ECONOMY

A ‘pool’ of investment

Athens Business Club (ABC) 2004, the forum set up by the government, the Federation of Greek Industries (SEV) and the Hellenic Center for Investment (ELKE) to forge contacts with the international business community during the Olympic Games, was an excellent opportunity to promote the country as an investment destination and its comparative advantages. A week after the Games, Kathimerini hosted ELKE’s vice president, Professor Dionysis Hionis, who considered the results of the initiative and the prospects it creates for the Greek economy. The image of the country has changed after the successful staging of the Olympic Games. Which do you think are the elements that came out more strongly? Beyond the promotion and the realization that Greece is a modern country with infrastructure and potential, the element that came out most strongly and is a significant advantage is Greece’s human capital. This is a very important factor in the adoption of investment decisions and the location of productive activities. How do you evaluate the participation of foreign businesspeople in the ABC 2004 events? Did it meet your initial expectations? ABC 2004, which was open all day at the Sarogleion Mansion, operated as a modern business forum and hosted several events and presentations, and a large number of contacts. Many of the events were organized by foreign organizations. We are satisfied with the participation of foreign businessmen, journalists and commercial attaches. The presence of foreign business people was also satisfactory. Once again, we mostly presented what we plan to do at the legislative and taxation level, not what has been done already. Should we not have been better prepared for the occasion of the Olympic Games? An investment decision is an irrevocable one, set in the future. It concerns the commitment of resources in a specific business activity with a view to securing future profits. Therefore, the process of attracting foreign investment should place particular weight on the future factors that will affect the costs, operations and revenue of an investment. In this framework, ABC 2004 presented the opportunities in specific sectors of the Greek economy. It facilitated business contacts for the creation of a favorable investment environment, while also projecting the achievements of the Greek economy and the advantages of its geopolitical position. Given that any benefits from the Olympic Games for the economy will show in the depth of time, how do you plan to keep alive the contacts with the international investment community. Will initiatives similar to ABC 2004 continue? The implementation of an investment plan is a long-term process, in which information and business networking play their own distinct role. A decision to invest needs time to mature. As regards multinational companies in particular, such a decision depends on many parameters and factors. The contacts forged at ABC 2004 provide a satisfactory basis for attracting investment. The website www.abc2004.gr provides for direct contact and communication with firms that declared an intention or interest in investing in Greece, and can constitute the basic pillar of an aggressive investment policy. What are the most important obstacles to attracting foreign direct investment (FDI) to Greece? Determining the relative importance of the various obstacles requires the quantification of some qualitative variables, which is quite difficult and differs according to branch and sector of activity. I could, however, dwell on the results of a series of research studies by both Greek and foreign bodies, with specific references to the factors hindering FDI. The most important ones are an inefficient public administration, weaknesses in the markets for factors of production and an unstable tax environment. These studies confirm things we all know and want to correct. The lack of modern industrial infrastructure and a simplified framework for the operation of companies also hinder investment activity. Such adverse factors increase the risk premium of investment schemes. This risk premium is reduced investment incentives. At the risk of being repetitive, I would point out again that in Ireland, prospective investors know the economic and institutional framework of the next 10 years and are able to comfortably make their medium-term plans. What sectors of the Greek economy do you see attracting foreign investment? The competitiveness of the Greek economy is improving steadily and, as a result, there are many sectors which could attract investors’ interest. However, there are some sectors that provide special opportunities. These are the energy market, the use of Olympic facilities after the Games and tourism. Judging by the interest shown during the ABC 2004 events, I would add real estate management. I would also include the sectors of new economy and advanced technology, given that the special know-how of the workforce has been upgraded. The international economy is slowly recovering and the Olympic Games were a success. Can we expect an increase in investment in the immediate future? The United Nations a few days ago released its estimates for FDI for the 2004-2007 period (UNCTAD, 2004), which are based on a questionnaire from a large sample of executives of multinational companies. After many years, optimism is expressed about FDI flows for all geographical areas, particularly in the sectors of foods and beverages, vehicle spare parts and electronic products and machinery. In this environment, the Greek economy is fighting for its own share, projecting a series of advantages and areas of activity. After ABC 2004, we have an international business pool which includes large multinational companies from where future investors can emerge.