gold 15

BARCLAYS IN CYPRUS. BANKING WITH STRONG FOUNDATIONS.

At Barclays, we offer unrivalled local expertise with international reach. As the dedicated wealth and investment management division of Barclays Bank PLC in Cyprus, we are part of an A+ rated* financial organisation with over 335 years of history and more than 164 billion** in assets under management.

Our highly experienced professionals use their collective wisdom to deliver seamless wealth management and corporate solutions to local and international clients.

Our team in Cyprus is also your gateway to the wider range of support and expertise available from Barclays globally, including our colleagues in Investment Management and Investment Banking. Barclays has been a leading name in the finance industry for Cyprus for over 70 years. Our services include:

Deposits Treasury FX Corporate loans Investments Trade finance Asset management Internet banking Personal banking Cash management solutions

To find out more about how Barclays can help, go to barclays.com/wealth or call us on +357 22 654477*** for the Nicosia office or +357 25 208000*** for the Limassol office.

*Standard and Poors rating. **Barclays PLC 31 December 2011. ***Available between the hours of 0830 and 1700 Monday to Friday. Calls may be recorded for security reasons and so that we may monitor the quality of our service. Call costs may vary. Please check with your telecoms provider. Barclays offers banking, wealth and investment management products and services to its clients through Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is registered in England and is authorised and regulated by the Financial Services Authority. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank PLC is authorised by the Central Bank of Cyprus to conduct banking and investment business.

International Banking

Gold ISSU

E 15 M

AY 20

12

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

529

1295

0005

77

0000

1>

ISSUE 15 JUNE 2012PRICE 6.95

POWERED BY:

LIFESTYLEDoes Wealthy meanHealthy?

PLUS: MONEY / BUSINESSECONOMYTAX & LEGALLIFESTYLE

GREXITWill Greece stay in the eurozone?

STONES & BONESInvesting in Fossils andMinerals

+ EUGEN ADAMI, STEEN JAKOBSEN, ANNI PODIMATASPECIAL REPORT: CYPRUS & NATURAL GAS. PRESENTED BY ERNST & YOUNG

companies that have chosen

to invest in CyprusALPARI FINANCIAL SERVICES LTD AMDOCS DEVELOPMENT CENTRE

ASBIS ENTERPRISES PLC BANCA TRANSILVANIA BOUYGUES BATIMENT INTERNATIONAL CARREFOUR COLUMBIA SHIP MANAGEMENT LTD

FBME BANK LTD IKEA (CYPRUS) KARDEX SYSTEMS LTD LIDL (CYPRUS) LUKOIL NCR NEST INVESTMENTS HOLDINGS CYPRUS LTD

RUSSIAN COMMERCIAL BANK UNITEAM MARINE VTTI WEATHERFORD INTERNATIONAL ...and many more

gold cover me diafimiseis.indd 1 30/05/2012 15:32

More than just a holiday destination with pristine white beaches and 300 days of sunshine, Cyprus can also cater to your business needs ranging from registering and setting up your companys operations to managing your EU, North African and Middle Eastern clients at a considerably lower cost.

As well as being an EU country and a member of the European Monetary Union since 2008, Cyprus enjoys the lowest corporate tax rate in the EU of 10%. Cyprus belongs to those jurisdictions on the OECD White List which have substantially implemented the internationally agreed tax standard.

In addition to this, Cyprus provides efficient business services, has a transparent legal and regulatory system and is committed to sustainable growth.

Cyprus welcomes both visitors and investors to work here, so, if you are searching for a new business base, consider Cyprus. Its more than just beaches and sun.

The Ministry of Commerce,Industry and TourismTel + 357 22 867100Fax + 357 22 375120www.mcit.gov.cy/[email protected]

Cyprus InvestmentPromotion AgencyTel + 357 22 441133Fax + 357 22 [email protected]

Columbias growth and expansion over the years is attributed to the uniqueness of Cyprus; being the islands strategic position at the crossroads of three continents, its comprehensive legal framework, double tax treaties regime, communication system, banking system, infrastructure in general and last but not least its highly educated labor force.

Captain Dirk Fry, Managing Director Columbia Ship Management Ltd

The favorable business climate, the excellent telecommunications infrastructure, the well educated and skilled human resources, the favorable tax rates and the proximity to the Middle East and Africa markets, were some of the key factors that enabled NCR to decide to move its regional offices to Cyprus in the 80s. Gradually, NCR managed to expand the office in Cyprus to cover also all the African Countries.

Managing Director of NCR Cyprus,Mr. George Flouros

gold cover me diafimiseis.indd 2 30/05/2012 15:32

www.pwc.com.cy

2012 PricewaterhouseCoopers Ltd. All rights reserved

Risk Assurance ConsultingCan you manage what you cant see?

Please scan with yoursmartphone to find more information about our services on our website.

www.pwc.com/cy/risk-assurance-consulting

creo

4-5:Layout 1 5/30/12 10:10 AM Page 1

4-5:Layout 1 5/30/12 10:10 AM Page 2

creo

6 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

08 10 18

72 {money}76 {economy}86 {tax&legal}94 {lifestyle}

issue 15june 2012

CONTAGION IN THE EUROZONE?by Adam Emilianou 20

WORKING TOGETHER FOR GROWTHby Anni Podimata, MEP 32

A LOGO IS NOT A BRANDby Peter Economides 98

+ OPINION

EDITORIALUP FRONTFIVE MINUTES WITH

INTERVIEWS WITH THE REPRESENTATIVES OF NINE MAJOR FIRMS THAT HAVE SET UP OPERATIONS AND OFFICES ON THE ISLAND22

34 | ITS HEAD IN THE FIRE TIME FOR CYPRUSInterview with Steen Jakobsen, Chief Economist of Saxo Bank

40 | STONES & BONESInvesting in Minerals and Fossils

44 | THREE WISHESThe Cyprus Shipping Chamber requests action on three key matters

48 | AON HEWITTGlobal Human Resource and related Financial Solutions

34

FEATURE

SPECIAL SUPPLEMENT51 | Cyprus and Natural Gas52 | Energizing Cyprus: What Happens Next? The Ernst & Young Energy Panel 54 | Brave New World By Demosthenes Mavrellis55 | Cyprus and the Paradox of Plenty, By Panos Ioannides


to invest in Cyprus 5148

4440

contents.indd 6 30/05/2012 08:45

creo

EDITORIAL

MANAGING DIRECTOR: George Michail

GENERAL MANAGER: Daphne Roditou Tang

MEDIA MANAGER: Elena Leontiou

EDITOR-IN-CHIEF: John Vickers

SENIOR EDITOR: Costa Ioannides

CONTRIBUTING EDITORS: Antonis Antoniou, Stella Mourettou,

Maria Pilidou

CONTRIBUTORS TO THIS ISSUE: Julian Callow, Peter Economides, Fabio Fois, Lauren Fransolet, Adam Emilianou, Panos Ioannides, Nathalie Kyrou, Dem-osthenes Mavrellis, Fiona Mullen, Georgia Papa, Anni Podimata, Dr. Savvas Savouri.

ART DIRECTION: Anna Theodosiou

SENIOR DESIGNER: Maria KyriakouPHOTOGRAPHY:

Olesia Constantinou, Jo MichaelidesMARKETING EXECUTIVE:

Kevi ChishiosSALES & BUSINESS

DEVELOPMENT EXECUTIVE: Christos Kyriakides

ADVERTISING EXECUTIVES: Irene Georgiou, Christopher Constantinou

OPERATIONS MANAGER: Voulla NicolaouSUBSCRIPTIONS: Kevi Chishios

PRINTERS: Cassoulides Masterprinters

CONTACT:5 Aigaleo St., Strovolos 2057, Nicosia, Cyprus

Mailing address: P.O.Box 21185, 1503, Nicosia, Cyprus

Tel: +357 22505555, Fax: +357 22679820e-mail: [email protected]

website: www.goldmagazine.com.cysubscriptions: [email protected]

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

529

1295

0005

77

00001>

ISSUE 15 JUNE 2012PRICE 6.95

POWERED BY:

LIFESTYLEDoes Wealthy meanHealthy?

PLUS: MONEY / BUSINESSECONOMYTAX & LEGALLIFESTYLE

GREXITWill Greece stay in the eurozone?

STONES & BONESInvesting in Fossils andMinerals

+ EUGEN ADAMI, STEEN JAKOBSEN, ANNI PODIMATASPECIAL REPORT: ENERGIZING CYPRUS, PRESENTED BY ERNST & YOUNG


to invest in CyprusALPARI FINANCIAL SERVICES LTD. AMDOCS DEVELOPMENT CENTRE

ASBIS ENTERPRISES PLC BANCA TRANSILVANIA BOUYGUES BATIMENT INTERNATIONAL CARREFOUR COLUMBIA SHIP MANAGEMENT

LTD FBME BANK LTD. IKEA (CYPRUS) KARDEX SYSTEMS LTD LIDL (CYPRUS) LUKOIL NCR NEST INVESTMENTS HOLDINGS CYPRUS LTD RUSSIAN COMMERCIAL BANK UNITEAM MARINE VTTI WEATHERFORD

INTERNATIONAL ...and many more

cover final.indd 19 29/05/2012 15:09

ISSN 1986 - 3543

John Vickers,Chief Editor

[email protected]

PUBLISHED BY IMH

Bad Timing

In my editorial of November 2011 I wrote: In the eight months of Golds existence there has not been a single issue of the magazine in which we have not commented on or dealt with the question of Greeces sovereign debt problem. Hopefully we can now forget about it for a few weeks or months as the markets give EU leaders credit for finally taking decisive action after more than a year of half-measures.

