Interview with Honorable Minister Yiorgios Lakkotrypis

Georgios Lakkotrypis

Interview with Cyprus Minister of Energy, Commerce, Industry and Tourism


What major challenges have you encountered, especially during the 3-year bill programme?

The primary challenge we have had to face has been the crisis. We need to keep at the forefront of our minds that we had a bail out in March 2013, which led to a severe recession. What dominates our thinking now is how we came as a country to that recession, and how quickly we managed to generate growth in 2015. During those three years we had to regain our credibility as a country, and to make structural reforms, generate growth and stay focused on the industries where we have a competitive advantage.

Tourism is one of the strongest sectors of the Cyprus economy, with 2.7 million visitors in 2015 and much more potential to develop. What measures are being taken in order to take the tourism sector to the next level?

Tourism has been one of the leading industries, but we need to admit that over the past 10-15 years we have lost competitiveness because we have failed to distinguish ourselves from other destinations that emerged with a similar tourist offer as ours, but lower cost.

For the past 10 years, we have received some 2.5 million tourists annually. We have gathered good momentum and we grew significantly in 2015. It was a challenging year, but we delivered 9% growth in arrivals and about 4% growth in tourist income. We expect to perform even better in 2016.

Some of the measures that we have taken include working closer with European tour operators, improving the country’s connectivity, and working with airlines to fly to the main markets but also to develop new ones.

We are preparing a new tourism strategy that will help us over the next decade.
We are looking at major infrastructure projects that will help us diversify our overall offer and have invested significantly in nautical tourism, golf and cycling. Soon we will grant a license for an integrated casino resort.

Tell us how you think this initiative of the casino resort is going to impact the economy.

We analysed the different types of casino in Europe and decided to take a unique strategy; to grant one license for 30 years, of which 15 years will be an exclusive license. The idea is to enable a bigger integrated type of theme park resort, where gaming will in fact be a minor concern — a resort like those you find in Las Vegas or Macau. It will help us to diversify our offer, and will be the first of its kind in Europe.

We passed transparent legislation for this and are in the second phase, which involves assessing interest from many different groups of investors. We hope that this resort can help us to attract between 1-2 million more tourists per year.

We are preparing a new tourism strategy that will help us over the next decade. We are looking at major infrastructure projects that will help us diversify our overall offer

You also mentioned marina and golf projects. Can you elaborate on these ideas?

We have excellent weather in Cyprus and a wide range of golf courses, allowing people to play golf all year round. In addition, we have invested in nautical projects: the new state-of-the-art Limassol Marina centre and Napa Marina where construction will begin this April. We want to attract tourists who will come and visit Cyprus with their yachts.

Natural gas has been discovered in Cyprus. How do you think this is going to impact the economy?

We have set a strategy based on three pillars, designed to understand how this will impact the economy in the short, medium and long term. In the short term the discovery of hydrocarbons should benefit the Cyprus economy by attracting supporting services for those operations happening offshore. I’m not referring exclusively to the economic zone of Cyprus, but also to those of neighbouring countries. Cyprus has a long history of excellent relationships with its neighbours. What’s more, we are already seeing the benefits of job creation.

In the medium term we anticipate that the sale of hydrocarbons will help us to go from a net importer to a net exporter of energy and this should help the trade balance and public finances.

Then, in the long term, we would like to leverage one of the key strengths we have as a country: our human talent, through the creation of a knowledge-based economy centred on the oil and gas industry. We intend to create new specializations in order to be able to deliver all the technical services implied — financial, legal and commercial. We are forced to import these, now, for the oil and gas industry, in order to be able to export such services.

Cyprus is number one in the world in water heating through solar panels, and has invested in other renewable energies such as windmills. Could you explain more to us about the renewable energy system in Cyprus?

The country’s strategy for renewable energy is very clear. The presence of the oil and gas industry has made us more passionate about renewable energy. We see our country moving towards a distributed renewable energy system. We expect that in the future every house will be able to generate its own power. The technology for solar energy is mature and is improving year on year; it should be on an industrial scale soon, helping us to drop the cost of the energy. We want to see small and distributed systems in every house. We have made a good start with water heating through solar panels, and we want to expand this as the technology improves and becomes more affordable for households. Today, we have about 8,500 households that are almost energy neutral, in the sense that they have installed solar panels and they balance what they consume and produce. They are becoming almost self-sufficient and we see even more potential for that in the future.

The strategic location of the country further enhances matters. We are leveraging this while putting the right policies in place

In terms of commerce and logistics, the country has a strategic location. Manufactured products have formed a big part of your exports. How does the government foster and support the development of high-value manufacturing?

First of all, we are continually seeking ways of reducing energy costs. We have been quite successful in growing exports for the last 3 years, with a growth of 10% in domestic exports led by pharmaceutical, agricultural and construction products. The strategic location of the country further enhances matters. We are leveraging this while putting the right policies in place. For example, through structural funds or exemptions, we can promote entrepreneurship.

We recently launched a tender for the creation of a science and technology park. It’s a way for us to move forward, to add value to industries and to promote innovation and research. We are now seeking strategic investors in order to attract high-value technology companies.

What is the government doing to attract investors and companies, and to promote business in Cyprus?

As a country, we constantly try to build a transparent legal regime and business environment. We have been restructuring our procedures over the past 3 years. We have been able to improve the registration of companies by lowering the time taken to issue certificates etc. Multiply that by many examples and you will discover that this government is running an ever more substantial programme of reforms.

What is your main message for foreign investors?

We have journeyed through a big financial crisis, but managed to come out the other end stronger and wiser, by adding in place the right policies. We did so not only to avoid a future financial crisis, but also to promote innovation and change, and to attract foreign direct investment. We want to become one of the most business-friendly places in the world.