Gold14 by Kevi Chishios

ISSUE 14 MAY 2012 PRICE €6.95

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THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

DIPLOMATIC ANSWERS FIVE AMBASSADORS TO CYPRUS DISCUSS THE ISLAND’S ECONOMIC, TRADING AND POLITICAL FUTURE

+ DAVID WOOTTON, LORD MAYOR OF THE CITY OF LONDON A SPACE ODDITY

Nik Halik still chasing childhood dreams

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INTERVIEWS

K.C. CHAN THOMAS KAZAKOS BRANKO MILANOVIC

LIFESTYLE

Put your money where your mouth is!

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE

03/05/2012 12:12

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03/05/2012 12:13

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 company’s 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.

“Columbia’s growth and expansion over the years is attributed to the uniqueness of Cyprus; being the island’s 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 the

favorable excellent

infrastructure,

business

climate,

telecommunications 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 80’s.

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

Cyprus Investment Promotion Agency Tel + 357 22 441133 Fax + 357 22 441134 www.cipa.org.cy info@cipa.org.cy

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Gradually, NCR managed to expand the office in Cyprus to cover also all the African Countries.” Managing Director of NCR Cyprus, Mr. George Flouros

The Ministry of Commerce, Industry and Tourism Tel + 357 22 867100 Fax + 357 22 375120 www.mcit.gov.cy/ts perm.sec@mcit.gov.cy

03/05/2012 12:13

www.pwc.com.cy

Global knowledge Local expertise

We listen. We learn what you want to do and we help you create the value you are looking for. Value that is based on the knowledge that our almost 1.000 local professionals draw from 169.000 experts in 158 countries. We focus on the provision of Assurance, Advisory, Tax and Global Compliance Services.

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issue 14 may 2012

08 EDITORIAL 10 UP FRONT 16 FIVE MINUTES WITH

FIVE AMBASSADORS TO CYPRUS DISCUSS THE ISLAND’S ECONOMIC, TRADING AND POLITICAL FUTURE

+ OPINION COMMUNICATING IN A CRISIS by Stephen Carver IN EUROPE TO STAY by Elena Ambrosiadou

18 60

CYPRUS THE PREFERRED LOCATION FOR EU YACHT REGISTRATION By Chrysilios Pelekanos 74 DON’T LOSE THIS ONE by Peter Economides

DIPLOMATIC ANSWERS

62 FEATURE 62 | A SPACE ODDITY Interview with celebrity financial coach, entrepreneur, adventurer and trained astronaut Nik Halik

68 | INEQUALITY IS NOT ALWAYS BAD World Bank economist Branko Milanovic on inequality, poverty and globalisation

94 78 84 86 91 94

{money} {business} {economy} {tax&legal} {lifestyle}

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

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KPMG Academy Upcoming Seminars: May - June 2012 Tax Audits in Cyprus: Reduction of Tax Risks and Preventative Tax Measures * 07/05/2012 Investment Funds and Investment Fund Management: The Cyprus Reality 10-11/05/2012 Accounting for Financial Instruments * 14-15/05/2012 Introduction to Strategic Planning and Financial Forecasting 28/05/2012 A Global Approach to Trusts and their Tax Implications 31/05/2012 Εξειδικευμένο σεμινάριο σε θέματα Φ.Π.Α. 11/06/2012

* The programmes have been approved by the HRDA. Enterprises participating with their employees who satisfy HRDA’s criteria, are entitled to subsidy. These seminars may contribute to Continuing Professional Development requirements.

For more information please contact: Persa Papademetriou T: +357 22209053 F: +357 22513294 E: ppapademetriou@kpmg.com Visit our website at: www.kpmg.com.cy or our web tv at: www.kpmgcy.tv

©2012 KPMG Limited, a Cyprus limited liability company and member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (”KPMG International”), a Swiss entity. All rights reserved.

Grasp knowledge into your hands

EDITORIAL

Leading the Way

ISSUE 13 MAY 2012 PRICE €6.95

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he contents of this month’s issue of Gold may be seen as a reflection of Cyprus’ growing role in international affairs and of the realisation – at last – that the island is neither the centre of the universe (an illusion suffered by many of our politicians over the years) nor a tiny victim of circumstance and thus incapable of playing its part on the global scene. The five ambassadors who came together for the discussion that makes up our cover story dismissed the idea that Cyprus is too small to count and spoke in glowing terms about Cypriot enterprise. They were especially complimentary about the professional services sector, improving bilateral trade figures and even the local political scene. We also feature interviews with four very different individuals: Nik Halik, a financial coach, entrepreneur, adventurer and – yes, really – trained astronaut; Branko Milanovic, a Lead Economist with the World Bank; K.C. Chan, the Hong Kong-based Founder and Chairman of the investment group KAB International Holdings; and David Wootton, Lord Mayor of London, who was in Cyprus last month on a visit ahead of the island’s forthcoming Presidency of the EU Council. Furthermore, in the following pages you can read about how London is maintaining its position as Europe’s foremost financial centre, see the detail of the new Double Tax Treaty between Cyprus and Poland and even discover the world’s most expensive culinary ingredients. Cyprus has never been a major player on the global or even the European scene – size can be important in politics and business – but membership of the EU, a change of economic focus from tourism to the provision of services (see Fiona Mullen’s article) and the recent discovery of gas and oil deposits offshore have brought significant changes to the country’s own view of itself and also to how others view it. No-one can ignore the island’s problems, from the longstanding division (the aforementioned ambassadors are convinced that it will eventually be ended) to more specific difficulties such as those facing the main commercial banks, the national carrier Cyprus Airways, and the overall economy. But problems are there to be resolved and, despite a worrying focus by the political parties and the local media on presidential elections that are still nine months away, efforts are clearly being made. If the government pays attention to some of the views expressed by leading lawyers in this issue, even more progress will be achieved to make Cyprus more efficient and competitive as a place for foreign investment. A key factor is investment in new technology and its deployment. Cyprus has always justifiably prided itself on its excellent telecommunications infrastructure and its rapid adoption of the latest developments in IT. It may be hard to believe but Cyprus is first in the world for the number of Facebook users as a percentage of its population (69%, compared with 50% for the US and 49% for the UK). This statistic may also say something about how much the Cypriots like to talk but the fact is that we live in a country that is way ahead of many nations when to comes to promoting the digital age. In this respect, Gold could not be left behind and I am delighted to say that from this month, the magazine will also be available to subscribers as an iPad/Android Tablet version. This latest development, coming hot on the heels of our first anniversary, is indicative of our determination to reach as many readers as possible in Cyprus and elsewhere. When a Cypriot-produced magazine has the potential to reach a truly global readership, this says a lot for the country’s growing role and influence on an international scale. We look forward to playing our part in this.

John Vickers, Chief Editor john@imh.com.cy

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

DIPLOMATIC ANSWERS FIVE AMBASSADORS TO CYPRUS DISCUSS THE ISLAND’S ECONOMIC, TRADE AND POLITICAL FUTURE

+ DAVID WOOTTON, LORD MAYOR OF THE CITY OF LONDON A SPACE ODDITY

Nik Halik still chasing childhood dreams

INTERVIEWS

K.C. CHAN THOMAS KAZAKOS BRANKO MILANOVIC

LIFESTYLE

Put your money where your mouth is!

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE

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PUBLISHED BY IMH ISSN 1986 - 3543

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:

Elena Ambrosiadou, Stephen Carver, Peter Economides, Nathalie Kyrou, Fiona Mullen, Chrysilios Pelekanos, Dr. Savvas Savouri, Michalis Zambartas ART DIRECTION:

Anna Theodosiou SENIOR DESIGNER: Maria Kyriakou PHOTOGRAPHY:

Olesia Constantinou, Jo Michaelides MARKETING EXECUTIVE:

Kevi Chishios

SALES & BUSINESS DEVELOPMENT EXECUTIVE:

Christos Kyriakides

ADVERTISING EXECUTIVES:

Irene Georgiou, Christopher Constantinou OPERATIONS MANAGER:

Voulla Nicolaou

SUBSCRIPTIONS:

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 22679820 e-mail: gold@imh.com.cy website: www.goldmagazine.com.cy subscriptions: goldsubscriptions@imh.com.cy

8 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS

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Gold May 2012.pdf

CMY

4/26/12

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2% 2.44% 3% 3.98% 2% 3.66%

UP FRONT

Recruitment Soars in First Quarter

20.73%

3.66%

RS Global Recruitment Solutions have released their First Quarter statistics for 2012 which reveal that, despite continuing high unemployment in Cyprus, recruitment during the first three months of 2012 shot up by 32.9% on the figures for October-December 2011. The statistics are based on permanent job placements made by GRS in Cyprus from 1 January 2012-31 March 2012. As a key service provider of recruitment and payroll to organisations operating through Cyprus, GRS is an excellent barometer of the prevailing market conditions in a variety of sectors.

CYPRUS 8.54% SECTORS 14.63% 2012 Q1 9.76%

Corporate Services Online Industry Sector Forex Finance / Banking Cyprus Investment Firm FMCG Engineering Media / Marketing Property Law / Legal Accounting Consulting IT

12.20%

13.41%

€360,000 SPENT BY GREEK CYPRIOTS IN THE OCCUPIED AREAS IN MARCH

In March 2012, Greek Cypriots used credit cards to spend a total of €360,237 in the occupied north of the island according to the latest figures released by JCC Payment Systems Ltd. The largest amount (€134,040) went on hotels, followed by €100,386 on airlines. The third largest sum (€41,663) was spent on entertainment which is believed to refer almost exclusively to casinos. By contrast, Turkish credit cards were used to purchase a total of €1,327,597 worth of goods and services in the government-held areas from March 1-31.

FILEMINDERS JOINS PRISM INTERNATIONAL EUROPEAN ADVISORY COUNCIL

ileminders Ltd has become a member of the International European Advisory Council of PRISM together with the biggest international companies in the sector of Professional Records and Information Services Management. Fileminders will be represented on the Council by Marios Xenophontos, one of its directors. With members in more than 60 countries around the world, PRISM (Professional Records and Information Services Management) International is a not-forprofit organisation based in Raleigh-Dur-

news_briefing.indd 10

ham, North Carolina, USA. It also maintains a secretariat in Brussels for dealing more specifically with its European members and EU affairs. The Board of Directors of PRISM International recently approved membership of its Advisory Councils in Asia, Europe and Latin America. In 2011 the Board formulated a policy to create a stronger governance structure for members in identifiable regions. Through discussions and exchanges of views, the Advisory Councils will formulate action plans as well as continuing to organise conferences in their particular regions.

27/04/2012 14:16

The Marshall Islands The Marshall Islands TheCorporate Marshall Islands Registry Registry The Marshall Islands TheCorporate Marshall Islands Corporate Registry

LUFTHANSA’S NEW BUSINESS CLASS SEAT

Corporate Corporate Registry Registry

1.98-METRE LONG BED GUARANTEES MAXIMUM SLEEPING COMFORT as the starting point, the airline then developed various concepts with the aid of well-known ergonomics experts, designers and seat manufacturers. In 2010 an eight-week trial was conducted on the FrankfurtNew York-Frankfurt route. In all, 1,349 passengers and a specially recruited test crew evaluated the prototype in terms of comfort, ease of use and technical stability. The outcome is a seat that meets the most discerning demands as regards seating and sleeping comfort. “The horizontal sleeping surface is a crucial factor for our passengers. This request was the focus for all our other considerations. In addition, we have improved very many details which, taken together, create maximum comfort,” Bischof explains. These include ergonomi-

cally improved cushioning to ensure a high degree of comfort in a sitting or horizontal position, as well as lowerable armrests that provide more space in the shoulder area when lying down. Each sitting or horizontal position can be adjusted individually and continuously without the need for the passenger to stand up. In addition, each passenger has more surfaces to put things on and additional storage compartments on the actual seat. The new Business Class seat is a major component of Lufthansa’s largest investment to date in its inflight product. Over the next few years, some €3 billion will be channelled into product improvements for passengers. Retrofitting Lufthansa’s entire long-haul fleet of more than 100 aircraft is expected to take four years.

©Corbis ©Corbis ©Corbis ©Corbis ©Corbis

n a few weeks’ time, when Lufthansa’s new Boeing 747-8 enters scheduled service, passengers will have their first opportunity to enjoy a Business Class seat which boasts a horizontal sleeping surface measuring 1.98 metres in length and converts into a comfortable bed at the press of a button. “We integrated our customers very closely into the development of our new Business Class so we would be able to offer a product that was totally in line with their wishes and requirements,” says Jens Bischof, member of the Lufthansa German Airlines Board. Back in 2007 Lufthansa conducted a survey of more than 500 frequent flyers in order to find out their preferences and their requirements for a Business Class seat. With that

IPHONE/IPAD APP FROM

FIDUCENTER

new iPhone/ iPad application became available last month, providing useful information about Fiducenter and Cyprus from an international business perspective. It includes the main aspects of the tax, legal and accounting regime of Cyprus, the services provided by Fiducenter, a directory of the company’s management team, contact details and an office locator. Fiducenter is an independent domiciliation agent, with a presence in three of the world’s most attractive financial centres in the world: Luxembourg, Cyprus and Singapore.

news_briefing.indd 11

Gates Foundation Scholarship for Marina Marina Theodotou, organizer of TEDxNicosia, has been selected by the Bill & Melinda Gates Foundation as one of 15 recipients of the TEDx Gates Foundation scholarship to attend TEDGlobal 2012 in Edinburgh this summer. “TEDxNicosia is definitely on the radar screen as a platform of change and ideas worth spreading in Cyprus and beyond,” she told Gold. TED is a nonprofit organization which started out in 1984 as a conference bringing together people from three worlds: Technology, Entertainment, Design. TEDx was created in the spirit of TED’s mission concerning ‘ideas worth spreading’ to give communities, organisations and individuals the opportunity to stimulate dialogue at a local level.

The The leading leading jurisdiction jurisdiction for for The leading jurisdiction for leading jurisdiction •The Management, The leading jurisdiction for for • Asset Asset Management, • Asset Management, Asset ••• Vessel Ownership Asset Management, VesselManagement, Ownership • Vessel Ownership Vessel Ownership ••• Real/Intellectual Vessel Ownership Real/Intellectual • Property Real/Intellectual Holdings Property Holdings •• Property Real/Intellectual Real/Intellectual Holdings Property Holdings •• Initial Public Offerings/ Property Holdings Initial Public Offerings/ • Publicly Initial Public Offerings/ Traded Companies Publicly Traded Companies •• Initial Public Offerings/ Initial Public Offerings/ Publicly Traded Companies Publicly Traded Publicly Traded Companies Companies

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

Maritime & Corporate Administrators affiliation the Marshall Islands tel: 4294 404 piraeus@register-iri.com tel: +30 +30 210 210in 4294 404&||with piraeus@register-iri.com Maritime Corporate Administrators tel: +30 210 4294 404 | piraeus@register-iri.com Maritime & Corporate Administrators www.register-iri.com www.register-iri.com tel: tel: +30 +30 210 210 4294 4294 404 404 | | piraeus@register-iri.com piraeus@register-iri.com www.register-iri.com www.register-iri.com www.register-iri.com 27/04/2012 14:16

UP FRONT

LITHUANIA RUSSIA SLOVENIA

SERBIA

CCCI BUSINESS FORUMS IN Lithuania, Russia, Serbia, Slovenia

ilnius, St. Petersburg, Belgrade and Ljubljana are the cities in which the Cyprus Chamber of Commerce & Industry (CCCI) is organising four business forums in June 2012. In collaboration with the Ministry of Commerce, Industry & Tourism, the CyprusRussian and Cyprus-Serbia Business Associations and local Chambers, the CCCI will be promoting Cyprus as a regional international services centre while seeking to further develop Cyprus’s financial cooperation with Lithuania, Russia, Serbia and Slovenia. The Business Forum in Vilnius takes place

on 12 June while the St. Petersburg meeting will be held two days later. The Forum in Belgrade is on 26 June with the Ljubljana meeting on 28 June. Those interested in participating should contact the CCCI’s Department of Services & Trade on 22889890.

Lithuania: Facts & Figures

The largest and most populous of the Baltic states, it is situated on the eastern shore of the Baltic Sea, bordered by Latvia to the north, Belarus to the southeast, Poland to the southwest, and Kaliningrad, a territory of Russia, to the west. • It was the last country in Europe to be converted to Christianity. • Famous people of Lithuanian descent include the actor Charles Bronson and the composer Aaron Copland. • Lithuania was the first Soviet republic to declare independence from the USSR. • The country joined the European Union with Cyprus on 1 May 2004. • I n the 14th century, Lithuania was the

biggest country in Europe: it included the present territories of Belarus and Ukraine, part of Poland and part of Russia. • The country’s population in 2011 was 3,244,601. • Lithuanian women live an average of almost 11 years more than men. Life expectancy is 68.0 years for males and 78.8 years for females. • The country has a workforce of 1.63 million. By occupation, 61.3% work in services, 30.3% in industry and 8.4% in agriculture. • Lithuania’s Gross Domestic Product (2010) was $36 billion. •T he average monthly earnings (first quarter of 2011) in the country are $842. • Exports amounted to $17.9 billion in the first 8 months of 2011. Export types were mineral products (25%), machinery and mechanical appliances (9.7%), chemicals (9.5%), vehicles and transport equipment (9.2%).

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UP FRONT

2nd

NICOSIA ECONOMIC CONGRESS

lpha Bank Cyprus presents the 2nd Nicosia Economic Congress on Wednesday 23 May at the Cyprus Hilton, Nicosia. Organised by the Institute of Certified Public Accountants of Cyprus (ICPAC) and Gold, this year’s Congress will address significant economic issues related to the global and European economy, the ongoing economic crisis in Greece and the consequences for the economy of Cyprus. The event is for business leaders and senior executives who will have an opportunity to share and exchange views and ideas on the latest business and macroeconomic trends. Among the speakers and panellists at the Congress, which is coordinated by IMH, are Erik Britton (Director, Fathom Consulting, UK), Manthos Delis (Senior Lecturer in Banking and Finance, Cass Business School, UK), James Dorgan (Director, Dorgan Associates, Ireland), Fiona Mullen (Director, Sapienta Economics Ltd., Cyprus), Dan O’ Brien (Economics Editor, Irish Times, Ireland), Savvas Savouri (Chief Economist at Toscafund Asset Management & Chief Investment Officer of the ToscaMetriks Fund) and John Walker (Chairman & Chief Economist of Oxford Economics).

“HELLO TOMORROW”

FROM EMIRATES

mirates recently embarked on an integrated marketing communications campaign as the company continues its evolution from a travel brand to a global lifestyle brand. Its new global brand platform and direction, themed “Hello Tomorrow”, positions the airline as the enabler of global connectivity and meaningful experiences. “Our new corporate image and global marketing campaign both underline the confidence we have in our existing products and services, and

the vision we have for the future growth of the airline,” said Sir Maurice Flanagan, Vice Chairman of Emirates Airline & Group. “Emirates is not just offering a way to connect people from point A to point B but is the catalyst to connect people’s hopes, dreams and aspirations. Emirates is connecting people and cultures creating relevant and meaningful experiences that are shaping the world,” he added. Emirates has grown from its early days in 1985, when it launched with just two aircraft, to its current status as one of the world’s fastest growing airlines with 171 wide-body aircraft including the world’s largest fleet of Boeing 777s and A380s. A brand synonymous with luxury and innovation, Emirates was the first to offer in-flight telephony across all classes, individual TV screens on every seat, First Class suites and an onboard shower spa on its A380 aircraft. The “Hello Tomorrow” campaign features print, TV and digital advertising including some iconic billboards in New York’s Times Square and Milan’s central train station. The Emirates website has also been refreshed to reflect the new messaging. Reflecting an effort to target a younger audience, the campaign is currently debuting with vignettes of the TV spots on Emirates newly launched Facebook channel.

New

offices for rebranded Baker Tilly

aker Tilly Klitou has entered into a new licence agreement with Baker Tilly International, whereby the firm will use the Baker Tilly brand and logo without any prefix attached. It is only the fourth member-firm in the world to achieve this, after the UK, USA and Israel. “This is a huge success for our firm and for Cyprus,” said Marios Klitou, CEO of Baker Tilly in Cyprus. The licence covers all Baker Tilly offices in Cyprus, Romania, Bulgaria and Moldova. The legal entities in all four countries will continue to be known as Baker Tilly Klitou. The change of brand/logo to Baker Tilly cements the firm’s commitment to Baker Tilly International – the world’s 8th largest network of accounting firms. On 9 April 2012 Baker Tilly Cyprus relocated to its new state-of-the-art office building at a prime location in central Nicosia. All the company’s other contact details (mailing address, telephone, fax, e-mail, websites) remain unchanged.

CORRECTION In the ‘Power List’ story in the April issue of Gold, we wrongly described Polys Michaelides as Chairman of the Cyprus Energy Regulatory Authority (CERA). The Chairman of CERA is, in fact, Georgios Shammas while Dr. Michaelides is the Commissioner of Telecommunications and Postal Regulations. We apologise to both for this error.

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INTERVIEW

five minutes with... THOMAS KAZAKOS, Director-General of the Cyprus Shipping Chamber

The Council of Ministers recently approved new legislation on piracy and maritime security, though we haven’t been hearing so much about the piracy problem lately. Is it still happening on a large scale? The reason why we haven’t been hearing about it so much is that it was the monsoon period when the pirates were unable to launch their attacks. However, the piracy issue is very much alive and although it may appear that it is restricted to the Gulf of Aden area, this is not the case. Thanks to the concentrated efforts of the forces that form part of the European Naval Force Somalia’s Operation Atalanta, some good work has been done but an area covering 1,000 nautical miles is impossible to police. Have Cypriot-flagged ships and their crews been victims of piracy? There have been several attacks and attempted attacks but, as far as we know, no Cypriot-flagged ship has been captured, possibly because of the shipping companies’ own internal protection systems. But we’re trying to be proactive with this new legislation in an effort to ensure that ships flying the Cyprus flag are as well-protected as possible. How much does piracy cost the shipping industry? According to the latest figures (2010), it is estimated that piracy is costing the industry and world trade as much as US$12 billion, and that is excluding the payment of ransoms. One reason why a new approach to the problem has become more imperative is that charterers are unwilling to hire a ship unless the owners can guarantee the secure transportation of their cargo from A to B. Until January, 2011 the whole of the ship-operating community was against the use of armed guards on ships. Nor was it willing to allow seafarers to carry

under strictly-defined circumstances. Of course, such legislation doesn’t resolve the issue of piracy but hopefully it will make a difference. The Council of Ministers recently approved a bill to tackle piracy in the shipping industry. What are its key provisions? The main point is that ships will be allowed to deploy armed guards on board merchant ships to protect the crew, vessel and cargo from pirate attacks.

Ships will be allowed to deploy armed guards on board merchant ships to protect the crew, vessel and cargo from pirate attacks arms: they are not trained soldiers and we were not prepared to ask them to risk their lives to defend cargoes against pirate attacks. But because the problem had reached such huge proportions, the International Chamber of Shipping (of which we are a member) took a big decision to change its policy. While maintaining its commitment that seafarers should not be armed, it asked national governments to pass legislation so that armed guards may be deployed

You have described it as a ‘pioneering’ piece of legislation. In what way? Some countries have enacted legislation based on documents that are a page and a half long. The bill that will be tabled before the House of Representatives contains 85 pages of detailed regulations. We need to be sure that the security guards are properly trained, certified and regulated; the terms of engagement must be clearly defined; the legal ramifications of accidents, etc., have to be set out. It’s a huge amount of detail. Have other European countries passed similar legislation or is Cyprus taking the lead? As far as I know, Cyprus is the first country in the EU to have drafted such all-embracing legislation. The Cyprus Shipping Chamber has worked very closely with the Department of Merchant Shipping, the Attorney-General, all the competent government ministries and other bodies to ensure that the law will be the most effective possible. Once it is enacted, it will show that Cyprus, as a leading maritime nation, takes its role seriously and it will give us a competitive edge against those that cannot guarantee their ships’ safety. Moreover, it will in some way compensate for what we are losing due to the Turkish embargo on Cyprus-flagged vessels.

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OPINION

Communicating in a Crisis Nobody wants things to go wrong but, when they do, companies must be prepared to deal with the situation

hen one looks at ‘classic’ crisis cases such as Exxon Valdez, Perrier Water and Shell Brent Spar, it never ceases to amaze that such globally powerful organisations can get things so terribly wrong. It is incredible how much time and money is spent on developing and discussing strategy compared to developing the skills needed to implement it or manage it if things go horribly wrong. The rules of crisis management are really quite simple. Prepare for the unexpected: It may be an unpleasant thought but if you run an airline, the chances are that one of your planes might crash one day. If you make food, you might experience a health scare. If you run a car company, you might have to manage a recall. If you run an oil company, you might have to manage a spill. It is vital to work out how your organisation would react if the worst were to happen and plan and train accordingly. Whilst risk registers and contingency plans are a good start, they can fool you into thinking that you have all bases covered. Planning and training must encourage creative flexible open behaviours. It is important to remember that it is usually the crisis that you never thought of that kills you. Preselect, train and empower a crisis team: When crisis strikes, things develop at a devastating pace and companies need to react fast, regardless of time zones, corporate procedures or internal politics. Individual leaders and teams should be preselected, trained and empowered to react instantly and calmly to the situation. In 2009, the consensus culture at Toyota condemned them to losing the initiative and being butchered by the media over their recall crisis. Unless you are ahead or on the curve you will always be playing catch up and the crisis will spread systemically. Put yourself in the customer’s shoes: When Toyota finally reacted in 2009, their crisis spokesmen tried to explain everything in engineering terms. What they should have done was consider what their customers may have been

Unless you are ahead or on the curve you will always be playing catch up and the crisis will spread systemically

By Stephen Carver

thinking (which is likely to have been whether their car was safe to drive). You have to build trust with your customers before their goodwill turns to anger, resentment and even personal hatred (as with BP in 2010). Regret, reason, remedy: First you have to show that you are human by showing empathy for those people affected and express regret for what has happened. Many people fear legal consequences and are often told “never say you are sorry”; but showing that you understand the feelings of your customers is not the same as admitting liability. Secondly, try to explain in straightforward terms what has happened and the reason. If you don’t yet know, then say so and do not hide information that customers need to know. Lastly, take control of the situation by stating what you are going to do to remedy the situation. Communicate, communicate communicate: In times of crisis, organisations often feel that they are being attacked by a hostile press and the temptation is to close the doors, call a meeting and ignore the ringing phones. While it is important to establish your message, it is vital that you are seen to be openly communicating as soon as possible – speculation fills a vacuum. Communicate to your customers via the media but don’t forget the other key stakeholders including your own employees, suppliers and partners. Know your message and stick to it: Most TV soundbites are about 30 seconds which means you need to sum up your message in this time, which in reality is only about 90 words. Don’t forget to take advantage of the other media routes open to you including radio, internet and social media sites such as Facebook, YouTube and Twitter. Take control: Crisis can hurt but it can also be an opportunity to show what a fine organisation you are. Case studies such as Johnson & Johnson Tylenol and BMI Kegworth show that if you are prepared and react well to a crisis, there can even be long term benefits in terms of customer loyalty and media perception. Seize the opportunity!

info: Stephen Carver is a lecturer in Project & Programme Management at Cranfield University in the UK where he appears regularly on national radio and TV. He is a Fellow of the Association of Project Managers. stephen.carver@cranfield.ac.uk 18 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

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SPECIAL REPORT

FOREX TRADING T PRIVATE BANKING AND WEALTH MANAGEMENT SERVICES ARE NOW AVAILABLE TO THOSE WHO NEED THEM IN CYPRUS By Costa Ioannides he foreign exchange market (Forex or just FX for short) is regarded as one of the fastest, most adrenalin-fuelled markets around. Until the dawn of the Internet, however, Forex trading in the currency markets had been an activity limited to major financial organisations, Central Banks, investment funds and all but the very rich. The emergence of online trading, however, has radically transformed the industry and, now, average investors can easily buy and sell currencies through an online FX brokerage account.

