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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. |
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