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Daily News Review – 11/01/2019

In today’s press:

ETYK: Poised to take measures at Hellenic Bank

Bank employees’ union ETYK was yesterday authorised by its Hellenic Bank members to take any necessary actions – including strike measures – needed to resolve the labour dispute that has arisen between the two sides. The decision was made following a secret vote at district general meetings, with 99% voting in favour of the union’s suggestions. ETYK said the strong participation of members and the percentage of those who voted in favour of measures proves how aligned the union’s positions are with those of its members, while it added that it will not allow the creation of two categories of employees at HB. ETYK said there is just one contract at Hellenic and all of its employees – including those moved from the Co-op – must join it. It concluded that it hoped HB would respect its employees and proceed with the relevant adjustments so as to avoid any unnecessary and damaging consequences.

Profits for CSE

The Cyprus Stock Exchange returned to profits yesterday, with the General Index rising to 0.18%, and the day closing on 65.13 units. The FTSE/CySE 20 index rose by 0.23%. The daily trading volume was €171,000.22. Hellenic’s shares attracted the biggest investor interest with €98,498 (down 0.28%, closing price €0.72), followed by those of Bank of Cyprus with €50,407 (up 0.42%, closing price €1.45) and Demetra Investment with €5,837 (down 1.23%, closing price €0.48)

Russian businesses are moving to Malta

Cyprus’ services sector is on the lookout for new clients from new sectors and geographical markets, as the Russians’ departure from the island is not just limited to them withdrawing their deposits and closing their bank accounts, but also moving their businesses to other destinations. The departure of Russian businesses after years of operating in the Cypriot market has become a daily phenomenon, according to professionals of the services sector – such as lawyers and accountants – while it appears that the majority of these businesses are moving to Malta, where the regulatory framework is still more relaxed, while also offering access to the EU.

Cyprus is no longer attractive to the Russians

Cyprus is no longer what it used to be for Russian businesses, Politis reports citing a Bloomberg article. The new regulations against money-laundering combined with the consequences from the US sanctions on high-profile Russian businessman have led them to withdraw their money from the island, which was once considered an important refuge. “Russians are downgrading Cyprus,” said Kyriakos Iordanou, head of the Institute of Certified Public Accountants of Cyprus, members of which have Russian clients. The value of deposits from third country nationals – mainly Russians – in the Cypriot banks dropped to €7.1b by end-November, according to the Central Bank of Cyprus. This is nowhere near the 2012 peak of €21.5b in deposits. En+ Group plc, which previously planned to move from Jersey to Cyprus, has instead decided to move to Russia. Its main shareholder is Oleg Deripaska, who is on the US sanctions list. The accounts of Viktor Vekselberg, whose group Renova is the main shareholder of Bank of Cyprus, have been frozen. Finance Minister Harris Georgiades told Bloomberg in September: “Cyprus’ economic model has already changed and morphed into one that relies far less on shell companies and foreign deposits. Cyprus is now focused on attracting new businesses of essence, with a natural presence and with real activity and employment.”

Government wants the €33m right away

The Finance Ministry has sent a letter to the House Finance Committee urging it to release the €33m funds for the Estia scheme. MPs had marked the funds when passing the 2019 budget. The ministry said in its letter that it cannot implement the plan for vulnerable borrowers without the relevant funds. It said the first payments to beneficiaries have to start being made by the year’s end.

Altamira: Puts housing and commercial properties to auction

Altamira Asset Management Cyprus Ltd was accepting bids for 5 plots of land and 12 investment properties by 8 January. According to a study by the website Brier, some of these properties are of high value, one even in the range of €4.5m. 

€109m spent on research and development

Cyprus’ expenditure on Research & Development (R&D) in 2017 increased compared to the previous year, but it was still the fourth lowest among the EU member states, said Eurostat. EU member states spent a total of almost €320b on R&D in 2017. As for R&D intensity, which is expenditure as a percentage of GDP, Cyprus in 2017 spent €109m, up from €70m in 2007, which marked an increase in its R&D intensity to 0.56% of GDP from 0.4% a decade previously. In the EU R&D intensity stood at 2.07%, compared with 2.04% in 2016. EU member states spent a total of almost €320b on R&D in 2017.

