GOLD ISSUE 43 by Kevi Chishios

ISSUE 43 october 14 - NOVember 13, 2014 PRICE €4.95

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Taking

the international investment, finance & professional services magazine of cyprus

care of business CIBA

cyprus international

businesses association

How CIBA looks after the interests of international companies in Cyprus

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+ ANDREAS DEMETRIOU, GEORGE IOULIANOS, PHIDIAS PILIDES

CYPRUS

Österreichischer Lloyd Seereederei Steaming Ahead

INTERVIEWS

Wes Porter Frixos Savvides George Stylianou

LIFESTYLE

Europe’s most glamorous ski resorts

Plus:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

www.pwc.com.cy

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Issue 43 October 14- November 13, 2014

6 EDITORIAL 8 UP FRONT 14 FIVE MINUTES WITH…

Taking

care

+ OPINION

CIBA:

cover story

A NEW VITALITY By Ric Todd

SMALL IS BEAUTIFUL Michael Roth

OF BUSINESS

How CIBA looks after the interests of international companies in Cyprus. Problem Solving Frixos Savvides on the Association’s past,,

72 | INVESTMENT EXPERT CONFERENCE 2014

present and future role.

Emergo Wealth presented last month’s Investment Expert Conference in Nicosia. We report on what was said.

74 | GETTING IT RIGHT Five big social media mistakes to avoid

SPECIAL

64 FEATURES

18 | READY FOR TAKEOFF Interview with Wes Porter, CEO of Hermes Airports

24 | THE WAY FORWARD George Ioulianos, General Manager of the Cyprus Fiduciary Association, talks about the progress made by the sector since it became officially regulated.

56 | A CYPRUS PENSION SYSTEM FOR THE 21ST CENTURY Aon Hewitt anticipates that major benefits to the country will arise from Cyprus-based financial institutions offering occupational pension arrangements.

18 60 | WHO’LL STOP THE RAIN? Bill Hancock and Pavlos Loizou share their views of the Cypriot real estate market and what it will take to unravel the current predicament.

ADVERTISING SUPPLEMENT 35 | MEMBER COMPANIES OF CIBA

64 | CCCI BUSINESS LEADER AWARDS Phidias Pilides (CCCI) and Andreas Demetriou (EY) on the forthcoming Business Leader Awards.

66 | FROM THE ASHES OF RECESSION TO THE BRAND OF SUCCESS Jonathan Gabay led a very successful Brand Congress in Nicosia last month.

68 | STEAMING AHEAD Interview with Capt. Eberhard Koch, Chairman, CEO and Managing Partner of Österreichischer Lloyd Seereederei (Cyprus) Ltd.

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

76 78 80 84 86

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

EDITORIAL

All This and Regulation Too

ISSUE 43 OCTOBER 14 - NOVEMBER 13, 2014 PRICE €4.95

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CYPRUS INTERNATIONAL

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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JHYL of business CIBA

BUSINESSES ASSOCIATION

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ne of best things that EU membership brought Cyprus more than a decade ago was a massive transformation in the global perception of what the island represented. From being seen (and used) as a rather dodgy tax haven, it quickly became a respected international business centre, attracting companies active in a broad range of sectors and glad to find themselves in a country with an attractively low tax regime, excellent legal and accounting services, a sizeable pool of well-educated human resources and, of course, fine weather and a relatively laid-back way of life. All this – and regulation too! We are all aware of the fact that many things came crashing down 18 months ago but, fortunately, Cyprus seems to engender confidence and loyalty in foreign companies and individuals. As Frixos Savvides, President of the Cyprus International Businesses Association (CIBA), told Gold (page 30), “With certain people we have a chemistry,” adding that “We Cypriots have to pay for our mistakes but foreign investors and foreign companies are not to blame for our sins. It is essential that we regain their trust.” This month’s cover story looks at the activities of CIBA, which was set up at the end of 1993 and is still going strong, representing the international business community and speaking on its behalf with successive governments and parliaments. The fact that it is still having to deal with the same problems more than two decades after its foundation may suggest that it has failed to make progress but it actually says much more about the failure of 20 years of government to simplify the rules and regulations that are meant to make foreign companies feel secure but, in fact, are more likely to steer them in the direction of Malta. Today, in particular, when every amateur economist in Cyprus will glibly tell you that we need foreign investment if the economy is to be restarted and led to growth, there is still too much bureaucracy, not enough English-language information for international companies and an apparent unwillingness to welcome investors with open arms, something that characterise our competitors. Much work remains to be done and it is to be hoped that associations like CIBA are able to make a difference so that we see actions to go with the fine words that we frequently hear about the value of foreign investment and international business. Since March 2013, we have also been hearing constantly about the need to restore confidence in investors and the various ways in which this can be achieved. This issue of Gold features several interviews in which the subjects have a clear vision of what can be done in their particular field of interest. Capt. Eberhard Koch, Chairman, CEO and Managing Partner of Österreichischer Lloyd Seereederei (Cyprus) Ltd., for example, believes that the Government should and can do much more to promote one of its most successful and lucrative sectors – shipping – and has specific proposals for this (page 68). Elsewhere, George Ioulianos of the Cyprus Fiduciary Association argues that a greater effort aimed at accommodating international business is required, whether this means greater efficiency by state services, more Double Tax Treaties or issuing more official information in English (page 24). We also present two brief reviews of the island’s economy by EY and KPMG which indicate that things are looking up. One of the reasons for this is that Cyprus has been forced to accept that regulation and transparency are not only necessary but essential if we are to maintain progress. It is also one way to keep international companies on the island and we cannot afford to lose them.

John Vickers, Chief Editor john@imhbusiness.com

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BANKING How Spain restructured its system

BITCOIN The Future of the Digital Currency

INTERVIEWS Peter Greenberg Matthew Kidd Alexis Tsielepis

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+ ANDREAS DEMETRIOU, GEORGE IOULIANOS, PHIDIAS PILIDES

SHIPPING

INTERVIEWS

LIFESTYLE

Österreichischer Lloyd Seereederei Steaming Ahead

Wes Porter Frixos Savvides George Stylianou

Europe’s most glamorous ski resorts

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

PUBLISHED BY IMH ISSN 1986 - 3543

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ANASTASIADES praises Cyprus shipping SAXO BANKâ&#x20AC;&#x2122;S SEPTEMBER VOLUMES RISE BY 51%

ddressing a working lunch hosted by the Cyprus Union of Ship Owners in Athens, President Nicos Anastasiades said that the Government is committed to further strengthening the Cyprus Ship Registry. He described the local industry as â&#x20AC;&#x153;one of the most important pillars supporting the islandâ&#x20AC;&#x2122;s economy.â&#x20AC;? Referring to the continuing Turkish embargo of Cyprus-flagged ships, Anastasiades stressed that Cyprus will continue its efforts to have these restrictions are lifted, adding that Cyprus would rank even higher in international shipping if Turkey fulfilled its obligations.

Saxo Bankâ&#x20AC;&#x2122;s volumes during the month of September increased sharply, rising by more than 51% in nominal terms to $321 billion when compared to the previous month. The figure is also 46%higher compared to September last year. Average daily volumes increased by more than 44% to $14.6 billion, while the new paradigm on the foreign exchange market has delivered a broad-based rebound in trading activity. Saxo Bank is the first major retail trading venue to publish its official volume numbers after having seen strong growth on the institutional side of business with KCG Hotspot, ICAP plcâ&#x20AC;&#x2122;s EBS and the CME Group all reporting dramatically higher activity in September.

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

EBRD Looks to Enhance Cyprus Investment

he European Bank for Reconstruction and Development (EBRD) is eyeing fresh deals in Cyprusâ&#x20AC;&#x2122; banking sector and planning to install at least one independent director on the board of its first investment in the country, Bank of Cyprus. Speaking at a Reuters summit, Lucyna StanczakWuczynska, who took up the post of regional Director of Financial Institutions at the EBRD earlier this month, hinted the bank was closing in on a second deal just over a month after sealing its first. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re looking at the entire banking sector in Cyprus,â&#x20AC;? Stanczak-Wuczynska said on Tuesday when asked where the ERBD could be involved next. She said the range of options also included providing specialist loan facilities and credit lines in the country, although she appeared to rule out taking a stake in the Co-operative Central Bank (CCB). â&#x20AC;&#x153;For co-operative banks, there are always challenges with shareholder composition and possible equity participation you can build into them. But we plan to stay involved in the financial sector.â&#x20AC;? Having taken what she described as a â&#x20AC;&#x153;big ticketâ&#x20AC;? â&#x20AC;&#x201C; â&#x201A;Ź100 million, a near 5% stake in Bank of Cyprus in the inaugural deal in July â&#x20AC;&#x201C; the EBRD now plans to get an independent director installed. â&#x20AC;&#x153;We are looking forward to seeing the change in the bank,â&#x20AC;? she said. â&#x20AC;&#x153;And we would like to propose an independent supervisory board member.â&#x20AC;?

Antara Palace Crowned ‘Most Prestigious Engagement Party Venue’

€80 Million Luxury Hotel Investment in Larnaca Larnaca is anticipating a capital injection in the form of an €80 million luxury hotel complex, to be built on the Phinikoudes seafront promenade. The project has been approved by the Municipal Council, and is set to be financed by Russian investors. The agreement stipulates, furthermore, that a substantial amount of money will go towards the renovation of the seafront area. Construction is expected to begin towards the end of 2015. Larnaca Municipality will receive €5 million from the sale of a plot that will be used as part of the construction space, with this money expected to be contributed toward a fund establishing a new open-air market.

ntara Palace, an ultra-exclusive, luxury five-star boutique hotel and spa at Polis Chrysochous, was honoured with the award for “Most Prestigious Engagement Party Venue” at the Prestigious Star Awards held last month at the Oriental Club in London. “To win this award in only less than 12 months since opening amongst the other tough competitors is really an achievement for Antara Palace,” an official release stated.

‘INVEST IN

A large number of Cyprus-based investors and consultants met an official delegation of the leading free zone of the UAE, the Ajman Free Zone (AFZ) and explored the lucrative investment opportunities available in Ajman. The seminar, led by

AJMAN’

In its category, Antara Palace beat international venues such as The Waldorf Astoria in New York, 170 Queens Gate in London and The Westin Sydney in Sydney, Australia. “It is a great honour for us that Antara Palace has received the Most Prestigious Engagement Party Venue award. We are proud that both the public and the experts chose Antara Palace. We would like to thank all of you who supported us and congratulate the winners in the other categories as well!” said Nora Csige, Co-Founder of Antara Palace.

senior officials, highlighted the incentives and benefits to the local community. The comprehensive range of tax incentives, state-of-the-art facilities as well as the administrative support offered by the AFZ, all proved of particular interest to Cyprus business representatives seeking to expand their trade and investment horizons. Mahmood Al Hashemi, General Manager AFZ, confirmed that Cyprus is one of the biggest potential markets for bilateral trade and hence the Free Zone was here for the 2nd time to meet investors and the business community. The first such investment summit was organised in November last year and received great positive interest from investors.

STYLIANIDES IMPRESSES

ypriot Commissioner-designate Christos Stylianides, assigned the portfolio of Humanitarian Aid and Crisis Management by Presidentelect Jean-Claude Juncker, made an excellent impression at his hearing on 30

September thanks not only to his commitment to the task but – somewhat strangely – to what various observers described as his “remarkable resemblance to movie star Omar Sharif”. In his initial statement, Stylianides said it was a privilege for him to be assigned the humanitarian aid portfolio and, in his presentation, he showed his commitment to the field, paying tribute

to the current holder of the post, Bulgaria’s Kristalina Georgieva who managed to transform the portfolio into a showcase for the benefits of EU action in the world. Stylianides started receiving congratulations while the hearing was still ongoing. In particular, Georgieva posted a photo of herself watching the hearing from her office. She said that he was “speaking from the heart” and called him “strong and convincing”.

LIMASSOL MARINA

AT MONACO YACHT SHOW

For the fourth consecutive year, Limassol Marina participated in the Monaco Yacht Show last week, alongside internationally renowned operator, Camper & Nicholsons Marinas. The CEO and Marketing & PR Manager of Limassol Marina Ltd shared news of the recent opening of the waterfront development’s dining facilities, shopping area, spa and fitness. This year’s show took place on 24-27 September at Monaco’s Port Hercules. Fast growing a reputation as the most exciting new destination in the Mediterranean, Limassol Marina can accommodate 650 yachts up to 115m. It also boasts luxury apartments with uninterrupted sea views and villas with direct access to the beach or private berths for yachts up to 60m attached to their garden

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 9

UP FRONT

Minthis Hills Inauguration

resident Nicos Anastasiades ofﬁcially inaugurated the Minthis Hills Golf Resort at Tsada, Paphos, last month, following the completion of the ﬁrst phase of the project. In addition to an 18-hole championship golf course, Minthis Hills will eventually include a luxurious spa, a village square, a health club, an equestrian centre, a tennis academy and over 500 private residences, making it one of the most exclusive and luxurious residential golf resorts in the eastern Mediterranean.

Game Changers for the Professional Services Sector

he 6th Cyprus Professional Services Conference To International Business took place at the Hilton Park Hotel in Nicosia on 24 September. Under the banner “Game Changers for the Professional Services Sector”, it gathered the most updated knowledge and expertise from organisations and professionals around the world, and combined it with local knowledge and practice in order to analyse ongoing changes to the professional services sector. Main Sponsor: Bank of Cyprus. Sponsors: Amicorp, Cablenet, Lamda Group, Powersoft, TFI Markets. Organisers: IMH and Gold Magazine. Communication Sponsors: Gold News Daily Newsletter and Goldnews portal. Supported by: Cyprus Fiduciary Association, Cyprus Investment Funds Association, Cyprus Investment Promotion Agency, The Institute of Certiﬁed Public Accountants of Cyprus, Advanced diploma in international taxation.

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INTERVIEW

five minutes with...

George Stylianou

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XTM has clients around the world but the company is based in Limassol. Which qualities made Cyprus the most appropriate place for the companyâ&#x20AC;&#x2122;s HQ? There are many great advantages to basing the company out of Cyprus but the primary one is the excellent people we have working for us at FXTM. Cyprus is fortunate to have a very skilled workforce, with many of our team members having studied at some of the top universities in the world. In addition to this, being a Forex hub, Cyprus boasts a large pool of human resources with valuable financial service experience. Another important factor in choosing to base FXTM in Cyprus is the transparency and stability of the regulatory environment. The fact that the regulator (CySEC) is so open and clear on the steps that it is taking gives us confidence and certainty for the future. Forex trading has been influenced greatly by the colossal shift to the digital world. Iâ&#x20AC;&#x2122;m referring to the relentless use of smartphones and tablets, whereby people can effectively access any information from anywhere, at any time. How do you personally believe this trend will develop? It is true that the changes to the digital

world mean that the Forex industry and brokers need to constantly adapt and change. I am personally excited and motivated by new technological innovations and what this means for the industry. In the past few years we have already seen a monumental shift away from desktop trading to huge numbers of people trading anytime from anywhere with their smartphone or tablet. I expect this trend to only grow from here â&#x20AC;&#x201C; particularly in emerging markets where mobile Internet currently has lower rates of adoption but the numbers are growing rapidly. The Forex market has grown exponentially in recent years. What further potential do you believe it holds for the coming years? The Forex market holds an enormous amount of potential and part of our job is to educate clients and prospective investors about to how to make the most of the opportunities that exist. There are still a lot of misconceptions about trading financial products online and this is why itâ&#x20AC;&#x2122;s so important for us to properly educate our clients. Just like taking up a new sport or hobby, it takes time and practice to become a skilled trader. At ForexTime we think by leading on a strong foundation of education, we can open the Forex trading market to a much wider audience.

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

Finally, what is the long-term vision for FXTM, both in relation to its operations in Cyprus and the international trading market? FXTM is very much focused on providing innovative solutions tailored to its clientsâ&#x20AC;&#x2122; needs in different regions of the world. This drives our progress and spurs our development of new technology and our overall approach to Forex trading. The company was launched on the foundation of maximum performance, customer satisfaction and security in every investment and we continue to face challenges head on and push the boundaries of the Forex industry. Client experience is at the core of what we do and so we invest heavily in constantly improving and providing excellent trading conditions for our clients. We were recently awarded as the Fastest Growing ECN Broker Asia 2014. We have great plans in the pipeline to provide market education that will better equip clients who take the time to develop their abilities in order to develop a better understanding of the markets and improve their trading skills. Conducive to this environment of progress is the companyâ&#x20AC;&#x2122;s continuous investment in the education and development of the FXTM team in Cyprus and our teams located internationally, to foster innovative approaches and to enhance client relations.

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ΚΕΒΕ

BUSINESS LEADER AWARDS October 2014 | Limassol

Organisers

Cyprus Chamber of Commerce and Indusrty Βy invitation only

THE CYPRUS CHAMBER OF COMMERCE & INDUSTRY,

IN COLLABORATION WITH IMH AND THE MAGAZINES IN BUSINESS AND GOLD, ORGANISES THE ΚΕΒΕ BUSINESS LEADER AWARDS,

THE INSTITUTION THAT HONOURS LEADERSHIP AND EXCELLENCE IN BUSINESS AND PROMOTES INDIVIDUALS FROM THE BUSINESS AND BROADER SOCIO-ECONOMIC SECTOR.

WE PAY TRIBUTE TO SUCCESSFUL LEADERS, POWER, INNOVATION, PERCEPTION AND KNOWLEDGE. WE RECOGNISE VISION AND THE ABILITY TO TURN IT INTO ACTION. WE HONOUR INTEGRITY AND ENTREPRENEURIAL ETHICS.

READ

INVESTMENT

Y of

r T e ak

In Ancient Greek mythology, the God Hermes was – among other things – the protector and patron of travellers, and a celestial messenger. Hermes Airports, it seems, OHZ ILLU ILZ[V^LK H UHTL ILÄ[[PUN its practice. And, as evidenced by his plethora of industry knowledge, and zealous passion for his leadership role, Wes Porter,

CEO of Hermes Airports

is proving to be the captain that the island’s airports have long needed to steer Cyprus’ tourism product back on course, and encourage a viable and fecund means of foreign direct

investment.

By Chloe Panayides | Photograph by Jo Michaelides

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

s he shares his insights and ideas with Gold, it becomes clear that Wes Porter is, most positively, ready for takeoff.

Gold: Hermes Airports is a successful example of the Build-Operate-Transfer model of private-public partnership. How did the agreement come about, and what have been the benefits so far? Wes Porter: The story goes back to early 2000 when the Government decided on the BOT method to get new state-of-theart terminals. Nine shareholders from Cyprus and abroad formed a consortium, bringing local and international expertise to the project. Under a 25-year concession agreement with the Government, Hermes Airports Ltd assumed the management of Larnaca and Paphos International Airports in May 2006. After eight years, the result speaks for itself. The concession agreement was awarded the ‘Best Transportation Project in Europe’ in the competition for Public-Private Partnership Awards 2013 by World Finance. This reflects the success of the project on various levels: using best practices, innovation, bringing socio-economic benefits to the end users and becoming a benchmark for other projects.

the existing ones. This significant investment in incentive schemes on behalf of the airports aimed not only to attract new routes or airlines but also to support existing airlines that have suffered a loss of traffic due to the decline in demand. Parallel to that, we have initiated and encouraged the involvement of stakeholders in an effort to present a common Cyprus proposition. So, after a difficult year, we expect in 2014 to reverse the trend and likely fully recover the last year’s loss of passengers. Gold: In recent years, passenger numbers have more or less oscillated around 6-7 million. What are your medium- to longterm goals in increasing traffic, and how might this be achieved? W.P.: One of the main priorities of our five-year strategic plan is to grow sustainable traffic, meaning that airlines that are convinced to try a route and bring people to Cyprus would be willing to stay and expand over time. How Cyprus will brand and promote itself involves all tourism and travel stakeholders: the Cyprus Tourism Organisation (CTO), hoteliers, tour operators, the Government and the airports. We have suggested to the Government and the CTO that Cyprus needs a national tourism strategy, with specific targets over a period of time and actions to support this. One of the things that we believe is essential is the re-branding of Cyprus by a renowned expert. When

Hermes Airports is a success story of foreign direct investment (FDI) in Cyprus Gold: And success is surely also measurable in terms of the economic benefits of the airports to the country’s economy as a whole. W.P.: Definitely. The results of the Economic Impact Study performed by PwC in 2013 clearly demonstrate that the airports’ contribution to the Cyprus GDP is €506 million (direct, indirect and induced), which corresponds to approximately 2.9% of the GDP for 2012. The number of directly employed people within the airport community reaches 4,900 while the total impact on employment (indirect and induced) is 12,700 jobs or 3% of the economically active population in Cyprus. Hermes Airports is a success story of foreign direct investment (FDI) in Cyprus and its shareholders expertise can drive greater FDI. From its inception, the consortium has provided a wealth of expertise on the aviation and tourism sectors, drawing on its network of nine shareholders representing a mix of Cypriot and international partners of world-class calibre. The shareholders are willing to assist in the Government’s collective efforts to attract more FDI. Gold: Considering the massive hit to the economy in March 2013, how is Hermes Airports faring? W.P.: Last year, our traffic fell by 5%. However, we have reacted since day one to minimise the impact of the financial crisis and, at the same time, to take advantage of any opportunities which could be created. Right after March 2013, we became more active in the market, we approached as many airlines and operators as possible, and introduced three additional incentive schemes to complement

we talk to airlines and tour operators, the perception is that Cyprus is only sun and sea, whereas I, being also relatively new here, see Cyprus as a wealth of experiences; a diversified island. Moreover, the casino resort, the gas and oil industry, and new hotel investments, can all contribute in a positive way. Air service development and connectivity is of strategic importance to Cyprus given its high reliance on the tourism industry. Airports must be supported in order to play an even more important role in making the development of inbound tourism possible. Gold: Larnaca has recently been accused as being one of the most expensive airports in Europe, with your strategy being viewed as actually inhibiting tourism growth. How do you react to those comments? W.P.: I think we need to clarify a few things. There is a concession agreement with the Government through which it receives a significant percentage of Hermes Airports’ gross revenues. We have studies which show that, without this contribution, our charges would be quite competitive compared to those of other neighbouring airports. The level of charges at every airport is related to the level of investment that has taken place. Many of the airports that we compete with for traffic – such as Heraklion, Antalya, Cairo, even Berlin – are state-owned airports with an infrastructure that is nowhere near what Cyprus has to offer. It is also important to mention that the five incentive schemes we offer effectively reduce the airport charges, and this is done in a targeted way to ensure results for the country as a whole. Bear in mind that we can’t possibly control

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 19

INVESTMENT

Hermes is perhaps the only private sector stakeholder that serves the whole of the tourism industry ^P[OV\[ JVUÅPJ[PUN VY competing interests whether the airline will pass on this benefit to its customers. Very often, airlines charge a fuel surcharge, which appears on the passenger tax along with the airport tax, and people mistake this as part of the airport charges. Gold: Tell us more about the incentive schemes that are in place to encourage the opening up of new routes and new airlines servicing the island. W.P.: Five incentive schemes are available to all airlines, effectively reducing the airport charges or providing marketing support. Currently, 35 airlines make use of these schemes and contribute to the growth of passenger arrivals to the island. The effort has already proven successful and is generating a lot of incremental passengers. In 2014, the incentive schemes are expected to generate over half a million incremental passengers. By using these incentives, we have managed in less than a year to bring 11 new airlines to Cyprus and establish new or additional routes for various destinations around the world. Gold: How far is Hermes involved at a government level in spearheading the open skies policy agreements with other countries? How important is this to facilitating growth? W.P.: Definitely, we are very much in favour of the open skies policy. We strongly believe that it is the right time for the Government to proceed with allowing more airlines to fly non-EU routes. This will open up new opportunities for Cyprus, especially for airlines that are interested in basing aircraft. Moreover, the Middle East area, although in close proximity to Cyprus, has been hugely underserved and we see the potential – once adequate connectivity is established – to use Cyprus as a gateway from the East to the West and vice-versa. Gold: Moreover, considering the airlines’ focus on profitability and the latter’s interrelatedness with a country’s prosperous tourism product, how closely involved is Hermes in the development of a national tourism strategy? W.P.: Hermes is perhaps the only private sector stakeholder that serves the whole of the tourism industry without conflicting or competing interests. It could become a catalyst in the industry and is willing to play a coordinating role to facilitate the development of the national tourism strategy that will combat

Of all the airports I have worked at throughout my career, Cyprus’ are the best 20 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

seasonality and the lack of market-specific branding. Hermes laid the foundation stone earlier this year by organising a tourism stakeholders’ conference, where renowned industry experts presented tourism and air connectivity transformation success stories. One outcome of the conference was the formation of a stakeholders’ working group to deal with strategic and tactical issues at different levels. Gold: And what would Hermes like to see in the coming years to ensure bountiful tourism for Cyprus? W.P.: We would like to see a willingness for collaboration and a spirit of teamwork. It is important for everyone to understand that we play in the same team. In this game there should not be separate goals for Hermes, the CTO, hoteliers, travel agents, etc. There is only one team, the team of Cyprus, and each of us has a specific role to play in order to win. In practical terms, we urgently need to address some long standing problems, such as seasonality, hotel availability, infrastructure, Cyprus’ brand, and the promotion of the latter. This, in my opinion, requires a bit of out-of-the-box thinking, not being afraid of change and, above all, the determination to act. Gold: Airports are the first and last place seen by a traveller visiting Cyprus: that’s a profound responsibility. How does Hermes ensure it always makes the best impression? W.P.: You are absolutely right. The airports are the first and last impression that visitors have of Cyprus and they play a critical role in showcasing the country and sustaining tourism. I think that the two new terminals that Hermes has offered to Cyprus since 2009 have completely changed the perception and positioning of the island in the minds of passengers. The new buildings, the modern technologies that have been adopted, along with the shops and restaurants, and the overall sense of place create a welcoming and inviting experience for the public. We are constantly looking for ways to improve and upgrade the technology as well as the competences of our staff. We are also working with all the other companies or Government agencies operating at the airport to find ways to improve customer service and process flows. We plan to introduce a customer care programme, which we would like to use to engage many of the airport and tourism stakeholders and set a benchmark for the island. Gold: Finally, what is it like being the Chief Executive of an airport? W.P.: Well, I would say that it’s a huge challenge and a great responsibility. The airport is possibly one of the most complicated businesses, as we have to deal with a multifaceted spectrum of considerations covering operational, commercial, technical, environmental safety and people’s issues. It is like running a small town… Every day is different from the previous one, so it might be a challenge but at the same time it’s a thrilling, exciting and stimulating experience! I truly feel that of all the airports I have worked at throughout my career, Cyprus’ are the best and I feel blessed to be working here.

