Introducing Greece

greece

Overview

Greece is strategically located between the mainland of Europe and the Middle East. It lies in the south of the Balkan Peninsula and is bordering to the north with Albania, FYROM (Former Yugoslav Republic of Macedonia) and Bulgaria. Greece shares its border with Turkey while its western front faces the Adriatic Sea and its southern side straddles the Mediterranean Sea. The country covers an area of 32,000 km2. Greece is a mountainous peninsula with fertile plateaus, coastal belts and about 50 inhabited islands, of which Crete is the largest. The climate is relatively mild during the winter. Daytime temperatures are usually between 6° C and 14° C with many hours of sunshine. The summer is warm, with temperatures between 28° C and 36°C. Low humidity and rainfall make the country and its islands in particular, one of the most popular vacation destinations in the world.
It boasts a well educated workforce and is a member of the Euro-zone. The tourism and shipping industries are very important in the country, and are growing rapidly. English is widely spoken, especially within the business Community. Historically, Greece represents one of the most ancient civilisations, with advanced cultural and political institutions dating back to 500 B.C.

Athens by night

During the Roman era, the country became part of the Roman Empire, becoming later one of the main administrative areas of the Byzantine Empire. Following the conquest of Constantinople by the Turks, Greece became a territory of the Ottoman Empire for nearly four centuries and achieved its independence in1829. It was only after a series of local wars that Greece stabilised its present territory. The period ending in 1974 was often characterized by political instability, culminating in the seven-year military coup of 1967. The 1974 democratic elections and a referendum created a parliamentary republic and abolished the monarchy, giving way to decades of relative political stability continuing through today.

Economic development

A number of state agencies supervised by the Ministry of Economy are responsible for handling different aspects of the government and finance programs for economic development, including the National Tourist Organization (EOT), the Center of Planning and Economic Research (KEPE), the Hellenic Center for Investments (ELKE), and the Hellenic Organisation of Small and Medium-sized Enterprises and Handcrafters (EOMMEX).

The business climate

A significant part of the economic activity is dominated by state-owned corporations. These have either total or almost total control of the railway, air-line, postal services, energy and natural resources, as well as sugar industry and arms and ammunition manufacturing. Most private businesses in Greece are small, operating as either family businesses or partner-ships with less than 50 employees. Share ownership in quoted companies is limited, but the Athens Stock Exchange continues to attract new listings every year. Government policy during the last decade aimed at keeping unemployment low while countering prolonged investment stagnation, which resulted in a significant expansion of the public sector and placed great strain on the economy. In recent years, government policy has been focused on the introduction of tight "austerity" budgets to restrain public spending and rationalize public debt. After achieving convergence with the E.U. and the full inclusion of the country in the Eurozone, the goals of the economic policy are to keep inflation and unemployment at low levels, reduce the wider public sector with extensive privatisation, complete infrastructure work in the country, and fund private investment programs among other targets.

The government welcomes foreign investment and supports the free enterprise and free-trade system. Greek and foreign investors are treated equally, while repatriation of proceeds and transfer of profits are effected through mediating banks without restrictions. With respect to investment, foreign ownership is permitted without restriction in almost all sectors (state-controlled companies included). However, some sectors like the arms industry are state-owned, and still closed to private investors. The most common forms of business establishment for foreign investors are the corporation (société anonyme) and the limited liability company. A minimum capital requirement is imposed on both sociétés anonyms and limited liability companies. General and regional tax and other incentives are available to both local and foreign investors. In addition, special industry incentives are also available to investors in general.

An investor can either form a company or acquire an existing one without any requirement for approval by the Greek government in relation to the valuation of the acquisition.

The government encourages establishment of industrial enterprises within specific industrial areas near the major cities of the country specially designed to offer infrastructure and facilities for industry. Location in less-developed areas or in the industrial areas is encouraged through higher incentives. Moreover, long-term financing from specialized credit institutions is available to local and foreign investors. Credit and financial services are also available from a large number of domestic banks and branches of foreign banks. Finally, profits are taxed at the company level, and dividends are distributed free of any withholding or income tax. Regarding trade policy, as a member of the EU, Greece is part of a constantly growing unified market of 380 million people, and the country is free of any restrictions or other legislation aimed at providing distinctive assistance to the local market. Greece offers tax and other incentives for manufacturing, tourism and advanced technology. The taxation system does not discriminate against foreign investors, as tax incentives are provided to all types of businesses. Worth noting too is that the domestic market is also receptive to imported products.

The full implementation in 1994 of the free movement of capital and foreign currency resulted in the abolition of all relevant restrictions and related procedures existing for investments. Therefore, Greece now has no restrictions or obligations for special procedures concerning foreign investment of non-EU origin. In general, all usual forms of carrying on business are open to foreign investors, i.e., licensing, importing and manufacturing through a branch or subsidiary; partnerships, or sole proprietorships. The presence of Greece within the EU market and its proximity to the emerging markets of Eastern Europe and to the Middle East make it a convenient location for companies to expand their distribution rapidly. Therefore, many foreign investors seeking to expand their markets are investing in Greece by acquiring established distribution networks either through the purchase of existing companies or establishment of their own companies. Because of the government's privatisation program several companies are becoming available for sale to local or foreign investors.

Overall, the government's favourable policy toward foreign investment is expected to continue in the future, as government policy encourages all types of productive investment that generate economic growth and employment through industrialization, manufacturing, automation, construction, expansion, and modernization of production with a package of non-tax and tax incentives. Generally, the incentives for investment are aimed at the industrial or tourist development of specific regions more than others.