More upheaval at Limassol port

Limassol port is about to go through more upheaval, as its operators Eurogate and DP World have not been able to appease port workers who are members of trade union PEO over the dispute on the renewal of the workers’ collective agreements. If corrective measures are not taken, port workers have decided to go on strike on Monday, 21 January, regardless of how this will negatively impact on the port’s operations. There will especially be problems in the servicing of ships. The decision was made at an extraordinary general meeting that took place yesterday at PEO’s offices in Limassol. In an announcement afterwards, PEO demanded that the decision to appoint an Arbitration Court is withdrawn and that consultations to resolve the labour dispute commence right away. In the opposite event, then depending on developments strike action will be taken. Specifically, PEO decided yesterday that: dockers will gather outside the Presidential Palace at the Cabinet’s next meeting to demand that it does not appoint an Arbitration Court; if consultations to resolve the dispute do not begin next week, then a 24-hour strike will take place on 21 January; blatant violations of the collective agreement will absolutely not be tolerated; as of 12 February, when it will be two years since the labour dispute over work at the jetty began, the work must be carried out only by registered dockers.

They will close the port down again

As above, with Alithia newspaper adding that members of SEK and DEOK were also present at PEO’s EGM yesterday.

War drums at Limassol port

Article by Athos Eleftheriou, general secretary of SEGDAMELIN-PEO, who says that during the dockers’ 24-hour work stoppage on 22 December over the collective agreement, the workers decided not to announce any further measures in order to grant time for dialogue to commence. But instead of dialogue from the employers and the government, war drums were sounded, he says. DP World and Eurogate decided to report the dockers for going on strike to the Port Council, which in turn referred them to the Disciplinary Board. The Transport Minister went on to immediately implement the Board’s decision to appoint an Arbitration Court. But he wonders, what about the rest of the decisions that have been pending since 2017 regarding the operations at the jetty, the appointment of an employer for the dockers, among other? SEGDAMELIN-PEO has from the start refused to accept such decisions and regulations; instead insisting on its position that the two sides should engage in dialogue, within the framework of the Industrial Relations Code and the labour practices in Cyprus. But the other side refuses to do that, says Eleftheriou. He wonders why the matter has been sent to Arbitration; to decide whether there will be pay rises or accept the scores of reductions the employers are seeking?

ICTS: 900 new jobs in 2019 in Cyprus

The site economytoday interviews the Operations Manager of ICTS, Theodoros Boukouvalas, who spoke about the progress the company has made and its plans for the new year. Among other, he says that for the past two years the company has had its big contracts with partner Hermes Airports, as well as DP World Limassol. Its cooperation with DPW Limassol to guard and control access to Limassol port began in 2017. In 2018 ICTS expanded its services to include physical and x-ray inspection services at Limassol port’s new passenger terminal.

Big changes with the merger of municipalities

The political parties are working behind the scenes and becoming involved in the effort to reform the island’s Local Administration, so as to improve their chances of having a say in the future mayors that will be appointed, Phileleftheros reports. There have already been political interventions over which municipality will absorb the Aglandja municipality in Nicosia, with more sure to follow, it adds. Interior Minister Constantinos Petrides told the paper that his main concern is to ensure that the new municipalities are viable and well-staffed, so as to provide a better service to the public. He added that there are still no official decisions on the exact number of municipalities there will be after the reshuffle, though a draft report has previously estimated there will be 10 to 15 municipalities left, from the current 30. Among the new District Administrations’ responsibilities will be to issue licences (such as for entertainment venues, alcohol supply, tobacco trading and selling, operation of petrol stations and public swimming pools).

Challenging the status quo is imperative

In Alithia, economist Savvia Orphanidou analyses the current financial situation in Cyprus for 2019. She says that having overcome the financial crisis and the difficult decisions that had to be taken because of it, Cyprus today has a 4% economic growth rate, one of the highest growth rates in Europe, while steadily the country is covering lost ground in terms of GDP. At the same time, unemployment went from 17% to 7.5% today, which is below the EU average. She further says that the banking sector has been safeguarded following latest developments and the reduction of NPLs, while banks started giving out loans to young couples and viable businesses. She says that reforms in the banking sector, in the management of public finances, social provisions, pensions, taxes, the introduction of the Guaranteed Minimum Income, big investments such as the casino and the marinas as well as the creation of a Deputy Ministry of Tourism, are important but not nearly enough. She argues that more reforms need to take place in the sectors of health, public service and investment law. She says that the partial denationalisation of telecommunications, the restructuring of the Central Bank, the reform of the Judicial System, the e-governance project and the creation of Deputy Ministries of Development, Digital Strategy and Culture are very important and need to be implemented very soon.

