According to a survey by the European Investment Bank
Discouraging Cypriot companies for new investments due to a pandemic
Important online Conference of EBE Nicosia with EIB Mousioutta: Without investments there is no growth
The pandemic has hit the investment climate in Cyprus, a fact that discourages companies from investing again.
This is one of the main conclusions of the important online Conference organized today by the Nicosia Chamber of Commerce and Industry (EVEL), in collaboration with the European Investment Bank (EIB), on the annual research “Investment and Investment Finance in Cyprus”.
Welcoming the speakers, the President of EVEL Mr. Michalis Mousiouttas stressed that no development can exist without investments, either from within or from abroad. Cyprus, he added, is in a transitional period that needs to redefine its priorities, its economic model and modernize its investment framework, making it more attractive for both foreign and domestic investment.
The results of the research of the European Investment Bank, Mr. Mousiouttas noted, are an important aid for how Cyprus should move in the future and especially after the pandemic, in order to reorganize its economy.
The Vice President of the European Investment Bank, Ms. Lilyana Pavlova, also addressed the Conference. This was followed by a speech by the Minister of Finance, Mr. Konstantinos Petridis.
Based on data mentioned in his own intervention by the Governor of the Central Bank Mr. Konstantinos Herodotou, investments in Cyprus decreased by 9.4% in the first 9 months of 2020. He also stated that the new loans from the banking system of Cyprus amounted to 2.8 billion euros in 2020 and are reduced by 8.8% compared to 2019, which amounted to 3.5 billion euros.
Mr. Herodotou highlighted the role of the EIB in Cyprus, saying that in the last 10 years it has supported with 1.2 billion euros projects in the fields of transport, energy and environment. He also, he said, channeled with 1 billion euros the Cypriot banks for SME financing in industry, services, tourism and infrastructure.
Presenting the research, the Head of the Economic Studies Department of the European Investment Bank Pedro de Lima said the following:
Interest in Cyprus for investments in 2020 decreased by 35.3%, in the EU by 28.2% and in the USA by 37.1%. More than half of the companies (51%) that had investment plans for the current financial year are investing less than planned, slightly above the EU average (45%). The most common impact of COVID-19 is expected to be the increased use of digital technologies (55%), especially among companies in the service sector (63%). Manufacturing companies have less of a long-term impact (29%). One in five companies (21%) expects a permanent reduction in its staff. This increases to almost one in three companies operating in the service sector (35%). About 1/3 of all businesses (33%) claim to have developed or introduced new products, processes or services as part of their investment activities. This includes 15% of companies that have introduced innovations in the country or in the global market. This percentage is equivalent to that recorded in the EIBIS 2019 report (39%), but below the EU average (42%). More than half of the companies in Cyprus (54%) have fully or partially developed at least one digital technology, which is below the EU average (63%). Nearly 1/4 of businesses (24%) believe that their business activity has been significantly affected by climate change and related weather changes, while two in five (41%) report a small impact. These levels are in line with the EU average (23% and 35%, respectively). More than half of the companies in Cyprus (53%) have already invested or plan to invest in the next three years in measures to address the effects of climate change and reduce carbon emissions. This percentage is lower than the EU average (67%). Uncertainty about the regulatory environment and taxation is the biggest barrier to investment in this sector (77%), followed by the cost of these activities (74%).
In his own speech, the President of the CCCI Mr. Christodoulos E. Agastiniotis stated, among other things, that before the pandemic 44% of Cypriot companies were willing to increase their investments in 2020, but then changed their plans resulting in only 18% continue to seek to increase their investment and 37% have decided to reduce their investment activity.
As it is understood, Mr. Agastiniotis stressed, the priorities have changed and the main issue that concerns companies today is money liquidity, security and survival. And that is why, he added that the CCCI is pushing for the guarantee of loans from the government. Mr. Agastiniotis then pointed out that much more needs to be done to restore the interest of companies for investment.
The conference was also addressed by the Director of Central and Southeastern Europe of the European Investment Bank, Anita Fürstenberg-Lucius, the Chief Financial Officer of the Ministry of Finance Mr. Kyriakos Kakouris and the Deputy CEO of Bank of Cyprus Mr. Pregas Mr. The discussion was moderated by the Professor of the University of Nicosia, Mrs. Haritini Tsagari.