Gold Magazine Issue 46 by INBusiness

ISSUE 46 JANUARY 14 - february 13, 2015 PRICE €4.95

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the international investment, finance & professional services magazine of cyprus

Diplomatic Advice 8 Ambassadors to Cyprus respond to...

10 AUSTRIA, FRANCE, ISRAEL, NETHERLANDS, SLOVAKIA, UKRAINE, USA, UK

Questions

on the Island’s Economy and Future MONEY

Economic & Investment Outlook 2015

INTERVIEWS

Howard Finger Alex Hooft van Huysduynen Theo Parperis

DINING

Europe’s Michelin *** Restaurants

Plus:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

www.pwc.com.cy

The tax system in Cyprus

Tax Facts & Figures 2015 - Cyprus

We in PwC are here to offer you the best of our knowledge and expertise. Our specialised tax solutions are adjusted to your own specific needs to support you in structuring your operations in an efficient way.

The guide is available on our website www.pwc.com.cy/tax-facts-figures

Issue 46 January 14 - February 13, 2015

6 EDITORIAL 8 UP FRONT

+ OPINION HOW TO DEAL WITH EUROPE’S AILING ECONOMY By George Theocharides 41 THE RISE OF FOREX By Olga Rybalkina

DIPLOMATIC ADVICE

For the first issue of 2015, we asked eight ambassadors – or, more precisely, seven ambassadors and one High Commissioner – to respond to 10 questions relating to the island’s economy, its aspirations for recovery and the possibility of long-hoped-for reunification this year.

47 | BEAUTIFUL VILLAGES OF CYPRUS

56 | BRAND NEW WORLD International Brand Expert Martin Lindstrom, named in 2009 as one of TIME Magazine’s “World’s 100 Most Influential People” will lead the 2nd Brand Congress in Nicosia.

58 | PAFILIA TOWER: BEHIND THE SCENES A look into the making of a worldclass mixed-use development on Limassol’s coveted seafront.

EU project ends

48 | THE ART OF WEALTH PRESERVATION

In today’s financially volatile environment, successful business owners and High Net Worth Individuals are, more than ever, turning to the experts to draw up a strategy that will enable them to protect their personal wealth.

FEATURES 24 | ECONOMIC & INVESTMENT OUTLOOK 2015 Advice from the experts on where to put your money.

38 | VENI, VIDI, VINCI VinciWorks is a leader in facing the challenge posed by regulatory compliance across financial and professional fields.

42 | REALITY CHECK REQUIRED Despite the indisputable problems in the eurozone, the latest edition of the EY Eurozone Forecast does find some reasons to be positive.

44 | NOT ANOTHER 1998 History will not repeat itself for Russia in 2015, says Dr. Savvas Savouri.

52 | LOVING & GIVING

Andrey & Julia Dashin’s Foundation donated €200,000 to charitable causes in the first eight months of its existence last year. The Russian businessman tells Gold about why he decided to set up the Foundation and explains how it works.

54 | IS EUROPE ON THE RIGHT PATH? The new Juncker Commission and its objectives have raised many doubts about the direction in which Europe is going. Some critics are questioning whether they have even got the economics right, especially with regard to the contribution of resource efficiency.

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

52 64 68 72 74 78

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

EDITORIAL

A New Era?

ISSUE 46 JANUARY 14 - FEBRUARY 13, 2015 PRICE €4.95

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THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Diplomatic Advice