Some hope! The whole of the Economy section in this issue (pp. 76-85) deals with the various scenarios that could arise following the second elections in Greece in six weeks. It didnt matter that EU leaders finally took decisive action seven months ago because Greek voters showed that they wanted to kick out the parties that had agreed however unwillingly to the austerity measures being demanded in return for billions of euros that would prevent the country from going bankrupt.It is no surprise that the vast majority of Greeks want to retain the euro as

their currency but it is similarly no surprise that they feel that they have suffered enough and that they are being tempted by the easy promises of the parties that are telling them that they can have their cake and eat it too. If the pro-austerity parties succeed in getting their message across to the electorate, Greece may be able to remain within the eurozone. In Cyprus we should be hoping and praying for this because any other outcome will be disastrous for the island.It is ironic that this crisis should have developed at a time when, under different

circumstances, the Cypriots would have been euphoric about the economic pros-pects that the discovery of natural gas in the countrys Exclusive Economic Zone means. If only we could have discovered the gas 10 years ago, or the eurozone crisis could have been postponed for a decade.Bad luck? Bad timing? Whatever it is, the reality is that in 2020 we may have

begun to feel the effects of being a gas-producing/exporting nation but right now we are on the verge of financial meltdown and are desperately short of cash. In our special report on energy in this issue (pp. 51-69), we look at both sides of the gas is good argument and wonder whether the same people who have got us into the current mess have any hope of managing the enormous wealth that we are ex-pecting to gain. Bad timing again. We really need a new generation of politicians who will understand the countrys economic problems and put their resolution at the top of the agenda, not at the bottom.Next month Cyprus takes over the Presidency of the European Council for six

months in what is seen in Nicosia as a chance to prove its true worth to the rest of the world by hosting more than 100 meetings with the participation of more than 20,000 officials from all over Europe. The rotating presidency gives countries, especially smaller member states, the opportunity to network, to get to know the EUs institutions better, and to feel invested in the union. It was introduced to give every country big and small the chance to share both the glory and the administrative burden of running the European Union.This huge challenge comes at a time when Cyprus has what would, in other

countries, be referred to as a lame duck president: Demetris Christofias has already stated that he will not run for re-election in February. It comes at a time that sees the longstanding Cyprus issue still unresolved while the political parties scramble around for anyone willing to stand as a candidate, though the financial crisis has overshadowed any idea of reunification. And it comes at a time when the cash-strapped government has already taken over one of the big three banks and the new Governor of the Central Bank is talking about a possible EU bailout. Bad timing, extremely bad timing.


editorial.indd 8 29/05/2012 15:24

creo

9:Layout 1 5/30/12 10:13 AM Page 1

creo

UP FRONT


Audi acquires Ducati A udi AG recently acquired the Italian sports motorcycle manufacturer Ducati from Investindustrial Group. Ducati is known worldwide as a leading brand in motorcycle manufacture, with outstanding expertise in engine de-velopment and lightweight construction. Audi Chairman Rupert Stadler said that as one of the worlds most profitable motorcycle manufacturers, Ducati is an excellent fit for Audi. In 2011 Ducati, which employs around 1,100 people, sold around 42,000 motorcycles and generated revenue of 480 million.

Norwegian expressionist Ed-vard Munchs The Scream is now the most expen-sive artwork ever sold at

auction, after it fetched $119.9m (91.19) last month. The 1895 pastel was bought by an anony-mous buyer at Sothebys in New York. The work is one of four in a series by the Norwegian expres-sionist artist and was the only one still privately owned. Seven bidders were competing for the work, which had a starting price of $40m. The crowd broke into applause, following the sale on 2 May. The previous record for an artwork sold at auction was for Picassos Nude, Green Leaves, and Bust, which sold for $106.5m in 2010.The demand for Grade A art

far outstrips supply and top-end artworks have become a reliable and highly desirable investment. The five factors that affect an artworks value are rarity, reputa-tion of the artist, confidence in the market, condition of the artwork, and competition for the piece. It is this last factor that has powered the continued rise in prices. A few years ago Sothebys would have had bidders from 3-4 countries whereas now its 20 or 30.

PwC Cyprus and Abacus Ltd at NEW YORK CONFERENCELast month, PwC Cyprus participated in the Cyprus-US Chamber of Commerce conference in New York, which focused on geopo-litical and economic devel-opments in Cyprus and on how US multinational com-panies (MNCs) can benefit from these. Also participat-ing for the first time and representing Cyprus was Abacus Ltd. Presentations focused on Cyprus at-tractiveness as a reputable financial centre and on investment opportunities created by the discovery of natural gas. Nicos Chima-rides of PwC Cyprus noted that the required infrastruc-ture is being created for the exploitation of natural gas that will be exported to various markets, provid-ing substantial investment opportunities in the energy sector. The revenues from this process will con-tribute significantly to the economic development of Cyprus and, together with services, the two sectors are expected to drive the local economy for many years, he said.Constantinos Chiotis of Abacus Ltd explained that the services sector ac-counts for almost 80% of the countrys GDP. Rang-ing from classic front-end or specialised banking services, to professional services, shipmanage-ment, back-office and fiduciary services, Cyprus has concentrated heavily in the last few years on high-value added services that cater to foreign clients, he said. Given its proximity to the Middle East and North African (MENA) countries, its EU status, its highly skilled labour force and its security, Cyprus has also become a headquarter centre for firms doing business in MENA. This is where US firms can con-centrate, whether they are rebuilding, selling or drilling in the region.

Business Concept Award that celebrates womens spirit of innova-

tion and entrepreneur-ship has been launched by the Cyprus Network of Female Entrepreneur-ship Ambassadors in col-laboration with the Centre of Entrepreneurship of the Cyprus International Institute of Management (CIIM). The competition will give women, teams of women or teams led by a woman an opportunity to be mentored by the Networks Ambassadors in developing an innovative business idea. Contestants can submit their business concept proposals online in Greek or English by 9 July, 2012.The Cyprus Network of Female Entrepreneurship

Ambassadors was established in the

framework of the European Network of Female Entre-preneurship Ambassadors, which is co-funded by DG Enterprise and Industry of the European Commis-sion. The Network, which is coordinated by First Elements Euroconsultants Ltd in partnership with the Mediterranean Institute of Gender Studies, aims at emphasizing the impor-tance of the engagement of women in Cyprus in roles that are traditionally reserved by men. Its mem-bers are highly successful women entrepreneurs.For more information regarding the Competi-tions Entry Guidelines and the Cyprus Network of Female Entrepreneurship Ambassadors visit: www.femaleambassadors.org.cy or contact the project Co-ordinator (First Elements Euroconsultants Ltd) on 22875710 or by e-mail: [email protected]

BUSINESS CONCEPT AWARD FOR WOMEN

THE $120M SCREAM

A

news_briefing.indd 10 29/05/2012 12:09

creo

IRI Hellas Ltd.in affiliation with the Marshall Islands Maritime & Corporate Administrators

tel: +30 210 4294 404 | [email protected]

www.register-iri.com

The Marshall IslandsCorporate Registry

The leading jurisdiction for

Asset Management,

Vessel Ownership

Real/Intellectual Property Holdings

Initial Public Offerings/ Publicly Traded Companies

Corbis






Asset Management,

Vessel Ownership



Corbis






Asset Management,

Vessel Ownership



Corbis






Asset Management,

Vessel Ownership



Corbis






Asset Management,

Vessel Ownership



Corbis

EMIRATES VOTED CARGO AIRLINE OF THE YEAR

Emirates SkyCargo has been voted Cargo Airline of the Year and, for the 24th consecutive year, Best Middle East Cargo Airline. The carrier, which was also

named Best African Cargo Airline, received the accolades at the prestigious Cargo Airline of the Year 2012 awards held at Londons Lancaster Hotel. The awards are organised

by trade magazine Air Cargo News and attract votes from freight forwarders around the world. These awards are voted for by our in-dustry and their recognition of the continued success of Emirates SkyCargo is a great hon-our, said Ram Menen, Emirates Divisional Senior Vice President Cargo. Emirates Sky-Cargo currently serves over 120 destinations spanning six continents from its Dubai hub.

Left to right: (l-r) Jacqui McArthur,

Emirates Cargo Controller; Ram

Menen, Emirates Divisional Senior Vice President Cargo; Bill

McPherson, Emirates Airport Services

Manager London Heathrow; and Phil

Rawlings, Emirates Cargo Manager UK.

CyLaw Launch Acting on the principle if you want a good job doing, do it yourself, the Cyprus Bar Association has launched CyLaw (www.cylaw.org), its own online source of legal information comprising a complete inventory of the islands legislation and legal documents, Supreme Court decisions (from 1883), executive decisions, rulings by the Court of Justice of the European Union and more. Over 10 years in the making, the project was originated by Cypriot lawyer Laris Vrahimis and is now run by the Cyprus Legal Information Institute (CyLii) for the Cyprus Bar Association. Already a vast database, CyLii aims to add court decisions and legal documents on the day they are issued.Most of the information is in Greek but older Supreme Court decisions and EU court verdicts are also available in English.

