ECONOMY

FDI has flat-lined in Greece

Bob Traa, the International Monetary Fund?s senior resident representative in Athens, described foreign direct investment in Greece like the ECG of ?a dead man? at an Economist conference in the Greek capital on September 19. And he was not exaggerating either, whatever some government officials like to believe, as figures released recently by the Bank of Greece show that Greece is an FDI desert.

According to data on the January-July 2011 period, net capital inflow from FDI came to just 634 million euros, down 46.77 percent from 2010 and 64.65 percent from 2009, when it totaled 1,188.9 million and 1,793.30 million respectively in the same period.

The most significant foreign direct investments in the seven-month period was the 43 million euros Chinese shipping giant Cosco paid to increase it share capital in the commercial port of Piraeus, 30 million euros from Velti Plc to boost the share capital of the Velti SA computer services company, the inflow of 400 million euros for the acquisition of Specifar Pharmaceuticals SA by US company Watson Pharmaceuticals Inc, and, finally, 392 million euros from Deutsche Telekom?s acquisition of another 10 percent of OTE telecom.

Meanwhile, liquidity problems faced by most Greek firms – compounded by the caution exercised by banks in financing investment loans and the drastic slashing of the state-funded Public Investment Program – have significantly limited investment from domestic interests as they are more focused on modernizing production and internal restructuring than investing to create more jobs.

The National Strategic Reference Framework (NSRF) is expected to provide the local economy with a shot in the arm, especially the construction sector, and there are 107 projects in the pipeline that will receive NSRF funding of over 9 billion euros.

Furthermore, three large investments in photovoltaic energy production that have been fast-tracked under the government?s recent plan to facilitate investment are expected to create over 700 new jobs.

Another development that is expected to help change the dismal landscape of investment in Greece is the outcome of the first competition called under a new law for some 140 investment plans with an overall budget of 725.82 million euros which is seen generating 812 jobs. However, these plans mostly concern small and medium-sized investments.

The next competition for the second round of funding will be launched on Saturday and close on October 31.