OPINION – By Kyriakos Iordanou, General Manager Institute of Certified Public Accountants of Cyprus
In November, the President of the Institute and I had the privilege of participating in the 2nd EU Arab World Summit in Athens. This event, organized by the EU under the auspices of the President of Greece, aims at gathering together the political and business leaders and of the Arab countries as well as EU Member states. It was a tremendous experience for us, as we were attending the summit for the first time. Even more impressive was the fact that ICPAC President Marios Skandalis was one of the three speakers from Cyprus, alongside the President of the Republic and the Governor of the Central Bank.
The Middle East and the eastern end of the Mediterranean form an intersection of cultures, beliefs, trade and business. It is a region of huge prospects and opportunities but, unfortunately, it is also an area of turbulence. By putting aside differences and fostering cooperation, respect and trust, tremendous opportunities will arise, prescribing a truly prosperous future for the region and its people.
Cyprus has been in this neighbourhood ever since its emergence from the sea. It has always been a bridge between Middle East and Europe, located at the crossroads of three continents – Europe, Asia and Africa. At the same time, it is a cross-section of civilisations and cultures. Cyprus has served as a prominent trade hub throughout several millennia of history.
Furthermore, being located at the South-Easternmost edge of the EU means that Cyprus is the arc that connects Middle East and Europe. It can very easily be the conduit for Arab businesses going into Europe, whilst it can also be the reverse, that is, for European companies to expand their operations into the Arab countries. Trade and business activities can stretched from our small island to the four points of the horizon.
Over the last few decades, Cyprus has positioned itself as a credible and competent international business centre. This has entailed a series of legislative and other actions, including, inter alia, bold tax reforms, the adoption of international accounting standards, changes to the business mentality, and a focus on other international business activities, such as shipping and other financial services. Hence, both European and Arab companies can facilitate their business operations via Cyprus, enjoying all the benefits and advantages offered, including, inter alia, security, fiscal stability, physical safety and quality lifestyle.
What was truly an eye-opener for me at the summit was the “revelation” of the region’s tremendous business activity and potential: massive construction projects, trade, technology, energy and business opportunities in all countries, from Iraq to Morocco. Whilst undergoing significant political and cultural development, the dominant countries of the region (i.e. Saudi Arabia and Egypt) constitute huge construction and development sites. Iraq and Syria, as the victims of terrible warfare, need immediate reconstruction. The Gulf countries remain business hubs and offer particular potential.
With regard to our profession, we saw the Arab countries imposing VAT on goods very recently whilst, as of 1/1/2018, the “titan” of the region, Saudi Arabia, introduced the mandatory preparation of financial statements for all companies, irrespective of size, based on IFRS. This is a very important development, as the country seems to be opening a window towards the rest of the business world. How does this affect Cyprus? Well, Cyprus introduced the same legislation decades ago and is probably the only country in the wider area that has such requirements in place for all companies. Hence, Cypriot professionals and institutions could very easily provide their expertise on both subjects.
In addition, as the whole of the region is under a lot of construction and development, there are specialized needs for professional expertise and knowledge, such as financial management and tax advice.
Our country lies within the radius of the Arab world, not only physically but culturally as well. Cyprus, as the closest EU Member State to the region, can provide those countries with the norms, values and comfort of the EU, whilst becoming their gateway into the EU. By selecting Cyprus as a base and taking advantage of all the benefits that Cyprus offers, many Arab companies could do business in any part of the world, including – dare I say it – Israel. On the other hand, the Arab world could be a vast export destination for Cypriot products and services.
It is surely redundant to refer to the energy prospects in the region, so what I would like to highlight are the huge opportunities in the shipping, education, health and services sectors. For instance, even ICPAC, via its joint examination scheme with ACCA, gives the opportunity to non-EU citizens to obtain an exceptional EU professional qualification, let alone the other academic institutions. Due to the island’s proximity to their home countries, students may opt to study in Cyprus (at a much lower cost than elsewhere) and reap the benefits.
So far, we have been looking more to the north and the west, overlooking the southern and eastwards horizons, possibly not recognizing the potential. Well, it is about time we did it and worked closely within our own neighbourhood. There are a lot to be gained from this in business, monetary and political terms.
It is for this reason that we commend and support all the hard work and the agreements signed by the Government with neighbouring countries over the last couple of years. Entering into strategic and business alliances with our Arab neighbours is something that should have been pursued long ago. The recent visit by President Anastasiades to Saudi Arabia and the agreements signed with Egypt are of huge importance. We hope that this trend will be further enhanced going forward, with the involvement of the private sector as well, in order to maximise the potential and the benefits.
I truly believe that we need to be more involved with the surrounding countries and should try to identify those areas where Cyprus and its professionals have a niche. Other markets worked well till now, however focusing on the adjacent parts our courtyard, may generate multiple benefits and fruits. So, let’s focus on our neighbourhood, opening thus new horizons, new prospects and new markets with new allies, converting all the challenges into opportunities!