24/7 LIQUIDITY AND LEVERAGE

Major unexpected occurrences aside, currency rates tend to move in very small increments on a day-to-day basis. Currency pairs tend to fluctuate at fractions of a percentage point in any given day, representing a less than 1% change in their value. Although this relative price stability makes foreign exchange one of the least volatile financial markets, the power of leverage enables these small changes in price to be magnified to reflect large gains, and conversely, large losses. As such, currency speculators in the retail FX market can leverage upwards of ratios of 200:1 and so hold positions in the market representing €20,000 with only €100. Because of this, the utilisation of high leverage rates drastically increases the risk/return profile of positions traders can hold. Combined with the ability to trade in world currency markets 24-hours a day and the massive liquidity inherent in the

market, FX traders have the ability to make – and lose – large amounts of money round the clock.

UNIQUE TRAITS OF THE FOREIGN EXCHANGE MARKET

- 24-hour continuous operation (except weekends) - Huge trading volume representing the biggest asset class in the world - A large array or variables that can impact exchange rates - The ability to employ leverage to magnify profit and loss margins - Global geographical dispersion

A LEVEL PLAYING FIELD

With massive liquidity and the ability to leverage, the global FX market has attracted increasing numbers of traders who either hold very shortterm positions that are opened and closed in a matter of minutes or long-term ones that are held for months at a time. With the exception of Central Bank interventions aside, the sheer size of the market makes currency pricing extremely market-driven and based almost purely on aggregate supply and demand dynamics, making FX trading almost immune to behind-the-scenes profiteering or insider dealing. With the allure of the FX trading proving hard to resist, it’s vital for potential investors to gain an understanding of what causes the market to move and how such occurrences can work for and against them.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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SPECIAL REPORT

ALPARI FINANCIAL SERVICES LTD (ALPARI FS)

SERVICES

Alpari Financial Services Ltd (Alpari FS) is an independent Forex broker that provides online trading services on the international currency market. It is registered as a Cyprus Investment Firm and licensed by the Cyprus Securities and Exchange Commission (licence number 129/10). It is part of the Alpari Family of Companies (Alpari), internationally recognised for its track record of innovative technological solutions and exceptional trading services. Alpari is a world renowned Forex broker. Since it was founded in 1998, Alpari has quickly expanded to 22 countries, including the world’s major financial hubs. Today, Alpari proudly offers nine regulated centres for safety and transparency to all investors and has earned the trust of more than 440,000 clients in over 150 countries, with monthly trading volumes on average exceeding US$200 billion (figures as of May 2011). The guiding principle that has shaped both the business and culture of Alpari is to provide clients with unparalleled service. At the heart of this principle are trust and transparency. These are the values that have enabled Alpari to earn the reputation it enjoys today. Our mission at Alpari is to provide our clients with a world-class Forex trading experience that is second to none. The

establishment of Alpari Financial Services Ltd (Alpari FS) in Cyprus extends this mission. Alpari set up an office in Cyprus because it is now one of the world’s major centres for online Forex trading. In addition, Cyprus’ strategic geographic location is ideal for service-type activities such as ours; it is situated at the crossroads of Europe, Africa and Asia and forms a gateway to the Middle East, which offers additional convenience to our clients in these areas. Alpari FS allows both retail and institutional clients to access the international currency market and trade different financial instruments, including Forex, spot metals, CFDs on commodity futures, ETF CFDs and share CFDs through multiple stateof-the art trading platforms, such as Meta Trader 4 and the newly launched Meta Trader 5 platform. Moreover, Alpari FS offers clients superior trading conditions with tight spreads and streaming quotes on all financial products and also gives them free access to economic reports, up-to-the-minute news and the very latest analysis from a team of financial specialists.

ALPARI FS PLATFORMS

• Tablet Platforms – iPad •P C Platforms – MetaTrader 4, MetaTrader 5 •W eb Platforms – Alpari WebTrader, Alpari Direct •M obile Platforms – iPhone, Android, BlackBerry, Smartphone, Pocket Pc

ALPARI FS SERVICES

• SMS alerts • Fast execution • Direct access to deep interbank liquidity • World-class multilingual customer support • Educational services, including one-on-one training

ALPARI FS TOOLS

• Web TV daily update • Dow Jones real-time streaming news

• Daily Analytical Reports from Alpari FS’ team of financial specialists • Thomson Reuters economic calendar with real-time streaming news • Trading Central combines elements of fundamental and technical analysis • Autochartist identifies technical patterns and plots Fibonacci retracement levels We believe in continuous development and place a great deal of emphasis on training and learning, not only for our personal development but for that of our clients as well. Our clients’ needs serve as our map and provide us with a winning direction to provide clients with the vital information and analytical tools needed to trade the financial markets. As the Forex industry grows, Alpari will continue to expand and develop, being at the forefront of the international Forex market with a commitment to delivering cuttingedge technology, comprehensive market research tools, advanced educational programmes and exceptional customer service.

RISK WARNING

Trading Forex and CFDs on margin on the OTC market carries a high level of risk and may not be suitable for all investors. There is a possibility that you may lose more than your initial investments. Prior to trading you should fully understand all the risks involved with forex trading and take into consideration your level of experience.

CONTACT DETAILS

Alpari Financial Services Ltd (Alpari FS) Alpari Tower, 35. Lamprou Konstantara, Kato Polemidia, 4156, Limassol, Cyprus Postal Address: P.O. Box 54311, 3101, Limassol, Cyprus Tel: (+357) 25257333, (+357) 25028750 Fax: (+357) 25257344 Website: www.alparifs.com e-mail: info@alparifs.com

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SPECIAL REPORT

FXPRO

ECN – HERALDING A NEW ERA IN FX TRADING

he financial crisis of the past few years has claimed many casualties, but FX has certainly not been one of them. Trading volumes have increased across all the available measures, but furthermore the trend towards migration onto electronic platforms has continued unabated. Euromoney’s recent e-trading survey showed participants (banks, corporates and investors) executing just 18% of transactions by voice, with this expected to fall to 13% in the not too distant future. But rather than creating a ‘them and us’ playing field between the institutional and retail players, the developments in electronic trading and execution have worked to narrow the divide, creating new and exciting opportunities for the retail FX space. Nowhere is this more apparent that in the field of ECN, or Electronic Communications Networks. It may not be the catchiest acronym but it has been one of the most significant developments in making the same opportunities available to both retail and institutional participants. ECNs work by pooling prices for a wide range of currency pairs from multiple liquidity providers and presenting them to traders on a customised trading platform. By scanning the market for the best bid and offer on any pair at any point in time, bid-offer spreads are, on balance, tighter than what is available from any single price provider. For some currency pairs, bid-ask spreads may approach zero, although this naturally dependent

on the available liquidity and positioning of the liquidity providers. In addition, traders can view market depth, as most platforms show the size of the bids and offers available on the platform. This element narrows the divide between FX – which still remains what’s known as an over-the-counter (OTC) product – and products traded on exchange (such as equities), where such transparency is taken for granted. It’s the difference between looking at the outside world through a letter box and a glass door: the latter gives you a lot more faith about what lies beyond. With the ECN model, the role and requirements of the broker change. In contrast to a market-maker, the broker acts as the intermediary to the trade, rather than the counterparty. In any market, that delivers natural advantages to the trader, primarily anonymity with whomever they are trading. It’s often said that markets are driven by fear and greed and, in most cases, participants prefer not to reveal whether they are bearish or bullish. There are exceptions to this rule in the institutional field but, even there, key players prefer to trade under the cloak of anonymity most of the time. There is sometimes a perception that ECN trading is only for the experienced, higher-volume traders. As always with trading, it boils down to what you are most comfortable with. ECN trading is instant – you won’t receive re-quotes. A re-quote occurs when a market-maker will not fill your order at the price you chose, more

often than now, owing to fast-moving markets. The counter-balance to this for ECN traders is that they may not always get the price they see, the same with any stop levels (which you place to say where you would like to exit a trade), or pending orders you set. No ECN provider can guarantee an exact price on these, whereas market-makers should look to fill as best they can, even if they take some slippage between the market price and the price given to the client. It’s the same when queuing for the last chocolate chip shortbread with your morning coffee. You may see it behind the counter but who’s to say it will still be there when you get to the front of the queue? You may have to settle for one without chocolate chips. Granted, we’re talking milliseconds in FX rather than a few minutes in a coffee shop but the principle is the same. In general, though, ECN accounts will offer less leverage than ones built around a market-maker model, in part due to the scenario outlined above. The ECN broker has no control over execution prices and so is likely to be more cautious in the leverage offered, ultimately to protect the client. For this reason, opening deposits required will generally be higher because more capital will be needed for any given position in the market. It’s not only technology that has supported the growth in FX trading in both the institutional and retail fields in recent years. The other major factor that has been apparent is the increased cross-correlation between many different financial assets. The mantra that

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has dominated the market chatter has been ‘risk-on, risk-off’. Bonds, equities, metals, credit and some aspects of FX (e.g. high-yielding currencies) have been caught in the ebb and flow of global risk appetite. In the first two months of 2012, as sentiment improved, stocks took off (the S&P 500 up 8.6%) and credit markets rallied, as did high-yielding currencies. This has changed the whole approach to investing, diminishing the risk-adjusted returns from diversification between different asset classes. A couple of anecdotal stories also highlight this shift. I was speaking to a senior banker earlier this year, who recalled how, before the crisis, the divisional heads at major asset managers (of credit, fixed income, equities etc.) may have met once a quarter to discuss the markets. Each was pretty much uninterested in what was going on in the other sectors, confident that they were on top of the micro-factors that were relevant to their respective asset class. Now they meet as frequently as once a week. Elsewhere, the London-based head of an Asian equities fund was telling me that the first thing he looks at in the morning is not the latest Asian economic data or corporate results, but the moves on Spanish and Italian bond yields. Five years ago, someone in a similar position would have struggled to find these on their news terminal and, in some cases, even on a map. How times have changed. But how has FX managed to be caught up in this development and yet rise above it? The best illustration is the fortunes of AUD/JPY. The yen, with near-zero interest rates, has been one of the primary carry currencies,

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where investors have borrowed. The Aussie dollar, with its comparatively high interest rates and strong linkage to China, has been one of the primary destinations for those wanting exposure to the global business cycle. The result has been a rollercoaster but one strongly correlated with equities and other asset classes. Even this has proven to be a tougher ride recently, as the Australian Central Bank has started cutting interest rates and the world has become increasingly nervous regarding the state of the Chinese economy. Yet these developments, together with those on the technology side, have helped deliver strong growth in funds trading algorithmic strategies in FX. Put simply, these are strategies that scan currency pairs for key patterns and execute trades accordingly, with the programs calibrated based on years of data. Trades can be open and closed in seconds. They may stretch to hours, and more rarely days. The aim is to generate returns that are uncorrelated not only with other markets but also with broader macro themes such as the carry example outlined above. Expect to hear a lot more about these types of strategies and funds in the coming years, together with more ways to make them accessible to retail investors. Whilst these wider technological developments have brought the pricing and liquidity of the institutional market to retail players offers new potential, it can also be daunting for those unfamiliar with FX. As with many skills, the best way to learn is by doing it, with most new traders starting

off with a demo account to familiarise themselves with the platform and markets. Furthermore, you don’t need a doctorate in international finance to trade. Many turn to expert advisors, programs which trade with pre-set rules. These can be adapted to FxPro’s cTrader platform using the cAlgo (algorithmic) language. Such robots have been a common feature of the retail FX space for some time and it’s notable that this rule-based trading is becoming increasingly common in the institutional space as well, using similar liquidity-pooling platforms to ECNs. This all means that the opportunities, liquidity and technology available to retail FX traders should continue to get better and better in the coming years. Simon Smith Head of Research FxPro Financial Services Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary.

CONTACT DETAILS FxPro Karyatidon 1, Ypsonas 4180, Limassol, Cyprus Tel: (+357) 25969200 Fax: (+357) 25969269 Website: www.fxpro.com e-mail: info@fxpro.com

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SPECIAL REPORT

TFIFX WHY TFIFX?

TFIFX has been providing bespoke currency trading services since 1999. TFI specialises in servicing High Net Worth Individuals, hedge funds, corporations and private investors/speculators that want to take advantage of currency fluctuations. TFI’s structure allows customised solutions to cater for clients’ needs and accommodate their trading strategies. We pride ourselves in our personal service and our sophisticated business model which provides us with the flexibility to quote larger transaction sizes (up to 200 lots per click) while maintaining fixed spreads, irrespective of the amount and/or market conditions. TFIFX provides investors with the opportunity to access the Foreign Exchange Markets 24/5 using the award winning MT4 Trading platform through web and mobile versions. The TFIFX support team will be with you on every step of the way to guide, train and provide you with market insight or even accept your telephone orders. Since 1999, TFIFX has been providing premium services to all of its clients, irrespective of trading volume or size, with professionalism and dedication to protect their clients’ interests. TFI is the only currency specialist boutique in Cyprus that offers a broad range of currency services including but not limited to Hedging of Currency Exposure and Payments in any currency.

TWO UNIQUE ACCOUNT TYPES TO CHOOSE FROM:

Premium Account: Ideal for Traders with high demands in service and execution. Benefits: • Trade up to €20 million per click with Fixed Spreads at all market conditions • 24h Access to the Treasury Room • Same day deposits/withdrawals • Zero Margin for Hedged positions • No FX Commissions or Hidden Fees • Instant Execution of Market Orders • Free 4Cast Market Commentary • In House daily/weekly market commentary & analysis • Segregated Client Funds deposited in EU • Banks • Trade online or over the phone • Negative Balance protection

CashBack Account: It rewards every single trade by returning you an exact portion of the spread. Benefits: • 1 pip CashBack on every round lot traded • Fixed Spreads at all market conditions • Same day deposits/withdrawal • Zero margin for hedged positions • Free Real time 4Cast market commentary • In house exclusive daily and weekly market research • Instant execution of market orders • Segregated Client Funds deposited in EU Banks • Multiple Funding options • Negative Balance Protection Client engagement: • We maintain a leading service by giving you the ability to trade major & exotic currency pair’s according to your requirements. • We consistently keep our spreads stable even under extreme market volatility. • We are able to provide you with all the necessary tools and information to advance your trading skills. • We will support your trades and answer your call 24/5. • We will provide you with treasury access 24/5. Forex Trading Tools on the Go: • iPhone TFIFX Rates and News App • iPhone MT4 Trading Platform • Android MT4 Trading Platform • Windows Mobile MT4 Platform • PC MT4 Platform SMS & email Alerts: • Daily Prices twice a day • Daily In-House Analysis • Weekly In-House Analysis • Trade Ideas Currency Trading in EUR – USD – GBP – JPY – CAD – CHF and more...

Loucas Marangos

Maria Theodorou

Charis Charilaou

Melina Panagi

CONTACT DETAILS

TFIFX 178, Athalassa Avenue, Irene Tower, 2025 Nicosia, Cyprus Postal address: P.O. Box 16022, 2095 Nicosia, Cyprus Tel: (+357) 22749800 Fax: (+357) 22817496 Website: www.tfifx.com e-mail: info@tfifx.com

Thanos Vassiliades

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COVER STORY Ashok Kumar, Indian High Commissioner

C I T A M O L DIP

S R E W S N A AMBASSADORS AND HIGH COMMISSIONERS ARE OFFICIALS OF THE HIGHEST RANK WHO LOOK AFTER THEIR COUNTRYâ&#x20AC;&#x2122;S INTERESTS AS ITS RESIDENT REPRESENTATIVE IN ANOTHER STATE.

As keen observers of what goes on in the nation to which they have been posted, they each have a unique view of the political, financial and cultural scene in their host country, naturally coloured by their own opinions and the official policies of their own government. Gold invited five of them for an unprecedented discussion on Cyprus, international and regional issues.

Matthew Kidd, British High Commissioner

By John Vickers. Photography by Jo Michaelides

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Michael Harari, Ambassador of Israel

IN OUR IMMEDIATE REGION, THE GREATEST CHALLENGE IS TO FIND POLITICAL STABILITY Alfredo Bastianelli, Ambassador of Italy

Andrew James Schofer, Chargé d’Affaires, US Embassy

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COVER STORY

SINCE 2005, THERE HAVE BEEN SUBSTANTIAL FLOWS OF FOREIGN DIRECT INVESTMENT (FDI) THROUGH CYPRUS TO INDIA AND CYPRUS RANKS EQUALLY WITH JAPAN IN TERMS OF FDI.

Gold: What would you identify as the major political and economic challenges affecting the world, the broader Eastern Mediterranean region and Cyprus? Alfredo Bastianelli, Ambassador of Italy: There are many interlinked challenges, including all the problems related to climate change, but for me sustainable development and sustainable growth will be the greatest in general terms. In our immediate region, the greatest challenge is to find political stability. There are many problems, such as terrorism which we have had to deal with over the last 20 years and which has increased since September 11, and most of them have a political origin in this region. On the specific

subject of Cyprus, it is a very marginal player in terms of this major problem but despite the division, it is a very stable place. A solution to its internal problems may facilitate the country to become a much bigger player in the region and it deserves to be, as the closest European Union country to the region. Matthew Kidd, British High Commissioner: One of the global challenges that we will need to address over the next 20-30 years concerns competition for resources of all kinds at a time when the world’s population is expected to continue growing quite fast, which will intensify this competition. Another challenge for the next generation will be to develop better ways to use the technological advances achieved in the last 20-30 years, in terms of the speed at which information moves and financial systems can evolve. At the moment, much more is happening – and much faster – than we can keep up with and that creates its own instabilities. Focusing specifically on this region, a few months ago we might have viewed Cyprus as a victim of the competition for resources, since it has always had to bring in most of what it needs from elsewhere. One of the challenges for Cyprus and the region will be to adapt to a new situation where, suddenly, it looks as though it is going to be a producer of a key resource and not just a ‘passenger’ in the world markets, obliged to buy what it needs from elsewhere. Ashok Kumar, Indian High Commissioner: I would tend to agree that the major world challenge is sustainable development. Over the past several years, there have been imbalances building up in the world economy which have now more or less come to a head in some areas. One of the consequences of the globalised economy is that even those countries which were not directly affected by the original causes of the problems of 2007-2008 have been very seriously affected. So how we manage the financial sector is very important to the real economy. Coming to the region, winds of change are blowing regarding the aspirations of the people and how they govern themselves. It is difficult to say what the outcome of these trends will be. Things evolve over time and I’m sure that they will evolve here too. But a vibrant democracy, such as the one in India, is the best way for a country to govern itself. How it is achieved and which path will be followed is naturally up to the individual countries to decide.

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Andrew James Schofer, Chargé d’Affaires, US Embassy: My colleague mentioned winds of change and I think we’re looking at very significant changes, not just in the region but globally, in terms of how states interact with each other, how populations have changed their expectations and they way they interact with their leaders and with other countries. I think that dealing with this new situation is probably going to be one of the biggest challenges – and opportunities – for us in the coming years. We certainly see this in the US and it is reflected in the way we are changing our focus in how we do diplomacy. The Secretary’s Quadrennial Diplomacy and Development Review lays out some of the areas on which we’d like to focus. As you may have seen, we have a new Under Secretary for Economic Growth, Energy and the Environment which demonstrates how important we see economic statecraft. And it’s impossible in this environment to separate issues into their more traditional strands – security and economic issues are connected just as security and the environment are connected; gender issues and other concerns are all things that we have to look at as we figure out how to work in this new situation. The changes taking place in the Middle East and the region are clearly significant and they are going to demand a lot of creativity on all our parts regarding how we can help this process move forward in a positive and constructive way. Regarding energy resources in the eastern Mediterranean, this is a very new development that poses some challenges but it also creates some very significant opportunities, not only in terms of economic development but also in the search for regional stability. Such opportunities create motivations and incentives for various parties to develop jointly. Michael Harari, Ambassador of Israel: I agree with what my colleagues have said but I would emphasise two points: in my opinion the real challenge is indeed the competition for resources but I would also say that after 15 years of speaking about globalisation and what it means, what we now need to see is how globalisation meets the particular interests of each one of us – whether a big state or a small state. The real challenge right now is for each of us to position ourselves, knowing that the wave is global. The second point, concerning our region, is, of course, stability which we all need in order to be able to deal properly with the economic challenges. The challenge here is how to achieve this stability,

given what we have had to face in the last 2-3 years. In a way, each one of us needs to be in a position to contribute to stability, especially in the region. We are all clever enough to understand this but we need to implement it. I think we can. Gold: Both Israel and Cyprus have longstanding problems which, in a sense, pose a threat to the stability that we all want. The Indian High Commissioner said that everything is evolving but in this case, are things not evolving fast enough or not at all? These two seemingly intractable problems have been around for 40-50 years now.

IT OFTEN HAPPENS THAT WHEN THERE APPEARS TO BE NO HOPE, SUDDENLY SOMETHING HAPPENS TO CHANGE A SITUATION AND I THINK THAT IT IS EXACTLY THE SAME IN THE CASE OF CYPRUS. Michael Harari, Ambassador of Israel: I think the art of international relations is to take advantage of any developments in the region and ask ourselves how we can benefit from them in order to – hopefully – solve our own problems. Developments everywhere are a given; we can’t change that. The main challenge and the beauty of what we are doing is how to make the most of developments for our own benefit. Matthew Kidd, British High Commissioner: Our experience from Northern Ireland actually suggests that you can have a

€100 MILLION

The amount that Cyprus is currently investing in Italy

problem which seems to be stuck for a very long time and then suddenly something happens which creates a possibility to make progress very quickly. If you watch the environment, you’re better placed to spot such an opportunity when it arises and it seems to me that there’s no reason why, just because the two problems that you mentioned have been in place for a long time, there can’t be a sudden breakthrough if the conditions are right and people are ready to grasp the chance when it comes. Alfredo Bastianelli, Ambassador of Italy: I fully agree and there are plenty of examples of supposedly unsolvable problems that have been solved within days. However, I wonder whether it is enough to merely watch and then take advantage of an opportunity, rather than helping that opportunity to arise. The so-called ‘Arab Spring’ presents plenty of opportunities but plenty of risks, too, so is it right just to watch and use the opportunity? What is happening in countries like Libya and Egypt – let’s leave Syria aside for a while because the situation seems very serious –must be accompanied by action by the European Union and the international community. We need to avoid the possibility of radicalisation, for example. I don’t think it’s enough to wait for opportunities. Something must be done, such as encouraging cultural exchanges and open markets, for example, to bring movement and progress. Ashok Kumar, Indian High Commissioner: It’s important that stability should not be confused with the status quo. When we talk about stability what we are actually looking at dynamic stability, meaning that things are progressing. Andrew James Schofer, Chargé d’Affaires, US Embassy: This is also an illustration of how complicated and inter-

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IF YOU JUST LOOK AT THE NUMBERS, THE CYPRUS-US TRADE RELATIONSHIP LOOKS SMALL BUT IF YOU LOOK AT THE BIGGER PICTURE, THERE’S A LOT MORE GOING ON THAN FIRST MEETS THE EYE. related the world has become. The issues that you mentioned are longstanding problems that we’re all aware of but what’s happening in the region now is affecting the dynamics of specific problems as well as how they interact with each other. What happens on the economic front is going to have an impact on the political side and vice versa. I agree that sometimes the best thing is ‘active observation’ by which I mean that we’re involved, we’re interested, we’re trying to see where we can help and what we can do but we can’t push processes faster than they’ll stand. I think it’s important to build conditions so that you’re ready to support solutions when they emerge. Gold: Let’s look at Cyprus from a commercial rather than a political angle. People here have often taken the view that because Cyprus is a tiny country, it can’t really do much in the world, though the recent gas and oil discoveries may change this. But, for example, the USA is huge so can Cyprus have a meaningful trade relationship with it? Andrew James Schofer, Chargé d’Affaires, US Embassy: If you look at the immediate bilateral economic relationship, it is small

but growing in some critical sectors and has some very important links, for example, in the financial services sector. We have some very large American companies represented here. In the energy sector, Noble Energy and Energy International have recently become involved and there is certainly room for growth there. In services and franchises there’s a lot going on but it’s also important to remember that Cyprus, as part of the EU, is part of a much larger transatlantic relationship which is huge. It’s our biggest trade relationship anywhere in the world and will likely remain that way for a very long time. So it doesn’t really matter if a Ford car, for example, is made in Germany and shipped to Cyprus; it’s both an intra-EU trade deal and also a transatlantic one. I think Cyprus has a lot to offer and we see a lot of companies expressing an interest in Cyprus because of its strategic location and the linkage it provides between the EU and the Middle East. It also has a favourable tax environment, great facilities in terms of shipping and so on. If you just look at the numbers, the Cyprus-US trade relationship looks small but if you look at the bigger picture, there’s a lot more going on than first meets the eye. Ashok Kumar, Indian High Commissioner: As far as trade is concerned, in the

case of India and Cyprus it‘s also very small, somewhere in the range of €60-70 million. At the same time, while there is a recessionary trend elsewhere, trade has expanded by almost 40% in the last year. Since the starting point is so small, there will always be opportunities for further expansion. Cyprus has developed a good financial sector and it signed a double taxation treaty with India in 1992. During the first decade nothing very significant happened but since 2005, there have been substantial flows of Foreign Direct Investment (FDI) through Cyprus to India and Cyprus ranks equally with Japan in terms of FDI. The Cypriot oil and gas sector will become prominent in the course of time and this is another area where India has its strengths. We are very strong in engineering, procurement and construction and I am sure that there will be some possibilities of joint ventures in the future. Gold: Is there going to be enough oil to go round? We’ve been hearing for years that it’s running out. Ashok Kumar, Indian High Commissioner: All countries are diversifying into new areas and India, for example, has also gone into the commercial production of coal-bed methane and shale gas. Shale gas production in the USA has expanded so much in the last few years that its LNG facilities which were set up to import gas have become redundant because they no longer need them. Now they are exporting gas, including to India. It is true that oil is a finite resource and we need to be looking to other renewable sources of energy and even though the development of nuclear energy comes with

$97.1 million

US GOODS IMPORTED TO CYPRUS IN 2011.

