Greece: the economic hub of the region
Greece has recently taken its place as a regional hub for an emerging market. It is the locomotive of the region. It drives business and economic developments and plays a leading role in the transformation of what was once Europe’s most backward region. It paves the way to Europe’s next economic miracle. This region of 140 million inhabitants has an enormous potential for growth. There are many investment opportunities in a vast array of sectors: in energy, tourism, real estate (particularly related to the increasing number of Europeans who want to buy property in Greece), banking, and services in general. And Greece is ideally located; a long-standing member of the EU and the Eurozone, a country with political, monetary and financial stability, it is the only European Union Member with direct access to South-eastern Europe. It comes as no surprise that a score of multinational corporations choose Greece as an ideal base of operations for South-eastern Europe and the Eastern Mediterranean.
Greece has the highest GDP per capita in the region and has in the past few years enjoyed a dynamic growth. As a result, it is a major source of FDI for our neighbours: more than 4000 Greek companies have invested in South-eastern Europe. Moreover, Greece does not only serve as the gateway to profitable investment in the region, but also, with its ports and advanced transport infrastructure, it serves as the highway of the region to the world.
Structural framework for investment
Broad reforms have helped in reviving entrepreneurship, improving the competitiveness of the economy and encouraging the international orientation of Greek businesses. The structural framework for investment support in Greece revolves around three institutional pillars: the Investment Incentives Law (the incentives on offer are among the most competitive in the European Union), the National Strategic Reference Framework 2007-13, and Public Private Partnerships (PPP).
Investment incentives are applicable to primary sectors (agriculture, mining), secondary sectors (manufacturing) and tertiary sectors (services) and cover a wide variety of business endeavours. For the purpose of promoting investment in outlying and less developed regions of Greece, the country is divided into three zones, A, B, and C, with zone A being the most industrialized areas of Greece, including the prefectures of Attica and Thessaloniki, and zone C being the most remote and less developed.
Broad reform agenda
The government has reformed the tax system to make it more competitive by reducing corporate tax rates from 35 per cent to 25 per cent and by simplifying the tax code. Private investment has been stimulated through generous investment incentives aimed to exploit Greece’s comparative advantages such as:
- Cash grants or leasing subsidies of up to 60% of the overall investment cost
- Wage subsidies of up to 60% for employment created by an investment
- Tax allowances of up to 100% of the overall investment cost
- Numerous benefits for investments in selected regions of Greece
(In addition, and in order to reduce regional disparities, investments are directed to the less-developed regions of the country. So far, projects worth €8.78bn are being supported by the Investment Incentives Law.)
Public Private Partnerships have boosted infrastructure investment and further economic growth. Projects valued at €4bn have already been approved and more will follow.
Privatisation and market liberalization
Investors have seized opportunities stemming from Greece’s expensive privatization and market liberalisation programme. Since 2004 the government has privatised a number of key assets, at the same time liberalising markets in gas, electricity, telecommunications, banking and transport are attracting high-profile investors such as Deutsche Telecom, Credit Agricole, Endesa and EDF Energies Nouvelles. A great effort is currently underway to restructure state owned enterprises The Government is currently implementing the second phase of the privatisation agenda, which focuses on companies that own and operate networks. It has already successfully launched international tenders for the planned Public Private Partnership at the ports of Piraeus and Thessaloniki. The tenders involve further growth and modernization of existing infrastructure, as well as the operation of the container terminal facilities of the ports for a period of 30 years. A similar project is being planned for airports in Greece.
Investing in infrastructure
Since 2004 Greece’s focus on moving people and goods efficiently and cost effectively has been a high priority. The Egnatia Highway is an example. One of the largest infrastructure projects in Europe, the 680km, €5bn project connects the Adriatic, Aegean and Black Seas. The highway is recasting the region’s entire commercial transport network as it provides a streamlined east-west corridor and multiple north-south connections; all part of the Trans-European Network. In addition, Greece’s renowned shipping industry transports raw materials and finished products 24/7. Its busy ports are a vital gateway to Western and South-eastern Europe and the Eastern Mediterranean. Greece’s 15 international and 25 domestic airports serve more than 20 million passengers annually and are key to moving cargo in and out of Greece. Athens International airport has been named European Airport of the Year and is recognised as second best in the world in its class.