OPINION

A New Vitality The relationship between the UK and Cyprus is a priority for both countries.

By Ric Todd

t is a great honour as well as a pleasure to represent my country here in Cyprus. I look forward to getting to know much better this beautiful island, its people and its culture. As a student of history, I understand and look forward to learning more about the history of Cyprus and its role in the development of European culture and civilization. The relationship between the United Kingdom and Cyprus is a relationship that is unique. Our membership of the Commonwealth is but one illustration of our shared history and our shared values. Our relationship has always been a very rich and active one, not only at the level of governments, but also throughout society. Many British people have made their homes in Cyprus. A large number of Britons visit here every year. Britain, and especially London, is a home to a large community of Cypriots, who play an important role in political and economic life in Britain. The educational and cultural bonds between us are a particular strength of our relationship. Bonds that bring us together, enriching both our countries. The relationship between the UK and Cyprus is a priority for us both at this important time and we are witnessing a new vitality to our partnership. We are in a genuine sense friends as well as partners who know that we can rely on each other in difficult times as well as good ones. During President Anastasiadesâ&#x20AC;&#x2122; time in office, we have seen numerous and important examples of the will of Britain and Cyprus to work together. His visit to London in January this year played a key role in developing and modernizing

We share the same desire to see a Europe moving forward in the right direction

our partnership as we look into the 21st century. I am sure that we can deepen and widen our bilateral relationship. We have opportunities to do this; politically, economically, culturally and in security and regional cooperation. This will be a key element of my work here in Cyprus with Cypriot partners. For a decade now we have been partners in the European Union. Given our many common interests, I am sure that the United Kingdom and Cyprus, working together and with our partners, can tackle the challenges facing us including regional instability, terrorism, the environment, development, energy security and overcoming the economic crisis. Geographically, we see Europe from opposite sides of the continent but we share the same desire to see a Europe moving forward in the right direction. The settlement of the Cyprus problem has been elusive for too long. I have already sensed how frustrated Cypriots feel. A settlement is in the interest of Cyprus, neighbouring countries of Cyprus, Europe and the region. Achieving a settlement is more important than ever. There is an opportunity before us now following the Joint Declaration in February. The President of the Republic may be assured of the commitment of the United Kingdom to support him in looking for a settlement and that we will do whatever we can to that end. In my first days here, I have been impressed by the breadth and depth of the areas of common interest between our countries. I am struck by the good will which I have found here and the warmth, kindness and hospitality of the Cypriots. I appreciate this enormously.

info: Ric Todd is the new British High Commissioner to Cyprus. The above text is adapted from his address given during the presentation of his credentials to the

President on 15 September. 22 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

FORWARD

ADMINISTRATIVE SERVICES

Ahead of the forthcoming Cyprus Fiduciary Association Forum, George Ioulianos, General Manager of the Association, tells Gold about the progress made by the sector since it became officially regulated, current problems and what he hopes to achieve with the Forum.

THE WAY By John Vickers

Photo by Jo Michaelides

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

old: Almost two years have passed since the new Fiduciary Law was voted in December 2012. What sort of an effect has it had on fiduciary firms in Cyprus? George Ioulianos: The Law Regulating Companies Providing Administrative Services & Related Matters of 2012 (the so called ‘Fiduciary Law’) was approved on December 21, 2012, setting the international business sector and the provision of administrative services under a clear, official regulatory framework. This was something that should have been done many years ago in order to advance our services and enhance the country’s reputation as an international business centre. We managed to introduce the Law at the very last minute, in the sense that it simply could not be delayed any longer. With all the international developments and pressure regarding the prevention of money laundering and terrorist financing, as well as on quality assurance through operating provisions, Cyprus could not wait any longer to introduce a framework for monitoring the provision of what are officially termed “administrative services”. I truly believe that, given the turmoil in the Cyprus economy and the haircut on unsecured bank deposits in March 2013, the introduction of regulation three months earlier succeeded in safeguarding the fiduciary sector from even worse and more unpleasant developments.

THE MAJOR ISSUE WE FACE TODAY IS THE ONGOING FINANCIAL CRISIS, WHICH CONTINUES TO CREATE A LEVEL OF UNCERTAINTY FOR INTERNATIONAL BUSINESSES Gold: And yet there have been many criticisms of the law, as finally passed, not least from your Association. G.I.: The Law does not include all Administrative Services Providers (ASPs) under its umbrella since lawyers and accountants are exempt from its provisions, on the grounds that they are regulated by their own selfmonitoring bodies (the Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus, respectively). In addition, due to the fact that the introduction of the regulatory framework coincided with all the other current international developments, ASPs are facing difficult times adapting to all new requirements. We should not forget that ASPs are being asked to go through these important changes amidst difficult economic circumstances. Adapting to and complying with all the requirements demands additional investment in procedures and personnel, something which, for many firms ranges from difficult to impossible to implement. What we are

looking at here is how to effectively regulate our sector, safeguard the business of our international investors and improve the quality of our services as a jurisdiction. This will not succeed simply by passing a Law; we need all the involved parties to continue cooperating in order to maintain a successful balance between regulation and business development. Gold: Has the new Law managed to improve the sector and its integrity? G.I.: I must confess that, almost two years after the enactment of the Law, ASPs have made significant progress, first of all in adopting the new regulated culture. The business is more structured and uniform for regulated entities and reporting requirements have forced a specific mindset on Directors and Compliance Officers. This is not to say that ASPs did not follow AntiMoney Laundering (AML) and KnowYour-Client (KYC) procedures before the Law (we shouldn’t forget that there are

THIS IS THE TIME TO COLLECTIVELY AND DECISIVELY PLAN THE FUTURE OF THE INTERNATIONAL BUSINESS SECTOR IN CYPRUS THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 25

ADMINISTRATIVE SERVICES

many ASPs in Cyprus with a significant international presence that are regulated in many other jurisdictions) but a regulatory framework ensures the proper application of procedures for all regulated entities. This is very important for the integrity of the fiduciary sector, as well as Cyprus as an international business centre, since we can now assure foreign businesses that their service providers are being monitored. Gold: How are the regulatory authorities coping with their new responsibilities? G.I.: The new Fiduciary Law has significantly increased the workload of the regulatory authorities, namely the Cyprus Securities & Exchange Commission (CySEC), the Institute of Certified Public Accountants of Cyprus (ICPAC), and the Cyprus Bar Association (CBA). As an Association, we strongly support the existence of a single supervisory authority as we believe this would ensure not only a level playing field for all regulated entities but also the effective implementation of the

CBA do not have to perform an assessment of their members before granting authorisation, nor do they require their members to submit periodic reports, etc. Moreover, the three bodies do not move at the same pace with regard to their common obligations, one example being the creation of public registries of licensed and authorised entities with all related information, including the registry of employees, as required by the Law. The Ministry of Finance has stated that we should all work towards a common monitoring framework and we recognise that the greatest issue faced by the authorities is a lack of resources, mainly personnel. In order to be able to perform their monitoring duties effectively and efficiently, the authorities should be in position to be up-to-date with international developments, provide timely guidelines to regulated entities, timely review reports and provide feedback, and perform frequent monitoring visits. The Cyprus Fiduciary Association has always been at the disposal

effort to improve their productivity, effectiveness and response. We need to accommodate international business in our country and we therefore need to work on major issues like expanding our network of Double Tax Treaties and promoting additional products as a jurisdiction, as well as dealing with more administrative issues, such as finding ways to process changes in statutory details, to issue certificates faster, to respond in a more timely manner for tax and VAT rulings, and to issue circulars and other communications in English. Gold: Is there a single issue to which your Association would give priority? G.I.: The major issue we face today is the ongoing financial crisis, which continues to create a level of uncertainty for international businesses. Nevertheless, it should be noted that the international business sector is going through major changes worldwide. Projects like BEPS (Base Erosion and Profit Shifting) adopted by the

CYPRUS WILL HAVE TO GO THROUGH SIGNIFICANT CHANGES IN ORDER TO ADAPT TO THE NEW INTERNATIONAL ENVIRONMENT AND THE CULTURE OF TRANSPARENCY regulatory framework that would leave no loopholes and really advance the fiduciary sector. However, we do recognise the effort and work done by all three nominated authorities. In a short period of time, they were asked to familiarise themselves with a new economic sector, set up procedures and assessment models for ASPs, perform monitoring visits, issue licences, inform regulated entities of their responsibilities, receive and review monthly and annual reports, and generally fulfil their obligations as supervisory authorities. Gold: Are all three regulators doing exactly the same work? G.I.: No. The obligations are not uniform among the three bodies since lawyers and accountants are exempt from the provisions of the Law. So, for example, ICPAC and

of all three authorities, ready to contribute our experience and knowledge to the development of policies and procedures, as well as to assist in administration issues, e.g. informing regulated entities on current developments. Gold: What are the major issues that the international business sector in Cyprus is facing today? G.I.: There are many things that need to be fixed and many others that need to be developed if Cyprus is to really advance its international business sector. The public sector is important in the provision of quality services to international clients and we are pleased to see that vital departments like the Department of the Registrar of Companies and the Inland Revenue Department are undergoing significant reforms in an

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

OECD, the Foreign Account Tax Compliance Act (FATCA) implemented by the US government, and the so called “de-offshorisation” package of laws promoted by Russia are all targeting the same thing: preventing the transfer of taxable profits to locations different from those where a company’s actual business activity takes place. To this end, governments around the world are promoting various measures including closer international cooperation, enhanced transparency and reporting requirements. The playing field is not the same anymore and Cyprus will have to go through significant changes in order to adapt to the new international environment and the culture of transparency. The adjustment and development of our international business sector was and is unavoidable.

DURING THESE DIFFICULT TIMES, THE COUNTRY NEEDS A NATIONAL POLICY SUPPORTED BY EVERYONE Gold: How has the situation developed since March 2013? G.I.: The Cyprus economy and our sector experienced a shock, especially after the events of March 2013, and we have no other choice than to move fast and adjust our model to current international business trends. As a jurisdiction, we have to see this as an opportunity to act quickly and lead the way, offering incentives, innovative services and safety in business activities. During this process, we have to aim for the long-term benefit of Cyprus as an international business centre for which the Government should draw up a plan. That said, I think we cannot compare our current status with where we stood last year or two years ago. The scenery is completely different, international developments are rapid and we need to adjust in order to have a bright future. Gold: So, whatever we do, ultimately international developments will affect our plans for the future? G.I.: Yes. We are just market players. We follow rules and regulations set at an international level. If we do not abide by them, we might face additional negative evaluations by the OECD or find ourselves blacklisted by certain countries. So the framework and rules are defined by others but that doesn’t mean there is no room for making our own plans. We have always been proud of Cyprus’ status as an eminent international business centre, offering great structuring opportunities, professional staff and high-quality services. We ought to further develop our product in order to maintain and advance our position in the market. We need to be up-to-date with the needs of international business and continuously upgrade the products and services we offer as a country; we need to expand our network of Double Tax Treaties; we need to undertake intensive promotional activities in order to attract the interest of international investors. This is the time

to collectively and decisively plan the future of the international business sector in Cyprus, a sector so crucial to the economy that it has always been its backbone and the major contributor to the country’s GDP. Gold: On November 6, you are holding the first Cyprus Fiduciary Association Forum entitled: “The Cyprus International Business Sector – The Way Forward”. What made you decide to organise this event and what do you expect to achieve with it? G.I.: This is the first large-scale conference to be organised by the Cyprus Fiduciary Association and it is our hope and intention to make it an annual event. Although it has long been a vital part of the Cyprus economy, the fiduciary sector was never really organised prior to the founding of our Association in November 2011. Since the issuing of the first professional guidelines to ASPs by the Association and the subsequent enactment of the Fiduciary Law in December 2012, the sector has been under steady reform, setting the proper grounds for development and quality advancement. We believe that this is the time for the sector to organise a real fiduciary conference that will specifically discuss the issues affecting the international business sector in Cyprus and seek solutions for the future. The ultimate goal of the Forum is to provide an opportunity to participants to express their issues, discuss potential solutions and eventually draft a strategic plan for the medium and long run. Our Association is already in contact with the Government, aiming to assist and contribute in the formation of its plans for the economy. The strategic plan to be drafted at the Forum will be submitted to the Government in order to be included in its broader general economic plans.

Gold: How do you see the Cyprus Fiduciary Association evolving? G.I.: Our Association was formed to advance the quality of the fiduciary services provided in Cyprus and to develop the international business sector. We want to effectively represent Administrative Services Providers before the public and private authorities, promoting the real issues of the sector and seeking solutions for the future. We shall educate professionals of the fiduciary sector by organising seminars, workshops and providing recognised qualifications. We will have productive and effective committees dealing with issues related to the fiduciary sector. These will draw up the Association’s policies but also provide the opportunity to ASPs to participate and contribute in the sector. We will also continue to provide networking opportunities to all market players, support to ASPs on issues related to the Fiduciary Law and AML Directives and opportunities to Members to publish their ideas and articles through the Association’s newsletters and other communication means. We strongly believe that the development of our sector can only be achieved through the joint and coordinated efforts of all sector participants. To this end, we are in contact with public and private authorities seeking ways to unite the sector, both in terms of regulation and representation. During these difficult times, the country needs a national policy supported by everyone. This is a major target of our Association, one that is shared and recognised by the majority of the sector participants. The Cyprus Fiduciary Association Forum “The Cyprus International Business Sector: The Way Forward” will be held on Thursday 6 November at the Four Seasons Hotel, Limassol. For more information: www.imhbusiness.com/the-cyprus-fiduciaryassociation-forum or call 22505555.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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cover story

COVER STORY

Taking

care

OF BUSINESS HOW CIBA LOOKS AFTER THE INTERESTS OF INTERNATIONAL COMPANIES IN CYPRUS

he Cyprus International Businesses Association (CIBA) was established on 31 December 1992, on the initiative of a number of businessmen who had decided to base their international operations in Cyprus, taking advantage of the island’s advantageous tax regime and relaxed immigration policies as well as the Mediterranean sunshine, a relaxed lifestyle and high standard of living. At the time, there were several hundred such companies in Cyprus but they had no specific association or organisation to represent and support their interests. CIBA was set up for this purpose and,

By John Vickers. Photography by Jo Michaelides.

more than two decades later, it remains the only Association of its kind, representing the whole of the international business sector. It currently has over 130 full members and supporting members and, as General Secretary Chris Koufaris states with a certain amount of pride, CIBA only accepts companies with real substance as members. “We focus only on international businesses with operational substance. In fact, a precondition for any company to be eligible to apply for CIBA membership is that it must have a fully-fledged and manned office in Cyprus. Substance helps create transparency which is an issue that Cyprus has had to face recently in the wake of accusations of money laundering and so on.” All potential members are obliged to provide key information when they apply

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

WE ALREADY HAVE A NUMBER OF COMPANIES THAT ARE

INVOLVED IN THE SPACE SECTOR to join CIBA. As Koufaris says, “We know who their accountants, lawyers and bankers are, we know who the company directors are, we know who we are dealing with.” It is not for nothing that CIBA’s logo recently added the words “We add value to your substance. Make yourself visible”.

Chris Koufaris (General Secretary) and Margarita Alexandrou (Assistant General Secretary)

“We want to encourage the substance issue to be taken up by a lot more companies. With all the international pressure that is being brought to bear, it’s only a matter of time,” Koufaris adds. Despite the fact that all CIBA members are fully-fledged companies, this does not mean that they do not face problems, which is precisely where CIBA comes in. The job of liaising with members falls to the Association’s Assistant General Secretary, Margarita Alexandrou. “I deal with all the day-to-day operations of the office and I organise events, etc., for our members so I am in regular direct contact with them,” she says. “Even though successive governments have supported the international business community, and we have represented them for over 20 years, they still face a variety of obstacles such as obtaining visas for their employees. This is a major problem for companies that require staff with special skills and language skills from various countries in order to further their business. Delays are often blamed on staff shortages in the Migration Department or on the Registrar of Companies but, whatever the reason, the result is the same and it’s not doing our reputation any favours.” The fact that such basic difficulties still remain is proof enough of the need for an Association like CIBA, Alexandrou adds. “If you decide to tackle an issue on your own, it’s a personal one. If we, as an Association, try to resolve it, that issue takes on a different dimension.” As noted above, Alexandrou is also responsible for following up on CIBA Executive Committee decisions for the organisation of specific events and meetings for CIBA members and this is an aspect of the Association’s activities which is given considerable significance. “The meetings give them an opportunity to join in or listen to a topic of interest and they are also a chance for networking. We try to choose topics that are of as broad interest as

possible and they have been very successful. As well as being a non-profit organisation, CIBA is non-political and independent so when people come to talk to our members we tell them to feel free to say what they want.” In addition to representing its current membership, CIBA is also keen to add new members to its list and, to this end, it has identified at least two new business sectors in which a small but growing number of international firms are active. One such sector concerns energy, notes Chris Koufaris, but he points out that “We are particularly interested in the field services sector – those industries and businesses that will be providing support to the big oil drilling companies. This is something we’ve been looking at with Jens Wilhelmsen, who comes from the oil & gas sector, and we‘ve just set up a committee to deal with related issues. Jens will be heading it and its members will be from specialist companies that are directly involved in the industry.” Wilhelmsen, Founder and Managing Partner of Anchor Capital Management Ltd., explains that the objectives of the CIBA Energy Field Services Committee include the establishment of an offshore energy field service base in Cyprus which will attract energy service field companies to the island, the promotion of new opportunities among local firms and providing advice to the Cypriot authorities in establishing the necessary regulatory framework and industry incentives. So far, things are moving well, he says: “I have personally been approached by foreign companies that are very interested in becoming involved in this oil & gas sector here.” “We want them to join us and take advantage of being under the CIBA umbrella in order to carry out their work in the best possible way,” Koufaris adds. “We also want to encourage local players to provide support to the sector and recently there have expressions of interest from companies involved in logistics – taking care of goods coming in and going out, transport, etc.” The second area to which CIBA has recently turned its attention is the space sector. “It may sound very sophisticated, ultra-high-tech and beyond the range of a country like Cyprus but we already have a number of companies that are involved in this area, which is all about orbital slots, satellites and the utilization of

WE WANT TO ENCOURAGE THE SUBSTANCE ISSUE

TO BE TAKEN UP BY A LOT MORE

COMPANIES space, ” says Koufaris. Last year, CIBA gave its annual business award to Avanti, a UK listed company which operates a fleet of telecommunications satellites, while another new name is Kyprosat, a space asset management company which grants contracted usage rights to orbital slots. CIBA has established a committee for this too and has already provided support for a couple of presentations of the space sector, says Koufaris. “It’s good that we have some new and positive things to say after the events of last year,” he adds. Other CIBA committees deal with Public Relations & Events Organisation, Member Support & Business Development and Regulatory Framework, Legal and Tax issues. The Association will continue to look after the interests of companies operating in a variety of sectors, he says, and he considers it important not to underestimate the effect of international companies on the local market and on local employment. “When an international company decides to set up operations in Cyprus, the senior management will usually consist of foreigners. But year by year, local people take over those positions because there has been a successful transfer of knowledge and know-how. This is one of the real benefits to the Cyprus economy and one that we have already seen in the shipping sector. Thirty years ago, all the managing directors and senior management in the Cyprus-based shipping companies were German. Today, a lot of the biggest and most successful ones are headed by Cypriots. Imagine if we can do that with the oil & gas and field services sector and the space sector and how many new opportunities will be created.”

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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cover story

COVER STORY

20 YEARS ON, CIBA IS STILL FIGHTING BUREAUCRACY ON BEHALF OF INTERNATIONAL COMPANIES. ITS PRESIDENT, FRIXOS SAVVIDES, SPEAKS TO GOLD ABOUT THE ASSOCIATION’S PAST, PRESENT AND FUTURE ROLE.

Problem

solving 30 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold: Last year, CIBA celebrated its 20th anniversary, which suggests that it plays a valuable role. How did it start? Frixos Savvides: In 1993, under what was then Cyprus’ offshore legislation, there were quite a lot of differences between local and foreign businesses. CIBA created a mechanism through which solutions could be found for problems that its member companies were facing. It was clearly something that was needed and it gave a voice to foreign investors in Cyprus and a platform from which they could express opinions, lobby the government on certain issues that were important to their daily lives and operations, and so on. One of the issues that was very important concerned work permits, visas, etc. Believe it or not, after 20 years we are still fighting to get a reasonable basis on which third country nationals can apply for such permits. But in general, CIBA has been able to play a very positive and useful role. Gold: Did it take a long time for CIBA to be recognized as the official voice of the international business community? F.S.: I think it was a rather long process, yes. During the time when CIBA was being set up, any demands/requests from the foreign community in Cyprus tended to be taken rather lightly. Under the legislation at the time, foreign companies enjoyed lots of privileges – very low tax, duty-free cars, exemptions from various other obligations that were applicable to Cypriot companies, etc.– and there was a general perception that they were already receiving lots of benefits and shouldn’t be asking for more. I think there was even a certain amount of resentment on the part of local businesses. The evolution of our legislation and the major tax reform of 2003, however, brought a certain equilibrium between Cypriot and foreign companies and this helped to change both official and unofficial attitudes towards foreign investors who were subsequently looked upon as ‘good customers’ who paid their dues like everyone else. Gold: CIBA was founded 10 years before Cyprus joined the EU. From the Association’s standpoint, did a lot change after that? F.S.: Definitely. Before and after we joined the EU, the criteria for setting up business in Cyprus were more or less the same but, for example, corporation tax was only 4.25%, there were duty-free allowances, etc. The foreign companies that are here now are here for different reasons from the ones that existed then. We became a gateway for those outside Europe to use for their holding companies to invest in Europe and vice-versa. A very good example of

this is Russia. Cyprus became the go-between for investment in and out of Russia through Cyprus holding companies. That was not the case before. Gold: Given that successive governments have recognized the importance of international businesses to the economy, have your members really faced any serious problems? Surely the administration should be doing everything it can to ease any difficulties. F.S.: It should but I have already mentioned the example of work permits and visas and our members still face problems in this area. We have a situation whereby a top executive of a world-famous multinational company who applies for a work permit has to go through the same channel for approval, in the same office, and even wait in the same queue as all other workers. It is, to say the least, insulting to ask such a person who holds such a senior position in a multinational company to provide a his-

ANY STEPS TOWARDS

A SOLUTION TO THE CYPRUS PROBLEM WILL BRING ABOUT

A HUGE BOOST OF CONFIDENCE IN THE COUNTRY

tory of employment and proof of education. Of course, I have served in government [Frixos Savvides was Minister of Health from 19992003] and I know that there is often room for discretion in such matters and a person taking decisions may decide not to follow the letter of the law and use common sense. But we are still on that road. Gold: Surely things are improving? F.S.: Unfortunately, in some instances things are worse now. Since the problems of 2013 and following the various scandals that have started coming to light, those in authority are often afraid to take decisions. So we need reforms in various areas of legislation so that the law is clear and does not require anyone to use their discretion to make an exemption. The President and CIBA have talked about the concept of the ‘one-stop shop’ as being ideal for a foreign investor who can find out everything he needs to know and do from a single point of

contact instead of having to do the rounds of various government departments. Such a body would not only take care of applications but, in theory, would also solve all the problems, whether they be work or building permits, VAT issues, etc. But such a ‘one-stop shop’ has to be a decision-maker, not simply a place that receives enquiries and then sends them to the various ministries for a response because if that is the case, we’ll be back at square one. Gold: Isn’t that what the Cyprus Investment Promotion Agency (CIPA) claims to be? F.S.: As a semi-government organisation with a budget approved by parliament, it is the ideal set-up to take care of this issue. I have been fighting for this in private and public for a long time but I don’t know if CIPA is equipped to do the job. If it is not, then someone else should do it because, as more and more major investors come to Cyprus, it is not right for government ministers to be involved in sitting down and talking to them. It’s a nice marketing tool and the government is doing well in this but the problem is that, no matter who is doing the talking, bureaucracy will ultimately block or delay things. Unfortunately, we are still not in a situation where there are defined criteria – such as the size of the investment, the origin of the investment, the area of the investment, etc. – which will automatically lead to the timely approval of an investor’s plans. Gold: How did the events of March 2013 change things for CIBA? F.S.: We had a very difficult time and we had to undertake the role of trying to justify what had happened without actually blaming anybody. It was very tough for everyone. People would not accept excuses for what was, in some cases, a major financial disaster for them that meant that they were unable to manage their affairs. In a small number of cases they had to close their business here and relocate or try to minimise their exposure in Cyprus, to the detriment of the economy of course. Today, when CIBA is asked to express a view of what to expect, we try to give them comfort but, at the same time, we ourselves are not sure what tomorrow will bring. We have lost a little of our credibility, I regret to say, so we are trying to get the decision-makers on specific issues to talk directly to our members. Gold: What do you mean? F.S.: Let me give you an example. Over the past 18 months, Bank of Cyprus has gone through a very difficult time but everyone knows that Bank of Cyprus is the most important piece of our financial world, directly related to the country’s economy in a very

