ECONOMY

Greece lagging in its FDI record

Greece can play a leading role as a regional investment hub in Southeastern Europe, a recent survey has concluded. According to the Ernst & Young Southeast Europe Attractiveness Survey 2008, Greece gets the top spot in half the criteria in the study, but notes that this positive picture does not translate into actual inflows of foreign direct investment (FDI). In terms of actual FDI inflows in 2007, Romania continues to be the most attractive destination, particularly in high value-added activities and ranks first on half of the location criteria surveyed. The survey, carried out in January 2008 includes eight countries, Romania, Bulgaria, Greece, Turkey, Croatia, Bosnia and Herzegovina, Cyprus and Serbia. The survey records the perceptions of senior managers regarding investment in the region and compares them with actual inflows. Southeastern Europe is described as the most attractive region for investment on the continent, winning the preference of 33 percent of respondents (Western Europe is second with 25 percent), particularly as regards three important criteria, labor costs (49 percent), rise in productivity (36 percent) and flexibility of labor legislation (33 percent). But investors appear to have a low level of awareness of the business environment in Southeast Europe. «Almost two-thirds of the respondents (67 percent) said their perceptions of the Southeast Europe investment environment has improved over the last three years, but we see a strong perception gap depending on investor’s experience in SEE – with resident investors having a better perception than potential investors,» according to the survey. Greece, as the most developed country in the region, is seen as having important advantages and is ranked first in terms of telecommunications infrastructure, stability of the political environment, transport and logistics, access to funding and availability and quality of research and development. However, the respondents rate Greece as only the fourth most attractive destination for investment in Southeastern Europe, fifth in terms of the volume of FDI and seventh in the number of investments. Fifty-two percent of the respondents consider Romania as an attractive country in which to do business, compared with 50 percent for Turkey, 40 percent for Bulgaria, 31 percent for Greece, 28 percent for Croatia, 19 percent for Serbia, 10 percent for Bosnia & Herzegovina and 9 percent for Cyprus. Reducing corporate taxes, more flexible labor legislation and simplified administrative practices are the chief means proposed by the respondents for improving Greece’s attractiveness for FDI.