It is indeed a great pleasure for me to be here today to attend and address this seminar. I welcome to Cyprus the Czech delegation headed by the Deputy Minister of Trade and Industry Mr. Zdeněk Vorlíček and I am confident that events like this one will further contribute to the promotion and strengthening of the financial, commercial and technological ties between Cyprus and the Czech Republic. I avail myself of this opportunity to assure them of our continuous support and assistance in this direction.

Cyprus has a record of a successful economic performance, reflected in rapid growth, full employment conditions and external and internal stability, almost throughout the post-Independence period. The underdeveloped economy, inherited from Colonial Rule in 1960, has been transformed into a modern economy, with dynamic services, industrial and agricultural sectors and advanced physical and social infrastructure. In terms of per capita income, currently estimated at US $15.000, Cyprus is classified among the high-income countries.

The success of Cyprus in the economic sphere is attributed, inter alia, to the adoption of a market oriented economic system, the pursuance of sound macroeconomic policies by the government as well as the existence of dynamic and flexible entrepreneurs and a highly educated labour force. Moreover, the economy benefited from the close co-operation between the public sector and the social partners.

During the last decade, the Cyprus economy has intensified its links to Europe. The European Union is the largest trading partner of Cyprus. Trade barriers between Cyprus and Europe have by now been completely dismantled on all but a handful of industrial products.

The high level of development of Cyprus has been a significant factor in the decision of the European Union to include Cyprus in the group of the first six countries with which it started accession negotiations in 1998. Apart from its paramount political significance, accession to the EU will have widespread economic and social ramifications. We are currently in the middle of a complete overhaul of our legislation and institutional structures, in the context of harmonisation with the respective legislation and institutions of the EU.

The sector of manufacturing has contributed its share to the development of the economy of Cyprus and it continues to be important to the economy accounting for about 11% of GDP and 14% of employment. However, the sector had serious problems in recent years, experiencing at times 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, due to rising costs of production and insufficient productivity gains, at a time of increasingly intensified international competition. At the root of these problems lie the structural weaknesses of the sector, the inadequate utilisation of new technology and to some extent outdated methods of management.

Taking into account the forthcoming challenges, stemming from the globalisation of the economies, the liberalisation of trade, the rapid technological changes, as well as the envisaged accession of Cyprus to the EU, the Ministry of Commerce, Industry and Tourism has proposed a New Industrial Policy, which was approved by the Council of Ministers in June 1999.

The New Industrial Policy consists of twelve chapters. The first two refer to the promotion of high technology in Cyprus through the establishment of incubators and the creation of a Center for carrying out applied research and technological development in high technology fields. The Government of Cyprus will provide partial financing for projects aiming at the development of new high technology products which will be approved to enter the incubator, up to a period of two years. Applications for such projects may involve the participation of non-Cypriot inventors or scientists.

The task of formulating the details of the implementation of the high tech industry was entrusted to a Technical Committee headed by the Ministry of Commerce, Industry and Tourism, which includes representatives of the Planning Bureau, the University of Cyprus, the Cyprus Chamber of Commerce and Industry, the Cyprus Employers and Industrialists Federation, the Institute of Technology and the Foundation for the Promotion of Research. The Committee has worked very hard over the past year, studying the experience of other countries and designing the right strategy for Cyprus.

The outcome of the work of the past year for the introduction of the concept of incubators in Cyprus is, I believe, an extremely interesting and innovative experiment in public-private sector collaboration. Based on the recommendations of the Committee, the Government has followed a tendering procedure to identify possible partners from the private sector, who would be interested in setting up and operating an incubator. At the present stage, the details of the collaboration have been finalised in the form of a four-year contract which will soon be signed by the Government and those of the pre-qualified partners that have fulfilled its terms and conditions.

In concluding I would like to express my sincere thanks and appreciation to all those who with their efforts made this seminar possible as well as to all participants who have taken valuable time to attend it.

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