Stelios Awards Ceremony on 18 June Five winning teams of Greek and Turkish Cypriot entrepreneurs will each be awarded 50,000 by Sir Stelios Haji-Ioannou at a ceremony on 18 June. The 2012 Stelios Award for Business Cooperation in Cyprus, now in its fourth year, is handed out by the Stelios Philanthropic Foundation.Since its inception in 2009, prizes have been received by a wide variety of teams from several

business sectors. In the first three years of the Award, Haji-Ioannou gave 750,000 annually in sponsorship, whilst this year the amount has been raised to 1 million and continues his promotion of business cooperation between Turkish and Greek Cypriot entrepreneurs.


creo

UP FRONT


Eurofast Taxand won the Cyprus Tax Firm of the Year 2012 award at last months Euro-pean Tax Awards organised by International Tax Review (ITR). It is the third time in the last 4 years that Eurofast has received the award.Zoe Kokoni, Director, International Business Division of Eurofast Taxand, received the award at a ceremony at the Dorchester Hotel

in London. In her acceptance speech she congratulated the members of the Eurofast Dream Team for their client support, dedica-tion, loyalty and commitment to excellence. The European Tax Awards reward firms in Europe for exceptional tax advice and their capabilities and innovation in the area of international tax planning.

A recent University of Oxford study has shown that $1 spent on investment promotion increases Foreign Direct Investment (FDI) inflows by $189 and that $78 spent on investment promotion creates an additional job by a foreign affiliate. It thus makes good business sense for governments to spend money on investment promotion activi-ties, which is the raison dtre of the Cyprus Investment Promotion Agency (CIPA). In a recent World Bank report on Global Investment Promotion Best Practices (GIPB) 2012, CIPA was ranked 5th out of 189 agen-cies worldwide in Inquiry Handling. This achievement is even more significant given that the report reveals that 80% of national investment promotion intermediaries (IPIs) fail even to respond to investor requests for

information, thereby costing their economies valuable opportunities to win FDI.The inquiry-handling assessment focused on four categories: availability and contactabil-ity, responsiveness and handling, the quality of the inquiry response, and customer care. Using a mystery shopper approach, GIPB 2012 assessed each IPI twice once with an agribusiness inquiry and once with a tourism inquiry. The surveys assessed each IPIs ability to respond to requests for information in a thorough and professional manner.The report notes that Inquiry-handling is at the core of investment promotion. It is one of the most important opportunities for an IPI to influence perceptions about a location and win investment projects. Unfortunately, for the majority of IPIs basic competency at inquiry-handling seems elusive.

INQUIRY-HANDLING: THE TOP 10 IPIS1. PRONicaragua (Nicaragua)2. Hungarian Investment and

Trade Development Agency3. Invest in Greece Agency4. Invest in Finland5. Cyprus Investment Promotion

Agency (CIPA)6. InvestHK (Hong Kong, China)7. ABAInvest in Austria8. Invest in Sweden Agency9. aicep Portugal Global10. Invest in Denmark

Zoe Kokoni, Director, International Business

Division of Eurofast Taxand (centre) at

the ITR European Tax Awards with Taxand representatives from

other countries.

EUROFAST TAXAND WINS TAX FIRM OF THE YEAR AWARD

CIPA ranks 5th in new GIPB survey


creo

15:Layout 1 4/27/12 3:28 PM Page 1

UP FRONT


Uncertainty in the equity markets and the global economy meant that the price of gold was hover-ing around $1,600 per ounce at the end of 2011 and it is still there, possibly disappointing those who predicted that it would reach $2,000 in 2012. The big-gest individual holders of gold, thought to account for approximately 16.5% (30,700 tons) of it, are Central Banks, international organisations and governments. According to the World Gold Council, which is the gold industrys key market development body, the Top 10 holders of gold are as follows:

UNITED STATES OF AMERICAVALUE OF RESERVES: $418.39 BILLION TOTAL HOLDINGS: 8,965.6 TONS The United States Bullion Depository in Kentucky (otherwise known as Fort Knox) is the most famous gold stockpile in the world. It holds the majority of the nations gold reserves, the remainder of which is held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office.

GERMANYVALUE OF RESERVES: $174.7 BILLION TOTAL HOLDINGS: 3,743.7 TONS According to the World Gold Council, Ger-manys gold coffers, owned by Germanys Central Bank (Deutsche Bundesbank), ac-count for 73.7% of its total foreign reserves.

THE INTERNATIONAL MONETARY FUNDVALUE OF RESERVES: $144.76 BILLION

TOTAL HOLDINGS: 3,101 TONS The International Monetary Fund (IMF) oversees international economic operations of 185 member countries. Its gold policies have changed in the last 25 years, but the reserves remain to stabilise international markets and aid national economies. In December 1999, the IMF sold a portion of its reserves to aid the Heavily Indebted Poor Countries Initiative.

ITALYVALUE OF RESERVES: $126.12 BILLION TOTAL HOLDINGS: 2,702.6 TONS The Banca DItalia manages Italys foreign reserves, which comprise the fourth largest gold reserve in the world and account for 73.4% of the countrys foreign reserves.

FRANCEVALUE OF RESERVES: $125.28 BILLION TOTAL HOLDINGS: 2,684.6 TONS The French Central Bank (Banque De France) is home to the countrys gold hold-ings, which comprise 71.8% of its foreign reserves.

SPDR GOLD TRUSTETF (GLD)VALUE OF HOLDINGS: $64.53 BILLION TOTAL HOLDINGS: 1,213.9 TONS Unlike other major gold holdings, this is one that investors can actually buy into. As the price of gold fluctuates, so does the value of the SPDR Gold Trust, also known the GLD. The fund held 38,845,889 ounces, or 1,213.9 tons of gold on June 30, 2011. Like many investors, the ETF has indicated that it has increased its holdings of gold since then.

CHINAVALUE OF RESERVES: $54.22 BILLION TOTAL HOLDINGS: 1,161.9 TONS The worlds most populated country has the seventh largest gold reserves but Chinas gold accounts for only 1.8% of its foreign reserves. With a population of 1.34 billion, the country holds about $40.46 worth of gold per person.

SWITZERLANDVALUE OF RESERVES: $53.5 BILLION TOTAL HOLDINGS: 1,146.5 TONS The Swiss National Bank conducts Swit-zerlands monetary policy and manages the countrys gold reserves which account for 15.8% of its foreign reserves, though this proportion has dropped in the past year.

RUSSIAVALUE OF RESERVES: $44.8 BILLION TOTAL HOLDINGS: 960.1 TONS The Central Bank of the Russian Federation is in charge of the countrys 960.1 tons of gold, which comprise 9.2% of the countrys foreign reserves. In 2010, the country overtook Japan in total holdings, adding more than 140 tons to its stockpile in that year alone. Russia contin-ued to buy gold in 2011, purchasing 4.9 tons in July, according to the IMF.

JAPANVALUE OF RESERVES: $39.36 BILLION TOTAL HOLDINGS: 843.5 TONS Overseen by the Bank of Japan, the coun-trys gold reserves account for only 3.5% of its total foreign reserves.

INTERCOLLEGE GLOBALTRAINING

Intercollege Globaltraining is the new identity that the Professional Studies Department of Intercollege/University of Nicosia is adopting for its operations in Cyprus and abroad. It marks the culmination of more than twenty years of hard work and the merger in 2012 of the business units in Cyprus (Intercollege), Greece (Globaltraining) and Romania (IntercollegeIBS) into a global professional organisation capable of meeting all its clients professional training needs. With continuous growth

and change taking place in the business world, more and more organisations are paying attention to the skills and abilities of their staff. Professionals are constantly faced with increasing expectations regarding quality and standards; employee knowledge and skills are, therefore, considered to be critical aspects for any organisation wishing to gain a competitive advantage. Intercollege Globaltraining is hosting a series of events throughout June to celebrate its new identity and to inform students and corporate clients about the benefits they can expect through their new website (www.globaltraining.org) and new study options (Live-On-Line).

