What millennial business leaders told the President about their view of the economy (pics)

Second- and third-generation leaders of major family businesses involved in a variety of industries recently met with President Nikos Christodoulides to offer their views and suggestions regarding the economy, the challenges facing their sectors and their expectations of the Government.

The eight young business leaders were George Theodotou, CEO, Alphamega Hypermarkets, Anna Mouskis, Marketing Manager, Muskita Aluminium Industries Ltd., Michalis Petrou, Commercial Manager, Petrou Bros., Evagoras Lanitis, Group Business Development Manager, Lanitis E.C. Holdings Ltd., Maria Zorba, Commercial Department, Zorbas Group, Marina P. Hajioannou, Director, Safe Bulkers Inc., Chryssie Jacovides, Legal Advisor, Special Project Executive, MSJ Group and Sophia G. Leptos, Executive Management, Leptos Group.

By 12:30, eight millennial business leaders had taken their seats at Nicosia’s Pralina Experience restaurant and were eagerly awaiting the arrival of President Nikos Christodoulides. Smiles and handshakes soon followed as he joined the group accompanied by the Secretary to the Council of Ministers, Penelope Papavassiliou, Deputy Government Spokesman Yiannis Antoniou, and the Head of the Office of the Deputy Minister to the President, Irene Georgalla. IMH CEO George Michail swiftly opened the proceedings, by inviting the young leaders to share their thoughts about the current state of the economy.

George Theodotou kickstarted the discussion by citing some positive official data: “Based on its latest projections, the Central Bank of Cyprus expects the country’s GDP to grow by 2.8% in 2024, compared with 2.5% in 2023, and an increase of 3.1% and 3.2% in 2025 and 2026, respectively.”

“The economic situation would have been even better, were it not for the exogenous factors of recent years – the pandemic, the war in Ukraine and the recent crisis in Israel – that have negatively affected not only the international but also the local economy,” stated Evagoras Lanitis, to be followed by Maria Zorba who emphasised the country’s competitive advantages. “Cyprus’ strategic location at the crossroads of Europe, Asia and Africa, along with EU membership, makes us an attractive hub for international business. The diversified economy, which includes strong sectors like tourism, shipping, financial services and an upcoming tech industry, offers numerous opportunities for entrepreneurs.”

The mention of shipping was not lost on Marina P. Hadjioannou, who was eager to confirm the importance of Cyprus’ maritime industry. “We are proud that, in a challenging global environment of increasing international competition, shifting trade patterns and new regulations, Cyprus has successfully established itself as a leading global maritime centre, attracting key industry players, generating significant investment opportunities and contributing to the country’s economy and welfare,” she told the gathering.

“Cyprus has become particularly appealing to foreign businesses wishing to set up headquarters,” Sophia G. Leptos noted, but Chryssie Jacovides was quick to warn that, “The current turbulent geopolitical environment and its economic repercussions pose significant challenges to the growth objectives of the Cyprus economy.” She went on to propose that, “We should focus on implementing the holistic digital transformation of the economy and the business environment and on further modernising our business, tax, legal and regulatory systems with the objective of facilitating business and increasing our competitiveness to attract both foreign and local investment”.

On hearing this, Evagoras Lanitis was quick to recall one of the Government’s promises: “Given the size of the economy and the need for foreign direct investment, I expect the Government to focus on what it has already announced under Vision 2035.”

Michalis Petrou then warmed to the subject, saying, “We expect the Government to provide support to Cypriot investors as well as to foreign ones. Cypriot investors have significantly contributed to the local economy over many years but it is the foreign investors who benefit from various incentives. This promotes uneven and unfair competition.”

Thus far, President Christodoulides had listened carefully as the family business leaders expressed their views and agreed with Michalis Petrou. “We do recognise the significance of family businesses and their long-time investment. We should support them as well as promote synergies and cooperation among Cypriot and foreign investors,” he told the gathering, before posing a question of his own: “What are the main challenges facing young business professionals such as yourselves?”

First to answer was Maria Zorba. “One of the main issues concerns navigating complex regulatory and outdated bureaucratic processes when establishing a new company, applying for permits, registering a trademark, etc. In many cases, processes have been digitised but, instead of making the experience more efficient and easier, it has resulted in digital bureaucracy and an overall bad experience.”

Anna Mouskis continued in a similar vein: “Navigating the bureaucracy and red tape associated with initiating new projects is a challenge. Procedural complexities often impede progress and delay the implementation of innovative solutions. Structural reform to reduce bureaucracy is a step in the right direction and one that will hopefully improve public sector efficiency and enhance the business environment,” she said, before adding, “It is regrettable that regulations in Cyprus are not consistently applied to all and the ability to get a job done often depends on personal connections. Companies are not uniformly held accountable to the same standards and, in some instances, even laws. It is crucial that the Government eliminates this type of corruption at all levels, to ensure fairness and transparency for all.”

Since the discussion was taking place in a restaurant, it was naturally interrupted on several occasions, once the various courses were being served, but it quickly resumed when the subject of technology came up. “The main challenge for young professionals/entrepreneurs is undoubtedly the rapid development of technology and the integration of AI into the operations of the organisations where they work,” George Theodotou observed. “The possibility of using AI in major sectors of the economy is impressive and we are only at the beginning. With specific reference to retail, AI is going to completely transform the sector in the future, affecting all links in the supply chain, from retailers and partner stakeholders to consumers. At this important juncture, it is therefore important to seize the opportunities being brought about by modern technology.”

