Time Is Money

Interview with Invest Cyprus Chairperson Yannis Matsis
20 December 2021
Time Is Money
Financial services expert and former Hellenic Bank CEO Yannis (Ioannis) Matsis has recently been named as the new Chairperson of Invest Cyprus and, in this capacity, he talks to GOLD about how he aims to enhance Cyprus’ status as an international business centre. Acknowledging the various challenges that exist for foreign investors wishing to do business on the island, he appears optimistic that many of these can be resolved through the Government’s recently upgraded Business Facilitation Unit.
 
By Artemis Constantinidou | Photo by Jo Michaelides
 
 
You have recently been appointed Chairperson of Invest Cyprus. What is your vision for the organisation and what do you personally hope to achieve in the context of your new role?
Ιt is a privilege and, at the same time, an outstanding obligation to have been appointed. After all, Invest Cyprus is responsible for attracting investment and for encouraging companies to move and set up offices with substance in the country. This is pivotal, especially in such a challenging decade. My goal could not be other than promoting the country’s business and investment policy abroad as part of our efforts to attract and facilitate significant sustainable investments and foreign company offices on the island.
 
In recent years, Cyprus has focused on attracting international tech companies, which has proved successful. Does Invest Cyprus plan on continuing with the same strategy?
The Government’s’ strategic decision in 2019 was to make the ICT sector one of the island’s main priorities. This has certainly proven successful so far. The priorities of Invest Cyprus are always fully aligned with the strategy of the Government, and therefore attracting international tech companies is one of our key strategic pillars. Given the great potential and expansion of the ICT cluster at a notable pace, we will continue to promote the island as a destination for international tech companies. We are witnessing great examples of existing companies scaling up their operations and of new companies and investors choosing Cyprus as a location to establish their operations. Aligning our efforts with all ministries and with the latest action plan for attracting foreign businesses, we are optimistic that the technology cluster will grow even more, and in a sustainable manner. Our goal is to establish Cyprus as a world-class destination for international ICT companies. Tech companies can create supplementary added value for the benefit of the whole economy and contribute to the transformation of our country into a renowned international business centre. 
 
According to a recent survey, in addition to Technology, the sectors of Health, Education and Tourism also appear promising as areas for investment. Does Invest Cyprus plan to exploit the FDI potential of these and other sectors?
As the state entity promoting the country’s business and investment policy abroad, we present every sector with solid investment potential. For this purpose, we have created and recently launched a “Project Bank” to act as a bridge, connecting investors with projects looking for Foreign Direct Investment (FDI). Additionally, in cooperation with the Deputy Ministry of Tourism, we have created the TourInvest Cyprus Unit, which promotes investment opportunities in the local tourism and hospitality industry. Invest Cyprus acts as the first point of contact and one-stop-shop for international investors and is actively involved in facilitating the investment process. It is also worth noting that Invest Cyprus, in full collaboration with the relevant ministries, has engaged and cooperated with the international tourism and hospitality advisory group THR with the aim of preparing a sectoral study to identify market gaps and investment pain points, and shape a comprehensive strategy to make Cyprus more attractive as an investment destination for projects in the Tourism and Hospitality sectors. Recently, we have also witnessed significant interest in the Health and Education sectors. It is very encouraging to see milestone investments and even more so during the COVID-19 pandemic. 
 
Following unresolved problems that arose with the movie productions in Cyprus and the negative publicity caused by the payment dispute, followed by the publicly aired views of the Auditor-General, what is the current status of the ‘Olivewood’ Scheme to offer tax breaks to international studios using Cyprus as their filming location?
It is quite encouraging that the  ‘Olivewood’ project is evolving in a sustainable way and a significant number of productions have been filmed in Cyprus in recent months. Our role in this as Invest Cyprus is to showcase to international audiences and filmmakers that Cyprus is an ideal location for film production, and we are pleased to see this effort yielding positive results. At the same time, I note that the Ministry of Finance, responsible for the implementation of the incentives scheme, has acted swiftly and already proceeded with amendments that constitute the Cyprus offering even more attractive. I should add here that we do not consider the issues that arose with a particular production company to be due to a fault of the scheme, but rather due to the procedures and protocols set out in the scheme not being appropriately followed. Had these procedures been properly adhered to, this would have ensured that the rebates were given, with no issues arising.  
 
How would you describe the profile of the investors we should be targeting with a view to increasing FDI?
Cyprus is well-positioned to cater to the needs of international investors. Our role as Invest Cyprus is to support the appropriate ministries and to work together as a united “Team Cyprus”, to promote the country as an investment destination and enhance its image. Undoubtedly, every investment organisation has its own profile and investment requirements, and it is not up to us to determine it. Furthermore, it is not up to us to indicate to a local businessperson with whom he or she should cooperate. Nevertheless, we want investors to be reputable and reliable as the country’s trustworthiness is the cornerstone of our efforts. As part of our advocating role, we continuously monitor the competition and examine the country’s FDI framework. We are always ready to suggest and swiftly adopt new incentives, so as to remain at the forefront of international developments. 
 
