OECD Product Market Regulation (PMR) Indicators: How does Cyprus*+ compare? ___________________________________________________________________________________ Competitive product markets foster economic growth Overall PMR Indicator and can improve the living standards of citizens. Index scale 0 to 6 OECD’s Product Market Regulation Indicators assess Cyprus 1.80 the alignment of a country’s regulatory framework with internationally accepted best practices. The EconomyOECD countries wide Indicator measures the distortions to competition that can be induced through the involvement of the Average 1.38 State in the economy, as well as the barriers to entry 5 Most competition1.00 and expansion faced by domestic and foreign firms in friendly countries 5 Least competitiondifferent sectors of the economy. This indicator is 1.82 friendly countries complemented by a set of Sector Indicators that 0.0 2.0 4.0 6.0 measures regulatory barriers to competition at the level of specific network and service sectors. * Footnote by Turkey: The information in this document with reference to "Cyprus" relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognizes the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of United Nations, Turkey shall preserve its position concerning the "Cyprus issue". + Footnote by all EU Member States of the OECD and the European Union: The Republic of Cyprus is recognized by all members of the United Nations with the exception of Turkey. The information in this database relates to the area under the effective control of the Government of the Republic of Cyprus.
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Cyprus
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Product market regulation in Cyprus is somewhat less competition friendly than in most OECD countries. While public ownership is less extensive than in most OECD countries, the government still owns some of the largest network operators. The administrative burden imposed on new firms is high and there is scope for better regulating the interactions between policymakers and interest groups. In addition, barriers in the service sectors are above the OECD average. However, efforts have been made to reduce the complexity of regulatory procedures and barriers to international trade and investment are low.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Cyprus
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Cyprus
Note: All the averages include only OECD countries. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS Overall, regulatory barriers to competition in the network and service sectors are higher than in many OECD countries. With the exception of accountants, professionals operate in a restrictive regulatory environment. Similarly, in many network industries there is scope for making the regulatory set-up more competition friendly.
Regulation in network and service sectors PMR Indicators for network sectors* Index scale 0 to 6 from most to least competition-friendly regulation 6
Cyprus
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5
4 3 2 1 0 Electricity
Air
Road
Energy
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services+ and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation 6
Cyprus
OECD average
5 most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2
1 0 Lawyers
Accountants
Architects
Civil engineers
Professional services
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* There is no natural gas sector and no rail sector in Cyprus. + When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Cyprus.
Strengths
Challenges
The regulatory framework in transport by water is competition-friendly and close to that of the best performing OECD countries. There are no major barriers to foreign entry, access to the market is regulated through a lean notification system, and the government does not own any player in the industry.
The administrative requirements necessary to start-up a new limited liability company are more burdensome than in most OECD countries, as seven bodies need to be contacted to fulfil all of them.
The government owns the largest operators in all the segments of the electricity industry and regulation is not in line with international best practice.
There is no regulation requiring transparency in the interactions between interest groups and policymakers, which may favour lobbying activities by incumbents.
Foreign suppliers face low barriers to enter both in the network and service sectors, less than in many OECD countries.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), "2018 Update of the OECD PMR Indicators and Database - Policy Insights for OECD and some non-OECD Countries", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org