Establishment Of The Cyprus Israel Business Association example essay topic

REVIEW OF CYPRUS ECONOMY Cyprus is a small, services oriented (services account for approximately 76% of GDP) free market economy with a record of successful economic performance - Rapid growth, full employment conditions, low inflation & external and internal stability. In terms of per capita income, currently estimated at US $18,500, Cyprus is classified among the high income countries. It has good business and financial services, modern telecommunications, an educated labor force and a sound legal system. Cyprus' geographical location, tax incentives, and modern infrastructure also make it a natural hub for companies looking to do business with the Middle East, Europe, the former Soviet Union and North Africa. Cyprus' entry into the EU in May 2004 marked the crowning point of protracted efforts over the years of its most important political and economic policy objective. As regards the economy, the harmonization process has transformed the whole economic structure of Cyprus and full accession is expected to bring a number of positive results.

At the same time, EU membership is a challenge to the business community to strive for increased competitiveness and the upgrading of quality of products & services. Economic growth in 2003 remained at the same levels as the previous year with the economy growing by 2% in real terms, mainly due to the containment of tourist demand. The low rate of economic growth for a second year in a row was reflected in the labour market with a small increase of the unemployment rate to 3.5%. Inflation was up to 4.1% from 2.8% in 2002 as a result of higher consumer taxes, particularly on petrol and an increase in VAT. The fiscal deficit rose to 6.3% from 4.6% of GDP, overshooting the Maastricht convergence criteria of 3%. The agricultural sector grew by 1.5% and its contribution to GDP remained unchanged at 3.9%.

Manufacturing shrank by 2% and its contribution to GDP slipped to 9.4%. The construction sector posted a growth of 4% and its contribution to GDP climbed to 8% as a result of increased investment in private and public construction projects. The hotel and restaurant sector shrank by 3.9% as tourist arrivals and revenues both fell. This sector's contribution to GDP fell to 8.2%. Wholesale & retail trade grew by 0.5% (approximately 13% of GDP) while the financial sector also made only marginal gains contributing 6.3% to GDP. The remaining tertiary sectors saw growth, particularly property management as well as health and social welfare.

Tourist arrivals in 2003 fell by 4.76% to 2.303 million. The drop was attributed to the negative climate in the region because of conflict and threats of terrorist attacks and to the further slowdown in rates of growth in Cyprus' main markets. BI-LATERAL COMMERCIAL TIES In recent years, Israel has become one of the major trading partners of Cyprus. The volume of trade between the two countries has increased considerably and there is strong potential for further increase in the coming years. Total imports from Israel for 2003 were CYP 87,597,000 making Israel the 10th biggest exporter to Cyprus overtaking countries like the Netherlands, Sweden, Belgium & the Russian Federation. Total exports to Israel were CYP 4,285,000 (includes products manufactured in other countries and exported to Israel).

The main imports from Israel include: petroleum oils & oils obtained from bituminous minerals O / T crude etc, products of the chemical or allied industries, machinery / boilers /mechanical appliances, plastics / rubber and articles thereof, base metals & articles of base metals and textiles. The exchange of business delegations and the excellent cooperation of the Cyprus Chamber of Commerce & Industry and the local Chambers of Commerce with our Embassy have been instrumental in contributing to the upgrading of trade relations. The establishment of the Cyprus Israel Business Association has been a very important milestone in trade relationships between Cyprus and Israel. Its activities include the publication of a newsletter, organization of commercial events and regularly updating its members with relevant information.

Recently, the Israel-Cyprus Binational Chamber of Commerce was established in Israel and, like the Business Association, its main aim is to promote and enhance bi-lateral commercial relations. Both associations cooperate closely and are in regular and direct contact with our Embassy. Another important recent development has been the introduction of our monthly economic newsletter by our Commercial Department. Its main aim is the promotion of economic ties between Cyprus and Israel. It includes information about business opportunities from Israel, innovations and new products, business news, exhibitions and other material that may be of interest to the Cypriot business community. It currently reaches 3,200 business e-mail addresses in Cyprus.

A similar publication entitled "Business Opportunities & News from Cyprus" will soon be introduced catering for the needs of Israeli businessmen.