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many challenges, I don’t think the world can rule it out. Yes, we’ll have to find solutions to the challenges but unless we do, I don’t see how we can achieve the sustainable development that we were talking about earlier. Alfredo Bastianelli, Ambassador of Italy: In 1978 I participated in an OPEC seminar at which it was predicted that there would be no more oil by the end of the century. The forecaster was clearly not correct! Andrew James Schofer, Chargé d’Affaires, US Embassy: This also highlights the importance of innovation and technological developments in all the issues we’re talking about, certainly in the energy area where Cyprus has a real opportunity to foster a kind of change. I was in the US last week and I was surprised there were people there talking to me about solar energy and wind energy – which is being developed here in Cyprus – and they were looking at other opportunities on which to cooperate. Matthew Kidd, British High Commissioner: You introduced the question by suggesting that there had been a tendency here in Cyprus towards an instinct of “we’re too small to be able to make a difference”. My sense has always been that, in commercial terms, Cyprus’ entrepreneurs and exporters have not suffered too much from that and rightly so. They’ve been very successful at building themselves niche advantages, networks, outputs and areas for exporting over the decades which have served them very well and they’ve been very successful at developing a financial services sector which is very big compared to the scale of the overall economy but developed, in my judgment, on a broad enough range of supports that it is reasonably sustainable. As for the island’s own economic prospects, I would say that the way the Cypriots have been able to develop their own advantages and show that they can compete over the years, particularly in the years after 1974, puts them in a good position for dealing with the new challenges and

opportunities in the gas and oil sector. That brings me to a point about the links between the UK and Cyprus in economic terms. We have just heard how Cyprus investment in India is as great as Japan’s and Cyprus also features in the Top 20 Foreign Direct Investment sources into the UK. Some of that money is not Cypriot in origin – it’s passing through Cyprus – but it demonstrates a role in this area for Cyprus which is significant and certainly too big to be thought of as too small to count. Michael Harari, Ambassador of Israel: There needs to be a change of perception and a realisation that, basically, size doesn’t matter. From our point of view, Cyprus has a fantastic location and much more. Total bilateral trade between Israel & Cyprus is €667 million. According to the Department of Statistics & Research of Cyprus, total imports from Israel for 2011 were €638 million (an increase of about 25% on the 2010 figure of €510 million) while Israel is now the 2nd largest exporter to Cyprus after Greece. Total Cypriot exports to Israel are worth €29 million (including products manufactured in other countries and exported to Israel) and this figure is up by approximately 39% on last year. A lot has been said about the financial services sector and double taxation agreements but I would go beyond such agreements. This is the real challenge. For example, there is a workforce with such a degree of high-level education here in Cyprus that it’s a pity not to take advantage of it. Yes, it makes a lot of sense to emphasise and promote the financial services sector but there is more. Alfredo Bastianelli, Ambassador of Italy: From a commercial point of view, Italy and Cyprus have a flourishing exchange, given our relative size. At the moment we rank equal fourth with Germany after Greece, Israel and the United Kingdom. As for financial exchanges, Cyprus is currently investing €100 million in Italy and Italy only €9 million in Cyprus, though I don’t know what proportion of the €100 million is Cypriot in origin. I would say that we were penalized in the past by the fact that there was no double taxation agreement in place but since last August Cyprus has now been removed from our Ministry of Finance blacklist and things are going to change. Cyprus promotes itself as a sort of bridge to the Middle East (which it most certainly is) but I wonder whether this means much to Italians, given the fact that we have traditionally had very strong relations with Egypt, Turkey and Algeria. However, I can see the financial centre that Cyprus could become in the region.

Gold: You’re all being very complimentary about the financial services sector in Cyprus. How do you view the broader local business world and what kind of impression have you gained through your contacts with Cypriot businessmen and the organisations representing them? Ashok Kumar, Indian High Commissioner: Some months ago I met a Cypriot businessman who told me that he was going to India to sign an agreement with a pharmaceutical company. I assumed that he was looking at importing Indian medicines to Cyprus because they are good quality and cost-effective so I was talking to him about the pharmaceutical industry in India and how I thought there was scope for distributing them in Cyprus after reading articles in the local press about the high cost of medication. But then he said, “I’m not doing this business for Cyprus. It’s for Nigeria”. This man is

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based in Cyprus, not Nigeria and I realised that Cypriot entrepreneurs are doing business in a way that is not captured in statistics at all. Alfredo Bastianelli, Ambassador of Italy: I know of a similar situation in a different sector: a local entrepreneur is trading 50-metre Italian yachts to Russia. Andrew James Schofer, Chargé d’Affaires, US Embassy: I think what you’re looking at here is the dynamism of the local economic environment which is open to entrepreneurship, innovation and creativity and that’s very much what American companies are interested in when they’re looking at places to do business. Gold: We’ve seen successive downgrades by the rating agencies of the Cyprus economy and its banks. Given that the whole of the eurozone has been downgraded, are they the result of something which is out of Cyprus’ hands or can you see why the agencies have reacted in this way? How do you view the work of the rating agencies? Alfredo Bastianelli, Ambassador of Italy: In Italy, very badly! However, looking at the countries whose economies have been downgraded, I do wonder whether Cyprus deserves to have its present rating which I don’t think it reflects the solidity of a manageable economy. In Italy the situation is peculiar in that we have a tremendous debt but all the other indicators are very positive. The Italian banking system has not suffered like that of many other European countries, we didn’t have a real estate bubble and the wealth of the country is higher than Germany’s. There is a tremendous debt, certainly, but does that mean a poor economy? Does it deserve to be downgraded? In Italy, people often tend to attribute these things to international manoeuvres and we are all very pleased to remember how an AAA rating was given to a bank that went bankrupt two days later. Cyprus has had some problems but the size of the economy is very manageable and it is in nobody’s interest to destroy it. It doesn’t require a tremendous effort to get it under control and some measures have already been taken. We need to see what else will be done after next year’s presidential elections but I think it’s natural to wonder why the rating agencies sometimes proceed with these downgrades. Matthew Kidd, British High Commissioner: I’m always rather resistant to conspiracy theories about the rating agencies. Some of the

judgments that they are trying to make – levels of debt, for instance – are directly quantifiable. Others, relating for instance to vulnerability to external factors, to quality of governance and all sorts of other things, are much harder to put figures on and they are thus more likely to be challenged when they issue ratings that are more negative than those people want to hear. The outlook for the UK economy, for instance, has recently been downgraded from ‘stable’ to ‘negative’ and the express reason why is because our exporting economy is, to a very large extent, dependent on the performance of a range of other economies, particularly those in the eurozone. It makes sense to reflect that vulnerability and interlinking with other economies in the sort of ratings that we get. At the same time, we assume that the fact that our ratings have stayed

ONE OF THE CHALLENGES FOR CYPRUS AND THE REGION WILL BE TO ADAPT TO A NEW SITUATION WHERE, SUDDENLY, IT LOOKS AS THOUGH IT IS GOING TO BE A PRODUCER OF A KEY RESOURCE. reasonably good through the last two quite difficult years is because the agencies judge that the government’s determination to see through its austerity programme is still firm and reliable. Nobody likes being given a bad mark or being told that they are not as good as they would like to think they are but it seems to me that when you get a warning before a downgrade, the right response is to look seriously at the message that’s being conveyed and face up to it. There will be cases where we can say that we’re being downgraded on a factor of external vulnerability or something out of our control but there will be other cases when we need to think about trying to do something about the problem that has been highlighted.

Andrew James Schofer, Chargé d’Affaires, US Embassy: Things are difficult all over – even the US economy recently faced a downgrade – and we’ve seen this play out in different ways in different countries. But overall it’s a crisis that we’ll see through and things will be better on the other side. I wouldn’t single out Cyprus for any special focus on the part of the rating agencies. What we’re seeing here obviously has to do with what’s going on in Greece and in the eurozone, as well as with certain decisions made by the government which they know they will have to deal with and are already taking steps to address. Ashok Kumar, Indian High Commissioner: Many things that are generally accepted in economics, such as if you have a current account deficit there will a devaluation of your currency, don’ always happen because of changes to other parameters. So, for instance, if savings of foreign exchange by China are ploughed back into the US economy, then the US economy can consume more without having the dollar go down. The rating agencies also assume that certain patterns will not change but they do. Economics is not physics. It’s not simple cause and effect. There’s a lot of human behaviour involved. The agencies provide their ratings as a tool but it is not the only one. All those involved have to look beyond the tool. Michael Harari, Ambassador of Israel: The rating agencies base their conclusions on fine analysis so most of their analyses should not come as a surprise to any government and, to be hones, I would think that all countries, including Cyprus, know what measures should have been taken and why. I think that it is much better to leave aside all the questions about the rating agencies and decide how to proceed. It is true that the agencies can influence the atmosphere but a much better way is to deal with the problems that they focus on and explain what we intend to do. Once we say what we’re going to do, that by itself immediately creates a different kind of atmosphere. Andrew James Schofer, Chargé d’Affaires, US Embassy: It’s human nature, I guess, but nobody challenges the ratings system when they’re getting AAA! It’s only when the ratings drop that suddenly they want to discuss whether this is the proper way to evaluate an economy or not. Maybe that discussion should happen not only when there is a crisis but further down the road.

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40% trade

BETWEEN INDIA AND CYPRUS HAS GROWN IN THE LAST YEAR.

Gold: You are all observers of the political scene in Cyprus. What is your impression of how politics works here? Michael Harari, Ambassador of Israel: There is a human tendency to say that politics in a certain country is unique and different, whether it’s Israeli or British or Cypriot or whatever. I don’t think politics in Cyprus is any different from how it is all over the world. There is a national issue here and what often happens in such a case is that the politicians spend far too much time and effort on it, even more than public opinion actually expects. So in this sense, there is always a feeling in Cyprus that politics is too focused on the national issue. It’s an art to balance the national issue and other serious issues and, in my opinion, the main question is how far the politicians are able to deal simultaneously with other serious challenges or not. And to be honest, I think they are doing it quite well. Matthew Kidd, British High Commissioner: One thing that strikes me – it is perhaps characteristic of a smaller society and it marks the political environment here very strongly – is the closeness of everybody to the leaders. As they say here, you’re never more than two phone calls away from the president, which means that people expect to be able to have a direct influence on political decisions regarding specific matters. The leaders who are managing the political issues of the day have to be aware of that and it does make a difference. It certainly doesn’t feel like that in the UK, for example. Another thing that is quite characteristic here is the stability of party loyalties. If you look at the polls from 20 years ago and compare the votes that the parties scored then with what they get today, you’ll see that there’s been very little shift in between. That seems to me to be something that can lead to a stifling of political debate which, in the long term, is not necessarily very helpful. But I would hope that these two factors actually play against each other: if new

issues that come up, the lines of access to the leadership are short enough for it to be possible for them to have an impact. The media are also very clear in their political allegiances most of the time and that also tends to make it harder for views, opinions and issues that lie outside the established terms of debate to get in and shake things up a bit. Alfredo Bastianelli, Ambassador of Italy: I agree that one of the characteristics of Cyprus is the loyalty of people to their family’s political party. Grandchildren tend to vote not for the party but for their grandfather who voted for AKEL or DISY so that doesn’t help in creating new solutions because people tend to be a little too ideological. A solution to the Cyprus issue is each party’s final objective but they cannot find a way to tackle it together. In Italy in the ‘80s, the problem of terrorism forced the formation of a government of national unity to tackle the problem and it was a success in the end. Gold: It’s a fact that everything seems to be played out in public here. In other countries, people are informed when something has been achieved. The politicians or the negotiators are talking to the media every night and leaking all the details of what has been said in confidential talks. Andrew James Schofer, Chargé d’Affaires, US Embassy: It certainly makes our jobs much easier as diplomats and observers of the political scene when everything is out in the open! I think the fundamental question for any democratic system is how do you have a vibrant, active, contentious system of discussing issues, debating them and taking decisions but, when it’s needed, come together as a community when dealing with issues of strategic importance for the country? Obviously that debate is going on

€667

MILLION

Total bilateral trade between Israel & Cyprus.

in the United States and it’s going on elsewhere. Here I don’t know exactly how it will play out and I think the Cypriots themselves may somehow wonder at what point the very active, positive and vibrant discussion will allow the country to unite when it’s really in its fundamental interest to do so, whether this is regarding gas, the national problem or any other issue. Gold: And are you optimistic or pessimistic about the chances of resolving the longstanding Cyprus issue? Alfredo Bastianelli, Ambassador of Italy: We mentioned earlier how it often happens that when there appears to be no hope, suddenly something happens to change a situation and I think that it is exactly the same in the case of Cyprus. It may seem hopeless today but something may easily arise that reverses the situation. I have to admit that, at this moment, I can’t really figure out what that ‘something’ might be but I do not exclude it. It’s a peculiar situation because people in both the north and the south of the island want a solution. The solution that each side wants is different but not tremendously different. The vast majority on both sides wants to resolve the problem, though the leaders may not always be helpful in finding it. At this moment I don’t see it. I was in Angola where there was what appeared to be a never-ending war going on between Unita and the government. My colleagues and I used to discuss the situation and we couldn’t see a solution. Then suddenly Jonas Savimbi, the leader of Unita, died and our discussions changed. We thought that there could now be peace but it would take a long time to find it. Two days later, Unita surrendered. That was a situation which we could never have imagined being resolved, so why not here? Especially as the country is in the European Union. Matthew Kidd, British High Commissioner: I always to prefer to be optimistic and I have three reasons for being optimistic here. The underlying one is that I can’t believe that people on both sides of the island do not count the costs of not resolving their problem. It is a fundamental common sense conclusion that the longer the problem is not resolved, the higher the cost. Secondly, there are models that have been developed over the years for addressing the big outstanding problems that we all know about. People obviously like some more than others but it is not impossible to identify what a solution might look like. The third point is that unlike in Angola, unlike in Northern Ireland and unlike in other cases, this isn’t a

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situation where there is violence which has to be stopped before a solution can be achieved. When the checkpoints were opened in 2003 it did not lead to violence and that is one of the most positive things that has happened over the last ten years. Ashok Kumar, Indian High Commissioner: Opposition parties all over the world do not do the government’s job; it’s their job to oppose but that does not mean that the parties will not come together when the right time comes. Obviously they are not going to do this before an agreement is reached but when the time comes for its implementation I’m sure that DISY AND AKEL will come together. Coalition politics is what we have in most states in India and while one party may oppose the other in the state, when it comes to central government they find a way of coming together. Solutions can be found and I think the major Cypriot parties will take the correct decision when a solution to the problem is close. Andrew James Schofer, Chargé d’Affaires, US Embassy: You asked if we’re optimistic or pessimistic. As you know, Americans are genetically predisposed towards optimism and we think there is always a solution. I remember how, on one of my first overseas tours, a senior diplomat took me aside and said, “You Americans are so naive, you believe in win-win solutions. That’s crazy. It’s a zero sum game.” I went home and thought about it and I realized that we do believe in win-win solutions and our experience shows that they are possible. And I think that if there was ever a situation where a win-win situation was possible, it’s here. As has been said, there are real costs to continuing without a solution and there are real benefits to everyone on the island in finding a solution. That doesn’t mean that it’s going to be easy or it’s going to happen overnight and I think the UN and Alexander Downer and his predecessors deserve a lot of credit for keeping the process alive and dedicating a lot of time and energy to helping the sides find ways to work together. I’m optimistic. Michael Harari, Ambassador of Israel: Optimism or pessimism? It’s a tricky one but since the differences between the two sides don’t seem to be huge and since most people have a good idea of what a possible future solution can achieve, I think the circumstances are ready for the politicians on both sides to translate this into a solution. I know that years ago there were different hopes and more wishful thinking but it seems to me that the gap between the two sides is quite small these days and there is enough recognition by the

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I THINK THE ART OF INTERNATIONAL RELATIONS IS TO TAKE ADVANTAGE OF ANY DEVELOPMENTS IN THE REGION AND ASK OURSELVES HOW WE CAN BENEFIT FROM THEM IN ORDER TO – HOPEFULLY – SOLVE OUR OWN PROBLEMS.

Matthew Kidd, British High Commissioner: And in some cases you can see your home and property across the line. That makes a big difference. You can even go and stand outside it... Alfredo Bastianelli, Ambassador of Italy: To end on a positive note, I served in Brazil and a month after I left, the generals stepped down and democracy arrived. I served in Mozambique and the year after I left, peace agreements were signed. I served in Indonesia with the dreadful Suharto and, when I left, democracy arrived there too. I served in Angola which was at war when I arrived and had peace afterwards… Gold: So when are you leaving, Mr Ambassador? Alfredo Bastianelli, Ambassador of Italy: Next year, so we will soon know who will be the person to sign the agreement!

majority of public opinion that we are heading towards a particular solution. Someone needs to translate this into an agreement. History has taught us that the right leader arrives at the right time but, unfortunately, we have no idea when that time is going to come. Alfredo Bastianelli, Ambassador of Italy: I don’t want to give the impression that I am pessimistic. The main components of an agreement are there but it needs some factor that I don’t see right now. As I mentioned earlier, I didn’t see it in Angola either. The deal itself is easy but personal feelings are often much too important. In Italy we also took in 200,000 refugees who left their homes and roots in Yugoslavia between 1946 and 1948. It’s 2012 and although Italy and Yugoslavia and later Italy, Croatia and Slovenia have settled the issue, the survivors are still complaining, using exactly the same words as the refugees in Cyprus after 40 years. It’s a peculiar experience to leave everything behind and here the issue is not only the property in the north but people’s feelings towards the property. It was stated earlier that everyone is two telephone calls from the president but it is also true that everyone is one telephone call from a refugee. This doesn’t facilitate a solution to the problem either.

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WHO’S WHO business services sector is the only sector with the necessary scale and dynamism to provide economic growth in the short term. “By attracting overseas investors it will also benefit the tourism and property sectors,” he adds. Yiannos Georgiades thinks that the discovery of hydrocarbons has already given the Cyprus economy a tremendous boost and that this “will safeguard the island’s political stability, further reinforcing its status as one of the best financial centres in the world.” In conjunction with developments in the oil and gas sectors, he also believes that environmental issues will play a greater role, in particular with regard to wind power and other renewable energy sources. Moreover, he predicts that the technology and telecommunications sectors will also expand greatly over the coming years and there will be a call for the development of further legislation, in particular in relation to services incorporating voice, data and video.

CYPRUS AS A COMPETITIVE JURISDICTION

If Cyprus wishes to be seen as better than Malta, Luxembourg and other competing jurisdictions, it needs to keep a close watch on what they are doing. All the experts to whom we spoke acknowledge that the island is already an attractive place for foreign companies to relocate to but some competitors are doing their best to offer the same benefits. Andreas Neocleous agrees that the biggest factor in Cyprus’ favour is the high quality and comparatively low cost of doing business here, including the availability of world-class professional services at considerably lower cost than in London and similar centres. Cyprus’s location and climate are also positive factors. However, he also sees that “competition is intense from centres such as Malta and Ireland within the EU and Dubai, Singapore and Hong Kong to the East” and advises that “We should not be too proud to learn from our neighbours and competitors. To attract and retain foreign business we

must excel in every field – we cannot afford any weaknesses.” Yiannos Georgiades is more upbeat: Although other European countries are trying to compete with Cyprus by lowering their tax rates and by signing favourable double tax treaties, he thinks they still have a long way to go before they are in a position to match the benefits that Cyprus has to offer: a corporate tax rate of 10%, a solid infrastructure, a legal system based on English law and now harmonized with EU law, UK-qualified lawyers, accountants and bankers, double tax agreements with over 43 countries and the recent signing of the protocol to the Double Tax Treaty between Russia and Cyprus. Yiota Kythreotou agrees: “Our geographical location makes us an ideal base for a business looking to expand into new markets,” she says. “We are in a position to offer a much more favourable corporate and personal income tax regime than any other European country; the liberal foreign direct investment regime and the network of double tax treaties and bilateral investment agreements make Cyprus a perfect location for an international group’s headquarters. Moreover, the high quality of legal, accounting and banking services and support that is available, complemented by a wide range of other providers (IT specialists, telecommunications systems, etc.), gives Cyprus a significant advantage.” Phivos Stephanou elaborates on this point: “By offering a corporate tax of only 10% (the lowest in the EU), Cyprus has become a favourable tax-incentive jurisdiction within the EU and beyond. The double tax treaties and EU directives offer various exemptions which attract companies to establish or relocate their headquarters to the island, as does the excellent infrastructure which allows the creation of ‘substance’ for tax planning by setting up company operations on the island. Demosthenes Mavrellis sums up the present situation thus: “In effect it all boils down to a cocktail of low corporate taxes, a network of double tax avoidance treaties, common law and highly skilled professionals. Add all these together and you have a winner.”

Andreas Neocleous, Founder and Managing Partner, Andreas Neocleous & Co LLC

Phivos Stephanou, Legal Consultant, Korpus Prava Corporate Services Ltd

Yiota KythreotouTheodorou, Partner, Pamborides LLC

Demosthenes Mavrellis, Partner, Chrysses Demetriades & Co. LLC

Yiannos Georgiades, Founding and Managing Partner, Georgiades & Mylonas

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SPECIAL REPORT

CA ADVOCATES (POURGOURA & ASPRI L.L.C.) THE FIRM

CA Advocates (Pourgoura & Aspri L.L.C.) was established in mid-2011 by Celia Pourgoura and Alexia Aspri whose aspiration was to create a progressive commercial and corporate law firm offering tailor-made professional services and fulfilling each client’s needs in a personal and individual manner. The Firm’s mission and vision is to provide professional and trusted legal services by establishing ongoing and longterm relations with clients through commitment, specialisation and the highest level of professional and personalised service in a quick, efficient and affordable manner. Although the firm advises on all areas of Cyprus law, it focuses mainly on the legal aspects of investment into and via Cyprus, driven by the island’s favourable tax regime, with core specialisations on commercial, corporate, banking, financing, shipping and real estate law as well as on the provision of fiduciary services. CA Advocates (Pourgoura & Aspri LLC) is a ‘boutique’ law firm consisting of two lawyers and corporate administrators.

AREAS OF PRACTICE

Commercial Law The Firm has a diversified and longstanding experience

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in advising through the issuing of legal opinions, drafting, negotiating and monitoring multimillion value transactions, both locally and internationally, including re-organisations, mergers, including EU/cross-border mergers, joint ventures, acquisitions, project financing, cooperation, shareholders’ affairs, IPOs on major stock exchanges, etc. Corporate Law The specialized staff are at the client’s disposal to directly, efficiently and quickly answer any question on Cyprus Company Law, the business entity’s corporate governance, and on the reporting and compliance requirements of Cyprus companies. Banking & Finance The Firm provides advice and conducts the negotiations and drafting of all necessary agreements and supplementary documentation relating to asset, property, project and trade financing. We further undertake the registration of securities in Cyprus with banks and other financial institutions wishing to secure loans. Shipping The Firm undertakes the incorporation of ship-owning companies, as well as the registration of ships under the Cyprus flag. Real Estate The Firm has extensive experience in immovable property law, including the drafting, negotiation, and monitoring and supervision of purchases and sales, including the

conclusion of deeds of sale (residential and commercial); the undertaking of transfer of title proceedings, the registration of mortgage bonds, the drafting of loan agreements for property transactions, the structuring of property transactions, the securitization of property purchases, letting of property, hotel developments, etc. Fiduciary Services A broad range of professional services is provided through the Firm’s affiliate company, Pourgoura & Aspri Fiduciary Services Limited. Such services include the provision of a Registered Office, nominee Directors (including professional directors, if required), Shareholders and Secretary as well as the opening of bank accounts with any bank of the client’s choice and, through associate companies, bookkeeping and accounting. In addition, the firm has extensive experience in applications for work permits/residence permits for the company’s foreign directors, owners and employees.

PARTNERS

Celia Pourgoura is a British-qualified lawyer with an LLB qualification, an LLM qualification in Commercial Corporate law, a Middle Temple Barrister-at- Law with registration at the General Council of the Bar of England and Wales as a non-practising Barrister at Law, and a practising registered member of the Cyprus

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Bar Association. From 2002-2005 and from 2008 until today, she has been dealing with corporate and commercial issues and specialising in trust law, anti-money laundering issues, contract law, company law and corporate administration. Since 2011 she has been the co-owner and director of CA Advocates (Pourgoura & Aspri L.L.C.). She speaks Greek and English fluently and is currently learning Russian. She has been nominated by Kings College, London as their ambassador in Cyprus. She is a member of the Society of Trust and Estate Practitioners (STEP) and of the International Bar Association. Alexia Aspri obtained a Bachelor of Commerce from Wits University in Johannesburg, South Africa in 2000 and an LLB from the same university in 2002. She was admitted as a member of the Cyprus Bar in 2003 and since then she has gained solid corporate and commercial law experience in the corporate law departments of some of the most renowned law firms in Cyprus. Her main specialisations are contractual drafting and consulting on corporate and tax strategies, mergers and acquisitions and re-organisations, Company law including management and administration of companies, Trusts and estate planning. She became a member of the Society of Trust and Estate Practitioners (STEP) in 2010. Since 2011 she has been the co-owner and director of CA Advocates (Pourgoura & Aspri L.L.C.). She speaks Greek and English fluently. She is also a member of the International Bar Association.

Celia Pourgoura

CONTACT DETAILS

CA Advocates (Pourgoura & Aspri L.L.C.) 33, Clementos Street, Flat 401, 1061 Nicosia, Cyprus Tel: (+357) 22460831 Fax: (+357) 22760831 Website: www.ca-advocates.com e-mail: info@ca-advocates.com

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Alexia Aspri

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SPECIAL REPORT

CHRISTOS PATSALIDES L.L.C. THE FIRM

Christos Patsalides L.L.C. is well-established in the legal world of Cyprus, offering a wide range of legal services. The law firm was founded in Nicosia in 1996 by the Managing Partner Christos Patsalides. Throughout its years of operation, the firm has expanded significantly and its name has become established in Cyprus for its large customer base. The firm’s goal is to provide only top quality services and the best solutions to any legal issues that arise. The firm consists of experienced and reputable lawyers as well as young, highly-educated and excellently-trained staff in all specialized legal fields. The firm’s Corporate and Litigation Departments, acting for a particularly enlarged portfolio of customers with high expectations, work in such a way that one complements the other, with excellent organisation and professionalism, full secretarial support and sophisticated computer systems, which result in the safe, speedy and full implementation of all cases assigned. Our top priority is our response to the specific characteristics and needs of each client with confidence and directness, and our aim is to provide the best possible service and solutions to all legal issues arising in relation to each client’s needs. The quality of our services, the special and trusted expertise of our firm’s various departments, together with the required structures for the speedy and efficient management and finalisation of all our clients’ cases and claims, have sealed the dynamic course of our firm in Cyprus.

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WHY CHOOSE CYPRUS?

Cyprus is considered a very attractive jurisdiction for doing business. Some of the benefits that one can enjoy by having a Cypriot company incorporated include the Corporate Tax rate of 10%, the taxexempt dividend income (subject to nonstringent conditions), no withholding taxes on payments of dividends, no taxation on profits from the sale of securities (no minimum holding period, percentage, etc.), no taxation on profits of foreign permanent establishments, no capital gains or income tax on the disposal of the shares of a Cypriot company, a broad double income tax treaty network, unilateral tax credit relief irrespective of the existence of a tax treaty, no substance, debt equity and thin capitalization rules, the full adoption of all European Union Directives, a sound legal system and much more.