At this point, Michalis Petrou commented on how rapid developments in technology have significantly affected both our personal lives and professional activities. “At the moment, the private sector is moving fast and the Government needs to keep up if we are to become a modern digitalised state,” he said, to which Maria Zorba responded by suggesting that the Government should increase support for innovation and technology, by providing tax incentives, credits for services or grants, given that investing in technology can be costly and requires continuous updates. She echoed an earlier comment, saying that, “Simplifying and streamlining regulations can reduce bureaucratic hurdles, enhance compliance and promote economic growth.”

In response to the President’s question, Chryssie Jacovides told him, “We expect the Government to focus on accelerating the pace of digital transformation across the public sector to create modern, digital government services.”

“Inflation, the energy crisis, and workforce issues are among the major challenges we face daily,” was Michalis Petrou’s response to President Christodoulides’ question. “In our sector, the prevailing issue continues to be the instability surrounding the Halloumi PDO. We hope for the further development of our national product, which we, as Cypriot producers, have proudly promoted and successfully positioned on the global cheese map.”

“What about the manufacturing sector?” asked the President, turning to Anna Mouskis.

“The Government needs to ensure conditions of fair competition and increase regulation along the Green Line regarding trade with the occupied areas,” she replied. “Aluminium systems manufactured in Turkey are managing to enter the Republic. Such products fail to adhere to the rigorous technical and environmental standards of those manufactured in Europe and, in some cases, are produced under lax working conditions, without strict environmental regulation and represent blatant infringements of our copyright.”

She went on to note the difficulties in recruiting and retaining talent. “Investing in people is key to both the transmission of knowledge, skills and expertise and to maintaining competitiveness in today’s global market. Finding talent and instilling pride in the technical professions is particularly challenging, as this line of work is often undervalued in our society. It is imperative that the Government supports the development of higher technical institutions or considers reopening institutions that produce skilled technicians.”

George Theodotou was quick to add that a similar problem exists in the retail sector. “There is a severe shortage of suitable labour, as the existing supply of workers cannot meet the ever-increasing demand, which makes it difficult for businesses to function properly, hindering economic growth,” he explained before acknowledging that, “Some steps have been taken to lay the groundwork for managing the problem in the long term and the competent ministry appears to be listening to the needs of businesses.” Nevertheless, he said, the complex and time-consuming bureaucratic procedures required for employing foreign labour still stand in the way.

Talk then returned to headquartering and tech firms. “Cyprus is already recognised as an upcoming, vibrant business destination and is attracting young talent,” stated Sophia G. Leptos. “By capitalising on the present momentum and enhancing our promotion efforts, the island can further solidify its reputation as a hub for youthful innovation and entrepreneurship,” she suggested. “The Government plays a key role in shaping Cyprus’ economic landscape and fostering innovation,” she added decisively. “Measures to lower interest rates would not only stimulate economic activity but would also encourage investment. Additionally, expediting permit approval procedures would have a significant spillover effect, particularly in the real estate sector, leading to an increased number of projects, more investment and a better housing supply.”

Chryssie Jacovides noted that, “For businesses to attract and retain talent, it is imperative that the legal and tax systems are enhanced,” and she gave an example from Greece, where companies are allowed to pay bonuses, in the form of dividends on their taxed income, to managers and employees who are not shareholders. “We should constantly be striving to explore such innovative approaches in order to attract and retain talent and to remain competitive in the coming years,” she told the gathering.

“Developing a larger pool of highly qualified and skilled personnel is critical in Cyprus’ efforts aimed at continuous improvement and sustainable growth on a global scale,” Marina P. Hajioannou argued. “Cultivating highly educated young talents, equipped with the academic skills necessary to join the Cyprus workforce in the future, is both a strategic priority and a competitive advantage to further attract international shipping business to Cyprus and expand the country’s maritime cluster.”

Focusing on the challenges of her particular sector, Chryssie Jacovides noted that. “The implementation of the National Health Scheme is an ongoing process and this is constantly creating important new challenges, which we are striving to turn into opportunities. In order for us to continue to improve the quality of our product portfolio and our services to patients and healthcare professionals, our operating methods – regarding supply chain, forecasting, stocking, warehousing, delivering, marketing and scientific support, among others – are being continuously adapted to the new frameworks being implemented in different sections of the pharmaceutical industry.”

At this point, Evagoras Lanitis touched upon the issue of speed, with regard to the response of the private and public sectors to market conditions and rapidly changing technology. He added that, “Businesses in Cyprus should link their growth and development to an action plan that involves venturing into new areas and sectors instead of relying on existing economic sectors, markets or products.”

Michalis Petrou then came up with a bold idea: “I believe that the establishment of a collective of young entrepreneurs to serve as an advisory body to the Government could resolve many issues and positively impact both the short-term and long-term strategies of Cypriot businesses.”

All the while, the President had been deep in thought, taking notes of everything that was said. He finally addressed those around the table with something of a personal admission: “When you become President, you sometimes get trapped within the five-year timeframe during which you are called to serve,” he said. “But this is mistake – you need to make long-term investments and see the bigger picture, to make moves and choices, the value of which may not be evident within those five years, but will actually represent a strong, long-term investment.”

Each of the eight young leaders at the meeting carries a heavy burden – the family name – and has a previous generation’s big shoes to fill. But the other shared characteristic, which shone through the discussion, is their desire to improve and enhance the country’s business ecosystem by excelling in their respective sectors.

By 15:30, goodbyes were in order and the President headed back to his office. Time will tell if this meeting proves to have laid the foundations for something bigger and become a stepping-stone for a new relationship between second- and third-generation family business leaders and the island’s executive power. They spoke and the President listened but, as everyone knows, actions speak louder than words.

(Photos by Michalis Kyprianou)

(This article first appeared in the 2024 edition of The Cyprus Journal of Wealth Management, commissioned by Eurobank Cyprus and published by IMH. Click here to view the article. Click here to view the entire magazine online.)