Greece must look for export markets beyond the Balkans

Yesterday’s proceedings at the first TIF Business Forum, an event taking place at the Thessaloniki International Fair (TIF), highlighted Greece’s penetration into the markets of other Balkan countries and the progress these countries have achieved in building a market economy in recent years. In Serbia, three Greek companies figure among the 15 largest foreign investors, while Greek enterprises have made significant investments in Bulgaria and the Former Yugoslav Republic of Macedonia (FYROM). A top Greek businessman warned, however, that in order to be truly competitive, Greek products and services have to appeal to markets beyond the Balkans. Irena Posin, president of the Serbian Investment and Export Promotion Administration (SIEPA), told participants her country offers Europe’s lowest corporate tax, at 10 percent, and 10-year tax exemptions for investments exceeding 7.5 million euros as well as for hiring local people. Foreign direct investment in Serbia has fluctuated since the fall of Slobodan Milosevic, in October 2000, but is expected to jump this year to $2 billion from $800 million in 2004. The three Greek companies figuring among the top foreign investors are Alpha Bank, which has invested a total of 152 million euros so far, bottler Coca-Cola HBC (100 million) and cement producer Titan (94 million). Romania also offers lower corporate taxes in order to attract investment, said Marian Olguta, Director of European Affairs at the Ministry of Economy and Trade. It recently reduced the corporate tax rate to 16 percent from 25 percent. Romania, an aspirant to join the EU as early as 2007, has a fast-growing economy: In 2004, GDP grew 8.3 percent and the unemployment rate has dropped to 6.2 percent from 10 percent in 2000, Olguta said. It is forecast to drop further, to 3.8 percent, by 2008. Foreign direct investment increased 40 percent in 2004. Concerning Greek-Romanian bilateral relations, Greek exports to Romania reached $420 million in 2004, while imports reached $580 million. Vencislav Arsov, adviser to FYROM’s finance minister, said the country’s priority is the creation of a free economic zone outside the capital Skopje. Even though Greece is FYROM’s third-largest trading partner, behind Germany and Serbia-Montenegro, the trade volume has fallen over the past five years. Svetlana Ilieva, head of Bulgaria’s small and medium-sized enterprise promotion agency BSMEPA, said aiding SMEs was a top priority for her country. She also emphasized the high growth (5.6 percent in 2004) and reduction in unemployment (11.6 percent in 2004 from 18 percent in 2003) achieved by Bulgaria. Evgenios Plalis, head of SEVE (the Association of Northern Greece Exporters), said exports have started to pick up but must maintain a growth rate of at least 5 percent annually. He added that Greece should place emphasis on the markets of big, developed regions and not so much on the Balkans and the Middle East.