Maria Panagiotou: To maintain our comparative advantage over other traditional destinations
By Panagiotis Rougalas
The position of the Cyprus Investment Funds Association (CIFA) is that it is not only necessary to improve the name and reputation of Cyprus, but the goal is that all investors, Investment Funds and managers feel comfortable talking about Cyprus to their counterparts. The president of the Cyprus Investment Funds Association (CIFA), Maria Panagiotou, emphasizes in her interview with “K” that Cyprus should maintain its comparative advantage over other traditional destinations, which is the provision of high-level services at a lower cost than that of competitors. Ms. Panagiotou talks about the diversification of the country's economic model, the importance of its reputation, the necessary legislations that must be passed, but also explains the decrease in Assets Under Management of Investment Funds that was observed in the previous months.
-In recent years, a significant effort has been made to diversify the economic model of the country. Do Investment Funds have a place in this effort?
– They certainly have a place and in fact the role they perform can be described as multidimensional. First of all, Investment Funds are an alternative source of financing business development plans and projects. Especially in Cyprus, where development over time has mainly depended on bank lending, the existence of alternative options is extremely important. The latest figures show that the Funds' investments in the Cypriot economy remain at stable levels as they amount to 2.4 billion euros and correspond to 26.8% of their total assets.
In addition, Investment Funds have managed to diversify, to some extent, the operating model of the professional services sector. You realize that running organizations that manage funds in excess of €9 billion requires the creation of many new, well-paid jobs. At the same time, it is necessary to have high-level support services, which must on the one hand be consistent with the high standards of operation of these organizations and on the other hand with the supervisory requirements that govern their licensing by the Capital Market Commission.
Of course it goes without saying. how the sector contributes directly and indirectly to government revenue and certainly to the consumption boost, which comes from the well-paid staff working in these organizations.
– You mentioned investments in the Cypriot economy. In which sectors are these investments located?
– A significant part of the investments is directed to main sectors of the Cypriot economy such as shipping, energy, tourism and real estate. At the same time, however, there is an increase in investment in emerging sectors such as technology, projects that emphasize Sustainability, health and so on. What I would like to make clear is that unlike traditional businesses, Investment Funds do not advertise or promote the projects in which they participate. Their goal is to select the appropriate investments that will have the expected returns for their own investors. In this way they highlight their work and their work, so it is normal that their investments are not widely known.
There was a reduction
– In the previous months we saw a decrease in Assets Under Management of Investment Funds. Is it something that bothered you?
– Indeed, there was a reduction which may have troubled those who do not have a direct relationship with the sector and do not know in depth how it works. The specific reduction was related both to the general course of the international markets and to the fact that some Funds, among the first to be created in Cyprus, completed their life cycle and their managers proceeded to liquidation. It is the normal mode of operation of Investment Funds and it is to be expected that as the years pass and the sector in our country matures, this cycle will repeat itself. At the same time, we also had new investment funds, especially from serious players on the international scene, who chose Cyprus. So, yes we noted the decrease but it did not cause us concern or panic. Instead, there was tangible evidence that the sector is gradually maturing. Of course, our goal remains the continuous attraction of Funds and Managers in our country so that the domestic ecosystem continues to grow. As a Board of Directors we want to see funds form an even bigger part of the investment activity in Cyprus.
– How can we achieve this? We often hear you say that this sector is highly competitive internationally.
– Indeed it is. Especially considering that we have to compete with destinations that have been serving Investment Funds for many years. I am referring to countries with tradition, because we must not forget that our own ecosystem is only a few years old.
Therefore, a continuous and organized effort is needed at all levels. In promotional and marketing matters, in regulatory and legislative matters so that we can offer an equivalent or even better product than other destinations. In addition, we should maintain our comparative advantage over other traditional destinations, which is to provide high-level services at a lower cost than our competitors.
No.1 Reputation< /h3>
–Is a country's reputation important in such cases?
-Obviously. It may also be the first thing that large investment organizations consider when evaluating their options for the country in which to establish themselves. We are glad that the government has started an organized effort to improve the name and image of our country abroad and as CIFA we are ready to contribute to this effort. For our part, we continue to promote our country and the sector abroad by participating and organizing targeted events and conferences, such as the one we will be organizing next October in Athens.
In this general effort that we are making to improve the name of our country, we should understand something very important. The aim should not be just to improve the name and reputation of the country, but to make all these investors, Investment Funds and managers feel comfortable to talk about Cyprus to their counterparts. We should convince them that they can and should become our ambassadors abroad. There is no better promotion and marketing than the investors themselves talking positively about you, especially if you are a small country trying to earn its share of a huge and well-networked international market.
Training
– Recently, the effort to improve the levels of financial literacy in Cyprus has intensified. Does your sector participate in this effort or are you purely aimed at professional investors?
– Strengthening financial literacy at all levels is our priority as a Council. We seek the continuous education of our members on current and upcoming issues and we carry out a series of seminars and trainings in this direction. At the same time, however, we know first hand that the management of personal or family property has become much more complicated than a few years ago. As a result, many of our fellow citizens may not be making the best use of their assets, or even worse may be putting them at risk due to ignorance, like a few years ago during the financial crisis when even deposits were lost or all that we are seeing occur with various types of pyramids. Today there are many safe and prudent ways to manage the assets or even just the available liquidity of an individual or a household. We want to empower the public with information on how they can take advantage of the services offered by investment funds either through UCITS or AIFs.
We need to be one step ahead of the competition.
–You mentioned earlier that low cost is one of our advantages. Over time, as an advantage of Cyprus, we also emphasize its geographical position. Does this also apply to Investment Funds?
–Applies to a certain extent, yes. That is why we try to approach Funds and Managers from countries in the nearby region. However, it is not enough by itself. A simple example: If the distance from a country is two hours by plane, but there is no direct flight, is this considered a benefit? Practically not. There are many funds that a fund manager considers before deciding in which country to register and operate it. Reputation, cost, distance are some of them. However, many other things are also evaluated, such as supervision (and in Cyprus through the Capital Market Commission we have very good supervision), the legal framework, taxation, the ability to serve the needs of the fund and so on. Simply put, there are many conditions that should be met to the maximum extent possible in order to be able to compete worthily with other destinations. Given that the sector in Cyprus is around 10 years old, we must be satisfied. It is indicative of the fact that we are proportionally one of the largest centers for cross border funds in the EU. from the competition. For example, ideally we would like the bill governing the administration services of the Investment Funds to be passed already.
We hope that this will be done before the end of the year and that there will be no further obstacles otherwise again we will be several steps behind the competition. Also, although we welcome and support the effort for tax reform, it should nevertheless be done in such a way that it does not negatively affect and detract from the attractiveness of Cyprus either as a destination for Investment Funds, or in general.
