Member of the European Union
On 1 May 2004, Cyprus became a European Union member state. Accession to the EU was a natural choice for Cyprus, dictated by its culture, civilisation, history, European outlook and adherence to the ideals of democracy, freedom, and justice.
Cyprus has successfully faced the challenge of integration, and its accession to the European Union has not resulted in any insurmountable difficulties. On the contrary, harmonization with the EU’s acquis communautaire was carefully planned and supported by appropriate policies.
In particular, Cyprus has undertaken significant economic and structural reforms that have transformed its economic landscape. Tariffs and quantitative restrictions have been eliminated for all manufactured goods and agricultural products originating in Cyprus and other EU countries. Trade and interest rates have been liberalized, while price controls and investment restrictions have been lifted. In addition, private financing has been introduced for the construction and operation of infrastructure projects; while the electricity supply and the telecommunications sectors have been liberalized.
Moreover, the Common Customs Tariff (CCT) as well as the relevant EU legislative framework for the facilitation of the free movement of goods, capital, and services, have been adopted.
In May 2005, the first anniversary of its accession to the European Union, Cyprus achieved an important economic goal when the Cyprus pound joined the European Exchange Rate Mechanism II (ERM II), a prerequisite for joining the eurozone. Following the firm commitment to pursue sound fiscal policies, essential for preserving macroeconomic stability and ensuring the sustainability of the convergence process, the Cypriot authorities announced concrete measures to strengthen Cyprus' economic performance and reach the eurozone targets. Cyprus expects to join the euro area by 2008.
Accession to the EU has launched a new era of challenges and responsibilities for Cyprus, and has generated several new business opportunities in various sectors:
As far as the energy sector is concerned, the establishment of an Energy Centre is under way. The Centre will comprise a Liquefied Natural Gas (LNG) receiving / storing / re-gasification terminal and a terminal for the storage and handling of oil products, including LPG and bitumen. Numerous projects are included in the 2007-2013 Strategic Development Plan.
In the tourism sector, plans include the construction of new marinas, theme parks and sports facilities, as well as the reconstruction of the island's two international airports, and of the Larnaca port.
New investment opportunities also arise through Cyprus' high technology investment programme related to the establishment of business incubators as well as the launching of a Cyprus Technology Park with the cooperation of French Riviera Chamber of Commerce and Industry and the Sophia Antipolis Science and Technology Park. Such initiatives aspire to facilitate the creation of new ventures, especially in developing and commercialising innovative products and methods, and to effectively utilise Cyprus’ outstandingly skilled workforce. In this connection, the School of Engineering has been established within the University of Cyprus, while an agreement has been signed with the Harvard School of Public Health (HSPH) regarding the establishment of the Joint International Institute on the Environment and Public Health.
The already recognized role of Cyprus as a regional banking and shipping center has become even more enhanced. As proof of the island’s position as the main transshipment center is the substantial volume of products re-exported which in 2005 reached C£462,6 mln (approx. €802 mln 4 ).
Increased financial assistance from the EU to Cyprus is available through structural funds, as well as through wider participation in European Programmes, such as the 6th Framework Programme.
Finally, export opportunities have been broadened for Cypriot products and services having obtained direct access to the vast EU market, with a total population of over 450 mln. Notably, more than half of Cyprus’ trade is with the EU. Cyprus also has diplomatic ties with countries that have established an embassy in the island in order to cover their interests in the Middle East and Europe.
The geographical proximity of Cyprus to the increasingly important market of the Middle East represents an important factor in creating partnerships between Europe and the Middle East; two different regions bound by mutual interests. The Middle East region with its oil-rich resources, coupled with the potentials that a wealthy market holds, provides excellent opportunities for European business. Similarly, Middle East manufacturers and traders can gain easier access to the prosperous EU market via Cyprus.
The Cypriot entrepreneurs’ wide knowledge of the markets of Eastern Europe and the Middle East, combined with the existence of a large number of International Business Companies in Cyprus, constitutes a substantial advantage for those who decide to use Cyprus as a base for penetrating regional markets. Cypriot entrepreneurs and other professional experts are prepared to enter into fruitful cooperation with interested foreign companies in order to develop all aspects of business activity