The island's strategic location has been a major factor in shaping its history throughout the centuries and, in recent years, its development into a centre for international business. Cyprus offers to entrepreneurs, investors and ship owners a unique basket of advantages for the conduct of their affairs worldwide. The island's excellent infrastructure, English legal system, high quality of life and low cost of living, combined with its well educated labour force, good industrial relations and generous tax incentives create an ideal business environment. GEOGRAPHY AND POPULATION Cyprus is situated in the eastern Mediterranean, lying at the hub of 3 continents and close to the busy trade routes linking Western Europe with the Arab World and the Far East. Cyprus' total area is 9.251 sq kms and is comparable in size to Lebanon in the Middle East or Connecticut in the United States. The island's time zone is 7 hours ahead of New York and 7 hours behind Tokyo. The island enjoys the best type of Mediterranean climate with about 300 days of sunshine per year. The bulk of the rain falls during the period from November to March. The coldest month is January with minimum and maximum mean temperatures of 6°C and 13°C, respectively, while in August, the hottest month, the corresponding minimum and maximum mean temperatures are 21°C and 36°C. Cyprus' estimated population is 746.000 of which 85 percent belongs to the Greek Cypriot community and 12 percent to the Turkish Cypriot community, whilst the remaining 3 percent are foreign residents. Greek and Turkish are the official languages of the Republic but English is widely spoken and understood, and is regularly used in commerce and government. Apart from the capital, Nicosia, with an estimated population of 194.000, all major cities are located on the coast. Limassol is the second largest city and the island's biggest port. Larnaca and Paphos, which are popular holiday resorts, are the third and fourth largest cities, respectively. GOVERNMENT AND LEGAL SYSTEM The structure of government is similar to that in "other western democracies where human rights, political pluralism and private property are safeguarded. The Head of State is the President of the Republic who is elected by universal suffrage for a 5 year term of office. The Council of Ministers, which is appointed by the President, is the executive organ of the Republic. Legislative power lies with the House of Representatives whose members hold office for a period of 5 years. There is a multi-party system of democracy based on proportional representation. Cyprus is a member of the United Nations and its specialised agencies, the Council of Europe, the Organization for Security and Cooperation in Europe, and the British Commonwealth. The island also has a customs union with the European Union which came into effect at the beginning of 1998. Cyprus is represented through full diplomatic missions in 29 countries, 9 major international organisations and 4 consulates general around the world. The legal system is based on the same principles as those applicable in the United Kingdom and all statutes regulating business matters and procedures are based essentially on English law. Most laws are translated into English. The Continental system of administrative law, according to which the legality of administrative decisions can be judicially controlled, has been introduced and applied by virtue of the constitution. Original criminal jurisdiction rests in District Courts for minor offences and in Assize Courts for more serious crimes. All appeals are heard by the Supreme Court which is also empowered to pronounce final judgement in all cases of constitutional and administrative law. THE ECONOMY Cyprus has an open free market economy. The island is often aptly referred to as a European country in the Middle East. Per capita GNP is approximately US$14.000, one of the highest in the Mediterranean. Considering other socioeconomic indicators such as the excellent housing conditions, pollution free environment and low crime rate, one may conclude that the quality of life is better than that reflected by per capita income alone. Furthermore, the cost of living is substantially lower than in most countries offering a comparable standard and quality of life. Nicosia ranks as seventh least expensive of the leading 56 international business centres surveyed in Prices and Earnings Around the Globe, published by the Union Bank of Switzerland (UBS) in August 1997. The economy is driven by thriving tourist and service sectors and an export-oriented industry. In terms of their contribution to GNP the most important sectors of the economy are: trade, restaurants and hotels; community, social and government services; finance, insurance and business services; and manufacturing. The performance of the economy has been such that it has combined high real growth with low inflation and low unemployment. Moreover, the economy is characterised by a low external debt service to exports ratio and a high international reserves to imports ratio. Of the US$4,5 billion annual gross foreign exchange earnings, 38 percent originate from tourism, 22 percent from the export of goods, 9 percent from transportation and more than 9 percent from international business and shipping companies. Trade, hotels and restaurants is the economy's most important sector. In fact, earnings from tourism have, in general, grown faster than