A SURVEY published on Thursday revealed the opinions of a sample of foreign businesses operating in Cyprus when it comes to how well the island shapes up as an international business centre.
The survey was carried out by accounting and auditing firm Baker Tilly Klitou and gave Cyprus a strong performance rating as a business centre but also highlighted its weaknesses.
The positive evaluation was primarily driven by the island’s low tax rates, followed by the strategic location. Private sector services also received high marks with accounting rated the highest with 94 per cent saying they were ‘good’ or ‘very good’. Other business services had an 80 per cent approval rating, banks 76 per cent, and lawyers 78 per cent.
When it came to the public service however, only 55 per cent of those polled were happy with the Registrar of Companies Office, which bodes ill since the registrar’s office is probably one of the more efficient civil service departments.
The other government department that foreign businesses have extensive dealings with is immigration. Out of those polled, only 26 per cent had something positive to say about that department, which means that three out of four came away from there with a negative impression.
This shows that it’s not just impoverished third-country nationals and ordinary EU nationals who get short shrift at immigration.
And it’s not only immigration. Earlier this month, a Limassol-based foreign company, which has been in Cyprus for many years, said it was mulling a return to the UK because of the labour ministry’s failure to listen to reason on the hiring of a Russian national for a specific position.
The company made it clear that despite the island’s favourable tax rate, from a financial point of view and from the point of view of running a business, the benefits of Cyprus as an attractive business location were “now marginal”.
Recent downgrades by international ratings agencies have compounded the problems, causing an outflow of deposits from the banking system. A financial centre cannot be downgraded as often as Cyprus has been over the past six months and expect that there will be no consequences.
The government has invested a lot of resources in attracting foreign investment to Cyprus over the past 30 years, and is forever urging the private sector to bend over backwards to that end. Clearly the private sector – according to the positive views in the survey – is doing its bit.
Therefore the government needs to look in the mirror because it cannot afford to rely solely on the low tax rate to lure foreign investors, while at the same time making it difficult for them to do their business when they get here.