SERVICES

Our corporate services include the formation and incorporation of companies, the establishment and management of trusts and related services such as the establishment, management and representation of Cypriot and offshore companies, the provision of trustee services for shareholders, directors, secretary and registered office of the company. A very important part of our services relates to advisory support concerning tax matters, tax planning restructuring, consultation for investment funds, dividend distributions, tax differences, capital gains tax, stamp duties, Value Added Tax (VAT) and much more. Another important and preferred service provided by Christos Patsalides L.L.C. is

the Redomiciliation of a Company to and from Cyprus. The Cyprus Redomiciliation legislation was enacted on July 28, 2006, as an amendment to the Companies Law Cap.113 to permit foreign (non-Cypriot) companies to redomicile to Cyprus; and Registered Cyprus companies to be redomiciled abroad. The existing business of a foreign company continues without interruption as a Cyprus company since the first company is not dissolved but simply ‘moves’ to Cyprus. Existing companies can choose to change their seat of incorporation to Cyprus without going through the liquidation and recontribution process in the current jurisdiction so it will no longer be necessary to wind up their activities and restart under a new company shell, something which is less time-consuming and more cost-effective for clients. The ability to redomicile companies to and from Cyprus opens new planning dimension for investors and traders. Foreign companies may now without difficulty benefit from the Cypriot Corporate Tax regime, an option that many clients prefer. Christos Patsalides L.L.C. also has a very reputable Intellectual Property Department. We provide services including the search and registration of trademarks, national, community and international trademarks together with the provision of the registration of trade names, the validation of patents, national, European and International patent registration and validation. A few of the reasons one should encourage the Registration of Patents and Trademarks in Cyprus: Cyprus has adopted the EU directives enabling it to recognize CTM and CD registrations.

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Cyprus is a party to the Madrid Agreement and Protocol and PCT through which international patent or trademark applications are recorded in Cyprus. Cyprus is a member of the Office for Harmonization in the Internal Market (OHIM) for the registration and protection of trademarks and industrial designs within the European Community. Following the accession of Cyprus to the European Union as a full member on May 1, 2004, Cyprus legislation has been harmonized in order to bring its Intellectual Property Law into line with the requirements of the acquis communautaire. Commercial activity on the island has created the necessity to offer protection to the Intellectual Property Rights of physical and legal entities in order to validate such activity. An important part of the abovementioned services is provided by our affiliated company, Christos Patsalides Corporate Management Ltd.

MANAGEMENT TEAM

Christos Patsalides L.L.C. consists of three partners and a chief financial controller: CHRISTOS M. PATSALIDES Founding and Managing Partner CONSTANTINOS KOKKINOFTAS Partner and Head of the Litigation Department

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AVGOUSTINOS TSARKATZIS Partner MARIOS KASTANIAS Chief Financial Controller

LAWYERS TEAM

CHRISTOS M. PATSALIDES Founding and Managing Partner CONSTANTINOS KOKKINOFTAS Partner and Head of the Litigation Department AVGOUSTINOS TSARKATZIS Partner GEORGE PANAYIDES Advocate - Litigation KYRIAKI VIOLARI Advocate - Corporate PHIVI TRAMOUNTANELLI Advocate - Corporate VARTENI KASAPIAN Advocate - Litigation GEORGE ANTONIADES Advocate - Litigation MARIA CHRONIA Advocate - Corporate DIANE CONSTANTINIDES Trainee Advocate

ACCOUNTING TEAM MARIOS KASTANIAS Chief Financial Controller DESPINA MICHAEL IRENE THRASYVOULOU CHRISTOPHOROS VASILIOU

SECRETARIAL TEAM GEORGIA SOLONOS Corporate Administrator MARIA CONSTANTINOU Executive Secretary

LANGUAGES SPOKEN Greek, English, Swedish, Armenian, French ASSOCIATIONS: Legal 500 Chambers Europe FICPI (International Federation of Intellectual Property Attorneys) Cyprus-China Business Association Cyprus-India Business Association Cyprus-Israel Business Association Cyprus-Russia Business Association Cyprus Bar Association Nicosia Bar Association

CONTACT DETAILS

Christos Patsalides L.L.C. Advocates & Legal Consultants 31, Evagoras Avenue, Evagoras Building, Suites 41-43, 1066 Nicosia , Cyprus Postal address: P.O. Box 25617 , 1311 Nicosia , Cyprus Tel: (+357) 22677677 Fax: (+357) 22674422 Website: www.patsalides.com.cy e-mail:Â info@patsalides.com.cy

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SPECIAL REPORT

E. PAPANDREOU & CO L.L.C. THE FIRM

E. Papandreou & Co L.L.C. was established at the beginning of 2009 and is already emerging as a boutique business law firm in the Cyprus market.Its approach to the legal practice is to focus exclusively on providing an effective and complete solution for the legal side of its clients’ affairs. The firm specialises in all aspects of commercial and corporate law, banking and finance, financial services, tax and trust law. Its goal is to become the firm of choice in the market, by providing a complete solution to its clients’ most challenging legal issues and significant business transactions. The firm’s aspirations are based on the expertise of its team of lawyers which comprises highly-driven and dedicated individuals with varied specialisations, as well as diverse academic and professional backgrounds. These individuals are capable of conceptualising and understanding the commercial aspects underlying any legal issue in question. Thus the team is adept at providing a professional and personalised approach to each client in order to help them achieve their business objectives in the most efficient manner.

AREAS OF EXPERTISE

Commercial: The firm’s philosophy

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is to be by the client’s side from the inception of his/her business plan and to have the opportunity to guide the client through all the necessary steps. Through professional and personalised consultation, the aim is to reach the most proficient solution based on the client’s needs and interests. Corporate: The team members of E. Papandreou & Co L.L.C. are considered experts in the field of Corporate Law. They can assist clients with their business entity’s compliance and reporting requirements with the Cyprus Authorities as well as with corporate governance issues. The team can provide legal advice on agreements and undertake to negotiate and draft agreements concerning, among others, corporate reorganisation requirements, mergers, acquisitions, cooperation, shareholders affairs, etc. Banking and Finance: The firm provides legal advice regarding asset financing which includes leasing, factoring and securitisation as well as on project, property and trade financing. The team is also at its clients’ disposal to draft and negotiate, on their behalf, any necessary agreements (such as loan, pledge and mortgage agreements) as well to prepare other relevant documentation in order to meet any requirements in place,

including the issue of legal opinions. The firm provides advice on strategies for corporate recovery and all aspects of insolvency procedures. This also includes pre-insolvency considerations, such as the duties and responsibilities of directors and shareholders. In addition, it offers advice on all forms of possible sanctions and the overturning of transactions. Trusts: Highly specialised in Trusts of Cyprus and other jurisdictions, the firm’s objective is to steer clients towards advantageous trust creations which comply with the regulations of the relevant jurisdictions and, at the same time, to optimise the benefits clients may enjoy from the creation of a Trust.

PROFILES

Elena Papandreou – Managing Director Elena obtained a Bachelor of Laws degree (LLB) from Leicester University. She was admitted to the Cyprus Bar in 1994 and has been a member of the Society of Trust and Estate Practitioners since 2008. She is also a member of the International Bar Association. Elena gained extensive experience working as a corporate lawyer in a highly reputable law firm in Cyprus for ten years before joining Dema Services Limited in 2006 as inhouse legal advisor. She established E. Papandreou & Co. LLC at the begin-

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to obtain a Master’s degree (LLM) from Edinburgh University in 2005. She has extensive experience in corporate law, corporate governance and real estate law. She gained considerable experience in drafting corporate and commercial contracts from her years of practicing the legal profession in a number of prominent Cyprus law firms and fiduciary companies. She has been a member of the Cyprus Bar Association since 2002 and is also a member of the International Bar Association. (e-mail: MariaAn@epaplaw.com)

ning of 2009, acting as the Managing Director, while continuing as a Director of Dema Services Limited. (e-mail: ElenaP@epaplaw.com)

Entgkar Antoniades – Manager Entgkar Antoniades obtained a law degree from the North-Caucasian State Technical University of Stavropol, Russia in 2004. He then went on to join Dema Services in 2006, gaining vast experience in the area of fiduciary services. He joined Elena Papandreou

Maria Anastasiadou – Manager Maria obtained a law degree (LLB) from the Aristotle University of Thessaloniki in 2001. She went on

Demetra Demetriadou – Advocate Demetra Demetriadou obtained her Bachelor of Laws degree (LLB) from the University of Kent in 2010 and was admitted to the Cyprus Bar in 2011. She has also become a member of the International Bar Association. Through practicing the legal profession in this office, she has gained experience in the areas of corporate and commercial law, chiefly in the areas of drafting and reviewing corporate documents, agreements, legal due diligence and cross-border mergers. She is currently studying to become a qualified Chartered Accountant. (e-mail: DemetraD@epaplaw.com)

CONTACT DETAILS

& Co LLC in 2009 as a legal adviser. He has extensive experience in corporate administration matters, as well as in the areas of drafting and reviewing corporate documents. He is also fluent in Russian.

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E. Papandreou & Co L.L.C. 8, Stassinos Avenue, Photiades Business Centre, 2nd Floor, Office 201, 1522 Nicosia, Cyprus. Postal address: P.O.Box 22599, 1522 Nicosia, Cyprus. Tel: (+357) 22466425 Fax: (+357) 22466427 Website: www.epaplaw.com e-mail: central@epaplaw.com

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SPECIAL REPORT

GEORGE Z. GEORGIOU & ASSOCIATES L.L.C. THE FIRM

George Z. Georgiou & Associates L.L.C. is a dynamic, professional fullservice civil law firm. Founded in 2005 by George Z. Georgiou, the firm has quickly grown and is recognised as one of Cyprus’ leading practices. It specialises in corporate, commercial and tax, land and property, employment, pensions and corporate immigration, and all forms of dispute resolution. The firm currently consists of 12 lawyers and legal consultants, of whom one is a barrister-at-law, one is a solicitor and three are trainees. All lawyers speak Greek and English and some also speak French and Italian. Moreover, the firm’s five administrative staff and two accounts officers are also fluent in English while one is also an Arabic speaker. Clients include individuals, companies of all sizes, municipalities, banks and multinational companies. The firm provides legal services to some of Cyprus’ largest local and international companies, as well as for international companies with a presence on the island. It facilitates business and develops strong relationships with all its clients. Located in the heart of Nicosia, but serving the whole of the Republic of Cyprus, the firm’s lawyers appear in all courts across the island. George Z. Georgiou & Associates L.L.C. not only serves Cyprus but the world, with clients based in every corner of the globe. Every accommodation is made for clients living in different time zones, so that they receive

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the same excellent service as those based in Cyprus. Professional translators are regularly used for languages that are not spoken by our firm. George Z. Georgiou & Associates L. LC. supports and advises on legal issues with an international element on a daily basis. As the sole Cypriot member of the international alliance Ius Laboris, which comprises member firms in 42 countries, with coverage in more than 100 countries, the firm is able to provide any international client with fully coordinated yet locally-specific global advice. Ius Laboris is the leading Global Alliance of Labour and Employment Law practitioners with 2,500 lawyers specializing in all areas of law relating to Human Resources. Furthermore, the Firm and its individual lawyers are members of numerous local and international associations among which are: • Ius Laboris, • The Honourable Society of the Inner Temple, • Nicosia Bar Association, • Cyprus Bar Association, • European Employment Lawyers Association (EELA) (George Z. Georgiou is the Board Member for Cyprus), • European Employment Law Cases (Cyprus Editor), • The European Circuit, • The Chartered Institute of Arbitrators (CIArb), • Royal Institute of Chartered Surveyors (RICS), • International Bar Association (IBA),

• American Immigration Lawyers Association (AILA), • Cyprus Human Resource Management Association, • Nicosia Chamber of Commerce, • Cyprus Chamber of Commerce, • Cyprus-China Business Association, • Cyprus-Russia Business Association, • Cyprus-Ukraine Business Association, • Cyprus-United Kingdom Business Association, • Cyprus-India Business Association. George Z. Georgiou & Associates L.L.C. has contributed to significant publications and continues to publish articles and chapters in international books, journals and legal magazines on a regular basis. Among these are: Ius Laboris Publications (chapters on Cyprus law): • SOCIAL MEDIA GUIDE (February 2012) • INDIVIDUAL DISMISSALS ACROSS EUROPE (November 2011) • SECONDMENTS TO AND WITHIN EUROPE (October 2011) • PAN-EUROPEAN PENSIONS GUIDE (September 2011) • IMMIGRATION - AN INTERNATIONAL HANDBOOK (January 2011) • COMPENSATION & BENEFITS REFERENCE GUIDE (August 2010) • TRANSFERS OF UNDERTAKINGS (December 2009) • COLLECTIVE REDUNDANCIES GUIDE (September 2009) • INDIVIDUAL DISMISSALS

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ACROSS EUROPE (December 2008) • PAN-EUROPEAN PENSIONS GUIDE (November 2008) • NATIONAL EMPLOYMENT LAWS ACROSS EUROPE (February 2007) Other publications: • THE INTERNATIONAL COMPARATIVE LEGAL GUIDE TO EMPLOYMENT & LABOUR LAW 2012, A Practical Cross-Border Insight into Employment and Labour Law, Global Legal Group (2012), • THE EMPLOYMENT LAW REVIEW, Chapter 8 ‘Cyprus’, 1st & 2nd Ed,. Law Business Research Publishers (2010, 2011) • LABOUR AND EMPLOYEE BENEFITS, Practical Law Multi-Jurisdictional Guide 2011/12, Vol. 1 • IATIL CONFERENCE, ‘Basic Principles of Cypriot Employment Law’ (2011) • THE PROJECT & CONSTRUCTION REVIEW, Chapter ‘Cyprus’ (2011) • INTERNATIONAL EMPLOYMENT & LABOR LAW, Littler Mendelson Guide, 2nd ed. (2010) • INTERNATIONAL BAR ASSOCIATION, ‘IBA’s Real Estate In a Nutshell: Cyprus’ (2009) • INTERNATIONAL BAR ASSOCIATION, ‘Hiring the Best Qualified & Most Talented Employees’, Kluwer Law International (2008) The Firm has won numerous awards for its services provision in relation to dispute resolution, land law and real estate and employment law.

PROFILES

MANAGING PARTNER George Z. Georgiou is the Managing Partner of the Firm. He specializes in all areas of civil law, with particular expertise in employment and pensions, corporate and commercial, dispute resolution and land. George graduated from Bristol University and is a barrister of the Inner Temple. He was admitted to the

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George Z. Georgiou

Cyprus Bar in 2001, the Chartered Institute of Arbitrators in 2005 and the RICS in 2012. He has published numerous articles in local and international magazines, journals and newsletters and contributed chapters to several international legal books. He lectures frequently in English and Greek on Cypriot Employment Law and other topics. SENIOR LAWYERS Eleni V. Loizides specializes in all areas of civil law, with expertise in litigation, employment and labour law, administrative law, and dispute resolution. Eleni graduated from the Aristotle University of Thessaloniki. She is member of the Cyprus Bar Association and the Nicosia Bar Association, having been a qualified advocate since 2006. She joined the firm in 2007 and is the Head of the Litigation Department of the Firm. She speaks Greek and English. Constantina Economou specializes in all areas of civil law, with expertise in litigation, employment, pensions & provident funds, corporate, and dispute resolution. Constantina graduated from Sussex University and Leuven University. She is member of the Cyprus Bar Association and the Kyrenia Bar Associa-

tion, having been a qualified advocate since 2001. She practiced law in a leading Cypriot firm specializing in litigation and corporate before joining George Z. Georgiou & Associates L.L.C. in 2007. She speaks Greek and English. Nadia Tryfonidou specializes in all areas of civil law, with expertise in corporate & commercial, dispute resolution, banking & finance. Nadia graduated from Kings College London and the LSE. She is member of the Cyprus Bar Association, the Nicosia Bar Association and a Board Member of the Cyprus Association for European Law. She has been a qualified advocate since 2004. She practiced law in a leading Athens firm, specializing in banking, capital markets, financial services and securities, commercial and corporate law. In 2006 she worked for the Office of the Commissioner for State Aid Control, before joining the firm as a Senior Lawyer in 2008. She speaks Greek and English.

CONTACT DETAILS

George Z. Georgiou & Associates L.L.C. 1 Eras street, 1st floor, 1060, Nicosia Tel: (+357) 22763340 Fax: (+357) 22763343 Website: www.gzg.com.cy e-mail: admin@gzg.com.cy

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SPECIAL REPORT

PAMBORIDIS LLC THE FIRM

Pamboridis LLC is a General Commercial and Corporate law firm with offices in Cyprus (Nicosia and Limassol), Greece (Athens) and the UK (London). The firm was founded in 2003 and is headed by Dr. George Pamboridis, assisted by three partners and a number of senior and junior associates in both jurisdictions. Its clientele comprises mostly corporate clients and the firm prides itself on its association with Barclays Plc., Citigroup, the Bank of Scotland, Standard Bank, Morgan Stanley, Swissport International, WJ Group of Companies, Singer International, SFS Group Plc, Sea Star Capital, LUKOIL, the Jumeirha Group, Verizon, Kraft Foods and easyJet. We are particularly honoured that distinguished International law firms such as DLA Piper, Clifford Chance, Simmons & Simmons, Chadbourne & Parke, Holman, Fenwick & Willan choose to work with our firm when dealing with matters of Cyprus or Greek law. The firm caters for all types of contentious and non-contentious matters and, through its experience and expertise, can add value to the businesses of its clientele. It prides itself on offering practical, no-nonsense advice and on understanding and, thus, enhancing the commercial objectives of its clients in every transaction. Pamboridis LLC places a great deal of emphasis on being responsive and in establishing and nurturing interpersonal relationships with its clients as their business evolves. The firm ensures that there is high-level partner involvement in each transaction in order to obtain the best possible outcome for the client and optimum efficiency. The firm particularly prides itself on its expertise in the following areas: Structured finance, capital markets, securitisations – We are instructed on a day-to-day basis by major banks and financing institutions to advise on a broad range of structured finance and capital market transactions.

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M&A, Joint Ventures and commercial contracts – Wwe ensure that our lawyers have a thorough knowledge of our clients’ industry sectors and are therefore able to evaluate each client’s needs and objectives, understand and address all regulatory, competition, tax and other parameters of each transaction and achieve the best possible results.

porate clients on matters concerning the whole spectrum of their business. M&As, international tax planning, project and ship finance, public listings, HR and competition matter, are some fields of expertise of the lawyers working out of the Nicosia office. The office is supported by a strong litigation department, engaging in all modes of dispute resolution.

Private equity/venture capital – We regularly represent both sponsors and investors in connection with the establishment of private equity investment vehicles, capital raising and investment activities through to establishing and implementing exit strategies whether by private sale, IPOs, mergers or acquisitions.

Limassol Office The Limassol Office offers a comprehensive legal service to clients involved in international shipping transactions, mergers and acquisitions, capital markets and public listings. The office specializes in corporate law as well as in commercial law contracts.

Tax planning – We regularly advise clients on a range of tax planning matters and ensure that we tailor our advice to the needs of each client and their business.

Athens Office The Athens office specializes in corporate and commercial law and acts primarily for foreign clients doing business in Greece but also for Greek clients involved in international and cross-border transactions. The Companies department of this office engages with matters of corporate structuring and re-structuring as well as with international tax planning. The Athens office maintains a network of affiliated firms whose expertise covers the whole spectrum of Greek law.

Energy (Oil and Gas) – Recent developments in the Exclusive Economic Zones of Cyprus and Israel have created a demand for high-level legal support in all aspects of exploration and exploitation of natural gas and oil reserves. The firm has acted in a timely manner and joined forces with one of the biggest global law firms in order to expose its lawyers to this new field and to secure for our clients the vast expertise of our global partners. Languages: English, Greek, French

OFFICES

The firm currently maintains four offices, two in Cyprus (Nicosia and Limassol), one in Greece located in the financial centre of Athens, Kolonaki, and most recently one in London (UK) in the heart of Mayfair. Nicosia Office The Cyprus Head Ooffice maintains a strong corporate and commercial law department offering advice mostly to cor-

London Office This is a representative office and its main target is to provide London-based clients – as well as professionals (lawyers, accountants and financiers) operating from the West End and the City – with support on matters of Cyprus law, especially in transactions involving group structuring and tax planning, but also oil and gas projects. Associations – memberships Our firm is the focus firm in Cyprus and maintains a close affiliation with DLA Piper, one of the biggest global law firms. The firm is also a member of Libralex, a network of law firms located in major business centres, principally in Europe.

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Number of lawyers: 18

PROFILES

Name: Dr. George Pamboridis Position: Managing Partner Career: Dr. Pamboridis has worked for the City law firm of Holman, Fenwick & William as well as with L. Papaphilippou & Co as a partner for 5 years. In 2003 he founded the firm and shares his time amongst the Nicosia, Athens and London office. Languages: English, Greek, French Member: Cyprus Bar Association, Athens Bar Association, Law Society of England & Wales Roll of Solicitors. Education: He studied law in Athens before obtaining a Masters degree (L.L.M) from the University of Southampton in Shipping Law. He was subsequently awarded an M.Sc. by the International Relations Department of London School of Economics and a Ph.D. in law from the University of Southampton in Public, International and Shipping Law. He is the author of “International Shipping Law” published by Kluwer Law and of numerous legal articles. Name: Riani Roussakis Position: Partner (Athens) Career:. Riani joined Pamboridis LLC in Athens in 2003. She became a partner in 2008 and currently heads our Athens office. Languages: Greek, English, French Member: Member of the Athens Bar Association Education: Riani studied law in Athens and after completing a training course in France, she completed her pupilage in Athens. Name: Yiota Kythreotou Theodorou Position: Partner (Nicosia) Career: She has worked for the City law firm of Watson, Farley & Williams specializing on asset and project finance. She now heads our non-contentions department. She was voted as partner in 2008. Languages: English, Greek Member: Member of the Cyprus Bar Association and the Law Society of England & Wales. Education: Yiota studied law at Oxford University (BA (Hons). She went on to obtain an LL.M. in Private International Law and has completed the Legal Practice Course. She is a qualified solicitor. Name: Electra Papadopoulou Makedona

Position: Partner (Limassol) Career: She was a partner in the Law firm of George L. Savvides & Co for 12 years. She then joined the law firm of Andreas Neocleous & Co until opening her own practice. She now heads our Limassol office. Languages: English, Greek. Member: Member of the Cyprus Bar Association. Education: Electra studied law in Athens and then acquired a Master’s degree (LL.M) in Company, Insurance and Shipping Law at King’s College, London. Name: Myria Agathocleous Position: Head of Litigation Career: She joined our firm in 2008 and is Head of our Commercial Litigation Department. Languages: English, Greek Member: Member of the Cyprus Bar Association since 1998. Education: Myria is a graduate of the University of Northumbria at Newcastle (LL.B). Name: Kristy Spyrou Position: Senior Associate Career: After completing her pupilage she joined the firm of Polyviou & Co as a litigator. In 2008 she joined our Corporate Department where she deals with commercial contracts, M&As and general commercial law cases. Languages: English, Greek Member: Cyprus Bar Association Education: Kristy obtained her degree from the Aristotle University of Thessaloniki (Greece) Name: Rodothea Papaconstantinou Position: Senior Associate Career: She completed her pupilage with our firm and is currently working as an associate in the Corporate Department. Languages: English, Greek Member: Member of the Cyprus Bar Association. Education: Rodothea is a graduate of the Aristotle University of Thessaloniki (Greece).

CONTACT DETAILS

Pamboridis LLC 45, Dighenis Akritas Avenue, Pamboridis House 1070 Nicosia, Cyprus Postal address: P.O. Box 27354, 1644 Nicosia, Cyprus Tel: (+357) 22752525 Fax: (+357) 22752800 Website: www.pamboridis.com e-mail: info@pamboridis.com

Yiota Kythreotou Theodorou

Riani Roussakis

Electra Papadopoulou

Myria Agathocleous

Kristy Spyrou

Rodothea Papaconstantinou

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SPECIAL REPORT

PAPACHARALAMBOUS & ANGELIDES LLC THE FIRM

Papacharalambous & Angelides L.L.C. was established in 1983 by Andreas Papacharalambous and Pavlos Angelides and is based in Nicosia. Although it began as a small office with two partners, it has grown rapidly as to become a leading multidisciplinary firm consisting of 11 in-house qualified lawyers. The firm is highly active both on a national and an international level. Apart from having an association with lawyers in all the main cities of Cyprus, the firm has also an extensive international client base and a number of associate offices abroad. Papacharalambous & Angelides L.L.C. is experienced in various areas of law and specialises in corporate law, mergers and acquisitions, tax law, family law, public and administrative law, Intellectual property law, banking, commercial and financial services law. The firm represents numerous listed companies in Cyprus and Greece, banking, insurance and finance institutions and offers consultancy services to government and semi-government organisations. Papacharalambous & Angelides keeps up with all current developments in law in order to serve its clients more effectively and efficiently by recognising each client’s individual needs. The firm strives to offer personal service, tailor-made to meet the needs of any business.

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ASSOCIATION MEMBERSHIPS

Papacharalambous & Angelides L.L.C is a member of the International Trademark Association (INTA), the European Communities Trade Mark Association (ECTA), the MARQUES, the Pharmaceutical Trade Marks Group (PTMG) and the International Association for the Protection of Intellectual Property (AIPPI). The firm was honoured with the “Business Law Firm of the Year in Cyprus” award by Corporate INTL Magazine 2011 and it has been also recommended by the Legal 500 EMEA 2012 Editorial as one of the leading firms in 2012. The Legal 500 Series is widely acknowledged as the world’s largest legal referral guide. Languages: Greek, English, Russian, Lithuanian

PROFILES

Andreas Papacharalambous B.A (Athens), Advocate – Partner Andreas Papacharalambous studied law at the National and Kapodistrian University of Athens. Since 1976, he has been practicing law in Nicosia, where he co-founded the Papacharalambous & Angelides LLC. Andreas deals with all areas of law and is in charge of the overall administration of the firm, as well as maintaining contacts with overseas clients.

Andreas Papacharalambous has been recommended by the Legal 500 EMEA 2012 Editorial in the area of dispute resolution. Pavlos Angelides, Barrister-at-law (Lincoln’s Inn) – Partner Pavlos has been a barrister since 1977 and is a member of Lincoln’s Inn. He is a founding partner of Papacharalambous & Angelides LLC and has considerable experience in litigation both in Cyprus and abroad. His speciality areas include trade, commercial, corporate and tort litigation. Pavlos has been Vice-President of the Nicosia Bar Association for a number of years. Loizos Papacharalambous LLB (Hons), Barrister-at-Law (Gray’s Inn), MCIArb, PGDip in International Commercial Arbitration – Senior Associate Loizos graduated from the University of Bristol before going on to successfully complete the bar vocational course with Gray’s Inn. He was admitted to the Cyprus Bar in 2004 and in 2006 he successfully completed the International and Comparative Commercial Arbitration Diploma with Queen Mary College of the University of London. Loizos has been Vice-President of the Nicosia Bar Association for three years and he is currently Vice-Chairman of the Cyprus Telecommunications Authority (Cyta). He is also a Member of the Chartered Institute of Arbitrators. Loizos has been recom-

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mended by the Legal 500 EMEA 2012 Editorial in the area of dispute resolution. His main areas of practice are commercial and corporate litigation, representation of banks, investment, finance and insurance companies.

versity of Thessaloniki from where he obtained his law degree in 1985. He is a member of the Cyprus Bar Association and has been practicing law since 1985. He has extensive experience in the field of civil litigation.

