A business association urged parliament on Monday to quickly pass an EU regulation that has to do with the screening of direct foreign investment in Cyprus, noting that the island plus Greece and Croatia are the only bloc countries to not have regulated the matter yet.
Pantelis Christofides, legal advisor to the Cyprus International Businesses’ Association (Ciba) told MPs that the relevant bill drafted is being discussed on-off in parliament for the past two years.
Christofides proposes that parliament here waste no more time in transposing the EU regulation into domestic law, and that the final text of the bill should incorporate the latest feedback from the European Commission.
The matter concerns EU Regulation 2019/452 of the European Parliament and of the Council “establishing a framework for the screening of foreign direct investments (FDI) into the Union”.
It seeks to establish a framework for the effective screening by member states of FDI “on the grounds of security or public order”, and includes the possibility for the European Commission to issue opinions on such investments.
In the context of the EU regulation, FDI is defined as “an investment of any kind by a foreign investor aiming to establish or to maintain lasting and direct links between the foreign investor and the entrepreneur to whom or the undertaking to which the capital is made available in order to carry on an economic activity in a Member State.”
Ciba’s Christofides cited a related EU report advising caution for entrepreneurs working with investors from non-EU countries, particularly the United States, the United Kingdom, the United Arab Emirates, China, Canada, Japan, and Russia.
According to the same report, in 2023 the United States continued to be the main foreign investor in the EU-27, accounting for 30 per cent of all corporate takeovers/buyouts and for 36 per cent of ‘Greenfield investments’.
In a Greenfield investment, a parent company creates a new operation in a foreign country from the ground up.
As for the United Kingdom, it accounts for 25 per cent of corporate takeovers and 21 per cent of Greenfield investments.
The EU regulation has been updated to draw the attention of member states to whether a foreign direct investment “is likely to affect security or public order” in a range of areas, including critical infrastructure – energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure.
Other areas relate to “critical technologies and dual use items” including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies.
In addition, supply of critical inputs, including energy or raw materials, as well as food security.
In parliament, officials with the finance ministry stated they have reservations about updating the text of the bill as it stands.
Chair of the House finance committee Christiana Erotokritou (Diko) said parliamentarians will proceed with an article-by-article debate of the bill, as it needs to go the plenum for a vote by year’s end.
