About Cyprus

Manufacturing and Industry

Even though the blow inflicted on the manufacturing sector by the Turkish nvasion of 1974 was severe, recovery during the 1975-83 period was remarkable. In the post invasion period in particular during 1975 -1983 the sector has been growing at an average annual rate of 9,1% and has become increasingly important for the economy, especially when emphasis was geared to supplying the foreign markets.

By 1999 the sector accounted for 11% of Gross Domestic Product (GDP) and 13,3% of employment. Exports of manufactured products in 1999, compared to 1973 figures (15 million), recorded a large increase and reached 166 million. The most important sectors in terms of value added are food and beverages, clothing, furniture and metal products. Other industrial sectors which continue to expand include printing and publishing, plastics, chemical and pharmaceutical products.

The manufacturing industry of Cyprus has been going through difficult times in the past decade, experiencing a fall in the growth of production, exports and employment. This development has been the result of an erosion in our competitiveness, both abroad and in the local market, at a time of increasingly intensified, international competition. At the root of these problems lie the structural weaknesses of the sector, the drastic reduction of tariff protection due to the participation of Cyprus in the World Trade Organisation, the rising labour costs and low productivity. As a result the share of the manufacturing sector in the Gross Domestic Product and in employment remained stagnant.

International competition is increasingly intensified mainly from two directions: on the one hand, the high-wage producers, who have combined design, quality and new forms of flexible production to cut working and capital costs and improved response times and on the other, the low-wage mass producers of South-East Asia.

Faced with this situation the Government having thoroughly considered ways and means for the reconstruction and development of the sector and taking seriously into account proposals put forward by industrialists and their respective organisations, has eventually resorted to the following basic goals which form the central core of the Government%26rsquo;s New Industrial Policy:
Assistance of existing and the attraction and development of new high-tech industries
Assistance and reconstruction of Cyprus traditional industry
Productivity improvement
Attraction of capital intensive foreign investment.

Within the overall effort to attain these goals the New Industrial Policy includes,, inter alia, the following chapters:
(a) The introduction of business incubators in Cyprus and the creation of a centre for carrying out applied research and development which are considered to be essential components of the effort to develop new high-tech products in Cyprus.
(b) The creation of a Foreign Investors Service Centre (One-Stop Shop) which will offer advice to foreign investors, provide assistance during the application procedures and the securing of the required permits and generally look after investors in the island. At a later stage these services will be extended also to local investors.
(c) The introduction of schemes for the provision of State Grants for assisting the technological upgrading of the manufacturing sector, for the creation of laboratories in Cyprus, for energy conservation and for the promotion of exports.

Entry Date 8/8/2001