RUSSIAN investments in Cyprus were worth around 2.7 billion – or 12 per cent of the islands GDP in 2010 – according to economists speaking at the fourth Cyprus Economist summit yesterday.
This total includes €0.5 billion in legal and accounting services, €28 million from Russian bank deposits and €34 million in Russian corporate tax.
However, this total excludes the estimated €221 million annual income from Russian tourists, which is set to increase further in the coming years, and revenue from locally resident Russians.
Presenting the data to assembled business leaders, politicians and economists, Sapienta Research director Fiona Mullen said: “Business with Russia is good while it lasts but we should be careful not to become over dependent on one market as we did with the British tourist market.
Her concern about Cyprus’ increasing dependency on Russian money were echoed by co-speaker and PriceWaterhouse Coopers executive board member Evgenios Evgeniou, who said the consequences of severing ties with Russia would be “significantly adverse.”
Evgenious said: “We should maintain and enhance (Russian) ties because we are facing increasing competition from other EU countries who are channelling investments into Russia.
A challenge for analysts of Russian investment has been a shortage of reliable data and discrepancies, due to the different ways that Russian and Cypriot financial institutions label transactions.
Mullen said: We know from the discussion at the conference that there are discrepancies in the figures quoted about Russia but what we can be sure of is that the turnover between the two countries is several billion Euros.
Tourist revenue is easier to estimate than that of residents thanks to more reliable arrival and spending data.
Using this data, Mullen puts the total income from Russian tourists at around €220 million, based on 223,861 recorded arrivals in 2010 (up from 148,734 in 2009) each spending on average of €1,000 per trip.
This is significantly more than the €400 average spend by British tourists, whose numbers declined from 1,069,196 to 996,046, and who would be outnumbered by Russians in 2025 if current trends continue.
Asked why more Russians and fewer Brits were coming to the Island, European Tour Operators Association head of policy, Tim Fairhurst said his organisation had found the easy visa application process was a draw for sun-seeking Russians, who now have more disposable income.
Conversely, Brits were being put off holidaying within the EU because of the VAT incurred.
Fairhurst said: “Cyprus has bent over backwards to make it easier for Russians to come here, while Britain has bent over backwards to make it harder for the British to come here.”
According to Cyprus immigration statistics, there are 10,500 permanent Russian residents in Cyprus business community estimates sit at around 20,000.
