Cyprus provides Japanese businesses with a distinct set of opportunities, leveraging its strategic position as an EU member state and a bridge between three continents. By leveraging Cyprus’ favourable business environment, we aim to increase our collaboration with Japan in sectors such as energy, finance, technology and shipping, says Yiannis Michaelides.
How would you describe the current Cyprus-Japan relations, and what significant diplomatic advancements do you see in the coming years?
Despite being at the opposite ends of the Eurasian Continent, Cyprus and Japan share a long history of friendship and cooperation. The growing economic and political ties between our two countries attest of our rich bilateral relations, as the year 2022 marked the 60th anniversary of the establishment of diplomatic relations between Cyprus and Japan. The opening of our Embassy in Tokyo in 2019 and the Embassy of Japan in Nicosia a year earlier, are testaments of the will of both countries to deepen bilateral relations. The political consultations held earlier this year in Nicosia and in 2022 in Tokyo, paved the way for an enhanced cooperation on international issues of mutual concern. We now have a concrete mechanism that enables us to hold regular consultations, exchange high-level visits and institutionalise our collaboration.
The bilateral relations between Cyprus and Japan are governed by a like-minded approach on international issues, multilateralism and global security challenges. We see Japan as a country that seeks to bring stability and prosperity in East Asia and the Indo-Pacific region, as we ourselves strive to achieve peace and stability in our region of the world.
Cyprus has an important role to play in the Middle East region and as a gateway to Europe. As such, we have already created synergies with Japan in crisis management, humanitarian assistance and civilian evacuation. In 2018, our partnership with Japan reached a new level with the signing of a Memorandum of Cooperation between the Cypriot and Japanese Ministries of Foreign Affairs on providing assistance to Japanese evacuees. Our cooperation is further highlighted by both countries’ understanding for the need to deliver urgent humanitarian assistance where needed and Japan’s readiness to participate in Cyprus’ plan for a maritime humanitarian corridor.
Furthermore, Cyprus and Japan are now enjoying a closer collaboration through the development of EU-Japan relations and the recent ratification by the EU and Japan of a Strategic Partnership Agreement. We are thus committed to working with Japan to promote peace, security, the rule of law and democratic values globally, as we are united in our commitment on non-proliferation, regional stability and peaceful conflict resolution.
Our cooperation with Japan will be particularly significant in the years to come in addressing global issues such as disarmament, energy and food security, and climate change. Building on existing bilateral memoranda of cooperation, there is a wide scope for partnership in a variety of fields including, science, research, education, cultural heritage, merchant shipping, tourism, just to name a few. Furthermore, we are working to increase trade and promote investments in innovation, digital technology and renewables. We equally see great value in our future cooperation with Japan on security and defence.
Japan is known for its technological innovation and advanced industries, what opportunities exist for Cyprus to strengthen economic and trade relations with Japan?
Cyprus and Japan have recently laid a strong foundation for expanding their economic and trade relations, especially in the fields of technology, renewable energy and financial services, as Cyprus is set to become a technology and innovation hub.
The recent signing of a Memorandum of Cooperation in the Area of Science, Technology and Innovation between Cyprus and Japan, underscores the shared interest of the two countries in enhancing collaboration in science and technology. This agreement aims at promoting, among others, joint research and innovation projects, exchanges and mobility in the academic sector, adoption of best practices and knowledge sharing. This new instrument will encourage cooperation in areas such as biotechnology, biomedicine, advanced materials, energy efficiency, robotics and AI.
Furthermore, Cyprus actively participates in Horizon Europe, the EU’s major research and innovation programme. Japan’s potential involvement in this program could open doors for Cypriot and Japanese researchers to work together on cutting-edge projects.
In the renewable energy sector, Cyprus is focused on becoming a leader in sustainable energy, particularly in solar and wind power. Japan’s expertise in energy efficiency, hydrogen technologies, and smart grid solutions aligns well with Cyprus’ renewable energy ambitions, offering opportunities for mutual benefit, as both countries aim for energy diversification and sustainability. Electricity supply is another area of potential partnership, through infrastructure projects such as the EuroAsia Interconnector and deep-sea cables, as Cyprus is in the process of connecting its energy production facilities and power grid to the Middle East and the European continent.
Cyprus’ position as an established financial hub within the EU, combined with Japan’s advanced fintech industry, creates avenues for collaboration. Asset management, investment funds and digital banking are areas where both countries can explore the future of financial services, in an increasingly interconnected global economy. The establishment in Cyprus of the MUFG Investor Services operational centre is a promising sign, as we look forward to more Japanese companies operating from Cyprus and expanding their presence through Cyprus into the EU and the Middle East.
Cyprus’ national promotion programmes, in conjunction with EU initiatives, support the potential for Cypriot companies to gain access to the Japanese market. The EU-Japan Centre for Industrial Cooperation and its EU Business Hub programme provide pathways for participation in trade expos, business missions and networking events, all of which are crucial for increasing market visibility and building bilateral business partnerships. The Cyprus Business Forum held in Tokyo in April 2024, which focused on shipping, energy, information, communication and technology as well as logistics and services, offered Cypriot and Japanese businesses a platform to discover and explore potential business synergies and opportunities.
Cyprus is a strong regional hub and EU base for international business, what key opportunities does Cyprus offer specifically to Japanese business?