domestic exports. Over 75 percent of tourist arrivals originate from the European Union. Cyprus' main exports are potatoes, citrus fruit, clothing, chemicals and toiletries, machinery and transport equipment, cigarettes, wood and metal products, cement and footwear. Manufactured goods and agricultural products account for 75 and 20 percent of domestic exports, respectively. With regard to imports, intermediate inputs and consumer goods are the most important categories, each contributing more than 32 percent of total imports. Cyprus' main trading partner is the European Union accounting for about 55 percent of imports and 40 percent of exports. BANKING AND FINANCE The legal tender is the Cyprus Pound. Its ultimate market maker is the Central Bank which aims to keep it stable against the Euro (CYP1= C 1,7086). In addition to the Central Bank, the banking system consists of 9 local commercial banks, 30 international banking units, 4 administered banking units, 3 specialised financial institutions and a number of leasing companies. Commercial banking arrangements and practices follow the British model. Strong correspondent networks are maintained around the world by local and international banks. Most of them subscribe to SWIFT, Reuters, Telerate and other services. Thus, they have easy access to the world banking network and are able to carry out traditional and specialised financial transactions. Cypriots and foreigners residing on the island enjoy the benefits of a well developed insurance industry with all types of risk accepted, mainly through agents and intermediaries. Currently, 81 insurance companies operate on the island, 24 of which are incorporated abroad and represent well known multinational insurers. Of the remainder, 30 are international insurance companies and 27 are local companies. The authorities regulate local banks and insurance companies in such a way as to safeguard the interests of depositors and assured, and to channel investments into productive activities.
The island's strategic location has been a major factor in shaping its history throughout the centuries and, in recent years, its development into a centre for international business. Cyprus offers to entrepreneurs, investors and ship owners a unique basket of advantages for the conduct of their affairs worldwide. The island's excellent infrastructure, English legal system, high quality of life and low cost of living, combined with its well educated labour force, good industrial relations and generous tax incentives create an ideal business environment.
GEOGRAPHY AND POPULATION
Cyprus is situated in the eastern Mediterranean, lying at the hub of 3 continents and close to the busy trade routes linking Western Europe with the Arab World and the Far East. Cyprus' total area is 9.251 sq kms and is comparable in size to Lebanon in the Middle East or Connecticut in the United States. The island's time zone is 7 hours ahead of New York and 7 hours behind Tokyo.
The island enjoys the best type of Mediterranean climate with about 300 days of sunshine per year. The bulk of the rain falls during the period from November to March. The coldest month is January with minimum and maximum mean temperatures of 6°C and 13°C, respectively, while in August, the hottest month, the corresponding minimum and maximum mean temperatures are 21°C and 36°C.
Cyprus' estimated population is 746.000 of which 85 percent belongs to the Greek Cypriot community and 12 percent to the Turkish Cypriot community, whilst the remaining 3 percent are foreign residents. Greek and Turkish are the official languages of the Republic but English is widely spoken and understood, and is regularly used in commerce and government. Apart from the capital, Nicosia, with an estimated population of 194.000, all major cities are located on the coast. Limassol is the second largest city and the island's biggest port. Larnaca and Paphos, which are popular holiday resorts, are the third and fourth largest cities, respectively.
GOVERNMENT AND LEGAL SYSTEM
The structure of government is similar to that in "other western democracies where human rights, political pluralism and private property are safeguarded.
The Head of State is the President of the Republic who is elected by universal suffrage for a 5 year term of office. The Council of Ministers, which is appointed by the President, is the executive organ of the Republic. Legislative power lies with the House of Representatives whose members hold office for a period of 5 years. There is a multi-party system of democracy based on proportional representation.
Cyprus is a member of the United Nations and its specialised agencies, the Council of Europe, the Organization for Security and Cooperation in Europe, and the British Commonwealth. The island also has a customs union with the European Union which came into effect at the beginning of 1998. Cyprus is represented through full diplomatic missions in 29 countries, 9 major international organisations and 4 consulates general around the world.
The legal system is based on the same principles as those applicable in the United Kingdom and all statutes regulating business matters and procedures are based essentially on English law. Most laws are translated into English. The Continental system of administrative law, according to which the legality of administrative decisions can be judicially controlled, has been introduced and applied by virtue of the constitution.
