Cyprus Economy and Competitiveness Council proposed the encouragement of acquisitions and mergers of Cyprus' companies in order to improve their competitiveness.
According to a written recommendation issued by the Council, the purpose is to create larger companies that could take advantage of economies of scale and become more productive and competitive, attract specialised personnel and become more extroverted and resilient.
"The change of culture for the promotion of acquisitions and mergers, as well as the provision of incentives in this direction, are issues that should be considered by the Government", the Council points out.
As the Council notes, micro-firms and small firms face barriers to finance access, are unable to innovate, to draw up an integrated strategy, to export and compete in the international economic environment. It is added that 92.9% of businesses in Cyprus are classified as very small businesses with up to 9 employees and 6.1% as small businesses with less than 50 employees.
The Council recommends the creation of an integrated framework of support and culture change regarding the promotion of acquisitions and mergers through the establishment of an Office to inform and guide businesses that wish to consider the possibility of a merger or an acquisition, as well as the organisation of informational events in collaboration with business organisations.
It also proposes modernisation of the legal framework for reorganisations, mergers and acquisitions of companies, as well as the procedures that will be affected by the modernised framework. The aim, it is noted, is the legal basis for mergers and acquisitions to be consistent with the modern spirit that exists in mature stock markets.
It also recommends tax relief and the elimination of burdens as well as the application of tax incentives in the agricultural sector and subsidies for agricultural equipment and machinery.
According to the proposal, tax reliefs will be applied to companies that employ up to 250 workers and have an annual turnover that does not exceed 50 million euros.
It also proposes the provision of specialised advisory services for companies intending to merge through the Advisory Services Plan of the Ministry of Energy, Trade and Industry as well as facilitating access to financing.
According to the Council, mergers and acquisitions in Cyprus are at very low levels, as most of the business are family businesses in traditional sectors - where there is no culture of mergers with the aim of expanding businesses.
The new Long-Term Strategy for the sustainable development of Cyprus, which was prepared by the Economy and Competitiveness Council with funding from the EU, proposes a new development model until 2035 and sets as an important pillar the improvement of the competitiveness and productivity of Cypriot businesses and the shift towards exports through digitalisation and continuous training. Achieving this goal requires larger enterprise sizes that will be able to respond to changing market conditions and survive in a globalized environment.