There is no doubt that 2019 is a key year for resetting the Greek economy from low-growth rates to higher-growth rates. As Greece has left behind the greatest economic downturn in modern history, it is required to achieve higher growth rates in the coming years so that economic growth can be sustainable, writes Dr George Patoulis, the regional governor of Attica in Greece.
Dr. George Patoulis is the newly elected regional governor of Attica region, which includes the city of Athens. He is also President of the Central Union of Municipalities of Greece (KEDE).
It’s common knowledge that the most appropriate way to achieve strong sustainable growth internationally is to attract Foreign Direct Investments (FDI).
The recent results of the national, EU and regional elections in Greece and the great political change that they brought to Greece provided a kick-start for the implementation of the aforementioned goal.
As a new Regional Governor of Attica and President of the Central Union of Municipalities of Greece (KEDE), I am convinced that the role of the Attica Region will be catalytic both to attract investment in our country and to achieve high growth rates in the coming years.
Our goal is that the Region of Attica is now the main lever for the economic re-ignition of the country. Prerequisites for this goal are to have a clear vision, with long-term planning and a coherent strategic development plan with specific goals and measurable results.
For our part, in the Attica region, we will lay the groundwork in order to attract foreign investments in Attica, which will preserve to a certain extent the fiscal surplus that has been achieved without requiring the maintenance of the policy of high tax rates that the previous government has routinely imposed.
In order to increase Foreign Direct Investments in the Attica Region and in general on Greek territory with the high growth rates that are required in the coming years, some prerequisites and some remaining reforms should be fully implemented as soon as possible. These are briefly listed below:
- Given that Greece forms the “investment platform” and that the country risk has now been reduced to a minimum, political stability has been restored; the remaining structural reforms will further enhance the competitiveness of the Greek economy.
- The creation of a simplified system of tax incentives and tax relief for investments is essential. Increased taxation, which initially made it easier to convert the budget deficit into a primary surplus, should be gradually reduced, as there was a higher primary surplus than the target set initially, in order to increase investment incentives and at the same time increase public investment. A stable, simple, fair and business-friendly tax system is rendered as necessary as never before.
- The reduction of bureaucracy, the increase in transparency and the improvement of the services offered to investors are catalytic elements for the future of a country that is immediately expecting a range of significant investments. It is also necessary to provide advanced services to help investors analyze investment decisions and deal with business activities. The actions include the improvement in the quality of sources, effective operation of services such as the one-stop-shop that aims to reduce bureaucracy and to improve the speed and efficiency of enterprises in Greece. It is also vital to link all government and state agencies through an online-computerized system.
- The support of young people’s ideas and initiatives that have specialization in technological innovations (patents). Financing (with the support of EU) of entrepreneurship should be a top priority. New enterprises can then be acquired or receive additional funding (through strategic partnerships) from foreign groups with a prominent position in the market, boosting automatically their market capitalization.
- Targeting of industrial sectors: the goal is not only to target the “traditional” sectors that already bring growth (i.e. shipping, tourism) but also to focus on other areas (human capital intensities) with huge growth prospects within the next decade (i.e. technological innovations, high-quality organic agricultural products, wellness tourism, etc.). Once the ‘priority’ areas have been identified, it is necessary to invest in the promotion of these sectors/products.
- It is very important for the country to attract long-term rather than short-term FDI, as the former will create new, sustainable jobs, contributing to the reduction of unemployment.
- Promoting the improvement of economic conditions in Greece to investors, (i.e. positive news should be at the forefront of the media, especially in the foreign media).
- Of course, a strong economy requires a strong and reliable banking system to support new investments and growth in Greece. Therefore, Greek banks have to focus on the major issue of tackling non-performing loans in order to achieve the targets set by the Bank of Greece for their immediate reduction in the next period. At the same time, the repatriation and increase of deposits in the Greek banks should continue at an even faster pace. Moreover, in the new post-memorandum era, it is imperative that banks diversify their clientele into more dynamic sectors of the Greek economy and direct their new lending to those small and medium-sized enterprises that are highly dynamic in their field, promoting growth through the utilization of specialized personnel and without requiring significant investments in fixed assets other than working capital. In any case, they should continue to target high value-added business sectors (such as tourism and medical tourism) where the profit margin is high and the growth of these sectors is expected to increase profoundly in the coming years.
The aforementioned 8 prerequisites form the necessary conditions for our country to become a “favorite” destination of long-term investment funds so that the Greek economy can really “re-ignite”.
However, in order for the necessary aforementioned conditions to become sufficient, we must first establish the trust of Greek citizens and investors to the positive long-term prospects of the Greek economy and initiate the return of the human capital (brain-gain) that left Greece during the ten-year period of recession.