The government is encouraging investment with tax reform, greater administrative efficiency and tighter financial control
| Kifisias Avenue is the heart of the new business centre in Athens |
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he New Democracy government had declared itself emphatically pro-business, promising to ease the tax burden on companies and combat bureaucracy. “We want to show the world that we are in favour of the strengthening of the market, competition, privatisation and investment,” says George Mergos (INTERVIEW), General Secretary at the Ministry of National Economy and Finance. “We will avoid following the path of our predecessors, who taxed everything. We aim to support business and to improve the business environment.”
The administration also promises more efficient, responsible and transparent management of Greece’s finances. One of its most pressing tasks is to deal with the fiscal deficit. Public expenditure on the Olympic Games – amounting to just over 1 per cent of GDP in the last few years – has pushed the deficit through the ceiling of 3 per cent of GDP set by EU rules.
The government aims to bring it down by one percentage point of GDP before the end of 2005 by curbing public spending and using funds raised by privatisation of state enterprises.
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Encouraging investment is crucial to achieving growth and job creation. The government has promised to support the stock market and the role of the Capital Markets Commission, and to strengthen competition in the banking sector.
The benefits of doing business in Greece are currently being promoted to potential foreign investors in the Athens Business Club, established by the Hellenic Centre for Investment (ELKE), in cooperation with the Athens Organizing Committee for the 2004 Olympic Games, the Hellenic Foreign Trade Board, and the Federation of Greek Industries (SEV). The British Hellenic Chamber of Commerce, with entrepreneur Charilaos Goritsas at the helm amongst others, targets UK-Greece relations.
According to Alexios Pilavios (INTERVIEW), Chairman of the Capital Markets Commission, the Greek market has matured to become like that of any other developed market in Europe. “Greece is not an emerging market any more,” he says. “It has the rules and transparency of much bigger and more developed markets.”
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Concerted efforts have been made by the banks to change their ways of conducting business and transform their organisational structures. There has been a series of mergers and acquisitions and privatisation has reduced the number of directly or indirectly state-controlled banks from 10 in 1995 to four. Around 80-85 per cent of the market is controlled by the five largest banks: the National Bank of Greece, Alpha Bank, Eurobank, Emporiki Bank (formerly Commercial Bank of Greece), and Piraeus Bank.
Half of the commercial banks are foreign banks, which account for 11 per cent of deposits and 13 per cent of loans. In March, General Bank of Greece was acquired by Société Général of France.
At
the Ministry of National Economy and Finance, Mr Mergos says: “We
want to maintain competition in the sector. We want international banks
to enter and we are encouraging banks already present in Greece to stay.”
Greek banks have been steadily expanding their presence in the Balkan
area – notably strengthening their links with banks in Bulgaria.
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The
Aspis Group, a leading player in the Greek insurance sector, aims to
spread its net even further afield. Already established in three European
countries, the group has plans to expand to a number of others.
“We are in Cyprus, where we have an insurance company, and we are
also in Sweden where we have now established a separate company,”
says the group’s President, Paul Psomiades. “We
sell our products in Germany, and we are going to start in Norway and
Finland next year.”
Aspis comprises 18 companies, including Aspis Bank and firms in mutual funds, in real estate, security and leasing. Aspis Bank currently has 67 branches. “When we reach 100 to 120 branches, we will be the right size for Greece,” says Mr Psomiades.
Insurance
remains the group’s core activity, however. According to Mr Psomiades,
the main objective is to secure the insurance part of the business a
place among the top 50 companies in the EU. He sees this being achieved
by 2007 through autonomous growth, acquisitions and expansion abroad.
“We may expand into the new member countries of the EU. In the
future, we will also consider Turkey.”
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