Eleni Papacharalambous LLB (Hons), Barrister-at-Law (Gray’s Inn) – Senior Associate Eleni is Head of the Intellectual Property Department. She acquired her law degree from the University of Exeter in the UK before going on to complete the Bar Vocational Course with Gray’s Inn. She then successfully completed the Cyprus Bar Examinations and is a member of the Nicosia Bar Association. Eleni deals with all aspects of intellectual property law and is a litigation lawyer on intellectual property matters. She is a member of the Harmonization Committee of the European Communities Trademark Association (ECTA) and has been recommended by the Legal 500 EMEA 2012 Editorial in the area of intellectual property.

Coralia Papacharalambous LLB (Hons), LPC (College of Law), LLM ( International Business and Commercial Law) – Associate Coralia obtained her law degree from City University, London in 2008. In 2009 she completed the Legal Practice Course (LPC) at the College of Law, London in the corporate stream. In 2010, she obtained her LL.M at the University of Manchester with specialisation in Banking and Company Law. Coralia is currently practicing in the Corporate and Intellectual Property field.

Stavroulla Ioannou Kyrou LLB (Hons), B.Sc (Business Administration) – Senior Associate Stavroulla acquired her law degree from the University of Kent at Canterbury, UK in 2000 and she also holds a B.Sc. degree in General Business Administration. She completed her Cyprus Bar training course at Papacharalambous & Angelides LLC where she works today. Stavroulla is a highly experienced corporate lawyer with excellent communication skills and practical experience in corporate structuring. Sophia Nicolaou LLB (Hons), M.Sc. (Management Information Systems) – Senior Associate Sophia obtained her law degree from the University of Sheffield, UK before completing her M.Sc. in Management Information Systems. Sophia is a member of the Cyprus Bar Association and has been practicing law since 1997. She specializes in family law. Demos Christodoulou B.A (Thessaloniki) – Senior Associate Demos studied at the Aristotle Uni-

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Marinos Charalambous LLB (Hons), Barrister-at-Law (Middle Temple) – Associate Marinos graduated from the University of Bristol in 2007 before going on to successfully complete the Bar Vocational Course as a member of Middle Temple. He completed his Cyprus Bar training course at Papacharalambous & Angelides L.L.C, where he continues to deal with cases in the Corporate and Litigation Departments.

Loizos Papacharalambous

Eleni Papacharalambous

Alexis Anastasiou B.A (Athens), LLM ( Commercial Law) – Associate Alexis graduated from the National and Kapodistrian University of Athens in 2008 after successfully completing his Law degree. In 2010 he obtained his LL.M at the University of Bristol in the commercial stream. Alexis currently specialises in administrative law, commercial and competition law. Panayiotis Shiakallis B.A (Athens) – Associate Panayiotis obtained his law degree from the National and Kapodistrian University of Athens in 1980. He worked in the Department of Land and Surveys for a number of years and he has been practicing law since 2008. He has extensive experience in Property Law.

CONTACT DETAILS

Papacharalambous & Angelides L.L.C. 12, Themistocli Dervi Street, 1st Floor, 1066 Nicosia, Cyprus. Postal address: P.O. Box 24901, 1305 Nicosia, Cyprus Tel: (+357) 22670189 Fax: (+357) 22676976 Website: www.palaw.com.cy e-mail: office@palaw.com.cy

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SPECIAL REPORT

PAPANTONIOU & PAPANTONIOU L.L.C. THE FIRM

Papantoniou & Papantoniou L.L.C. was founded in 1987, by Antonis S. Papantoniou. It is an esteemed law firm that provides an extensive range of legal products in an efficient and cost-effective manner to local and international clients. The firm provides legal, consulting and fiduciary services, judicial representation, international trusts and tax planning to clients in Cyprus and worldwide. In the context of its legal services, the firm has a full-function organisational mechanism for representing international interests in Cyprus and providing consulting services to persons and companies intending to expand their business activities in Cyprus or through Cyprus on a global level. Since 2004, the firm has been a member of European Law Firm (E.L.F.), an international organisation consisting of law firms from every European country. E.L.F. is a sophisticated and cohesive network of 29 commercially orientated law firms committed to offering outstanding yet cost effective legal services across Europe and beyond. Membership is by invitation only and is limited to one representative per country.

SERVICES

The aim of E.L.F. is the provision of high quality legal services to businesses, companies, public and private organisations. Through its ELF mem-

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bership, Papantoniou & Papantoniou L.L.C., has the ability to provide legal services in any other European country and worldwide. This ensures the speedy processing of legal affairs, efficiency and legal protection for business activity in other countries. The firm has been an active member of E.L.F. and has enhanced its experience, knowledge and legal practice on an international and European level throughout the network. Moreover, our law firm offers an extensive range of legal services in the Franchise Agreements sector of which aims to protect clients’ interests by providing constant support for the smooth operation of these agreements. Furthermore, it provides services to clients regarding the development of their business in the European area, the protection of their interests when they invest in real estate, the protection of their intellectual property such as trademarks, industrial ownership and judicial representation whenever necessary. Additionally, the firm’s experience and activities extend to representing its clients’ interests in the finance sector, including the stock market, securities, investment accounts and judicial representation whenever necessary. We also act as introducers to the Cyprus Stock Exchange and we advise and assist companies on public listing. The firm’s expertise also extends to the sector of green development through Eu-

ropean funding programmes that apply to companies and individuals. As a consequence, this has opened up new horizons for cooperation and the representation of foreign companies wishing to be active in this sector through Cyprus companies. Last but not least, the firm has earned a reputation for representing the interests of Middle East, Indian, Chinese, Eastern European and Russian companies which use Cypriot international companies to expand their business activities in Europe. The firm has close connections with Arabic, Indian, Chinese and Russian law firms so as to provide the highest quality of services with a view to protecting their interests. At the same time, our 25-year experience in providing legal services to Cypriot and international clients in almost all business sectors gives them a chance to develop their business activities beyond the borders of their own country. The firm’s experience, knowledge and connections give Cypriot and International clients a chance to obtain high-quality and cost-effective legal representation in response to challenges and opportunities as they arise. Papantoniou and Papantoniou LLC is a full service law firm. It offers an extensive but non-exhaustive range of legal services in almost all fields of law. The firm has built a strong reputation for providing legal services to Cyprus and International companies, financial institutions and private clients.

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Antonis S. Papantoniou

The areas of practice in which the firm specializes are: • International Tax & Trusts • Corporate & Commercial Law • Mergers & Acquisitions • Banking & Finance Law (Stock Exchange) • Investment Law • General Litigation & Arbitration • Intellectual Property Law • Wills & Probate • Admiralty & Shipping Law • Debt Recovery Corporate Department One of the largest departments of the firm is the company division, which deals in particular with the establishment and administration of companies, both International Business Companies (IBCs) and local ones registered in Cyprus and in other countries: • International Tax Planning • Formation of Cyprus Companies • Registration and administration of trusts -Trustee services • Registration of branches of foreign companies in Cyprus. Establishing and assisting foreign investments in Cyprus. • Director, Secretarial and Nominee services, Registered Office, Mailing Address • Management and administration of companies • Opening of bank accounts.

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• Book keeping, Accounting, Preparation of financial statements and audit reports through qualified accountants. • Registration of Shipping Companies General Litigation Department Our litigation department has extensive experience and a proven track record in successfully handling a wide range of claims and disputes in respect of general civil and criminal litigation including: • Company and partnership disputes • Banking and finance disputes • Insurance claims • Contract Claims • Debt collection • Intellectual Property • Stock exchange Cases • Intellectual Property Department: The firm offers a full range legal services and assistance in relation to intellectual property law. Our expertise covers the following areas: • Advice on the acquisition, registration and protection of all intellectual property. • Franchising and licensing. • Restrictive trade practices • Protection against unfair competition. • Patent, trademark, copyright, franchising proceedings and passing off actions. • Advice on all related tax aspects. Languages: Greek, English, French, Arabic

Offices: Cyprus, Greece and associated offices all over Europe through the European Law Firm. Association memberships Cyprus Bar Association, the International Society of Logistics (SOLE), the Association of European Legal Community and the European Law Firm. Number of lawyers: 8 1. Antonis S. Papantoniou (Managing Director) 2. George Payiasis (Senior Associate Lawyer) 3. Nicoletta Papamichael (Senior Associate Lawyer) 4. Kyriakos Georgiou (Associate Lawyer) 5. Nicoletta Nicolaidou (Associate Lawyer) 6. Dora Demetro (Associate Lawyer) 7. Angelos Exadaktylos (Associate Lawyer) 8. Maria Karekla (Associate Lawyer)

CONTACT DETAILS

Papantoniou & Papantoniou L.L.C. 41, Themistocli Dervi St., Hawaii Tower, Office 708, 1066 Nicosia, Cyprus Postal address: P.O. Box 21233, 1504 Nicosia, Cyprus Tel: (+357) 22817711 Fax: (+357) 22817717 Website: www.paplaw.com.cy e-mail: paplaw@logos.cy.net

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SPECIAL REPORT

PROTOPAPA, DEMETRIOU & CO L.L.C. THE FIRM

As a boutique law firm, Protopapa, Demetriou & Co L.L.C. operates with integrity and ethos. We utilize our diverse professional experience to offer our clients a wide range of services in both the local and international legal arenas. Its dynamic business-oriented team, with the support of the firm’s own developed cutting-edge technologies, stands dedicated in offering personalized and efficient yet tailor-made solutions for its clients’ constantly-changing needs. The founding partners of Protopapa, Demetriou & Co L.L.C. have a proven successful track record and have demonstrated throughout their professional careers their readiness to manage each and every issue without compromising the firm’s values and sense of responsibility. The firm capitalizes on its Partners’ and dedicated Associates’ diverse academic and professional backgrounds in order to offer efficient and effective solutions to clients. In doing so, it saves clients’ valuable time and resources thanks to the understanding that the only constant in any company should be continuous movement in today’s rapidly-changing business environment.

AREAS OF PRACTICE • Corporate Law • Commercial Law • Investment Firm Formation and Consulting

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• Company Incorporation and Registration • Fiduciary Services • Company Liquidation • Mergers and Acquisitions • Intellectual Property • Contract • Debt Recovery and Collection • Insurance Claims • Restructuring and Insolvency • Property • International Judgments • Employment • Wills and Probate • Tort Languages: Greek, English, Russian, French, German, Italian

OFFICES

Head Office: 15, Spyros Kyprianou Avenue, Matrix Tower II, 4001 Limassol, Cyprus Tel: (+357) 25720000 Fax: (+357) 25720055 Greece Office: 25, Vasileos Konstantinou, 10674 Athens, Greece Tel: (+30) 210-7254490 Fax: (+30) 210-7246489

MEMBERSHIPS

• Cyprus Bar Association • Athens Bar Association • International Bar Association • Cyprus-Russian Business Association • Cyprus-Lebanon Business Association

• Cyprus-China Business Association • Cyprus International Business Association (C.I.B.A.) • Cyprus Chamber of Commerce and Industry (C.C.C.I.) • Cyprus Employers and Industrialists Federation (O.E.B.) Listed By: • www.martindale.com • www.iflr1000.com • www.legal500.com • www.chambersandpartners.com • www.alqlist.com • www.lawyersincyprus.com

PROFILES

LOUIZA A. PROTOPAPA Louiza Protopapa was a Partner in a wellacknowledged law firm before she set out to establish her own practice through the present legal partnership. With more than eleven years as a corporate lawyer and litigator, she has acquired extensive experience in civil, commercial and corporate matters. She has been a consultant for major M&As and has negotiated on behalf of the Sponsor in expensive sponsorship contracts in some of the most prestigious areas of sport as the WRC (World Rally Championship), Formula 1 Racing and UK Premier League football. She is also experienced in the area of online marketing and has provided advice to clients seeking the services of powerful Internet providers such as Google,

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Yahoo!, Bloomberg and Euronews. Her practice focuses mainly on international and local business consulting, specialising in corporate structures, investment firms, consulting, online marketing, software applications protection and the protection of Intellectual Property in general. She is also involved in all related corporate litigation. Practice Areas: • Corporate Law • Advertising and Marketing • Commercial Litigation • Company Law • Trademark Registration • Computers and Software • Contracts • Mergers and Acquisitions • Intellectual Property Protection • Investment Firm Consulting Memberships: • Cyprus Bar Association • Athens Bar Association • International Bar Association. Languages: Greek and English CHARIS D. DEMETRIOU Charis Demetriou has an associate diploma in Criminology from City University, New York and a law degree from Exeter University, UK. He was admitted to the Cyprus Bar in 2004 and has worked as a litigator in large firms ever since. One of the founding members of this partnership, he has extensive experience in medical negligence claims, insurance claims and personal injuries, debt collection and debt recovery claims. Throughout his career he has successfully managed property acquisitions and assisted major property firms with the financing of their projects. His experience extends across the whole spectrum of labour issues. He is Secretary of the Board of the Limassol Bar Association having been re-elected in 2012. His interests have led him to become a Prosecutor on the Disciplinary Committee of the Cyprus Football Federation. Practice Areas: • Insurance Claims • Debt Collection • Debt Recovery Claims • Medical Negligence • Personal Injury

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Charis D. Demetriou

Louiza A. Protopapa

• Tort • Criminal and Civil Litigation • Labour Consulting and Litigation • Property Memberships: • Cyprus Bar Association • Athens Bar Association • International Bar Association.

CONTACT DETAILS

Protopapa, Demetriou & Co L.L.C. 15,Spyros Kyprianou Avenue, Matrix Tower II, Floor 3, 4001 Limassol, Cyprus Postal address: P.O. Box 51511, 3506 Limassol, Cyprus Tel: (+357) 25720000 Fax: (+357) 25720055 Website: www.pd-legal.com

Languages: Greek and English

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SPECIAL REPORT

SYMEOU & KONNARIS L.L.C. THE FIRM

The firm, which has been in operation since 2003, was founded by Panikos Symeou (Lawyer) and Christakis Konnaris (Lawyer). Over the past few years, it has developed a wide range of contacts in numerous jurisdictions, enabling it to take an international view of its clients’ needs. The firm’s policy is to deliver expert legal services in an environment that encourages professionalism, confidence and trust.

AREAS OF PRACTICE

The firm covers virtually all areas of legal practice, such as litigation, real estate, contract law, shipping law, commercial law, employment law, etc. However, its main focus is on the field of corporate and commercial law and it deals with all aspects related to companies and the legal world surrounding them. Our firm carries out the formation of companies, branches and trusts in Cyprus, the Seychelles, British Virgin Islands, the UK, Belize, Panama, the USA & a number of other jurisdictions. The firm’s dedicated team carries out professional business administration, tending to all of our clients’ corporate managerial needs, providing nominee services (nominee directors, shareholders, secretaries, registered office) where required. Our experience in the corporate world enables us to carry out a full analysis of our clients’

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individual business objectives, needs and requirements, which allows us to legally assist, advise and provide professional services which cater for the development of our clients’ business. Cyprus is a favourable location for direct and indirect investment, offshore activities and a hub for international business, due to its strategic location, its favourable tax regime and the existence of a wide network of double tax treaties. Our firm provides detailed international tax planning, specifically structured according to our clients’ personal objectives, organisational needs and jurisdiction particulars. As a law firm, we further provide legal consultancy on investment opportunities worldwide, and assistance in raising finance, consultancy in relation to setting up the optimal international business group structure. We aid in the opening and management of bank accounts with reputable banks and act with them for relevant professional banking services.

OUR MISSION

In general, our main objective as a firm is to provide expert legal services in an environment that encourages trust and professionalism, covering all areas of the law and tending to our wide clientele. We aim to legally advise, assist and serve our clients throughout all the stages of their business activities through personal

attention, a quick response and a high standard of excellence reflected in our service. Number of Lawyers: 7 Languages: Greek, English, Russian, French

PROFILES

Panikos Symeou is one of the founding partners of Symeou & Konnaris L.L.C. He graduated in law (LLB) from the Peoples Friendship University of Moscow and later obtained a Master’s degree (LLM) in Business Law from De Montfort University, UK. He also holds a Master’s Degree in the Science of Finance Management. Mr. Symeou was admitted to the Cyprus Bar Association in 2003 and he has practised in all areas of law for the past nine years. He speaks Greek, Russian and English. Christakis Konnaris is one of the founding partners of Symeou & Konnaris L.L.C. He graduated from the Peoples Friendship University of Moscow, where he obtained his Bachelor’s in Law in 2002 and later obtained his Master’s Degree from the Taras Shevshenko University, Kiev, Ukraine. Mr. Konnaris was admitted to the Cyprus Bar Association in 2003 and has been practicing law ever since. He speaks Greek, Russian and English.

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Christakis Konnaris

Panikos Symeou

Neda Irodotou completed her studies in law at the Aristotle University of Thessaloniki in 2002. She was admitted to the Cyprus Bar Association in 2003 and began her practice. Neda has been with the firm since December 2010 and has continued to practise in all areas of the law. She speaks Greek and English.

corporate law. She speaks English, Russian and Greek.

our firm in February. She speaks Greek and English.

Alexander Platon graduated from LMU (London) in 2010 and joined our corporate department in September 2011, practising in the area of corporate and company law. He speaks English and Greek.

Dr. Zsofia Nagy graduated from the Faculty of Law at the University of Szeged, Hungary in 2009 and has been practising law ever since. She joined the firm in June 2011. She speaks Hungarian, English and French.

Kristina Ermakova finished her studies in Political and Social Science at the Peopleâ&#x20AC;&#x2122;s Friendship University of Moscow in 2005 and went on to complete her legal studies in 2008. With the firm since August 2008, she deals with all aspects of

Andria Lambrou obtained her LLB at the University of Leicester in 2009, before completing her Masterâ&#x20AC;&#x2122;s in Maritime Law at the University of Nottingham in 2010. Andria was admitted to the Cyprus Bar Association in 2012 and joined

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CONTACT DETAILS

Symeou & Konnaris L.L.C. 61, Spyrou Kyprianou Avenue, SK HOUSE, 4003, Limassol Cyprus. Tel: (+357) 25818400 Fax: (+357) 25355559 Website: www.sklaw-firm.com e-mail: corporate@sklaw-firm.com

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leading

law firms in cyprus A Special SuPPLEMENT

SPECIAL REPORT

WHAT THE LAWYERS SAY

LEADING PRACTITIONERS ON CUTTING RED TAPE, WATCHING THE COMPETITION AND PROMOTING ECONOMIC GROWTH

f Cyprus wants to be viewed internationally as a serious professional and financial services centre, it needs to improve it a variety of areas, say many commentators. Moreover, the island should be keeping a much closer eye on what its competitors are doing if it is to continue making a major contribution to the economy and helping it to grow. We asked a number of representatives of leading Cypriot law firms for their views on three key issues.

REDUCING BUREAUCRACY

The main target of the experts’ criticism is, not surprisingly, the civil service and the way it deals with international business. Andreas Necoleous believes that, unfortunately, the public sector continues to be one of the principal obstacles to Cyprus’s economic success. “We must change our attitude to international business,” he says. “Rather than placing obstacles in the way of international businesses and increasing their costs we must develop a ‘can-do’ attitude, welcoming our customers and providing them with assistance and new opportunities. This is the way to success and prosperity.” Others are more specific about the service that needs to undergo the most urgent face-lift: “It is absolutely essential that we make it a top priority to make the Registrar of Company’s department more accessible online and cut to red tape,” says Demosthenes Mavrellis. “It is in our best interest to make certificates required by companies available online, at least to professionals on a same day basis.” Phivos Stephanou and Yiannos Georgiades echo his comments. “By implementing an efficient user-friendly electronic system, the Cyprus Registrar of Companies can

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accelerate the procedures related to registration of new companies, the submission of annual returns and effect changes for already registered companies in a much more convenient way,” notes Stephanou, adding that current procedures cause great delays and, in many instances, do not promote the image that Cyprus would like to have as an EU country. “The Registrar of Companies needs to begin making use of the wide range of technology available, allowing for online company registrations, online submissions of documents and forms and online company file searches,” says Yiannos Georgiades. “As the knowledge and understanding of technology and the opportunities that new developments open up, I firmly believe that changes to the way in which the Registrar of Companies works will ultimately lead to a more efficient and workable system.” However, Yiota Kythreotou is rather more positive, noting that some progress has been made. “Cyprus has established the Point of Single Contact, a service through which businesses interested in establishing their activities in Cyprus can complete procedures such as company registration, VAT, income tax, social insurance fund and employers registration and applications for the issuance of residence and work permits,” she explains. “This service is expected to make it easier, quicker and simpler for foreign investors to establish and pursue their business activities in Cyprus.”

GROWTH IN THE ECONOMY

At present, only two sectors look certain to enjoy growth in the foreseeable future: energy (thanks to the discovery of natural gas in Cyprus’ Exclusive Economic Zone) and the financial & business services sector, partly due to this. Demosthenes Mavrellis

believes that the discovery of hydrocarbons will lead to major inward investments, both direct and indirect and that the proximity to the raw material will lead to the creation of new industries. “Furthermore, the nascent industry will give rise to new areas of knowledge which the Cypriots will export to other regions. What is happening offshore is definitely a game change,” he says. Phivos Stephanou and Yiota Kythreotou are in agreement here too. In the coming years, says Stephanou, developments in gas-related infrastructure projects will increase with investment in the energy sector and this, in turn, will bring about substantial growth in fields such as gas production, liquefaction, petrochemical projects, and processing. This will allow leading players in the energy sector to invest in facilities for processing and exporting the natural gas found off Cyprus. In Kythreotou’s view, the implications of the discovery of natural gas reserves in Cyprus’ Exclusive Economic Zone will be “immense” and not only for the island but also for her profession. “We shall soon be facing significant legal, regulatory, operational and technical challenges,” she says. “Lawyers, in particular, will be required to assist clients with negotiating the terms on which deep sea drilling should take place and drilling licenses are granted, on the terms of raising of capital and finance on an unprecedented scale (by Cyprus standards) but they will also need to have a firm grasp of modern developments on a wide range of issues, from operational practices, to the availability and terms of insurance cover.” Andreas Neocleous is a little more cautious regarding natural gas. “While I share the hope that the discovery of gas offshore will bring prosperity to all of us, exploiting the gas and reaping the benefits will take many years,” he says, explaining that, in his view, the financial, professional and

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OPINION

In Europe To Stay

Greece’s real difficulty is the lack of political will to implement a strategic plan.

he crisis in Greece is very serious. In the short term there will be little or no investment, with negative growth. Why? Because insufficient cost savings make it harder to meet payment schedules and there is no stimulus for demand, from Sunday shopping to straightforward infrastructure developments. What has Greece been doing wrong? Taking too long to act has made loans more expensive, weakened asset valuations, undermined confidence and increased fear. Greece should have restructured 20% of its public sector workforce at the outset. Instead, it has sacrificed private enterprise by overtaxing, thereby entering a death spiral of ever-lower demand. It has not focused on protecting vital activities in favour of appeasement, misplaced efficiency drives, dangerous neglect and corruption. An example of appeasement concerns public TV and radio. There are three broadcasting institutions where only one is needed but no changes have been made. Similarly, there are several institutions for managing public buildings from schools to courts. Essential public infrastructure is under-invested – often crumbling – which makes many Greeks uncomfortable in their country. Just one institution with proper systems and technology – and a long-term plan – would deliver a better result at a fraction of the cost. An example of the misplaced and destructive pretence to efficiency was the disruption of the taxi sector in the middle of the tourist season last summer. Corruption has been effected through the building-up of an oversized and over-expensive public sector. Salaries have been high, not because public sector workers were adding value to the economy through the application of technology and innovation, but because cash was available to employ them in exchange for political loyalty via a network of favours. Additions to pension and other ancillary benefits have created a disaster in at least three ways: public sector employment starved the private sector of a high-quality workforce; it made the

Greece should have restructured 20% of its public sector workforce at the outset

By Elena Ambrosiadou

private sector dependent on the public sector, and vulnerable to any economic crisis; and it prevented the rationalisation of any industry, ministry or sector of the economy. Corruption in Greece is not restricted to the tax collection system. Cash was not invested in laying the foundations of an efficient, sustainable economy but wasted through the lack of political will to implement a strategic plan. In the current government scheme, elected politicians from across the spectrum have to work together, see the problem together and deliver a result together, which any party alone would not have been able to implement. The politicians know this and yet they keep offering elections without the ability to protect the citizens. The interim government does not have the power to enforce the changes required but the plan and budget will have to be followed by whoever is in power without fail. This is what the people of Greece deserve. When one looks at Greece, with its private sector involvement and the international effort made to bring about stability, one realises that Greek society has to change on an unprecedented scale. Like any people, Greeks do not want change, yet this could be helped if they are offered hope. Let us allow the spirit of improved management – which can control the unions, eliminate senseless benefits, and measurably contract the size of the public sector, together with a growth-led approach to managing the economy – to deliver. What about the future of Europe and that of Greece within it? In the banking sector, Goldman Sachs, and JP Morgan cautiously expect that the euro will hold and Europe will hold, whatever the pain and conceptual, structural, and political adjustment for all Europeans. The euro is also here to stay for Greece; the borders of Europe are the borders of Greece; the population of Europe is the brethren of Greece. Let us not be afraid to make that commitment to our future, to our allies, and to ourselves. It takes courage to accept what is wrong, and even more courage to subject oneself to the operating table without anaesthetic. But without it, there is no chance of survival.

info: Elena Ambrosiadou is the Founder and Chief Executive of IKOS Asset Management 60 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

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INTERVIEW

pon meeting Nik Halik, it’s difficult not to be impressed by his youthful exuberance. Casually dressed and very down-toearth, he is nobody’s idea of a ‘typical’ multi-millionaire. It quickly becomes clear that it is precisely his playful, almost childlike and inquisitive mind that has enabled him to experience both the small and big pleasures of life while discovering ways to become immensely wealthy. Gold: Given that both your parents are Greek, what is your position on where Greece now finds itself? N.H.: Ethnically and culturally I am Greek and the way that Greece is being

invest, I’m not dependent on economic factors to determine how much money I’m going to generate. Gold: So what did you do in anticipation of the 2008 crash? N.H.: I foresaw the coming of the crisis back in 2003 and so during 2006 and 2007 I had all my property investments revalued (i.e. at their peak) and bolstered my lines of credit. This gave me the resources to be ready to buy when prices collapsed and to seize opportunities. Anyone who’s an experienced stock market investor becomes a good property investor by default because the stock market is the lead indicator for how the property market is going to perform.

Gold: And how about the stock market? N.H: The same goes for my stock market interests. The way I invest in stocks does not rely on a particular market direction. I focus on utilising stocks in a way that creates an income. As such, investors like me don’t trade the market, we create it. Speculators trade because they are chasing the direction of a particular stock, commodity or ETF while what I do is to create the marketplace – in the same way that a casino services gamblers, I service the options traders because the odds are stacked in my favour. In this sense people should rely on being able to create their own economic plan and not on governments which nearly always let you down.

A SPACE ridiculed really bothers me. But Greece needs to start living within its means and Greeks need to accept that their problems are self-inflicted. They should stop blaming the government because they are the ones who kept voting the same politicians and parties into power over and over again. The older generation has well and truly ruined things up for today’s young people in Greece. Gold: By 2007 you were a multi-millionaire. How have your asset holdings fared since the global financial crisis? N.H.: They’ve improved! Crisis is a time of opportunity but, given the way I

Gold: Since the crisis, many investors are cautious about getting caught out again. What would you recommend to protect an investor from market risk? N.H.: I don’t simply invest in property with the wish or hope that it will go up in value. I always look at the profit that will be inbuilt in the purchase; if I do benefit from capital growth, that’s just an added bonus. In terms of property investing, I never buy brand new from a developer; I always buy something that’s dilapidated and add value by making improvements and renovations in a way that will quickly appreciate the value of the property and rapidly turn it into a source of rental income.