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 31

cover story IF BANK OF CYPRUS

SUCCEEDS CYPRUS HAS A CHANCE

IF IT DOESN’T SUCCEED

THINGS WILL BE VERY

DIFFICULT IT’S AS SIMPLE AS THAT

major way. If Bank of Cyprus succeeds, Cyprus has a chance. If it doesn’t succeed, things will be very difficult. It’s as simple as that. On this basis, and because there are so many conflicting issues, we invited John Hourican to speak to our members. He talked for an hour and a half (the longest speech we’ve ever had at CIBA) and then answered questions for a further hour. He and his assistant, Euan Hamilton, were both very impressive and explicit and, at the same time, very reassuring. This is what we want our members to get. Not our view – we may say something today and then something else happens tomorrow – but the view of those who are at the heart of things. We intend to do something similar with the Minister of Health and with the Minister of Energy, Commerce, Industry & Tourism. We want CIBA to be appreciated by the Government and the institutions as the place where they can get the genuine reaction of the people who have placed their trust in this country, invested their money and will continue to do so provided they know what’s going on and can obtain answers to their questions. So we are helping our members form an opinion – we don’t want to form it for them. Gold: What will the Minister of Health be telling them? F.S.: Health is a major issue for all of us but we should remember that most foreign employees based in Cyprus are already covered by private health insurance in their own countries. If we place another burden on them and the companies that employ them by obliging them to make contributions – essentially another tax – they may look elsewhere. It is important that the Government pays attention to such issues

so, in this case, I am sure there will be a constructive exchange of views between the Minister and our members. It is very important that we maintain the number of foreign companies that we already have here. We don’t want them to relocate. That’s our primary concern. If we lose a major part of what we have it will be the beginning of the downfall of the Cyprus economy and the services sector as we know it. Gold: Eighteen months on, do you feel that confidence is returning to the international business community in Cyprus? F.S.: Yes, but it is returning slowly and painfully. There is still a major issue which has to do with the banks and the exchange restrictions. Once this is over with and we are back to normal, confidence will return in a big way. We need to see Bank of Cyprus and the other banks pass the stress tests and start acting like banks again. Now they are acting like debt collectors and firefighters. As long as this is happening we have no chance. The banks have to get back to what they are supposed to be doing – lending money. And getting it back of course! Gold: The third decade of CIBA’s existence started with a very difficult situation. How optimistic are you that things will improve? F.S.: By nature I’m very optimistic. And frankly, we don’t really have a choice. Without optimism we’d all be on medication! The truth is that we do have things to look forward to – we have gas and oil exploration and we are starting to see some light at the end of the tunnel regarding the Cyprus Problem. If we manage to have a solution – I’m not even talking about a final solution but an interim one such as the opening of Famagusta – this will rejuvenate and restart the economy in a major way. The other big issue – the Turkish embargo on Cyprus-flagged ships and aircraft – relates to an obligation on the part of Turkey in the context of its application for EU membership. I believe this can be solved too and I hope it is. Any steps towards a solution to the Cyprus Problem will bring about a huge boost of confidence in the country. Gold: Cyprus has long wanted to be seen as a major regional business centre. Is this still a feasible aim? F.S.: Yes it is. The two issues that make any

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

place a candidate for being seen as a regional or international business/financial centre are a favourable tax regime and the number of double tax treaties it has with other countries. We have these but, of course, we are not the only ones. However, we have an advantage over many of our competitors, which is the quality of life we are able to offer foreign investors with families. We have good schools, good food, a good climate and a safe environment and, as Cypriots, we welcome foreigners and we make them feel at home. We are not looking for anything beyond what they offer and bring to our country and with certain people we have a chemistry. We feel good with them, they feel good with us. We don’t openly exploit or take advantage of them and this is very attractive to those who want to bring their families with them and have a relaxing and safe life. We can still offer that, in addition to all the financial advantages. With major developments here, such as Limassol Marina, we can now also attract High Net Worth Individuals, who are not big spenders but they market our country for us by promoting their own lifestyle which then becomes known around the world. So, on the matter of retaining our status as a major business centre, I think it is possible. Moreover, Cyprus has always benefited when there has been trouble in the broader region. Today with the problems of Islamic State in the Middle East, I believe that many people from the Gulf States and their neighbours will start using Cyprus again for their holidays and possible investments. Gold: What should the Government’s mission be regarding foreign investment as we move into 2015? F.S.: As the importance of our natural gas reserves grows, foreign companies will come in to support this major industry. This is unavoidable so that is not a priority. The Government’s priority, in my opinion, should be to support today’s foreign investors and their companies, to make them realise that they are welcome, wanted, liked and loved. After everything we did to these people – imposing haircuts on their bank deposits, locking their money, etc. – we need to find ways of reassuring them that such a situation will not arise again. We Cypriots have to pay for our mistakes but foreign investors and foreign companies are not to blame for our sins. It is essential that we regain their trust.

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INTER IKEA DISTRIBUTION LTD.

SEAWARD MANAGEMENT LTD.

AVANTI HYLAS 2 CYPRUS LTD.

INTER KADDOUH TRADING LTD.

AVTOVAZBANK CYPRUS BRANCH

INTERPAPER LTD.

BAKER TILLY KLITOU & PARTNERS LTD.

INTERSHIP NAVIGATION COMPANY LTD.

BANK OF CYPRUS LTD.

IRONFX GLOBAL LTD.

BANQUE BEMO S.A.L.

ITERA GROUP LTD.

BARCLAYS BANK PLC

JORDAN AHLI BANK PLC.

BERNHARD SCHULTE SHIPMANAGEMENT (CYPRUS) LTD.

JORDAN KUWAIT BANK PLC.

BERYTUS MARINE INSURANCE & REINSURANCE LTD.

JT INTERNATIONAL COMPANY (CYPRUS) LTD.

BOUDICA TRUST CO. LTD.

KANNAVA, KITROMILIDOU & CO LLC

BULL (CYPRUS) LTD. BYBLOS BANK S.A.L. CHARTAC MANAGEMENT SERVICES LTD. CHEMIKALIEN SEETRANSPORT (CYPRUS) LTD. CHRISTODOULOS G. VASSILIADES & CO. LLC COLUMBIA SHIPMANAGEMENT LTD. C.P. PALEMA LTD. CYPRUS INTERNATIONAL INSTITUTE OF MANAGEMENT (CIIM)

KAPAL (CYPRUS) LTD.

SODEXO CYPRUS LTD. SOFTIMPACT LTD. SONGA OFFSHORE S.E. SOVEREIGN TRUST (CYPRUS) LTD. SPECTEC LIMITED STEELNET LTD. SUPERNOVA CONSULTING LTD. SYNOT INTERNATIONAL LIMITED

KPMG LTD

TRANSBUNKER TRADING LTD.

KRONOSPAN HOLDINGS PLC

TRICAN WELL SERVICE (CYPRUS) LTD.

MAESTRO SHIPMANAGEMENT LTD.

TRIDENT TRUST COMPANY (CYPRUS) LTD.

MARLOW NAVIGATION COMPANY LTD.

TRUST INTERNATIONAL INSURANCE COMPANY (CYPRUS) LTD.

DELOIITE LIMITED

NATIONAL BANK OF GREECE (CYPRUS) LTD.

FILEMINDERS LTD.

SHAMROCK SHIPPING & TRADING LTD.

TRADING POINT OF FINANCIAL INSTRUMENTS LTD.

MUSKITA HOTELS LTD.

FANARIA MERCHANTS & MARINE CO. LTD.

S. DROUSSIOTIS REAL ESTATES LTD.

KKCG S.E.

DEEP SEA SUPPLY MANAGEMENT (CYPRUS) LTD.

EVRASIA BUNKER ASIA PTE LTD.

S.C. JOHNSON COMPANY LTD.

TFI MARKETS LTD.

MERCK SHARP & DOHME CYPRUS LTD.

EUROBANK CYPRUS

SAFT NIFE M.E. LTD.

KAZOULIS GLOBAL LOGISTICS LTD.

D.D. FIDELITY ASSOCIATES LTD.

EPICOR SOFTWARE CYPRUS LTD.

RCB BANK LTD

TAMOIL OVERSEAS LTD.

MARTRACON SHIPMANAGEMENT LTD.

EY CYPRUS LTD

REUTERS MEA LTD.

KARDEX SYSTEMS LTD.

CYWORLD WEALTH LTD.

DENGERIS HOLDINGS LIMITED

REEDEREI NORD LTD.

NCR (MIDDLE-EAST) LTD.

TSYS CARD TECH SERVICES LTD. UAL ALLIANCE LTD. UNICOM MANAGEMENT SERVICES (CYPRUS) LTD. UNITEAM MARINE LTD. USM MANAGEMENT CYPRUS LIMITED

NEST INVESTMENTS HOLDINGS (CYPRUS) LTD.

VISTRA (CYPRUS) LTD.

OPUS GROUP HOLDINGS LTD.

VTT VASILIKO LTD.

PEDERSEN & PARTNERS (CYPRUS) LTD.

WCV WORLD CAPITAL VENTURES CYPRUS LIMITED

PIRAEUS BANK (CYPRUS) LTD.

WINDSOR BROKERS LIMITED

P. KALOPETRIDES & CO LTD.

WORLD VISION INTERNATIONAL

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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SPECIAL PROMOTIONAL FEATURE

&<3586 ,17(51$7,21$/ %86,1(66(6 $662&,$7,21 Now in its 21st year, CIBA continues to be the only professional association that represents the whole of the international business sector in Cyprus. It currently has over 130 members and that number looks set to grow as new sectors of economic activity develop and attract international companies to the island. On the following pages, ten member companies of CIBA present their services/products and history in detail.

&217(176

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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SPECIAL PROMOTIONAL FEATURE

Andreas Neocleous & Co LLC

Andreas Neocleous, Founder and chairman of the board

ndreas Neocleous & Co LLC is the largest law firm in Cyprus by a considerable margin and is generally recognised as the leading firm in south-east Europe and the Eastern Mediterranean region. In Cyprus we

have more than 130 fee-earners operating out of three offices and an international network of offices in Moscow, Kiev, Prague, Budapest, Brussels and Sevastopol. All the independent legal rating

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

organisations place us at the top of their rankings. We are the only Cyprus firm to achieve a top-tier rating in every practice area from the Legal 500 and Chambers Guides, a distinction achieved by only a handful of firms worldwide. Having pioneered the development of business links with Russia and Eastern Europe two decades ago, we have unmatched experience of assisting clients in investing in these dynamic and rapidly-growing economies. In recent years we have widened our geographic horizons to include clients in Asia, particularly in China and India, the Middle East and South America. Alone among law firms in Cyprus we have followed a strategy of specialisation, supported by investment in technology, knowledge infrastructure and an international network. Specialisation enables our people to keep at the forefront of developments in their respective fields and to develop a depth of expertise that is not possible for a general practitioner, given the complexity of modern business. We are organised into two main streams, namely non-contentious advisory work and similar activities, and contentious work such as dispute resolution. Within each of these there are specialist teams. For example, our corporate and commercial group includes specialist teams for banking and finance, corporate and M&A, tax and tax planning, insolvency and restructuring, EU and competition, intellectual property and data protection. Our dispute resolution group is organised into four teams, each dealing with a particular area of litigation. There are also industry-sector groups, each of which focuses on a particular sector, such as shipping, real estate, financial services and insurance. We are the only firm in Cyprus which is fully departmentalised and

equipped with the necessary information technology and knowledge management infrastructure to deal with the needs of today’s multinational work, allowing us to match the levels of service offered by the world’s major legal centres with our in-depth knowledge of cross-border transactions. More than half our clients in number (and a much greater proportion in value terms) are international companies. All our staff speak English and we have staff speaking almost every European language. Our success in the marketplace enables us to recruit the best people, to provide them with challenging, interesting work and to give them unmatched scope to develop their career. Our guiding philosophy is to understand our clients’ aims and objectives, and to work with each client to achieve those objectives, by providing the best, business-oriented advice and assistance. We provide our clients with practical solutions to the business issues they face, rather than abstract theoretical analysis. We recognise that time is precious in today’s fast-paced business environment and we pride ourselves on our responsiveness and on getting things right first time. Each of our specialist lawyers is familiar with the latest developments in his or her field, and does not have to spend time getting up to speed in a particular area, at the client’s expense. This saves our clients money as well as time.

MAIN AREAS OF PRACTICE ADMIRALTY AND MARITIME:

1 partner, 5 others

This department deals with registration under the Cyprus and other flags and all aspects of ship finance. It also handles collisions, charter party disputes and executions of judgments against assets of shipping companies worldwide.

BANKING AND FINANCE, INCLUDING PROJECT FINANCE:

and trademarks, the licensing and franchising of technology and passing-off actions.

The department advises on the Cyprus aspects of major international financing transactions, including Master ISDA Agreements, secured and unsecured loans, derivatives, raising of debt and loan capital and netting agreements. It has strong links with commercial and investment banks, international development banks, trust companies and underwriters.

LITIGATION AND ARBITRATION:

2 partners, 11 others

CORPORATE AND COMMERCIAL/ MERGERS AND ACQUISITIONS:

4 partners, 41 others

7 partners, 30 others

This department handles administrative law, admiralty, international trade law, land, matrimonial and traffic accident cases, debt collection, defamation, negligence and other torts,and conducts domestic and international arbitration, mediation and other forms of ADR. TAX LAW AND INTERNATIONAL TAX PLANNING:

2 partners, 25 others

The department advises on corporate management and governance, formation, merger and acquisition of companies in Cyprus and abroad, corporate reconstruction and reorganisation, capital raising transactions, and private equity work. It has particular expertise in investment via Cyprus to and from Russia, Eastern Europe and Asia.

The department advises on tax law and treaties, plans structures for multinational companies and High Net Worth Individuals, and handles tax disputes. Recent tax reforms in Cyprus provide tax planning opportunities for local and international businesses and individuals.

COMPETITION AND EU LAW:

1 partner, 3 others

1 partner, 4 others

This department advises multinational enterprises investing in Cyprus on competition and merger control issues arising from international merger agreements, agency and distribution arrangements and joint ventures. Members of the department work closely with their colleagues in other departments to ensure compliance with EU requirements.

REAL ESTATE AND IMMIGRATION:

This department deals with all types of property-related work, from acquisition of residences to large scale development projects. Our immigration group has an excellent track record in handling applications for residence permits and for Cyprus citizenship for investors.

CONTACT INFORMATION

Andreas Neocleous & Co LLC

INTELLECTUAL PROPERTY, INFORMATION TECHNOLOGY AND E-COMMERCE:

1 partner, 6 others

Advising on the acquisition, registration and protection of copyright, designs, patents

Neocleous House, 195, Archbishop Makarios III Avenue, P O Box 50613, Limassol, CY 3608 Tel: (+357) 25110000 Fax: (+357) 25110001 e-mail: info@neocleous.com Website: www.neocleous.com

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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SPECIAL PROMOTIONAL FEATURE

Columbia Shipmanagement ABOUT US

Columbia Shipmanagement was established in 1978, providing ship and crew management through tailor-made services that have added value, provided solutions and delivered highly competitive advantages to our clients. Shipmanagement offices are located in Cyprus, Germany, Greece, Singapore and China, managing a fleet of approximately 380 vessels. In the highly competitive passenger vessel industry, Columbia Shipmanagement has maintained a global presence since 1985, providing premium Cruise and Hotel Services by dedicated teams from Hamburg and Limassol while the teams are further supported by all other Columbia Management offices. Additionally, the Ship Management offices are supported by 13 Columbia Shipmanagement-owned crewing agencies located in Europe, Eastern Europe and Asia.

Columbia Shipmanagement focuses on building trustworthy and strong relationships with clients and providing quality, safe and cost effective services. These include technical, crew and commercial management, new building supervision, consulting and cruise vessel services. SERVICES

TECHNICAL MANAGEMENT Through its comprehensive shore-based management network, Columbia Shipmanagement provides full technical support to its managed fleet. Our procurement specialists ensure economies of scale and volume-based contracting to ultimately deliver quality and competitive services to our Clients. Furthermore, we offer practical advice on wider technical and engineering matters, including research into and the application of latest technologies and industry regulations. CREW MANAGEMENT & TRAINING Columbia Shipmanagement employs over 14,500 staff on land and sea across the world, operating first-hand our diverse fleet of commercial and passenger vessels. We understand the vital role of seafarers in safe and successful ship operations. Columbia Shipmanagement is committed to growing and developing a pool of highly qualified seafarers. Each year, Columbia Shipmanagement invests significantly in the ongoing training of crew, optimizing their professionalism, competence and singleminded focus on safety and efficiency. COMMERCIAL SERVICES

Our operations team has considerable experience in the efficient, safe and profitable management of all kinds of tonnage, working closely together with ship commands, charterers, brokers, port agents and bunker suppliers to en-

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

sure proficiency across the board. We are acutely aware of all the commercial considerations within a highly competitive industry and we meet these requirements head-on with a range of services offered in the best interests of our clients: Chartering Voyage Estimation Post Fixture Voyage Accounting Payments Agency Bunkering NEW BUILDING SUPERVISION

Columbia Shipmanagement offers its clients a complete new building solution, from design, contract negotiation and planning, right through to supervision and delivery. Columbia Shipmanagement has supervised the building of a significant number of vessels of all types in leading shipyards across the world. Our clients benefit from Columbia Shipmanagementâ&#x20AC;&#x2122;s excellent knowledge of technical, commercial and environmental considerations, as well as national and international shipping standards. CRUISE SERVICES

Out of our Hamburg and Limassol offices, Columbia Shipmanagement offers comprehensive cruise vessel management which includes the following: Hotel Management Technical Management Crew Management Operations Management

CONTACT INFORMATION

Address: Columbia House, 21, Spyrou Kyprianou Avenue, 4042 Limassol Tel: (+357) 25843100 Fax: (+357) 25310086 e-mail: marketing@csmcy.com Website: www.columbia-shipmanagement.com

Ship Management Crew Management Ship Operations Technical Consultancy New Building Supervision Columbia Shipmanagement

Cyprus: www.columbia-shipmanagement.com | Germany: www.csm-d.com Singapore: www.csm-sg.com | Shanghai: www.csm-cn.com

SPECIAL PROMOTIONAL FEATURE

GMM Global Money Managers Ltd ABOUT US

GMM Global Money Managers Ltd is a fund management company operating in compliance with Law 78(I)/2012, holding UCITS Manager licence No. 2/13. It operates in the financial sector, setting up, running and managing mutual funds in line with the most recent UCITS IV Directive. The company is an innovative fund-managing firm based in Cyprus, seeking to provide effective geographical coverage of the local market, Greece, the Balkan states and the wider S.E. Mediterranean region. GMM’s objective is to preserve the capital it manages and achieve optimal yields. GMM is firmly focused on achieving a wide diversification of investment risk in international money and capital markets via the mutual funds and other related products it offers (such as ETFs, SIFs, AIFs, etc.). It offers an extensive range of potential investment options (money market, fixed income, balanced, equities and special purpose funds among others) for the small, medium and large portfolios of both private individuals and institutional investors. GMM’s management team and associates are well reputed with many years of experience, specialized knowledge and the focus, determination – zeal needed to monitor market developments. Their primary aim is to safeguard invested capital and generate optimal yields. Moreover, the members of the company’s Investment Committee have extensive experience (over 20 years), either directly as an administrator or as a member of the investment committee in organizations that have worked with the management of Investment /Insurance Funds. GMM is a member of the Cyprus

International Businesses Association (CIBA) and the Cyprus Investment Funds Association (CIFA) as well as of the International Capital Markets Association (ICMA), an influential voice for the global capital market that represents a broad range of capital market interests, including global investment banks and smaller regional banks, as well as asset managers, exchanges, central banks, law firms and other professional advisers. PRODUCTS & SERVICES

GMM Mutual Funds - Flexible and effective solutions: By implementing the UCITS IV legal framework, GMM offers investments a range of options for even greater flexibility: A high standard of management and personal service from GMM’s staff who offer up-to-date information on a systematic basis. The option to set up and actively manage funds with a minimum of €200,000. This allows investors to choose a fund tailored made to their own specific characteristics that can invest directly in markets or via GMM’s umbrella funds. Investors are systematically given information and their assets are valued daily, thereby promoting full transparency. Investments can be made via GMM’s umbrella funds, thereby ensuring access to the entire range of investment choices, coupled with optimum geographical diversification. Any type of investor may also allocate part of its capital in investments denominated in a different currency (other than the euro) thereby ensuring even greater diversification. A fund can be registered and distributed in another EU Member State. An independent certified manager

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

GMM IS FIRMLY

FOCUSED

ON ACHIEVING A WIDE DIVERSIFICATION OF

INVESTMENT RISK IN INTERNATIONAL MONEY AND CAPITAL MARKETS VIA THE MUTUAL FUNDS AND OTHER RELATED PRODUCTS IT OFFERS

may be appointed. It is also possible to opt to register, under certain circumstances, the Fund in a different country and also have an alternative custodian. Units of the mutual funds managed by GMM are available within the Republic of Cyprus from its offices during normal business hours on working days. In certain cases, units of funds may also be sold via the sales network of associated credit institutions, management companies and investment firms, in line with the provisions of the Republic of Cyprus’ Investments Services and Activities and Regulated Markets Laws. The company can also sell units of the funds it manages in other Member States (e.g. in Greece) via agents certified by the competent authorities of that state.

CONTACT INFORMATION Address: 36, Stasinou Avenue, Strovolos, 2003 Nicosia Tel: (+357) 22205858 Fax: (+357) 22378194 e-mail: info@global-mm.com Website: www.global-mm.com

Whoâ&#x20AC;&#x2122;s your tailor?

In GMM we design investment solutions tailor made for you. We listen to your needs, we respect the conditions you set, we adapt your targets and bring results. With safety and discretion. With experience and specification. Because GMM creates and manages Mutual Funds and specific investment products (ETFs, SIFs, AIFs, etc) in Europe and worldwide. It offers to all the private and institutional investorsâ&#x20AC;&#x2122; portfolios a wide range of choices in the international capital markets. It is your European passport for the fascinating journey in the attractive universe of investments.

ZZZ JOREDO PP FRP

36 Stasinou street, Strovolos 2003 Nicosia, Cyprus Â¨ ) : ZZZ JOREDO PP FRP ( LQIR#JOREDO PP FRP GMM is a UCITS/AIF management company and is a member of ICMA, CIFA, CIBA.

INVESTMENTS IN UNITS OF THE UCITS HAS NO GUARANTEED RETURN AND PAST PERFORMANCES DOES NOT GUARANTEE FUTURE RETURNS

SPECIAL PROMOTIONAL FEATURE

Grome Marketing (Cyprus) Ltd.

ABOUT US

The GROHE Group comprises Grohe AG, Hemer, Joyou AG, Hamburg, (fully consolidated since 1 July 2011) and other subsidiaries in foreign markets. The GROHE Group is the world’s leading provider of sanitary fittings. Regional GROHE offices for the East Mediterranean, Middle East and Africa were established in 1986 in Nicosia, Cyprus. GROHE is the first German sanitary fittings manufacturer to maintain a global sales organization and an international production network that produces worldwide while maintaining the same quality standards. In order to deliver “Pure Freude an Wasser” under the GROHE brand to consumers around the globe, the GROHE Group relies on its brand values, namely quality, technology, design and responsibility. In January 2014, the GROHE Group was taken over by the LIXIL Group and the Development Bank of Japan. The LIXIL Group is a global leader in the building material and housing equipment industry. GROHE and JOYOU remain independent within the LIXIL Group. Notably successful GROHE reported a turnover of €1.45 billion in 2013. A worldwide workforce of some 9,300 men and women (including 3,500 at Joyou) in 130 countries are dedicated to creating innovative prod-

ucts that add genuine value to customers’ daily lives. PRODUCTS &SERVICES

GROHE has a state-of-the-art product portfolio with an innovation rate of 25% every two years, developed in a coordinated process of innovation by the GROHE in-house Design Team and the Research & Development Department All products are designed and engineered to contribute to a perfect water experience. The GROHE product range comprises everything from aesthetically appealing designer faucets for bathrooms and kitchens to ingeniously safe thermostats for showers and shower systems that pamper the user, from smart installation and flushing systems to attractive accessories. Pride of place is taken by GROHE SPA®, a selection of distinctive premium products, personalized concepts and natural lifestyle accessories to convert any bathroom into a personal spa. Positioned as a specialist brand for the trade market, GROHE Professional supports fitters and installers with products, services and practical training on a day-to-day basis. GROHE products are manufactured at the company’s three German factories incorporating GROHE Centres of Excellence in Hemer, Porta Westfalica and Lahr, as well as at its three international sites in Portugal, Thailand and Canada. Three Chinese factories

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

REGIONAL

GROHE OFFICES FOR THE EAST MEDITERRANEAN, MIDDLE EAST AND AFRICA WERE

ESTABLISHED IN 1986 IN NICOSIA, CYPRUS mainly manufacture Joyou products. The Corporate Centre, the internal Design Studio and the GROHE Store, the multifunctional showroom that imaginatively showcases the GROHE brand universe, are all based in Düsseldorf, Germany.

