Foreign investments in Cyprus are being hampered by bureaucratic procedures, exhaustive banking checks and infrastructure deficiencies, the House Energy Committee heard on Wednesday.
The government is considering revising its foreign investment attraction strategy to improve and simplify procedures for international businesses operating in Cyprus.
Banks impose stricter checks than other EU countries
A representative from the Cyprus Chamber of Commerce and Industry (CCCI) told the committee that bank checks on foreign businesses in Cyprus are much stricter than in other European Union countries.
The chamber highlighted high transportation and energy costs, alongside significant delays in issuing various permits as major obstacles for foreign investors.
Shipping companies open accounts faster in UK and Switzerland
The Cyprus Employers and Industrialists Federation (OEB) representative cited bureaucracy within both government machinery and banks as primary concerns.
The Cyprus Shipping Chamber noted that whilst maritime prospects are enormous, banks present the biggest challenge. According to shipowners, maritime companies can open accounts faster in England and Switzerland than in Cyprus.
Infrastructure and corruption
The Cyprus Bar Association representative acknowledged that despite improvements to the country’s image, the shadow economy reaching 25 per cent and corruption continue to hinder investment attraction.
The association also pointed to significant delays in the justice system, slow processing of applications by banks and government departments, and noted that pending tax reform will not benefit foreign investors.
Limited international schools hinder executive recruitment
The Cyprus International Business Association (CIBA) highlighted delays in government procedures and the banking system affecting foreign investments.
CIBA emphasised insufficient international schools in Cyprus as an obstacle to attracting foreign investment executives to the island.
Government strategy under review
Investment funds representatives referenced banking sector delays, whilst the Cyprus Scientific and Technical Chamber (ETEK) stressed the need to accelerate digitalisation processes.
ETEK warned that public debates create market uncertainty, hampering investment confidence.
The Business Service Centre representative noted that the Foreign Investment Facilitation Unit was established in 2021, providing tax measures and incentives whilst accelerating various procedures.
A ministerial committee will convene at month’s end to examine all emerging issues, with the representative indicating that strategy revision is under consideration.