n his televised New Year message, President Anastasiades gave a very upbeat assessment of 2014, noting that, “The economy is now stabilized; Cyprus has returned to the markets; our financial system has been consolidated and made great progress; the international Rating Agencies and our international lenders are, at last, giving Cypriot banks and our economy continuously positive evaluations. As we enter 2015, Cyprus is turning a page. We are entering a new era”. Fine, encouraging words, based on fact. But one does not “enter a new era” simply by saying so and it would appear that, as he approaches the second anniversary of his election as President, Anastasiades has come to realise what all successful politicians discover: it is much easier to be in opposition than in government. His surprising declaration of willingness to form a more broadly-based government – his first announcement on returning to Cyprus following heart surgery in New York – suggests an awareness that, unless he gets the opposition parties involved in the difficult reforms that need to be implemented this year in accordance with the 2013 bailout agreement, the country will not only see its reputation eroded once again but will find itself in need of essential funding. AKEL and the smaller parties, with the support of the media, have been doing their best to prevent the Government from honouring its signature to the agreement by which Cyprus will receive €10 billion and they have made clear their intentions to continue on this course, no matter the cost to the nation. Fortunately, the stance of the Democratic Party (DIKO) has been a more responsible one (its MPs voted for the 2015 budget), despite the sometimes confusing rhetoric of its leader Nicholas Papadopoulos but, without an outright majority to support him, Anastasiades finds himself in a difficult position: the Government is committed to civil service reform, privatisation, and updating legislation on many issues but it is faced by a parliament whose members are happy to criticise without submitting any viable alternative proposals. Will the island’s political party leaders come together in a spirit of unity? It is extremely doubtful, given their record so far, with the 40-year-old situation since 1974 being a perfect example of the extent to which they are willing to put national interests above their own. We are likely to see another 12 months of gamesmanship, during which our international lenders grow increasingly impatient with our inability to keep our word while the parties resort to their populist slogans, as if they will magically get rid of the Troika, pay off all our debts and, of course, get themselves re-elected. If we think our parliamentary representatives are not fit for purpose, however, it is worth taking a look at what is happening in Greece where, later this month, yet another general election is due. The mere possibility of the anti-Troika opposition coming to power has already slashed millions off Greek share prices and once again there is talk of a possible default on the country’s huge debt and its exit from the eurozone. This time, however, even Germany seems willing to let it happen, knowing full well that a return to the drachma will mean even more austerity than Greece is experiencing now. It is to be hoped that the members of the Cyprus House of Representatives do not see their Greek counterparts as representing some kind of heroic defiance in support of the country’s sovereignty and thus decide to follow their example. The whole point of entering a new era is for it to be better than the old one. The uncovering of widespread corruption over the past 12 months suggests that, in many ways, it will be better. But ultimately, it will take a new attitude by those who pass legislation to shoulder their responsibilities.

John Vickers, Chief Editor john@imhbusiness.com

8 AMBASSADORS TO CYPRUS RESPOND TO...

10 AUSTRIA, FRANCE, ISRAEL, NETHERLANDS, SLOVAKIA, UKRAINE, USA, UK

Questions

ON THE ISLAND’S ECONOMY AND FUTURE MONEY

INTERVIEWS

DINING

Economic & Investment Outlook 2015

Howard Finger Alex Hooft van Huysduynen Theo Parperis

Europe’s Michelin *** Restaurants

PLUS: MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

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2014 KPMG Compensation and Benefits Survey Following the successful completion of KPMG’s Compensation and Benefits Survey in 2008, 2009 and 2011, KPMG’s People & Change Practice announces the launch of the 2014 KPMG Compensation and Benefits Survey. The KPMG Compensation and Benefits Survey is the only large scale compensation survey which provides representative data for the Cyprus labor market. The Survey’s participants are companies of all sizes operating within different sectors of the Cyprus market thus allowing our expert Advisors to tailor the positions analyzed and the information presented within the report to the specific needs of the Cyprus labor market. Aiming to provide our clients with valuable and significant information which will enable their companies to build a competitive advantage in the labor market, the main objectives of this year’s Survey are the following: •

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To present the common policies, practices and strategies of compensation and benefits implemented by a representative sample of companies operating within the Cyprus market; To present remuneration and benefits data of 180 generic and industry-specialized positions; and To present the impact of the economic crisis on remuneration and benefits data.

We would be honored to have your company participate in the Survey, by providing us with all the required information. All participants shall benefit by participant specific prices for the purchase of the final report and publicity upon the announcement of the Survey’s results. For more information, please contact us: George Tziortzis Board Member Head of Management Consulting T: 22 209292 E: gtziortzis@kpmg.com Marios Papalazarou Associate People & Change T: 22 209107 E: mpapalazarou@kpmg.com

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Management Consulting People & Change Services

UP FRONT

Alpha Bank Cyprus to Absorb Emporiki Cyprus

ANASTASIADES TO SEEK ‘CONSENSUS GOVERNMENT’

resident Nicos Anastasiades announced just before Christmas that he intends to hold talks with the island’s political leadership in a bid to form a consensus government early in 2015. The announcement

came just hours after he returned to Cyprus from New York where he underwent open heart surgery. “The problems facing the country cannot be left in the hands of one person,” he said, adding that a consensus government or one enjoying broad approval would be the

best way to overcome the country’s political, economic and social problems. Anastasiades also stated his intention to re-model [OL WYLZPKLU[PHS VɉJL VU the pattern of those in other developed countries and to press ahead with civil service reform.

lpha Bank Cyprus’ Board of Directors has approved the acquisition of Emporiki Cyprus, the subsidiary of Greece’s former Emporiki Bank, which has been acquired by the Alpha Bank Group. Alpha Bank Cyprus will acquire 100% of Emporiki Bank’s shares via absorption, a move that constitutes part of the general restructuring plan spearheaded by Alpha Bank Group. The acquisition remains subject to regulatory approval by the Central Bank of Cyprus.