WHO OWNS THE MOST GOLD?


creo

CM

Y

CM

MY

CY

CMY

K

Gold May 2012.pdf 1 4/26/12 8:39 AM

creo

UP FRONT


Stavros Pantzaris (Partner Ernst & Young Cyprus Ltd)

Constantinos Yiorkadjis (Mayor of Nicosia)

Dan O Brien, John Walker, Theodoros Parperis and Fiona Mullen

Marios Loucaides, Michalis H. Hadjikyriacos (Alkis H. Hadjikyriacos Frou Frou Biscuits Public Ltd Managing Director)

and Marios Savvides (General Manager of Piraeus Bank Cyprus Ltd)

Christos Mouskos (Alpha Bank Senior Credit Manager), Stelia Chrysostomou, Dinos Demetriou (Alpha Bank Stores Manager) , Marios Economides, Irene Charitou (Alpha Bank Marketing Manager)

Manthos Delis, Savvas Savouri, Theodoros Parperis, Louis Christofides and Jim Dorgan

Polys Michaelides (General Manager Laiki Cyprialife Ltd) Emilios Trannousis (Asset Fund ManagerLaiki Bank), Petros Petrides (Director IFG Trust Cyprus Ltd)

Elena Mouzouri and Elia Koliandri

George Louca (CFO Cyprus Trading Corporation), Constantinos Meivatzis (Director IFG Trust Cyprus Ltd)

Fani Pedoulou (Head of Sales TFI Markets) and Maria Theodorou (Executive Director

TFI Markets)

THE COSTS OF THE EURO-ZONES DISINTEGRATION ARE EXTREME, IT HAS NO CHOICE BUT TO SURVIVE AS IT IS GIVEN THE ALTERNATIVES.ERIC BRITTON, DIRECTOR, FATHOM CONSULTING

GOVERNMENTS WILL DO WHAT NEEDS TO BE DONE ONCE THE HORROR OF WHAT OTHERWISE AWAITS SINKS IN.JOHN WALKER, CHAIRMAN, OXFORD ECONOMICS

NICOSIA ECONOMIC CONGRESSCHALLENGING TIMES AHEAD Prominent business, community and academic leaders gathered at the Hilton Park Hotel in Nicosia on 23 May to discuss crucial issues affecting the Cypriot economy.

news_briefing2.indd 16 29/05/2012 14:08

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS Gold 17

Dan O Brien, John Walker, Theodoros Parperis and Fiona Mullen

Marios Loucaides, Michalis H. Hadjikyriacos (Alkis H. Hadjikyriacos Frou Frou Biscuits Public Ltd Managing Director)

and Marios Savvides (General Manager of Piraeus Bank Cyprus Ltd)

Christos Mouskos (Alpha Bank Senior Credit Manager), Stelia Chrysostomou, Dinos Demetriou (Alpha Bank Stores Manager) , Marios Economides, Irene Charitou (Alpha Bank Marketing Manager)

Michael Pilos (TFI Markets Marketing Communications Manager, Margarita Xenofontos, Georgia Papadopoulos (TFI Markets Sales Manager), Thanos Vasileiades (TFI Markets Chief Operating Officer), Anna Antoniades, Stephanos Panayiotides (TFI Markets Sales Manager)

Congress Organisers: Gold & ICPAC. Congress Coordinator: IMH. Main Sponsor: Alpha Bank. Gold Sponsors: Deloitte, Ernst & Young, KPMG. Silver Sponsors: Abacus, InterTaxAudit, Nexia Poyiadjis, TFI Markets. Telecommunication Sponsor: Cablenet.

Erik Britton (Director of Fathom Consulting), Christos Rotsas (Managing Director of Rotsas & Co Ltd) and

Christos Kyriakides (ICPAC Operations Director)

Manthos Delis, Savvas Savouri, Theodoros Parperis, Louis Christofides and Jim Dorgan

Polys Michaelides (General Manager Laiki Cyprialife Ltd) Emilios Trannousis (Asset Fund ManagerLaiki Bank), Petros Petrides (Director IFG Trust Cyprus Ltd)

THE CYPRUS GOVERNMENT SHOULD GO TO THE EU NOW TO ARRANGE A STANDBY FINANCING FACILITY JUST IN CASE GREECE DOES EVENTUALLY LEAVE THE EURO. THIS IS MUCH BETTER THAN BEING FORCED TO DO THIS IN A HURRY AND RISK POSSIBLE BANK RUNS THAT MAY ENSUE.FIONA MULLEN, DIRECTOR, SAPIENTA ECONOMICS

WHAT WE WILL SEE ACROSS EUROPE IS MASSIVE DE-POPULATION AS JOBS AND OPPORTUNITIES DRY UP... AND LEAVING THE EURO FOR GREECE IS NOT A PANACEA, ITS A DEATH SENTENCE.SAVVAS SAVOURI, CHIEF ECONOMIST, TOSCAFUND ASSET MANAGEMENT

news_briefing2.indd 17 29/05/2012 14:08


INTERVIEW

A new generation of leaders on both sides of the divide could make a difference

Few people would disagree with your call (in your new book Creative Cy-prus) for a new economic model based on concepts such as renewable/sustain-able resources and innovation but what needs to be done to implement them?The book goes beyond renewable resources. It argues that sustainabil-ity should be at the heart of our socio-economic planning; it is the way to have an economic model that creates jobs for young people and improves the quality of life for all. And there are some concrete proposals: for instance, I argue for the adoption of an Environmental Contract by the political parties with indices that will guide public policy; the adoption of green taxation; the establishment of a Knowledge Region in Nicosia. By simply looking at GDP growth we are mis-measuring our lives to quote the Nobel laureates Amartya Sen and Joseph Stieglitz who have influenced my think-ing quite a bit. The book stops short of proposing a political programme but the ideas are concrete and can be easily con-verted into a medium-term policy plan. The book is a compass, not a map.

Similarly, few would disagree that something needs to be done about the public service (except, perhaps, those working in it). Do you think that a future government will have the courage to take drastic action or does Cyprus need to be obliged to do so by the terms of an EU bailout?Let me put it bluntly: it will be absolutely inexcusable if reforms are forced upon us instead of us taking the initiative. Look at the trap Greece fell into. We should avoid slipping down the same slope. Reform of the state will be part of the debate for the upcoming presidential elections and my goal with the book is to contribute to this debate. I do believe that the next govern-ment will act much more decisively, with more professionalism and a greater sense of responsibility than in the past.

You say that we need a better state. Is it going to be forced upon us or can Cyprus again re-create itself as it did in 1974?The difference, as I see it, from 1974 is that then we were forced to act. A catastrophic war pushed us into action. Now we must find the strength and the motivation and the vision inside us. Our society is dissatis-fied with the current state of affairs. The aim of the book is to turn this into creative dissatisfaction, not let it simmer, confuse us and lead us to a point of no return.

How confident are you that the islands politicians and authorities are capable of handling the revenues from natural gas in a responsible manner?Frankly, not at all. And I can substanti-ate this. See, for instance, the lack of adherence to the GRECO report of the Council of Europe on party financing. Dont they see the temptation for corrup-tion when party people are appointed to the boards of the enterprises managing our natural gas while foreign companies can make donations, even secretly, to their parties? And look at the experience with the appointments of board members without any expertise or experience in the institutions they are managing on our behalf. Not very bright prospects I would say. We need to change the mindset and this is the message repeated over and over again in the book.

You say that for some, the Cyprus Problem has become a professional career. If these people have an inter-est in prolonging the division, do you believe that it can be resolved by a new generation of Greek and Turkish Cypriot politicians?We should not underestimate the role of Turkey in this conflict and start self-flagellation. Ahmet Davutoglu has explicitly said that Turkey wants to keep the Cyprus issue open. But yes, I do believe that a new generation of leaders on both sides of the divide could make a difference. The EU provides many means for finding a solution that is workable and fair for both sides, and natural gas can be used to increase our influence in Europe so that, in turn, it puts pressure on Turkey. This could be our stick. At the same time it is a carrot for our Turk-ish Cypriot compatriots but we should be explicit and precise about this and not simply make vague references.

Creative Cyprus: Political reforms for Cyprus in the 21st century is available only in a Greek-language edition at present.

STAVROS A. ZENIOS, President of the Rectors of the Universities of the European Capitals and author of Creative Cyprus:

Political reforms for Cyprus in the 21st century

five minutes with...

five_min_zenios.indd 18 29/05/2012 12:10

creo

19:Layout 1 5/29/12 5:26 PM Page 1

OPINION

As the implausible turns into the inevitable, a growing number of proponents are arguing that a Greek exit might even be desirable

Contagion in the Eurozone?A Greek exit would place Cyprus at risk but the danger to the EU is far greater

info: Adam Emilianou is a Partner at Chrysses Demetriades & Co. LLC

The economic crisis runs deep in Europe and is getting worse. Marked by government deficits, plunging stock mar-kets, unemployment and social unrest, it is threatening the

stability of the euro and straining the fabric of the European Union itself. These problems were not wholly unexpected.

The Maastricht Treaty, which created the framework for the European Union, was built on weak foundations among a group of strik-ingly different (in terms of history and culture) and often quarrelsome sovereign states. From the outset there was a one-size-fits-all monetary policy and a lack of coordinated, centralised fiscal policy within the Union. These potential problems were largely

ignored by the Maastricht Treaty but it was generally believed that any crisis would actu-ally lead to greater European integration. This has been shown to be right to a certain extent. The recent bailout of countries such Ireland and Greece, the establishment of a financial stability mechanism and the purchase of gov-ernment bonds by the European Central Bank are all evidence of greater European integra-tion and coordination. Unfortunately, this is set against a backdrop of nationalist politics amongst member states that is preventing further integration. At the centre of all this is Greece, whose

odds of exiting the euro are shortening by the day. After five long years of recession, the Greeks are suffering from austerity fatigue. An inconclusive outcome of the first election on 6 May has led to an interim government, and the scheduling of another election on 17 June. An election result signalling a rejection of Greeces austerity programme will almost certainly result in Greeces departure from the eurozone and even the EU. But if Greek banks continue to suffer mass runs, as deposi-tors withdraw their euros for fear that they will be forcibly converted into new drachmas, Greeces fate could be sealed even sooner.As the implausible turns into the inevitable,