What are the incentives that Cyprus currently offers to foreign investors and how do they compare with those of its main competitors?
Cyprus offers a unique combination of advantages to foreign investors, such as the pro-business attitude across all aspects of doing business, an enviable lifestyle and targeted tax incentives. On the other hand, we acknowledge that there are also pitfalls, which we are continuously trying to resolve in cooperation with the relevant ministries and public administration departments. We know where we fall behind regarding the competition and we are striving to improve. However, we are confident that the new strategy and action plan for attracting foreign businesses to the country announced by the Minister of Finance, which resulted from an in-depth study conducted by the Government, is a great example of these efforts.
 
During a recent event at the Presidential Palace, a few foreign investors expressed their disappointment regarding the high level of bureaucracy they often have to endure, which also relates to the way they are treated by various government bodies. What are your thoughts on this matter, and what does Invest Cyprus plan on doing to assist investors on such matters and other challenges that they face? 
Red tape is a timeless issue that has afflicted foreign investors and local businesses for many years. The EU-approved Recovery and Resilience Plan dictates significant structural reforms and digitisation which, led by the Deputy Ministry of Research, Innovation & Digital Policy, will modernise the public administration. It will be such a shame if we fail to take full benefit of the Plan, to implement structural reforms, eliminate bureaucracy, introduce an appropriate digital footprint and attract relevant private investments. The sustainable development and digitalisation train is ready to leave the station and this is our last chance to get on board. As the global economy becomes more and more digital, we do not have the comfort of delaying significant decisions.  
 
To what extent do you believe that the transformation of the Fast-Track Business Activation Mechanism into a Business Facilitation Unit will be effective?
The newly upgraded Business Facilitation Unit aspires to tackle red tape by simplifying the licensing process. It will be responsible for company registration and name approval, registration with the Social Insurance, Employers’ and VAT and Income Tax Registries, for providing guidance for the establishment and operation of companies in Cyprus, and for the issuance of residence and employment permits. It is already successfully guiding and assisting companies to establish a presence on the island, for which credit must be given to the Ministry of Energy, Commerce & Industry.
In today’s business environment, time is money. The Unit has been set up with the express purpose of speeding up the licensing process and ensuring that it is as effective as possible. It is already achieving the expected positive results. 
 
Do you have any additional suggestions that could be implemented by the Government in order to boost FDI in Cyprus?
There are many enhancements that could potentially be introduced after appropriate study and consultation by all appropriate government bodies. Examples include improving air connectivity, introducing judicial reforms such as the establishment of the commercial court, etc. To this end, we are happy to say that the Ministry of Justice is already making progress. Moreover, we could further enable the migration of companies, not only in the ICT sector, by extending the recently announced government measures to the Tourism and Hospitality, Education and Healthcare sectors, introducing additional investment incentives in the Renewable Energy sector, etc. The Government is very focused on this and is tirelessly and continuously evaluating how it can further improve the Cyprus product offering. Invest Cyprus is always by the Government’s side, assisting in these efforts.
 
Based on your longtime experience as a banking professional, how would you assess the status of the banking sector in Cyprus? Do you believe it’s on the right track to be considered an incentive for foreign investors to do business in Cyprus? Will any attempt be made to encourage international banks to set up here?
The banking sector in Cyprus has improved significantly since the 2011-2013 crisis. The percentage of Non-Performing Loans (NPLs) is the lowest since the financial crisis, capital and liquidity buffers are satisfactory, corporate governance of banks has been upgraded and reached international best standards, and the banks’ operating model has started adapting to the new digital environment. Banks are still striving to ensure they build long-term sustainable and profitable business models and they are on the right track. I should note that foreign investors always examine the state of a country’s banking system during their decision-making process. The progress made by banks in recent years is another advantage for the country as an international business centre. Regarding international banks setting up here, I doubt that this will happen in a stand-alone mode but I do expect that international banks will soon be looking to gain a foothold in the island’s banking business through acquisitions of local banks.
   
How do you expect Cyprus’ overall economy to develop in the next decade and how will this affect its status as an investment destination? 
Cyprus’ economy has proven to be more resilient to the coronavirus crisis than initially expected. Compared with other southern European economies, which also have important tourism-related activities, Cyprus’ recovery has out-performed all of them. Despite the uncertainty still caused by the pandemic, the expectations are for significant growth during 2022.The most vital aspect is for the country to follow a sustainable growth path, not an opportunistic one, as happened many times in the past. “Vision 2035”, as set out by the Cyprus Economy and Competitiveness Council, is paving the way for sustainable long-term growth. We all need to understand that the best way towards real long-term acceleration of the size of the local economy is by attracting more international companies and their highly skilled staff to live and work on the island.
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