In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
In recent years, Cyprus was ranked among the top destinations in terms of attractiveness for foreign direct investment. The country gradually removed most investment restrictions when it became a candidate for accession to the European Union. Sectors such as financial intermediation could benefit from these initiatives and Cyprus began receiving a large amount of FDI annually.
However, the influence of the international economic environment has been significant. FDI, which had fallen sharply in 2008 and 2009, primarily due to lower investment in real estate, has since been struggling to resume growth and in 2012 should be affected by the crisis in Europe and the Greek crisis. In 2013 FDI reached only over USD 840 million.
Tourism, wellness activities, medical services, development projects of natural resources (oil, gas), research and technology are the most promising areas for future investments. Almost complete liberalization of foreign investment increases the country's attractiveness.
The United Kingdom, the Netherlands, Russia and Panama were among the major investors in Cyprus in 2013. This same year, Financial and Insurance Activities, Professional, Scientific and Technical Activities and Wholesale and Retail Trade were amongst the top FDI sectors.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Cyprus||Eastern Europe & Central Asia||United States||Germany|
|Index of Transaction Transparency*||8.0||7.0||7.0||5.0|
|Index of Manager’s Responsibility**||4.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||6.3||5.9||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||2,384||1,257||533|
|FDI Stock (million USD)||20,666||21,047||21,182|
|Performance Index*, Ranking on 181 Economies||43||-||-|
|Potential Index**, Ranking on 177 Economies||129||-||-|
|Number of Greenfield Investments***||9||5||7|
|FDI Inwards (in % of GFCF****)||57.7||40.3||17.8|
|FDI Stock (in % of GDP)||83.2||92.4||97.0|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: October 2014