Shortage of skilled staff, digital strucuture are obstacles to investment in Cyprus, EIB survey finds

Obstacles to investment and business areas ripe for improvement have been identified by the European Investment Bank’s Investment Survey 2024's data on Cyprus.

Newly released, the EIB’s Investment Survey 2024 paints a picture of the leadership of EU businesses, among other things, in the green transition and the reinforcement of their supply chains in the face of heightened geopolitical risks and supply-chain disruptions.

The Survey, among other things, identified what firms in Cyprus consider to be the main obstacles to investment, with a whopping 91% citing ‘Availability of skilled staff.'

Also, while Cyprus topped a number of positive lists within the Survey, the country also stood out in others that indicate action should be taken to improve the island's attractiveness to investors and otherwise improve its business prospects.

For example, Cyprus was in last place in the category of ‘Innovation activities,’ and near the end of the list in the category of ‘Use of advanced digital technologies.’ The country also generally performed poorly in terms of the measures companies are taking to in the green transition and to protect and improve the environment.

Looking at the Survey's findings on Cyprus in more detail, Cyprus was in last place in the category of ‘Innovation activities,’ with firms reporting that 45% of their total investment in the last financial year was for developing or introducing new products, processes or services. A further 49% was invested in products, processes or services new to the firm. Hungary was in first place with 81% of their total investment in the last financial year was for developing or introducing new products, processes or services.

Cyprus was also close to the end of the list in the category of ‘Use of advanced digital technologies,’ with firms reporting that they used multipe digital technologies within their business amounting to only 41% compared to 65% in Czechia but also ahead of eight other countries, including Greece in last place with 30%.

Also, when it comes to ‘Use of advanced digital technologies,’ Cyprus firms reported the significant use of only virtual reality and big data.

In the ‘Obstacles to investment,’ section, 91% of Cyprus firms mentioned ‘Availability of skilled staff,’ 86% ‘Energy costs,’ and also 86% mentioned ‘Uncertainty about the future,’ 69% ‘Business regulations,’ 66% ‘Labour regulations,’ 64% ‘Availability of finance,’57% ‘Transport Infrastructure’ and another 57% also ‘Demand for products or services,’ and 51% mentioned ‘Digital infrastructure.’

Cyprus performed poorly when it comes to ‘Measures to reduce greenhouse gas emissions – any measure,’ in third last place being ahead of only Latvia and Greece in terms of firms having taken measures to reduce emissions.

And, while firms in Sweden lead the way, with 60% of firms setting and monitoring greenhouse gas targets, Cyprus is last in Europe and ahead of only the US, with only 21% of the firms setting and monitoring these targets.

Slovenia, Germany, Lithuania, France, Austria, Finland and Malta show the highest shares of both investment and investment plans to deal with the impact of climate change and reduce carbon emissions. By contrast, Cyprus lags behind significantly, with the lowest share of firms that have invested or are planning to invest in climate action, the Survey’s section on ‘Investment plans to deal with climate change impact’ shows.

Cyprus did not particularly stand out when it comes to ‘Risks associated with the transition to a net zero emission economy over the next five years.’ While firms in Sweden and Finland are most likely to see opportunities in the net zero transition, more than half of firms in Lithuania perceive that the transition to a net zero emission economy represents a risk. In Cyprus 30% of firms perceive the transition as representing a risk, 43% perceive no impact and 27% see the transition as an opportunity.

The ‘Share of firms investing in measures to improve energy efficiency,’ section sees Cyprus in the second half with 47%, compared to Finland, Denmark, the Netherlands and Slovenia where around six in ten firms invested in energy efficiency improvements in 2023 but ahead of countries including Luxembourg where the percentage stood at just 27%.

The country performed worse when it came to ‘Share of investment in measures to improve energy efficiency,’ with Cyprus firms reporting 9% of their total investment in the last financial year was primarily for measures to improve energy efficiency in their organisation.

Cyprus was just past the middle of the graph when it comes to the ‘Impact of climate change- physical risk,' with Portugal and Spain reporting the highest share of firms impacted. The lowest share was held by Latvia and Czechia.

In the section ‘Energy audit,’ meanwhile, Croatia, Hungary and Denmark stand out for conducting energy audits, with at least two-thirds of firms in those countries having conducted one in the past three years. By contrast, only around a quarter of firms have undertaken such assessments in Czechia and Luxembourg. Cyprus was just beyond the halfway mark with 46% of the country’s firms reporting such an audit compared to 69% in Croatia and 24% in Luxembourg.

Also read: EIB Investment Survey 2024: More than 70% of European companies have invested in their digital transformation