Tasked with assisting and attracting foreign investors with the overall aim of growing the Greek economy, Enterprise Greece has been a critical organization is supporting Greece’s impressive economic recovery and its current growth trajectory. CEO Georgios Filiopoulos describes key investment opportunities for prospective investors such as in energy, logistics, and tourism, and highlights existing German investors such as Hochtief, TUI, Fraport and Deutsche Telecom that have already seen tremendous success in their long term and strategic investments in the country. Enterprise Greece continues to streamline and improve its offerings for investors and expects Greece’s appeal as an investment destination to continue to grow in the German market
The Greek economy shows promising signs of recovery, having emerged from eight years of EU bailout programs in August 2018. What lessons has Greece learned from the years of economic recession and how can Greece further sustain its economic recovery?
Greece is entering a new era. Despite the setback from the global coronavirus pandemic, Greece’s economy has become more competitive and outward-oriented. Greece has successfully returned to the international bond markets, and its credit ratings have been upgraded. Last year the Athens Stock Exchange was the best performing stock market in Europe. Greece is definitively back. Our goal now is to move on from the coronavirus crisis, build on our underlying economic momentum and achieve long-term sustainable growth. The main lesson from Greece’s financial crisis was that the Greek economy needed to adopt a new growth model based on exports and foreign direct investment rather than domestic consumption. That transformation is well underway. Major reforms over the last decade have already borne fruit, and the new government is stepping up those efforts. These include cutting taxes, reducing red tape, and accelerating privatizations to make Greece even more attractive for foreign investors.
More generally, the Greek government is committed to speeding up all investment projects large and small. It recently unblocked two major projects: Cosco’s €611 million investment plan for the Port of Piraeus and the €8 billion redevelopment plan for the former Athens airport at Hellenikon – a landmark project that represents the biggest urban redevelopment project in Europe. Another example: the government recently adopted a new investment law that will eliminate hundreds of bureaucratic obstacles to investment.
As the new government aims to reposition Greece as an investment destination, what critical factors does Greece need to take into consideration today to further improve its investment environment and how is Enterprise Greece facilitating foreign direct investment in the country?
The Greek government moved quickly to address the new coronavirus pandemic by swiftly implementing public health measures and pledging more than €10 billion in public assistance to ease the economic shock of the outbreak. At the same time, Greece continues to represent a unique investment proposition: combining the advantages of a developed country, with growth opportunities usually associated with emerging economies. The country boasts several competitive advantages, among them: an excellent geostrategic location, a highly-skilled labor force, attractive asset prices, a stable currency and political system, world-famous cuisine, a deep cultural heritage, unparalleled natural beauty, and a Mediterranean climate. As the world gradually recovers from the global pandemic, those advantages remain and will continue to make Greece an attractive investment destination.
The goal now is to press ahead with reforms, like reducing bureaucracy and lowering the tax and social security burden on enterprises, while also attracting foreign direct investment. To attract foreign investment, Greece wants to get out the message that the country is indeed entering a new era. To do so, the government has launched the “Repositioning Greece” initiative to showcase the new Greece. One unintended but positive consequence of the coronavirus crisis has been to accelerate the growth of online public services, making it still easier for an investor to do business in Greece. Enterprise Greece is helping to make Greece a more investment-friendly destination with several initiatives. For example, we help shepherd major strategic investments through Greece’s fast-track process and reach out to investors with roadshows, trade missions, educational seminars, and other events. We also provide an ombudsman service to help resolve any administrative problems encountered by investors.
In total, 19 strategic investment projects have been approved for Fast Track status — projects that are deemed particularly significant to the Greek economy and job creation. Combined, these 19 projects represent €2.5 billion worth of investment and are expected to create 7,300 jobs. Most of the projects are in tourism assets or renewable energy production. Enterprise Greece is also working to improve its services. Recently, the agency became part of the Ministry of Foreign Affairs to better coordinate Greek economic policy goals abroad. Another recent change: the agency is now governed by rules and regulations of the private sector rather than the public sector. In practice, this means that we will be able to go out and hire talent from the private sector, and this will also reduce internal bureaucratic procedures. That means fewer man-hours spent on unnecessary administrative work, and more time spent assisting investors. Throughout the coronavirus crisis, Enterprise Greece has continued to operate as normal and to conduct business as usual. The agency has been actively informing businesses and exporters of the available economic support measures and disseminating information on trade restrictions as a result of the pandemic. Enterprise Greece launched a “Support Greek Exports” information campaign and has worked in close collaboration with all its international and national stakeholders to minimize the impact of the coronavirus crisis on Greek small- and medium-sized businesses.
Tourism is the backbone of the Greek economy. Following the impact of the collapse of Thomas Cook, what is your evaluation of the investors’ interest in the tourism sector? Which are the sectors in which Greece holds a competitive advantage for investments and which ones will you be pushing forward in the short and long term?
While the coronavirus crisis is expected to have a severe impact on Greek tourism this year, the underlying trend is that Greek tourism is growing and has attracted investor interest in the hospitality sector. Greece welcomed more than 30 million visitors in 2019 and collected more than €16 billion in revenues from tourism, marking its sixth record year in a row. Greece is on its way to becoming one of the top 10 tourist destinations in the world.
As a result, over the last three to four years, Greece has seen a sharp increase in both local and foreign investment in the hospitality sector – particularly in 4- and 5-star hotels, including from major multinationals like TUI or Wyndham Hotels & Resorts. In the last four years, more than 55,000 new 4- and 5-star hotel beds have been added in Greece while in Athens alone more than 40 new hotel units opened their doors in the first half of 2019. According to a recent study by Greece’s tourism industry think-tank, INSETE, total investments in the hotel sector in 2018 increased by 46% to €2.26 billion. Foreign direct investment in tourism and property totaled €1.5 billion representing almost half of total FDI inflows into the country that year. It is estimated that another €5 billion in investments will be needed over the next several years to cope with rising demand.
