SEV Hellenic Federation of Enterprises is a leader in the business community in Greece as the oldest business federation in the country. Theodore Fessas, President of SEV, discusses the potential of the Greek economy, sectors he finds poised for rapid growth, as well as initiatives SEV is pushing for such as reducing corporate and individual taxation, privatization, strengthening industry-academia collaboration, and increasing incentives packages to stimulate investment in the Greek economy. Mr. Fessas emphasized the importance of Germany as a trade and investment partner, and sees Germany as a key partner as Greece transforms its economy in preparation for the Fourth Industrial Revolution
The Greek economy is gaining momentum achieving a growth rate of 1.9 percent in 2018. How would you describe the economic turnaround in real terms and what is your assessment of Greece’s progress from an economic point of view?
Economic growth for 2020 is expected to be above the European Union average. Sovereign bond yields are at historical lows. Greece is riding a wave of increasing optimism; business expectations and consumer confidence are surging, and rapid investment growth is expected to improve productivity and competitiveness. Steps are being taken to reduce corporate and personal taxation, but more is needed. The biggest wager is whether the current economic climate, people’s perceptions and new legislation can be transformed into an investment wave on all fronts. Steps have already been taken towards reducing bureaucracy, simplifying licensing, as well as facilitating large scale investments. Transforming taxation into an instrument for growth through hyper-depreciations and other incentives are also expected to help investment. Nevertheless, the key challenge lies in widening the tax base and eliminating tax evasion. In addition, accelerating the digital strategy and overhauling public administration structures are crucial for Greece’s first wave adaptation to the Fourth Industrial Revolution.
Where are the key areas of investment opportunities in Greece currently? Which sectors do you see as the primary engines for growth?
Greece presents industrial investment opportunities in mining, energy, water, basic metals, chemicals, pharmaceuticals and foods, as well as in more traditional sectors such as tourism, retail, logistics and construction. More recently, investments in more mature industries have been complemented with ventures in cutting-edge information and communication technology, as well as in the precision engineering and electronics sectors. There are also investment projects involving infrastructure and linked to privatization and concessions, in roads, rails, seaports, airports, hydroplane ports, and in telecommunication networks. To support investment activity, Greece offers substantial incentives for large-scale strategic investments. In sum, prospects for investment and growth in Greece are rapidly improving. This is bound to lead to an expansion of trade and capital flows, for the mutual benefit of our both countries and peoples. The Greek business community is eagerly willing to strengthen business ties with Germany.
What are the factors needed to increase Greece’s attractiveness as an investment destination?
Greece stands ready to attract investment of the highest caliber. Doing business in Greece requires lifting further red tape and enhancing digitalisation. Privatization is also key for attracting investment. Many public corporations need to be privatized. The focus of the approach should concern improving the quality of public services on offer, as well as their cost-effectiveness. Public-Private Partnerships and concessions can both be vehicles that will unlock the great investment potential in Greece. SEV has proposed the creation of a National Investment Council, headed by the Prime Minister, so that investments become a national priority. However, we further need agreement and cooperation with the government on goals and instruments for job creation and growth.
Despite significant progress made thus far, the Greek economy continues to face major challenges stemming from crisis-related legacies, with brain drain being a notable issue. How can Greece better link the education system to the job market?
In the last decade, 500,000 people left Greece. Among them some of our best young minds, and also many people who simply could not find a job. I do not necessarily believe that leaving the country for a while is a negative thing. Once abroad, horizons broaden and new skills are acquired. Nevertheless, it is becoming a significant problem for companies in Greece, as they experience skill shortages. Reversing the trend is crucial and will be achieved through two different approaches. The first involves improving the competitive environment affecting Greek corporations. Reforms are already underway in this respect, while reducing taxation and social security contributions would help significantly as well. The second aspect is through specific policies for addressing brain drain. The key lies in linking education and the market. This can include incentives for R&D investments to create a fertile environment for the cooperation between universities and businesses for research, collaborations and tackling common challenges. Creating an innovation ecosystem and allowing for the smooth transition from education to the workplace is also a key factor. In this respect, cooperation is needed to ensure that education and skills reflect the needs of the private sector. There is still a skill gap in Greece which worsens the brain drain. At SEV, we advocate for greater and deeper cooperation between public policy, education, and research, and the private sector. In the framework of the Fourth Industrial Revolution, knowledge and skills are constantly evolving. Through cooperation, we can ensure that education remains relevant and helps the graduates’ employment prospects.
In May 2019 you presented the main priorities of the business community for the period 2019-2024, focused on the EU. How do you envision Greece’s role within the EU evolving during this period and how can Greece better promote its national interests within the EU?
A strong Greece is even stronger in a strong EU. Strengthening Greece’s participation in all EU endeavours remains our main objective. We support growth policies aimed at improving the EU’s position in the global economy. We fully support the European goal of increasing industry’s share to 20 percent of GDP, through policies, priorities and finance mechanisms, aimed at improving companies’ adaptability, digital transformation and innovation. We find that our national interests is best served in a just, adaptable and modern union. Other important pillars include climate change, the completion of the energy internal market as a source of improved competitiveness, and of course, Digital Europe. The latter is seen as a key prospect for Greek industry and we are firm believers in Industry 4.0 project to transform the economy and allow us to leapfrog into the 21st century.
How is the Greek-German trade relationship and how can Greece capitalize on the momentum created and shift the perception of German foreign investors?
Germany is a long-standing friend of Greece and one of our strongest, and closest, trading partners. Almost 10 percent of Greek exports go to Germany and 15 percent of our imports come from there. Germany is also a significant FDI partner in Greece. In 2018 alone, German investors invested €459 million, 14 percent of total net FDI in Greece. Our trading relationship is going from strength to strength in both directions. We import from, and export to, Germany in significant volumes, a relationship that hardly faltered even at the peak of the crisis. German companies that have participated in Greek privatization efforts have proven their commitment and abilities. German investors would also be welcome to invest in Greek companies and take advantage relatively low stock valuations and real estate prices, as well as human resources of the highest caliber. Further and deeper cooperation would only make things better. For example, we are very eager to tap into German know-how in the run-up to the Fourth Industrial Revolution. The change of narrative for Greece is already taking place in the German market and globally. Greece is increasingly seen as an opportunity rather than a threat to the European edifice. SEV prides itself on our approach to international cooperation and the business opportunities that may result from it. Our export trade missions bring our members into contact with business opportunities around the world, while our results-based efforts yield numerous business deals. We work hard to demonstrate Greece’s ability to change and exploit the opportunities arising from our potential.
Considering the strengths of the German economy in industry, technology, innovation and renewables among others, what investment opportunities can Greece present that suit the profile of German investors?
Greece has plenty of investment opportunities to offer. Foreign capital net inflows have doubled in recent years, though still, at around €4 billion, they represent just 2 percent of GDP. As expected at the initial phase of a country’s repositioning in the global investment map, most of the foreign investments are in the area of services, mainly tourism, financials, and investments in real estate, specifically housing. What is most needed in our country, however, beyond portfolio investments, is greenfield investment. And the government works hard towards that direction.