Gold: In your own financial plan, you say that don’t expect to see any genuine growth in the Western economies until 2015. That’s still another three full years away so what’s your rationale? N.H: In the property market there’s still the issue of oversupply which needs a number of years to be properly absorbed. In the US stock market, the only reason that it’s proving to be buoyant is that Barack Obama is looking to be re-elected and is therefore trying to bolster employment levels by injecting lots of liquidity into the US economy. After the elections the US stock markets will deflate and it won’t be until 2015 that the proper

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

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price paid in cash and the remaining 80% being mortgaged. I have four residences around the world that I bought outright in cash because they are none-income generating (i.e. liabilities). I also have many other business interests such as my financial services and products work that further enable the ‘lubrication’ of more property acquisitions. Of course, real estate is also susceptible to risk. Six months ago I lost an entire beach on an island I have in the Bahamas due to a hurricane but that was an extreme event. The most important aspect I look at when investing in property is its uniqueness, I won’t buy into

ing other peoples’ goals. We all have to realise that our fate lies squarely in our own hands – the government doesn’t care about us, our parents are biologically programmed to like us, our siblings are biologically obligated to like or at least tolerate us and the dog will only lick us because we feed it! Gold: What do you get from helping people through your financial training seminars and books? N.H.: I get so much out of teaching people how to take control of their own destiny, to become financially independent and then ensure that they don’t allow their kids to go out into the world being financially illiterate. When I was younger

CELEBRITY FINANCIAL COACH, ENTREPRENEUR, ADVENTURER AND TRAINED ASTRONAUT NIK HALIK TALKS TO GOLD ABOUT HOW HE BECAME A MULTIMILLIONAIRE IN HIS TWENTIES, HOW HIS ‘SHARELORD’ SCHEME WORKS AND HOW, AT 42, HE IS STILL CHASING HIS CHILDHOOD AMBITION TO GO INTO SPACE. By Costa Ioannides. Photograph by Olesia Constantinou

ODDITY fundamentals – especially regarding access to credit – will be in place for instigating a genuine bull market. Investors buying property now shouldn’t expect to see any meaningful capital growth for at least another six years. Gold: So right now is not a good time to sell property either? N.H.: I’ve never sold a property that I’ve purchased for investment purposes. I’ve been investing in property since I was a teenager and I’m 42 now! My rule for making investments in real estate is to invest in well placed buy-to-let type properties with no than 20% of the purchase

main_story2_halik.indd 63

a project where there are lots of other identical units. I like to invest in properties [in Australia] that were built from 1890-1920 because they are scarce and can’t be duplicated.

Gold: The focus on uniqueness seems to be a very strong theme in your life. N.H.: Absolutely. Everybody should be striving to develop their uniqueness. After all, you are your most important brand and, if you’re not building your own brand then, by default, you’re building someone else’s. If you don’t set out your own goals in life you get sucked in to becoming a tool for achiev-

I was very money-orientated in the sense of creating wealth; now I’m much more cause-orientated. Once someone has put his own house in order and found his true purpose in life, that’s the time to look at helping others do the same. Some of my old guitar students are now musicians earning a few thousand dollars a week but that’s exactly where they want to be and so they consider themselves fulfilled. Personally, I just couldn’t justify spending my time playing guitar when I realised I could make a lot more money just sitting on a beach, sending off a few e-mails and working on my businesses as opposed to working in them.

27/04/2012 12:43

INTERVIEW

Gold: How did you come up with your so-called ‘Sharelord’ strategy for utilising stocks to generate cash flow yourself? N.H.: While my band-mates where doing drugs and spending indiscriminately, I was saving 80% of the US$1,500-2,000 a week I was getting paid and investing it in property back in Australia. However, once I had acquired 7-8 properties, the banks refused to lend to me as they thought I was overleveraged so I had to look for other cashflow generating strategies. After investing in many different things from agriculture and livestock (a lot of which was speculative and, at best, broke even) I gravitated towards the stock market and to futures, Forex and commodities trading. But yet again, it was based on speculation – gambling on a specific market direction and hoping to generate returns. Eventually I discovered that other investors, who were far more sophisticated and astute than the speculators, were in effect creating the marketplace. When I was first introduced to the concept of issuing options on shares owned I didn’t really understand it until I started comparing it to how the property market works, i.e. just as a landlord rents to a tenant, a ‘Sharelord’ rents his shares to a ‘tenant’ who is an options trader, (a speculator or gambler) who

GREECE NEEDS TO START LIVING WITHIN ITS MEANS AND GREEKS NEED TO ACCEPT THAT THEIR PROBLEMS ARE SELFINFLICTED buys time-lapsing options to buy the actual shares. The share owner or ‘Sharelord’ buys the shares and issues options (like rental contracts) to put these shares on hold and commits to the possibility of selling them at a predetermined price in the future. For this the ‘Sharelord’ receives an upfront payment for these shares so even if the speculators lose their money, as a ‘Sharelord’ you are stacking the odds in your favour.

AUTHOR OF THE THRILLIONAIRE, NIK HALIK

(Nikos Halikopoulos) was the youngest of four children born to Greek immigrants to Australia. He suffered a variety of medical problems as a young boy and spent a large part of his childhood confined to his bedroom. During this time he read the Encyclopaedia Britannica repeatedly, while obsessing over his favourite comic book hero Tintin. Eventually overcoming what turned out to be a psychosomatic condition, he began planning ways to fulfil the ten life-time goals that he had set out as an 8-year-old, which included becoming a rock star and an astronaut. Halik relocated to California at the age of 17 to study music at the Guitar Institute of Technology in Hollywood before performing and recording with various bands throughout the ‘80s and ‘90s. He quit the music industry to pursue his business interests and became a multi-millionaire in his twenties thanks to shrewd investments in the property and the stock markets. He later completed his space training at Russia’s famed Star City complex in Russia and was selected as the backup to Richard Garriott on the 2008 autumn flight to the International Space Station. Among his other achievements: • Performing a 33,000-foot HALO sky dive • Climbing 6 of the 7 highest mountain peaks in the world • Running with the bulls in Pamplona • Going on expeditions to Antarctica • Descending to the wreck of the Titanic • Sleeping in a sarcophagus in the Kings Chamber in the Great Pyramid at Giza

Gold: There’s a major difference though: as the tenant in a property you don’t have the option to buy it a predetermined price, while with share options, if the price of the shares increase to a point where it makes sense to exercise the option, those shares are called away from the owner. N.H: True, but as the share owner you set the selling price and collect your rental income from day one. Say you buy 100 shares for $18 each and you rent them out immediately at $20 – you’ve instantly created a $200 dollar income by investing $1,800. If the market price moves to $25, the ‘tenant’ who paid $2 per share for the option to buy your shares will probably exercise that right to buy from you at $20 because he will make a profit of $3 per share (the current market price of $25 per share minus the $2 per share call option). So the ‘tenant’ makes 150% return on his investment while you make 22% (11% in the initial sale of the options and then another 11% on the actual sale). On the other hand, if the price stays the same, falls or increases to just $22 per share you still make your initial 11% cash return, regardless. Gold: But if the share price goes down a lot, say to $14.4 (i.e. a 20% fall), you may keep the 11% ($200 dollar) initial gain in cash terms but you will still be left holding shares that have lost value and take a 9% overall loss in cash terms. N.H.: Yes, this is true, which is why I always recommend utilising some of the call premium received for the shares to insure against downside losses exceeding 88-95% by using protective put options (i.e. the right to sell at a predetermined price). As a landlord, you would ensure your property against damage so why not do the same with your shares? It reduces the income somewhat but it also protects you. Remember, too, that we train people to understand the analytical aspects of shares and their trends and how they may be expected to perform in the future. We also recommend utilising only established US stocks and avoiding certain sectors due to their inherent volatility.

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

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INTERVIEW

Gold: So in effect you’re capping the upside of your potential returns while insuring against unexpected falls and opting for small-low risk steady income rather than hefty quick returns. N.H.: Absolutely. ‘Sharelord’ isn’t a get rich quick scheme, it’s a get rich slow scheme. At the end of the day the strategy yields an average monthly return of about 4%. It gives a substantial degree of reliability which enables you to properly budget your life. However, most traders aren’t chasing modest returns – they’re interested in making big money fast; they want to go into Forex and make a 400% return in a matter of minutes. I’m not interested in that side of the game because history tells me that the majority of these people lose their capital over the longer term. They are not investors but speculators.

NIK HALIK’S FINANCIAL FREEDOM WEALTH MATRIX

Halik encourages his Financial Freedom students not to spend money on lifestyle changes until they reach the end of a 4-step investment chain, describing the process of going straight from savings to funding one’s lifestyle as ‘financial cancer’.

GOLD: People are obviously making money using your ‘Sharelord’ strategy but have there been any disasters too? No less that 30% of N.H.: People have lost money but this one’s income should tends to happen when they start doing go into a savings account that is used things that we don’t recommend, exclusively for buying such as not insuring their stocks or growth assets. investing in very volatile markets. Part of the ‘Sharelord’ scheme is a recommendation service that highlights the stocks we identify as being neutral to bullish. In the past 3 months, 93% of the stock we have recommended to ‘buy to rent’ has been called and 7% of our recommendations went down. However, provided that the investors who bought those shares also took out insurance, they would have been protected for up to 95% of the fall in value. No stock is immune to suffering falls in value, not even Apple!

2. Growth

Growth strategies focus on purchasing low-risk assets (e.g. property or solid dividend paying stocks) that are capable of generating additional income.

1. Savings

Gold: If someone has a few thousand euros and wants to use that money to become wealthy over a period of 10 years, what would you advise them to do? N.H.: Firstly I would recommend that they invest in themselves and discover what motivates them. Don’t chase the money – work on this [points to his head]. Wealth is a by-product of getting your head in order. Gold: Isn’t that what a formal education is for? N.H.: In theory maybe but it isn’t. Have you ever seen a university professor driving around in a Ferrari 458? You have people teaching business studies and economics who have never owned a business in their lives. Formal education simply teaches you how to put all your eggs in one basket and be a better taxpayer.

3. Momentum

Momentum strategies use the additional returns generated by growth strategies to invest in higher-risk/higher-return activities.

4. Lifestyle

Only profits generated from the momentum strategies can now be used to make major lifestyle acquisitions.

GOLD: When are you expecting to go into space and finally fulfil your ambition to be an astronaut? N.H.: I was supposed to go in 2009 but was bumped off that flight and the same thing happened again in 2010. If NASA hadn’t decommissioned the space shuttle programme, I would have already gone up. The Russian space capsules only fit three people with one always having to be a Russian pilot so in this sense I’m now competing with national space agencies around the world for a very limited number of places. I think my best chances now lie with the commercial

sector. I’d take any opportunity to go into space. I’d even be willing to undertake a one-way space mission as long as it wasn’t in my mother’s lifetime. Gold: To say that you’re an adventure seeker is an understatement. Is there anything you miss right now? N.H.: Yes, living in California which has blue skies throughout the year, I miss clouds – dark ominous looking clouds, the type that precede a hurricane. I love chasing tornadoes. I like extremes. I need that excitement once in a while otherwise I get bored.

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

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30/04/2012 08:57

ECONOMICS

INEQUALITY IS

NOT ALWAYS BAD

BRANKO MILANOVIC IS A LEAD ECONOMIST IN THE WORLD BANK’S RESEARCH DEPARTMENT UNIT DEALING WITH POVERTY AND INEQUALITY, AND A VISITING PROFESSOR AT THE SCHOOL OF PUBLIC POLICY AN THE UNIVERSITY OF MARYLAND IN THE US. AN EXPERT ON INCOME DISTRIBUTION AND THE INEQUALITIES WITHIN AND BETWEEN NATIONS, MILANOVIC FOCUSES PRIMARILY ON THESE ISSUES AS WELL AS ON GLOBALISATION, AND DEMOCRACY. HE SPOKE TO GOLD ABOUT THESE AND SET OUT HIS VIEW OF THE FUTURE. By Costa Ioannides. Photograph by Jo Michaelides

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

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ECONOMICS

Gold: What is the most intriguing aspect of your work at the World Bank? Branko Milanovic: For me, the reason why it’s a great place to be is the data that I can access which is unavailable to people anywhere else in the world. I am working in the unit within the bank that deals with household surveys, which has been my biggest area of interest since graduating as a student. The World Bank is also increasingly focusing more on issues of inequality rather than just poverty. Gold: Would you agree with the view expressed by Jan Tinbergen [the first winner of the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel] that “inequality is the result of a race between technology and education”? B.M.: I would agree with Tinbergen’s assessment to a degree but we are living in a somewhat peculiar age. There is the implicit assumption in Tinbergen’s argument that technology is always, by definition, skills-biased. In other words, every wave of new technology should produce an increased demand for more highly-skilled people. I think this is truer the further we looked back in history. However, new technology these days often leads to the requirement of simpler skills from workers. For example, robotics and automation enable ever more complex tasks to be performed but a human operator now has only to push a button for these complex tasks terms of Europe’s to be completed. prospects for

IN future growth

I’m not at all Gold: Are you hopeful that optimistic over growth rates in the developed the medium world will return in time to to long term prevent major social fragmentation and conflict? B.M.: In terms of Europe’s prospects for future growth I’m not at all optimistic over the medium to long term. I’m not saying this because of the challenges currently facing the euro but because of the overarching trends that have been prevalent over the last 30 or so years. Although Europe is, in global terms, an extremely rich continent, in my view it faces two very big challenges: firstly, in terms of technological innovation, Europe faces competition from not only the US but increasingly from places such as China, India and Brazil. Secondly, despite having a highly-educated workforce, populations across EU countries are either declining or at best stagnating – these same declining populations are also ageing and, with growing life expectancies, their welfare is expected to be provided for by generous state benefits. This problem could be negated by allowing a mass inward migration of young workers, but unlike the US and Brazil, European countries have traditionally been exporters of labour [i.e. migrants] and have problems accepting immigrants, especially from outside the EU. For these reasons, I’m not very hopeful about Europe’s long-term prospects.

Gold: So you don’t think that the return of high growth rates will solve Europe’s socio-economic problems? B.M.: Modest, positive growth rates will eventually return but there will also be an inevitable retrenchment of the welfare state, given its increasing unsustainability for the reasons I’ve mentioned. Social fragmentation will happen and is already happening in many countries but what I find most worrying is the installation of technocratic governments in places like Greece and Italy which represents a de facto failure of the democratic process to manage these countries through a crisis. Such negative occurrences are likely to be seen in more and more European countries in the future, especially those with fragile democratic traditions in Central and Eastern Europe, as in the case in Hungary, for example. Gold: So you see the austerity measures imposed on countries like Greece as being problematic in the longer term? B.M.: Although austerity measures are being implemented to overcome the economic challenges that insolvent countries are now facing, they are likely to lead to other difficulties. The eurozone countries have already had the powers of their Central Bank stripped away and we’re moving in the direction of moving decision-making power on the economy, taxation and spending into technocratic hands. What then remains for a country’s population to decide through local democracy? The EU already has its detractors and recent events have only made things worse. Nobody’s been taking any notice of the activities of the EU Commission or the EU Parliament for the past three years. Don’t get me wrong, I’m not against technocrats – I’m one myself – but technocrats cannot be politicians. Politicians are selected and empowered by their constituents – by their people –and technocrats aren’t. As such I can’t summon up any enthusiasm for what’s happening with the austerity measures being imposed on troubled EU countries. Gold: In your view, what is the single biggest contributor to inequality in countries? B.M.: There are two major causes that I would highlight in this respect: firstly, the entrenchment of political power is the single biggest contributor, especially in poorer countries. By this, I mean that those who gain political power use it to become wealthy and then they use that wealth to stay in power and to further the interests of their own friends, family or ethnic or political affiliates. In this way, political empowerment is seen as a means towards economic enrichment in many countries. Secondly – and this applies more to betterdeveloped countries – it is the issue of education. Wealthier people tend to be more highly-educated and intermarry with other highly-educated people. Their children then go on to have access to a good education and go to college or university. However, at the same

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

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ECONOMICS

NOBODY’S BEEN TAKING ANY NOTICE OF THE ACTIVITIES OF THE EU COMMISSION OR THE EU PARLIAMENT FOR THE PAST THREE YEARS time large sections of the population who don’t have the financial means are deprived of access to a good education – here I’m thinking of the United States in particular. In the US, a large proportion of children born to ethnic minorities, especially African Americans who can’t afford to send them to private schools, have no choice but to settle for a level of public school education which, in many cases, is relatively low. This process encourages inter-generational disparities and further exacerbates inequality within a given country. Gold: If you were a 20-year-old relatively unskilled political refugee and had access to any country in the world to live the rest of your life, which country would you chose to migrate to and why? B.M.: This is a difficult one – I suppose for unskilled and uneducated political refugees it would make sense to go to a country with more generous levels of welfare support compared to their home country. In this case, the countries that spring to my mind are Sweden, Norway and Germany. It explains why miscellaneous groups of migrants from Sudan, Afghanistan and Pakistan tend to migrate to such countries as political refugees. However, if a person is more entrepreneurially-minded, their potential in economic terms may be better served in the United States, Australia or AngloSaxon-type countries. Having said this, if you were a migrant from Portuguese-speaking Africa you might do very well to migrate to Brazil. Gold: Capitalists argue that free markets and their inherent inequality create a powerful incentive to be innovative in order to succeed. Do you agree with this point of view and that inversely, equality and high rates of economic redistribution discourage innovation? B.M.: I agree up to a point but I would use the analogy of good and bad cholesterol. Not all cholesterol is bad, just as not all inequality is bad. A certain amount of inequality is needed in order to motivate people to be educated, to go on to take entrepreneurial decisions and to innovate. One can argue quite confidently that the absence of these motivations was a major contributing

factor to the decline of socialism. But now we seem to have reached a point where the bad inequality has kicked in and there is an entrenchment of inter-generational affluence supported by the concentration of political power and/or access to good education. This leads to whole sections of society being locked out of the economic system and denied access to opportunities. So yes, some inequality is good but taken beyond a certain level, it starts to poison society, in the same way that too much bad cholesterol can lead to a heart attack. Gold: Which country would you identify for having struck the ideal balance between having enough inequality to encourage healthy rates of innovation, providing relatively open access to high levels of education while, at the same time, protecting vulnerable sections of society? B.M.: The obvious one that, to my mind, seems to have struck a good balance in this regard is Germany. The Germans score very highly on both innovation and social redistribution. Other countries that have struck a healthy balance are Canada and Australia. The United States was also doing very well in this regard until the 1990s. Gold: Globalisation has made the ‘have-nots’ acutely aware of what they don’t have but they have gained a voice and the ability to mobilise more effectively. Do you envisage greater polarisation of our societies over the coming decade? B.M.: I think the crisis has certainly exacerbated social polarisation in some European countries. I’m somewhat encouraged by the fact that so far the backlash against migration and immigrants to Europe hasn’t been as strong as I feared it would be. Given the severity of the crisis and what has happened before in history, I was not excluding a situation where immigrants would be rounded up and checked for proper documentation with a view to repatriation. This is a good thing and openly xenophobic political movements such as the True Finns Party or the Front National in France have not really achieved mass popular support to date. However, the question is how long will this remain the case should an economic recovery fail to materialise? In this sense I do see the potential for increased social polarisation between: indigenous populations (for example those in France who consider themselves as French ‘de souche’, i.e. ethnically French), recent immigrants; and more seriously the descendants of migrants (such as ethnic Turks born in Germany or ethnic Algerians born in France). Gold: When you’re not engrossed in your work how do you like to pass your time? B.M.: I don’t really have hobbies as such – my work takes up a lot of my time. However like to watch good football games, especially after being based in Madrid last year. I’m really engrossed in the Spanish league and the rivalry between Barcelona and Real Madrid in particular!

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

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OPINION

Cyprus the preferred location for EU Yacht Registration Use of a Yacht Leasing Agreement can offer considerable benefits

ew guidelines issued by the Cypriot VAT authorities make Cyprus one of the most attractive jurisdictions for yacht registration in the EU. On the basis of the new guidelines, the effective VAT rate for yacht registration can be as low as 3.4% through the use of a Yacht Leasing Agreement. A Yacht Leasing Agreement is an agreement whereby the lessor (the owner of the yacht) contracts the use of the yacht to the lessee (the person who leases the yacht) in return for a consideration. At the end of the lease period, the lessee may opt to purchase the yacht at a fraction of the original price. Such a final purchase is strictly an option which may be exercised by the lessee, at the end of the lease period, for a separate consideration. For VAT purposes, the leasing of the yacht is considered as a supply of services with the right of deduction of input VAT by the lessor. This supply of services by the lessor is taxable at the basic VAT rate of 17% but only to the extent that the leased yacht is used within the territorial waters of the European Union. A specific condition is that the lessor must be a company registered in Cyprus while the lessee may be an individual or legal person, irrespective of their residence/place of incorporation. Taking into consideration the inherent difficulty of trailing the movements of a yacht in order to determine the time it is used within the territorial waters of the EU and outside the EU, the Yacht Leasing Guidelines provide that Cyprus VAT will only be applied to a percentage of the lease consideration. The applicable percentages determined by the VAT Service depend on the length and type of the yacht (motor or sailing) and indicate the presumed length of use of the yacht in EU waters. For VAT purposes there is, therefore, no need to maintain, any detailed record or log books of the yachtâ&#x20AC;&#x2122;s movements. The applicable presumed percentage of use of the yacht in EU waters and the effective VAT rate are as follows: MOTOR YACHTS Length of yacht (metres) 24+

Percentage of use within EU waters 20%

Effective VAT rate 3,4%

14.01-24

30%

5,1%

8.01-14 Â

50%

8,5%

Less than 8

60%

10.2%

Boats allowed to sail only within protected waters

100%

17%

By Chrysilios Pelekanos

SAILING YACHTS Percentage of use within EU waters

Effective VAT rate

24+

20%

3,4%

20.1-24

30%

5,1%

10.1-20

50%

8,5%

Less than 10

60%

10.2%

Length of yacht (metres)

For VAT purposes, the leasing of the yacht is considered as a supply of services

Where the lessee exercises the option to buy the yacht at the end of the lease period, the VAT authorities will issue a certificate to the lessee confirming full payment of the total VAT liability, provided that it has been paid. The VAT treatment prescribed in the Yacht Leasing Guidelines will apply if all the following conditions are met: 1. A lease agreement is concluded between a Cyprus company and an individual or legal person (irrespective of residence/place of incorporation). 2. T he yacht arrives in Cyprus within one month from the date of inception of the lease agreement. Any extension of the time limit may only be given by the VAT Commissioner and it shall not exceed the time at which the option to purchase the yacht is exercised. 3. An initial payment amounting to at least 40% of the value of the yacht must be paid by the lessee to the lessor at the inception of the lease agreement. 4. T he lease payments are payable on a monthly basis, and the lease period must under no circumstances exceed the period of 48 months. 5. T he lessee may purchase the yacht at the end of the lease period, for a final consideration of not less than 5% of the value of the yacht. 6. T he lessor is expected to make a total profit from the leasing agreement of at least 10% on the initial value of the yacht. 7. T he prior approval of the VAT Commissioner needs to be obtained for the application of the Yacht Leasing Guidelines. Such approval will cover the acceptability of the initial value of the yacht and the applicable percentage of use within EU waters on the basis of which VAT will be applied. The total profit from the leasing agreement which amounts to 10% on the initial value of the yacht, will be subject to Income Tax at the rate of 10%.

info: Chrysilios Pelekanos is in charge of Indirect Tax Services at PWC 74 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

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{may 2012}

ISSUE

+ BOOK REVIEW MONEY: The Naked Trader: How Anyone Can Make Money Trading Shares By Robbie Burns 82 BUSINESS: The Ultimate Small Business Marketing Book By Dee Blick 85

{money}

78 London Calling The City is set to maintain its place as Europeâ&#x20AC;&#x2122;s foremost financial centre 80 Made in Hong Kong Interview with K.C. Chan, Founder and Chairman of KAB Strategy (Cyprus) Ltd.

ECONOMY: Thinking, Fast and Slow By Daniel Kahneman

TAX & LEGAL: Common Corporate Tax Base and Determination of Taxable Income: An International Comparison By Christoph Spengel and York Zollkau 91

{economy}

86 Move over sun-and-sea economy! The suits are taking over! Business services surpass tourism as the main services export

LIFESTYLE: My Little Plates By Roddy Damalis

91 {business}

84 Fit For The Future Interview with David Wootton, Lord Mayor of London

91 European Parliament The Economic and Monetary Affairs Committee of the European Parliament votes in favour of a EU-wide Financial Transaction Tax 90 Signed At Last The Protocol to the Cyprus-Poland Income and Capital Tax Treaty

{lifestyle}

94 Put Your Money Where Your Mouth Is! The Top 10 most expensive food items in the world

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS

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88 Personal Attention and Ultimate Performance UPM Ltd offers boutique wealth management services

{tax&legal}

Gold 77

27/04/2012 12:52

financial services

{MONEY}

By Dr. Savvas Savouri

LONDON CALLING THE CITY IS SET TO MAINTAIN ITS PLACE AS EUROPE’S FOREMOST FINANCIAL CENTRE. 78 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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ven if it does sound glib it is not an exaggeration to claim that London has had a remarkably good recession, given that employment across it has returned to its alltime-high of five million. Of course there are those who question its outlook, with concerns most focused on the prospects for employment across its important financial service sectors. Indeed, those trying to forecast occupancy for London’s prime office market will have had to cope with some quite disturbing headlines recently, headlines that may quite easily have induced fears for what the future may hold. Just consider what has been seen with US and European banks. The London-based capital market activities of many of these have borne significant headcount losses in their deleveraging. Market watchers will also have noticed opportunistic acquisitions where a number of London’s stockbrokers have been collapsed into larger rivals. Those small and mid-sized brokers not taken over have suffered in a climate of low trading volumes and lacklustre corporate activity. Some might see this as hardly encouraging for future occupational demand. We do not share such concerns. In so many cases, the current positioning of a market should not be interpreted as a reflection of where it will be in the future. Bear in mind that Beijing has made it perfectly clear that, from 2014, it wants to see a more flexible RMB. This is a necessary condition for it to access global capital markets, so that it can, for instance, issue sovereign debt. These developments will transform all asset classes and generate sizeable new trading volumes. Crucially, Beijing has been unequivocal that London will be China’s major off-shore hub. In short, the withdrawal of US -and European-owned investment banking capacity from London is occurring as the need for such services is set to surge. Just consider the potential for corporate activity over the coming years. Across swathes of the developing world, companies must be contemplating how best to expand into growing markets. In most cases, the actions they take will require a capital market event: a listing or an acquisition. Having watched clients nurtured for many years engage in deals and London listings being advised by western investment banks, one must wonder why banks from the developing world allow this absurdity to continue. For our part we doubt the emerging world’s commercial banks can delay building out investment banking activities in London for much longer. Russian, Canadian, Australian and South African banks have already begun to provide ever greater

deal advice thanks to the expansion of their London investment banking presence. Indeed, these should be seen as the vanguard of an invasion of London office space by other resource-rich economies whose banks can boast extremely healthy balance sheets. Make no mistake: funding is no constraint to their ambitions, nor is human capital. After all, a great many nationals from fast-developing economies are already employed across London’s financial service sectors. As much as companies across the emerging world are poised to engage investment banks for deals, so too will their counterparts across the developed world be. Many of these are certain to be considering how best to respond to austerity in their old markets and fierce competition in the new. With corporate balance sheets generally healthy, one again has to expect M&A activity. This will require advisory work and will lift secondary volumes in their wake. This potential is yet another reason why it seems to us at least ill judged to be leaving investment banking at such a time.

