Cyprus must move urgently to establish a national mechanism for foreign investment controls, according to the President of the Cyprus International Businesses Association (CIBA), Vassilis Demetriades. In an in-depth interview with Economy Today, Demetriades warned that the lack of an official screening framework not only breaches EU obligations, but risks damaging Cyprus’ attractiveness to international investors.
“Creating such a mechanism is not just a European requirement, it is a strategic necessity,” he said. “It must be built on principles of proportionality, legal clarity and effectiveness.”
Cyprus and Croatia remain the only EU member states yet to adopt legislation enforcing Regulation (EU) 2019/452 on FDI screening. Demetriades stressed that this delay creates legal uncertainty, with investments made in Cyprus potentially coming under retroactive scrutiny from other EU countries or the European Commission, particularly for deals concluded after 10 April 2019.
CIBA, which represents a core pillar of Cyprus’ international economic footprint, has long advocated for a smart, carefully calibrated framework that protects national interests while preserving the island’s appeal to investors. “Over-regulation can be just as damaging as under-regulation,” Demetriades noted. “The challenge is to strike the right balance.”
A strategic partner, not a passive recipient
Cyprus, he said, should not view the EU regulation as a burden, but as an opportunity to establish itself as a reliable and modernised partner in a rapidly evolving global investment landscape. Comparable mechanisms already exist in the United States (CFIUS), United Kingdom (ISU), Canada (FIRES), and India (DPIIT), with which Cyprus seeks to deepen both economic and diplomatic ties.
CIBA has taken several steps to guide its members through the evolving regulatory terrain. These include public consultations, legal briefings, and conferences co-organised with CIIM and the International Law Association. A recent forum in Limassol brought together stakeholders from the legal, accounting, and shipping sectors to discuss both EU obligations and best practices under the new regulatory framework proposed by the European Commission.
Demetriades highlighted the importance of building an efficient state mechanism with trained personnel, clear timelines, and cooperation across ministries- particularly with input from the Research and Innovation Deputy Ministry. He also called for the creation of an advisory body involving Cyprus’ intelligence and security services to provide strategic oversight in sensitive sectors such as energy, health, telecommunications, and technology.
Legal certainty drives trust
A central concern raised by international businesses is the potential for delays, bureaucracy and ambiguity once the screening mechanism is operational. But for Demetriades, the answer is not deregulation, it is precision. “Legal certainty is essential for trust,” he said. “Investors don’t fear rules; they fear unpredictability.”
The introduction of well-structured foreign investment controls could, in fact, enhance Cyprus’ competitiveness. Under the new framework, companies certified by the screening authority may be better positioned to attract financing, particularly in high-tech sectors. “Banks and international lenders value systems of oversight. This is not a brake on investment- it can be a catalyst,” he said.
CIBA has submitted multiple position papers and proposals throughout the consultation period with the Finance Ministry and Parliamentary Committee on Finance. Demetriades reiterated the association’s call for Cyprus to align its eventual screening mechanism with the Commission’s 2025 Recommendation on outbound investments, especially regarding sensitive technologies and national security.
“The EU has made clear where things are heading,” he concluded. “Cyprus has a window of opportunity, but it is closing fast.”
Also read: Foreign investment screening law heads to Parliament
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