a growing number of proponents are arguing

that a Greek exit might even be desirable. They argue that the only solution for Greece is to exit the eurozone to allow its economy to get a boost from a depreciation of its newly-created currency. However, the moment the deprecia-tion of its new currency occurs, Greece will be poorer as all its imports (such as oil) will be more expensive. How will this impact eco-nomic growth? Without a disciplined monetary policy and bold structural reforms to retain the gains from its cheaper currency and to avoid hyperinflation, the situation in Greece will be as bad as or worse than it is today. The direct financial costs of a Greek exit to

the countrys creditors are estimated by Daiwa Capital Markets to be in excess of 350 bil-lion. While these losses seem manageable, they are, of course, only the direct costs. A Greek exit is likely to have a material impact on growth and confidence elsewhere, delivering large and potentially damaging losses in terms of lost economic output and lower asset prices in other parts of the eurozone. The country most obviously at risk is Cy-

prus, whose banking system is closely linked with that of Greece. Ratings agency Moodys estimates that a Greek euro exit would result in Cypriot banks incurring losses of more than 9 billion, approximately 50% of the coun-trys GDP. Even without a Greek exit, the Cyprus governments finances are stretched with fears that the cash-strapped government may need to step in to bail out the large bank-ing sector. The government has already agreed to underwrite the 1.8 billion rights issue of Cyprus Popular Bank required to bolster its regulatory capital after it was unable to raise the funds privately. Whats more, the Cyprus economy is struggling to find its way out of recession, with the IMF projecting that this year the economy will shrink by 1.2% and unemployment will rise to 9.5%. Ultimately, Cyprus is a small economy and

could easily be rescued if the need arose. The real danger is if contagion spreads to other big-ger countries such as Italy or Spain, which may eventually cause the breakup of the European Union itself.

By Adam Emilianou


opinion_adam.indd 20 29/05/2012 12:11

creo

6,50%Your deposits sky high. term deposit scheme

5,27% average annual interest rate

usbQuadra - TD is the 24month deposit scheme, which pays

interest every 6 months, and offers, not only security and

safety but also high and fixed rates.

Minimum deposit amount 50,000 Deposit duration 24 months Payment of interest at the end of each tier, in a current or savings account of your choice

Withdrawal option of the total capital amount, at the end of each tier, without penalty

Available for new deposits only Rate starts from 4,25% on the 1st tier, and ends with 6,50% on the last tier Average annual interest rate 5,27% (at the end of the 4th tier)

1st tier 2nd tier 3rd tier 4th tier interest rate interest rate interest rate interest rate

1st-6th month

4,25% 4,75% 6,50%

7th-12th month

13th-18th month

19th-24th month

5,60%

The bank reserves the right to terminate or alter this product at its discretion

For more information on the product, visit one of theUSB Bank branches

up to

Started in 1925 to evolve in 2009 to USB Bank PLC and in 2011 to become a member of the International BLC Bank - FRANSABANK Group. With an innovative and dynamic approach, USB Bank aims to support its customers with integrity and professionalism, offering flexible solutions tailored to their traditional and newly formed needs.

W E D E L I V E R W H AT M AT T E R S

www.usbbank.com.cy | 8000 2323

creo

FOREIGN DIRECT INVESTMENT: An investment made by a company or entity based in one country, into a company or entity based in another country. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies.

THE DISCOVERY OF GAS RESERVES OFF CYPRUS HAS CREATED A NEW IMPETUS FOR FOREIGN COMPANIES WISHING TO INVEST IN THE NEW INDUSTRIES THAT ARE CERTAIN TO DEVELOP OVER THE NEXT FEW YEARS. HOWEVER, THE ISLAND HAS BEEN ATTRACTING FOREIGN DIRECT INVESTMENT FOR SEVERAL DECADES NOW AND ON THE FOLLOWING PAGES WE PAY TRIBUTE TO SOME OF THE COMPANIES THAT HAVE LED THE WAY IN HELPING TO PUT CYPRUS ON THE FDI MAP AND PLAYED THEIR PART IN BOOSTING THE ISLANDS ECONOMY AND INTERNATIONAL IMAGE. WE ALSO SPOKE TO KEY REPRESENTATIVES OF NINE FIRMS THAT HAVE CHOSEN TO INVEST IN CYPRUS. By Costa Ioannides


to invest in CyprusALPARI FINANCIAL SERVICES LTD. AMDOCS DEVELOPMENT CENTRE

ASBIS ENTERPRISES PLC BANCA TRANSILVANIA BOUYGUES BATIMENT INTERNATIONAL CARREFOUR COLUMBIA SHIP MANAGEMENT

LTD FBME BANK LTD. IKEA (CYPRUS) KARDEX SYSTEMS LTD LIDL (CYPRUS) LUKOIL NCR NEST INVESTMENTS HOLDINGS CYPRUS LTD

RUSSIAN COMMERCIAL BANK UNITEAM MARINE VTTI WEATHERFORD INTERNATIONAL ...and many more

cover_story.indd 22 29/05/2012 16:30

creo


With a highly educated workforce, attractive tax rates, a strategic location and now offshore hydro-

carbon resources, Cyprus is attracting an increasing number of foreign investors.Despite four years of sustained eco-

nomic turbulence, Foreign Direct Invest-ment (FDI) into Cyprus has remained at enviable levels. Thanks to a great extent to the islands comprehensive network of double tax treaties and its EU and euro-zone membership, FDI reached a peak of 2.5 billion in 2009. Although FDI inflows have fallen since then, Cyprus is now bracing itself for a massive wave of infrastructure development activity as global energy giants such as ENI, Total, and ENEL line up to secure rights to the islands newly-discovered offshore hydro-carbon resources. Cyprus favourable tax regime is,

without doubt, a major reason why Cy-prus is attractive to foreign investment and to companies seeking to establish an international base for outbound investment into other jurisdictions. Given that Cyprus corporate tax rate of 10% is one of the lowest in the Euro-pean Union (with no withholding tax on dividends for non-resident compa-nies), when combined with attractive labour costs its understandable why many foreign investors have found the island to be a winner. More than 50 double tax treaties have also reinforced the countrys position as a commercial bridge between the European Union and the wider MENA (Middle East, North Africa) region. Cyprus currently hosts over a quar-

ter of a million domestic and foreign companies. Global corporate giants with a significant presence on the island in-clude Lukoil and IKEA as well as a range of banks such as Alpha Bank, Piraeus Bank, Socit Gnrale and the Rus-sian Commercial Bank. New overseas companies making major investments in Cyprus over the past year alone include Romanias Banca Transilvania, Greeces Fourlis, the Dutch Group Vitol, and Germanys Schwarz Beteiligungs Group and the low-price grocery retailer Lidl.

Major Projects & SectorsAVIATIONDue to the successful transition of key state-owned assets to private interests through a system of Build-Operate-Transfer (BOT) agreements, the islands two international airports have recently been developed by a consortium of pri-vate companies including Bouygues Bti-ment International and Egis of France.

expected to originate from the oil and gas extraction and processing sector. Preliminary results released at the end of 2011 by the US giant Noble Energy indicated the detection of 5-8 trillion cubic feet of gas during its exploratory drilling operations in Cyprus offshore Block 12 alone, enough for Cyprus do-mestic consumption and lucrative export possibilities. Further multi-billion euro investments are expected in the coming years as Cyprus prepares to fully exploit and commercialise its offshore hydrocar-bon resources through the construction of LNG plants, pipelines, and methanol and oil product storage facilities.

Oil & GasThe new private oil storage terminal built by Vitol Tank Terminals Vasiliko (VTTV), a Cyprus subsidiary of the Dutch-based Vitol Tank Terminals Inter-national (VTTI), is due for completion by the end of 2013. The 200 million state-of-the-art oil product terminal facil-ity at Vasilikos will create of an estimated 1,000 new jobs during its construction and upon completion. The government has also embarked on the construction of an Energy Centre, planned for completion in 2013, for the storage of various fuels, including oil and natural gas, which, it believes, will assist in transforming Cyprus into a regional energy hub.

The Cyprus Investment Promotion Agency

As a government-funded organization, the Cyprus Investment Promotion Agency (CIPA) is responsible for attracting FDI to Cyprus, and providing aftercare services to investors. CIPA has direct access to ministries, government departments and stakeholders, with the ability to influence fast-tracking setup requirements if and as needed, and to provide investor aftercare services once the investor has established a presence in Cyprus. A one-stop shop was also recently opened in order to simplify the administration of enquiry procedures for local and international investors. As a result, investors and businesses now need only get in touch with one department to secure nearly all their required permits.

Cyprus attracted

1.7 billion in FDI inflows during the first three quarters of 2011TOURISMSimilar agreements have also been instrumental in the construction of the first of four new marinas, with Limassol Marina due for completion by the end of 2012. At an estimated cost of 360 million, the project incorporates luxury residences, boutiques, restaurants and shops within the marina itself, attract-ing more high-end tourists and captur-ing a bigger share of the Mediterranean yachting market. Three more marina complexes are also planned for Larnaca, Agia Napa and Paphos.

Limassol MarinaUsing a PPP (Public Private Partnership) arrangement which incorporates a long-term leasing arrangement, the companies participating in the development of the new Limassol Marina are Cybarco Plc, Francoude & Stephanou Ltd, J&P Avax, Joannou and Paraskevaides Ltd, Athena SA, CADS Holdings Ltd and Limassol Marina Development Co Ltd.