WE HAVE EVERY CONFIDENCE THAT THE CITY WILL REMAIN THE WORLD’S INSURANCE AND REINSURANCE HUB Lest we forget, London has long been the world’s insurance underwriting centre. As wealth is generated across the developing world, efforts will be made to protect it. From property to health, we have no doubt that the insurance market will enjoy considerable growth in China, India and in the many other nations expanding from relatively low bases. We have every confidence that the City will remain the world’s insurance and reinsurance hub. Of course financial services can be performed in a great many growing locations. Our point is that London will expand with new Central Business Districts (Dubai, Shanghai etc) rather than lose at their expense. For a host of reasons London remains peerless. Consider the British Government’s preference to remain outside the financial transaction tax being prepared elsewhere across the EU. This, and Britain opting out of other regulatory changes being planned for Continental centres, can only cement London’s place as Europe’s foremost financial centre. Indeed, we are confident a great deal more capital is set to make its way into London.

Waves of investment capital looking for prime office opportunities across London will, of course, lift real estate values directly and so benefit REITs through upward revisions to their NAVs. We would go further and argue the REITs could easily find themselves outright bid targets with any number of potential predators coming to mind. This leads us to a looming dilemma for investors in search of income. Thus far, resource companies have been able to offer generous dividend growth. If, however, they are confronted by ever higher minerals taxes this will restrict their ability to continue doing so. Australia recently passed such a levy at 30% on steel and coal, with similar taxes already in place or planned across Africa and South America. With Gilt yields also likely to remain compressed (covered next), REITs will become all the more attractive for British life and pension managers in search of income. These managers were indeed once the main owners of London office property. In short, from being net sellers for some years we expect British funds to return to this asset class, having to compete with overseas buyers in the scrum. One cannot, of course, have buyers without sellers. With events across Europe set to worsen, we expect many continental funds to reduce their London real estate exposures. Sellers will also be drawn from the group of investors who either do not share our positive view of the London market’s prospects, or who see the yield compression as an exit opportunity having been involved much higher up. The return of British income funds to the prime London office market obviously assumes rental growth as well as continued compression in the risk free rate. We expect Britain – and London in particular – to receive considerable capital and labour evacuating Europe. These would be sure to compress yields in two ways. First, the flood of arriving human capital will keep British inflation in check, as wages are competed down from dentists to plumbers, across to waiters and chefs and even extending into business services. Second, the flood of arriving financial capital will lift asset prices and compress yields. With this in mind we would argue that, although having recently moved higher, ten year gilt yields are likely to once more fall, possibly not only moving below 2%, but testing 1.5%. The yield on 20-year Gilts is also certain to compress, and any issuance of longer-dated UK debt, say 50+, would, we believe, be received by a market with a healthy appetite. We accept that with time Gilt yields may edge higher once more. However, we expect them to move to what by historical standards are rather modest borrowing rates.

info: Dr. Savvas Savouri is a Partner and Chief Economist of Toscafund.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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investment

{MONEY}

MADE IN HONG KONG IN 2011, THE HONG KONG IPO MARKET WAS THE TOP PERFORMING MARKET IN THE WORLD, FOR THE THIRD SUCCESSIVE YEAR. WHEN K.C. CHAN, FOUNDER AND CHAIRMAN OF KAB STRATEGY (CYPRUS) LTD WAS IN CYPRUS RECENTLY, HE SPOKE TO GOLD ABOUT THE SUCCESS OF THE HONG KONG STOCK EXCHANGE, CHINESE INVESTMENT IN CYPRUS AND MORE. By John Vickers, Photograph by Olesia Constantinou

Gold: The Hong Kong IPO market has performed remarkably over the past three years. What’s the secret? K.C. Chan: If you want to undertake an Initial Public Offering (IPO) you will look to do it where you can get a higher Price/Earnings (P/E) ratio. A company with a choice of Cyprus or Hong Kong, for example, will always choose Hong Kong because even companies in the same industry that find a P/E in Cyprus of 4 will have 14 in Hong Kong. It is very high in Shanghai too but the market there is closed so foreigners cannot invest. In the region, Hong Kong generally gives a high P/E compared with Singapore, Japan and Korea so that’s one reason for the market’s success. The second reason is that in addition to money coming from other countries, Hong Kong also has a lot of cash coming in from China. And thirdly, if a brand is listed in Hong Kong – take Prada, for instance, which does excellent business in China – people will have an even greater trust in it. If I’m a rich Chinese and I buy Prada, when I see that it is listed on the Hong Kong Stock Exchange (HKSE) I may well be tempted to buy some shares in the company. Gold: One product that KAB offers focuses on the IPO market and we understand that

it has returned 48% to your investors. This sounds incredible. K.C.C.: I agree. It’s amazing and, I have to say, it is within our expectations, though not that much! Our focus on Hong Kong IPOs seems to be an unbeatable strategy because we believe that Hong Kong will maintain its attractiveness in the World IPO markets. Every year since 2005, we have seen that IPOs have scored double-digit returns! Gold: Doesn’t that suggest that when the IPO takes place, the initial share price is greatly undervalued? K.C.C.: Not really. IPO share price fixing is highly determined by the issuers and underwriters. They will gauge the price according to the market atmosphere, the attractiveness of the industry, the confidence of the issuers in the company as well as the oversubscription rate during the course of the road show. Gold: We’ve talked about IPOs but what about the performance of the HKSE in general? How did it do in 2011? K.C.C.: Last year was a good year. After the crisis in Europe it fell sharply as happened in many countries but it has rebounded – last week it was at an all-time high. When ordinary

people start showing an interest in stocks and shares, that is a sure sign that the market has turned around. However we have doubts about the sustainability of this rally going further into 2012. Gold: On the other hand, the market seems to have got off to a bad start this year. According to Reuters, Hong Kong’s IPOs have suffered their worst start since 2009. What’s happening? K.C.C.: IPOs are all about timing. You may ask why some companies decide to launch an IPO when the market is down. As a matter of fact, they have limited choices because of the rule that they have to list within six months of an application being approved. If the issuer wants to extend the date, they have to re-submit the latest audit report for further approval. To avoid paying extra costs, most of the issuers choose to list their shares even in a downward market. In Hong Kong it can cost €1 million in fees to undertake an IPO. That sounds like a lot but in most cases the amount of capital raised is huge enough to make the fees appear small. However, no-one wants to lose that even if the timing of the IPO may not be ideal. Gold: How optimistic are you about the

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prospects of the HKSE this year? K.C.C.: This year looks likely to be similar to 2009. Recently the IPO market has not been very active but there are many names in the pipeline which will have to launch soon, though precisely when is not known. That depends on how the underwriters feel rather than the public. In six months’ time I think we will be seeing maybe 10 IPOs a month but they are not all big brands. Most of the really big names are already listed so we’re talking about small to medium cap companies. Gold: Although the Shanghai Stock Exchange is closed to foreigners while the HKSE is open to everyone, do Chinese companies still list on the HKSE? K.C.C.: Yes, the attractiveness of the HKSE is still very high for Chinese companies mainly because they have a long queue waiting to list on the Shanghai Exchange, whereas they can list their shares in Hong Kong only within 6-8 months from the kick off their application. Gold: Will the reported large wage increases being given to Chinese workers affect the performance of Chinese companies on the HKSE? K.C.C.: Definitely, especially those companies in labour-intensive sectors such as textiles, toys, garment and electronic manufacture. The surge in the cost of production erodes their profit margin. However, on the other side of the coin, labour has higher spending power that helps boost the retail sector which, in turn, drives more consumption of electric appliances, durable goods and even properties. Gold: Is there an awareness within the Chinese leadership that the more people become accustomed to a consumer society such as the one we are used to in the west, the more they will also want to enjoy Western-style personal freedoms? K.C.C.: The Chinese Prime Minister Wen Jiabao has spoken many times in the media about the need for China to carry out political reform in order to deal with the growing demand for equality and democracy from the masses. With the growth of the middle class and with more and more students studying abroad and returning from the West, (over 600,000 students have studied abroad in the last 2 years), it seems that the trend of Westernisation is inevitable. The seed of change has been sown in China’s soil. However, nowadays, most of the ruling leaders are still conservative and reluctant to surrender their benefits from the

CYPRUS IS IMPORTANT FOR US SO THAT WE CAN PROMOTE OURSELVES TO THE REST OF EUROPE

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investment

existing power distribution. It will take a long time before we see a dramatic change to the Chinese political landscape. Gold: It’s been said lately that China must either innovate or slow down its growth rate. Do you see new areas for innovation or will the authorities choose the path of slower growth? K.C.C.: Experience suggests that the Chinese don’t like innovation very much. Take the iPhone as an example. When the iPad 3 launched globally, it was already being said that the i-Pad 4 (counterfeit) was available in the Chinese market. If you look at the structure of the economy, manufacturing, energy and infrastructure have dominated the country’s GDP in the last decade. As a matter of fact, as global demand slows down, a fall in China’s GDP is inevitable. This is one of the reasons why the last National People’s Congress meeting emphasized the need to raise domestic spending in order to sustain a certain level of growth mainly to maintain social stability, which is one of its ruling objectives. As far as innovation is concerned, I don’t see China taking that route. Gold: China is the world’s largest producer of gold and the second largest consumer. Do you agree with those who predict a $2,000 per ounce price by the end of 2012? K.C.C.: Yes, I do. I think the gold price rises because the real value of money keeps diminishing by the QEs from Japan to the USA. In addition, the physical demand of Gold is steady not only in China but also in India. People like to own physical gold. In Hong Kong recently, we have seen many Mainland Chinese asking to buy physical gold, so the demand is real there! Gold: And you think this will continue to rise? K.C.C.: Yes. I believe Gold will find its support around $1,550-$1,600 and that may be the start line of the coming rally Gold: Why did you decide to set up an office in Cyprus? K.C.C.: We came here in 2005 but our first stop in this part of the world was not Cyprus but Kuwait where our role was really that of an introducer of clients there to banks in Hong Kong. When we found ourselves dealing with more and more clients, we decided to start using our own KAB brand rather than that of others. Knowing that Cyprus was going to

WHEN ORDINARY PEOPLE START SHOWING AN INTEREST IN STOCKS AND SHARES, THAT IS A SURE SIGN THAT THE MARKET HAS TURNED AROUND join the EU in 2004, we decided that it was worth getting a license to operate here, partly because it was close to Kuwait, and so we went ahead and obtained it, knowing that it would help us in the future to expand into Europe. We understand our own strengths and we know that the boom in China is an opportunity for everyone. Cyprus is important for us so that we can promote ourselves to the rest of Europe. Gold: There appears to be a growing interest on the part of Chinese investors in Cyprus. Are you aware of this? K.C.C.: I think they are interested in the oil, gas and property sectors. With the growing numbers of Chinese billionaires and consortiums, some of them have started to be aggressive in order to cope with their long-term strategic development. On the other hand, individuals are interested in obtaining a foreign passport so that they can leave the country in case trouble comes to them in China. A foreign identity document also helps their children to study abroad. Indeed, if you take a look at the requirements for obtaining a Cypriot passport you will know that they stipulate a huge amount of investment – €10 million – but if they have that amount of money they can spend just €1 million and get a Canadian or an Australian passport – and Australia is only a 7-hour flight from their home. So I don’t foresee a great deal of investment by Chinese individuals unless Cyprus lowers its requirements for a passport. However, the truth is that Cyprus is still not very well-known in China. Gold: How optimistic are you about KAB’s prospects over the next five years? K.C.C.: I have strong faith in Cyprus. One reason is that there are lots of financial companies registered in Cyprus such as FxPro and Alpari which are doing big business in currency trading and are bound to be interested in the Chinese market. The country has 1.3 billion people, including more than a million mil-

lionaires and over a thousand billionaires. So the potential of this market is huge. We have already built up a network in China and it’s growing, and we have the know-how which is a major advantage over our competitors. I believe that our turnover will rise in the coming years. We are looking into the possibility that we will eventually collaborate with a strong partner in Cyprus to explore the huge China opportunity and that will definitely be a winning scenario for all of us.

BOOK REVIEW THE NAKED TRADER: HOW ANYONE CAN MAKE MONEY TRADING SHARES BY ROBBIE BURNS (HARRIMAN HOUSE LTD, 2011) R.R.P. £12.99 (£8.44 FROM AMAZON.COM.UK)

f you’ve ever fancied playing the financial markets, The Naked Trader takes you through the various ways that shares can be traded online, with advice on how to make some serious money. And whilst a lot of finance books are written by self-proclaimed gurus & non-trading mentors, Robbie Burns actually trades for a living. His book may not turn you into an expert investor overnight but it will make the world of stocks and shares much less of a mystery whilst providing you with some very useful hints tips and information that will give you a good foundation of knowledge on which to build through experience. Written in a humorous and down-to-earth style, the book looks at the strategies and techniques you can implement to maximise the return on your investment and, just as importantly, to avoid the mistakes that will detract from your efforts. Burns promotes a realistic potential trading outcome and doesn’t pretend that every share you buy will give you fast and/or high growth. A good introduction to the world of investing.

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

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london

{BUSINESS}

OVER TWO MILLION PEOPLE IN THE UK ARE EMPLOYED WITHIN THE FINANCIAL AND PROFESSIONAL SERVICES SECTOR

FIT FOR THE FUTURE

THE LORD MAYOR OF LONDON WAS IN CYPRUS LAST MONTH BUT THOSE WHO WERE EXPECTING TO SEE BORIS JOHNSON WOULD HAVE BEEN SURPRISED WHEN DAVID WOOTTON APPEARED. IN FACT, THE TWO POSTS OF LORD MAYOR OF THE CITY OF LONDON AND THE MAYOR OF LONDON ARE DIFFERENT AND COMPLEMENTARY. LORD MAYOR DAVID WOOTTON SPOKE TO GOLD ABOUT HIS JOB AND WHY HE DOESN’T MIND GIVING 700 SPEECHES A YEAR FOR NO PAY. By John Vickers

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Gold: What is your main responsibility as Lord Mayor of London? David Wootton: The City of London is the world’s pre-eminent financial centre. As Lord Mayor I am an ambassador for the City of London and the whole of the UK’s financial, professional and business services industry. It’s my job to make a case for its importance in creating jobs and growth. Gold: What is the purpose of your overseas business visits? D.W.: The purpose of these visits is to encourage international two-way trade, to encourage economies to raise capital in London, to generate access to new markets for city businesses, and to engage with decisionmakers and business leaders to help the City stay competitive. Gold: How valuable are they? D.W.: The links forged by my business delegations are made increasingly valuable by the growing international participation in UK industry and services. The UK financial services industry is a major source of employment and is the greatest wealth generator in Greater London. It is a highly international operation and 40% of the workforce within the City are employed by overseas companies. Gold: Do you make similar visits within the UK? D.W.: I make a number of visits to regional centres around the UK. The purpose of these trips is to emphasise that the City of London Corporation’s work, and my own promotional visits overseas, are all undertaken in support of the whole of Great Britain’s financial and professional services – not just firms with a base in London. Gold: What is the role of the City of London Corporation? D.W.: The City of London provides local government and policing services for the financial and commercial heart of Britain – the ‘Square Mile’. It is committed to supporting and promoting the City as the world leader in international finance and business services through the policies it pursues and the high standard of services it provides. Gold: How important is the financial services sector to the UK and specifically to the City of London? D.W.: Over two million people in the UK are employed within the financial and professional services sector. The City of London

represents these workers and their firms globally. If the City is globally competitive and attracting international business then this benefits the whole of the UK. Gold: How has it been affected by the global financial crisis? D.W.: Before the financial crisis the City had a 31% share of the world’s financial services and, thankfully, because of the quality we have in the UK, that remains our share today. But it has clearly been a difficult time for everyone. We in the City know that our future success and prosperity depend on our friendships with all our international partners. We are a global financial centre but we are also Europe’s financial centre so we need a stable and successful European economy – a market of 500 million consumers and investors. This is the message that I have brought to Cyprus: that the City of London remains firmly committed to the single market – a market that is responsible for over half of the UK’s overseas trade. Gold: What is the purpose of your visit to Cyprus? D.W.: We are in Cyprus to meet our Cypriot political and business partners in advance of the EU Presidency, to find ways in which we can work together – throughout the Presidency and beyond – and to stress the importance of the City in creating jobs and growth right across the European Union. I hope to spread a positive message – about the importance of the financial services industry, the importance of our partnership with Cyprus and the continuing importance of the European Union and the single market. Gold: Do you view Cyprus in any way as a ‘competitor’, given that the island’s economic focus has switched to the provision of financial services and it offers companies a flat 10% corporation tax rate? D.W.: It’s clear that Cyprus is a burgeoning financial centre. This is to be welcomed. This common ground is one of the reasons why I believe the UK and Cyprus can work well together, through the European Union, to ensure that a solution to the current crisis is found, which does not fragment the single market or undermine the global competitiveness of EU members. Gold: Your position is unpaid and apolitical and you make around 700 speeches a year. Why would anyone want to undertake such a job?

D.W.: This job is a great opportunity to support and promote the city I love by travelling to interesting parts of the world, like Cyprus! Gold: What do you hope to have achieved by the end of your year in office? D.W.: My theme is to ensure that the City and its institutions are “fit for the future”. I want to shine a light on the contribution made by the City to the whole of the UK and to highlight its importance to the wider economy.

BOOK REVIEW THE ULTIMATE SMALL BUSINESS MARKETING BOOK BY DEE BLICK (FILAMENT PUBLISHING, 2011) R.R.P. £15 (£9.75 FROM AMAZON.COM.UK)

his book, written for anyone wanting to get to grips with marketing and needing a helping hand, is packed with powerful tips, proven tools and many real-life examples and case studies. Every page contains common sense marketing advice that can be implemented immediately. Dee Blick is one of those rare business authors with a successful track record for growing small businesses. Her advice is invaluable and can be trusted. While so many marketing books focus on companies with huge budgets and big marketing departments, this one is aimed squarely at SMEs and has proven examples to back up everything she suggests. Practical, straightforward and packed full of sensible and achievable ideas, it is a combination of business advice, communication skills, positive thinking, and some practical suggestions for achieving your business objectives. You’ll learn how to plan and review your marketing activities, write brilliant copy that generates sales, troubleshoot effectively when your marketing is not delivering, make your website a magnet for visitors and much more. Even if you are a marketing professional, you’ll be impressed.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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cyprus

{ECONOMY}

MOVE OVER SUN-AND-SEA ECONOMY! THE SUITS ARE TAKING OVER! BUSINESS SERVICES SURPASS TOURISM AS THE MAIN SERVICES EXPORT

By Fiona Mullen

AN ECONOMY THAT RELIES ON HIGHLY EDUCATED, ENGLISH-SPEAKING ACCOUNTANTS AND LAWYERS IS A PERFECT FIT FOR THE 21ST CENTURY

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sk any foreigner, or even fellow island-dweller, what they think is the mainstay of the Cyprus economy and you will almost invariably get the reply that it is tourism. And until about a decade ago, this was true. At its peak in 2001, when tourist arrivals reached almost 2.7 million, income from tourism accounted for one-fifth of GDP. But a combination of factors has meant that tourism has been on a rocky, mainly downward slide ever since. External shocks, such as the 9/11 attacks, the Iraq war in early 2003, when there were fears that Iraq had missiles that might reach as far as the British Bases, and the SARS outbreak later the same year were followed unfavourable exchange-rate movements. But there were also home-grown reasons. The government left it until the last moment before EU membership to liberalise the air transport sector. This reduced the scope for competition and lower prices. It was not until five years after EU accession that the first of the major no-frills airlines (easyJet) started flying to Cyprus and another three years before the next one (RyanAir). Then a dispute over the award of contracts meant that the Larnaca and Paphos airport upgrades did not start until 2006. The hike in landing and other fees that accompanied the upgrades pushed up airfares at a time when competitor destinations such as Egypt and Turkey were offering high quality holidays at lower prices. Last, but not least, retailers and restaurants in particular seem to have taken the opportunity of the introduction of the euro to push up prices. Between 2007 and 2010,

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while the price of imported goods (excluding petroleum) declined by a cumulative 3.8%, the price of locally-produced services rose by 13%. So we priced ourselves out of the market and, not surprisingly, the cost-sensitive British tourist stayed away. From a peak of 1.49m in 2001, the number of British tourists dropped to 996,046 in 2010.

By then, accountants and other consultants could market a clean slate from the OECD, EU membership and the lowest EU corporate tax rate to boot, as well as other attractive features such as no withholding tax on dividends for non-resident companies. The era of business services had begun.

TAX LOCATION TO THE RESCUE

An economy that relies on highly educated, English-speaking accountants and lawyers is a perfect fit for the 21st century. However, that should not make us complacent, since there are a number of challenges on the horizon. These include the government, the European Commission and competition from other jurisdictions. We all saw the casual way in which one finance minister threatened to raise the corporate tax rate and thus take away our main marketing tool, namely the lowest corporate tax rate in the EU. Even if the measure did not pass, it sent a damaging message to foreign investors that the tax system in Cyprus might not be stable. Other business taxes have since risen. We have had the €350 the annual registration fee, the double increase in tax on dividends, from 15% to 17% and then to 20%, taking the effective corporate tax rate above 20%, and companies must now pay rental tax at source for business premises. While not all of these new taxes affect non-resident companies, there are plenty of foreign companies which do have their residence in Cyprus, and which therefore will have seen life become more expensive. Secondly, we have the threat of EU tax harmonisation. The hawks would have us apply the same tax rates right across the eurozone (as

While balance of payments income from travel (mainly tourism) fell from €2.2bn in 2001 to €1.6bn in 2010, income from “other business services”, which comprises mainly legal, accounting and merchanting services, climbed from just over €1m in 2001 to €1.8bn by 2010. In fact, 2010 was the first year in which the “suits” overtook the sea and sand. Data for the first three quarters of 2011 suggest that tourism will regain first place for the full year, thanks largely to a diversion of tourists from North Africa and the Middle East. But within the next five years, I expect the accountants and lawyers to have firmly established their place as the number one foreign exchange earner on the country’s current account. One important reason was an improvement in image. In 1999, the IMF had grouped Cyprus together with other jurisdictions as “Offshore Financial Centres” which “promise anonymity and the possibility of tax avoidance or evasion”. By April 2009, after a lot of hard work, Cyprus had been officially placed on the OECD White List, which includes jurisdictions that have “substantially implemented the internationally agreed tax standard”. This acted as a tremendous vote of confidence. A full reform of the tax system took place in 2003, followed by EU membership in 2004.

CAN IT LAST?

if we have not already learned that a one-sizefits-all policy in the eurozone can lead to disaster). Even if the hawks do not get their way, they might be able to impose a harmonised tax base. Does that mean that we have to start taxing the dividends of non-resident companies, or have the same double taxation treaties as every other eurozone member? Right now, it is difficult to say. But if we lost both the treatment of withholding tax and national double tax treaties, it would take away two of our key competitive advantages as a tax jurisdiction. Thirdly, there is the squeeze of competition. While other EU countries are attracting new business, Cyprus has singularly failed to attract investment funds, for example, allowing Malta and Luxembourg to take most of the pie. A January article in Bloomberg Markets Magazine highlights that Malta has registered over 500 funds and has €8bn under management, according to the Malta Financial Services Authority, boasting a 30% jump in four years. Meanwhile, Luxembourg has more than €143bn under management across more than 700 hedge funds and funds of hedge funds. These new funds have brought jobs to Malta, as well as spending on office space, hotel, tourism and travel as the funds move their accounting, functions and investor relations. Cypriots have learned through overdependence on tourism that having a large sector that cannot adapt can have significant knock-on effects for the economy as a whole. To misquote the Gospel of St Matthew (a tax man), “Man does not live on low tax rates alone”. To keep up with the competition and the possible removal of our key competitive advantages, we need both innovative businesses and a responsive government.

EXPORT OF SELECTED SERVICES (EUR M)

(Source: Central Bank of Cyprus, balance of payments)

Travel (mainly tourism

Other business services (mainly accounting, legal, merchanting)

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wealth management

{ECONOMY}

PERSONAL ATTENTION AND ULTIMATE PERFORMANCE UPM LTD IS A CYPRUS-BASED COMPANY OFFERING BOUTIQUE WEALTH MANAGEMENT SERVICES IN THE FORM OF DISCRETIONARY PORTFOLIO MANAGEMENT AS A MULTI-CURRENCY, MULTI-ASSET SOLUTION TO HIGH NET WORTH INDIVIDUALS AND THEIR COMPANIES. By John Vickers

Left to right: Nicolas Theocharides, Elena Constantinou, Elpida Papastylianou

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n the wake of the global financial crisis, many HNWIs have shifted their wealth towards safer, more conventional and liquid investments as they seek predictable returns and regular cash flow. They now tend to allocate more funds outside their home regions as they search for geographical diversification and higher returns from higher growth countries. As a result they demand the rigorous selection of investment products and want the best from those available by third party providers. UPM Ltd (the initials stand for Ultimate Performance Management), which began operations in 2007, is responsible for all its clients’ portfolio-related investment decisions and their administration, while maintaining close and continuous communication with clients. The minimum value for a portfolio is usually around €1million while each client’s bespoke portfolio has its own customised strategic and tactical asset allocation that satisfies his risk profile and financial needs – from the ultra-conservative (cash and near-cash instruments) to the medium- and higher-risk approach. “We know our clients well,” says CEO and Managing Director Nicolas Theocharides. “And they know us. We take great pride in the depth and quality of the relationships we have built over the years and we know from experience the value of time and effort spent at the beginning of a relationship, not only to ensure the right solutions but also to understand what our clients are looking for. We always take time to get it right from the start.” The firm’s vigilance is backed by knowledge, experience and a keen instinct for sound financial judgment. The thoroughness of this approach has worked in favour of UPM’s clients and, Theocharides notes, many HNWIs are increasingly showing a preference for having independent wealth managers to look after their money, in a manner that resembles a Family Office approach. “The enormous changes in investment

management over the last decade have challenged traditional approaches. As wealth managers, we have been at the forefront of these changes, using the full range of available investment options,” says Elena Constantinou, Head of Asset Management. By using vehicles such as an open architecture platform and by not being productbound to any financial institution, UPM is in a position to choose what its team of experts considers to be the best available investment products from some of the most prestigious banks or fund houses in Europe. This works to the client’s benefit, both in terms of lower fees and being able to make unbiased and objective choices when it comes to investments. “In today’s transformed investment landscape, we create bespoke portfolios for each client using a number of carefully chosen investment instruments such as stocks, bonds, funds, alternative investments and absolute return strategies,” explains Nicolas Theocharides. “The multiplicity of investment instruments we use aims at delivering the ability to finely tune the balance of risk and reward to individual strategies and goals. We cooperate with world-recognised financial institutions such as Crédit Suisse, Deutsche Bank, JPMorgan Asset Management and others, and we consider our independence vital for delivering superior returns to our clients. This is achieved by working with many banks, not only one.” Theocharides, an economist, draws on his own experience as a qualified banker, having held several management posts in International Business and Private Banking during a successful 20-year career with a major local bank in Cyprus. “Cash is a very important part of the client’s wealth,” notes Elpida Papastylianou, Chief Financial Officer. “Client cash is kept with a number of approved banks and, due to the high level of funds we keep with them, we are in a position to obtain the finest Treasury rates for deposits for the benefit of our clients.” It is what she calls a “deep sense of responsibility to our clients” that motivates UPM to focus on capital preservation whilst exploring all options to maximize returns in accordance with the client’s investment profile. “HNWIs no longer want their portfolios to be loaded with the banks’ proprietary

investment products and fees,” says Nicolas Theocharides. “They increasingly prefer independent wealth management companies that are highly regulated. This is where a firm like UPM comes in with outstanding personal attention, performance and competitive fees. We only pass on to clients out of pocket expenses and our own management fee. There are no hidden fees and our clients appreciate this.”