Original criminal jurisdiction rests in District Courts for minor offences and in Assize Courts for more serious crimes. All appeals are heard by the Supreme Court which is also empowered to pronounce final judgement in all cases of constitutional and administrative law.
THE ECONOMY
Cyprus has an open free market economy. The island is often aptly referred to as a European country in the Middle East. Per capita GNP is approximately US$14.000, one of the highest in the Mediterranean. Considering other socioeconomic indicators such as the excellent housing conditions, pollution free environment and low crime rate, one may conclude that the quality of life is better than that reflected by per capita income alone. Furthermore, the cost of living is substantially lower than in most countries offering a comparable standard and quality of life. Nicosia ranks as seventh least expensive of the leading 56 international business centres surveyed in Prices and Earnings Around the Globe, published by the Union Bank of Switzerland (UBS) in August 1997.
The economy is driven by thriving tourist and service sectors and an export-oriented industry. In terms of their contribution to GNP the most important sectors of the economy are: trade, restaurants and hotels; community, social and government services; finance, insurance and business services; and manufacturing. The performance of the economy has been such that it has combined high real growth with low inflation and low unemployment. Moreover, the economy is characterised by a low external debt service to exports ratio and a high international reserves to imports ratio. Of the US$4,5 billion annual gross foreign exchange earnings, 38 percent originate from tourism, 22 percent from the export of goods, 9 percent from transportation and more than 9 percent from international business and shipping companies.
Trade, hotels and restaurants is the economy's most important sector. In fact, earnings from tourism have, in general, grown faster than domestic exports. Over 75 percent of tourist arrivals originate from the European Union.
Cyprus' main exports are potatoes, citrus fruit, clothing, chemicals and toiletries, machinery and transport equipment, cigarettes, wood and metal products, cement and footwear. Manufactured goods and agricultural products account for 75 and 20 percent of domestic exports, respectively. With regard to imports, intermediate inputs and consumer goods are the most important categories, each contributing more than 32 percent of total imports. Cyprus' main trading partner is the European Union accounting for about 55 percent of imports and 40 percent of exports.
BANKING AND FINANCE
The legal tender is the Cyprus Pound. Its ultimate market maker is the Central Bank which aims to keep it stable against the Euro (CYP1= C 1,7086). In addition to the Central Bank, the banking system consists of 9 local commercial banks, 30 international banking units, 4 administered banking units, 3 specialised financial institutions and a number of leasing companies.
Commercial banking arrangements and practices follow the British model. Strong correspondent networks are maintained around the world by local and international banks. Most of them subscribe to SWIFT, Reuters, Telerate and other services. Thus, they have easy access to the world banking network and are able to carry out traditional and specialised financial transactions.
Cypriots and foreigners residing on the island enjoy the benefits of a well developed insurance industry with all types of risk accepted, mainly through agents and intermediaries. Currently, 81 insurance companies operate on the island, 24 of which are incorporated abroad and represent well known multinational insurers. Of the remainder, 30 are international insurance companies and 27 are local companies. The authorities regulate local banks and insurance companies in such a way as to safeguard the interests of depositors and assured, and to channel investments into productive activities.
The stock exchange commenced its operations in 1996. The council of the stock exchange is responsible for implementing the exchange's policies.
Transactions are electronically displayed and the exchange is planning in the near future to proceed to a fully computerised on-line trading, clearing and settlement system.
The operation of the stock exchange will, in time, encourage more companies to float new issues and acquire funds for productive investments. This development will give greater momentum to an emerging stock market, stimulated further by the island's thriving economy.
HUMAN RESOURCES
Cyprus maintains public elementary and secondary school systems of a very high standard. The educational system is complemented by vocational schools whose main objective is the satisfaction of the growing demand for skilled personnel by the tourism and manufacturing sectors. In every city there exists a selection of good quality private schools which are addressed mainly to the needs of foreign speaking pupils. These schools offer tuition in English, French, Italian, Armenian and Arabic at reasonable fees.