ENERGYThe biggest source of inward investment into Cyprus over the coming years is


to invest in Cyprus

COVER STORY

cover_story.indd 23 29/05/2012 16:30

creo


ALPARI FINANCIAL SERVICES LTD.Alpari Financial Services Ltd (Alpari FS) is part of the Alpari Family of Companies (Alpari) which was founded by three aspiring financially-minded individuals in 1998. Alpari has been offering online trading

services to both retail and corporate clients all over the world for more than 14 years and allows clients to trade financial products, such as Forex, CFDs on commodity futures, ETF CFDs, currency futures and options through multiple state-of-the-art trading platforms. Alpari

FS opened its headquarters in Limassol in 2010.

AMDOCS DEVELOPMENT CENTRE Amdocs (AMerican Directories Operations & Computerized Systems), one of the worlds leading high-tech companies,

has been in Cyprus for ten years. The Amdocs Development Centre in Cyprus, which was established in 1997, currently employs approximately 750 people programmers, finance and operations staff supporting additional Amdocs locations in Central and Eastern Europe.

Demetris KouloundisDIRECTOR OF SALES - MEA, BALKANS & RUSSIA, KARDEX SYSTEMS LTD.

Gold: What were the key factors that motivated Kardex Systems Ltd to seek to establish a presence in Cyprus? Demetris Kouloundis: The decision to lo-cate the overseas Kardex division in Cyprus back in 1977 was influenced by the islands strategic geographical location to serve our overseas markets and the friendly but ef-ficient business environment. Other factors that influenced the Boards decision were the legal and accounting framework which is based on the English system, the availabil-ity of well-trained and versatile manpower as well as the tax-effective regime.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? D.K.: Setting up an operation in Cyprus is a straightforward process as the different government departments try to provide all possible support, to expedite the process and encourage new international business to the island.

Gold: What are the advantages and dis-advantages of sourcing employees locally?D.K.: International companies can very easily source employees from the local workforce with the great advantage that they are internationally educated, qualified to high international standards and have no language or cultural barriers.

Gold: Is there an area in which you would like Cyprus to improve as a busi-ness and services sector location? D.K.: As an international business and service sector location, we would expect cer-tain improvements such as extended flight coverage by the national carrier, Cyprus Airways, to main Gulf business destina-tions such as Saudi Arabia. The government needs to reform and further modernize the public sector and it must also take steps to prevent unnecessary industrial disputes which have a negative impact on interna-tional business, such as the recent strikes by air traffic controllers.

Electricity2010 saw the establishment of the islands first-ever 82 MW wind park. A second (22 MW) is already in operation and a third (33MW) has been construct-ed. A number of smaller wind turbines of 0.8MW each are due for commission-ing this year. The new wind parks will contribute to Cyprus efforts to live up to its EU obligations to have 13% of its energy produced by Renewable Energy Sources by 2020.

In another development, Cyprus, Greece and Israel have committed themselves to conducting a feasibility study for a project that will seek to connect Israel to the EU electricity market by submarine cable via Cyprus and Greece. The idea of the EuroAsia Interconnector, initiated by PPC Quantum Energy, is expected to cost about 1.5 billion and will have the ca-pacity to transmit 2,000 MW of electricity along its east-west cable, selling the Israel Energy Corporations excess generation to Cyprus and other buyers in the EU.

FINANCIAL SERVICESAs a reputable world-class financial services centre, Cyprus succeeded in attracting just under 1 billion from international financial service companies in 2009-2010. Increasing numbers of international banks such as Barclays Wealth, Socit Gnrale and Russian Commercial Bank have established a presence in the Republic in recent years, along with a multitude of investment specialists, fiduciary and foreign cur-rency (Forex) trading companies.

RESEARCH, TECHNOLOGY AND COMMUNICATIONSInvestment in research and technology has been encouraged in Cyprus using a grass-roots approach through the estab-lishment of key academic organisations such as the Cyprus Institute (2005) and the Cyprus University of Technology (CUT) in 2007, the former enjoying links to world-class research institutes anddedi-cated research centres focusing on energy, environment and water, computation-based science and technology, while the CUT focuses on geotechnical sciences and the environment; engineering and technology; health sciences, manage-ment and economics and applied arts and communication. Meanwhile, plans for a Technology Park and the promotion of specialized incubators are in the pipeline, designed to offer a range of opportunities for R&D investment.

SHIPPINGWith more than 1,000 registered vessels and 130 ship-owning, shipmanagement and shipping-related companies collective-ly controlling a fleet of 2,300 ships with a 46 million gross tonnage, Cyprus already lays claim to having the third largest ship-ping fleet in the EU and the tenth largest worldwide. With a recent EU-approved tonnage tax system, the islands position has been significantly bolstered as the larg-est shipmanagement hub in the EU and the largest crew management centre in the world. Leading shipping companies with a presence in Cyprus include Columbia Ship Management, Interorient Navigation, Uniteam Marine and Reederei Nord.

Cyprus is 8th in the world for inward FDI performance according to the World Investment Report 2011 of the United Nations Conference on Trade and Development (UNCTAD)

COVER STORY

cover_story.indd 24 29/05/2012 16:30

creo

Setting up an operation in Cyprus is a straightforward process


The Centre focuses on the development of new industry leading products, as well as enhancements and upgrades to existing offerings.

ASBIS ENTERPRISES PLCASBIS is a leading distributor of IT products in the fast-growing markets

of Central and Eastern Europe, the former Soviet Union, the Middle East and North Africa. The companys revenues reached almost $1.5 billion in 2008 arising from its operations in 26 countries and sales to more than 75 worldwide. In 1995 the company moved its headquarters to Cyprus. The company currently employs

over 1,000 people, of whom about 100 are in Cyprus, mostly in the finance, administration, logistics and sales departments managing global operations.

BANCA TRANSILVANIA The Romanian banking group Banca Transilvania established

a presence in Cyprus in October 2007. With over 1.35 million corporate and private clients, the bank has over 6,000 employees. Banca Transilvanias shareholders include the European Bank for Reconstruction and Development, Bank of Cyprus and the International Finance Corporation.

Demetris Kouloundis

cover_story.indd 25 29/05/2012 16:31

creo

COVER STORY

Gold: What were the key factors that motivated Nest Investments Holdings to seek to establish a presence in Cyprus? Mehran Eftekhar: Location, ease of access, the labour force, communication facilities, the legal structure, the language, cost, taxation and the holding company regime.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? M.E.: When we set up in Cyprus in 1990 the processes were straightforward. Now, due to EU and other regulations, things are more complicated but still not too cumbersome

Gold: What are the advantages and disadvantages of sourcing employees locally?M.E.: Local employees are highly educated and most are very motivated. A range

of HR positions is available but in some special areas, such as doctors and medical support staff, obviously a wider EU speciality is required.

Gold: Is there an area in which you would like Cyprus to improve as a business and services sector location? M.E.: Flights to and from Cyprus by a more dynamic airline are needed. There should be easier access to immigration and visa processes, better control of costs, better quality tourism and a more dynamic promotion of the Island as a business centre.

Gold: What are your future plans for your operations in Cyprus? M.E.: Apart from being a major investor in the planned Limassol Oncology Centre, we are planning to expand our insurance and reinsurance operations in the region and to build an iconic World Trade Center Tower.

Dirk Fry CEO, COLUMBIA SHIP MANAGEMENT LTD.

Gold: What are the advantages and dis-advantages of sourcing employees locally?D.F.: The high level of education and good knowledge of the English language, a willingness to work hard and employee loyalty are some of the characteristics of the local workforce. The initial lack of specialized knowledge in certain technical shipping areas has been bridged to an extent through training and specialised study but a quite substantial number of expatriates still have to be employed to fill the gaps in the technical fields of shipping. This is mainly due to the fact that Cypriots do not chose a seagoing career, even today, when unem-ployment has risen considerably.

Gold: Is there an area in which you would like Cyprus to improve as a busi-ness and services sector location? D.F.: There is always room for improve-ment and, through the Cyprus Shipping Chamber (CSC), the shipping community has been active in bringing the relevant issues to the attention of each and every government. Cooperation with all gov-ernmental departments and officials has been excellent and a lot has been achieved over the years. It is, therefore, important to keep all what has been achieved and, in particular, the current taxation system. The government should also consider the shipping communitys proposal, officially made by the CSC during its last AGM, to appoint an Under-Secretary for Shipping under the President of the Republic who will be able to look at the increasing issues surrounding shipping not only locally but internationally as well.

Gold: What are your future plans for your operations in Cyprus? D.F: We shall continue to be here, offering professional and quality services to our worldwide clients.

John Hadjiparaskevas MANAGING DIRECTOR, UNITEAM MARINE

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? J.H.: We have always enjoyed excellent local and international support though the network of professionals available in Cyprus. Our lawyers, accountants and bankers contributed to ensuring the smooth setup and running of our operations. The strong support of all Cyprus administrations for the maritime industry has also greatly contributed to tackling legislative, tax and other industry issues to ensure smooth sailing for our companies.

Gold: What are the advantages and disadvantages of sourcing employees locally?J.H.: The availability of highly-educated staff and professionalism apparent in the local workforce has always been the main advantage of sourcing employees locally. Furthermore, the ease in using English as a business language is a significant advantage.

