First of all, I would like to thank the Organizers for inviting me to this event.  I have no doubt that today's event will be of interest and will prove fruitful to all participants. It will also demonstrate the increasing importance of Cyprus as a business and services centre in the Eastern Mediterranean.

Cyprus is a high-income country with a population of about 670.000.  It is located in a strategic position in the Eastern Mediterranean, at the crossroads of three continents.  It has a market-oriented economy with the private sector assuming the major responsibility in production activity.

During her short period of independence Cyprus has passed through an evolution from an underdeveloped economy in the 1960´s to a developed service oriented economy in  the 1990´s.

Cyprus has a record of successful economic achievements reflected in rapid growth, a very low inflation rate, full employment conditions and external and internal stability.  The Gross Domestic Product was about $10 billion in 2001 and prospects for the year 2003 are remain positive with a projected GDP of $11.5 billion or about $17.000 per capita.

Cyprus has one of the highest standards of living in the Mediterranean.  The Cyprus pound has been linked to the European Currency Unit as of June 1992 and to the Euro as of the beginning of 1999, a step which demonstrates our European orientation.

We are also a member of the United Nations and its specialized agencies as well as the Council of Europe and the Commonwealth.  Cyprus has been linked with the European Community since 1973 through an Association Agreement.

In July 1990, Cyprus applied to join the European Union as a full member.  Negotiations started in 1998 and Cyprus is expected to become a full member by the year 2004.  In addition, Cyprus has become since 1995, a full member of the World Trade Organization and has adopted the provisions of the General Agreement on Tariffs and Trade (GATT).

When Cyprus becomes a full member of the EU it will constitute the EU´s frontier in the south and in the east through which trade with the EU and the Middle East can be effected.

Cyprus´ current trade regime is very liberal and we already maintain good relation with all the countries in the area.  On accession to the EU, trade relations with the region, especially the Mediterranean countries will acquire a new boost, as Cyprus will grant to these countries zero rates of duties on industrial imports and on a number of  agricultural imports.  These countries will reciprocate the concession by extending to Cyprus the preferential import regime they maintain vis a vis the EU, within the framework of their respective Association Agreements.  As barriers to trade are dismantled, experience shows that not only trade flows will increase and cooperation will strengthen, but the competitiveness of the productive sectors will also improve as a result of open economies.

Cyprus, as a member of the EU will have the opportunity to co-operate with its Mediterranean Partners in a number of fields other than trade for which provision is made in the respective Association Agreements.  Such fields are education and training, environment, industrial cooperation, telecommunications, energy, tourism, etc.

Cyprus´s accession presents therefore an important window of opportunity for the region, which will mark a new era in the relations between Cyprus, the EU and the Mediterranean Partners.

It must also be mentioned that the Euro-Mediterranean Partnership, which was initiated at Barcelone in 1995, offers a wealth of opportunities for the region and the EU to strengthen relations and integrate their economies.  The Euro-Mediterranean initiative lays also emphasis on the promotion of investment projects in the region, in areas such as tourism, energy, industry, telecommunications, water, transport and the environment, especially investments with regional co-operation dimensions.

Trade between Cyprus and the U.S.A., which is the biggest supplier of Cyprus, expanded significantly in the past decade and the total turnover reached the figure of U.S.$422 m in 2001.  Exports of Cyprus products to U.S.A. amounted to U.S.$17 m in the year 2001 while Cyprus imports were of the level of U.S.$405 m. The main products exported to U.S.A. are footwear, clothing, Portland cement, halloumi cheese and fish.  With a view to promoting further the traditional trade between the two countries in 1998 the Cyprus- U.S. Chamber of Commerce was founded.  It is, also, worth mentioning that the Cyprus Trade Center in New York provides its best services towards this direction.

It is worth mentioning that a large number of non-resident individuals and corporations have been quick to spot and exploit the business opportunities offered by Cyprus.  These opportunities can be found mainly in two sectors: direct foreign investment and offshore business.

As regards direct foreign investment Cyprus offers a number of advantages.  These are the geographical location of the island, the relatively low operating costs, the availability of a skilled and highly educated labour force, excellent telecommunications and a modern infrastructure.

The government also promotes and maintains favorable investment conditions that permit entrepreneurs to participate directly in the process of economic development.  In its efforts to harmonize the island's policies with those of the EU, the basic criteria relating to direct foreign investments have been recently reviewed and considerably liberalised, thus allowing foreign investors greater percentage participation in investment projects.  Administrative procedures have become much simpler and there are no complicated criteria other than the rejection of applications for projects which may create environmental problems or may appear detrimental to the country's economy or national security.

In line with its stated policy of protecting the rights of foreign investors, Cyprus ratified the “Convention on the Settlement of Investment Disputes between States and Nationals of Other States”.

Cyprus is also a signatory to the Multilateral Investment Guarantee Agency Agreement (MIGA), which insures foreign investors against non-commercial risks.

In order to improve the business environment and instill further the sense of security of foreign investors, Cyprus has been negotiating the last few years the conclusion of bilateral agreements for the Promotion and Reciprocal Protection of Investments.  Cyprus has already signed sixteen such agreements

These non-fiscal advantages are supplemented by specific tax incentives which both local and foreign investors may take advantage of. Such incentives are: low corporation tax, low income tax, no tax on dividends, low tax on interest, tax losses can be carried forward and set off against future profits indefinitely, profits from a permanent establishment outside the Republic are exempt from tax.

Cyprus has also entered into a wide network of bilateral Double Tax Treaties (32 Double Tax Treaties, which cover 40 States), which makes Cyprus an ideal location for establishing a local business particularly for international tax planners who may wish to take advantage of the provisions of these agreements.

Furthermore, the Government, taking into account the intensification of competition and the globalisation of the economy has announced a New Industrial Policy, which includes a number of generous grant schemes and incentives which aim at:

• The introduction and development of high-tech industries

• The enhancement of productivity

• the reconstruction and support of the traditional industries and

• the attraction of foreign investment.

It is worth mentioning that all the above schemes and incentives are addressed not only to Cypriots but to foreign investors as well who wish to register a company in Cyprus or a combination of Cypriot and foreign interests.