1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Greek government continues to state its desire to increase foreign investment, though the country remains a challenging climate for investment, both foreign and domestic. Despite the most recent EUR86 billion bailout agreement signed in August 2015 between the Greek government and its international creditors, under the auspices of the ESM, economic uncertainty remains widespread, though sentiment has been broadly improving since 2017.
Numerous additional structural reforms, undertaken as part of the country’s 2015-2018 international bailout program, aim to welcome and facilitate foreign investment, and the government has publicly messaged its dedication to attracting foreign investment. The Trans Adriatic Pipeline (TAP) is one example of the government’s commitment in this area. In November 2015, the Greek government and TAP investors agreed on measures and began construction on the largest investment project since the start of the financial crisis, with the pipeline set to begin operations in 2020. Nevertheless, many structural reforms have created greater challenges to investors and established businesses in Greece. The country has undergone one of the most significant fiscal consolidations in modern history, with broad and deep cuts to public expenditures and significant increases in labor and social security tax rates, which have offset improved labor market competitiveness achieved through significant wage devaluation. Moreover, corruption and burdensome bureaucracy continue to create barriers to market entry for new firms, permitting incumbents to maintain oligopolies in different sectors, and creating scope for arbitrary decisions and rent seeking by public servants.
Limits on Foreign Control and Right to Private Ownership and Establishment
As a member of the EU and the European Monetary Union (the “Eurozone”), Greece is required to meet EU and Eurozone investment regulations. Foreign and domestic private entities have the legal right to establish and own businesses in Greece; however, the country places restrictions on foreign equity ownership higher than the average imposed on the other 17 high-income OECD economies. The government has undertaken EU-mandated reforms in its energy sector, opening much of it up to foreign equity ownership. Restrictions exist on land purchases in border regions and on certain islands because of national security considerations. Foreign investors can buy or sell shares on the Athens Stock Exchange on the same basis as local investors.
Other Investment Policy Reviews
The government has not undergone an investment policy review by the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), or United Nations Committee on Trade and Development (UNCTAD), or cooperated with any other international institution to produce a public report on the general investment climate. Nonetheless, in March 2018, the OECD published an economic survey describing the state of the economy and addressing foreign direct investment concerns. The government has sought the OECD’s counsel and technical assistance to carry out select reforms from the recommendations and develop additional reforms in line with the government’s emphasis on the social welfare state.
Greece’s business registration entity GEMI (General Commercial Register) has the basic responsibility for digitizing and automating the registration and monitoring procedures of commercial enterprises. More information about GEMI can be found at http://www.businessportal.gr/home/index_en . The online business registration process is relatively clear, and although foreign companies can use it, the registration steps are currently available only in Greek. In general, a company must register with the business chamber, tax registry, social security, and local municipality. Business creation without a notary can be done for specific cases (small/personal businesses, etc.). For the establishment of larger companies, a notary is mandatory.
The country has investment promotion agencies to facilitate foreign investments. “Enterprise Greece” is the official agency of the Greek state. Under the supervision of the Ministry of Economy and Development, it is responsible for promoting investment in Greece, exports from Greece, and with making Greece more attractive as an international business partner. Enterprise Greece provides the full spectrum of services related to international business relationships and domestic business development for the international market. Enterprise Greece offers an Investor Ombudsman program for investment projects exceedingEUR2 million. The Ombudsman is available to assist with specific bureaucratic obstacles, delays, disputes or other difficulties that impede an investment project. As reported by some business, Enterprise Greece, even with its ombudsman service for investments, is not very effective at moving investments projects forward.
The General Secretariat for Strategic and Private Investments streamlines the licensing procedure for strategic investments, aiming to make the process easier and more attractive to investors.
Greece has adopted the following EU definition regarding micro, small, and medium size enterprises:
Micro Enterprises: Fewer than 10 employees and an annual turnover or balance sheet belowEUR2 million.
Small Enterprises: Fewer than 50 employees and an annual turnover or balance sheet belowEUR10 million.
Medium-Sized Enterprises: Fewer than 250 employees and annual turnover belowEUR50 million or balance sheet belowEUR43 million.
The Greek government does not have any known outward investment incentive programs. Ongoing capital controls, though partially lifted, still impose restrictions or additional procedures for any entity seeking to remove pre-existing large sums of cash from Greek financial institutions.
Enterprise Greece supports the international expansion of Greek companies. While no incentives are offered, Enterprise Greece has been supportive of Greek companies attending the U.S. Government’s Annual SelectUSA Investment Summit, which promotes inbound investment to the United States, and similar industry trade events internationally.