EIB GRANTS €80M LOAN TO UNIVERSITY OF CYPRUS

he European Investment Bank (EIB) will grant a loan of some €80 million to the University of Cyprus following the signing of a relevant funding agreement for the expansion and modernization of the University’s facilities. At a ceremony held last month, the agreement was signed by EIB President Werner Hoyer, Finance Minister Harris Georgiades and University Rector Constantinos Christofides. The project, which is the largest EIB investment in Cyprus to date, includes the construction of new buildings, a photovoltaic park and the upgrading of existing facilities to enhance energy efficiency and earthquake protection. Harris Georgiades told those at the signing ceremony, “Most importantly, we are investing in the economy of knowledge,

giving impetus to research and innovation, investing in the human capital of our country and its new generations; this is the best investment a state could make, as it is directly related to the promotion of a new, more sustainable and competitive economic growth model that Cyprus so desperately needs.” For his part, EIB President Werner Hoyer said that the agreement dispels the myth that the bank is only interested in funding large infrastructure projects: “The truth is rather the opposite,” he said, “as for nearly fifteen years the bank has been focusing a large portion of its activity

on the knowledge economy. Clearly Europe needs to find a way to increase productivity if it is to achieve sustainable growth and one of the solutions is to facilitate investment in areas such as research, innovation and education.”

COOPERATIVE BANK REBRANDING

he Cooperative Central Bank (CCB) launched its new, rebranded corporate identity at an event organised last month at the University of Cyprus. The bank’s new image is described as “the culmination of the efforts of the past 12 months which have “transformed the cooperative sector into a robust organisation that looks to the future with confidence and optimism”. The island’s cooperative sector has taken a momentous leap forward

in the past year, CCB Chairman Nicholas Hadjiyiannis told the gathering. Having emerged from the challenges of the economic downturn in Cyprus, the CCB has now laid solid foundations for the profitable future of the sector, he added. “We are the largest financial institution in the island with regard to the number of customers and extended branch network. We are, and remain, the most reliable organisation that focuses on its people,” Hadjiyiannis concluded.

NEW LARNACA

ROUTES

TO BRISTOL, KATOWICE AND SOFIA

homson and First Choice are to launch a new route between Bristol, UK and Larnaca next winter. The ;OVTZVU (PY^H`Z ÅPNO[Z [V 3HYUHJH ^PSS JHWP[HSPZL VU [OL popularity of Cyprus, while feeding Thomson Cruises’ ‘cruise and stay’ programme in the region, which includes calls at Ashdod in Israel and Athens. Meanwhile, Wizz Air, one of the largest low-cost airlines in Central and Eastern Europe, has announced that from June 24 2015, it will begin operating a new twice-weekly route from Katowice to 3HYUHJH ;OL ÅPNO[Z Z[HY[PUN MYVT Á WLY WLYZVU ^PSS VWLYH[L VU Wednesdays and Sundays. The same airline recently revealed that, as from April, it will operate a UL^ :VÄH 3HYUHJH ÅPNO[

10th ANNIVERSARY CELEBRATIONS FOR GRS lobal Recruitment Solutions (GRS), the largest recruitment consultancy in Cyprus, recently celebrated its 10th anniversary. Co-founders Donna Stephenson and Steve Slocombe, along with the employees of the GRS Group (which includes Global Recruitment Solutions, Fairfax Yeaman and FX Careers), enjoyed a private event held

G GRS co-founders Donna Stephenson and Steve :SVJVTIL WYLWHYL [V J\[ [OLPY ÄYT»Z [O IPY[OKH` JHRL

at Dino Art Cafe in Limassol. It was an evening of awards and congratulations for a decade of hard work and dedication, especially by the company’s top performers: Philippa Stephanou, Top Consultant 2014 and Top Consultant of GRS’s first 10 year; Caroline Rafferty, who took second place for her recruitment performance; Hayley Buckle, third for her recruitment

performance; Top Temporary Worker Consultant Scott Gray for his excellent efforts in supplying personnel to emergency energy projects in Cyprus and overseas as well as to infrastructure projects in Cyprus. A further award was presented to Nicoletta Demetriou FCCA, Director of Fairfax Yeaman, for the company’s outsourced payroll services.

