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Cyprus’ private sector “ready for growth”

Interview - August 18, 2015

Lanitis Group, one of the largest private sector conglomerates in Cyprus, has seen the best and worst over the past years, and Executive Chairman Platon E. Lanitis is confident that if the right approach is taken, then current conditions will see a return to sustainable growth in Cyprus.


As a private sector leader, what is your perspective on the economic recovery in Cyprus?

Without a doubt we are in a better state than we were back in 2013, but still it’s a very fragile recovery – we still have a long way to go. One should not forget that unemployment is still high, especially among young people, and there is hardly any liquidity in the market.

The government took the right steps; they have announced a lot of public works, but they haven’t commenced yet, so it hasn’t filtered through into the real economy.

Banks don’t have the liquidity to give out loans, and the other thing is of course that interest rates are high compared to other EU countries, and certainly too high to make major investments.

However, we are starting to find that in Limassol, in particular, the green leaves are coming through; the marina development and projects like the Oval have performed well beyond expectations.

Investors are shopping around on the market again, looking for projects. One year ago, we did not have that; we had to convince them to come here.

Now, we have to be careful that this momentum has to be maintained. We need more positive changes and we cannot sit back and relax.

What we have agreed to with the troika, we have to follow it through. The privatization of ports and telecommunications has to go through.

This is an opportunity to correct everything and the biggest threat to our economy now, are the positive early economic indicators, which give us the excuse to look over the reforms again and perhaps not go through with them.

We need to move forward with the correct measures that have been agreed upon.

What does the private sector need to really ‘outgrow’ the recession?

The private sector is the most dynamic sector, and one of its characteristics is that it adapts fast. Yes, we went into a sudden overnight reverse mode, and we had to cut costs and see where we could find synergies instead of expansion.

Our competitors suddenly became our possible partners to merge and cut down costs even further. However, cutting costs is effective up to a point – there is no growth coming out of that.

There has to be growth following cost cutting. We are at a stage where we are now ready for growth, but the problem is the liquidity.

The banks are still to a large extent debt collectors; I’m not denying that they are burdened with NPLs and have their own problems to go through, but we need liquidity.

The Lanitis Group is highly diversified across some of the most resilient sectors in the country. In the current business environment where do you see Lanitis focusing?

We were hit hard during the crisis, like all big groups on the island. We were heavily involved with Laiki Bank, which disappeared overnight, so we had a bitter pill to swallow.

We had to shrink, deleverage, and now I believe we are ready to go into a growth mode. We still have some ground to cover in consolidating some of our companies and some of the activities that we are involved in.

In the hotel industry we joined forces with other groups; maybe there is room in other divisions in our group, such as the construction industry.

Then we need to go through our projects such as the Limassol Greens and the Oval. Certainly, one of the areas that Cyprus has room for growth is tourism.

We are an island with only 800,000 people and Rhodes is an island 210 miles away that has 80,000. Their season is between May–October and they have 2.5 million tourists, and the same with Crete.

We nearly have all-year-round tourism and we cannot manage to get that number. So, there is a lot of room for expansion here. We are blessed with 365 days of sun, so tourism is one section where I believe the future lies.

Another area where I see growth is within medical tourism. After all, Europe is ageing, and people are looking to go to warmer climates. The medical sector is something we should look at.

People are coming to Cyprus to retire, especially from the Nordic countries. We have a high quality of life and we are a small country with easy access, good telecommunications and we speak English, which is very handy.

For the Brits, we drive on the correct side, which is the left side, so we have a lot going for us.

Given how hard the crisis hit the private sector in 2013, you do not seem to talk about it with too much pain. There is a real sense of optimism, a focus on looking forward.

You have to keep looking forward. However, if you do not learn from the past, you are bound to repeat it. But we have to be optimistic and there is no point in crying over spilled milk.

The only thing I hope is that we have learned from our mistakes and from what happened up to 2013. We are part of Europe and a free market system, so you need to believe in that.

Regarding the Cyprus Question, there is now a sense that we are right on the cusp of a solution, although I know that this is probably something you have heard many times over the last 40 years. Is there something you see that is different from before? Is a solution something you factor into your strategic planning?

For us, and from a business perspective, a possible solution will open up tremendous opportunities. Number one, the country risk would be reduced.

Up to now, investors that came to Cyprus had to include the country risk in their projections. Business people are for a solution, a good solution.

Now, there is always a discussion about what is good, but from the private sector side I believe a solution would be fantastic news.

We are lucky that we have two politicians that share the same vision, and that is very important. I hope that they will not repeat the mistakes of the past with the Annan Plan, where we were rushed to vote within a week, and there was no time given to try to explain to people what the plan was about.

We are tired, we have had enough and it is time for a solution. As long as it is a European solution, and it seems Turkey wants a solution as well, because of their aspirations to become a member.

This solution is one of many factors enticing UK investors back into Cyprus. With the pound as strong as it is, Cyprus is becoming a lot more attractive. Where do you see the most potential for UK investment?

The conditions with the UK remind me of when we first started with the Aphrodite Hills Resort. At the time, our plan was to go and do our marketing within the UK, then to move on to Ireland and Germany to sell the properties.

We never made it out of the UK, because we sold out, because sterling was extremely strong against the Cyprus pound. Now, sterling is strong against the euro.

Interest rates in the UK are at the lowest ever and real estate in the UK is going up, so it is exactly the right time. I strongly believe that the UK will return to being our biggest market for second homes.

People from the UK know Cyprus well, because of the reasons I told you; the good weather, the telecommunications and the British bases.

From an investor’s point of view, the fact that we now have a government taking the right steps, certainly, the returns that we foresee on our projects are far better than the ones of six months ago.

Also, as we said, a possible solution would be the icing on the cake.

There was significant damage done in 2013 to investor confidence in Cyprus. Moving forward, how would you like investors and the general public to see Cyprus? What should the Cyprus brand be?

Cyprus is where you can do business in a correct manner, whether it is law and order, whether it is security or the level of expertise in professional services.

Cyprus has the potential to be known as a safe international business hub. Furthermore, we are a very small country, and we are friends with all our neighbors, which is very rare.

From a tourism perspective, I agree that we should move away from “sand and sea”, and become “sand, sea, and more”.

We have it all, with the growth projects, with the possibility of the casino, again thanks to the government that said yes where the previous one said no.

We are living in interesting times; there are opportunities, we just that we need to be a bit careful.