IT WAS REASSURING to see that finance minister Harris Georgiades kept both feet firmly on the ground, after the two-day official visit to Kuwait, in which he was accompanying President Anastasiades. The minister refused to make any promises or raise hopes of Kuwaiti investments in Cyprus, despite the media reports about the country’s fabulous wealth and its 70 billion dollar development fund.
The embarrassments suffered by the previous government with regard to foreign investments are still fresh in the memory. Everyone still remembers the fanfare surrounding the supposed multi-million investment by Qatar which never materialised and the arrival at the presidential palace of the Canadian head of the Triple Five group that was supposed to undertake a variety of projects – including a strategic participation in Cyprus Airways – and has not been heard of since. These were not the only ones.
This is why it is so important for the government to avoid big promises and never go public about anything before signatures are put on the dotted line. Georgiades quite rightly said that the government would not rush into announcing anything that was not specified and defined. He also stressed the need for the economy to be put on a sound basis again before Cyprus could become attractive to investors.
Once this has been achieved the government and private sector should start thinking outside the box with regard to attracting foreign investment and forget about land development or the construction of more hotels. Of course, there were developers in the government’s delegation to Kuwait, one of whom yesterday spoke about Kuwaiti interest in holiday homes in Cyprus, but first there had to be direct air links. The very idea of setting up direct flights so that a few developers could sell unwanted holiday villas is preposterous.
Unfortunately, we remain stuck in the old thinking that foreign investment is about selling holiday homes to foreigners and building more apartments, shops and office. The project we tried to sell to the Qataris was also a land development – the construction of a super-luxury hotel, apartments and shopping centre in the centre of Nicosia as if we had a shortage of such premises. It seems we are incapable of thinking of any other form of investment because we have a big construction sector that needs to work. But how many more holiday homes, offices and shops are we going to build?
The government and business sector must come up with innovative and attractive investment ideas. For instance the idea of building a commercial exhibition centre next to Larnaca airport, mooted by a Chinese businessman, could be explored; the idea of setting up a tram service, championed by the Cyprus University rector could be investigated. It is original projects, with good, long-term profit prospects that would attract foreign investment and not just open invitations to invest in Cyprus, which seems to be the standard practice.
Has nobody yet realised that this approach does not work? Hundreds of countries and cities are competing to attract foreign investment, so why would anyone decide to invest in Cyprus? There must be specific, viable proposals to attract investors. But first we must also mend our ways, stop seeing potential investors as an opportunity to make a fast buck at their expense.
The previous government’s attempt to sell the Qataris a grossly overpriced plot of land in Nicosia for the proposed development was one of the reasons the project fell through; it drastically reduced its land valuation, eventually, but it was too late. We must understand that nobody would part with their millions if they suspected their prospective partner was trying to pull a fast one. If we took the long-term view we would offer land, facilities or buildings at lower prices as a way of attracting investors instead of looking to gain an advantage from the start.
Then there is the state bureaucracy that seems to think that its role is to make life as difficult as possible for businesses. Procedures need to be simplified and speeded up to help business rather than put obstacles in its way as is the current practice. And we must show that investments are safe. This could only be done if there is a properly functioning banking sector and rule of law. The existence of over 100,000 property owners without title deeds, the slow, inefficient justice system, state bureaucracy, capital controls and dysfunctional banking system make Cyprus anything but attractive for foreign investment, even if there are opportunities.
We desperately need to put our house in order, clean up our act, come up with project ideas and offer real incentives if we are ever to see the foreign investment the politicians love to talk about but do nothing practical to attract.