A friendly and specialized labour force
People remain the most important component of any business and Greece is home to one of the best labour forces in the region. To meet investor demand and the needs of the market, Greece offers a skilled, creative and well educated workforce that is ready to take on the challenges of the millennial generation.
English and other languages are widely spoken, professionals in the workplace are well educated and the level of university degrees in management is by far the highest in Southeast Europe.
To live and work in the Land of the Gods
There are few places in the world where the combination of work and play is so attractive. Greece, combining the Mediterranean Sea, accessible mountains and literally hundreds of getaways, is ideal for “living the good life.” Greece’s exceptional lifestyle combines vibrant cities with some of the most beautiful landscapes in the world. City life is a mosaic of arts and culture, endless shopping, delicious cuisine, and exciting nightlife. And weekend trips to picturesque islands or secluded mountain villages make living in Greece a truly unique experience.
Energy diplomacy is of ever increasing importance in the international strategic environment and Greece is demonstrating an active interest in the energy game. The country is positioned as a potential regional gas hub and a regional power broker with a strong of energy deals.
The South Energy Corridor
In November 2007, Greece and Turkey inaugurated a $300 million 186-mile interconnector passing under the Sea of Marmara linking the Greek and Turkish gas grids and creating an energy corridor that connects the rich natural gas fields in the Caspian Sea region to Europe. The pipeline will use natural gas pumped into Turkey from Azerbaijan’s giant Shah Deniz gas field and, initially, it will carry 250 million cubic meters of gas a year to Komotini, in north-eastern Greece from Karacabey in western Turkey. Its capacity is expected to triple by 2012 with a further extension via the Turkey-Greece-Italy interconnectors across Northern Greece and the Trans-Adriatic pipeline under the Adriatic Sea to Italy and the European energy markets. The length of “Poseidon” or, as it officially known, the Interconnector Greece-Italy (IGI) will be more than 800km, of which approximately 600km will be built in Greece and it is expected to become operational in 2012. Its construction is a joint venture between Greek Gas Company DEPA SA and Italian Edison Spc.
Burgas-Alexandroupoli Oil Pipeline
Greece is part of the Burgas-Alexandroupoli oil pipeline project (BAP project) that will provide an outlet to the Mediterranean for Russian and Caspian crude oil from the Bulgarian Black Sea port of Burgas to the Greek Aegean port of Alexandroupoli. The $1bn pipeline will be 280km long, with 135km running through Greek territory, and would transport 15-23 million tons of oil per year in the first phase, as well as 35 million during the second.
The construction and operation of this pipeline, which will be underway by 2010, is of major importance, not only to Bulgaria and Greece, but also to the greater region as well as the international oil community. It contributes to international energy security by ensuring an additional route, complementary to the Bosporus, for the transportation of energy resources, from the centres of production to the major markets in the Mediterranean, Europe and the USA.
South Stream Gas Pipeline
On 15 May 2009, Greece joined transit countries Italy, Bulgaria and Serbia In signing an agreement with Russia’s Gazprom to build a major gas link designed to pump 31 billion cubic metres of Central Asian and Russian gas into Europe. The 900km South Stream pipeline will run under the Black Sea, linking Russia with Bulgaria and then fork out into two branches. Greece would be the pipeline’s southern branch to Italy. South Stream is planned to be operational in 2015. Construction of the Greek section of the project will be a 50-50 joint venture between Russian energy giant Gazprom and Greece’s natural gas provider DESFA. The project will cost up to €1bn and the pipeline will carry about 11 billion cubic metres of gas through Greece.
To find out more, please contact:
The Greek Embassy, 1A Holland Park, London W11 3TP
t: 020 7727 8860
t: +30 210 335 5700