Speech given by H.E. Mr José Manuel Cervera de Gòngora, to the members of the Association
at a reception on 16 May 2005
Ladies and Gentlemen:
is for me a pleasure and a great honour to have you here at this
Embassy. I had promised to invite you to this gathering which should
have taken place in February, but my engagement and tight Agenda during
the last few months made it impossible. That is the only reason why we
can only have this meeting today, with a certain delay. Its aim
-useless to say- is to enhance the activities of the Association of
Cypriot and Spanish Businessman. In this context, I would like to give
you some information about the Spanish Economy, and say a few words
about what my country can offer to Cyprus.
Spain counts today on a population of approximately 40 million people,
mostly urban and 34% of which lives in the main Spanish cities; as well
as on a per capita income of 15.400 $ and a GDP of more than 570
billion € ;
2.- This means that it is the eighth Country in the world in terms of the size of its economy, the fourth Stock Exchange European market by its bulk of contracts
and a Country with an economic growth (2.8%) which has consistently
surpassed by 76% the growth of the rest of the EU Member States during
these last eight years
We are talking about a liberalized economy, whose degree of opening
(measured by the sum of exports and imports of goods and services) has
passed from 37.4% of the GDP in 1986, to more than 60 % last year. And
as for the movement of capitals, the restrictions which, several years
ago, were imposed by the Spanish legislation, they have disappeared
progressively while the weight of foreign investments in the GDP grew
is an economy which, in the last two decades, has gone through an
intense privatisation process, not based on ideological reasons but on
budgetary, strategic and technological constraints. A privatisation
process which was introduced seeking financial and industrial
coherence, as well as technological rationality.
In short, we can say that in the framework of the so called liberal TRIAD,
which forms the present European consensus (to stabilize, to
liberalize, to privatise); the Spanish government has erected the basis
of the Modernisation Program of the State's Entrepreneurial Public
But how is Spain nowadays reflected on Cyprus in the commercial field?
Spain presently only represents about 3.5% of all Cypriot Imports and
1.6 % of all Cypriot Exports. Unfortunately, Countries such as the
United Kingdom, the United States, Italy, Greece, Germany and France -
to mention the six main trading partners of Cyprus- still export more
to your market than Spain does. Nevertheless, it is our belief and
desire that - slowly, but steadily - this trend will change in favour
of Spain in the near future.
Because it is a fact that a wide range of Spanish products are
presently more competitive in international markets than their rival
products. This has recently been the case here with several Spanish
companies operating in the fashion market. Spanish shoe and women's and
men's clothing stores here, which some of you so well represent
fortunately with so much success here in Cyprus, are a great success
story that makes us all proud and satisfied.
But I could also mention the growing sales in Cyprus of many different
modern Spanish furniture brands, of Spanish ceramic tiles and of
Spanish cars (SEAT). And this, just to mention a few of the other
success stories of Spanish Exports to Cyprus.
-Ladies and Gentlemen- Spanish Exports to Cyprus represent 166'89
million Euros in 2003, whereas imports from Cyprus are reaching in the
same period 15,42 millions of Euros. Coverture Rate of 1.082%.
Cars, furniture, ceramic tiles, textile, shoes, are traditional exports.
Nevertheless, we believe that much more can still be done to open up your market more to other Spanish products. And when I say done,
I am, of course, not only thinking of the benefits that lie here, in
Cyprus, for Spanish manufacturers. I am also and very especially,
thinking of the benefits that would lie in them for Cyprus importers
and retailers. Because enormous range of Spanish products that are
unknown in your Country have not yet reached the Cypriot market and
would have a tremendous commercial potential here: I am thinking, for
example, of a diversity of Spanish wines such as Jerez and Cava - which I am afraid are still not easily available in your supermarkets -, of Spanish cured ham - the world famous Jamón Ibérico or Serrano
which is so demanded in other E.U. Countries and the United States, but
which is practically non existent here - and of many other quality food
and drink products.
I am also thinking of Spanish cosmetic products, of Spanish garden
furniture; of Spanish jewellery; of the very advanced medical and
hospital equipment that my Country now produces; of Spanish industrial
machinery and construction equipment and material; of decorative and
household articles of great quality and beautiful design, of different
brands of Spanish electrical appliances not yet present here; and, why
not also, of Spanish toys, which are among the best in the world and of
far a greater quality than those made in Asia.
(Investment of Spain abroad -Cyprus)
But today, exports of merchandises are not enough: Ten years ago,
success in the international market was the mark of quality of a
product and of its management; however, at the present time, the
guarantee for a regular presence in international markets requires, in
most cases, the physical presence in the said markets. Most times, it
demands even the transfer abroad of part or the whole process of
manufacturing. As well as other activities of the company, in order to
keep up the very share of the domestic market. Since 1997 the rate of
direct investment issued by Spain has surpassed the rate of investment
received from abroad.
as a proof of this overlapping of Spain in the international market,
the total sum of issued and received direct investment has passed from
one and a half - three percent of the GDP (1,5/3%) at the beginning of
the nineties, to almost nine percent (9%) of the GDP in these last
years. As for possible investments of Spain in Cyprus I think there are
possibilities in the tourist field (Hotels, Golf Courses), in the
financial area (banks), the agricultural sector (irrigation) and
construction (solar energy), just to give a few examples.