CONTACT INFORMATION

Headquarters Address: 195B, Old Nicosia-Limassol Road, Dhali Industrial Zone, 2550 Nicosia Postal Address: P.O.Box27048, CY-1641 Nicosia – Cyprus Tel: (+357) 22465200 Fax: (+357) 22379188 e-mail: info@grome.com Website: www.grohe.com

SPECIAL PROMOTIONAL FEATURE

Hellenic Bank – Global Markets & International Banking Division

ellenic Bank is one of the leading financial institutions in Cyprus, providing a full spectrum of products and services to international businesses and financial institutions. Today, the Hellenic Bank Group enjoys an extensive network of branches in Cyprus, as well as a number of strategically located representative offices in Russia, Ukraine and South Africa while employing more than 1,400 people, locally and abroad. The guiding principles and values of the Group of credibility, consistency and prudent management make it a safe, proper and reliable choice in a challenging international financial environment which is constantly changing. EXPERIENCE YOU CAN COUNT ON

In 1990, Hellenic Bank founded the first International Business Centre in Cyprus located in Limassol. Almost a quarter of a century later, the Bank has four International Business Centres on the island; two in Nicosia, the capital, one in Limassol, the largest ship management centre in the European Union, and one in the coastal city of Larnaca. OUR OFFERING

Through a wide range of services backed by advanced technology and experienced staff, the International Banking Division at Hellenic provides integrated financial services to corporate, institutional and individual clients around the world. Our products and services portfolio includes: Deposits Payments Credit Facilities Debit & Credit Cards Internet Banking Services Treasury & Foreign Exchange Services Private Banking Services Custodian Services Trade Finance Services Insurance Services Escrow Account Services Brokerage & Investment Advisory Services

INTERNATIONAL PAYMENTS

Efficient and effective payment and settlement systems are performance critical and an essential operational component for success. Our systems help lower transaction costs, improve operational efficiency of trade and commerce and provide support to global business. AWARDS Deutsche Bank “EUR STP Excellence Award” for exceptional quality. CITI Bank N.A. “Citi Performance Excellence Award”. KEY FEATURES Accurate and cost-effective processing of international transactions Same day value inward and outward transfers in all freely convertible currencies including Russian Roubles Late cut-off times Immediate confirmation of executed payments via the net banking platform Extensive networks of correspondent banks Participation in SWIFT, EBA (step1), SEPA and TARGET OUR SERVICE APPROACH

The customer-centric approach adopted by the organization ensures excellence in service coupled with confidentiality and security. Each International Business Centre client is assigned a dedicated Relationship Manager and Advisor who acts as a liaison, enabling the client’s business to access the Bank’s services effectively and without delays.

REPRESENTATIVE OFFICES

In 1998, Hellenic Bank capitalized on the expertise acquired from being the first bank to establish specialized international business centres in Cyprus by establishing Representative Offices in Standton, South Africa, and Moscow, Russia. Since 2008, the global presence of the Bank has expanded to include Representative Offices in St. Petersburg, Russia and Kiev, Ukraine. These offices provide information about the Bank, offer access to the Bank’s wide range of products and services and support business people interested in establishing a business activity in Cyprus IN A NUTSHELL

Hellenic Bank invites you to experience what a first class international bank can offer: A wide range of services, tailored to each client’s needs. Speed and efficiency of execution of payments, including same day value. Highly competitive pricing. International Business Centres certified to the ISO 9001:2008 standards. “The Best Consumer Internet Bank” and“The Best Corporate/Institutional Internet Bank” in Cyprus as recently awarded by Global Finance magazine. A leading provider of custodian services, repeatedly grantedthe “Top Rated Custodian in Cyprus” award. An award-winning, Private Banking service.

ISO QUALITY CERTIFICATION

In 1997, the Limassol IBC obtained ISO 9002:1994 quality systems certification for the whole of its operations, the first ever centre in Cyprus to achieve such certification for its banking operations. Today, Hellenic Bank Public Company Ltd maintains the ISO 9001:2008 quality systems certification for all of its International Business Centers.

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CONTACT INFORMATION

Corner Limassol & 200, Athalassa Avenue, Nicosia Postal Address: P.O. Box 24747, 1394 Nicosia Tel: (+357) 22500000 Fax: (+357) 22500066 Contact: Phanos Pitiris, Business Development Manager e-mail: p.pitiris@hellenicbank.com Website: https://www.hellenicbank.com/en/ international-new

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Gold 45

Kazoulis Global Logistics Ltd has been active since 1980. We are amongst the pioneers in the field of International Forwarding Business. During all these years, we have introduced and applied innovative ideas which have influenced the development and improvement of services currently available in the Cyprus market. For almost 4 decades , Kazoulis Global Logistics, is a pioneer in providing quality logistic services to the Cyprus market. We continuously invest in human resources, infrastructure and facilities. We are now considered as one of the most credible and reliable companies capable of offering comprehensive services covering all aspects of the 3PLogistics services within the Cyprus Market

Our Recipe for Success It is no secret that most companies succeed because of their well defined mission and vision and the streamlining of all company parameters to reflect on that on their day to day operations. To achieve the above we have invested heavily on the following four parameters:

Our aim is nonstop efforts for improvement.

Company Services x Sea Freight x Transport x Customs Clearance x Household Removal x Insurance

x x x x x

¾ ¾ ¾ ¾

Our Staff Associates and Partners Products & Development Company culture

3PLogistics Air freight Warehousing Projects Records Management KGL is investing constantly in assets such as warehousing and Logistics facilities

Company¶V Values x One company, one team We bring our people together as one team, making them feel

secure and happy.

x We serve our Customers with Courtesy and Passion We know how important it is to fulfill the needs of our clients, therefore, we do our best to achieve this.

x We maximize communication at all levels Through our management style, open-minded approach and positive attitude, we encourage our staff to maximize their delegation.

x Initiative, Honesty, Respect Through the years we identify and reward the personal values and build the relationship between ourselves and our clients.

x We continuously improve the Quality of our services Kazoulis Global Logistics exists and grows because through out the years, the company has managed to offer its customers the fastest and most reliable services.

x We believe and depend on our staff We constantly train, equip and develop our staff Invests in innovative services like Records Management and gives the companies the ability to become more productive and efficient.

Our Company invests to innovate services like records Management and gives the companies the ability to become more productive and efficient.

What is Records Management? Records management, or RM, is the practice of maintaining the records of an organization from the time they are created up to their eventual disposal. This may include classifying, storing, securing, and destruction (or in some cases, archival preservation) of records. A record can be either a tangible object or a digital information: for example, birth certificates, medical x-rays, office documents databases, application data, and e-mails. Records management is primarily concerned with the evidence of an organization’s activities, and is usually applied according to the value of the records rather than their physical format. For more info about our services and to arrange an appointment with a qualified marketing executive you can call us at 77772233

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SPECIAL PROMOTIONAL FEATURE

NCR Cyprus

CR in Cyprus was established in Nicosia, on April 1st, 1955, as a subsidiary of the parent company, NCR Corporation. With nearly 60 years of experience in meeting the needs of consumer-oriented businesses, NCR Cyprus provides specific solutions and consulting services, to Government and Semi-Government organisations, Banking institutions, Businesses in the Retail, Communications and other selected industries. Manned with approximately 130 qualified and highly trained professionals, NCR in Cyprus maintains one of the leading positions as an experienced technology provider for business solutions. NCR’s customers in Cyprus are some of the leading organisations representing key sectors including government, telecommunications, financial, and retail. NCR is surely leading by example in the marketplace and will continue to lead this market through superior technology, as well as through our world class professional services and customer services organisations. NCR Cyprus was the 1st IT vendor to receive ISO 9002 Certification in Cyprus, which is a proof of the high quality service standards offered. Also, in 2012, NCR in Cyprus

NCR’S CUSTOMERS IN CYPRUS ARE SOME OF THE LEADING ORGANISATIONS

REPRESENTING

KEY SECTORS INCLUDING

GOVERNMENT,

TELECOMMUNICATIONS, FINANCIAL, AND RETAIL

was honoured by CIPA (the Cyprus Investment Promotion Agency) with an International Investment Award in recognition of its long and successful presence in Cyprus and for contributing to establishing Cyprus as a reputable international business centre. NCR’s office in Cyprus is also the NCR headquarters for the Asia, Middle East, and Africa (AMEA) region, managing the business of NCR directly or through authorized resellers in more than 70 countries in the region. It is truly a large, multi-cultural region, with diverse living standards and technological infrastructure in each and every country and is manned with qualified and highly trained professionals. Over the past decades, NCR Asia, Middle East and Africa has managed to play a leading role in developing the infrastructure in these countries, based primarily on the everlasting virtues of determination and innovation. NCR AMEA region constitutes a significant contributor to the NCR Corporation financial results. NCR Corporation (NYSE: NCR) is the global leader in consumer transaction technologies, turning everyday interactions with businesses into exceptional experiences. With its software, hardware, and portfolio of services, NCR enables more than 485 million transactions daily across retail, financial, travel, hospitality, telecom and technology, and small business. NCR solutions run the everyday transactions that make your life easier. But what NCR does goes beyond niche technologies or markets; NCR solutions run the everyday transactions that make life easier and help businesses around the world increase revenue, build loyalty, reach new customers and lower their costs of operations. By continually learning about – and thereafter pioneering means – of how

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

NCR’S OFFICE IN CYPRUS IS ALSO THE NCR

HEADQUARTERS FOR THE ASIA, MIDDLE EAST, AND AFRICA (AMEA) REGION, MANAGING

THE BUSINESS

OF NCR DIRECTLY OR THROUGH AUTHORIZED RESELLERS IN MORE THAN 70 COUNTRIES IN THE REGION the world interacts and transacts, NCR helps companies not only reach their goals, but also change the way consumers shop, eat, travel, bank and connect. NCR is headquartered in Duluth, Georgia with approximately 29,000 employees and does business in 180 countries. NCR is a trademark of NCR Corporation in the United States and other countries. NCR is a trademark of NCR Corporation in the United States and other countries.

CONTACT INFORMATION

Address: 80, Limassol Avenue, 2014 Nicosia Tel: (+357) 22423388 Fax: (+357) 22424460 Website: www.ncr.com Twitter: @NCRCorporation Facebook: www.facebook.com/ncrcorp LinkedIn: www.linkedin.com/company/ncrcorporation YouTube: www.youtube.com/user/ncrcorporation

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 49

SPECIAL PROMOTIONAL FEATURE

Nest Investments Holdings (Cyprus) Ltd ments (Holdings) Ltd., which rapidly grew to be a leading general insurance provider in the Afro-Asian region. He also acquired Trust International, a reinsurance service company established in Bahrain to serve the entire MENA and Afro-Asia regions offering bespoke re-insurance products to other insurance companies and major corporations. SERVICES

ABOUT US

Nest Investments Holdings (Cyprus) Ltd, was established in Cyprus in 1990 as the island was considered ideal as a base of operations due to its location, legal structure, human resource availability and infrastructure. Headquartered in Limassol, Nest Investments Holdings is the ultimate shareholding company of all the business assets of the Nest Group which include substantial or majority shareholding interests in excess of $4 billion in Direct Insurance, Re-insurance, Property Development, Manufacturing, Banking, Licensed Operations such as World Trade Centers in 22 countries in North America, Europe, Africa, the Middle East/ Gulf Region and Asia Pacific regions. The Group employs more than 1,500 people. Everything started in Jersey in 1989 when Group Chairman and founder Ghazi Abu Nahl acquired Nest Invest-

Direct insurance operations are carried out in Algeria, Cyprus, Lebanon, Palestine, Libya, Syria, Iraq and Yemen. The reinsurance operations lead from Bahrain is covered through branches and representative offices in Cyprus, Malaysia, Morocco China and USA. The company also has a 100% subsidiary, which participates in Lloyd’s syndicate’s capital. It is UK FCA and Lloyds regulated. Banking operations cover the Algerian territories with 36 branches providing trade finance. The Group owns real estate in Qatar, Bahrain, Cyprus, Lebanon, Palestine, UK, Yemen, Libya, Syria, and Algeria. The group’s Insurance Broking activities are based in UK and Jordan. The UK entity providing wholesale reinsurance broking is also FCA and Lloyd’s regulated. Today the Group includes a direct insurance company operating in Cyprus (Trust International Insurance and Reinsurance) with US$12 million paid-up capital. With headquarters in Nicosia and branches in Limassol, Larnaca and Paphos, Trust employs more than 70 Cypriot nationals providing all classes of non-life insurance. The Company started operations in August 2009 and now is the 6th largest insurance entity

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

THE COMPANY

IS THE ULTIMATE SHAREHOLDER OF TRUST CYPRUS WHICH IS NOW THE

6th LARGEST INSURANCE ENTITY IN CYPRUS

in Cyprus. The group also has a Reinsurance Branch of the Bahrain, Arated Re-insurance entity in Cyprus, as well as World Trade Center operations in the promotion of trade facilities and consultancy services in 16 locations and 13 countries. Group Chairman Ghazi Abu Nahl is also the Chairman of the World Trade Centers Association in New York. The Association has 330 members in more than 100 countries. Mehran Eftekhar, Group Corporate Services and Finance Director, is also on the Board of the WTCA as a director representing World Trade Center Cyprus. The Group is planning to expand its insurance and re-insurance operations in the region and to build an iconic World Trade Center Tower in Cyprus.

CONTACT INFORMATION

Address: Ariadne House, 2nd Floor, 333, 28th October Street 3106 Limassol Postal Address: P.O. Box 54857, CY-3728 Limassol, Cyprus Tel: (+357) 25588811 Fax: (+357) 25587300 e-mail: nest@nestco.org Website: www.nestco.org

TO BE THE BEST IN EVERYTHING WE DO Nest Group marks a presence of over 20 years in Cyprus, combining a wealth of industry experience and knowledge in the fields of Insurance, Reinsurance, selected Real Estate developments, Banking and World Trade Center operations. The Group operates in more than 23 countries, covering North America, Europe, Africa, the Middle East/Gulf Region, the Far East and Australia. The Group’s assets surmount US$4,345m and its annual turnover is in excess of US$599m. As a Holding Company, we are very proud of our operations in Cyprus through our subsidiaries:

INSURANCE ACTIVITIES Trust International Insurance Company (Cyprus) Ltd www.trustcyprusinsurance.com

INSURANCE AND REINSURANCE ACTIVITIES Trust International Insurance & Reinsurance Company B.S.C. (c) Trust Re – Cyprus Branch www.trustre.com

SERVICED OFFICES AND PROMOTION OF TRADE ACTIVITIES World Trade Centers Holdings (Cyprus) Ltd www.wtchcy.org

www.nestco.org Tel: +357 25 58 88 11 | Fax: +357 25 58 73 00 E-mail: nest@nestco.org

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 51

SPECIAL PROMOTIONAL FEATURE

VTT Vasiliko Ltd )6<; =;; =(:03026 3;+ =;;= â&#x20AC;&#x201C; THE COMPANY THAT PUT CYPRUS ON THE ENERGY MAP

VTT Vasiliko will soon complete the construction of one of the biggest and most technologically advanced Terminals for the storage and management of oil products in the Eastern Mediterranean, connecting Europe and the Black Sea with markets in the Middle East and Asia. The Terminal is situated in Vasiliko and is expected to begin operations in November 2014. The investment for the construction of the terminal was 300 million Euros, which is about 1.7% of the GDP in Cyprus, excluding investments in the provision of other services created to support the operation of the Terminal. VTT Vasiliko Ltd is a Cyprus-registered privately owned company that was founded in 2010. The company is a subsidiary of VTTI B.V., the international group that owns and operates oil storage terminals in five continents with a total capacity of 8.6 million mÂł. VTTI is a joint venture of two companies: Dutch giant Vitol, the worldâ&#x20AC;&#x2122;s largest trader of energy products today, and MISC, a leading shipping company whose main shareholder is the national oil company of Malaysia, Petronas. WHY CYPRUS?

The Eastern Mediterranean is a region of heavy commercial activity for oil products that did not offer adequate facilities for storage and management of these products. Cyprus was chosen because of its strategic geographical location and its deep sea waters close to the shore that can accommodate large

vessels. In addition, Cyprus is a member of the EU and therefore adopts the concept of bonded warehousing which favors the activities of such terminals. Furthermore, Cyprusâ&#x20AC;&#x2122; modern economy offers a high level of service and a qualified English-speaking workforce. TERMINAL ACTIVITIES

VTTV encompasses a fit for purpose oil storage terminal with 28 tanks with a storage capacity of 543K mÂł of fuel (Gasoline, Diesel, Jet fuel, Gasoil and other light petroleum products). The company plans to expand the terminal with 13 tanks of a total capacity of 305KmÂł, primarily for the storage of Fuel Oil and/or Crude Oil. Oil trading companies will be able to lease space in the Terminal in order to store the products that they market to Cyprus, the wider Eastern Mediterranean area and beyond. In addition, the companyâ&#x20AC;&#x2122;s biggest asset, the marine jetty which extends 1500m offshore, can be used for securely loading and discharging oil products between ships â&#x20AC;&#x201C; something that now occurs in the open sea, with all the risks that this entails. Therefore, Cyprus will serve as a hub in the Eastern Mediterranean to capture the flows of Fuel Oil from the Black Sea to the East, Middle Distillates from the East to the West, and Gasoline from Europe to the East Med and the Red Sea. At the same time, the Terminal can serve as an alternative option for the local Cypriot market requirements when the business activities of petroleum companies will be relocated from Larnaca, as well as a temporary storage facility for the stateâ&#x20AC;&#x2122;s strategic stocks which are currently stored in Cyprus, Greece and the Netherlands. For this interim solution

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

the cost for the state will remain the same if not lower. THE BENEFITS FOR CYPRUS

The Terminalâ&#x20AC;&#x2122;s activities and its unique role in the industry will be very highly beneficial for Cyprus. As this type of terminal is the first of its kind in the Eastern Mediterranean, Cyprus will become a hub for trading companies who require oil storage services. This will lead to very positive outcomes for the Cyprus economy. New job positions are being created and the local workforce is being enhanced with technical knowledge that did not previously exist in the country. In addition, fuel cost will be reduced due to increased competition in the market. Port duties will generate profit for the Cyprus Port Authority of approximately â&#x201A;Ź18 million per year, while the State will have additional revenue from customs duties and the taxation of companies that market their products through the Terminal. The project will also generate opportunities for synergies, sharing the infrastructure with other potential developments in the area, such as the LNG terminal. It also initiated the development of specialized laboratories, and providers of towage and pilotage service that could potentially be useful for future oil and gas projects. Finally, an investment of this size and the significance of the project in the industry around the region position Cyprus on the map for future foreign investments and business activities.

CONTACT INFORMATION 75 Mari, 7736, Larnaca 24257500 xee@vttv.vtti.com

A VTTI Group Company

● ● ● ● ● ● ●

Oil Storage Terminal 28 tanks – Gasoline, Diesel, Jet fuel Storage capacity 543K m3 4 jetty berths for ship tankers – draft up to 18,1 meters Jetty extends 1500m oﬀshore Capability of loading/discharging at 2500m3 p/h €300 investment

SPECIAL PROMOTIONAL FEATURE

Windsor Brokers Ltd.

indsor was established in Cyprus in 1988. The successful cooperation between the companyâ&#x20AC;&#x2122;s founders and a prominent local legal office had initiated the licensing process for financial derivatives trading since at the time, regulation of financial services locally and in the region was limited to stock trading. Windsor Brokers was the first licensed and regulated Investment Firm by the Central Bank of Cyprus followed by the Cyprus Securities and Exchange Commission - CySec. The company made a significant contribution to the development of the financial services industry in Cyprus, sustains the local economy by generating employment and income through foreign direct investments and has always been committed to supporting and promoting Cyprus as a strategic business hub. Windsor Brokers has been a leading provider of financial services for over 25

Acceptance speech by CEO Johny Abuaitah at the CIPA International Investment Awards

CEO Johny Abuaitah and Founder Nicolas Abuaitah at the Windsor Brokers 25th Anniversary Celebration

years, offering FX, CFDs and Futures OTC trading to retail and corporate investors from over 80 countries worldwide from its headquarters in Limassol, the Windsor Business Center. Over the years, the company has received international awards for its innovative products, services, partnership programs and customer support. In 2013, Windsor was ranked one of the top ten Cypriot Investment Firms and the first in its field based on capital reserves with a capital adequacy ratio at 40% - one of the highest in the FX industry. 2014 was a very special year for Windsor Brokers as the year began with the celebration of the companyâ&#x20AC;&#x2122;s 25th Anniversary with guest of honour, the President of the Republic of Cyprus Mr. Nicos Anastasiades. In September 2014, Windsor was the first broker offering financial derivatives to receive a CIPA International Investment Award as recognition for investing in Cyprus and for contributing to the growth of Cyprus as a world-class business center.

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

CONTACT INFORMATION

Windsor Business Center 53, Spyrou Kyprianou Av.4004 Mesa Yitonia, Limassol, Cyprus P.O.Box 54478, 3724 Limassol, Cyprus Website: www.windsorbrokers.com

EXCLUSIVE for:

FOREX, BINARY OPTIONS AND SPREAD BETTING BROKERS

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Contact Telephone:

+44 207 117 2081

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www.gwazy.com Gold 55

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

PENSIONS

he fundamental objective of pension provision is to provide an adequate, safe and sustainable income to people in retirement. As life expectancy projections continue to be revised upwards, policy makers have a responsibility to ensure that the pension system is sustainable and the costs of increasing longevity are shared fairly between generations.

Given the anticipated pressures on the long-term financial sustainability of the state social security system as well as the need to maintain income adequacy at retirement, policy makers need to take decisive measures to reform the pension system to improve sustainability and ensure the systemâ&#x20AC;&#x2122;s adequacy. Across the world, pension systems and their reforms are in a constant state of flux. Since the early 1990s, the outlook on global pension systems and their reforms has changed markedly. The most recent reassessment is triggered by the on-going global financial crisis and its implications for funded and unfunded pensions. Reforms should ensure that the Pension System helps people to save for their retirement, while supporting the most vulnerable in a fiscally sustainable way. Securing an adequate retirement income for citizens should be a priority for policy makers and any reform measures to improve sustainability should not come at the expense of the systemâ&#x20AC;&#x2122;s adequacy.

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

In most countries, pensions currently represent a very large and rising share of public expenditure. Although spending on public pension varies widely by country, all countries are projected to face sharp increases in pension cost expenditure the future, due to the worsening of the demographic environment. The sustainability and adequacy of pension systems depends on the degree to which they can be supported by contributions, taxes and savings from people in employment. Financing arrangements, eligibility conditions and labour market conditions must be calibrated such that a balanced relation between contributions and entitlements, and between the number of actively employed contributors and the number of retired beneficiaries, can be achieved. Securing the financial sustainability of pension systems is a very complex task. Although there are endless variations of reforms that can ensure the long term viability of the system, the associated risks and the impact on members can be quite different depending on the chosen reform action plan. The presence of a relatively generous pension system in Cyprus has prevented the Cypriot workforce from seeking alternative solutions for their retirement needs, leaving a largely single-pillar pension system in the country. Together, longevity growth and the transition into retirement of an increasing number of workers will have far-reaching economic and budgetary consequences for Cyprus, impacting the economic growth potential and exercising pressure on public finances. The recent financial and economic crisis has made it harder for almost all national pension systems to deliver on pension promises. It has thus become more urgent than ever to develop and put in place comprehensive strategies to adapt pension systems to changing economic and demographic circumstances. The challenges are massive, and reforms of pension systems and retirement practices are essential for improving growth prospects. Reforms should ensure that the Pension System helps people to save for their retirement, while supporting the most vulnerable in a fiscally sustainable way. Securing an adequate retirement income for citizens should be a priority for policy makers and any reform measures to improve sustainability should not come at the expense of the system’s adequacy

DECISIVE

schemes – Defined Benefit (DB) or Defined Contribution (DC); the third pillar refers to voluntary funded schemes on an occupational or personal basis. The fourth pillar offers informal (family), market-based, and public support (e.g., health care) to the elderly. Using the pillar structure to highlight reform trends is motivated by the very broad and increasing support for the multi-pillar pension concept. The structure can be viewed as a means of risk diversification and as recognition that different pillars have varying degrees of importance for the key target groups in a population.

ADEQUACY

KEY STRUCTURAL REFORM TRENDS

POLICY MAKERS

NEED TO TAKE MEASURES TO REFORM THE PENSION SYSTEM TO IMPROVE SUSTAINABILITY AND ENSURE THE SYSTEM’S

A pension to a worker who has retired because of age, illness, or disability, was previously thought of as charity, but is currently viewed as the social responsibility of an employer or the state.

THE MULTI-PILLAR SYSTEM In 1981, countries started moving toward the multi-pillar system. Under the 2005 World Bank definitions and structure (Holzmann and Hinz 2005), this structure separates 5 pillars – starting with a “zero pillar” differentiation from a “first public pillar” to better differentiate between the poverty reduction/redistributive (zero pillar) and consumption smoothing (first pillar) objectives of public and unfunded schemes. The second pillar refers to mandated funded PILLAR 0

Social safety net (poverty reduction)

The most drastic changes since 1990 are: The more than doubling of countries with a zero pillar, The transformation of Notional Defined Benefit (NDB) to Notional Defined Contribution (NDC) schemes in 8 countries, and The introduction of Financial Defined Contribution (FDC) schemes in 29 countries that mostly complemented, and only rarely replaced, NDB schemes. The push for alternative or complementary reform approaches, such as Non-financial (or Notional) Defined Contribution (NDC) and Matching Defined Contribution (MDC) schemes. The introduction of a multi-pillar pension scheme with a significant shift from publicly managed, unfunded defined benefit (DB) schemes to privately managed, fully funded defined contribution (DC) schemes has been one of the key structural reform trend. Chile was the first – more countries followed.