The time-worn old Larnaca Airport

Politis reports that discussions have been ongoing since 2009 on how the state could have taken advantage of the buildings that once used to be Cyprus’ main airport in Larnaca. However, its buildings and surrounding areas remain unused since 2009, when the new Larnaca Airport was launched. The airport has since fell into decay. The author recounts previous failed efforts to take advantage of the airport, such as the interest of Chinese investors that wanted to turn it into an exhibition centre and the efforts by Hermes Airports that tried to find investors. It was further rumoured that the Airport would be turned into a luxury hotel and even a casino. The author says that the issue of the time-worn Airport will be submitted to the Minister of Transport for discussion on 14 January.

Revenue from Betting satisfactory in 2019

It is estimated that the National Betting Authority will receive a total €23.120.000 from the betting industry in 2019 and spend €22.887.479. Spending in 2019 is expected to rise by 3.3% compared to last year (€22.157.924). According to the National Betting Authority’s budget which was submitted to the Parliament for a vote, the main profits for the year 2019 will come from the following: The betting tax (€15.400.000) which is calculated as 10% on the net revenue, a fixed fee (€3m – same with 2018) and a 3% contribution to the Authority (€4.6m) of which 2% is allocated to the Cyprus sport Federations and 1% to gambling addiction programmes. The Authority’s budget also includes an envelope for the development of a software program and the purchase of digital equipment in order to safeguard state income.

Close to €11m passengers went through Cyprus airports in 2018

Politis reports that according to information provided by Hermes Airports, passengers that went through Cypriot airports rose to 10.9 million in 2018, marking a 6.7% increase from last year. Hermes Airports predicts that passenger arrivals will increase in 2019, albeit at a smaller rate.

Hotel Industry going through a “hot” winter

Hotel workers’ trade unions have submitted their demands, following the completion of the industry’s last collective contract on 31.12.2018. The two unions issued a joint press release in which they mention their demands (the rights that were granted in 2013), which include granting raises to all employees, introducing salary grades, a Welfare fund as well as a 13th salary. The president of the Employers & Industrialists Federation (OEV) said on Twitter, that the trade unions have maximalist demands and that they have ignored OEV’s appeals to act with prudence and realism.

Cabinet to discuss potential conflict of interest of OKYPY head

The Cabinet will discuss the potential conflict of interest in the employment of Sir David Nicholson, head of the organisation of state health services (OKYPY). The Auditor-General had yesterday called on the cabinet to examine the situation as a matter of urgency, asking them to review the appointment of Nicholson as head of OKYPY. In a January 9 letter, the auditor attached a 10-page legal opinion by the attorney-general who said that at first glance there seemed to be a conflict of interest concerning his and his wife’s involvement in hospitals operating in the UK. The law states that OKYPY members have a conflict of interest if they are linked to “any businesses dealing with health issues. From an internet search the auditor-general discovered that Nicholson – former chief of Britain’s NHS – had not disclosed several associations.” Health Minister Constantinos Ioannou said that the matter will be discussed by the Cabinet in its next meeting, underlining that this development may cause upheaval but does not affect the Organisation’s normal operation.

Why not reimburse the pharmaceutical industry?

Phileleftheros author, Chrystalla Chadjidemetriou criticises the agreement between the state and Hermes Airports, which entails a reimbursement of losses due to the Tymbou Airport which operates in the Turkish-occupied north. The company has received €45m from the state so far and will receive another €23m. The author says that with the same rationale, more industries should be reimbursed including the Pharmaceuticals industry, which loses a lot of revenue due to the fact that many GCs choose to go shop from pharmacies in the occupied north.

Agathangelou’s email divided CMA

The Cyprus Medical Association (CMA) was divided after the revelation yesterday that the president of the association, Petros Agathangelou had called doctors who choose to be integrated in the General Health System “defectors”, in an email. He also said that it “would be unethical if a doctor undermined the effort of its colleagues to safeguard their scientific dignity”. The email created a rift between the doctors with some even considering to resign from the Board. Doctors who advocate for the GHS, announced that they will organise an awareness campaign in order to inform their colleagues on the new system.

Tax Department and Auditor-General to scrutinise doctors’ tax returns

According to Phileleftheros, tax authorities and the auditor general are joining forces to scrutinise doctors’ tax returns to determine whether they evade taxes. The paper said that they will also review whether all doctors have a tax file and whether the income they declare justifies their assets. Tax authorities can seek further information from the doctors themselves and can also carry out on the spot checks.