Gold: Is there an area in which you would like Cyprus to improve as a business and services sector location?J.H.: Cypriot tax legislation must remain competitive and the new tonnage tax regime be safeguarded.Additionally, it will be very beneficial to ensure the continuous upgrading of the technology used in all public sector services. Finally, the successful lifting of the Turkish embargo will contribute greatly as it certainly hinders maritime growth in Cyprus.

Mehran Eftekhar FCA, GROUP HEAD OF CORPORATE SERVICES & FINANCE DIRECTOR, NEST INVESTMENTS HOLDINGS (CYPRUS) LTD


BOUYGUES BTIMENT INTERNATIONAL Bouygues Btiment International is one of the worlds leaders in the building, civil works and electrical contracting and maintenance sectors. Since the successful completion of Cyprus two new iInternational airports, Bouygues

Btiment International decided to set up a permanent branch in Cyprus in order to play a predominant role in the revitalization of the Cypriot construction industry.

CARREFOUROver the past 40 years, the Carrefour Group has grown to

become the worlds second-largest retailer and the largest in Europe as well as one of the worlds leading distribution groups. In Cyprus, the trade name Carrefour made its first appearance in 2005. Today there are 7 hypermarkets in Cyprus, with stores in every town.

COLUMBIA SHIP MANAGEMENT LTDColumbia Shipmanagement Ltd., established in Limassol in 1978, has become a leading player in the shipping sector, respected for its pioneering efforts in the implementation of safety of life at sea and safe ship and cargo

cover_story.indd 26 29/05/2012 16:31

creo

The government should consider the shipping communitys proposal to appoint an Under-Secretary for Shipping


operations as well as being a leading proponent in the fight against pollution and other environmental hazards.

FBME BANK LTD.Originally established in Cyprus in 1982 as a subsidiary of the Federal Bank of Lebanon SAL,

FBME is a commercial bank with a heritage of banking experience in Europe, Africa and the Middle East, specializing in cross-border transactions and commercial trading activities. The bank serves international companies and individuals from over fifty countries.

IKEA (CYPRUS)To the delight of home DIY enthusiasts on the island, the low-price home furnishings store IKEA opened its first 22,000 square metre outlet in Nicosia in September 2007 within the busiest commercial square mile on the outskirts of Nicosia.

Cyprus was the 37th country in the world to host an IKEA store.

KARDEX SYSTEMS LTDKardex Systems is a leading international provider of tailored solutions for automated storage, materials handling and retrieval. Cyprus has been the home of the

Dirk Fry

cover_story.indd 27 29/05/2012 16:31

creo

companys Overseas Division since 1980. The Cyprus head office is also responsible for the opening up of new markets and the management of Kardexs direct operations in Greece, Singapore, Malaysia, India and China.

LIDL (CYPRUS)Lidl is one of the major grocery

retailers in Europe, having opened its first store in Germany in 1973. In the 1980s, the Lidl discount concept spread across Germany and then, in the 1990s, internationally. Lidl currently operates over 8,200 stores in over 24 countries and, in November 2010, it

opened outlets in 7 locations in major towns across Cyprus, significantly changing the retail sector landscape of the island.

LUKOILThe Russian oil company Lukoil commenced commercial activities in Cyprus at the beginning of 2002 as

Lukoil Cyprus Limited, purchasing 16 existing petrol stations from BP Cyprus and ExxonMobil. Ten years on, and following the renovation of old stations and the construction of new ones, the company operates 31 stations across the island and controls around 12% of the market for petroleum products in Cyprus.


COVER STORY

Gold: What were the key factors that motivated Alpari Financial Services Ltd. to seek to establish a presence in Cyprus? George Giannoulakis: Alpari Financial Services Ltd (Alpari FS) was set up in Cyprus because of its friendly business environment, well-developed infrastructure and tax incentives. Cyprus has also become a well-known hub for the Forex industry and it covers our strategic plans for development. Cyprus strategic geographic location is ideal for service-type activities such as ours.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? G.G.: Like any new endeavour it was challenging. We did not achieve what we have today without overcoming challenges its inbred in Alparis nature! Weve been pleasantly surprised with some aspects, whilst there is certainly room for improving efficiency in other

aspects. Overall, it has been a positive experience.

Gold: Is there an area in which you would like Cyprus to improve as a business and services sector location? G.G.: Although, at present, various efforts are being made and initiatives taken to market and promote Cyprus, these efforts need to be further enhanced. A clear and focused message of what Cyprus has to offer needs to be better communicated at all levels of the economy, in both the public and private sectors.

Gold: What are your future plans for your operations in Cyprus? G.G.: We wish to grow our operation in a steady, consistent and level-headed manner by cementing Alpari FS presence and active participation in Cyprus. We are excited about a number of projects in the pipeline and look forward to announcing them as and when they come to fruition. Keep watching this space There are exciting times ahead!

George Giannoulakis CEO, ALPARI FINANCIAL SERVICES LTD.

George Flouros AREA VICE PRESIDENT, EAST MEDITERRANEAN MIDDLE EAST AFRICA, NCR CORPORATION

Gold: What were the key factors that mo-tivated NCR to seek to establish a pres-ence in Cyprus? George Flouros: The favourable business climate, the excellent telecommunications infrastructure, the well-educated and skilled human resources, favourable tax rates and the islands proximity to the Middle East and Africa markets were among the key factors that motivated NCR Corporation to establish its regional offices to Cyprus. The NCR Middle East region was established in 1986 and in the mid-1990s, the Cyprus of-fice expanded its business to include African and Eastern Mediterranean countries. Al-though a small part of the NCR world, the NCR Middle East/Africa region consti-tutes a significant contributor to the NCR Corporations financial results. NCR cur-rently employs more than 100 highly skilled professionals in Cyprus.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? G.F.: The process of setting up NCRs headquarters for Middle East/Africa area

in Cyprus was straightforward and no un-foreseen difficulties were experienced. The whole process was relatively quick and this was facilitated by the great support extended by the various government offices here.

Gold: What are the advantages and dis-advantages of sourcing employees locally?G.F.: NCR is an equal opportunity employ-er, so we provide employment opportunities to locals as well as to foreign nationals. Nev-ertheless, due to the fact that there is a high availability of skills locally, the majority of our employees in Cyprus are locals. Gold: Is there an area in which you would like Cyprus to improve as a busi-ness and services sector location? G.F.: In todays competitive environment, the island needs to continuously reinvent itself so as to become a more favourable des-tination for foreign companies than other countries in the region. To do so, CIPA (the Cyprus Investment Promotion Agency) must be given executive powers and the authority to devise the strategy for Cyprus as an investment destination and to by-pass the current bureaucratic processes. Cyprus also needs to improve substantially as an airline hub connecting Cyprus to the rest of the world. Finally securing visas for Cyprus-based employees from some of the countries in the region is a time-consuming task because they do not have embassies here. Although some progress has been made, a lot more needs to be done.

Gold: What are your future plans for your operations in Cyprus? G.F.: NCR is a fast-growing company globally and even more so in the markets we cover across the Middle East and Africa. Ex-ecutives from the NCR office in Cyprus have extended their responsibilities to cover the growing markets of Asia from India to China, Singapore, Australia and New Zea-land. Our plan is to continue to invest in the emerging economies while we continue to grow our base across all the countries we cover. NCR is probably one of the best examples of a foreign company investing in Cyprus and it can be used as a reference to attract other multinational companies to follow its example.

cover_story.indd 28 29/05/2012 16:31

creo

NCR NCR is a global technology company which today specialises in self-service solutions for ATM machines and software, POS and Retail systems and airline check-in systems. It was founded in 1884 as the National Cash Register Company, maker

of the first mechanical cash registers. NCR was established in Cyprus in 1955, as a subsidiary of the NCR Corporation. Ther companys Middle East/Africa (MEA) regional headquarters in Nicosia are responsible for 20 NCR subsidiary organisations and a total of 49 distributor

organisations in an equal number of countries within the region.

NEST INVESTMENTS HOLDINGS CYPRUS LTDNest Investments established a presence in Cyprus in 1990 and operates in 22 countries of the Middle East, North Africa, Asia and Europe.

Headquartered in Limassol, Nest Investments (Holdings) Ltd is the ultimate shareholding company of all the business assets of the Group. This includes substantial or majority shareholding interests in excess of $1.2 billion in many direct insurance, re-insurance, licensed operations such as World Trade Center, property


Christovalantis KarayiannisMANAGING DIRECTOR, LIDL (CYPRUS)

Gold: What were the key factors that motivated Lidl to seek to establish a presence in Cyprus? Christovalantis Karayiannis: As a country with a stable economy and a good infrastructure, Cyprus is an attractive market for European companies. During the 1990s Lidl started to open stores outside Germany and since then has expanded strongly throughout Europe. Our goal is to provide top quality products at the lowest possible prices in every European country, including Cyprus. This has helped establish us as the grocery store that covers the Cypriot consumers everyday needs.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned?

C.K.: Setting up an operation in a new country is never easy but the simplicity that characterizes our operations and work process is a cornerstone of our success. A lot of problems are often revealed during the launch process. It is very important to be well-organised, flexible and have the right business partners on your side so you can overcome every obstacle that may occur.

Gold: What are the advantages and disadvantages of sourcing employees locally?C.K.: In my opinion there are no disadvantages. The knowledge of local culture, history and traditions is very important for setting up an operation in a new country and it can only be obtained through the local workforce. The key to being successful and gaining acceptance in a new market is to combine the companys principles and philosophy with local working conditions and consumer behaviour.

