Role as a shipping hub
Cyprus constitutes one of the largest ship management centers in the world; around 50 ship management companies and marine-related foreign enterprises are conducting their international activities in the country while the majority of the largest ship management companies in the world have established fully fledged offices on the island. Its geographical position at the crossroads of three continents and its proximity to the Suez Canal has promoted merchant shipping as an important industry for the island nation. Cyprus has the tenth-largest registered fleet in the world, with 1,030 vessels accounting for 31,706,000 dwt as of 1 January 2013.
Economy of Cyprus
After a three-and-a-half-year recession, Cyprus returned to growth in the first quarter of 2015. Cyprus successfully concluded its three-year financial assistance programme at the end of March 2016, having borrowed a total of €6.3 billion from the European Stability Mechanism and €1 billion from the IMF. The remaining €2.7 billion of the ESM bailout was never dispensed, due to the Cypriot government’s better than expected finances over the course of the programme. In 2016, Moody’s Investors Service changed its outlook on the Cypriot banking system to positive from stable, reflecting the view that the recovery will restore banks to profitability and improve asset quality. The quick economic recovery was driven by tourism, business services and increased consumer spending. Creditor confidence was also strengthened, allowing Bank of Cyprus to reduce its Emergency Liquidity Assistance to €2.0 billion (from €9.4 billion in 2013). Within the same period, Bank of Cyprus Chairman Josef Ackermann urged the European Union to pledge financial support for a permanent solution to the Cyprus dispute.
In 2008 fiscal aggregate value of goods and services exported by Cyprus was in the region of $1.53 billion. It primarily exported goods and services such as citrus fruits, cement, potatoes, clothing and pharmaceuticals. At that same period total financial value of goods and services imported by Cyprus was about $8.689 billion. Prominent goods and services imported by Cyprus in 2008 were consumer goods, machinery, petroleum and other lubricants, transport equipment and intermediate goods.
Oil and gas
In 2011, Noble Energy estimated that a pipeline to Leviathan gas field could be in operation as soon as 2014 or 2015. Surveys suggest more than 100 trillion cubic feet (2.831 trillion cubic meters) of reserves lie untapped in the eastern Mediterranean basin between Cyprus and Israel – almost equal to the world’s total annual consumption of natural gas.
The Cyprus legal system is founded on English law, and is therefore familiar to most international financiers. Cyprus’s legislation was aligned with EU norms in the period leading up to EU accession in 2004. Restrictions on foreign direct investment were removed, permitting 100% foreign ownership in many cases. Foreign portfolio investment in the Cyprus Stock Exchange was also liberalized. In 2002 a modern, business-friendly tax system was put in place with a 10% corporate tax rate, the lowest in the EU. Cyprus has concluded treaties on double taxation with more than 40 countries, and, as a member of the Eurozone, has no exchange restrictions. Non-residents and foreign investors may freely repatriate proceeds from investments in Cyprus.