Cyprus: Business environment at a glance

(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2007-08: Continued gradual implementation of EU competition legislation. Competition authority becomes more active.

2009-11: Further strengthening of domestic competition. Small chance of privatisation of public utilities.

Policy towards foreign investment

2007-08: Euro adoption in 2008 raises Cyprus' attractiveness as a location. Policy towards foreign investment generally welcoming. The takeover of at least one bank is likely, although reservations against foreign takeovers remain.

2009-11: Increasing market integration at EU level raises chance of further acquisitions of major Cypriot companies.

Foreign trade and exchange controls

2007-08: Substantial chance that Turkey will lift restrictions on transport links with Cyprus, albeit after a further delay.

2009-11: Foreign-trade regime determined by EU policy. Non-tariff restrictions to intra-EU trade in services to be reduced.

Taxes

2007-08: Tax system remains attractive, with only minor adjustments to be expected.

2009-11: Possibility of increased social security contributions, in order to accommodate the financial pressure expected from the ageing of the population.

Financing

2007-08: Consolidation of the banking sector likely. Adoption of the euro increases financing choices for business and reduces lending rates.

2009-11: Market for private pensions expands.

The labour market

2007-08: Wage indexation and fairly healthy economic growth lead to substantial wage increases.

2009-11: Legislation to raise the private-sector pension age may be passed.

Infrastructure

2007-08: Development to upgrade the two airports starts. Investment in new golf courses. Construction of new marinas may also begin.

2009-11: Further infrastructure investments to improve tourism product.

Copyright 2006 Economist Intelligence Unit