CAIRO: Leaders of Egyptian and Cypriot business gathered Tuesday evening in an effort to promote bilateral trade and investment.
Egyptian Minister of Trade and Industry Rachid Mohamed Rachid and Cyprus President Demetris Christofias headlined Cyprus-Egypt Business Forum, which featured speakers explaining different element’s of each country’s trade policy.
Rachid called Cyprus “our closest neighbor to Europe, while Christofias touted the island nation as “a favorable country for investment.
Both spoke only briefly, leaving the heavy lifting to a number of business leaders who conducted something of an information session about trade policy, tax law, and investment opportunity.
This is the first official visit by President Christofias to Egypt.
He was also accompanied by a delegation of Cypriot officials and businessmen including the Cypriot Minister of Commerce, Industry and Tourism Antonis Paschalides as well as the Minister of Foreign Affairs Markos Kyprianou.
Rachid and Paschalides discussed issues pertaining to trade in services and agricultural goods as well as the means to facilitate negotiations between Egypt and the European Union on the liberalization of trade in services.
A ministry statement said that Paschalides expressed interest in importing natural gas from Egypt.
A number of Cypriot businessmen touted Cyprus as a low-cost place to do business. Cyprus’ corporate tax structure and numerous bilateral trade agreements made the country, they argued, the most appealing place in the European Union to do business.
Cyprus was among the latest nations to join the EU, gaining membership in May 2004.
With a corporate tax rate of just 10 percent, which the business leaders touted as the EU’s lowest, foreign direct investment (FDI) has been pouring into Cyprus.
According to Sotiris Sotiriou, director general of the Cyprus Promotional Agency, there was $572 billion in FDI outflows from Cyprus in 2006.
Sotiriou prodded the Egyptian business community to invest more heavily in Cyprus, plugging what he called the country’s “low setup and operating costs.
Andreas Christofides, a managing partner at KPMG, covered tax issues for investing in Cyprus. He noted that capital gains from the sale of immovable property situated outside Cyprus was tax exempt and that companies could reorganize in Cyprus tax free.
“The Cyprus tax system has the seal of approval of the EU, said Nicos Chimarides, a partner at Price Waterhouse Cooper, explaining that the Cyprus’ enticing tax structure is not at risk to be changed.
Cyprus is also making an effort to diversify its economy, which is currently heavily concentrated in the services sector. Services and tourism accounted for 63 percent of GDP in 2007. Construction, manufacturing, and financial intermediation followed, each accounting for 8 percent of GDP.
Cyprus’ banking system, argued Chimarides, has endured the global financial crisis better than most European countries.
“The Cypriot banks were never involved in the toxic loans, he said. “The banking system is among the strongest in Europe right now.
The conference was also a call to Egyptian bankers to grow their businesses. One banker noted that even though Egyptian GDP was almost 7 times that of Cyprus’ GDP in 2008, Egypt’s population is roughly 100 times larger than Cyrpus’.
With Cyprus, therefore, so far ahead of Egypt in terms of GDP per capita, Cypriot bankers argued that a stronger Egypt-Cyprus partnership might help grow Egyptian GDP per capita.
Cyprus is one of the EU’s largest shipping countries. This is particularly important, argued some at the conference, given Cyprus’ proximity to Egypt and the Suez Canal. Cyprus has the third largest merchant fleet in the EU – after Greece and Malta – with 19 million gross tons.
Bilateral trade between Egypt and Cyprus reached ?73.8 million in 2008 with Egyptian exports to Cyprus reaching ?57.9 million and imports from Cyprus reaching ?15.9 million.
Total Cypriot investments in Egypt amount ?434.9 million distributed over 108 projects.
Backing up words with actions, Cypriot President Christofias met with President Hosni Mubarak Tuesday to discuss trade relations. The two signed three agreements during the meeting.