BOOK REVIEW THINKING, FAST AND SLOW BY DANIEL KAHNEMAN (ALLEN LANE, 2011) R.R.P. £25 (£15.49 FROM AMAZON.COM.UK)

n this universally praised work, which was named by the New York Times and The Economist one of the Best Books of 2011, Daniel Kahneman (a winner of the Nobel Prize for economics), weaves his remarkable insights into an engaging narrative that is compulsively readable from beginning to end. Kahneman is one of the most original and interesting thinkers of our time and in Thinking, Fast and Slow, he takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think and make choices. One system is fast, intuitive, and emotional; the other is slower, more deliberative and more logical. Drawing on a lifetime’s experience, Kahneman reveals where we can and cannot trust our intuitions and how we can tap into the benefits of slow thinking. Offering practical and enlightening insights into how choices are made in both our professional and our personal lives. Thinking, Fast and Slow may well transform the way you take decisions and experience the world.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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european parliament

{TAX&LEGAL}

FINANCIAL

TRANSACTION TAX ECONOMIC AND MONETARY AFFAIRS COMMITTEE OF THE EUROPEAN PARLIAMENT VOTES FOR EU-WIDE TAX

proposed EU-wide would have to pay the tax. Under the financial transaction tax Commission’s proposals, such transacshould be better designed tions would have escaped the tax, because to capture more tradonly financial institutions based within ers and to make evading the FTT zone would be subject to it. it unprofitable, says a The “residence principle” proposed resolution adopted at the end of April by the Commission is also kept, which by the Economic and Monetary Affairs would mean that shares issued outside of Committee of the European Parliament the FTT zone but traded by at least one (EP). The resolution also notes that plans institution established within the zone for the tax should go ahead would be caught. even if only some Member The resolution also States opt for it. raises the stakes to make IT IS TIME TO The EP has been calling evading the FTT potenCHANGE THE for a financial transaction tially far more expensive FINANCIAL tax (FTT) for close to two than paying it. Taking SERVICES years and the European the UK stamp duty apBUSINESS Commission tabled a legisproach, the text links MODEL, AWAY lative proposal for one late payment of the FTT to in 2011. the acquisition of legal FROM HIGH Rapporteur Anni Podiownership rights. This FREQUENCY mata (S&D, Greece) said means that if the buyer TRADING TO after the vote (33 in favour of a security did not pay SERVING THE and 11 against), “The comFTT, he/she would REAL ECONOMY the mittee has been consistent not be legally certain of with what Parliament has owning that security and been pushing for and I would hence be unable to now expect Member States to show the clear the trade centrally. same consistency with their declaraIf it is not possible to establish the tax tions. It is time to change the financial EU wide at the outset, enhanced coopservices business model, away from high eration should be envisaged, the resolufrequency trading to serving the real tion says. However, it also recognises economy”. that introducing the tax in a very limited The adopted text adds to the Comnumber of Member States could lead to mission proposal an “issuance principle” a significant distortion of competition whereby financial institutions located and that measures should therefore be outside the FTT zone would also be taken to address this. obliged to pay the FTT if they traded seVarious exemptions were requested by curities originally issued within this zone. a number of MEPs. In the end the most For example, Siemens shares issued in substantive exemption was that granted Germany and traded between a Hong to pension funds, which would see the Kong institution and one in the US tax waived on their transactions.

BOOK REVIEW COMMON CORPORATE TAX BASE AND DETERMINATION OF TAXABLE INCOME: AN INTERNATIONAL COMPARISON BY CHRISTOPH SPENGEL AND YORK ZOLLKAU (EDITORS) (SPRINGER, 2012) R.R.P. £90 (£90 FROM AMAZON.COM.UK)

he study conducted by the Centre of European Economic Research (ZEW), the University of Mannheim and Ernst & Young contributes to the ongoing evaluation of the proposal for a Draft Council Directive on a Common Consolidated Corporate Tax Base (CC(C)TB) released by the European Commission on March 16, 2011. For the first time, details on the determination of taxable income under the proposed Council Directive are compared to prevailing corporate tax accounting regulations in all 27 Member States, Switzerland and the US. The study presents evidence on the scope of differences and similarities between national tax accounting regulations and the Directive’s treatment in a complete, yet concise form. Based on this comprehensive comparison, it goes on to discuss remaining open questions and adjustments needed if the Directive is to be implemented in national tax law. Readers will find it a valuable source of information and will gain a clear first impression of how the proposed CC(C) TB could affect corporate tax burdens in the European Union.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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{TAX&LEGAL}

SIGNED AT LAST THE PROTOCOL TO THE CYPRUS-POLAND INCOME AND CAPITAL TAX TREATY

By Michalis Zambartas

elations between Poland and Cyprus are nothing new. In 1364 King Casimir the Great (Kazimierz Wielki) of Poland invited King Peter the First of Cyprus to attend a political gathering in Krakow aiming at promoting closer cooperation amongst the European Kingdoms. In the 648 years since then, economic and political relations between the two countries have grown significantly, particularly over the last two decades following the signature in 1992 of the investment-friendly Agreement for the Avoidance of Double Taxation (the official name of the Double Taxation Treaty or DTT). On 22 March 2012, the governments of Cyprus and Poland signed a Protocol amending certain provisions of the DTT in order to further stimulate the development of business relations. This long-anticipated Protocol introduces certain important changes to the tax regime between Cyprus and Poland that will come into effect once the text is ratified by the Parliaments of both countries. (Until then, the provisions of the current DTT remain in force). The main changes are the following:

DIVIDENDS

The text of the current DTT provides for a 10% withholding tax (WHT) on dividends paid out from a company resident in Cyprus to its Polish shareholder and vice-versa. The new Protocol amends this already beneficial arrangement to make it even more favourable. In the case of a shareholder/beneficial owner being a company (other than a partnership), which holds directly at least 10% of the capital of the company paying the dividends for an uninterrupted period of 24 months, the WHT is 0%. This means that even in cases where the recipient of dividends does not fulfil the requirements under the EU ParentSubsidiary Directive, it can benefit from the amended provisions of the DTT to reduce or eliminate its tax obligation.

THE ABOLITION OF THE DIRECTORS’ FEES “LOOPHOLE” WILL MAKE STRUCTURES BETWEEN POLAND AND CYPRUS MORE TRANSPARENT In the case of individuals, as well as companies that do not meet the above requirements, the applicable WHT is 5%.

INTEREST

Since companies registered in Cyprus are often used as intra-group financing vehicles, they are expected to benefit substantially from the

amendments in the Protocol regarding interest payments. The current DTT provides for a 10% WHT on payments of interest made by a tax resident of Poland to a tax resident of Cyprus and vice versa. The new Protocol reduces this WHT to 5% if the recipient, as the beneficial owner of the interest, is a resident of the other Contracting State.

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

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ROYALTIES

The Protocol maintains the beneficial 5% WHT as provided in the current DTT, but in line with recent amendments to the OECD Model Convention, it takes account of the requirement that the recipient should also be the beneficial owner of the income in order to enjoy the reduced tax rate. Moreover, the definition of royalties has been amended. Whilst a comparison with the current text of the DTT does not show much difference, there is a clear intention to provide further clarity and to make the scope of this provision as specific as possible.

BENEFICIAL OWNERSHIP

Another noteworthy change in the Protocol is the inclusion of the term ‘beneficial ownership’. It can be seen in the new provisions considered above relating to dividends, interest and royalties. In recent years there has been some confusion over the definition of beneficial ownership. Recent case law in various countries seems to support the perception that the legal owner of the income is also its beneficial owner and this approach seems to justify the use of Holding Companies and thus encourages tax planning. However, the OECD has introduced a draft paper discussing the possible introduction of a distinction between “legal ownership” and “economic ownership”. Although the OECD paper is still a draft, if this approach is adopted, the tax authorities would be able to pierce the corporate veil in every single case claiming suspicion in tax evasion. As a consequence, of the OECD draft, Polish and Cypriot structures will need to be revised in order to create substance. What is meant by substance here is essentially the introduction of a solid corporate infrastructure which will ensure that the management and control of the company is located in Cyprus, i.e. the residency status of the company. Furthermore, additional substance-enhancing measures will need to be taken such as employing staff, registering with local business associations, etc.

DIRECTORS’ FEES

The most controversial new provision seems to be related to the taxation of directors’ fees. One of the major advantages for Polish taxpayers resulting from transactions with Cyprus was the taxability of the directors’ fees in Cyprus, i.e. effectively being exempt from taxation. Unfortunately, the relevant provision of the DTT has been often subject to abuse. For instance, the di-

COMPANIES REGISTERED IN CYPRUS ARE EXPECTED TO BENEFIT SUBSTANTIALLY FROM THE AMENDMENTS IN THE PROTOCOL REGARDING INTEREST PAYMENTS rectors’ fees provision was often used to distribute sums of money which were presented as a salary of a director of a Company when, in reality, they should in most cases have been distributed as a dividend and would thus have been subject to taxation. In order to combat such cases, the new Protocol amends the relevant provisions stating that any directors’ fees and other similar payments derived by a resident of a Contracting State in her/ his capacity as a member of the Board of Directors/Supervisory Board or of any other similar organ of a company which is a resident of the other Contracting State shall be subject to taxation only in the state of residence of the Director. As a result, the taxing rights on directors’ remuneration are shifted from the source country to the country of residence of the Director, subjecting Polish residents to a Polish tax burden of 19%.

EXCHANGE OF INFORMATION

Following the general trend towards combating tax evasion and in line with increased transparency regarding cross-border payments, the Protocol introduces a detailed procedure on the exchange of information between the two countries. The new provisions allow the competent authorities of Cyprus and Poland to exchange any information that is deemed relevant for the administration or enforcement of domestic laws concerning all types of taxes (provided that domestic tax laws are not contrary to the DTT). Any information received by any of the contracting states shall be treated as “secret” (confidential) and may be disclosed only to persons or authorities exercising assessment, collection, appeal or supervision thereof. Needless to say, the new provisions contain certain safeguards to the application of the general rule of exchange of information. Both contracting states need to follow certain procedures for collecting and supplying information that are in accordance with their domestic laws. In the case of Cyprus

Authorities, Cypriot Law 72(I)/2008 on the Collection of Taxes provides that the Director of Inland Revenue will only supply foreign tax authorities with information if he/she receives substantial details about the concerned person and the reason for the request for such information. This provision has been put in place to ensure that the foreign tax authorities do not engage in “fishing expeditions” without a valid excuse or claim for detailed information about the activities of the person under investigation. As a further precaution, Cypriot legislation provides that the Director of Inland Revenue shall only supply information if he/ she has obtained the prior written consent of the Attorney-General. To ensure the effective application of this provision, the Protocol stipulates that the relevant authority cannot refuse to supply information merely on the grounds that it has no domestic interest in the said information. In addition, information that could qualify as trade, business or industrial secrets will not be caught within the ambit of the Protocol and will not be subject to exchange.

AVOIDING OF DOUBLE TAXATION

The Current DTT provisions allow for a reduction to the Polish tax paid on dividends, interest and royalties in accordance with the tax payable in Cyprus. The new Protocol abolishes the latter and provides that the reduction in Polish Tax shall be applicable to the tax paid in Cyprus. It is expected that when the above change comes into force, the dividend income of a Cypriot company received by Polish tax residents will be subject to a rate of 19%.

CONCLUSION

The new Protocol should be seen as an instrument aimed at enhancing the business relations between Poland and Cyprus. It is expected to enter into force on 1 January 1, 2013. As noted above, the most important changes are the introduction of the Beneficial Ownership principle and the substance considerations. Furthermore, the abolition of the directors’ fees “loophole” will make structures between Poland and Cyprus more transparent and free from exploitative tax planning. A major benefit of the Protocol is that it actually goes further than the Parent Subsidiary Directive, expanding on the circumstances where 0% WHT is applicable to dividends. It is now of the essence to consult your tax advisor the soonest in order to assess whether your current structures are compliant with the new Protocol.

info: Michalis Zambartas is a Tax & Legal Associate at Eurofast Taxand, Cyprus, Tel: (+357) 22699222, www.eurofast.eu THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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{LIFESTYLE}

PUT YOUR MONEY WHERE YOUR MOUTH IS!

DELICIOUS, DELECTABLE, DELIGHTFUL, DISTINCTIVE... AND EXPENSIVE INGREDIENTS By Nathalie Kyrou

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ive years ago the Dome Restaurant in Bangkok, Thailand served up what was billed as the most expensive meal ever sold. Six chefs were flown in from France, Germany and Italy to prepare the 10-course gourmet meal with ingredients sourced from all over the world. The 15 guests, mostly real estate and gaming moguls from Asia and the United States, paid $30,000 plus taxes and tips. Arranging a similar dinner at the Dome may be beyond your capabilities but if you are happy to spend vast sums in the name of a very special gastronomic experience, and particularly if you consider yourself to have a talent in the kitchen, you can always treat yourself to some of the most expensive food items in the world. Here, in alphabetical order, are the Top Ten.

01. BELUGA AND

ALMAS CAVIAR

Beluga caviar is the roe (or eggs) of the beluga sturgeon, found primarily in the Caspian Sea, the world’s largest salt-water lake, but also in the Black Sea basin and, occasionally, in the Adriatic Sea. Beluga caviar is the most expensive type, with present market prices ranging from $7,000 to $10,000 per 1 kilo, making it one of the most expensive food items in the world. Beluga caviar is usually served on its own as it does not need added flavours. Generally, the lighter the colour of the caviar, the older and more expensive the fish is. Almas, a pearly-white variety, is the rarest type of Beluga available, with an extremely small production – it comes from Iran and the only known outlet is the Caviar House & Prunier in London’s Piccadilly, which sells 1kg of Almas caviar in a 24-carat

gold container for about €20,000. The Caviar House also sells a €970 tin for those on a smaller budget.

02. BLUE LOBSTER

Clawed lobsters produce $1.8 billion for the seafood industry every year and the most expensive (and less known) species is the blue lobster, found in waters from the shores of England to those of Morocco. One taste of blue lobster and it is obvious why you have to pay more for this rare delicacy: the tasty meat is even juicier (the blue meat turns red once cooked so if you’re accustomed to the usual red lobster, don’t worry). Blue lobsters cannot be raised in farm environments and the creatures themselves have their own desire for delicacies, eating only other lobsters! The female blue lobster reportedly tastes better than the male and the way to tell the difference is to note that the male has one larger claw while the female has two equally sized pincers.

for $6,100. In a true sign of the recession, in 2011, a Densuke was auctioned off in Japan at the bargain price of $3,740. And you’re still complaining about the prices you paid the old man in his van in Cyprus last summer?

04. FOIE GRAS

Foie gras (French for ‘fat liver’) refers to the specially fattened livers of ducks and geese and, though once a rare delicacy dating back to ancient times, it can now be readily found beyond the menus of the finest restaurants, at an estimated price per pound of $50. Traditionally served as an appetizer with toast or fresh fruit, in recent years this gourmet treat has been making its way into a variety of more common dishes. Foie gras tends to receive more publicity today due to the controversy

03. DENSUKE

WATERMELON

The Densuke, a type of black watermelon grown only on the northern Japanese island of Hokkaido, is often given as a gift due to its extraordinary rarity (only about 65 of these prized fruits are harvested each year). Harder and crispier than the watermelons westerners are used to, and with a different level of sweetness, a 7.71kg Japanese Densuke became the most expensive watermelon in the world a few years ago when it was sold at auction

surrounding its production than for its famous rich and buttery flavour. To obtain foie gras (usually from birds about five years of age), handlers force-feed ducks (often the speciallybred sterile mallard duck) twice a day for two weeks with a mixture of lightly cooked and seasoned corn meal that is carefully balanced to mix with the bird’s natural chemicals. Forcefeeding geese is a more delicate process and involves three feedings a day for three weeks. Animal rights activists say the production of foie gras is inhumane. For fans, the Perigord region of France is particularly noted for producing the world’s finest foie gras and the Rougie Company is generally considered to be the finest producer.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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dramatic fall in its numbers. Matsutake mushrooms currently cost around $1,000 per pound, though prices for specific mushrooms may reach up to $2,000 per pound. They are known more for their spicy, fruity aroma than their flavour and are a cherished gift in the Japanese corporate world.

05. GLASS EELS

Tiny translucent elvers – baby eels the size of toothpicks, with big black eyes and spines – are mysterious creatures, also referred to by their place of origin (civelles if they are obtained from French waters, or angulas if they are fished off the coasts of Spain). Although they may sound and look rather unappetizing, glass eels are a rare delicacy that can only be enjoyed (usually fried with garlic) by the privileged few. A worldwide shortage of the prized dinner fare has made a pound of baby eels now worth around $30,000 on the open market once grown to market size. This year’s astronomical prices have got fishermen and dealers on edge about poachers, fishermen’s safety, the secrecy of fishing spots and unwanted publicity. There is even a move to have the eels protected by the Endangered Species Act so if you want to try them, you may need to hurry.

06. MATSUTAKE

MUSHROOMS

Matsutake is the common name for a group of Japanese mushrooms which have been a significant part of the nation’s cuisine for the last 1,000 years. The annual harvest in Japan is around 1,000 tons, partially made up by imports from China, Korea, and Canada. The Matsutake (or mattake) is the most expensive mushroom in the world because of its rarity. While it was once nearly synonymous with autumn in Japan, the introduction of an insect that killed the trees under which the mushrooms grow has caused a

07. OYSTERS

Oysters, long considered to have aphrodisiac properties, are best served raw in their own fluid with a slice of lemon, although they are occasionally cooked. Some kinds, such as pearl oysters, are not eaten though they are edible. However, the most sought-after and most expensive oysters are those classified as fines de claires, produced by raising native European oysters (Ostrea edulis) in specially converted salt marshes (claires), where the water is frequently changed, is higher in mineral content, and contains a special ingredient which gives the oysters a special green tinge. Farm-gate prices for oysters have jumped 65% in the last three years because of a herpes virus which decimated the harvest along France’s 5,500km coast and it is now feared that having fewer oysters may threaten an industry that was worth $823 million in sales in 2009 as consumers may lose interest in the product because there is less of it to market. Last year, retail prices for oysters in Paris climbed to $22 a dozen in some neighbourhoods, from $18.25 a dozen in 2010.

08. WAGYU STEAK

/ KOBE BEEF

Wagyu (which means Japanese beef) is a breed of cattle (just as Angus steak comes from Angus cattle). Kobe beef, known for its steep price tag as well as its flavour and well-marbled texture, is from the specific black Tajima-Ushi breed of Wagyu cattle raised in Kobe, Japan. True Kobe beef is bred using secret traditions; it is a reg-

istered trademark in Japan and can cost up to $300 per pound. To be considered Kobe beef, the meat must be from Wagyu cattle born and slaughtered in the Hyogo Prefecture province of Japan. The cattle farmers there pamper their cattle with beer to keep them calm, daily massages with sake to keep their bodies tender, and grain fodder to keep them well-fed. Cheaper Kobe-style beef can be purchased for $40 to $150 per pound but this meat comes from Wagyu cattle crossbred with Angus cattle in North America. Kobe-style beef tends to be darker than pure Kobe beef and usually has a bolder flavour.

09. WHITE ALBA

TRUFFLES

Expensive truffles are notoriously pricey because they are difficult to cultivate, which in turn makes them a true delicacy. White truffles are even more expensive than black truffles, and although many people describe them as smelling like earth, tree roots and old cheese, they remain a gastronomical object of desire. White Alba Truffles, from Alba in Italy’s Piedmont region, are famous for their aroma, taste and aphrodisiac qualities. In 2006 a gigantic Italian White Alba truffle weighing 1.51kg was bought for $160,406 but a year later, this record was beaten by a white truffle from Tuscany weighing 1.49kg, when it was sold at auction in Hong Kong for US $330,000. In 2010 two truffles weighing just under 1.36kg went for the staggering sum of $330,000.

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10. YUBARI

MELONS

Round, sweet and shockingly expensive, the world’s most expensive cantaloupe melon grows in volcanic ash and is harvested by hand after 105 days. Yubari melon farmers are forbidden from selling directly to consumers – the entire crop must go to the Japanese Agriculture Association for grading. And while in 2007, the first Yubari King melons sold for about $20,000 each, by 2009, the first of the season were auctioned in northern Japan for just $5,200 a pair. This time last year the price had risen sharply to $12,500 per fruit.

THE WORLD’S MOST EXPENSIVE LUNCH We’ve all heard the business expression “there’s no such thing as a free lunch” and there is no-one who emphasizes this more than billionaire investor, industrialist and philanthropist Warren Buffett. Placing a hefty price tag on his company for lunch, Buffett has hosted his socalled Power Lunches over the

SOMETHING SPECIAL IN CYPRUS Celebrity chef, restaurateur and TV personality Roddy Damalis, owner of the Ta Piatakia restaurant in Limassol and author of a recently published cookery book (see review), knows how to find any ingredient – no matter how rare or precious – if a customer specifically requests it. For private parties or celebrations when money is not an issue, Damalis enjoys the challenge of creating a unique menu from eclectic and hard-tofind foods. “In the 10 years since I began operating my restaurant here in Cyprus, I have noticed that, while I personally am able to obtain any ingredient I want from my suppliers, it is a problem for most people in the trade. However, things that were once difficult to source are getting easier to find. I can order from my suppliers on a Monday and have the goods delivered by Thursday-Friday.” While Roddy may just have to pick up the phone to order beef from northern Africa or fresh scallops, sashimi salmon and seafood via

his local distributors, there are not many of them on the island. Chefs and hoteliers tend to rely on a few Cyprus-based companies such as Maxifoods Ltd, Sashimi Ltd. and Amaxulus Prime Foods that distribute expensive and difficult-to-find food items. Yiannos Gregoriou, Food and Beverage Manager at the Four Seasons Hotel in Limassol says that, in his experience, when it comes to extravagant expenditure on meals, customers tend to splash out on drinks such as cognac and champagne rather than costly food items. He notes that the most expensive dish on the menu at the Four Seasons is about €50 though he is able to place a special order anything a client requests, through the hotel’s connection with Andreas Mavromatis and its sister Mavromatis restaurant in Paris. Among the most expensive dishes the hotel has ever offered its customers are rare caviar and white truffles. Black truffles are on the menu in a delicious risotto dish.

last decade to benefit the Glide Foundation, a San Francisco community-based charity organisation. The lunches are auctioned on eBay and, at $2.63 million, this year’s beat the 2008 record of $2.11 million. The winner and up to seven guests may dine with Buffett at Smith & Wollensky in Manhattan.

BOOK REVIEW MY LITTLE PLATES BY RODDY DAMALIS (PESTLE & MORTAR, 2011) R.R.P. €35 (€35 FROM WWW.TAPIATAKIA.COM)

ast year, Roddy Damalis, the distinguished chef and owner of the Limassol-based restaurant Ta Piatakia, finally published his long-awaited first cookery book, entitled My Little Plates (which is what the name of his restaurant means). It includes 100 of Roddy’s much-loved recipes and in it the author (and, more recently, something of a TV personality) shows how his highly original fusion of tastes and colours can be easily prepared at home. Anyone who has had the pleasure of dining at Ta Piatakia will be simultaneously delighted and sceptical about this. While red mullet dressed in rose petals may seem fairly straightforward, can you really cook ostrich in commandaria and apricot, pumpkin & kataifi pie or even a soufflé omelette with halloumi and lounza like the master himself? There’s only one way to find out of course. Meanwhile, the photos are beautiful (including 20 pages on Limassol), the recipes well-explained and, overall, the book is a work of art worthy of its author. Like the restaurant, it comes highly recommended.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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Don’t Lose This One

THE LAST WORD

The old Hellinikon airport premises are up for sale but this prime piece of Athens is much too important. By Peter Economides

Do you remember Hellinikon Airport in Athens? The minute you landed you knew you’d arrived. Hymettus on one side. The Saronic on the other. And the hustle and bustle of the arrivals hall with the permanent smell of stale smoke. It had a charm all of its own. I loved that airport. I remember when the new Athens airport opened. I caught a taxi back home after a long flight from New York. As we drove towards the first toll gates on the new highway, the driver told me how good he felt about the new airport. “Like I’m in Germany.” “Yes,” I replied, “but I would have liked to have seen something more Greek.” “Columns?” he asked. Well not quite. But I could have just landed in Munich or Hamburg. Wonderfully efficient, but not quite Greek. And the stale smoke was not all that was missing. I love Athens. I have done ever since I first came here as a young child, even though that was during the dark days of the junta. Years later I moved to Athens from Hong Kong. Then I left for Mexico City and New York. Whilst living in New York, I visited on a business trip

and, after seeing one of those magnificent orange sunsets over the Saronic Gulf, I decided to move back. And here I am. Athens has one of the finest coastlines anywhere. And for someone who grew up in Cape Town, that is saying a lot. But I am amazed how this city has turned away from the sea. The preferred suburbs are in the north, ‘in the mountains’ as I like to say. And we’ve built walls between the seaside suburbs and the sea. Poseidonos Avenue. The tram. Walls.

What happens to Hellinikon affects the future of Athens

Both of them. And don’t even talk about Kastela where the sidewalks are too thin to walk along. Ever since plans for the new airport were first announced, we’ve been hearing talk about the future of Hellinikon. The most common talk at first was about a huge park – larger than Central Park and Hyde Park combined. Hmmm... What would that cost to maintain? €20 million? €40 million? €100 million annually? Did anyone ask New York or London? Hellinikon recently went up for public sale. This prime piece of real estate – no, this prime piece of Athens – will go to the highest bidder. And whoever wins the bid will be free to do whatever they choose with it. Wow. Whose city is this? This cannot be left to a property developer to decide. This is too important. Way too important. What happens to Hellinikon affects the future of Athens. I understand those who advocate turning it into a huge park but I disagree with them. We have a unique chance to open this city up to the sea. To open up new possibilities. To develop a showcase for the future of this city and for the future of every city plagued by issues of economics and the environment. I can think of other lost opportunities in Greece’s recent history. I hope Greece does not lose this one.

info: Peter Economides is a Brand Strategist and founder of Felix BNI. He is a former Executive Vice President and Worldwide Director of Client Services at global advertising agencies McCann-Erickson Worldwide and TBWA\Worldwide. He has worked on some of the world’s most iconic brands including Coca-Cola, Apple, Absolut, illy, Audi and Nike. In Cyprus, he has been involved in branding projects for Bank of Cyprus, Sigma Television and easy-forex. Peter is based in Athens.

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

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