For 91 years, the Cyprus Chamber of Commerce and Industry (CCCI) has been working with both the Cypriot business community and the government to convey and promote the views of Cyprus’ engine of growth: the private sector Its membership now exceeds 8,000 enterprises from the entire spectrum of business activity across the country. Approximately 150 professional associations are affiliated with the CCCI and there are five regional chambers around the country. What’s more, CCCI holds nearly 40 bilateral associations with the world’s most important countries.
“Effectively, we are a consulting body to the government, which at the same time is serving the interests of the business community of Cyprus”, said CCCI President Christodoulos Angastiniotis.
But thanks to the chamber’s new leadership, Angastiniotis is hoping that CCCI will do more than just that. Angastiniotis, a highly respected businessman in Cyprus and former chairman of the Board of the Cyprus Investment Promotion Agency (CIPA), was elected to the CCCI presidency last year. With his strong ties to both the business community and the current government, being in direct contact with the country’s president, Angastiniotis plans to steer Cyprus’ business endeavours to greater heights, but also move the country towards what he believes it is lacking most: digital transformation.
“The Chamber of Commerce strongly believes that Cyprus needs to put into place ASAP a digital transformation unit in Cyprus”, Angastiniotis said adamantly.
So why is digital transformation a surefire way to expand Cyprus’ economic success? A bit of background on the nation’s recent economic recovery will lay the scene for why digitasation is indeed Cyprus’ next important step forward.
When it comes to economic growth, there has been very little complaint, given that Cyprus has been experiencing high growth rates over the past five years. “Last year our growth rate was about four percent, and we expect that in 2018 it is going to be at least the same”, Angastiniotis stated with optimism. “This is because of the good policies that the government has put in place and because the private sector has responded positively”.
A number of those “good policies” being implemented under President Nicos Anastasiades are focused on dealing with the country’s high level of non-performing loans (NPLs), which are a major reason for the economic downturn Cyprus experienced in 2012. Banks in Cyprus were handing out loans to unsecured borrowers, an international phenomenon that actually sparked the Great Recession. Fast-forward six years. While Cyprus has seen considerable economic growth, it still has the second highest percentage of NPLs in the EU, amounting to 44.1 percent of total loans as of October 2017.
“Our top priority for 2018 is to put into place laws and regulations that will help the banks and the economy to handle the non-performing loans”, said Angastiniotis. “We are not going to hide behind the bush. The non-performing loans are the biggest challenge the economy is facing”.
To help address this issue, the Ministry of Finance is establishing a state-owned asset management firm, as part of project “Estia”, which will take the non-performing residential property loans off the balance sheets of Cypriot banks. This will allow Estia to focus on managing high-risk assets, while banks focus on offering high-quality loans that will continue to spur the Cypriot economy forward.
Angastiniotis has strong support for the Estia plan. However, he noted that “the heart of the problem of the NPLs in Cyprus has been the fact that the parliament did not give the right tools, did not install the right mechanism, so that the banks could collect or push to collect their NPLs; I believe that the main body to be blamed for that is the Parliament of Cyprus where I dare say populism prevails, so I think now things are reaching a very dangerous bend”.
Cyprus’s National Popular Front party, or ELAM, is the country’s leading populist movement. It blames the government and Turkey and the Turkish Cypriots for much of the country’s economic and political troubles, creating even more tension between the Greek and Turkish Cypriots.
Angastiniotis, for his part, believes strongly in a resolution to the divided Cyprus problem, stating with conviction a solution would increase the country’s competitiveness and bring many social benefits. In fact, he says the one and only thing keeping Cyprus just a notch below a favourable investment grade is the Cyprus problem.
“If we resolve the Cyprus problem, then all sectors will grow a lot faster [–] shipping, property, energy, financial services, they will all really fly in terms of expansion; but that’s not an easy issue”, he admitted. “We hope that in the forthcoming months there will be an opportunity to bring Turkey around the discussion table and find a sustainable solution to the Cyprus problem for the benefit of all Cypriots”.
With all of these issues and respective solutions in mind, Angastiniotis is adamant that Cyprus’ game-changing decision will be to dive head first into the digital revolution. Revisiting his words: “Cyprus needs to put into place ASAP a digital transformation unit in Cyprus”, and the sooner the better, as Angastiniotis says this current digital gap is what is holding Cyprus back from becoming a key player in the EU. He points out that the lack of a Cypriot digital transformation unit “is an issue … we are being left behind. We are not progressing as fast as we should and our rating within the European Union is not that good”.
Angastiniotis says a more structured digital framework will attract more international investors to the country, improving the Cypriot justice system (which he says works well, albeit a bit too slowly), and establishing an entity that will let Cyprus not only enter, but drive Europe’s digital revolution.
He believes that what the country needs to make this happen is “an undersecretary, deputy ministry, or a form of a body that will have horizontal and vertical powers to design, implement, regulate, and control the digital transformation of Cyprus”.
Given his close ties to the current administration, Angastiniotis confidently stated he has “every reason to believe that in the forthcoming days or weeks the government will announce the formation of a digital retransformation body, maybe a deputy ministry, that will take over this design, oversee and execute this project because it is a very, very important issue”.
In the meantime, the country has already embraced startups and entrepreneurs working in the digital field. The Cypriot government, along with CCCI and CIPA and numerous other organisations, supports startups by bringing in investors and coaching them through the growth process.
“We have genius people in Cyprus,” Angastiniotis said matter-of-factly. “Research and development are also ongoing in Cyprus, especially with the trilateral arrangements between Cyprus, Greece, and Israel.”
The three countries recently signed a Memorandum of Understanding within the framework of the 4th Trilateral Summit aimed toward boosting commercial ties and general business relations between the countries, including promoting cooperation on energy and entrepreneurship.
These sectors are an added economic growth driver for Cyprus – along with the economy’s main pillars of tourism, shipping, real estate, and financial services.
“We do have a lot of advantages because we offer a lot of sectors,” said Angastiniotis, adding that Cyprus’s location at the crossroads between three continents and the excellent human capital in Cyprus, along with the country’s low tax rates, are also big advantages to investors.
“We are a competitive destination”, he concluded.
Indeed, in June the government decided to establish a Competitiveness Council to study the factors impacting economic growth, monitor the competitiveness and productivity of the economy, and recommend targeted policy measures. As for Angastiniotis, he is hoping that the government finds digitisation to be the biggest factor today that will take its economy to new heights in the future.