The island ranks among the leading countries of the world in terms of the proportion of university graduates. In 1992 the University of Cyprus, which is located in Nicosia, opened its doors to its first 500 students. It currently has 4 faculties: Humanities and Social Sciences; Pure and Applied Sciences; Economics and Management; and Letters. During its short life, the University has produced over 1.000 research papers in scientific and conference publications.
Cyprus has a well-trained and versatile work force. Qualified professional, technical and clerical staff with wide experience and fluency in English and other languages are available for employment at reasonable remuneration.
Terms and conditions of employment are negotiated either directly between the employee and the employer or through collective bargaining between trade unions and employers' organisations. The number of man-days lost to strikes each year (an average of 47 per 100.000 for the period 1993-97) is low by international comparisons. Added to this is the fact that Cypriots are hard-working, adaptable and honest. Interpol statistics reveal that in 1997 the average number of serious crimes was 597 per 100.000 population, far below the corre-sponding figure for the European Union. As a result of the high educational level of the population and due to historic and economic links between Cyprus, Britain and other European countries, legal, accounting, management, computer and other services are of the highest standard. A large number of lawyers are graduates of British or European universities or members of the English Inns of Court. Most accountants are British trained and members of either the Institute of Chartered Accountants or the Chartered Association of Certified Accountants. Professional advice, therefore, is available from experts who can draw on both local and international knowledge.
TRANSPORT AND TELECOMMUNICATIONS
There is a wide network of air-routes connecting Cyprus with Europe, Africa and Asia. The island's two international airports are situated near Larnaca and Paphos, some 50 and 150 kms, respectively, from Nicosia. They handle almost 1.100 scheduled flights per week served by 36 international airlines as well as flights operated by 84 chartered airlines. The island is rapidly becoming a major international transit station for commercial air transportation with excellent connections within the entire region.
Seaborne traffic is served by a fully renewed port system comprising the multi-purpose ports of Limassol and Larnaca, the industrial port of Vassiliko and the 3 specialised oil terminals of Larnaca, Dhekelia and Moni. About 70 shipping lines include Cyprus in their regular schedules to and from 5 continents and 4.000 ships totalling 15 million net registered tons call at Cypriot ports each year.
Limassol and Larnaca ports are the island's main sea gateways handling over 3,5 million tonnes of seaborne cargo, including the entire traffic in transit. Both ports are increasingly being used as regional warehouse and distribution centres. Supplementing one another in terms of facilities and traffic, they constitute a major container trans-shipment centre in the eastern Mediterranean. Transit cargoes enjoy special treatment at the ports. Such treatment includes, in addition to minimal customs formalities, free trade facilities, a very reliable handling and delivery system, the extension of berthing priority to their carriers and special rates for their long-term storage.
Cyprus recognises the importance of telecommunications and has invested heavily in the development of this sector. As a result, the island may claim, in this respect, to be among the most developed countries in the world.
The Cyprus Telecommunications Authority (CYTA) provides a variety of advanced telecommunications services, covering the whole spectrum of customer needs for both voice and data communica-tions, fixed and mobile. Special emphasis is also placed on the provision of value added services, such as various Internet-based multimedia services which promise to be a dominant business activity in the next decade.
The national network utilizes state-of-the-art technology such as digital switching and transmission systems and fibre optic cables.
In line with its efforts to establish the island as a centre of advanced telecommu-nications services and a regional hub, CYTA has, in collaboration with other telecommunications administrations in the region, installed submarine fibre optic cable systems connecting the island with Greece (Aphrodite 2), Israel (CIOS), Syria (Ugarit), Lebanon (Cadmos) and Egypt. The latter constitutes part of a huge submarine fibre optic cable system, SEA-ME-WE2, stretching from Marseilles to Singapore.
CYTA was also involved in the establish-ment of the LEV submarine cable system, connecting Israel, Cyprus and Italy, which became operational in January 1999.
Furthermore, Cyprus will be a landing point for SEA-ME-WE3, a 38.000 kms long 10Gbit/s state-of-the-art submarine fibre optic cable network linking the Pacific Rim, South East Asia, the Middle East and Western Europe.
This extensive fibre optic cable network is complemented by an equally impressive satellite telecommunications network. The satellite earth stations operate mainly via INTELSAT, EUTELSAT as well as via Russian satellite systems.