Executive Summary
Executive Summary Strategically located at the crossroads of Europe, Asia, and Africa, Cyprus offers much promise and opportunity to U.S. investors. Best prospects lie in the energy, shipping, services, and high technology sectors. Though smaller, niche investment opportunities exist in food processing, franchises, and export-oriented businesses. Investors should not miss new opportunities created by efforts to develop renewable energy and offshore energy resources, expand tourism infrastructure, and reform the healthcare sector. Cyprus offers a low tax business environment, skilled and English-speaking professionals, and excellent infrastructure. Doing business in Cyprus is not without its challenges. The Cypriot economy contracted by 5.4% in 2013 because of the financial crisis, and is expected to contract by another 4.8% in 2014, before returning to mild growth in 2015. Many economists attribute the financial crisis to the Cypriot banking sector’s high exposure to Greek bonds. Cyprus engaged the Troika (European Commission, IMF, and European Central Bank) for assistance that was contingent on several points include the government agreeing to restructure the banking sector and cut government spending by roughly 7% over four years. As of early 2014 the Troika has praised Cyprus for its progress in, three formal reviews, and risk rating agencies have improved Cyprus’ ranking since the crisis. Companies considering investments in Turkish Cypriot administered areas should be aware of complications that arise from the lack of international recognition and the absence of a comprehensive political settlement in Cyprus. Turkish Cypriot business leaders are especially interested in working with American companies in the fields of processed agriculture, renewable energy, and franchises.
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