long-term growth. The proposal for such a park at Pentakomo failed to generate interest in the past. Are there any new plans in the pipeline for such a project?
A viable and self-sustaining ecosystem for ICT companies needs much more than just a technology park. It takes a combination of solid and competitive commercial, legal, financial and immigration frameworks. At Invest Cyprus, we concentrate our efforts on identifying and filling these gaps; this is the only way we can attract even more tech companies and related Foreign Direct Investment (FDI) to our country. If we don’t establish Cyprus as a growing tech jurisdiction, how can we expect anyone to invest hundreds of millions in creating a technology park? And vice versa, if the overall framework for tech companies is not attractive, why would any organisation or professional relocate to a country that only has a tech park to offer? Besides, such projects are clearly demand-driven and their economic reasoning is based on a longer-term plan. Attracting tech companies demands a holistic approach that will cater to their needs and that’s what we are trying to achieve.
When it comes to headquartering, there is a growing consensus that the competition has shifted from national to city level. What is your take on the matter? Is the economic and social performance of our cities now the driver of foreign investments when the contrary was once the case?
This may be the case for large cities in other EU countries. In Cyprus, even though most foreign companies relocate to Limassol, we have recently seen companies choosing Nicosia and even Larnaca as their local base. From our discussions with foreign companies, they take several factors into consideration before making a choice on their next destination: safety, private education, amenities, the ease of doing business, taxation, the local workforce, the cost of living and the ease of attracting top talent from abroad. Certainly, local authorities have an important role to play here, as these companies take the level of city infrastructure seriously. Having said that, Invest Cyprus never promotes specific cities or geographic areas, but Cyprus as a whole.
In October 2020, a new Immigration Framework for tech companies was launched, with the aim of making it easier for tech professionals and their families to relocate to the island for work. In this context, what other initiatives are in the pipeline?
Invest Cyprus always works closely with the relevant Ministries and government bodies, proposing reforms and new incentives. We listen to our investors’ needs, draft suggestions and promote them through the relevant official channels. For example, we had suggested the adoption of new relocation and immigration incentives for non-EU specialists for 20 ICT-related professions. As a result, ‘Category 3’ was created last October; this has enabled hundreds of ICT specialists to easily relocate to Cyprus over the last 10 months. We are continuously striving to make Cyprus an even more attractive destination, both for existing international high-tech companies looking to scale up their operations and for new companies.
To be competitive when developing Cyprus into an ICT hub, it seems evident that there needs to be collaboration between all relevant stakeholders: government, private capital, local authorities and universities. What kind of steps have you taken to facilitate this collaborative effort? And how do you ensure that such initiatives stay immune to local politics?
We are not pursuing immunity from politics. On the contrary, as the state investment authority that promotes the country as a business and investment destination abroad, we consider the Government to be our most important partner. For example, without the efforts of the Minister of Interior, we wouldn’t have the amended immigration framework in place, which covers the expansion needs of the existing cluster and simplifies the relocation of newcomers. We fully believe that collaboration among all stakeholders, including the House of Representatives, is necessary in order to turn Cyprus into a hub for technology and innovation. This is why Invest Cyprus, in cooperation with the advisory firm Ernst & Young, has conducted a comprehensive study with the aim of drafting a holistic plan that will improve the overall framework for international ICT companies. Part of the mandate given to the firm was to compare Cyprus as a destination for tech companies with other competitive countries. The firm was also asked to identify the bottlenecks of the national framework and suggest countermeasures. The results of the study were also made available to the Cyprus Economy and Competitiveness Council, the body responsible for drafting the country’s ‘Vision 2035’ long-term growth strategy.
How can we improve the way we approach promotional activities to increase our presence in major international hubs?
Invest Cyprus already has a strong marketing and promotional plan to establish Cyprus as a world-class jurisdiction for international tech companies. This has been one of our priorities since 2019 and we are delighted to see our efforts bearing fruit. Many EU countries are making a great effort to attract tech companies and the competition is fierce. Both financial and human resources are necessary to compete and increase our chances of getting noticed when approaching these companies. At the same time, by promoting the potential of Cyprus to host new ICT companies on an international level, we increase awareness of our island among tech workers and support the recruitment needs of the existing cluster. In 2020, the Gross Value Added to the economy by international ICT companies operating in the country stood at €1.5 billion, while it contributed to the creation of 13,000 related jobs. With the tech market in Europe estimated to grow even more in the coming years, Cyprus could grab an even bigger slice of FDI for ICT headquartering and for shared services centres.
What benefits does Cyprus offer as a hub for international tech companies?
In an ever-changing international landscape, in which all major institutions are targeting a level playing field, Cyprus has key benefits to offer: 1) A geostrategic location offering market access to 500 million EU consumers and proximity to the MENA region; 2) A Fast-Track Mechanism for Licensing & Immigration for non-EU nationals; 3) Access to a tech-savvy EU talent pool and a well-educated, highly-skilled, multilingual workforce; 4) An attractive EU-approved corporate tax environment with a favourable IP regime as low as 2.5%; 5) Low-cost high-quality professional services; 6) An enviable lifestyle in a safe, clean and healthy environment with high living standards and comparatively low costs; 7) A pro-business attitude, a robust regulatory framework and a legal system aligned to the UK common law; 8) Special income tax incentives for expat executives and new tax residents of Cyprus.