Recently named Best Foreign Investment Practice, Greece by World Finance, Papapolitis & Papapolitis is a firm that represents major financial institutions and multinational corporations, which invest in various sectors of the Greek market. The firm today is at the forefront of the legal market in major foreign direct investment transactions in Greece.
Papapolitis & Papapolitis has experienced the development of corporations and projects in Greece, from the early days of penetrating the market, up to today where these corporations owned by foreign investors play a major role in their respective industries within the Greek market. As such Papapolitis & Papapolitis can offer a key insight into the sometimes difficult, but highly rewarding venture of investing within the Greek market.
The Greek market has experienced an increase of FDI after 2004. For example, net inflows reached Ä4.275bn in 2006, up from Ä487m in 2005. The economy expanded at an average annual rate of four percent from 2004-2007 and 3.2 percent during 2008, one of the highest rates in the Euro zone, where growth was 1.2 percent. After the global economic crisis the European Commission, in its economic forecast report of spring 2009, estimates that Greece’s growth rate will be 0.1 percent for 2010, above the EU 27 rates.
Lately there has been very bad publicity concerning Greece’s financial situation, mainly due to its large deficit. Needless to say that other major countries in the EU, as well as major non-EU countries, suffer from almost the same problem.
The Greek government has already decided to take very strict economic and financial measures as well as to apply major structural reforms in its fiscal policies, which will help immensely in Greece’s economic recovery.
In 2010 great opportunities for foreign investment will be created since the Greek government has stated that major state owned entities will be privatised (i.e. Public Utilities, Banks, Airports, Energy Companies etc.).
One of the major difficulties that foreign investors face when investing in the Greek market is at the time of entering into the market. The main issue has to do with navigating through Greek bureaucracy and dealing with public authorities. It might prove to be a lengthy procedure and during this time a legal advisor that possesses the local know-how and expertise, but at the same time has a key understanding of a foreign investor’s corporate goals and needs is definitely needed. A winning blend would include attorneys who have actually worked in major financial centres of the world, but also have the necessary skills and knowledge of the way in which the Greek market operates. These types of attorneys are found within the Papapolitis & Papapolitis foreign investment practice and pride themselves that they can deliver the most excellent service to foreign investors.
Nevertheless, efforts and reforms are taking place to diminish these hurdles and for bureaucracy issues to be resolved.
One of the most noteworthy reforms in investing in Greece is the newly established Invest in Greece agency the official Investment Promotion Agency of Greece that promotes and facilitates private investment. The agency is set to identify market opportunities and provides investors with general assistance, analysis, advice, and aftercare support free of charge.
Greece’s investment incentives on offer are among the most competitive in the European Union.
The structural framework for investment support in Greece revolves around three institutional pillars:
1) the Investment Incentives Law
2) the National Strategic Reference Framework 2007-’13
3) Public Private Partnerships (PPP)
Namely:
1) cash grants that can reach up to 60 percent, covering part of the expenses of the investment project by the Greek State;
2) leasing subsidies that can reach up to 60 percent, that cover part of the payable installments by the Geek State relating to a lease that has been entered into for the use of new mechanical or other equipment; or
3) wage subsidies that can reach up to 60 percent, provided for employment created by the investment; or
4) tax benefit that can reach up to 60 percent, that allows income tax exemption on non-distributed gains. This benefit is effective upon completion of the investment for the first ten years of operation and is created through a tax-exempt reserve.
The above investment incentives are applicable to energy, tourism, industry, advanced technologies and innovation projects and cover a wide area of business activities.
Finally, the new “Fast Track” law developed by the Ministry of Economy and Finance that accelerates the licensing procedure for investments in Greece is applicable in energy, tourism, industry, advanced technologies and innovation projects and is available to large scale investments that their total value exceeds Ä200m or investments exceeding Ä75m, provided that the investment creates 200 new jobs.
Under the “Fast Track” law Invest in Greece can act as a one-stop-shop for investors that undertakes all procedures and licensing required for investments that meet the criteria of the law.
All of the above endeavours and reforms do offer a foreign investor great incentives in order to invest in the Greek market and those investors who have established businesses in Greece have experienced great profits posted.
For example, in the real-estate and gaming sector foreign clients of Papapolitis & Papapolitis have developed one of the largest hotel casinos in Europe that is also one of the most profitable hotel casinos worldwide.
Other areas where foreign investors have acted with tremendous success within the Greek market is the Renewable Energy Sources (‘RES’) industry, where Greece has the prospect of becoming one of the major European countries that produces energy from renewable sources. The incentives offered by the Greek State for these types of projects, as well as the new laws that are coming to place expediting the licensing procedures make the Greek RES market to be extremely lucrative to foreign investors. Papapolitis & Papapolitis represents foreign multinational companies that invest in the Greek RES market and have experienced immense success.
In addition, the Greek banking sector has remained stable through 2009 and tests conducted jointly by the Bank of Greece and the IMF suggest the “Greek banking sector has enough buffers to weather the expected slowdown of the economy”.
Papapolitis & Papapolitis suggests that investing in Greece is surely a venture that pays off and from experience those who have made such an investment have found themselves in a great position with their corporations posting profits throughout the years.
The financial crisis that Greece is experiencing at the moment has led the Greek government to make changes that in the long run will have a positive impact on the market. The market will open and new major opportunities that will speed up the privatisation process will be created. The bureaucratic legal framework that has deterred foreign investors from entering the market up until now will also be simplified.
Greece needs FDI and the Greek government has fully understood this parameter. We are now witnessing an attempt from the government to eliminate every obstacle that could delay or hinder any foreign investment.
The new efforts and reforms made by the Greek government offer hope that Greece will become even more competitive within the global market and that foreign investors will find themselves in an even more comfortable position when investing in the Greek market.
Papapolitis & Papapolitis considers that in this year many foreign investors will be encouraged to invest in the Greek market, due to the combination of new major opportunities and the new framework that is offered by the government’s reforms.
Nicholas Papapolitis is a Senior Associate at Papapolitis & Papapolitis. For more information www.papapolitislawfirm.com; www.investingreece.gov.gr