In general, Greece is one of the hottest investment destinations for the hotel and resorts sector in Europe. The demise of Thomas Cook was an earthquake in the industry internationally and the coronavirus crisis will also have a severe impact. However, the Greek tourism industry remains strong and as a result investor interest remains high. One of Greece’s comparative advantages is its variety of destinations and attractions. Apart from sun and sea, the country also boasts spectacular mountains, cultural heritage sites, a vibrant contemporary art scene, thermal springs, and major religious sites. Greece offers unique cuisine and viniculture that are at the heart of the Mediterranean diet. These other facets of Greece lend themselves to the further development of adventure and sports tourism, gastronomy and wine tourism, corporate retreats, spa and wellness tourism, religious tourism and so on. As part of its long-term planning, Greece’s tourism ministry is working to develop the country’s potential as a destination for medical tourism, possibly through the creation of public-private clusters involving hospitals, medical centers, and hotels. According to a new study by diaNEOsis, the development of health and wellness tourism in Greece could potentially generate €13.6 billion in revenues and create 173,000 jobs over five years.
Greek exports have demonstrated a stable increase during the last few years. Can you elaborate on your export trade promotion program and the main initiatives through which Enterprise Greece supports Greek enterprises and their extroversion strategies?
Greek exports of goods and services edged to a new record high in 2019, confirming the growing strength of Greek products abroad despite economic headwinds in global trade. According to the latest data from the Hellenic Statistical Authority, Greek exports grew 1.0% from a year earlier to €33.8 billion – and they were up by 4.7% excluding volatile petroleum-related products – extending a five-year-long streak. Since 2015 exports have grown by more than 30% and are now equal to roughly a third of GDP. One of the silver linings of Greece’s economic crisis was that many Greek companies were forced to reorient themselves to the international market and away from Greece’s domestic market. As a result, this has produced a competitive and dynamic export sector in Greece. This includes Greece’s world-famous food products, but also pharmaceuticals, building and construction materials, beauty products, and maritime equipment, to name a few examples.
At Enterprise Greece, we champion Greek exports through a variety of outreach efforts. We support business trade missions abroad, host buyers’ events in Greece, hold educational seminars around the country, promote Greek regional products through in-country diplomatic missions and organize the national presence at dozens of international exhibitions. Last year, our export promotion program included our participation in more than 70 international trade events for a wide variety of product categories — food and beverages, ICT and software, cosmetics and beauty products, industrial and marine equipment, building materials, clothing, jewelry, defense equipment, hotel, and catering supplies and equipment.
How is Greece’s energy transformation, the transition to a green economy, and the country’s potential to become a logistics hub impacting investment opportunities in Greece?
Greece recently unveiled a new €44 billion national energy strategy to step up the development of cleaner and renewable energy sources and, combined with the steady liberalization of its energy sector over the past decade, has established itself as a regional energy hub at the crossroads of Europe, Asia, and Africa. Those moves have brought a slew of new investments: from wind farms to pipelines to power transmission projects. In the past year alone, Greece welcomed the inauguration of a new €300 million wind park on the island of Evia, the completion of the Greek portion of the €4.5 billion cross-border Trans Adriatic Pipeline, and new LNG facilities near Athens.
Also in the works are the privatization of the state gas distribution network, a €1 billion project to connect the island of Crete to the mainland’s power grid, and a second LNG facility in northern Greece. At the same time, Greece’s multi-billion-euro investment plan to build out road, rail, port and airport infrastructure, has attracted the presence of major international players in transport and logistics. Greece is transforming into a major logistics hub for the region drawing investors from Europe, Asia, and North America. Already the Port of Piraeus has become the busiest container-shipping hub in the Mediterranean and one of the 10 busiest in Europe. With its geostrategic location and with major projects already underway, Greece’s energy and logistics sectors represent two of the country’s most exciting investment opportunities.
Following the privatization of 14 regional airports, can you share with us the success stories in Greece that also involve German investors and share with us what type of investments in Greece best suit the profile of German investors?
There are many. German companies have been strategic investors in Greece for decades and have been very successful here. In recent years, they have invested in a range of industries – from infrastructure to retail to tourism – and have been instrumental in shaping the Greek economy in the process. One example is German construction and infrastructure company Hochtief, which more than 20 years ago won the concession to build and operate the Athens International Airport. The project was the pioneer case for public-private partnerships in Greece and has been highly successful. Since then, as you mention, Fraport has followed and is investing more than €1 billion to upgrade Greece’s 14 regional airports. That has given a tremendous boost to Greece’s tourism industry already and with much more promise ahead. Another example is like Lidl, which just celebrated 20 years in Greece, and has invested €1.3 billion in Greece over the last two decades and created thousands of jobs.
German telecommunications giant Deutsche Telekom also made an initial, long-term bet on Greece when it bought a minority interest in Greece’s state-owned Hellenic Telecoms, or OTE, before the crisis and has since raised its stake in the company several times. That has proven to be a very good investment over the years and, reportedly, offset a disastrous earnings cycle for Deutsche Telekom in the U.S. – it is no exaggeration to say that OTE helped save the German giant.
Tourism infrastructure will likely remain an important sector for German investors in Greece, and German travel operator TUI is another successful example. Two years ago it announced plans to add 10 hotels in Greece to its investment portfolio and has been successfully implementing that strategy. Greece is a very popular destination for German travelers and German visitors represent Greece’s most important tourism market. That’s likely to continue. Greece represents an exciting investment opportunity in a range of sectors. And German companies are taking part in those opportunities.