The pandemic last year left a negative mark on the attraction of Foreign Direct Investment internationally, making the road to recovery even more difficult.
According to data provided by the relevant UNCTAD, in 2020 foreign direct investment was reduced to $ 859 billion, recording a historic decrease of 42%, compared to $ 1.5 trillion in 2019. At the same time, the landscape remains for the attraction of Foreign Direct Investments for this year as well, since the relevant forecasts of UNCTAD speak of a further reduction of 5%, with the partial recovery in the flow of FDI being postponed to 2022.
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Last year's decline, according to the same data, is the largest observed since the 1990s, and is 30% below the total percentage of investments made during the global financial crisis of 2008-2009.
According to UNCTAD, East Asia attracted one-third of all foreign investment internationally last year. On the other side, foreign direct investment in the United States plunged 49%, with the corresponding rate for European Union countries soaring to 71%. Rates indicative of the effects of the pandemic as well as the rapid decline observed in hitherto developed economies.
The… safari is difficult
Given the importance of attracting investment to achieve the goal of recovery, a highly competitive environment is being formed for Cyprus as well, since especially the competing European destinations have already started an intensive hunt for attracting investment.
In these circumstances, the country is called upon to fight, in order to attract investments that are considered perhaps more necessary than ever, due to the pandemic and the negative consequences it has brought to all sectors in which the Cypriot economy is based: Tourism, services and real estate.
In this context, the Cyprus Investment Promotion Agency (Invest Cyprus) has in turn intensified its promotions in priority areas, while in cooperation with the relevant Ministries it works to strengthen the country's competitiveness.
In fact, having two new weapons in his quiver, which Invest Cyprus, in collaboration with other agencies, managed to secure last year. This is the revision of the policy of issuing residence and employment permits for specialized personnel from third countries, in specific fields of technology and information technology and the newly established Rapid Activity Mechanism. Weapons that are expected to significantly enhance the effort to attract international technology companies in order to transfer part of their activities in our country.
Speaking to “F”, the General Manager of Invest Cyprus, George Kampanellas, in turn highlighted the importance of these measures for the transformation of Cyprus into a modern and versatile business center. Mr. Kampanellas described as equally important the efforts that began for the use of economic diplomacy. “We expect that significant synergies will be created, starting with the closer cooperation of Invest Cyprus with the Diplomatic Missions abroad”, he added.
Headquartering is at its peak
Invest Cyprus will in the meantime focus this year on its promotions in Headquartering, with a special emphasis on attracting companies active in the field of Technology and Information Technology. As Mr. Kampanellas explained to “F”, the presence of such companies in Cyprus creates multiplier benefits in the Cypriot economy, through the creation of new jobs and the increase of the tax base. In addition, as Mr. Kabanellas pointed out, “these companies contribute horizontally to all sectors without exception”.
The Agency's promotions have also begun to bear fruit, with the number of foreign companies choosing Cyprus to relocate its headquarters growing steadily.
At the same time, Invest Cyprus places special emphasis on attracting Foreign Direct Investment in projects of strategic importance in the fields of Tourism and Hospitality, through the specialized unit “TourInvest” as well as complex developments related to health and education.
At the same time, the country continues to be promoted as a European jurisdiction for the registration of Investment Funds and the installation of Fund Managers. “We remain committed to keeping Cyprus on a growth trajectory and promoting it as an attractive investment destination, while contributing, with our suggestions, to further enhancing the comparative advantages and incentives that the country can offer to foreign investors,” he said. .
Finally, he added that the organization's officials remain in contact with foreign investors who are already active on the island, providing them with ongoing support for the implementation of their investment plans.