Cyprus provides Japanese businesses with a distinct set of opportunities, leveraging its strategic position as an EU member state and a bridge between Europe, the Middle East, North Africa, and Asia. Cyprus has long established itself as a thriving business hub, with a vast array of investment opportunities in key growth sectors of the economy. The island’s ideal strategic location, advanced infrastructure and high quality of life do not only represent key reasons to relocate or establish headquarters in Cyprus, but also make Cyprus an excellent choice for investment.
The island is an ideal investment gateway to the European Union, as well as a portal for investment outside the EU. As a member of the EU and the Eurozone, Cyprus ensures safety and stability for investors, while also offering them market access to 450 million EU citizens.
One other significant advantage is Cyprus’ advanced and business-friendly legal framework, based on English Common Law principles, which fosters a stable and transparent environment for international business operations. Our country’s robust legal and regulatory framework is fully compliant with the EU, the Financial Action Task Force and other monitoring organisations. Additionally, Cyprus’ competitive tax regime, maintaining one of the lowest corporate tax rates in the EU, offers a variety of incentives, that make it an attractive base for foreign companies.
In addition to its growing innovation ecosystem, Cyprus has become a hub for knowledge transfer and partnerships, particularly in industries such as services, fintech, renewable energy, and shipping. The island has also established itself as a major educational and research centre, with a high rate of foreign scientific collaboration. Japanese companies looking to expand their footprint in Europe will find Cyprus’ infrastructure highly developed, with its deep-sea ports, international airports, and telecommunications systems, providing robust support for cross-border activities.
By choosing Cyprus as a base, Japanese businesses benefit from a skilled, multilingual workforce, along with structured support for business setup through initiatives such as the Business Facilitation Unit. With increasing private investment in R&D and innovation-driven sectors, Cyprus offers a solid platform for Japanese companies to explore long-term growth and partnership opportunities. The strong presence of foreign investment in Cyprus, which we welcome and support, is a confidence vote to the island and its economy.
Over the years, the Government of Cyprus has sought to maintain conditions of stability and confidence, consolidate and modernise the banking system, preserve tax certainty and a business-friendly environment for the private sector.
New infrastructure and housing developments are underway across the country with significant foreign investor backing. International companies are setting up headquarters in Cyprus, which is becoming an increasingly attractive gateway to growth markets. Cyprus’ growth performance is attracting foreign direct investment from different parts of the world, including Asia.
The island’s two multi-purpose deep sea ports, located in the coastal cities of Limassol and Larnaca, offer logistics solutions through advanced facilities for cost-effective transport and processing. The two modern international airports in Larnaca and Paphos, offer their services to millions of visitors per year, connecting the island to the most popular transit hubs throughout the world.
Considerable investment has also been made to transform the island into a major telecommunications and server hub in the region, connecting Cyprus via submarine fibre optic cable and satellite to other networks in the Eastern Mediterranean basin and beyond.
In addition, human talent constitutes Cyprus’ most compelling advantage, complemented by a broad range of high-quality professional services. As a dynamic business centre, Cyprus offers an abundance of highly educated and skilled individuals, multilingual in their majority, ready to serve the needs of any business.
What sectors or niche segments in Cyprus do you think have untapped potential in terms of attracting more Japanese investment and cooperation?
Several niche sectors in Cyprus hold considerable potential for attracting Japanese investment and fostering deeper cooperation. Some examples are education, healthcare consulting services, innovative medical technologies, financial and compliance services, the hospitality leisure industry, the film and sports, as well as the fashion industry. Cyprus is also home to a number of innovative companies in the field of cybersecurity, aerospace, automotive, renewable energy as well as advanced materials.
Furthermore, the discovery of hydrocarbons in Cyprus’ Exclusive Economic Zone (EEZ) created new prospects for the island to become an energy and key regional fuel hub in the Eastern Mediterranean. These developments have attracted significant investment from world leading energy companies as well as companies operating in the oil and gas auxiliary services sector. Equally, Cyprus focuses on developing its renewable energy infrastructure and is investing in new solutions to improve its energy mix.
Moreover, there is a growing potential of exchanges with Japan in the culinary sector, since over the past three years, exports of Cypriot goods, including the famous Cypriot cheese halloumi have increased substantially. There is room for growth and for more Japanese consumers to enjoy our unique products. In addition, the rich cultural heritage of Cyprus, combined with its natural beauty, makes it an attractive destination for Japanese tourists, particularly in niche segments like heritage and wellness tourism.
What are your key priorities for advancing Cyprus-Japan relations in the coming years, and what specific areas do you believe hold the most potential for stronger collaboration?
Our key priorities for advancing Cyprus-Japan relations focus on strategic areas that will enhance bilateral ties. One of the main goals is to strengthen trade and investment, positioning Cyprus as a gateway for Japanese companies looking to expand into European, Middle Eastern, and North African markets. By leveraging Cyprus’ favourable business environment, we aim to increase our collaboration with Japan in sectors such as energy, finance, technology and shipping.
We also see great potential in expanding academic and research cooperation. Cyprus is keen to further develop partnerships between universities and research institutes in science, technology, innovation and disaster prevention. Another priority is to foster cultural exchanges and tourism, developing people-to-people contacts so as to further strengthen the bonds between the two countries.
On the diplomatic front, Cyprus and Japan share common goals and as such cooperation in international fora remains a priority, especially in addressing global challenges such as security, conflict prevention, climate change and sustainable development. We see great potential in developing our political, economic and cultural bonds with Japan. Cyprus could constitute a valuable and reliable partner in the Middle East and the EU, as the relations between our two countries continue to grow into a solid, fruitful and long-lasting partnership.