PILLAR 1

PILLAR 2

PILLAR 3

PILLAR 4

Mandatory Government provision (income replacement)

Comoulsory private provision (income replacement)

Voluntary private provision (income replacement)

Family support, own house, and other social security ILULÄ[Z L N OLHS[OJHYL

Options Universal, means tested or cash transfer

Options DB (Funded partially funded or unfunded Notional/Funded DC, integrated/not

Options Funded DB of DC Trust, Insurance products, through a central fund integrated/not

Options Savings, Insurance products, AVC

Common Features PAYG out of tax centrally controlled

Common Features Typically unfunded HUK ÄUHUJLK [OYV\NO tax, centrally controlled

Common Features Typically privately controlled

Common Features Funded DC

Common Features Family own house, personal or public healthcare

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 57

AON HEWITT

EMPOWER

RESULTS

on Hewitt helps solve your most complex EHQHĂ°WV WDOHQW DQG UHODWHG Ă°QDQFLDO challenges Aon Hewitt is the global talent, retirement and health solutions business of Aon plc. It empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. It advises, designs and executes a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. With offices in over 90 countries, Aon Hewitt is the worldâ&#x20AC;&#x2122;s premier destination for the broadest range of human capital consulting and outsourcing services. Combined, Aon Hewitt represents $4.3 billion revenue and serves more than half of the Fortune 500. Aon Hewitt is organised as one firm with two principal segments, Consulting and Outsourcing.

FOCUS ON RETIREMENT Actuarial consulting is at the heart of the business, representing about 70% of the firmâ&#x20AC;&#x2122;s global consulting revenue. It invests heavily in its actuarial capabilities globally and its stated goal is to have strong local capabilities providing the highest quality of services at country level and experienced global actuaries available to support clients at regional and headquarters levels. Aon Hewitt is the Number 1 Investment Consulting firm globally with more than $4.5 trillion under advisement Hewitt, EnnisKnupp and Aon, the firms which came together to form Aon Hewitt,

have significant experience of working together across offices and borders and it is now bigger than ever with staff based in 40 offices across the world dedicated to providing clients with the best investment and customer service. Its Cyprus-based Investment consulting team has $10 billion of assets under advisory including local and regional Pension Schemes, Provident Funds and Insurance companies. Aon Hewitt provides services to some of the largest companies, organisations, pension funds, provident funds and insurance companies in Cyprus and the region. The firmâ&#x20AC;&#x2122;s philosophy is that no customer is the same. It takes pride in developing bespoke solutions that are driven by client need. In consultation with clients, its investment consulting and fiduciary teams will design and implement a specific solution precisely tailored to each clientsâ&#x20AC;&#x2122; needs. Aon Hewitt is independent of all investment management organisations; it does not receive remuneration funding from investment managers, for research studies or conferences. All of its research is paid for by the fees earned from clients. Its opinions on investment managers are free of any bias or conflict of interest.

FOCUS ON CORE BENEFIT ADMINISTRATION Aon Hewitt is the largest provider of defined benefit plan administration services in the world. In addition, it is the leading independent provider of defined contribution administration servicesâ&#x20AC;&#x201D;the only major provider of these services not affiliated with a financial services company. Self-administering Pension, Provident and Medical plans is an overwhelming challenge for many companies. The advances that companies see from self-administration are usually slow to develop. What are the consequences and their impact on the company? Higher plan costs? De-satisfied plan members? Employees who never enrol? Today, more and more companies rely on Aon Hewittâ&#x20AC;&#x2122;s expertise to deliver solutions from a wide range of services. Its Core Ben-

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

POSITIONING CYPRUS AS AN INTERNATIONAL PENSIONS MANAGEMENT CENTRE

Global DC pension assets are currently valued at around $15 trillion of which $5 trillion is outside the US, and are expected to grow by around 10%-15% a year. Positioning Cyprus as an international hub in the institutional pension market could be an attractive alternative to the declining market for the traditional ďŹ nancial services business as well as an enhancer for the efforts to promote Cyprus as a Funds jurisdiction. Aon Hewitt anticipates that major beneďŹ ts to the country will arise from Cyprus-based ďŹ nancial institutions offering occupational pension arrangements in multiple jurisdictions, and potentially attracting other large institutions to Cyprus for the same purpose. Furthermore, there will also be signiďŹ cant beneďŹ ts from multinational companies establishing their own multi-country pension trust using Cyprus as a home country and as a point of entry into the EU for non-EU parties. A Cypriot plan can accommodate employers all over the EU and even beyond, including Russia, CEE and the Middle East. In all cases, the additional business will serve to strengthen the Cypriot professional services market, and enhance the countryâ&#x20AC;&#x2122;s reputation as a leading ďŹ nancial services centre and contribute to economic growth.

efit Administration services enable companies to eliminate the administrative burdens associated with managing Pension, Provident and Medical plans in order to: Â&#x2DC; Reduce plan costs Â&#x2DC; Improve enrolment process and take-up rate Â&#x2DC; Improve member communication and satisfaction Â&#x2DC; Ensure accuracy and compliance via proven, efficient and best-practice processes Â&#x2DC; Enable HR to focus on strategy and not administration Philippos Mannaris, CEO for Aon Hewitt in Cyprus, explains: â&#x20AC;&#x153;Aon Hewittâ&#x20AC;&#x2122;s comprehensive suite of consulting and benefits outsourcing solutions encompasses a full range of offerings, from strategy and design through financial management and, ultimately, to the delivery of retirement and healthcare programmes to employees. Our clients recognize the benefit of relying on Aon Hewitt for tightly integrated services that deliver increased efficiency and cost savings, and provide them and their employees more control of their retirement programs and a better return on their investment. Each of our services is among the â&#x20AC;&#x153;best in class,â&#x20AC;? and our integrated service solutions are unmatched.â&#x20AC;? For more information: www.aonhewitt. com.

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REAL ESTATE

WHO’LL

STOP THE RAIN? By Chloe Panayides

Pavlos Loizou, Resolute Asset Management, Partner – Cyprus & Greece Photo by Jo Michaelides

Bill Hancock, Managing Partner of Resolute Asset Management

nfettered lending and indiscriminate buying: the perfect economic storm... So perfect, in fact, that as of July 31, 2014, non-performing loans (NPLs) in Cypriot banks had soared to 47.17% – or €28.88 billion – of a total loan portfolio of €61.24 billion. And, now, as shelter is sought, stakeholders find themselves devoid of the necessary tools and materials to effectively construct refuge. What will become of the foreclosures bill? How will banks even contend with assessing what assets they will accrue as a consequence of this crisis? In a stagnant market, what will become of the island’s real estate? Who will stop the figurative rain? Enter Bill Hancock, Managing Partner of Resolute Asset Management and newly-appointed Partner – Cyprus & Greece, Pavlos Loizou (formerly of Leaf Research), both well versed in advising owners and managers of

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

distressed commercial real estate exposures. In an exclusive interview with Gold, they share their views of the Cypriot market at present and their ideas on what it will take to unravel the current predicament. Gold: Let’s start with the big news: how was the merger between Resolute and Leaf Research engendered? Bill Hancock: The simple reality is that Resolute Asset Management was already conducting work in Cyprus and Greece. We are intensely focused on ensuring that all work we deliver is done so effectively, and at one point we realised that language was becoming a barrier, and a lack of access to certain information an impediment. We spoke with Pavlos (Loizou, then Managing Partner of Leaf Research), and engaged Leaf Research as a sub-contractor on select projects. Together, we tackled a hotel in Paphos, as well as a shopping mall in Greece. And, I should append, we had actively been considering putting something on the ground in Greece for at least two years, and had come to realise that Cyprus was a particularly interesting market. Of course, we respected the fact that such a venture required isolating a partner with the right philosophy, psychology, and mentality. In a fortuitous twist of fate, we mutually came to realise that Pavlos fits the bill. Gold: From your point of view, Pavlos, what made the prospect of merging attractive? Pavlos Loizou: From our part, the main challenge we had was that we had ideas on how to assist banks with tackling their non-performing loans (NPLs), but were confronted by the ever more crystallising truth that decision-makers prefer to go for branded institutions. Teaming up with Resolute was our way to more effectively break into the market; Resolute’s name, ex-

Selling 10,000 apartments to a US LX\P[` ÄYT KVLZU»[ HJ[\HSS` ZVS]L [OL WYVISLT" ^OLU `V\ ZLSS [OLZL 10,000 apartments to OVTLV^ULYZ [OLU WYVNYLZZ PZ THKL perience, and international expertise were the perfect complement. Gold: And the result is quite an innovation for the Cypriot market. P.L.: In essence, we are the first commercial real estate services company to offer specialised distressed real estate services in Greece and Cyprus, being able to advise and assist in managing NPLs, as well as the only company active in real estate with an overseas network. We can draw on Resolute’s experience, providing, therefore, a better level of quality to clients. Why not go to the big accounting firms for such services, some may ask? Well, one can certainly get good advice from the latter, but there is no substitute for real knowhow. For example, a company has a building, and it considers property management to be a necessity. It is: property management covers simple actions such as finding tenants, collecting rent, paying bills, general maintenance, etc. Asset management, however, is very different. It’s about being an active owner, and developing – and updating, according to changing conditions – a strategy, balanced on the question: “How do I optimise value, cash flow, and more?” B.H.: Institutions are often “accidental” owners, and there are therefore constraints with regard to the number of people employed to tackle this activity, as well as the necessary and relevant expertise (Europe, in particular, is crying out for this expertise). Moreover, banks may be the economic owners of assets, though not the legal owners, which creates other issues. Our team worldwide is fully equipped and capable of helping to reconcile these discrepancies. Gold: Given your expertise, where would you say the Cypriot market find itself at present? B.H.: To take a metaphorical stance, Cyprus’ ‘machine’ has, fundamentally, stopped; that

happened some years ago, no less. And when a machine is inactive, it degrades: rust appears unforgiving. Getting it working again requires attention to detail: lubricating the cogs, oiling the springs, tightening the hinges. This is where Cyprus is right now. There are huge quantities of small units of real estate on the books of various institutions. These need to be sold to people who want to actively use them. For example, selling 10,000 apartments to a US equity firm doesn’t actually solve the problem; when you sell these 10,000 apartments to homeowners, then progress is made: the machine is one step closer to churning once more. Cyprus, thus, needs to put assets back in the world of the real economy.

that they have to do this, and putting this realisation into action. B.H.: This Catch-22 cycle doesn’t have a start and an end. The relevant stakeholders just have to intervene. P.L.: Exactly. And assuaging people’s fears of mass foreclosures, I can’t stress enough that banks will not simply collect a real estate asset and foreclose. They will struggle. Unfortunately, we have a political problem in Cyprus, which is being masked as a foreclosures problem. In reality, the foreclosures bill must be approved in a viable format in order to facilitate our banks passing, initially, the stress tests and thereafter shoring up their foundations for long-term sustainability.

Gold: It seems that the crucial link between the real estate sector and economy isn’t always heeded. P.L.: For sure. There’s a terrible misconception that real estate is just bricks. Unequivocally and indisputably, it’s not: real estate is heavily intertwined with the economy. In its most simple form, it’s the collateral against which loans are distributed; loans used to pay for services, pioneer businesses, and more. Unfortunately, we find ourselves in a bit of a Catch-22 situation now, wherein the economy needs to be fixed to save the real estate industry and vice versa.

Gold: You mentioned price points needing to be accessible. It’s no secret that, in the past, real estate values in Cyprus had been growing exponentially and somewhat unnaturally. What are your views on this? B.H.: People easily understand the value of, for example, a shoe retailer: the latter’s value is based on how many shoes it sells. The value of real estate, however, is trickier to ascertain. There’s this idea of ‘intrinsic’ value – how many blocks were used to build a unit equates to its overall value. It’s not that simple. The value of real estate is as much its core components as it is the service it provides, and heightens or lessens according to this stipulation, itself affected by the wider economy and market conditions. Realism is needed when considering this idea of ‘intrinsic’ value, which is evasive at best. Intrinsic value is certainly almost always different from where the market value is at. Sophistication of thinking is lacking; there is often a disconnection between the actual assets at hand, and one’s thoughts (or wants) of them.

Gold: Succinctly, what needs to be done? P.L.: The Government needs, imminently, to put the legal framework in place for foreclosures, and to reassess transfer fees. Also, assets need to be assessed, one by one, and checked: do they have their title deeds? Do they have their legal permits? Only then can they be put back on the market and, crucially, at a price point accessible to people. We are currently lingering in the space between the banks having realised

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 61

XXXX REAL ESTATE

Gold: So how do we untangle this impasse? B.H.: Flexibility is key. In the good times, a shop owner could perhaps have rented out his space for €10,000 per month. Now, during the downturn, the space simply won’t sell for that price. So, the owner is left with two real options: leave the building and space to degrade to the detriment of himself, the market, and even the town (if we’re considering aesthetics), or rent out the space for considerably less, covering, at least, month-to-month costs. Gold: Assuming you’ve already approached various financial institutions in this quest to effectively manage waning assets in Cyprus, how have they reacted, and what form of assistance might be lent? B.H.: Obviously, we’ve approached various banks. Overall, the response has been positive. We are most active in operationally and, to a degree, financially, complex situations, such as hotels or developers still active in the market. Thankfully, we can help various stakeholders understand that solutions need not be black or white. An understanding could be reached between the relevant parties, avoiding what many fear to be the inevitable eventuality – the demise – of, for example, an active hotel. The last thing anyone wants is for an entity such as a hotel – that contributes to the wider economy – to close down. So the question is “how do the bank and borrower work together, and how can we help them?” P.L.: And I think it’s also important to consider our banks’ current state. Bank of Cyprus just this summer finished its electronic merger with the now defunct Laiki Bank; Hellenic Bank’s CEO recently resigned; and the Cooperative institutions have been reduced in number from 83 at the beginning of the year to the current 18. The sector is trying to understand who’s who, and what’s what. For real estate, this doesn’t bode well. A bank may think it has X number of assets worth €1 billion when, in reality, the assets are worth €400,000 (due to degradation, data failure, etc.). Gold: Are the banks equipped to handle the undertaking before them? P.L.: No, probably not. This is an unprecedented problem, and a strategy definitely

>L OH]L H WVSP[PJHS WYVISLT in *`WY\Z ^OPJO PZ ILPUN THZRLK HZ H MVYLJSVZ\YLZ problem needs to be put in place without fail, and sooner rather than later. B.H.: Let’s say that a bank has 50 mid-sized commercial properties. The bank will need X number of people – of the right capability – to handle the assets (and to agree to take on a job with a finite life, no less). Thus, banks are inherently structurally under-resourced to deal with the current problems in Cyprus. And this is where we come in. The simple nature of how assets come to a bank means that there has been a lack of management, and combined with the lack of resources stigmatising a bank, the options become limited. P.L.: For a long time, we’ve had people with the know-how producing sub-par quality work of high volume and low margin, and accountants employed more sparingly, producing low volume albeit high margin work but without the necessary knowledge of the industry. We now need professionals who can take the information of the market and adequately digest it; who, with the adroitness of a problem-solving mind, can put the pieces of the jigsaw puzzle together. Gold: So what are some examples of Resolute’s projects currently under management? B.H.: We have under management a major resort project in London, the largest and most modern logistic park spanning 100,000m² in St. Petersburg, Russia, and technically some 15 shopping malls throughout Romania and Greece. Overall, in Greece and the wider Balkans region, we’re handling about 5,000 projects, and we have approximately 40-45 people dedicated to these endeavours spread throughout our offices in Cyprus, Greece, St. Petersburg, Bucharest, Sofia, Athens, and Istanbul. Gold: Would you say that asset management is something of a creative process? B.H.: I suppose it is, yes. It’s about seeing

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

the potential value in an asset and effectively repositioning the asset to be able to extract the said value. Gold: And do you feel that the Cyprus market has certain idiosyncrasies that may alter your approach to it? B.H.: I don’t actually perceive any concrete idiosyncrasies in the Cypriot market. The island has a very slow foreclosures law but so does Italy (I know of a case where it took 22 years to foreclose a particular property!), and the backlog of unissued title deeds is something the Greek authorities are also tackling. Cyprus certainly has its own unique mixture. The biggest constraints are the market size (that is, the smaller number of end users), and the state of the banking system. That said, the island does have some positives as well. It sounds cliché, but it’s a genuinely beautiful locale, it has a solid services industry and there is the prospect of oil and gas extraction. Gold: Considering what real estate has done for locales such as Dubai, do you feel that Cyprus has missed an opportunity of sorts due to a lack of strategy and cohesive development? B.H.: Well, certainly, if I was President (and don’t get me wrong, there’s a reason I’m not!), I would be inclined to look at the innate qualities of the island and build upon them. Tourism, for example: Cyprus won’t drive its tourism by building – unabashedly and without direction – holiday homes. It needs a strategy, and this most definitely applies to the real estate sector’s association with tourism as well. The same goes for education. Many of the younger generation internationally would be most interested in coming to Cyprus – considering its Mediterranean setting and weather – to receive their qualifications. But to achieve this, a strategy needs to be developed, and infrastructure put in place accordingly.

BUSINESS

SUHVHQWV

KEBE

BUSINESS LEADER AWARDS

PHIDIAS PILIDES, PRESIDENT OF THE CCCI, AND ANDREAS DEMETRIOU, COUNTRY MANAGING PARTNER, EY SPOKE TO GOLD ABOUT THE FORTHCOMING AWARDS. By John Vickers, Photograph by Jo Michaelides

Phidias Pilides, President, CCCI, Organiser Why did the CCCI decide to inaugurate the Business Leader Awards? The decision of the Cyprus Chamber of Commerce and Industry (CCCI) to launch the KEBE Business Leader Awards as an annual event falls within the Chamber’s policy to give due recognition and appreciation to selected members of the Cypriot business community for their long-lasting and consequent commitment to business excellence and leadership. What is the objective of the Business Leader Awards? The CCCI’s main objective with the introduction of these awards is to acknowledge and reward dynamic entrepreneurs in Cyprus, for their proven business behaviour and integrity and to show to the rest of society that, even in very difficult times, proper entrepreneurship always leads to growth and property. These awards are meant to act as illuminating examples to prompt new generations of entrepreneurs to follow similar responsible and solemn business behaviour and actions. How were the recipients of the awards selected? An 11-member awards committee – consisting of the 5 Vice-Presidents, the Secretary-General and the Director of Services and Trade of the CCCI, and four representatives of ΙΜΗ – was responsible for the selection of the recipients from a long list of prominent candidates through a rigorous and demanding procedure. Each candidate was evaluated on the basis of a number of predefined criteria which characterize a successful Business Leader and those who met these criteria were selected as the award winners for 2014.

What, in your view, are the main qualities that an excellent business leader should have? An excellent business leader must first of all have vision and the ability to inspire and lead people into innovative and creative paths. He/she must be farsighted, knowledgeable and successful in his/her field, characterized by exceptional management skills and leadership capabilities. Business integrity, ethics, combined with continuous commitment to excellence and adherence to Corporate Governance practices, are core values for any business leader. Gaining the respect of employees, competitors and the wider business community is the best proof that he/she deserves to win such an award. Eighteen months after the events of March 2013, how do you view the local business scene? The local business scene remains difficult. The banking system, despite many positive developments, still faces a number of problems before it functions completely smoothly. A lack of liquidity in the market is still a major problem affecting businesses’ ability to expand and create new jobs and growth. The high rate of unemployment affects the purchasing power of many people resulting in reduced consumption and decreased economic activity. At the same time, though, sectors such as Tourism, Business Services, Shipping and domestic exports have shown a positive trend this year. Taking into consideration the projections that 2015 will not be a recession year, together with the developments in the newly developing energy sector, we are optimistic that the country will slowly but steadily return to growth.

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

Andreas Demetriou, Country Managing Partner, EY Main Sponsor Why did EY decide that this was an idea worth sponsoring? Our support for the Business Leader awards is another way of recognizing the contribution of those outstanding business leaders in Cyprus who inspire others with their vision, leadership and achievement. EY Cyprus has been serving local businesses for more than 75 years and we are proud to be associated with those that are contributing to the prosperity of the communities in which we live and work. How important are awards to the broader business scene in Cyprus? Awards emphasize the importance of high performing businesses to job creation and economic growth for our country and the prosperity of its people. By recognizing past contribution and achievements we also aim to encourage more entrepreneurial activity in Cyprus, particularly those with potential to be tomorrow’s market leaders. Most business awards focus on companies but here the emphasis is on individuals. What made you decide on such an approach? The Cypriot business scene has been dominated by family businesses. Through prudent investment and steady growth, the founders of these businesses sought to pass on a dynamic legacy to their children and grandchildren and thereby succeed for generations. Today we are recognizing those strong, visionary leaders who established successful businesses and/or contributed to taking their businesses to the next level. What, in your view, are the main qualities that an excellent business leader should have? The most important characteristic of a good leader is having a vision, a purpose, clearly articulated performance targets and the passion to achieve them. A leader should also be able to attract, develop and inspire the best people, promote teaming and embed shared values in the organisation. A good leader should have selfawareness, respect for others, be decisive, persevere when things do not happen as planned or expected and, of course, assume responsibility for the results of the business. How optimistic are you about the possibility of an early exit from the Troika’s economic adjustment programme, as suggested by the Government recently? The Troika’s “front loaded” austerity measures have temporarily improved public finances but public debt remains high at over 110% of GDP. We need to continue with the necessary structural changes that will ensure the long- term sustainability of public finances, while also implementing reforms which will enhance job creation, innovation and investment. Boosting employment is an urgent priority for moral, political and economic reasons and we can do this by finding the right balance between flexibility in labour legislation and job security. A stable, business-friendly environment is also necessary to encourage both local and inbound investments so as to return to sustainable growth, Above all, there must be the political will, backed by actions, to do the right things. PHOTOGRAPH TAKEN AT EY’S NEW OFFICES IN THE JEAN NOUVEL TOWER IN THE CENTRE OF NICOSIA THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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BRAND CONGRESS

FROM THE ASHES OF RECESSION TO THE BRAND OF SUCCESS more profitable, with interested and loyal consumers? “Brand honesty,” declared Gabay.

HONESTY IS THE BEST POLICY

Trust in leadership has been lost, as so many brands are claiming to be the ‘best’. Consumers have become confused by the many forceful messages which endeavour to almost brainwash them into believing that a specific product will make them cool, attractive or successful. “Shoppers have therefore become cynical – and who can blame them?” Gabay asked. “We are missing the ‘why’ word in branding. Companies are failing to see that what consumers really desire is an answer to the question, “Why should we believe these brands anymore?” It is not all bad news though, as this questions reveals that they do actually want a reason to believe.” In fact, Gabay continued, indirect marketing is being recognized as one of the most effective forms of brand promotion in the current market. ow it’s time for resilient businesses to venture further – reinventing their brands as a source of national pride as well as a global testament to being able to rise from the ashes of adversity to bloom with success.” So said Jonathan Gabay, one of Europe’s leading independent brand advisors and a highly respected creative branding, PR and reputational management authority, addressing the Brand Congress on September 26 at the Hilton Park Hotel, Nicosia, aptly entitled From the Ashes of Recession to the Brand of Success. Venturing to provide both inspiration and enlightenment, Gabay explained the ‘new consumer mind’ to his audience, elucidating that today’s consumer has a vastly altered perceptions of brands and, indeed, harbours a diminished sense of loyalty to and trust in them. How might brands, therefore, navigate this challenging environment and emerge

“Ν

SAY IT SOFTLY – INDIRECT MARKETING Modern musicians – popular pop bands specifically – have cultivated this strategy to perfection. These young, often multi-million pound digitally integrated brands use social democratization to promote themselves, indirectly boosting sales. How? “When the members of the band have just finished a concert, they will go onto social media sites and talk to fans about what a wonderful event it was. They will express how excited they were and how much they enjoyed it. Unlike traditional musical groups, they are putting across the idea that their fans can not only look up to them, but also relate to them as they, too, want to share their experiences with friends online. “The concept of being ‘one’ with fans – essentially consumers – and encouraging feelings of unity is a highly effective strategy.”

ADVOCATING UNITY – LESS IS MORE

“More is less, in this new environment,” Gabay told attendees at the Brand Congress.

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

By Effy Pafitis

Rather than dictating overzealous visions for the consumer should they purchase a certain product or invest in any form of brand, companies should be offering a far more straightforward message, he explained “What companies need to be communicating to consumers now is the following: Buy the brand, not because it is the best but because we understand each other.” Transparent communication with (and empathy for) the consumer is one of the only sure-fire ways to ensure brand extension in the new market. “A brand is not what you – the owner – say it is, it is what they – your consumers – say it is.” “What you make people feel is as important as what you feel you should make,” said Gabay, delving into a semiotic explanation of the theory.

