ECONOMY

Head of Hellenic Center for Investment hopes to make it easier for foreign capital

The Hellenic Center for Investment (ELKE) was founded five years ago to seek, promote and support foreign investment in Greece and international alliances with Greek companies. In the first four years of its existence, it recommended the approval of a total of 34 investment plans by foreign firms, amounting to 150 billion drachmas (440 million euros). Despite its proven track record, National Economy and Finance Minister Yiannos Papantoniou, who supervises ELKE, felt that it needed a boost in order to become more effective. To this end, he appointed Costas Bakouris as its new chairman in July 2001, told him to undertake a series of studies in order to decide what changes needed to be made in order to speed up investment proposals and make Greece more attractive to investors, and undertake revision of the existing law on foreign investments, which dates from 1998, incorporating ELKE’s recommendations. Bakouris has a long record as manager of a foreign multinational company and the former managing director of Athens 2004, the Olympic Games organizers, from 1998 to 2000. The latter post, especially, made him acutely aware of how Greek bureaucracy works – or doesn’t. In an interview with Kathimerini English Edition, he shared his thoughts about what should be the necessary changes at ELKE and how to make Greece more attractive to foreign investors. Part of my taking over this job was the idea from the minister that we would do something different with ELKE, says Bakouris. In other words, we would like to make it a more effective tool for promoting foreign investment and make sure that it becomes a real ‘one-stop shop’ for prospective foreign investors. So, what was missing from ELKE during the first five years of its operation? According to Bakouris, a significant defect was that ELKE was not the one-stop shop it advertised. We are a one-stop shop as far as providing information to investors: These are the licenses you need; these are the forms you have to fill out; these are the ministries you have to contact and, if you are in trouble, come back and let us know. So, they get an idea of what’s required but there is no effective support in terms of us playing a leading role in providing them with the licenses they need and the other stuff, all in one place, he says. ELKE would also like to take over some of the work from the Economy Ministry, especially the viability studies and the follow-up on investments. In any case, we would like to smooth the prospective investor’s path. Allow him to face fewer problems, fewer disincentives, says Bakouris, who adds that he does not want to pre-empt the recommendations of ELKE’s studies. These should be ready by mid-December. The new investment law will be presented to Parliament in mid-March. These, however, were the plans made under Papantoniou. What if he leaves his post this week, in an expected Cabinet reshuffle and a successor takes over? I can only hope that he, or she, has the same sense of urgency, Bakouris replies. One of the studies undertaken by ELKE would compare the incentives offered by Greece and other countries in the European Union, the Southeast and Central Europe. Ireland, for example, is touted as a perfect story of attracting investments. Part of that was due to its location and English-speaking work force. It also, according to Bakouris, offered revolutionary incentives, such as a very low (corporate) tax rate. While he does not recommend that Greece imitate the Irish example, he, purely and simply, believes that a reduction in tax rates would stimulate growth and increase overall government revenue. Total direct foreign investment in Greece amounted to $16.041 billion in 1999. ELKE would like to set targets for growth, but after its studies are completed. What can Greece do to attract more foreign investment? According to Bakouris, there are things that can be done immediately, others that can be done in the medium term and, still others, act as constraints that have to be overcome through skillful advertising. One of these, he says, is Greece’s size and location. It’s a small country, relatively far away from other EU countries, which increases transportation costs. But we can advertise it as a regional base, a hub of investment in an area of 180 million people, including Southeast Europe and Turkey. He says that the Greek companies’ knowledge of Southeastern Europe is their main selling point to foreign firms looking for regional partnerships. There is also, Bakouris says, a perception of Greece as a holiday destination rather than as a destination for serious investment. This also must change, gradually. Meanwhile, ELKE is looking to fund tourism projects – not hotel-building – that would extend Greece’s tourist season and also make it an attractive convention host. What must be done in the short term is the provision of incentives. In the longer term, and this is paramount, is the improvement in the country’s competitiveness, including the competitiveness of its work force. In our brochures, we are selling our labor force as the second-cheapest in Europe, he says, but we do know it must improve its productivity and also its flexibility. Bakouris does not have any clear signs yet that investment will shrink in the wake of the September 11 terrorist attacks. We still have a lot of applications made after that date. But, I think, the international investment pie will shrink a bit. We can only hope it will be temporary. As for ELKE’s immediate future, Bakouris says, we would like to become more aggressive in promoting Greece as an investment location, especially over the next four years, because we have a unique window of opportunity. This unique window is provided by the important EU fund inflows through the third Community Support Framework, the hosting of the Olympic Games, the many changes in infrastructure, tax reductions, and privatizations. This window of opportunity is not going to last for years. We would like to make 2002, ‘The Year of Investment,’ Bakouris adds. As part of that campaign, Bakouris will be visiting Chicago in early November to talk up Greece’s investment opportunities. For an agency that plays, and expects to continue, such an important role in the Greek economy, ELKE has a surprisingly small staff of only 22 people. I don’t think this will change, unless our role changes radically, says Bakouris.