ECONOMY

Real incentives needed

The government is taking the wrong tack if it considers that it is doing all it can to boost investment, Odysseas Kyriakopoulos, chairman of the board of the Federation of Greek Industries (SEV) told MPs yesterday. Kyriakopoulos was addressing the Finance Parliamentary Committee, which is examining a bill on entrepreneurship submitted by the government that aims at providing incentives to boost investment. High investment growth in recent years has been fueled mainly by public investments, facilitated by European Union fund inflows through three Community Support Framework programs. But private, and especially foreign, investment has been lagging behind, hampering efforts to sustained the recent high economic growth. «The cause of investment stagnation is the legal framework, the bureaucracy, the deficient infrastructure. There is sufficient capital and access to it, through the banks. But we lack foreign investment and the reason is the way the State treats the investor. It’s the way tax inspections are conducted, it’s the multiplicity of tax laws, it’s the fact that no businessman can know in advance how his investments will fare in the next five years and what sort of taxes he will pay, so he can plan in advance,» Kyriakopoulos told the deputies. «While Greek investors may have adapted and are familiar with the existing mechanisms and solutions and are able to incorporate all these problems in their costs, I believe foreign investors are not willing to compromise; if we do not change our attitude profoundly, we will not see foreign investments,» the SEV chairman added. Kyriakopoulos was particularly scathing about incentives provided for mergers and hirings. «The administration and the ministries have no idea how the market works or how mergers happen… Someone must tell you: Mergers work and create surplus value only when we have synergies. What does this mean? It simply means that, during a merger, jobs must be shed, at least initially.» During the recent failed merger of the Alpha and National banks, unions, the government and all opposition parties were unanimous in demanding that no jobs be shed, despite the obvious need for cuts. The government is also trying to induce companies to hire more people by promising a reduction in the corporate earnings tax from 35 to 32.5 percent. «SEV’s position is that this is no incentive at all. No one will hire people simply to pay less tax. The healthy way to increase employment is through investment and growth.» Other European countries, including Germany, have agreed to cut their corporate taxes to 25 percent, or even lower. Greek industrialists have been calling for similar bold cuts. Testifying about the same law, Panayiotis Voilis, president of the Association of Members of the Athens Stock Exchange Council (SMEHA), demanded that merchant marine companies, especially those owning ocean-going vessels, be kept away from the stock market, given the riskiness of the business. He was indirectly referring to Kathimerini, the only listed company with such a component. Faced with these liabilities, Greece’s natural assets, namely its rich cultural heritage and archaeological treasures, do not have the impact they should in attracting tourists to the country.