So far investments of Spain abroad. What about foreign investments in my country?
(FOREIGN INVESTIMENTS IN SPAIN)
are the characteristics of the Spanish economy that make her a selected
destination for so much foreign investment especially in the last two
During this last period, Spain has carried out an important process of
modernization which has included a deep renovation of its
infrastructure. The infrastructure plan for the period 1993-2007
provides for a total investment of 135 billion euros in infrastructure
The network of highways, with more than 10.000 km, has tripled since
1982, and by 2010 Spain will have 13.000 km of the most modern highways
in the world.
In regard to railways, Spain has also a network of 15.000 km. The
high-speed lines have become a priority in the governments'
infrastructure plans: It is expected that by 2010 Madrid will be
connected, through high-speed trains, with the French border in three
different points, with the Mediterranean Coast by 2008 and around 2007
with all of Andalusia and Portugal.
Finally, Spain has a very good telecommunications network: to the
64.000 km of conventional optic fibre lines, we have to add one of the
biggest networks of underwater cable and satellite connections in the
As far as the population is concerned, in accordance to the obligations
adopted by the EU in order to guarantee an adequate level of
employment, the Spanish government has carried out, since the mid
nineties, deep reforms in its labour market, introducing a greater
degree of flexibility in employment. Spain has created more than 25% of
the employment generated by the European Union.
is a fact that today the Spanish labour market offers one of the best
relations, in Europe, between labour cost and productivity. We speak
here of an active, highly qualified and productive population, capable
of adapting itself to technological changes. A fact that has
contributed to the Spanish productivity growth, placing itself amongst
the highest in Europe nowadays.
this context, it is important to point out that there has been a
transfer of manpower from agriculture -which decreased by 12 % (from
18% to 6 % in the last fifteen years) towards the sector of Services,
which increased itself by 12 % (from 50 % to 62 %) in that same period
16.- As for the Financial Infrastructure, I can say that, in the last 20 years, the deregulation, the development of new technologies and the advance of de-intermediation,
have all radically transformed the structure of the Spanish financial
sector and the behaviour of its banks. These have embarked in a process
of internationalisation, through acquisitions and mergers, seeking to
attain the right size in order to survive in the new international
For Spain, this situation, in the financial and in any other field, has
favourable historic precedents. It so happened in 1959 with the end of
the autarchy and the Stabilization Plan and in 1970; with the
Preferential Agreement with the EEC; it happened again with the
Accession to the European Communities in 1986 and I am sure it will
happen again with the Enlargement Process, which began last year with,
amongst other, the Accession of the Republic of Cyprus. A Process, as
you know, which still has not finished.
As I have just said, the financial intermediaries have gained much higher importance, and more specifically in their three more representative forms.
In the last decade, the wealth of the investment funds has turned from 3% of GDP in 1990, to 32% of GDP in the year 2000.
All these arguments explain the great volume of foreign investment that
Spain receives in a consistent way. In the seventies, Spain held the
eighth place of the OECD in terms of direct flows of investment we
received; in the eighties we climbed to the fourth place and in the
nineties to number six.
Foreign direct investment in my Country is mostly aimed at the services
sector and at the industry sector. Cars, chemicals, iron and steel,
food products and electronics have been, amongst others, the industrial
sectors which have received the highest number of investments in Spain.
In the services sector, we can underline the investments in finances
23.- What kind of aid and incentives does the Spanish legislation provide? Well...
I will enumerate a few ones:
- State incentives for professional training, which partly subsidize the costs of professional training plans
- State incentives for employment, which introduce discounts in social security quotas
for some groups of the labour force (unemployed women between 16 and 45
years of age, handicapped people, unemployed older than 45 years of
- State incentives for specific industrial sectors
- Incentives for investment in specific regions in accordance to community rules.
- The plan of support to Small and Medium Size Companies,
- Incentives to the internationalisation of companies
- And, last but not least, the aid and incentives given by the E.U. to regions suffering economic depression.
Flow of investment from Cyprus to Spain is very small in both
directions, and today there are but few Cypriot investments in Spain.
That is why those figures can be improved in the future.
I would not like to bother you any more with date and figures. As I
said before, the aim of this speech has only been to inform you that
there are still many things that we can do together in order to
strengthen our commercial, financial and economical relations. And for
that end, we rely , on the always wise and loyal cooperation of our
Honorary Consul General, Mr. Spyros Araouzos, and the efficient
contribution of the Association of Businessmen of Cyprus and Spain. On
our part, useless to say, that the Spanish Embassy will always be
unconditionally well disposed to support your initiatives.
and Gentlemen, I wish to thank you for having so patiently listened to
me, and invite you to have a drink and something to eat.
Thank you very much.