Source: Financial Mirror
600 Cyprus companies invest EUR 110 mln in a year
Cyprus is one of the largest foreign investors in Romania currently maintaining its eighth position in the overall rankings with most of the interest remaining in property and real estate, said Iuliu Winkler, Romanian Secretary of State in charge of international trade, tourism as well as small and medium sized companies. In an exclusive interview with the Financial Mirror, Winkler said his meetings with his Cypriot counterpart, Commerce Minister Antonis Michaelides, and at the Cyprus Chamber of Commerce and Industry (KEVE) were fruitful and will help in the development of business ties between the two countries. But he admitted that interest is predominantly in real estate and property with Cyprus companies having established 600 companies in Romania, investing a total of EUR 110 mln between June 2006 and May 2007.
Cypriots usually register a Romanian company the capital of which will be owned by a Cyprus based company, which then becomes the owner of the Romanian property and thus many tax issues are bypassed. Winkler nevertheless is satisfied with the arrival of thousands of Cypriots into Romania, as well as international companies booking investments to Romania through Cyprus, helping push Cyprus into eighth position in the FDI table, which in 2007 totaled EUR 9 bln.
“If you strip out the privatization of Commercial Bank of Romania, then the actual figure in 2006 was EUR 7 bln, which we hope will be repeated again in 2007,” Winkler told the Financial Mirror. While total FDIs in the first quarter of 2007 amounted to EUR 1 bln, this figure is expected to climb as more companies are privatized. Winkler also expressed his satisfaction at the fact that development companies from Cyprus have recently started to establish a presence in Romania, with some moving into property development beyond Bucharest to the other cities.
“There is a lot of potential since Cyprus is strong in services, with about 75% of GDP based on your services sector, while the reverse is true in Romania, which is dominated by manufacturing, industry and agriculture. Cyprus and Romania compliment each other.” -- Massive infrastructure potential Winkler also called on Cyprus companies to rush to Romania in order to help in the modernization drive of the country. He noted that Romania will have access to EUR 31 bln in EU-structural funds in the 2007-2013 period, most of which will be spent on boosting the infrastructure, while funds will also be spent on environmental projects, agriculture, human resources and others.
Romania also wants Cyprus companies in order to take advantage of its low but skilled labour force. “Unfortunately the number of Cypriot business people with manufacturing units in Romania is on the decline, but we are sure with the right marketing, we can improve the situation,” said Winkler. In addition to shipbuilding on behalf of Cyprus based shipping companies, Romania may be tapped to supply fuel and energy to Cyprus, as well as light industry products. Following discussions here, KEVE has decided to organize a trade mission to Romania in order to further boost bilateral trade ties.