Costas Mavrides: Cyprus needs to encourage the physical establishment of companies on the island

The message that the time has come for Cyprus to adapt its model towards encouraging companies to establish a physical presence on the island and so will reproduce benefits for the entire economy and society, MEP Costas Mavrides suggests.

The DIKO and Progressive Alliance of Socialists and Democrats (S&D) MEP contrasts these companies with those with only a legal presence in Cyprus for the purpose of reduced taxation and that benefit limited professional groups.

In his interview with InBusinessNews, Mavrides ranks the maintenance of the country’s comparative advantage for the provision of services through the activity and establishment of companies on our island as being among the main issues of the European agenda for Cyprus, while at the same time emphasising the need for a European organisation to be based in Cyprus.

This, he indicates, will contribute to the creation of hundreds of new jobs, high wages with a positive contribution and spillover to the economy and added political value for Cyprus.

Costas Mavrides also points out that if we have to promote a specific sector at the present time, it should be energy, so that - as he explains - there will be a smooth transition to low-polluting energy sources with significantly reduced costs, such as natural gas, on the way to clean energy.

How do you intend to use your presence in the European Parliament to contribute to strengthening the economy of Cyprus?

As a member of the Finance Committee of the European Parliament for two terms, I have accumulated knowledge and experience to intervene with the aim of co-shaping policies, mainly legislations, that take into account the needs and problems of Cyprus.

Among the main issues of the European agenda for Cyprus, I include maintaining the comparative advantage for the provision of services through the operation and establishment of companies in Cyprus.

However, I point out that the time has come to adapt our model as Cyprus, towards the establishment of companies with a real physical presence that will reproduce benefits for the entire economy and society and not just companies with a legal presence for the purpose of reduced taxation and which benefit only limited professional groups.

For the banking sector, two main issues are pending. The effective compliance and implementation of the European legislation on abusive clauses with the elimination of illegal overcharging, which concerns the correct administration of justice and the completion of the banking union with a pan-European guarantee of deposits, as a guarantee of reliability, stability and fair competition in the banking sector in the EU as a whole.

In addition, I insist on the need to finally have a European organisation based in Cyprus, which will contribute to hundreds of new jobs, high salaries with a positive contribution and spillover to the economy and of course additional political value for Cyprus.

Finally, I mention the mega issue of housing, which I have been pushing for years with a focus on the use of the EU Recovery Mechanism, in which I was a negotiator on behalf of my political group and where we managed to include the possibility for investment in the housing sector, but this was not implemented in Cyprus by choice of the Governments here.

The private sector is a key factor in the economy. What specific actions do you intend to take to boost businesses operating in the country?

Continuing, I will respond to the question with specific issues from the European agenda and not with general references that are often outside the competence of the EU. To this end, I believe that fair competition is decisive for the economy and consumers and Cyprus suffers seriously in various vital sectors of the economy.

Furthermore, the "open secret" that few talk about and virtually no one acts on is unfair competition from the occupied areas.

The political priority for Green Line trade, as established and established at the European level, has caused serious distortions and economic "suffocation" in various sectors of the economy, to the extent that it has already "killed" many micro-enterprises and others are at their limits, without any initiative at the political/legal level to protect them.

Specifically, products produced in the occupied territories as well as other illegally imported products from Turkey are channeled into the free areas, without of course respecting European health, labour and environmental standards.

Thus, on the one hand, public health is put at risk and on the other, fair competition is distorted, since institutionally there is an unfair advantage in the occupied areas where the products are produced or imported at a seriously reduced cost compared to what the EU imposes on businesses in the free zones and which have to comply with significant costs in the production process.

What do you consider to be the biggest problem of Cyprus that prevents its further development and the rise of its GDP?

First of all, the rise in GDP alone does not imply the prosperity of the many that everyone preaches about, especially in the run-up to elections, but in fact the policies bring other results. The point is that the majority of people and the financially weak benefit from the increase in GDP as much as possible.

If an increase in GDP is skewed in favor of a very small group, the economic level gap will widen at the expense of the weak, even though as an indicator GDP is rising.

However, today, expensive energy, which is a raw material for the activation of the modern economy, is the biggest brake on the growth of Cyprus's GDP, along with reduced competition in many sectors.

What, in your opinion, is the sector of the economy that is underperforming and you think should be strengthened further?

If we have to suggest a specific sector now, it would be energy, so that there is a smooth transition to low-polluting energy sources with significantly reduced costs, such as natural gas, on the way to clean energy.

But, it's not just underperforming but faltering due to deeply entrenched interests, corruption scandals and perennial political incompetence.

On a more general level, as I explained above, the economic model of the provision of services by companies based in Cyprus, primarily due to the low tax rate, has already reached its limits and there is widespread political pressure to change it.

For years we have been insisting that Cyprus should adjust its tax advantage, enriching it with other incentives, with the aim of attracting companies with a real presence on the island.

Cyprus offers itself as a place for innovation and technology companies to operate due to significant domestic advantages that the country must highlight and strengthen, e.g. low installation costs, highly qualified scientific staff, reliable system of justice and public service, etc.

Thus, a large percentage of young scientists will be able to remain in Cyprus.

Contact with MEPs of other groups and with Commissioners of various member states

Apart from the political group to which you belong, which other political formations in the European Parliament will you seek cooperation with?

I belong to the second political group in the European Parliament, the Progressive Alliance of Socialists and Democrats (S&D) and through my participation in various committees I have contact with MEPs from other groups and with Commissioners from various member states.

Also, as Chairman of the Political Committee for the Mediterranean, I had the opportunity to be in contact with representatives (MPs or Senators) of the parliaments of various Mediterranean states, e.g. Egypt, Israel, Palestinian Authority, Morocco, Yemen, Turkey, Lebanon, etc.

What is the advice you gave to the newly elected, so that they are heard more in the European Parliament?

An MEP can impress domestic public opinion with various communication and advertising "tricks", either through Social Media or with an uncontrollable chatter of announcements and Press Releases, while in practice his political influence and political weight may be nil.

That's why my advice is obvious. The aim and action of an MEP should be focused on co-shaping EU policies. through his arguments and actions at the European level and not by impressing public opinion in Cyprus.

(Source: InBusinessNews)