Marios Cosma: Cyprus has been and will always be an investment destination

The message that Cyprus has always been and will always be an investment destination has been sent by the Managing Partner of K. Treppides & Co Group, Marios Cosma, who also emphasises that the country’s image has changed.

In an interview with InBusinessNews, Cosma makes particular mention of the change in approach on the part of state services towards interested investors, noting that, to a large extent, they now operate in an encouraging rather than discouraging manner in terms of the transformation of investment interest that is manifested in practice.

In fact, as he characteristically states, if the competent state authorities overcome the fears of the past and align themselves with the logic of promoting entrepreneurship, the arrival of global investors in Cyprus will be a given fact.

Marios Cosma underlines the need to concentrate and focus on specific sectors to attract investment, while at the same time characterising as extremely important the participation of the President of the Republic in business missions, similar to his recent visit to the USA.

"The important achievement of the latest mission to the US is that the message has been conveyed that the business model of Cyprus is reliable and that it has changed at the level of government services," the Managing Partner of K. Treppides & Co Group points out, to additionally indicate that there are sufficient incentives that could be granted by the state with the aim of attracting further investments.

Positive change in the treatment of investors

We see Cyprus, especially in recent years, attracting significant quality foreign investments, whose contribution to the development of our country's economy is decisive and universally recognisable. What is your overall reading of the investment environment that has developed on our island and, in particular, its attractiveness?

After some years of stagnation, our country has returned, from 2022 and onwards, to a growth trajectory in terms of attracting foreign investment.

A combination of events, such as the regional wars in Ukraine and Israel, changes in tax procedures at the global level, and the cooperation of state agencies, have significantly helped in terms of the arrival of investors in Cyprus, especially in the technology, services and shipping sectors.

It is important to highlight the positive change in the treatment of investors by government agencies, especially in relation to the technology and shipping sectors. We see that, without of course giving investors preferential treatment, government agencies and their officials now approach business in a supportive manner and do not operate in a bureaucratic and, by extension, deterrent manner.

The Ministry of Interior is also moving towards such a model in relation to the granting of work permits to personnel from third countries.

In conclusion, if the competent state authorities overcome the fears of the past and align themselves with the logic of promoting entrepreneurship, I am certain that the arrival of global investors will be a given fact.

Undoing dependence on the Russian market

Would you say that as an investment destination we have now changed our image in the eyes of foreign investors and their trust in Cyprus is being restored? Is the "rebranding" undertaken by the government and Invest Cyprus bearing fruit?

Cyprus has always been and will always be an investment destination. The question is what quality of investors would we like to attract. Today, the image of Cyprus has changed, since we as a country have disconnected from the perception of dependence on the Russian economy.

The war in Ukraine provided the kick-start to focus on other international economies, which are much more mature and developed and, therefore, under certain conditions, more long-term.

To be clearer, I am not referring to cases of Russian investors who invest in Cyprus and/or are based in Cyprus, and invest in international markets outside of Russia.

Russians who live in Cyprus or in Europe, for me personally, are Cypriots or Europeans, and it is not right to define ethnicities when addressing investors.

Undoing dependence on the Russian market was bound to bring a period of stagnation, especially between 2020-2022, since the entire mechanism (i.e. government, entrepreneurs and competent bodies) had to be reshaped to serve different economies and entrepreneurs with different business profiles and business plans.

Something that worries me is the fact that we are financially linked to the Greek financial system. I wonder if this fact worries foreign serious investors, because it is a system that has shown over time that it is not stable and has no credit consistency.

What is certain, however, is that Cyprus has changed for the better in terms of perception and this is a consequence of the government's work. Today we talk about the "arrival" of investors, while previously we talked about "attracting" investors. The meaning of the words, by definition, demonstrates that we have changed.

The attempted change in approach to the model by the government, which is also being followed by Invest Cyprus, regarding the direction to be followed, is, I think, obvious.

I should note that Invest Cyprus is a government agency and the strategic directions are set by the respective government. The Board of Directors and management of Invest Cyprus, as well as its officers, must be credited with the successful development of the plan based on the government's directions.

I would like to point out, however, to the government that the Cyprus Investment Funds Association (CIFA) needs to be reviewed and its work must be evaluated, as financial resources are not inexhaustible.

Perhaps these resources should be channeled to other institutional bodies, which are aimed at successful sectors of our economy (technology and shipping).

Tax reform a step in the right direction

In your opinion, does the upcoming tax transformation that has been announced move towards maintaining the existing and creating an even more attractive environment for the relocation of foreign companies to Cyprus?