COCA-COLA’S ‘SHARE A COKE’

In 2011, beverage giant Coca-Cola demonstrated its marketing genius through its strategic ‘Share a Coke’ campaign, originally launched in Australia. The company released millions of Coke bottles and cans whose iconic Coca-Cola logo had been replaced with 150 of the most popular Australian names without any prior notification to consumers – an occurrence unheard of for such a large brand. The discovery of these personalised Cokes sparking online conversations and media interest, both engaging and enticing consumers. “In just three short months following the launch of ‘Share a Coke’ in Australia, the company reported a 7% increase in young adult consumption. Sales transactions grew by 3%, volume increased by 4%, and the brand experienced an 870% increase in Facebook traffic.” “This is brand success, in its essence,” Gabay underlined.

BRAND CONGRESS Organiser: IMH Main Sponsor: Cyta Sponsors: Fileminders & KEO Beer Communications Sponsors: InBusinessNews.com, Goldnews.com.cy, Sigma TV & OK! Creative Design Sponsor: Partners Y&R For more information contact IMH on: 22505555 email: events@imhbusiness.com website: www.imhbusiness.com

ST EA SHIPPING

ÖSTERREICHISCHER LLOYD SEEREEDEREI (CYPRUS) LTD’S SLOGAN, “STEAMING AHEAD”, CONJURES UP IMAGES OF A MIGHTY VESSEL SLICING THROUGH THE AZURE WATERS OF THE OCEAN. THE PHRASE ALSO BRINGS TO MIND THE CONFIDENCE AND DETERMINATION WITH WHICH THE SHIPPING COMPANY HAS DEVELOPED ITS OPERATIONS OVER THE COURSE OF ITS RICH 178-YEAR HISTORY. AND IT MAY ALSO REFER TO THE FIRM’S RELOCATION IN 2001 TO CYPRUS, WHERE IT HAS BECOME A KEY COMPONENT OF THE ISLAND’S ATTRACTIVE MARITIME SECTOR, BOTH FACILITATING AND ADVOCATING FOR ITS DEVELOPMENT. By Effy Pafitis

ahead

AMING n an exclusive interview with Gold, Capt. Eberhard Koch, Chairman, CEO and Managing Partner of Österreichischer Lloyd Seereederei (Cyprus) Ltd, discuss all the ways in which ÖL has been – and still is – steaming ahead.

Gold: ÖL has undergone a series of transformations since its establishment. Tell us about its history. Eberhard Koch: Österreichischer Lloyd was founded in 1836 and was one of the biggest shipping companies in the world by the turn of the 20th century. With the demise of the Austro-Hungarian Empire in 1918, ÖL ceased to exist and was subsequently re-born shortly after the Second World War in 1951 as a shipowning company in Vienna, Austria. Then, in 1976, the company joined forces with Krohn Shipping Group and became, in 1991, a ship management subsidiary both for in-house as well as third party vessels. Having joined in 1984 as Managing Director, in 2001 I had the opportunity to move to Cyprus, where we had partially taken our operations. After careful consideration, we relocated our full operations to the island in the same year, to where our offices are currently located, close to the Port. In July 2008, we decided that we no longer wished to be considered a Third-Party Ship Management firm and subsequently underwent a strong and steady development to concentrate purely on ship ownership. Since then, as shipping has became more competitive, ÖL has introduced its proven expertise and a comprehensive range of services to the maritime sector. ÖL proudly flies the Cyprus flag and exclusively accommodates the excellent skills of the existing Med Crew Ltd seafarer pool onboard.

– Europe, Asia and Africa – it has an excellent, skilled workforce and, in terms of legal and accounting services, Cyprus again ticks all the boxes with its professional service offering, as well as its banking operations – yes, I can still say this despite last year’s developments in the financial sector. Cyprus has established itself as an international business centre and is seen as a primary hub and platform for international business operations, due to its advanced telecommunications and infrastructure, a developed and easily understood legal system, low setting-up costs and much more. So, for us, it wasn’t so much a question of “Why choose Cyprus?” but rather, “Why not choose Cyprus?” Gold: Apart from the favourable business environment, the decision to relocate the company must also have taken many personal factors into consideration. From this perspective, what drew you to live in Cyprus? E.K.: Moving to Cyprus had been my intention for quite a long time and I still feel that I should have done it earlier. Having previously visited the country several times on business, I had seen its healthy, safe, welcoming atmosphere for myself. It was such a stark contrast to my native Austria in so many ways and I couldn’t help but lament my departure whenever I was to leave the island! I love the sea and I greatly enjoy taking my boat out. Back in Austria, whenever I managed to escape on a Friday afternoon to the Baltic where my boat was located, we either faced rain, thunderstorms, or strong winds – an unpleasant experience! Subsequently my wish was to move to the South. Interestingly, Österreichischer Lloyd was originally founded in the Mediterranean city of Trieste and so, in some ways, it has come full circle by returning to another Mediterranean city. I am extremely happy to have been here for the past 14 years and I can safely say that

FOR US, IT WASN’T SO

Gold: What inspired the relocation of the company’s headquarters to Cyprus 13 years ago? E.K.: Cyprus is very attractive to companies of the maritime sector. Its strategic location, excellent tonnage tax system and relevant treaties with other shipping hubs all contributed to the decision; I personally believe that the Cyprus flag is one of the best, most advantageous flags in Europe. The island lies at the crossroads of three continents

MUCH A QUESTION OF “WHY CHOOSE

CYPRUS?” BUT RATHER, “WHY NOT CHOOSE CYPRUS?”

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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SHIPPING

nobody will persuade me to go back to Germany!

CYPRUS IS A SOLID JURISDICTION

the President to resolve imminent matters and work for the fulfilment of shipping potential in Cyprus. Nicos Anastasiades has been President of the Republic for over a year now and nothing has happened; this is very disappointing. The shipping sector collectively contributes 7% of the island’s GDP. In my opinion, we could contribute much, much more – at least double. We have a fantastically responsible Department of Merchant Shipping, lawyers, bankers and excellently educated staff on the island – but we desperately need to promote the industry.

AND SHOULD

Gold: Would you encourage others in the international maritime sector to follow your example and establish operations on the island? E.K.: Cyprus encompasses a marriage of business potential and quality family life. I am certainly promoting this; whenever I talk to colleagues, associates, clients and the like, I tell them that this is one of the safest, healthiest countries in Europe. Though the banking sector could be better managed and structured, there is the potential to establish ship finance here and to promote the maritime cluster much more than we already do. We have excellent flight connections, excellent schools, hospitals – everything is here. The climate is fantastic, the food is exquisite and the island is peaceful. These factors are greatly relevant to the business community. At ÖL, for example, we are doing the same work as a shipping company in Hamburg but believe me when I tell you that we are doing it in a much more relaxed, enjoyable way, due to this optimal lifestyle.

BE GIVEN THE RECOGNITION

IT SO GREATLY DESERVES

Gold: Indeed, despite the island’s recently altered economic environment, many advantageous factors remain. Can the same be said about its business incentives? Are these still as applicable to ÖL today as they were when you first began operations on the island? E.K.: Absolutely! We still believe that Cyprus is one of the few jurisdictions that offer the “full package”. It remains one of the most advantageous business centres in the region in the wake of the financial crisis, with the added benefit of the availability of attractive programmes such as the Permanent Residence Permit and naturalisation via investment. Though Cyprus may very well be considered a small country to some, in my opinion it is a solid jurisdiction and should be given the recognition it so greatly deserves in this respect. In order for its great qualities to be known, however, constructive efforts for the promotion of the island – and its shipping sector – must be undertaken. Gold: How might this further promotion be facilitated? E.K.: To promote shipping, we urgently need a Permanent Director for the Department of Merchant Shipping, as well as an UnderSecretary for Shipping. These positions must be fulfilled by high calibre, local professionals from the maritime sector, of which there are several potential contenders who are more than adequately qualified to undertake the responsibilities corresponding to these positions. This would – I’m certain – result in a significant increase of the shipping sector’s contribution to the country’s economy.

Gold: To be fair, the incumbent President has had to deal with so many pressing matters following his election. E.K.: Yes, but although there is a feeling that the Government is paying attention to more urgent matters – which I am happy about, as, I’m sure, is the Troika – we should not ignore the development of something that creates earnings on a daily basis. I must emphasize that the Department of Merchant Shipping is a cash-cow – it is simply a profit centre – despite the fact that it doesn’t have a permanent director! Just imagine how much further it could develop if measures were set in place specifically targeting its growth. Gold: Other jurisdictions have certainly benefited from such permanent roles in key maritime institutions. Is there a country whose shipping sector you particularly admire and which believe Cyprus would benefit from emulating? E.K.: Singapore certainly comes to mind. Administered by the Maritime and Port Authority (MPA) of Singapore, the country actually now ranks among the top ten largest registries in the world, with more than 3,000 registered vessels, totalling 43.7 million gross tons, and is considered one of the preferred choices of flag by many international ship owners. Singapore-registered vessels not only enjoy tax advantages and financial incentives but they also benefit from a high-quality ship registry. Singapore appears to have an efficient infrastructure and a business-friendly environment which continues to attract ship owners worldwide to register. Welcome in all of the world’s ports, this mark of quality translates into business advantages over more traditional-based operators. With no restrictions on trading areas of Singaporeflagged ships, some clients prefer to deal with a Singapore-incorporated maritime operator.

THE SHIPPING SECTOR COLLECTIVELY

Gold: Isn’t this something that has already been promised by the Government? E.K.: All three candidates in the February 2013 presidential elections promised to appoint an Under-Secretary for Shipping, who would deal directly with

CONTRIBUTES 7% OF THE ISLAND’S GDP.

WE COULD CONTRIBUTE MUCH,

MUCH MORE – AT LEAST DOUBLE

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

Gold: Have such incentives ever tempted you to move from Cyprus and adopt the Singapore flag? E.K.: No, despite all the advantages of Singapore, I am not considering adopting its flag, as long as Cyprus’ tonnage tax system (TTS) is safeguarded. I implore the relevant bodies not to alter the TTS, as it is not only a factor of great significance for Österreichischer Lloyd but arguably the prime attraction of Cyprus’ maritime industry. Provided that the tonnage tax remains consistent, I won’t be planning to move from Cyprus.

OPINION

Small Is Beautiful Countries like Cyprus are valuable players in the European team.

ix years after the beginning of the financial and economic crisis, the EU still faces serious challenges to its social and economic conditions. Unacceptable high rates of unemployment, especially among Europe’s youth, and unsatisfactory levels of economic growth require strong common action. Cyprus is confronted with these problems as well. The country is struggling hard to overcome the recession which started in 2012. 19% of the total population and 35% of the young people in Cyprus are without a job. Finding a solution to this problem must be our top priority. Our response to the crisis has to be more than just austerity or liberalisation. Instead, we need a comprehensive policy approach: Long-term stability, strengthening social cohesion and promoting growth as well as employment are as important as fiscal discipline. The EU must be politically and economically strong but at the same time socially balanced. Greece and Cyprus are still in the middle – to be precise, in the last third – of their respective programmes. Cyprus has achieved remarkable progress in the implementation of the adjustment programme. It has returned to the international financial markets and improved its international ratings. I am confident that government and parliament will assume their responsibility and continue to push forward all necessary reforms. We are aware that there is still a long and painful way to go for Cyprus. But Germany is ready to support Cyprus on its reform path. Reform was necessary and continues to be necessary. But there has to be a clear perspective for the time after the reform programme. How can we promote growth and employment in Cyprus? How can we secure a promising future for the young generation? What is the right economic and social model for Cyprus? I am convinced that there is big potential in tourism, the shipping industry or energy supply. The offshore gas field located off the southern coast of Cyprus is a great opportunity, economically and politically. During his visit to Berlin in April, Foreign Minister Kasoulides spoke about these energy

We want Cyprus to emerge stronger from the crisis

By Michael Roth

sources as “a new tool for peace and stability” and a “game changer” for Cyprus. Let me emphasize the importance of good bilateral relations between Germany and Cyprus. The stability, the trust and the shared values in our bilateral relations are crucial in these challenging times. Even controversial decisions about sanctions against Russia are concerted closely between our governments. Yes, finding a compromise among 28 EU member states can be difficult. But European politics benefits from different views, varying expectations and variable experiences. On an institutional level, Germany provides concrete expertise to Cyprus in fields such as energy, health or financial institutions. We want Cyprus to emerge stronger from the crisis than before. Of course, more than institutional cooperation is needed: personal contacts between the governments are important, too. This year, President Anastasiades and Foreign Minister Kasoulides have paid successful visits to Germany. I am confident that more members of the German government will visit Cyprus in the future, taking part in the exchange of ideas and visions. Let me assure you – and this is not a threat: I will come back to Cyprus! We are talking about profound changes that demand a lot from citizens. We need a strong and active civil society in order for the EU to be successful. Europe is much more than a technical process for political elites and legal experts – it is a project for society as a whole. This is why I am counting on your support. I know that European policies can seem very technical and complex. However, I am convinced that it is well worth the effort. These days, we can feel the winds of change from many directions. It is good to know that Germany and Cyprus are in this storm together. Germany has always thought of itself as an advocate for smaller member states. I am convinced: Small is beautiful! It is not the size of a country that matters in the EU. What really matters are ideas, creativity and a pro-European commitment. In this respect the smaller countries like Cyprus have a lot to offer. And they are valuable players in our European team.

info: Michael Roth is the German Minister of State for Europe. The above text is taken from his address to a public discussion on “Germany and Cyprus in a changing EU” held at the Goethe-Institut in Nicosia last month. THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

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INVESTMENT

EXPERT CONFERENCE 2014

he investment landscape in Cyprus and in much of Europe provides ground for optimism, as economies and markets recover from the global financial crisis. Private and institutional investors alike are now searching for opportunities for growth and portfolio diversification at a time when yields are low and under pressure. On Friday September 19, Emergo Wealth presented the Investment Expert Conference at the Hilton Park Hotel in Nicosia, analysing the global market outlook, providing alternative investment solutions that can enrich the investor’s portfolio, as well as providing information about investment opportunities in Cyprus and abroad, including pension fund schemes, the future of alternative investments and more.

DR. MIKE F. BALM In his opening address, Dr. Mike F. Balm, Managing Director of Emergo Wealth, expressed his view that this year’s event was more important than it had ever been. “As recent events have shown,” Balm emphasized, “we can lose wealth very quickly, whilst rebuilding it takes a considerable amount of time.” Citing the ongoing financial crisis, Balm quoted Edmund Burke’s oft-repeated statement, “Those who do not know history are destined to repeat it,” to emphasize his meaning. “But with crisis, comes opportunity,” continued Balm. “Now,” he stressed, “is the time to look to the future.” DR. PETR ZEMCIK Giving attendees an overview of the global outlook, Dr. Petr Zemcik, Director of Economic Research at Moody’s Analytics, noted that although the global economy remains fragile, it is expected to gain traction gradually into 2015. “The eurozone is shaky,” he confided, “despite being helped by growth in the US and the UK. Stagnant domestic demand in major European countries and the crisis in Ukraine, meanwhile, leave the region vulnerable to external shocks.” Expanding on the latter, Zemcik explained that the Russian embargo on agricultural

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By Effy Pafitis

goods imported from the West is set to create a ripple effect of troubling repercussions throughout Europe, stifling growth in the long term. Germany, commonly perceived to be Europe’s ‘strongman’ economy, is set to experience a 1% drop in its GDP this year as a consequence of the elimination of its exports to Russia – which represent a mere 3.3% of the country’s total exports. Following this example, it is clear, Zemcik underlined, that weaker economies throughout Europe, many of which depended heavily of a far higher value of exports to Russia, will suffer greater economic consequences. GAUTAM CHADDA In his presentation, Gautam Chadda, Director and Investment Counsellor of Royal Bank of Canada Wealth Management, outlined the need for a global approach to asset allocation. “The global marketplace offers investors a rich bounty of opportunities to choose from, whether by asset class, geography or sector. Investors focused on an individual market inherit significant biases from the market in question,” he said. Cypriot investors tend to focus on the local market alone and will therefore be hard pressed to meet their investment goals, he noted. “Though one doesn’t expect the Cyprus investment market to match its more sophisticated European counterparts, its volatility is extreme,” Chadda revealed, citing some shocking figures. According

Emergo Wealth presents

The

INVESTMENT

Expert Conference 2014 The Emergo Wealth Investment Expert conference was addressed to management committees of provident and pension funds, managers and consultants of provident and pension funds, accountants, lawyers, legal advisors, ﬁnancial advisors, internal and external auditors, CEOs and CFOs, human resource executives, fund managers, investment departments of banking institutions, and competent authorities of the state. Organiser: Emergo Wealth. Secretariat: IMH. Communication Sponsors: Gold Magazine and GoldNews.

to the Bloomberg-sourced data presented, annual returns of the Cyprus Stock Market have plummeted from 68% in 2005, to an astounding -10% in 2013. “By casting their nets far and wide via a global approach, Cypriot investors can achieve their investment goals using different risk premia and a diversified approach,” he underlined. DR. CONSTANTINOS NEOPHYTOU As longevity increases globally, retirement schemes and provident funds have become more essential than ever, explained Constantinos Neophytou, Director of Investment Strategy of Emergo Wealth. However, the relevant statistics do not appear to reflect this increased urgency in Cyprus. “The total assets of the Cyprus Social Insurance Fund stood at €7.5 billion in 2012, with 93% of that owed to the fund by the state,” he said. “Even putting aside for a moment the ability of Cyprus to repay this very large loan, the return on assets is well below inflation and unlikely to help the Fund provide adequate income replacement provisions to its Members.” Retirement plans in the island’s private sector are also underfunded, Neophytou added, while a large percentage of employees do not contribute to a Provident Fund at all. “In light of recent events and the projected deficit,” he stressed, “it is incumbent on managers to protect the fund’s assets and obtain the highest risk adjusted returns; neither can be done without proper international diversification.” PHOEBUS THEOLOGITES In the ever-changing market of global equities, cyclicality is the only constant, said Phoebus Theologites, Chief Investment Officer of SteppenWolf Capital LLC. The most significant cycle, he

continued, instrumental to the development of global equities, is the relationship between the US Federal Reserve, the European Central Bank (ECB) and the local banks throughout the eurozone. The US, Theologites explained, has managed to “reprint its way” to an economic recovery, referring to the Fed’s Quantitative Easing (QE) policy, in a successful attempt to boost the economy. In its wake, the ECB will also begin a similar policy, he revealed, which is hoped to similarly facilitate some form of economic growth. “The Federal Reserve was limiting European “money printing” in order to allow for economic growth in the US, and now that this has been achieved, the Fed is set to return the favour and allow the ECB to do the same, which is only to the benefit of the – hopefully sustainable – development of global equities.” YANNIS MATSIS “Over the last few years,” began Yannis Matsis, CEO, Point9 Financial Ltd, “Central Banks around the world have been engaging in unprecedented amounts of monetary easing through the so-called Quantitative Easing programme.” The consequence of this, he explained, is a significant appreciation in the prices of all financial asset classes, accompanied by the risk of a subsequent decline once the monetary stimulus is withdrawn. His presentation examined how investors may navigate this “risk-on environment”, focusing in particular on fixed income investments throughout Europe and beyond. OLIVIER KINTGEN “Only 19% of securities of the fixed income market offered to you will yield more than 4%, compared to the versus 30% average recorded ten years ago in 2004,” said

Olivier Kintgen, Chief Investment Officer, Europanel Research and Alternative Asset Management (ERAAM). “Half of these securities,” he added, “are long-term bonds, maturing in more than 12 years.” As such, the inclusion of alternative investments in the asset allocation process is essential, Kintgen told attendees, adding, however, that the challenges of incorporating these alternatives are many. The main challenges investors face include barriers to entry, finding the appropriate balance between risk and reward, sourcing the best players for the best market environment and monitoring the key timing between investments and redemption. “In the constantly evolving investment world,” Kintgen explained, “setting-up a partnership with a specialist provider is imperative.” Creating and maintaining such a partnership is required in order to clearly define objectives and compose a solution-based, rather than a product-based model. Concurrently, it may facilitate the identification and access specific idiosyncratic opportunities, such as niche markets with tailor-made products. DR. GEORGE THEOCHARIDES In his presentation, Dr. George Theocharides, Associate Professor of Finance at the Cyprus International Institute of Management and Member of the Board of the Cyprus Securities and Exchange Commission, said that though Cyprus is experiencing a prolonged economic crisis, it is imperative to recognize that crises create unique opportunities, particularly in non-traditional sectors such as energy and technology. In addition, he noted, many of the benefits that made Cyprus an attractive investment destination are still in place, making traditional assets such as those in real estate and construction, tourism or banking viable. Theocharides also commented upon Cyprus’ impressive global competitiveness, informing attendees that the island had been evaluated 39th of 189 countries for Ease of Doing Business by the World Bank, 32nd of 161 countries in Bloomberg Rankings’ Best Countries for Business, 21st of 140 countries of the World Economic Forum’s Best Travel and Tourism Environment and Infrastructure Listing and, finally, 1st of the EU member states for Bathing Water Quality evaluated by the European Environment Agency.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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SOCIAL MEDIA

GETTING

IT RIGHT

Five big social media mistakes to avoid By Mariana Antonescu

o matter what size your company is, social media can be a powerful marketing tool which, if used properly, can help expand your company brand. Used the wrong way, it can hurt the brand, costing you goodwill and prospective customers. I recently spoke to group of fellow entrepreneurs and international companies, all with a presence on social media but, like many others, struggling to find the right way to establish themselves. Here are my Top 5 picks of the most common social media mistakes companies make and how to avoid them.

NOT HAVING A STRATEGY Fewer than 20% of businesses say that their social media strategy is mature. Too many companies jump into social media with no plan. They grab an employee who seems to “understand Facebook” and put them in charge. This rarely works. Mistakes in your social media marketing can come back to haunt you. Without a clear strategy, businesses can create the best content on the web but receive little or no engagement. Creating a strategy

includes having distinct and measurable objectives, developing a clear social media policy, and planning out a content calendar with end goals in mind.

TRYING TO DO IT ALL If you are thinking of devoting resources to every social network, you may want to reconsider. Social media marketing is meant to build and solidify relationships with existing customers, bring in new ones, and ultimately grow your business. It takes tremendous resources to do this the right way. You are better off prioritizing one or two social networks if you want to see real growth and success. If you only have enough time, money and energy to

MISTAKES IN YOUR SOCIAL MEDIA MARKETING CAN COME BACK TO HAUNT YOU

info: Mariana Antonescu MBA is a Cyprus-based social media consultant. http://mari10.blog.com/ 74 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

devote to one or two activities, then do it and do it well. You can’t conquer the wholesocial media world. No brand can.

FOCUSING ON QUANTITY INSTEAD OF QUALITY Some companies are willing to do anything to get more followers or ‘likes’, from buying followers to staging fake Twitter hacks. But ‘likes’ don’t equal sales. While you may have to pay for ads to reach some of your audience, paying to boost your fan count is a bad tactic that should be avoided. Only real fans can spread brand awareness and become brand advocates. It may seem like a great idea to boost the number of fans by purchasing them but it can ultimately be detrimental to your brand. Focus on quality, not quantity.

NOT INTERACTING WITH FOLLOWERS Reputation is your biggest marketing weapon. Customers now place more trust in online reviews than advertisements. Social media is meant to be interactive and consumers expect a certain amount of responsiveness from businesses. Responding to posts helps consumers feel more connected to the brand. Businesses should have a strategy in place to respond to posts, both negative and positive, and use the social media platform as a part of their crisis management strategy. Responding to followers helps build trust between brands and consumers, which can affect future sales and word-of-mouth marketing.

NOT INTEGRATING WITH OTHER DIGITAL ASSETS Social media works best when integrated with other digital marketing efforts. One mistake that many businesses make is to leave their social media accounts separate. Not only should the accounts be linked together but they should also be directly tied to websites, e-mails and paid search advertising campaigns. Not connecting these accounts reduces the amount of reach that each asset has separately. Maximize the use of tools that will help you with managing multiple accounts and sorting information relevant to your business such as HootSuite. Are you willing to stay up to speed and stay current with each new turn in the social media street race? As long as you have the desire to play the game properly and you put in the effort, you’ve got a solid chance at winning. In the end, what you get is what you bring to the fight. And that fight gets better every day you learn and apply new lessons.

{October 14 – November 13, 2014}

ISSUE

+ BOOK REVIEWS MONEY: How to Speak Money By John Lanchester

{money}

76 Investing in Foreign Exchange Markets More and more investors and fund managers are looking for alternative investments that enable sufficient portfolio diversification to reduce risk. Forex may be the answer.

{economy}

80 Cyprus: Economy Dynamics Views on the Cypriot Economy, the Banking Sector and other key sectors from the first issue of EY’s newsletter Cyprus: Economy Dynamics. 83 Signs of Growth In its latest Cyprus Economy Update, KPMG looks at several key areas, including those showing signs of growth.