COLUMBIA SHIPMANAGEMENT OPENS

SHANGHAI OFFICE imassol-based Columbia Shipmanagement ended 2014 on a high note, having inaugurated a new office in Shanghai in collaboration with the Shanghai Marine Services. More than 150 guests attended the Columbia Shipmanagement

(Shanghai) Co. Ltd. office opening, including leaders and guests from the Shanghai maritime and shipping industry as well as numerous Chinese and international dignitaries. Through the new partnership, Columbia Shipmanagement will build on its longstanding relationship

with China, which began in 1987 and has continued over the years through 130 new ship building and supervision projects. An official statement confirms Columbia Shipmanagement Shanghai’s intention to operate to the same high standards and quality systems of the Columbia

Group, ensuring that the company’s Chinese clients receive quality and highly competitive services delivered in a professional and transparent manner, adding value to their assets and contributing to the success of their organisations.

UP FRONT

MERITKAPITAL NAMED â&#x20AC;&#x2DC;MOST PROGRESSIVE CYPRUS BROKERâ&#x20AC;&#x2122;

imassol-based investment firm MeritKapital Ltd (MK) has been named Most Progressive Broker of Cyprus for 2014 by Global Financial Market (GFM) Review. The recognition is largely attributed to the versatility of the financial products and regions across which MeritKapital is able to render its brokerage services.â&#x20AC;&#x153;Particularly on the fixed income side, MeritKapital is well-versed in Russian and CEE corporate and sovereign

paper on both the domestic and Eurobond markets. A strong network of trading lines with Western, Russian and CEE major banks and of agreements with renowned international custodians facilitates this continuous growth,â&#x20AC;? a company statement reads. Moreover, on the equity side, it explains, MeritKapital offers global DMA solutions across multiple trading platforms which may include Bloomberg EMSX, Reuters or Quik. The GFM awards are voted for by peer industry firms, invited to identify the best players in the sector.

â&#x20AC;&#x153;INTERNET ILLITERACYâ&#x20AC;?

RIFE IN CYPRUS

espite its strong telecommunications infrastructure, Cyprus has perhaps surprisingly been evaluated as one of the EU countries with the highest proportion of â&#x20AC;&#x153;Internet illiterateâ&#x20AC;? people per capita in its population. According to YLSL]HU[ Ă&#x201E;N\YLZ W\ISPZOLK I` ,\YVZ[H[ [OL VÉ&#x2030;JPHS Z[H[PZ[PJHS VÉ&#x2030;JL VM [OL ,< ZVTL of Cypriots reported that they had no Internet experience at HSS >P[O H [V[HS VM VM [OL

SUSTAINABILITY AND FAMILY FROLICS aphos and Limassol were recently honoured with prestigious tourism awards. Paphos has been included in the Sustainable Destinations Global Top 100 list of tourist destinations recognised globally for their commitment to sustainability.Â The Paphos district was awarded a gold medal for the quality of its coast for 2013-2014 and additionally selected as one of the top 20 â&#x20AC;&#x153;most clean, green and in harmony with natureâ&#x20AC;? sustainable tourist destinations.

Additionally, the luxury fivestar Anassa hotel on the Paphos coast has been included in Tatler magazineâ&#x20AC;&#x2122;s listing of the best 101 hotels in the world and evaluated as the most attractive hospitality establishment for families in 2015. In the special editionÂ Tatler Travel Guide 2015, out now, the editorial team names Anassa the best â&#x20AC;&#x153;Family Frolicsâ&#x20AC;? hotel. â&#x20AC;&#x153;This hotel isnâ&#x20AC;&#x2122;t new, or boutique chic, or even particularly grand. But thatâ&#x20AC;&#x2122;s why we love it. It has staff whoâ&#x20AC;&#x2122;ve worked here forever, guests whoâ&#x20AC;&#x2122;ve been coming for aeons. Its family run, smart as a pin and adored by all,â&#x20AC;? the publication claims.