As I have mentioned in the past, tax transformation is moving in the right direction.

Some changes that may be incorporated into the upcoming law, such as tax deductions in relation to profits that are reinvested in infrastructure projects within the Republic or in investments in infrastructure projects serving the Republic abroad, will create the conditions for recognising Cyprus as a country associated with long-term investments.

The relocation of foreign companies to Cyprus is a result of the prevailing international perception that, for legal entities, non-establishment is no longer a business model for investment.

Tax legislation must be designed to serve the development of entrepreneurship and the arrival of income from the international market, as this will increase state revenues, increase investment opportunities and improve the quality of life of permanent residents of Cyprus.

Tax legislation with a framework that affects the attraction of income from international markets and increases the costs of organisations/companies, has negative effects, such as the latest tax change in the United Kingdom.

The granting of incentives

What other incentives could be granted by the state so that the country can attract even more foreign investment? What are your own proposals and suggestions?

The incentives that could be granted by the government are many and must be consistent with its medium- and long-term policy.

For short-term plans, foreign investors will recognise as an additional incentive actions that will simplify procedures and reduce response and decision-making time, through - for example - the adoption by government services of modern service practices and the real utilisation of technology.

At this point, I should emphasise that Ministries and Deputy Ministries, such as the Interior, Finance, Shipping and Innovation, have demonstrated significant improvement and this is recognised by foreign investors.

However, a similar improvement approach must be adopted by the various supervisory authorities under Ministries, as well as by Ministries that have direct or indirect contact with investments.

The important achievement of the US tour

You were among the businessmen who accompanied the President of the Republic during his visit to the US a few weeks ago, which aimed to promote Cyprus as an investment destination and attract investments from American companies. What is your assessment of this particular campaign?

The presence of the President of the Republic on business missions lends credibility and more prestige to the entire effort. The fact that the President of the Republic, together with government ministers, attended meetings is something that will bring profit to the Cypriot economy in the medium term, as long as there is continuity and consistency.

Meetings with state leadership, in the presence of Invest Cyprus, create communication channels for investors, especially for American companies of the size of those that met with the President of the Republic and the government delegation.

We must keep in mind that public companies cannot make official statements. But certainly, they now have Cyprus in mind and at the appropriate time will turn to our country, since they now know that there is a stable service to which they can address any questions and requests they may have.

The important achievement of the latest mission to the US is that the message has been conveyed that the business model of Cyprus is reliable and that it has changed at the level of government services, which, always acting based on the laws and within the framework of legality, simultaneously function as advisors, without, of course - it is emphasised - serving or promoting interests.

Where should we focus for investments?

In which sectors do you see interest from foreign companies to operate in Cyprus, but also in which sectors could we as a country "invest" in order to make them equally attractive?

I will respond by restating the position of the President of the Republic at the 15th Nicosia Economic Congress, with which I agree.

“We must decide that we cannot serve and pursue all sectors.” It was a substantive message that lends prestige and credibility to the sectors in which we as Cyprus invest.

My view is that we will not attract industry (we have industry) nor should we chase unattainable dreams (see investment funds) at the expense of other sectors of the economy, in which we are protagonists.

We are in an ideal position (i.e. location, know-how, infrastructure, etc.) to attract technology and software companies (they are largely related to services), technology data analysis companies, companies providing support services to technology financial companies, to regulated companies, technology companies related to financial operations (FinTech) and, of course, more than ever before, to attract shipping companies, whether these are shipping management companies or ship-owning companies.

I should note that the two Deputy Ministries - of Shipping and of Research, Innovation and Digital Policy - are doing an excellent job and this is something that should be credited to both their political superiors and their officials, since in a short period of time (within two years) they have reshaped Cyprus' presence in these sectors.

The side effects of the trade war

Do you believe that the scenario created by the global trade war that has emerged as a result of the new tariff policy on the part of the US could act as a deterrent for the arrival of foreign companies in our country? How worrying are the developments in your opinion?

I believe it is premature for anyone to take a position on the above developments. Cyprus is a very small economy and its course is not expected to be affected. There may be a differentiation in the investment time horizon, but this will be a negligible effect.

Time will tell. What is certain is that Cyprus must be ready for opportunities, which, however, must be understood by all of us as bringing temporary profit and perhaps some benefits in the future, without meaning that they are investment opportunities.

Our small-sized economy should be our strength, as it makes us capable of readjustments that can always bring positive results or reverse negative impacts.

(Source: InBusinessNews)