|Address by the Minister of Commerce, Industry and Tourism,|
Mr. Antonis Paschalides, at the “Global Russia Business Meeting”
at Le Meridien hotel, Limassol, on Monday 11 April, 2011 at 12:00
Ladies and Gentlemen,
It is indeed a great pleasure and a privilege for me to be here today and address this event, which is co-hosted by the Republic of Cyprus, the Cyprus Investment Promotion Agency and Horasis.
Russia plays a key role in the global economy, as evidenced by the high levels of investment inflows and outflows to and from the country’s economy, its leading role in the emerging BRIC (Brazil, Russia, India, China) economies and its rich natural resources, on which many countries rely.
Russia is the EU’s most important single supplier of energy products, covering over 25% of the EU consumption of oil and gas. In turn, the European Union is the most important destination for Russia’s energy exports.
Moreover, the Russian Government continues to focus on establishing Russia as an international financial and business center and as a result, in recent years Russia has evolved into a powerful financial force on the global business map. Earlier this year, the Russian Government passed amendments to its “Strategic Investment Law” to entice investors to invest in Russia in selected strategic sectors, such as biomedical technology, energy efficiency, Information and Communication Technologies and space and nuclear industries. The aim is to diversify its economy, which is heavily reliant on exports of oil and natural gas. Multiple initiatives, such as abolishing capital gains tax on long term direct investments, have succeeded in both attracting new investors and maintaining those already in Russia.
Since Cyprus is a member of the European Union, allow me to refer briefly to the importance that the EU attaches to Russia.
The EU has a vital interest in promoting the prosperity of its largest neighbour. The European and Russian markets are fundamentally complementary. The EU is a knowledge-based economy that must focus on long-term growth prospects, while Russia is a high-growth emerging economy that needs a knowledge base to be able to further develop its strengths in advanced science and technology.
Economic ties between Russia and the EU have grown substantially over the last years. Russia is the EU’s third most important trading partner in goods, after the US and China, making the EU the largest market for Russian goods.
In the Technology sector, Russia has shown the world that it is dedicated to becoming a main contender in the Technology arena. The Russian Government has earmarked, in March 2010, $5.5 billion for the establishment of “Skolkovo”, a high-tech hub outside Moscow that is Russia’s answer to Silicon Valley. We have also seen a Government focus on supporting innovation and technology research at Universities. After all, investments that require a technology transfer result in the creation of new quality jobs.
Additionally, venture capital funds are critical to the development of joint projects in biomedical technology, applied software and innovative technologies. To support these efforts, the Russian Government has passed new intellectual property legislation.
Scientific cooperation between the EU and Russia is already very successful. Russia has, to date, been the most successful third country participant in the EU Research and Development Framework Programme. The framework participation focuses on: promoting a high rate of competitiveness and economic growth through the implementation of advanced scientific achievements, strengthening and optimizing the links between research and innovation and, lastly, maintaining small and medium size entrepreneurship in the field of research and innovation.
Coming now to the role that Cyprus can play in investments within Russia, the recent signing of the Protocol between the Republic of Cyprus and the Russian Federation will further contribute to the strengthening of the existing solid bilateral investment relationship. Additionally, agreements, including the Double Tax Treaty, between our two countries have led to strong results, as evidenced by the exponential growth of the Russian Business Community in the past ten years.
Direct Investment from Cyprus to Russia totaled 1.36 billion euros in 2008, while the corresponding figure in 2009 was 317.3 million euros. The main economic investment activities from Cyprus to Russia in 2009 included Financial Intermediation Services, Trade and Repairs and Real Estate and Business Activities. Direct Investment from Russia to Cyprus recorded an upward trend the last couple of years, amounting to 735.6 million euros in 2008 and 1.5 billion euros in 2009.
As a member of the European Union since 2004, Cyprus has and will continue to play a critical role as a logistics and services hub for trade and other business activities from Russia to countries within the EU.
Although, the economies of Cyprus and Russia cannot be compared given their vast difference in size, both countries may benefit from the strong relationship and cooperation which exists.
Russia offers investment opportunities in various priority sectors of the economy, as mentioned earlier. Cyprus, through its quality business services sector may act as a bridge for channeling investments by major international players in those strategic sectors, and can also become a springboard for Russian corporations to develop their international activities in the EU, Middle East and Africa.
Related links:Χαιρετισμός Υπ. Οικονομικών, χαιρετισμός Προέδρου Βουλής, ikypros