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

Limassol, meanwhile, has been chosen as one of the 10 Travelersâ&#x20AC;&#x2122; Choice Destinations on the Rise, based on the ratings and feedback received from TripAdvisor members regarding accommodation, gastronomy and activities in the area. â&#x20AC;&#x2DC;This valuable distinction serves as a reward for the ongoing efforts of all parties involved in upgrading the tourist product and repositioning Limassol as a cosmopolitan high quality sea side destinationâ&#x20AC;&#x2122;, said Maria Stylianou Michaelidou, Manager of the Limassol Tourism Board.Â

population having never used the Internet, Romania is the EU state with the highest â&#x20AC;&#x153;Internet illiterateâ&#x20AC;? section of the population. It is followed by )\SNHYPH HUK .YLLJL 0[HS` HUK 7VY[\NHS ([ [OL V[OLY LUK VM [OL ZJHSL PU +LUTHYR VUS` VM people have never used the Internet, followed by LuxemIV\YN [OL 5L[OLYSHUKZ HUK -PUSHUK :^LKLU HUK [OL <UP[LK 2PUNKVT ;OL ,< H]LYHNL PZ

UP FRONT

THE CASHLESS

SOCIETY

s certain start-ups threaten to make ATMs obsolete and Apple Pay is on the way, current

trends are seemingly pointing to a future with increasingly less cash floating around. For certain countries, however, that future is close to becoming a reality, as

UNITED KINGDOM 4 NON-CASH PAYMENTS’ NON-CASH PAYMENTS’ SHARE SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 89% OF TOTAL VALUE OF CONPERCENTAGE OF THE POPUSUMER PAYMENTS: 90% LATION WITH A DEBIT CARD: PERCENTAGE OF THE POPU88% LATION WITH A DEBIT CARD: From July 6, London buses stopped 88% CANADA

accepting cash as a valid payment, In February 2013, Canada requiring “Oyster Card” or a prepaid stopped minting and distributticket. It’s doubtful that too many ing one-cent coins, supposedly Londoners will care, however; only saving the country $11 million a year. The decision to phase out 1% of commuters used cash in 2014, compared to 25% in 2000. the coin was due to its excessive and rising cost of production relative to its face value.

relies on a debit card, here are the 10 countries leading the pack toward a nearly cashless economy, according to the recent MasterCard Cashless Journey report.

a number of them have shifted almost entirely toward non-physical payment. Based on the rate of cash-free transactions and the percent of the population that

SWEDEN NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 89% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 96%

BELGIUM

NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 93% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 86%

Belgium has a law limiting cash payments to €3,000. Belgian law provides for a remarkably hefty ﬁne of up to €225,000 for any violation.

Bank robberies in Sweden plunged from 110 in 2008 to only 16 in 2011, the lowest level since the country started recording its numbers in the early 1970s. The reason? Swedish banks are carrying less cash than ever before and there’s often nothing for would-be thieves to steal.

THE NETHERLANDS NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 85% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 98% 7

In Amsterdam, the city's parking meters no longer accept cash or coins. A number of retailers and restaurants in the city also refuse to take cash but Dutch customers have taken such policies in their stride, with 75% stating that they understand and accept the no-cash rules.

2 8

UNITED STATES NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 80% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 72%

The shift to electronic payments grew during the second half of 2014, with Apple announcing its new Apple Pay service and introducing, along with Microsoft and other tech companies, electronic watches with payment capabilities.

FRANCE

NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 92% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 69% France has a similar law to Belgium, preventing any cash transactions over €3,000 but it is not the most drastic of those in Europe: Spain has banned cash transactions above €2,500 and Italy does not allow cash transactions above €1,000.

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

South Korea would have been higher on the list had it not been for recent governmental initiatives aiming to rein in household debt by reducing the use of credit cards.

GERMANY NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 76% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 88%

Since 2012, visitors to Munich's Oktoberfest have not needed to carry cash for their drinks bill: merchants needed only an iPhone with an EMV chip reader plugged into it to accept credit or debit card payments, using technology from the German company Payworks.

SOUTH KOREA NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 70% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 58%

AUSTRALIA NON-CASH PAYMENTS’ SHARE OF TOTAL VALUE OF CONSUMER PAYMENTS: 86% PERCENTAGE OF THE POPULATION WITH A DEBIT CARD: 79%

Australian GenerationOne CEO Jeremy Donovan committed himself to living a cash-free life during November 2014. Many other organisations and individuals in the country committed to joining him in the challenge.