{business}

78 CIOs at the Tech-Junction Deloitte’s 2014 Global survey looks at the role of Chief Information Officers

BUSINESS: The Lean Management Systems Handbook By Rich Charron, H. James Harrington, Frank Voehl, Hal Wiggin 78 ECONOMY: The Shifts and the Shocks: What We’ve Learned – and Have Still to Learn – from the Financial Crisis By Martin Wolf 83 TAX & LEGAL: The Evolution and Equilibrium of Copyright in the Digital Age By Susy Frankel & Daniel Gervais (Editors) 85 LIFESTYLE: The Children Act By Ian McEwan

{tax&legal}

84 The Tonnage Tax Regime in Cyprus Cyprus’ Tonnage Tax provides Cyprus with a significant competitive advantage.

{lifestyle} style ttyle e}

86 Winter Wonderlands Forget sun and sea. It’s time to enjo enjoy some ice and snow on a skiing h holiday. 90 A Day In The Life Nicolas Theocharides

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS

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forex

{MONEY}

Investing in Foreign Exchange Markets “RISK COMES FROM NOT KNOWING WHAT YOU’RE DOING”. WARREN BUFFET

By Antypas Asfour, CFA

n this highly globalised and integrated economy we live in, traditional asset classes are showing increased correlations, especially since the 2008 financial crisis. Investors and fund managers are thus looking for alternative investments that enable sufficient portfolio diversification to reduce portfolio risk. One such asset class is foreign exchange with its various ways in which investors can gain exposure. “Foreign Exchange” is a term commonly used but not necessarily widely understood. The foreign exchange (Forex/FX) market is based on changes in the values of currencies. Currencies are quoted in pairs, for instance EUR/USD, hence denoting the value of one currency relative to another – in this case how many US dollars are needed to purchase 1 euro. Exchange rates fluctuate constantly 24/5 as they are impacted, inter alia, by macroeconomic expectations, central bank actions and geopolitical events.

The FX market has experienced a boom in recent years following technological advances, with volumes rocketing, according to the Bank of International Settlements, from $1.24 trillion on average per day in 2001 to $5.35 trillion in 2013, constituting it the world’s largest and most liquid financial market. Forex

FOREX IS THE WORLD’S LARGEST AND MOST LIQUID FINANCIAL MARKET trading and investing has become accessible to retail investors following the widespread adoption of broadband Internet, which enables online trading without the need to go directly to a large international bank. Moreover, these advances in information technology, coupled with advances in processing speeds, have permitted the growth of algorithmic

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trading, where pre-programmed trading systems process data and capture execution opportunities using their automated reasoning. Although the use of algorithmic trading in FX is not as extensive as in the US equity markets, where it accounts for 80% of trading, the trend is for algorithmic trading in FX to continue its remarkable growth, which has stood at an annual compound growth rate of 35% from 2003 to 2010, based on data from the Aite Group. Investors looking to tap into the FX market may do so in a number of ways. One option available is to trade on margin through one of the hundreds of FX brokers, many of which are located and regulated here in Cyprus. One advantage is that, because of the use of leverage, only a fraction of the actual trade value is needed as a deposit though, on the downside, leverage is a double-edged sword: the more leverage employed, the higher the risk-taking. A second noteworthy caveat is that

BOOK REVIEW HOW TO SPEAK MONEY

BY JOHN LANCHESTER (FABER & FABER, 2014) R.R.P. £17.99 (£12.59 FROM AMAZON.CO.UK)

most FX brokers are market makers, therefore profiting from client losses, and thus their interests are not aligned with those of their clients. An alternative investment option is to open a foreign currency bank account, gaining exposure by converting your funds. The drawback of this option, however, is that it can be quite costly depending on the bank’s spread, charges and commissions. Another option is to invest in an exchange traded product that tracks currencies. The benefit of this approach is that costs are more transparent but, on the downside, it is possible that the notes on offer cover a limited number of currencies or that the basket of currencies available do not match the investor’s objectives. A better option is likely to be to invest in an FX fund or through a portfolio management service where, through active management,the aim may be to beat a pre-agreed benchmark. Costs here are again transparent with management and/or performance fees being the

norm. Cons, though, may include a high minimum investment amount and/or a possible lock-up period. A final alternative is to use a dedicated FX investment platform where investors can mirror or copy the trades executed by algorithms or traders. On the pros side, the investor does not need to engage in any decisionmaking about when to enter and exit a trade and there are usually no management fees involved; on the downside, investments may be highly leveraged. It is this high use of leverage, in fact, that is the greatest risk for an FX investor since the asset class on its own is not a highly volatile one. Using the Dollar

FOREX AS AN ASSET CLASS IS GENERALLY LESS RISKY THAN OTHER WIDELY USED CLASSES

oney may be a global language but, according to this bestselling author, so few of us can speak it because it can be JVTWSL_ QHYNVU ÄSSLK HUK JVTWSL[LS` IHMÅPUN 3HUJOLZ[LY ZL[Z V\[ [V KLJVKL it, explaining everything from high-frequency trading to the difference between the World Bank and the IMF (a matter of NVVK JVW IHK JVW OL YLJRVUZ /L HSZV shows that money men are not above using euphemisms to hide what they really mean: rather than sacking or making redundant they prefer “reducing payroll” VY ¸Z`ULYN`¹ 3HUJOLZ[LY ILSPL]LZ [OH[ HYN\TLU[Z about the economy are going to dominate the social and political landscape over the next decade and so we should HSS HPT [V ILJVTL TVYL ÄUHUJPHSS` SP[LYH[L /L ZH`Z! ¸6UL VM T` HTIP[PVUZ MVY this book is that it’ll make readers want to go and read more about money and LJVUVTPJZ¹ .VSK YLHKLYZ HYL HSYLHK` doing this but if you have any gaps in your knowledge, this witty, provocative, insightful and often funny book is neither too technical nor too patronising and KLÄUP[LS` ^VY[O YLHKPUN

Index as a proxy for FX investing, it is evident that Forex volatility measured through standard deviation is usually a fraction of that seen in equities and commodities, indicating that Forex as an asset class is generally less risky than other widely used classes. To conclude, it is apparent that investors wishing to diversify their portfolio have a wealth of options to choose from when it comes to investing in the foreign exchange markets. Learning more about these options and seeking professional assistance can help investors better comprehend which options are better suited for their objectives and risk tolerance.

info: Antypas Asfour, CFA is a Portfolio Management Officer at FxPro Financial Services Limited and a Lecturer in Performance Management, Business Ethics and

Strategy at the Cyprus Institute of Marketing. THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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CHIEF INFORMATION OFlCERS

CIOS AT THE TECH-JUNCTION

{BUSINESS}

DELOITTE’S 2014 GLOBAL SURVEY LOOKS AT THE ROLE OF CHIEF INFORMATION OFFICERS

n its newly-published CIO Survey report, Deloitte presents the findings from the firm’s 2014 global survey, this year with responses from over 900 Chief Information Officers (CIOs) from all major industry groups in 49 countries from the Americas, Europe, the Middle East, Africa, Asia and Australia. Last year, Deloitte explored the effectiveness of CIOs as business partners and the need for them to step up to make a greater impact within the boardroom. This year, the concept has been extended and the spotlight is turned on the role of the CIO as a business leader of growth through innovation. In particular, the report explores the idea of the CIO as a Venture Capitalist, an interesting trend examined in its Tech Trends 2014 report. It also explores the world of analytics, discussing current adoption levels and key barriers to more widespread use. This year’s survey focuses on the CIO as a business leader and a driver of growth through technology innovation. Organisations across the globe are setting their sights on stronger growth and, for many, technology investment is clearly a strategic priority. Digital, analytics and big data are taking precedence as technology is changing the way businesses operate and companies are adapting their operating models to reflect the emerging digital economy However, while more than half of CIOs (52%) consider innovation an important priority, they receive little funding for this within their IT function. Almost half have less than 10% of their budgets aligned to innovation-related activities. Deloitte’s sec-

WHILE MORE THAN HALF OF CIOS (52%) CONSIDER INNOVATION AN IMPORTANT PRIORITY, THEY RECEIVE LITTLE FUNDING FOR THIS WITHIN THEIR IT FUNCTION

ond global CIO Survey reveals a disparity between the excitement over, and proposed investment in, technology – and the role the CIO is playing in this transformation. The CIOs who participated in Deloitte’s survey provided insight into the perceptions, priorities, opportunities and challenges of CIOs around the world. Kevin Walsh, Head of Deloitte’s technology consulting practice, says: “This year’s survey points to a real shift in board members’ attitudes towards IT investment and the importance of new and digital technologies for business development. However, the ongoing lack of innovation budget is very surprising given positive current market conditions and a general acknowledgement that technology is essential for organisations to deliver stronger customer engagement. Either there is still limited budget for innovation – or, and perhaps more likely, it has been given to someone else in the organisation.” Business leaders’ attitudes to risk are an even bigger constraint than inadequate budgets in making riskier IT investments for innovation and growth, according to CIOs. While the survey results suggest CIOs are willing to take intelligent risks with IT investments (71% class themselves as risk tolerant, not risk averse), this appetite for investment does not seem to be reflected in their current portfolios of projects. “CIOs are still most often associated with maintaining core IT systems and ‘keeping the lights on’,” says Walsh. “However, a key question in this year’s survey is whether CIOs should take more responsibility for technology innovation to help their organisations grow. The challenge will be to convince company leadership they are capable of delivering these new technologies.” Despite some challenges, there have been significant improvements in business relationships as Deloitte’s findings reveal that CIOs are becoming more effective business

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

partners (10% increase on last year, with half rating themselves ‘strong and effective’).

BOOK REVIEW THE HE LEAN MAN MANAGEMENT SYSTEMS HANDBOOK

BY RICH CHARRON, H. JAMES HARRINGTON, FRANK VOEHL, HAL WIGGIN (PRODUCTIVITY PRESS, 2014)

R.R.P. £38.99 (£37.04 FROM AMAZON.CO.UK) erformance management, which is the primary focus of a Lean organisation, occurs through continuous improvement programmes that focus on education, belief Z`Z[LTZ KL]LSVWTLU[ HUK LɈLJ[P]L JOHUNL management. This book details the critical components required for sustainable Lean management and explains how managers at all levels of an organisation can integrate Lean into their daily management activities. 0[ KLÄULZ [OL 3LHU WOPSVZVWO` HZ ^LSS HZ [OL beliefs and behaviours required to develop a thriving Lean company culture. Expounding on essential Lean concepts, this is an ideal guide to help new managers and leaders make the transition from theory to sucJLZZM\S HWWSPJH[PVU PU [OL ÄLSK 3LHK H\[OVY Rich Charron is the founder and president of The Lean Manufacturing Group, which provides Employee Learning & Lean Implementation programmes focused on waste elimination, productivity improvement, HUK WYVÄ[HIPSP[` LUOHUJLTLU[ *VTWSL[L with brief summaries and examples of the most important tools in Lean management systems development, the book provides a reliable roadmap for deploying a Lean management system across your organisation, and subsequently across your entire value stream.

cyprus

{ECONOMY}

Cyprus: Economy Dynamics

he Cypriot economy continues to contract and faces significant headwinds in 2014, both fiscally and in key sectors of the economy, such as banking and real estate development. Its overall performance however, is above the expectations of the Troika as included in the revised Memorandum of Understanding on Specific Economic Policy Conditionality for Cyprus (MoU, August, 2014). In fact, the latest reports from the Troika are positive, with forecasts for the macroeconomic outlook for Cyprus revised upwards (EC Forecast, Spring, 2014). Dominion Bond Rating Service (DBRS) (2014) upgraded the long-term foreign currency issuer ratings for Cyprus from CCC to B. Fitch (2014) revised its fiscal projections to a deficit of 5% of GDP in 2014 and 4.6% in 2015,

CONFIDENCE IN THE ECONOMY SHOWS SIGNS OF IMPROVEMENT down from its previous forecasts of 7.5% and 6.9% respectively.

MACROECONOMIC FORECASTS After the positive assessment of the 4th

quarterly review of Cyprus’ macroeconomic adjustment programme, the European Stability Mechanism (ESM), approved the disbursement of €600 million to Cyprus on July 7, 2014, bringing the total amount of ESM assistance to €5.35 billion as at July 9, 2014. The remaining amount that the ESM initially committed to Cyprus (c.€9 billion) will be paid in quarterly instalments until 2016, as scheduled (ESM, 2014). Also, €84 million of the €1 billion 3-year loan approved by the IMF to Cyprus (May 2013), has already been disbursed (July 2, 2014) after the completion of the 4th quarterly review. The final Eurogroup decision for the payment of the next tranche, comprising €350 million by the ESM and about €86 million by the IMF, was not part of the agenda of the scheduled Eurogroup meeting in September as originally expected. The delay was the result of the Government’s failure to satisfy the requirement for the passing of foreclosure legislation that will shorten the amount of time required for lenders to repossess property collateral. GDP is expected to shrink by 4.0% in 2014 and minor growth of 0.5-1.0% is expected for 2015 (EC, 2014). In contrast, Fitch (2014) expects growth to resume in 2017 and not in 2015. The IMF expects that the economy could start growing immediately, despite the scarcity of bank

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

EY CYPRUS RECENTLY LAUNCHED A SERIES OF NEWSLETTERS FOCUSING ON THE CYPRIOT ECONOMY, THE BANKING SECTOR AND OTHER KEY SECTORS THAT CONSTITUTE THE DRIVING FORCES OF THE LOCAL ECONOMY. THE FOLLOWING IS TAKEN FROM THE FIRST ISSUE OF CYPRUS: ECONOMY DYNAMICS.

lending, with financing expected to flow from businesses in sectors that were not severely affected by the recession and were not over-leveraged. The IMF highlights the tourism and other services sectors such as health, energy and education, which could support the Cypriot economy within the next two years. Confidence in the economy shows signs of improvement. According to the economic sentiment indicator published by the Economics Research Centre of the University of Cyprus (CypERC) confidence in the economy improved by 0.6 points in June 2014 compared to May 2014. The increase, which was the 14th consecutive monthly increase recorded since April 2013, is attributed mainly to a strengthening of the economic confidence of consumers and a marginal improvement in the business climate in the construction industry. According to the 5th Troika review in July 2014, there are signs of stabilisation in the Cypriot banking system. However, the economic outlook overall remains negative. Implementation of the MoU agreed with the Troika last year remains on track. Fiscal targets for 1H2014 were comfortably met; however, additional effort is needed to achieve the target of a primary surplus of 4% of GDP by 2018 (1Q2014: 0.7%).

MEASURES AIMED AT PUBLIC DEBT REDUCTION HAVE HAD A NEGATIVE IMPACT ON OVERALL ECONOMIC ACTIVITY MAJOR CHALLENGES PERSIST One of the biggest challenges for the Cypriot economy is the required decrease in public debt, which reached 112.2% of GDP in 1Q2014. The Ministry of Finance forecasts that public debt will reach 120.4% in 2014. Several measures agreed under the MoU (April 2013), including scaled public sector wage cuts, rationalisation of social benefits and pensions, increases in VAT and excise taxes, as well as increased social security contributions, are all aimed at reducing the public debt to sustainable levels. Implementation of the measures prescribed by the MoU has so far been successful and the results achieved have been positive. Nevertheless, measures aimed at public debt reduction have had a negative impact on overall economic activity and direct (and indirect) social consequences, such as the reduction of social benefits, increased unem-

ployment, etc. As part of the MoU, the Government is expected to introduce measures aimed at protecting vulnerable social groups, including low-income families, the unemployed and the disabled. In July 2014, a Law was passed by the House of Representatives with regard to the minimum guaranteed income (MGI) policy, which will provide state benefits (housing and/ or income subsidies) to everybody below the MGI threshold. The policy is expected to help rationalise the state-sponsored benefits and allowances system, allowing for more efficient and cost-effective administration. The government began accepting applications for the welfare package on July 18, 2014. Legislation that paves the way for the privatisation of the three largest state-owned enterprises was passed last March and the process is proceeding as planned in the MoU. On

April 30, 2014, a privatisations officer was appointed by the Council of Ministers. The Troika expects that the privatisations will generate about €1 billion by the end of the programme period (2016) and an additional amount of €400 million until 2018, which will be used for public debt reduction (MoU, May 2014).

PUBLIC FINANCE DEVELOPMENTS The general government deficit for 2013 (€896.9 million, 5.4% of GDP) was lower than in 2012 (€1134.9 million, 6.4% of GDP). In 1Q2014, the general government deficit was €31.6 million or -0.8% of GDP, a decrease of €556.7 million compared to 4Q2013.The EC forecasts a further increase in the General Government Deficit in both 2014 and 2015. In a more recent report, Fitch (2014) revised its initial projections and it now expects the General Government Deficit to improve to 5% of GDP in 2014 and to 4.6% in 2015. The decrease in the General Government Deficit resulted mainly through the decrease in government expenditure (mainly attributed to reductions in payroll expenses as well as social security payments). The total reduction in payroll expenses in 2013 amounted to €132 million compared to those incurred in 2012, while there was an annual increase in social security payments of about €71 million in 2013.

UNEMPLOYMENT REMAINS THE MAJOR CHALLENGE According to data published by European Statistical Service (Eurostat) in June 2014, unemployment stood at 15.0% (May 2014: 15.1%), with youth unemployment (those under 25) at 35.1%, among the highest rates in the EU-28. Unemployment has been increasing since 2009. Between 2011 and

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GENERAL GOVERN MENT DEFICIT AS A PERCENTAGE OF GDP

cyprus

{ECONOMY}

CYPRUS COULD START BORROWING FROM THE INTERNATIONAL MARKETS SOONER THAN EXPECTED 2013 Cyprus recorded the highest increase in the unemployment rate amongst the EU-28 member states. The government has introduced several new programmes to encourage the hiring and/or retraining of the unemployed. For example, a six-month placement programme for unemployed graduates in order to gain work experience was introduced in March 2014, aimed at creating 2,500 new jobs for unemployed graduates up to 35 years of age. According to data published by Statistical Service of Cyprus (CyStat), in July 2014, the number of registered unemployed persons increased to 46,727 (June 2014: 44,925), a monthly increase of 4%. The main sectors contributing to the rise in unemployment over the last few years were wholesale and retail trade, hospitality and construction. For the first seven months of the year, the number of registered unemployed persons reached 48,705 of which 17.8% (8,653 persons) were from the wholesale and retail trade sector,14% (6,815 persons) from the construction sector and 13.2% (6,431 persons) from the hospitality sector.

ON A PATH TO RECOVERY INCREASED GOVERNMENT INCOME

In June 2014, total income tax receipts increased marginally by 0.2% or €1.4mn YoY. Specifically, the total amount paid to the Inland Revenue Department (IRD) for the 2Q2014 was €728.6 million, compared to €727.2 million in 2Q2013. The marginal increase is mainly attributed to the imposed penalties and the capital gains tax.

INCREASED IMPORTS AND EXPORTS

In June 2014, total imports increased by 5.1% YOY (€422.1 million compared to €401.8 million in June 2013). In addition, total exports recorded an increase of 8.4%, reaching €146.4 million in June 2014, up from €135.1 million in June 2013. The trade balance deficit increased by 7.6% to €1,602.5 million in the first half of 2014, up from €1,488.6 million in the first half of 2013.

SMES In April 2014, the European Investment Bank (EIB) agreed to provide a €50 million credit line ffor C Cypriot di li i SMEs. The financing will be disbursed through the Cooperative Central Bank (CCB), which will also provide further SME financing of its own. In 2013, EIB support for Cyprus reached €250 million, of which 60% went to SMEs (€150 million), 37% (€92.5 million) to infrastructure projects and 3% (€7.5 million) to industry. Additionally, the Government announced that it is preparing a private financing corporation that will provide financing for SMEs. According to the Government, the initiative could receive funds from German and EU financing organisations (EIB, European Reconstruction and Development Bank). Although the details of the amount and the process of the financing have yet to be finalised, the initiative is expected to provide a welcome source of financing for the Cypriot SMEs and contribute to job creation.

INCREASE IN APPLICATIONS FOR REGISTRATION OF COMPANIES In July 2014, the applications for registration of companies in Cyprus recorded the highest increase since March 2013. The increase is partly attributed to the positive 4th quarterly review by the Troika in June. According to data from the Registrar of Companies and Official Receiver, there were 1,138 applications for registration of new companies in July 2014, (up from 908 in July 2013, a 25.3% increase). Total new registrations for the first seven months of 2014 were 5,254 (suggesting that the new company registrations for FY2014 could be at similar levels as those in 2013).

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LIFTING OF CAPITAL CONTROL MEASURES Following the achievement of the set milestones, the Ministry of Finance announced on May 30, 2014 that all restrictions on transactions within Cyprus would be abolished. The cashing of cheques is now permitted and the limits on transfers and payments of €50,000 for individuals and €200,000 for legal persons per institution have been abolished. Restrictions on the opening of new accounts at credit institutions and for capital flows out of Cyprus remain in place. The gradual abolition of restrictive measures is expected to help increase liquidity in the market and boost the overall economic activity.

BETTER PERFORMANCE OF CYPRIOT GOVERNMENT BONDS The yields of the Cypriot Government Bonds (CGBs), reached their lowest levels since May 2011, when the steep rise in yields had forced the Cyprus government out of the international bond markets. The performance in the yields is attributed to the improvement of the eurozone economy and also to the successful implementation of the Cypriot MoU, with regard to both the fiscal targets and the structural reforms. Importantly, the decrease in CGB yields suggests that Cyprus could start borrowing from the international markets sooner than expected. Already, Moody’s (2014) has upgraded the prospects for the CGB from negative to positive, retaining its rating at Caa3. However, the rating is still negative due to the risk of default or debt restructuring in the short run that persists as public finances remain highly correlated to the banking sector.

SIGNS OF

cyprus

GROWTH DRIVERS

Â&#x2039; *`WY\Z HUK 9\ZZPH OH]L HNYLLK [V HU VWLU ZRPLZ WVSPJ` [OH[ ^PSS IVVZ[ [OL [V\YPZT PUK\Z[Y` PU *`WY\Z .VSM YLZVY[Z L_JS\ZP]L OV[LSZ HUK ^LSSULZZ [V\YPZT WYVK\J[Z HUK ZLY]PJLZ HYL NYV^PUN :[YVUN SPURZ ^P[O THQVY [V\Y VWLYH[VYZ H ZPNUPÃ&#x201E;JHU[ L_WHUZPVU PU Ã&#x2026;PNO[ KLZ[PUH[PVUZ HUK [OL KL]LSVWTLU[ VM UPJOL [V\YPZT HSS PUKPJH[L [OL ZLJ[VY ^PSS JVU[PU\L [V Ã&#x2026;V\YPZO Â&#x2039; ;OL .V]LYUTLU[ OHZ KLJPKLK [V JYLH[L H :JPLUJL ;LJOUVSVN` 7HYR Âº:;7Â» WYVTV[PUN YLZLHYJO PUUV]H[PVU HUK [LJOUVSVN` 0U[LYLZ[LK WHY[PLZ OH]L ILLU PU]P[LK MVY HU 0UP[PHS ,_WYLZZPVU VM 0U[LYLZ[ [V KL]LSVW HJ[P]P[PLZ PU [OL :;7 VY [V \UKLY[HRL P[Z LZ[HISPZOTLU[ HUK VWLYH[PVU Â&#x2039; ;OL U\TILY VM PU]LZ[TLU[ JVTWHUPLZ SPJLUZLK I` *`WY\Z :LJ\YP[PLZ *VTTPZZPVU PZ PUJYLHZPUN Â&#x2039; 5L^ SLNPZSH[PVU NV]LYUPUN [OL (S[LYUH[P]L 0U]LZ[TLU[ -\UKZ (0-Z ^PSS TVKLYUPZLZ [OL YLN\SH[VY` HZWLJ[Z VM (0-Z PU *`WY\Z ^OPSL L_WHUKPUN [OL VW[PVUZ H]HPSHISL MVY M\UK THUHNLYZ 0[ IYPUNZ *`WY\Z \W [V WHY ^P[O V[OLY JVTWL[P[P]L ,< PU]LZ[TLU[ M\UKZ Q\YPZKPJ[PVUZ Â&#x2039; ;OL .V]LYUTLU[ ^PSS Z[HY[ [OL [LUKLYPUN WYVJLZZ MVY [OL LZ[HISPZOTLU[ VM H JHZPUV YLZVY[ Â&#x2039; :WLJPÃ&#x201E;J PUJLU[P]LZ HYL WYV]PKLK [V UVU ,< JP[PaLUZ MVY PU]LZ[PUN PU *`WY\Z PUJS\KPUN HJX\PYPUN PTTV]HISL WYVWLY[`

n its latest Cyprus Economy Update, KPMG looks at several key areas, including those showing signs of growth:

TOURIST ARRIVALS For the period January-August 2014, tourist arrivals totalled 1,734,880 compared to 1,637,792 in the corresponding period of 2013, recording an overall increase of 5.9%. Tourist arrivals reached 373,086 in August 2014 compared to 352,215 in August 2013, recording an increase of 5.9%. COMPANY REGISTRATIONS The number of applications for company registration submitted to the Department of the Registrar of Companies and Official Receiver increased for the sixth consecutive month in August 2014. According to the Department`s statistics, the number of applications for company registrations was 722 in August this year, while the corresponding number in August 2013 was 618, recording an increase of 16.8%. In July 2014, the number of applications recorded the biggest increase since March 2013 (25.3%) reaching 1,138 from 908 during the corresponding month of 2013. Total registrations from the beginning of 2014 until the end of August 2014 were 7,297, compared to 7,304 during the corresponding period of 2013. PROPERTY SALES Sales of real estate in Cyprus increased in August for the sixth consecutive month of

growth CYPRUS AND RUSSIA HAVE AGREED TO AN OPEN SKIES POLICY THAT WILL BOOST THE TOURISM INDUSTRY IN CYPRUS the year. During the month, a total of 335 contracts for the purchase of property were submitted to Land Registry offices across Cyprus, representing a 25.9% increase on the 266 contracts submitted during the same period of last year. During the eight months to August 2014, the total number of properties sold in Cyprus was 2,995, a 23.2% increase on the first eight months of 2013. MOTOR VEHICLE REGISTRATIONS Total registrations of motor vehicles increased by 23.7% to 13,543 for the period January-July 2014, from 10,947 in the same period in 2013. The number of new private saloon car registrations increased to 10,120 from 7,774 in January-July 2013, an increase of 30.2%. On an annual basis, registrations of private cars rose by 48.7%. UNEMPLOYMENT The number of registered unemployed persons on 31 August 201 was 45,583. Based on the seasonally adjusted data, the number was 47,865 compared to 47,826 the previous month. In comparison with August 2013, a decrease of 2,868 persons or 5.9% was recorded, mainly in the trade, construction, education, manufacturing, professional, scientific and technical activities, and financial and insurance sectors.

