Panayiotis Rougalas
Cyprus faces a deadline by the end of 2024 to align with the European regulation governing large foreign investments. Parliament aims to review and enact the relevant legislation alongside budget discussions, but time constraints mean a decision must be reached by the final plenary session.
During a recent Finance Committee meeting, all invited parties expressed support for regulating foreign investments. However, they emphasized that controls should be carefully implemented to avoid excessive bureaucracy that could deter investments.
One sticking point raised in the discussion is that the current draft lacks a financial threshold for when state oversight of foreign investments should begin. Currently, the draft allows oversight from the first euro invested, which stakeholders argue is impractical. This proposal’s timing coincides with recent acquisitions of private hospitals by investment funds in Cyprus, and not bank acquisitions, which had drawn attention in 2022 with Lonestar's bid for the Bank of Cyprus.
The bill also proposes establishing a committee comprised of various ministries, moving away from an earlier version that concentrated decision-making solely with the Minister of Finance. The new version recognizes that some foreign investments could impact critical infrastructure, sensitive technologies, or data, aiming to protect the EU's interests in these areas.
According to a 2021 report from the European Court of Auditors, foreign direct investment in the EU was valued at around €117 billion, accounting for 8% of the global total. The regulation mandates a cooperation framework that assesses the cross-border effects of foreign investments handled by member states and addresses potential risks to EU security and public order. The report also noted that six EU member states, including Cyprus, currently lack mechanisms for reviewing foreign direct investments.