Gold: Is there an area in which you would like Cyprus to improve as a business and services sector location? C.K.: As already mentioned, the country has a good infrastructure and cooperation with local authorities is very good. Cyprus is trying to create a favourable environment to attract new investors and meet the standards of international companies which are willing to set up business in the country. In my opinion Cyprus is on the right track to providing high-level services which will make it easy for companies to establish functional operations in the country.

Gold: What are your future plans for your operations in Cyprus? C.K.: More quality for less, of course. Of all the things we offer customers, their satisfaction is our main priority. For this reason, we shall be expanding our stores network and increasing the existing range of products to meet the customer demand.

As a country with a stable economy and a good infrastructure, Cyprus is an attractive market for European companiesChristovalantis Karayiannis

cover_story.indd 29 29/05/2012 16:31

creo

A very good step forward would be to make the government sector more flexible when it comes to automating its processes

development, asset management, and building materials manufacture in 22 countries in North America, Europe, Africa, the Middle East/Gulf Region and the Far East.

RUSSIAN COMMERCIAL BANKThe banks history goes back to 1963,

when the Moscow Narodny Bank of the USSR established a branch in Beirut. As the political situation in the Middle East deteriorated, the branch was relocated to Cyprus where ownership was transferred later to Vneshtorgbank. In August 1995, the branch was transformed into Russian Commercial Bank (Cyprus)

as an overseas unit of VTB Bank. Since the accession of Cyprus into the European Union in 2004, Russian Commercial Bank (Cyprus) operates as a fully fledged European bank.

UNITEAM MARINEEstablishing its presence in Cyprus in 1978, the Uniteam Marine

Management Group is actively involved in all aspects of ship management and has expanded into a multinational company with offices in Cyprus, Germany, Lithuania, Ukraine, Singapore and Myanmar. The group is active in full management, operations, crew management, technical management,


Serhei Kostevitch

cover_story.indd 30 29/05/2012 16:31

creo

financial administration, consultancy and ISM/ISO 9001:2000 services.

VTTIVTTI, which operates a network of bulk logistics assets around the world, is owned 50% by the international energy trading group Vitol and 50% by MISC Berhad of Malaysia. VTTIs

network of terminals, together with an ambitious programme of new construction projects, puts it in the key shipping lanes and anchorages of the world. Construction of VTTIs new 220 million terminal project in Cyprus, VTT Vasiliko Ltd, which will turn Cyprus into a regional energy hub, is due for completion in 2014.

WEATHERFORD INTERNATIONALWeatherford International Ltd. is one of the largest global providers of advanced products and services that span the drilling, evaluation, completion, production and intervention cycles of oil and natural gas wells.Todays

Weatherford is a result of internal growth and innovation as well as the consolidation of more than 250 strategic acquisitions. The Weatherford Cyprus office is both an active operational base with a primary focus on equipment repair and maintenance, as well as project management around the globe.

Serhei Kostevitch CEO AND CHAIRMAN OF THE BOARD, ASBIS GROUP

Gold: What were the key factors that moti-vated ASBIS to seek to establish a presence in Cyprus? Serhei Kostevitch: The key factors back in 1995 were, of course, the tax regime governing international businesses, and the legal frame-work enabling the company to build a solid and transparent operation close to the territories in which it operates. Moreover, the security and quality of life offered to the families of the founders played a significant role in the deci-sion to choose Cyprus.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? S.K.: The process was greatly assisted by professionals (lawyers and accountants) and was therefore an easy process. There were some problems during the setup of the company but the Central Bank and all the relevant bodies responsible for international businesses at the time were quite helpful and willing to assist in overcoming any problems.

Gold: What are the advantages and disad-vantages of sourcing employees locally?S.K.: We have found that there is a very high level of education and professionalism in Cyprus and we have managed to attract high-calibre, experienced employees from the financial environment who assisted the com-pany in its efforts to become Cypriot and not be viewed as an offshore company. The only disadvantage we have experienced concerns the sourcing of people with a knowledge of IT cor-responding to our needs to service our EMEA territories.

Gold: Is there an area in which you would like Cyprus to improve as a business and services sector location? S.K.: A very good step forward would be to make the government sector more flexible when it comes to automating its processes. More specifically, it would be good to see an in-terrelationship among ministries and a one-stop shop for all companies, not only for establishing a company but also for administering it as well.

Gold: What were the key factors that motivated VTTI to seek to establish a presence in Cyprus? George Papanastasiou: VTTI was looking to invest in an oil terminal in the Eastern Mediterranean which is considered an area of high hydrocarbons trading activity but, at the same time, one that lacks oil storage capacity.Cyprus, Lebanon, Egypt and Turkey were evaluated and Cyprus was selected as meeting most of the criteria: a favourable geographical location, an EU member state, (employing the concept of bonded warehousing for hydrocarbons in storage), deep sea water close to shore to accommodate large vessels, a modern economy, good services provision and a highly- educated and English-speaking workforce.

Gold: Was the process of setting up an operation in Cyprus as straightforward as originally envisioned? G.P.: The process was far more difficult than originally envisioned. Bureaucracy almost killed the project a year ago because applications for permits and licences were left sitting in government offices for months without being processed. The absence of inclusive legislation and the lack of knowledge of this kind of business and such projects were not helpful either. Gold: What are the advantages and disadvantages of sourcing employees locally?G.P.: The advantages are the discipline that characterises the local workforce, the quality of their work, ease of communication (as

they are also English speakers), and the fact that they are well-educated and, when it comes to white collar workers, highly-educated. The disadvantages are the higher cost compared with the workforce in some Eastern European countries and also they lack experience of working on large-scale and specialized projects.

Gold: Is there an area in which you would like Cyprus to improve as a business and services sector location? G.P.: It needs to speed up the processes for approvals/permits/licences and create a one stop shop for applications. The complexity of existing legislation in certain areas should be removed to expedite decision-making and thus attract foreign investment.

George Papanastasiou, MANAGING DIRECTOR, VTT

COVER STORY


cover_story.indd 31 29/05/2012 16:31

creo

OPINION

Unless we find the balanced approach that includes both strong fiscal discipline and measures for growth, our long-term ambitions are still at risk

Working Together For GrowthEurope must now focus now on measures to encourage and boost growth

info: Anni Podimata is Vice-President of the European Parliament and a member of the Greek Socialist party PASOK. The above article is adapted from her address to the workshop The future of Europe at the European Parliament in Brussels on 9 May.

I believe that we are currently facing a very severe multi-dimensional crisis in Europe and we have a duty to restore the credibility and attrac-tiveness of Europe in the eyes of European citizens. Let me refer to a

few examples of what the European Parlia-ment (EP) has done so far as a contribution towards the management of the crisis. First of all, from the very beginning, the EP was critical of the European Commission and, especially, of the European Council for not being able to find and apply a comprehensive solution and approach on the part of the EU to the crisis at an early stage. Due to the insistence of the EP, new rules of regulation and supervision have been adopted for the financial markets in Europe. But although there have been some decisive steps towards an exit from the crisis, according to the latest information, growth is still weak in the euro-zone as a whole and unemployment is rising in an alarming way. We are not yet out of the crisis and the

situation remains quite fragile. We therefore need to complete the reforms that we have al-ready started to implement in order to restore stability and we need to focus now on mea-sures that will encourage and boost growth. There is a need for a healthy balanced budget throughout the EU and especially in the eu-rozone but it is clear, I believe, that austerity on its own cannot be the response and can-not guarantee an exit from the crisis. There can be no efficient progress in this direction without concrete policies that are going to push growth and job creation. We have come to realize that, in order to tackle the crisis, it is very important to combine fiscal austerity with policies for growth. Lack of progress in one area can seriously undermine efforts on the other. Until now Europe has made a lot of progress regarding the integration of

fiscal policies and getting states to commit to fiscal discipline. Growth measures are finally on the agenda and the EP has been at the forefront of this debate from the very begin-ning of this crisis, pushing for growth and innovative measures such as the Financial Transaction Tax and the significant resources it can produce, Eurobonds and 2020 Project Bonds. Unless we find the balanced approach that includes both strong fiscal discipline and measures for growth I think our long-term ambitions are still at risk. I am glad to refer here to the ambitious

2020 strategy for growth, the five main areas of which are Employment Research, Develop-ment & Innovation Climate Change & En-ergy Education Social Exclusion & Poverty. Growth is the real long-term challenge in a rapidly-changing world. The EP is delighted and satisfied to see that there are now repeated calls from the European Central Bank, from the IMF and from the European Commission in favour of the adoption of a growth compact to boost economic development in Europe and to complement the fiscal compact which has already been decided.Our goal is to generate resources for invest-

ment to restart our economies, to create jobs, especially for the younger generation who are the first to suffer the consequences of the crisis and are paying a disproportionately high price for it. In Spain and Greece, youth unemploy-ment is around 50% nowadays. We cannot ac-cept or afford to sacrifice a generation or run the risk of creating a lost generation. It is our political choice to build our future within a strong, healthy union based on the values that made us build this union, the values of free-dom, responsibility and solidarity. I strongly believe that these are values we should stand up for and defend and it we are to be efficient and effective we have to work tog

gold 15

Documents