{ECONOMY}

B BOOK RREVIEW THEE SHIFTSS AN AND THE SHOCKS: WHAT WEâ&#x20AC;&#x2122;VE LEARNED â&#x20AC;&#x201C; AND HAVE STILL TO LEARN â&#x20AC;&#x201C; FROM THE FINANCIAL CRISISÂ BY MARTIN WOLF (ALLEN LANE, 2014) R.R.P. Â£25.00 (Â£17.00 FROM AMAZON.CO.UK)

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THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 83

shipping tax

{TAX&LEGAL}

THE TONNAGE

TAX REGIME

IN CYPRUS

he new tonnage tax system contains most of the favourable features found in tonnage tax systems in other EU countries, and more. The system, therefore, provides Cyprus with a competitive advantage and is expected to significantly contribute to the improvement of the already strong position of the country in the shipping world. The tonnage tax system is available to any owner, charterer or ship manager who owns, charters or manages a qualifying ship in a qualifying shipping activity. The tonnage tax is calculated on the net tonnage of the ship according to a broad range of bands and rates prescribed in the legislation. The rates applicable to ship managers are 25% of those applied for ship owners and charterers. A qualifying ship is any seagoing vessel certified under applicable international or national rules and regulations and registered in the ship register of any member of the International Maritime Organization

and the International Labour Organization, which is recognized by Cyprus. The new tonnage tax system specifically excludes certain types of ships, such as fishing vessels, ships used primarily for sports or recreation, river vessels, non-self-propelled floating cranes and non-ocean going tug boats, among others. Any commercial activity that constitutes maritime transport, crew management and/or technical management is considered a qualifying activity. The definition of maritime transport includes the traditional carriage of goods and passengers, as well as ancillary services such as all hotel, catering, entertainment and retailing activities on board a qualifying vessel, the loading and unloading of cargo, the operation of ticketing facilities and passenger terminals. Towage, dredging and cable laying are also eligible for tonnage tax.

SHIP OWNERS Ship owners of Cyprus flag ships automatically fall within the scope of the tonnage tax system. Ship owners of community flag ships and foreign flag ships may opt

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

THE SYSTEM PROVIDES CYPRUS WITH A COMPETITIVE ADVANTAGE to be taxed under the tonnage system. Ship owners of foreign flag ships must comply with certain requirements to qualify for the option to be taxed under the new system. These include the requirement that a share of their fleet be comprised of EU flag ships, which share must not be reduced in the three-year period following the exercise of the option (flag-share requirement) and that the commercial and strategic management of the fleet be carried out from the EU/EEA. Any ship owner opting for the tonnage tax system must remain in the system for 10 years. Early withdrawal will result in penalties, calculated as the difference between the amounts paid during the period the ship owner was under

TONNAGE TAX RATES

The following table summarizes the applicable rates for the tonnage tax calculation:

NET TONNAGE 0 -1,000

per 100NT

1,001-10,000

€36.5

10,001-25,000

25,000-40,000

€20.06

€12.78

€31.03

>40,000 €7.30

The rates applicable to ship managers are 25% of the above.

The charterers of a fleet comprising EU and non-EU flag ships must also comply with the flag-share requirement. An eligible charterer may opt to be taxed under the tonnage tax system, but once the option is made, it must remain in the system for 10 years. Early withdrawal will result in the penalties outlined above for ship owners. The tonnage tax system covers profits from shipping operations, dividends paid directly or indirectly out of such profits and interest earned on funds used as working capital or for the payment of expenses arising out of the charter party.

SHIP MANAGERS

the tonnage tax system and the amount that would have paid had it been subject to corporation tax in the same period. In addition, the ship owner will lose the right to opt for tonnage taxation until expiration of the 10-year period from the date the option was first exercised. The tonnage tax system covers profits from shipping operations, dividends paid directly or indirectly out of such profits, profits on the sale of the ship and interest earned on funds used as working capital or for the financing, operation and/or maintenance of the ship.

CHARTERERS

Any charterer who charters a ship under bareboat, demise, time or voyage charter is eligible for the tonnage tax system provided the tonnage of the ships under time and/or voyage charters do not exceed 75% of the total tonnage of ships chartered and owned, for more than three consecutive years. This eligibility percentage increases to 90% if the ships chartered are EU/EEA ships or their crew and technical management are carried out from the EU/EEA.

A ship manager who provides crew and/ or technical ship management services is eligible for the tonnage tax system provided it satisfies certain criteria. These include the maintenance of a fully fledged office in Cyprus, the employment of a sufficient number of qualified personnel (51% of whom should be EU/ EEA citizens) and at least two thirds of the management is entirely carried out from the territory of the EU/EEA. Further, a share of his fleet must be comprised of EU flag ships, which share must not be reduced in the three-year period following the exercise of the option (flagshare requirement). All ships and crews under management must comply with relevant international standards and EU law requirements must be fulfilled, in particular those relating to maritime security, safety, training and certification of seafarers, environmental performance and on-board working conditions. Other specific criteria must be complied with, depending on the ship management service provided (i.e. full implementation of the 2006 Maritime Labour Convention for crew managers and the ISM Code certification for technical managers). The tonnage tax system covers profits from the provision of crew and/or technical ship management services, dividends paid

directly or indirectly out of such profits and interest earned on funds used as working capital or for the payment of expenses relating to the management of the ships. The 10-year option rule also applies to eligible ship managers and the same penalties apply for early withdrawal.

BOOK REVIEW TH THE HE EVOLU HE EEVOLUTION TION N AND EQUIEQUI LIBRIUM OF COPYRIGHT IN THE DIGITAL AGE BY SUSY FRANKEL & DANIEL GERVAIS (EDITORS) (CAMBRIDGE UNIVERSITY PRESS, 2014)

R.R.P. £75.00 (£67.52 FROM AMAZON.CO.UK) he digital age has prompted new questions about the role and function of copyright, which has progressively increased its scope of protection over new technology and modes of distribution yet many copyright owners express dissatisfaction and consider that the system is not working for them. Meanwhile, many users of copyrighted material, and even some owners, consider that copyright gives too much protection and that the owners want too much. This book considers how copyright might evolve in the 21st century and how it might reach equilibrium between authors, owners, users and those who connect them. The essays here are by an interesting cross-section of experts, some of whom think that there should be no restrictions on the online use of copyrighted material while others argue that copyright owners should have total control over any use of the work. Copyright legislation clearly needs to evolve in the digital age, while balancing the interests of authors, owners, intermediaries and users of all types and this book makes a good contribution to the debate.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 85

S D

european ski resorts

N A

R L E T R N DE I W ON W

{LIFESTYLE}

IME T S . IT’ A E S AND

SUNyides T E G ana FORChloe P By

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

ND A E E IC M O YS O J N TO E

ON W SNO

AY! D I HOL G IIN K S A

SKIING BECAME A POPULAR RECREATIONAL ACTIVITY AND SPORT IN THE MID-1800S. AND NOTHING, IT SEEMS, HAS MANAGED TO REDUCE THIS FEVER

he air has cooled and sunset colours have softened, crystallising into the pastels of fading days, as the earth prepares to conjure and

burst forth autumn colours to accent our landscape. Gone are dreams of beaches littered with golden sand and turquoise sea, as hard working professionals look to the splendor that may be wrought, instead, from colder months. The natural association is, of course, skiing. And, thankfully for both novice and experienced lovers of this sport, luxury resorts are plentifully nestled throughout the world, most prominently on Cyprus’ doorstep, in Europe. Travelling over snow on skis has a rich and varied history dating back almost five millennia. Some sources suggest that whilst the origins of skiing are most commonly associated with having evolved from Scandinavian nations, there is evidence to

Y L A T I CORTINA D’AMPEZZO, ITALY

famous racing town and host of the 1956 Olympics, Cortina is the affluent destination of choice for Italians and foreigners alike. Still, Cortina’s reputation for everything else first and skiing second may have as much to do with relaxed Italian attitudes to skiing than the quality of what’s on offer. When holidaying, Italians are described as being as much focused on good food, plenty of socialising, and sunbathing, as they are on skiing. For ski-obsessed north Europeans, it leaves early morning, lunchtime and late afternoon slopes practically deserted for much of the season. A UNESCO World Heritage Site, with spectacular Dolomite landscapes, and a quaint town with up-market shops straight out of Milan, Cortina has excellent nursery slopes and long scenic runs for intermediates. How-

suggest that it may have been practiced as early as 600BC in Daxing’anling, in what is now China. Once purely utilitarian – a mode of transport in unforgivingly cold conditions – skiing became a popular recreational activity and sport in the mid-1800s. And nothing, it seems, has managed to reduce this fever. While Cyprus may be uniquely positioned to permit the adventurous at heart to engage in both sea- and ski-related activities within a few hours’ driving distance of each other, below are eight of the most luxurious and glamorous resorts in Europe, sure to enrich anybody’s vision of the pleasures of skiing in a true winter wonderland.

A ever, skiers should be wary of erratic snow records. Après-ski: Wine bars galore and discothèques aplenty, none are left wanting for Après-ski in Cortina. Bars Enoteca and Lovat come highly recommended, as well as clubs Hippo and Limbo. On some nights there ice disco dancing at the rink, which makes for an entertaining evening. Where to stay: The Miramonti Majestic Hotel is a few minutes out of town but is simply magnificent. The five-star Grand Hotel Savoia, and the five-star Rosapetra Spa-Resort also come highly recommended for their warmth, charm, and chic decour. Getting there: The nearest Italian airports to Cortina are Canova di Treviso (136km – 1 hour 45 minutes transfer time) and Venice Marco Polo airports (148km – 1 hour 50 minutes transfer time).

LECH ZÜRS AM ARLBERT, AUSTRIA

hilst devoid of the ostentatious aura befitting that of St. Moritz or Courchevel, Austria’s Lech Zürs am Arlbert (Zürs for short) is one of the country’s most exclusive ski resorts. Described as being small though perfectly formed, Zürs is, in essence, a collection of extremely expensive hotels, favoured by the wealthiest of visitors. The neighbouring village of Lech was a favourite of Princess Diana and also featured in the film Bridget Jones: The Edge of Reason. With some 34 lifts (18 chair lifts, 11 surface lifts) that offer skiers an impressive 730 metres of vertical descent, Zürs

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 87

european ski resorts

has 54 pistes with a total length of 110 kilometres. Zürs is depicted as being best suited for intermediate skiers and snowboarders but there is also a lot of terrain for beginners and experts too. Après-ski: Sophistication incarnate, most feel content to lap up the luxury of their lavish hotel. Enjoy evening drinks in the Hotel Montana’s piano bar and dine on roast sucking pig or veal at Hotel Zürserhof (jackets mandatory). Where to stay: The five-star Hotel Zürserhof is considered to be on a par with the world’s most luxurious mountain abodes. The best room in the house is the Royal Suite (two-beds, two-baths) with an open fireplace, sauna/steam cabin and your own personal butler (€3,200 per night). Getting there: The closest airport is Zurich. Transfer time is 3 hours.

ST. ANTON, AUSTRIA

Depicted as a “riotous extreme skier’s paradise”, St. Anton has become famous for its perfectly groomed pistes, traditionallystyled hotels, and range of fist-class restaurants. St Anton’s impressive ski area, extensive off-piste and high annual snowfall positions it as one of Europe’s best ski areas for challenging on- and off-piste skiing and snowboarding with around 280km of piste skiing, huge amounts of off-piste and over 1,500 vertical metres served by 85 ski lifts throughout the Arlberg, including nearby

E C N FRA COURCHEVELL 1850 1850, FRANCE Although Courchevel consists oof four satellite villages — Courchevel Le Praz, Courchevel 1550, Courchevel 1650 and Co Courchevel 1850 — it is most famous for its highest high resort, the exclusive village of Courchevel 11850 (named for its altitude). Affectionately dubbed the “St. Tropez T of winter sports”, Courchevel 185 1850 attracts arl d is credited d d as being the istocracy galore, and

Stuben and the neighbouring ski resort of Zürs. Après-ski: There are approximately 70 restaurants to choose from, including restaurants in more than twenty leading hotels. For excellent food and wine in a wonderful traditional setting, book a table for dinner at The Hospiz Alm in nearby St Christoph. Where to stay: The family-run, five-star Raffl’s St Antonerhof perfectly combines Tyrolean tradition with modern charm, whilst the 17-room, ski-in/ski-out Das Mooser Hotel is depicted as being chic and welcoming, boasting, furthermore, a superb spa and restaurant Getting there: The nearest airport to St. Anton is Innsbruck, which is approximately 100km away. There is also a shuttle bus from Zurich airport (200km), which will deliver you to St. Anton in just over 3 hours.

OBERGURGL, AUSTRIA

Obergurgl is credited as being the highest parish in Europe and, as such, enjoys an enviable snow record. The season opens at the beginning of November and closes come May. Combined with its modern snow

6th most expensive place in the world, leaving behind locales such as Hong Kong, Cannes and Tokyo. Beginners, intermediates, and advanced skiers will be in their element, with a range of piste and off-piste choices, plus an excellent lift system that is more often than not described as being queue-free. Après-ski: With a total of seven restaurants sharing 11 Michelin stars, guests of Courchevel 1850 are spoilt for choice. Lunch at the two-Michelin-star Airelles restaurant (in the eponymous six-star hotel) with its Hermès tableware, and Saint Louis chandeliers can’t go amiss and, following a long day of skiing, head to the to the terribly chic wine and piano bar, Le Piggy’s. For those feeling adventurous (and with €2,000 to spare), the Les Caves nightclub stocks Nebuchadnezzar (15ltr) Moët. Courchevel also hosts a variety of luxury shops including Louis Vuitton, Hermes, Valentino,

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

making equipment and the lack of queues, Obergurgl is praised for being especially good for the beginner and intermediate skiers who will love the long, wide motorway pistes. The ski area totals approximately 55km of marked pistes, with 90% covered by artificial snow cannons. Après-ski: The à la carte restaurant, Edelweiss and Gurgl is Gault Millau-rated and uses mainly local produce to create its traditional Tyrolean specialties and international dishes. Where to stay: All the accommodation is of high quality and it is a popular destination year round for spa visits. Hotel Bergwelt is a small luxury hotel renowned for both its cuisine and wine cellar and has a pool and a modern spa over three floors. The Chalet at 11° East, meanwhile, is a luxurious British-run private chalet sleeping up to 10 people. Its ski-in/ski-out location in Obergurgl on the piste right by the children’s ski school makes it ideal for families. Cost from €16,000 for the whole chalet, half-board. Getting there: The nearest and most convenient airport for visitors is Innsbruck airport, which is 97 km away (about 1.2 hours by car or taxi).

Prada, Cartier, Fendi, Dior, and Chanel.

Where to stay: The resort has a pleth-

ora of hotels bestowed with a 5-star ranking, and is also home to two out of France’s eight ‘palaces’ – prestigious six-star rated hotels – Chavel Blanc, and Airelles. Les Grandes Alps also comes highly recommended due to its location and excellent spa area. Le Kilimandjaro is another favourite, where individual chalets (sleeping 12) may be booked at a cost of €11,300 per night. Chalets include a private butler. Getting there: Whilst Courchevel does have its own airport, it may only be reached by private plane, due to its extreme nature. In fact, the History Channel programme, Most Extreme Airports, ranks it as the 7th most dangerous airport in the world. Best to head for Geneve Cointrin Airport, France – approximately 149 km away – or Grenoble Airport at a distance of 130km.

ND KLOSTERS, SWITZERLAND

All the experts agree: Klosters is the traditionalists’ safe haven. A charming chalet-style village (linked with Davos, and now mostly marketed jointly with its neighbour), the resort moreover boasts great off-piste with lovely runs to nearby Arosa and Gargellen in Austria. Royals flock in their masses to avail of its charisma, most notably the Prince of Wales, Charles, and the Duke and Duchess of Cambridge, William and Katherine. At an altitude of 1,560 metres, Klosters is one of the highest Alpine resorts in Europe; a vast network of ski slopes. Whilst intermediates and advances skiers would approve, beginners may find the slopes a little challenging. Après-ski: The Casa Antica nightclub was reportedly a favourite of Princess Diana, whilst the Chesa Bar in the Chesa Grischuna Hotel is another staunch hangout of the Royal family. Where to stay: Reserve a suite at the elegant Hotel Walserhof with its panoramic mountain views and Michelin-starred restaurant at some €995 per night. Getting there: Klosters ski resort lies 150 km from Zurich, the nearest international airport. Transfer time is approximately 1.5 hours.

wealthy, as well the host of the prestigious St. Moritz Polo World Cup on snow. Feel the sun on your face and the powder under your feet as you avail of the region’s 350 km (217 miles) of ski pistes. Thanks to its altitude of between 1,800 and 3,303 metres (above sea level, snow is guaranteed. Après-ski: Enjoy an after-dinner drink at the Altitude Bar in the Kulm Hotel with live piano music (gentlemen must wear jackets and ties) then test your luck at the Casino St. Moritz in the Kempinski Grand Hotel des Bains. Where to stay: With its breathtaking views and 150-year tradition of hospitality, the €1,750 per night Kulm Hotel St. Mortiz in the heart of town is a must. Getting there: The nearest airport is Zürich, approximately 125 miles away from St Moritz. The train transfer from Zürich takes four hours but is a scenic route, taking in soaring bridges, extraordinary gorges and glaciers.

The majesty of St. Moritz is irrefutable. Boasting a ‘champagne climate’ (that is, dry air and sunshine), St. Moritz is, further to providing for fabulous skiing, embellished with high-end boutiques often frequented by the world’s most

BOOK REVIEW 755 THE CHILDR CHILDREN ACT BY IAN MCEWAN (JONATHAN CAPE, 2014)

R.R.P. £16.99 (£8.49 FROM AMAZON.CO.UK)

ZERMATT, SWITZERLAND

ST. MORITZ, SWITZERLAND

white truffle shavings at Chez Vrony. The Vernissage is a particular treat, rolling a cinema, bar, restaurant, and gallery all into one. Where to stay: The Chalet Zermatt Peak is a private catered residence costing more than €165,000 for two weeks in the high season, and is the most expensive in the Zermatt high-price segment. Highlights include a walk-in wine cellar, three HD cinema areas and a wellness centre. Getting there: Geneva or Zürich airports are the closest to Zermatt. Approximately 3.5 hours transfer time should be factored in.

Zermatt: the jewel in Switzerland’s ski resort crown. Hailed as one of the world’s best ski resorts, Zermatt may have initially become known for its uniquely prominent mountain peak, the Matterhorn, though it has succeeded in earning its reputation and worldwide recognition based on its own merits. The atmosphere embodies old-world charm, with class and warmth oozing along its little network of streets decorated with glistening lights. At an altitude of 1,620 metres, Zermatt is traffic-free and boasts a huge interlinked ski area and outstanding mountain scenery. That said, beginners may find some of the pistes challenging. Après-ski: A gourmet’s heaven, guided gastronomic ski tours are available, through which guests can sample sweetbreads with morel cream sauce at Zum See, and risotto with

iona Maye, a high court judge, is shocked when her husband of 30 years tells her that he needs the excitement VM H WHZZPVUH[L HɈHPY HUK [OH[ PM she is not interested in improving their sex life, she should allow him [V M\SÄS OPZ KLZPYLZ <UZ\YWYPZPUNS` ZOL [LSSZ OPT [V SLH]L >OPSZ[ [Y`PUN to come to terms with the situation, -PVUH PZ YLX\PYLK [V [Y` H KPɉJ\S[ case involving a seventeen-yearold boy with leukaemia who, as a Jehovah’s Witness, is refusing a blood [YHUZM\ZPVU [OH[ JV\SK ZH]L OPZ SPML She decides to visit him in hospital HUK KLLWS` HɈLJ[LK I` [OL IYPNO[ articulate young man, she makes a decision that sets in motion a chain of events which has far-reaching consequences for herself and those HYV\UK OLY ;OPZ OHZ LJOVLZ VM Enduring Love and other McEwan books about the strange bonds that can develop between people in odd ZP[\H[PVUZ ;OL H\[OVY»Z THU` HKTPYLYZ will not be disappointed by his latest ^VYR ^OPJO KLHSZ ^P[O JVUÅPJ[Z between the law, religion, morality and character with his usual exceptional ZRPSS

Source: Websites Ultimate Ski, The Telegraph, and On the Snow were consulted in compiling this listing. THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 89

A Day in the Life

Nicolas K. Theocharides The &KLHI ([HFXWLYH 2IĂ&#x20AC;FHU of Ultimate Performance Management (UPM), on taking care of other SHRSOHÂˇV PRQH\ WKH MR\ RI FRRNLQJ and why he has no regrets about quitting the bank he served for 19 years.

â&#x20AC;&#x153;I live in Nicosia with my wife and two sons. I wake up at 5.50am and get out of bed around 6.15am which is the best time to talk to my wife, who leaves home at 6.45am (sheâ&#x20AC;&#x2122;s a head teacher) just as Iâ&#x20AC;&#x2122;m going out for a brisk 45-minute walk with the dog which puts me in a good mood. I arrive at work at 8.30, by which time we know what happened in the previous dayâ&#x20AC;&#x2122;s European and US markets, Japan has just closed, China is still in full swing, Moscow is opening and India has just opened. Itâ&#x20AC;&#x2122;s an around-the-clock process and geopolitical events are having an increasing effect on the markets so itâ&#x20AC;&#x2122;s important to keep informed. When I received an offer and a scholarship from the University of East Anglia I decided to study Economics with a minor in Law. I saw this as an interesting and unusual combination and, indeed, it gave me a very good start to my professional career. When I came back to Cyprus and I got a job with a local bank, where I spent 19 years, eventually launching the international business department in Nicosia when business from Russia was starting to have a real effect. I then moved into private banking and, an in 2007 â&#x20AC;&#x201C; when everyone th thought I was committing the gravest error of them all! gra â&#x20AC;&#x201C; I decided to leave. I had received

offers from two Swiss banks to go and work in Zurich but I also had a proposal from some very important clients whom I trusted to start UPM. I viewed it as an exciting challenge and I accepted. Of course, at the time, nobody could have predicted the global crisis and depression that was to follow, but I have never regretted my decision. By mid-morning I have made up my mind which decisions need to be acted upon. We do frequent portfolio reviews, looking at specific positions from both a short-term and long-term perspective and these may dictate buy and sell positions. We also have regular communication with our clients to discuss strategy, our view of the markets, how the global economic environment is affecting their specific portfolio, etc. On a continuing basis, we also review the standing of our counterparties, especially the banks with which we keep our clientsâ&#x20AC;&#x2122; money and investments. The greatest part of the day is spent in this way. Looking after other peopleâ&#x20AC;&#x2122;s money requires us to be even more vigilant than we would with our own money. The stakes are high and the sums are big. Itâ&#x20AC;&#x2122;s hard-earned money that people are entrusting us with and we have to live up to and exceed their expectations. In an increas-

Still my y favourite instrument instr

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

Still my favourite band

ingly more regulated environment, we are also having to spend more and more time on compliance issues. I leave the office anytime between 5.30pm and 7.00pm, but in the age of the tablet and the smartphone, you donâ&#x20AC;&#x2122;t need to physically put work in a briefcase and take it home with you. I always check my e-mails, even before going to bed, so that if there is anything that needs my attention I can deal with it. In this business, youâ&#x20AC;&#x2122;re on call all your waking hours! My wife invariably works far

One of the excellent TV series that I have enjoyed recently

beyond her official finishing time, so in the evening I may be the one who cooks for us. Itâ&#x20AC;&#x2122;s something I have enjoyed since my student days and I think Iâ&#x20AC;&#x2122;m pretty good at adapting recipes. I listen to music a lot. I played the cello for seven years at school and I still enjoy many of the works that we performed. As a teenager I used to listen to â&#x20AC;&#x2DC;60s pop music but now I prefer â&#x20AC;&#x2DC;70s and â&#x20AC;&#x2DC;80s rock. Queen are among my favourites â&#x20AC;&#x201C; Freddie Mercuryâ&#x20AC;&#x2122;s voice was amazing. I read far less than I used to but I still enjoy a good thriller by John Grisham, Dan Brown, Jack Higgins and Jeffrey Archerâ&#x20AC;Ś My wife and I have got into the habit of watching TV series together: House of Cards, Breaking Bad, Fargoâ&#x20AC;Ś My all-time favourite British series is Fawlty Towers. I have just started to get back into cycling, having come to a recognition that we have to do the best that we can for our health. I gave up smoking in 2007 and thatâ&#x20AC;&#x2122;s been going well so far. I am very happy with what Iâ&#x20AC;&#x2122;m doing. I also gain a lot of satisfaction from my membership of the Board of Directors of CIPA, which also takes up quite a lot of my time. Itâ&#x20AC;&#x2122;s a big challenge to try to attract investors to Cyprus but I believe itâ&#x20AC;&#x2122;s one that we will win. Catastrophes of all kinds have always come and gone. If we put things into perspective and see that, while things may be tough for a while there is an opportunity to do things better and achieve something, weâ&#x20AC;&#x2122;re halfway there.â&#x20AC;?