NICOSIA, Oct. 9 (Xinhua) -- Cyprus is considering new rules to slow down its investment for residence program which had helped it revive the dormant construction sector following the 2013 economic crisis, an Interior Ministry high official said Monday.
Speaking on condition of anonymity, the official confirmed press reports that the government is mulling moves to counter criticism within the European Union, though he said the criticism was unjust.
The official said one of the measures under consideration is to fix a ceiling to the number of people to whom the Council of Ministers could issue a passport in exchange for investment.
Nicholas Tofarides, an official of the Cyprus Land and Building Developers Association, said that Cyprus issued 1,360 passports since the program began, resulting in about 4 billion euros (4.7 billion U.S. dollars) in income from foreign investors.
"The number of passports is not that large to justify all this clatter and noise, given the fact that almost all European countries offer motives for people to obtain their citizenship," said Tofarides, who heads one of the biggest land developing companies in Cyprus.
He speculated that the reason for the protests is the speed with which Cypriot authorities move to serve applicants.
The Interior Ministry official said another measure which is under consideration is the prohibition of advertisements by large land developers who try to attract customers.
"The Ministry of Interior, along with the Finance Ministry and the Cyprus Investment Promotion Agency, favors imposing strict measures regarding advertisements which follow unethical lines," the official said.
He added that some developers tend to give the impression to prospective customers that they have close ties with politicians and promise they can safeguard them a passport.
"Beyond fixing a ceiling and prohibit advertisements, we may also consider some other small changes to the program along the lines followed by similar schemes of EU countries to allay concerns expressed in Brussels, without affecting it very much," the official added.
These measures are quality ones. For example, a prospective applicant must invest at least 5 million euros, of which 75 percent will be "primary capital" in a project that will create at least 80 new jobs or at least 50 jobs with a salary package of over 1 million euros, or invest 1 million euros in research.
The country's Finance Minister Harris Georgiades told a local newspaper that passports issued by Cyprus do not exceed 0.3 percent of the total number issued by all EU countries.
He added that passports are issued to people who have real ties with Cyprus such as a permanent residence and a sizeable investment, plus a period of continual habitation in Cyprus.
The investment for residence program has contributed to a large extent in reviving the construction sector which collapse at the start of Cyprus's 10-billion-euro bailout in March 2013.
However, the IMF warned in a recent report that there is a danger of an overheating of the sector because of several projects offering either luxury residences to foreigners or high class tourist complexes.
Some local economists also disagree with the philosophy of the project, pointing out that an investment in industry is much more beneficial.
"A foreign investment in real estate brings very little benefits compared to a similar investment in a factory, in opening a research establishment or moving the headquarters of a company to Cyprus," said in an interview Sofronis Clerides, an economics professor at the State University of Cyprus.
However, Finance Minister Georgiades said he is aware of the dangers but he is not worried about the possibility of a new so-called real estate bubble such as that which followed the boom after Cyprus joined the Eurogroup in 2008.
"This is because most of the development projects are self-funded and do not rely on lending," he said. (1 euro=1.18 U.S. dollar)