Antonis Fragoudis: Cyprus's accession to the Schengen zone is a catalyst for attracting investments

For the Cyprus Employers & Industrialists Federation (OEB), the accession of Cyprus to the Schengen zone is an important strategic goal for the economy, with multiplier benefits, which will act as a catalyst for attracting investment and for further development of business activity.

"Investors from European Union countries will see Cyprus as a safer and more stable market, since it will now be fully integrated into the European space without internal borders." "This will entail easier movement of investors, faster business agreements and the strengthening of the real estate and infrastructure sector," notes Antonis Fragoudis, Director of OEB’s Economic Affairs and Administration Department in an interview with InBusinessNews .

As he explains, on their part, Cypriot businesses "gain more direct access to the European market without bureaucratic obstacles. This means easy movement of professionals within the EU, further development of partnerships with European businesses as well as the creation of a physical presence in other Schengen states."

For the real estate sector, as Fragoudis states, an increase in buyers from the EU is expected, especially for second homes or investments, as it will now be easier to transfer ownership to European citizens.

At the same time, OEB identifies that in addition to the opportunities, challenges will also arise from the possible accession of Cyprus to the Schengen zone, which businesses will be called upon to face - and also to adapt to new realities.

"With Schengen, Cyprus will have to align even more strictly with the European framework of border control, security, data protection and operational transparency," he further notes.

What are the main opportunities that will arise for the Cypriot economy from Cyprus's accession to the Schengen zone, particularly with regard to the investment and entrepreneurship sector?

For the Cyprus Employers & Industrialists Federation (OEB), the accession of Cyprus to the Schengen zone constitutes an important strategic objective for the economy with multiplier benefits that will act as a catalyst for attracting investment and for further development of business activity.

Seeing examples from other countries that are already part of the Schengen zone, our membership will further strengthen the climate of trust.

Investors from European Union countries will see Cyprus as a safer and more stable market, as it will now be fully integrated into the European area without internal borders. This will mean easier movement of investors, faster business agreements and a strengthening of the real estate and infrastructure sectors.

In terms of business development, Cypriot businesses gain more direct access to the European market without bureaucratic obstacles. This means easy movement of professionals within the EU, further development of partnerships with European businesses, as well as the creation of a physical presence in other Schengen states.

For the real estate sector, an increase in buyers from the EU is expected, especially for second homes or investments as it will now be easier to transfer ownership to European citizens.

The conclusion is that the free movement of people, goods, etc., facilitates business and strengthens trust in international collaborations, which are fundamental pillars for the economic development of Cyprus.

How do you anticipate that joining the Schengen zone will affect Cyprus' position as a business and investment hub in the European Union? Are there sectors, such as Headquartering and investment funds, that you believe will benefit the most?

The Schengen area currently includes 29 European countries that have officially abolished border controls. Of these, 25 are EU member states. Bulgaria and Romania are the newest members, having fully joined a few months ago, on 1 January, 2025.

The only EU member states that are not yet part of the Schengen area are Cyprus and Ireland.

I understand that the procedures for completing all the prerequisites on the part of the Republic of Cyprus are progressing at an intensive pace so that our country's request for membership in the Schengen area can enter the final phase, that of the final evaluation, before the end of this year.

Especially for our country, OEB emphasises that non-integration is also a disadvantage at the investment level, since from the moment the investor has the opportunity, he will make choices for investments in an EU country that is in Schengen.

Cyprus' accession to the Schengen zone essentially unifies Cyprus geopolitically, legally and economically with the entire territory of the EU. It is a development that sends a strong signal of confidence with significant horizontal benefits, both for business and for our country more broadly.

With regard to Headquartering in particular, with easier travel within Europe, Cyprus could well become a center for the establishment of digital nomads, a destination for start-ups, and a hub for technological and innovative businesses.

The establishment of companies from neighboring continents that see Cyprus as an entry point to the EU is facilitated, since their executives will be able to move freely, without restrictions or visas, in a competitive, European environment.

The same applies to investment funds. Our membership will further strengthen their presence here. The goal is that Cyprus will gradually become a hub by offering a flexible legal and tax framework.

What challenges do you see arising for businesses in this scenario?

There is no doubt that joining the Schengen zone is certainly a positive development. OEB identifies that in addition to the opportunities, there are also challenges that businesses will be called upon to face and adapt to new realities that are being created.

One of the issues that still concerns our accession process concerns the Green Line, since there are concerns about ineffective control of all those who arrive in the occupied areas and enter the free areas through the checkpoints.

However, it appears that it is now under management, as exercises have been carried out on paper and it is estimated that practical solutions will soon be found.

The challenges that are expected to arise include stricter compliance and regulatory framework. With Schengen, Cyprus will have to align even more strictly with the European framework of border control, security, data protection and operational transparency.

We should also not overlook the fact that the movement of people is not one-way but two-way. Just as access for Cypriot businesses to the EU is facilitated, so is the entry of European businesses into Cyprus, resulting in more intense competition.

Also, since an increase in the flow of people, investors, workers and tourists is expected, there is likely to be further pressure on the local market, especially with regard to the adequacy of infrastructure such as, for example, housing, schools, transportation, etc.

How will Cyprus' accession to the Schengen zone contribute to strengthening the country's image as a reliable member of the single European market?

Today, the Schengen area has a population of over 450 million and an area of ​​4.5 million square kilometers. Around 1.7 million people commute to work within the area every day, constituting in some areas up to a third of the workforce.

Geographically, Cyprus's inclusion in the southeastern part of the Schengen zone projects Cyprus as a bridge between the EU, the Middle East and Africa, thus upgrading it as a hub of geostrategic importance.

At the same time, it sends the message to EU markets and partners that Cyprus has taken the necessary actions regarding the upgrading of public services, technological infrastructure and security mechanisms, as well as institutional harmonisation with the other member states.

This means that our state is fully aligned with the rest of Europe.

Entry into Schengen acts as an international seal of validity and strengthens our country with all that this entails, especially in international media and social networks, perceptions of entrepreneurs, exporters, investment organisations and in assessments of the degree of ease of 'Doing Business in Cyprus'.

(Source: InBusinessNews)