Government, industrialists worried about low exports

Widening trade deficits are worrying the government, which is looking for ways to boost exports. Greece exports less than all other European Union countries, including Luxembourg, in absolute and relative terms. Yesterday, Odysseas Kyriakopoulos, chairman of the Federation of Greek Industries, visited Economy and Finance Minister Nikos Christodoulakis to discuss ways to promote exports. He also presented the minister with a longstanding grievance by export industries, that the State is slow to return VAT on exports. The government claims that the delays are an unfortunate but necessary by-product of the tax inspection process, which includes closer scrutiny of VAT returns over 3,000 euros. Businessmen say the delay has more to do with the government’s needs to balance the books by showing added revenue. «We are all upset over the VAT issue,» Kyriakopoulos said, adding that the minister made no commitment to resolve the issue. Christodoulakis and Kyriakopoulos agreed that it was essential to boost enterprise competitiveness and product quality in order to increase exports. They also agreed on the need for a strong policymaking and advisory body, although it was not clear whether this would be a strengthened version of the Export Promotion Organization or a new body. The two sides are conducting their own studies about the state of exports and ways to improve them. Christodoulakis said that he has instructed ministry officials to look at weaknesses in export promotions policy and come up with proposals. SEV has hired US consultants McKinsey for a similar project. The government wants to strengthen the role of Greek embassies abroad in promoting Greek products. For this purpose, the department of foreign economic relations, and its supervising deputy minister, were transferred from the Economy Ministry to the Foreign Ministry. The transfer has faced several problems, including the unwillingness of civil servants to move from one ministry to another and resulted in the resignation of Deputy Minister Yiannis Zafiropoulos early this year. There is also some good news on the export front: Greece’s external trade with the 13 EU candidate member states almost quadrupled in the 1990s, which will facilitate the absorption of shocks when their tariffs come down after membership, the Panhellenic Exporters’ Association (PSE) said in a study. Greek exports to the 13 countries during this period rose 337 percent and imports from them 224 percent during the 1990-2000 period, compared with respective rates of 34 and 45 percent with regard to all countries. These countries accounted for 21.3 percent of Greek exports in 2000, from 6.5 percent in 1990; the 10 prospective new EU members (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia) accounted for 8.4 percent of Greek exports in 2000, Bulgaria and Romania for 7.8 percent and Turkey for 5.1 percent.