THE SIGNING of a memorandum of association between Hermes Airports and a so far unnamed Chinese company with a view to developing the old Larnaca airport into commercial showrooms and a logistical services centre was welcome news. Although there is a long way to go for the completion of negotiations, which have not yet started, and the signing of a business deal, the memorandum is a first step towards putting into effect an excellent idea.
Hermes Airports spokesman Adamos Aspris explained that the old airport would be the site of large commercial showrooms for Chinese products and there would also be logistical centre for managing orders to Europe, the Middle East and Africa. “In effect, Cyprus will become a gateway for Chinese products to Europe, the Middle East and Africa,” said Aspris, who claimed the project would be “one of the biggest investments ever made in our country.”
There is little doubt that such a project, if it materialises, would prove a big boost to the economy as it would create thousands of jobs, attract tens of thousands of business visitors to the island and generate significant business for the service industries.
We may be celebrating prematurely, because this is a big and complex project which could require long and arduous negotiations before there is an agreement and there is always the possibility the two sides would not sign a deal. However, the benefits for the economy would be so significant we hope Hermes will have the full support of the state services, which are not always helpful to private initiatives.
The fact that this joint venture is a private initiative is another positive factor. If the state was involved, there was a big chance it would come to nothing as has happened with the much-trumpeted Qatar investment, a deal between two governments that appears to have fallen by the wayside. Finance minister Kikis Kazamias said on Thursday he had asked the Qatari government to make clear its intentions – if it planned to go ahead with the project opposite the Hilton Hotel, it had to sign the agreement.
There would not have been such foot-dragging if the Qatari project had been a private initiative. Private companies, which would have carried out a feasibility study before making any deal, get things done economically, efficiently and promptly, as we saw with the construction of the two airports in Cyprus, because they are solely interested in earning a healthy return on their investment as soon as possible. Such considerations do not enter the thinking of state bureaucrats, which is why state projects suffer from huge delays and overspending and state-owned organisations are big loss-makers.
The fact that a foreign company – one of the partners in Hermes Airports – with a good reputation and expertise in big, complex projects would also be involved in the old airport project is another factor in favour of the proposed joint venture. And perhaps this would finally convince the statists running the country that all big projects, from conception to execution and operation should be handled exclusively by private business. The creation of consortiums in which local firms join forces with foreign firms possessing expertise and know-how is the sensible way forward.
The state’s only obligation would be to facilitate such projects, minimising bureaucratic delays and obstacles as well as offering incentives to companies that are prepared to make big investments and create jobs. We mention this, because there are bound to be difficulties for the project in question. For instance would the state be able to sell the land of the old airport to the joint venture without taking offers from other interested parties, as it is obliged to do by law? What would happen to the joint project with the Chinese company when Hermes’ 20-year contract for the operation of the airports expires? Would the government take over the running of the airports and the commercial showrooms in the old airport area?
These are questions that would have to be answered before any serious negotiations for the establishment of commercial showrooms and a logistics centre begins between the interested companies. And the government should be prepared, because any prevarication or failure to provide satisfactory answers would simply lead to the abandonment of the project. The companies involved may eventually decide that the project would not be economically viable, but the government must still do everything in its power to facilitate it. This is a big opportunity for the country which should not be lost because of government mistakes.
