Transcript greek-investment-law_clustering

Synergy & Networking (Clustering)
Projects in the New Greek
Investment Law (3908/2011)
Study Visit, Athens, 23 April 2013
name: Konstantinos Bourletidis
adress:
state:
contact:
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Greece has significant investment opportunities arising
primarily from its geopolitical position, its inclusion in the
European Union and the Eurozone, its natural resources, its
human resources and its infrastructure.
The economic crisis that emerged in 2010, triggered by the
global financial crisis and fiscal imbalances, resulted in the
inclusion of Greece in the support mechanism of the IMF
and the EU and the implementation of strict economic
policy, with negative effects on economic fundamentals.
However, the necessary structural reforms accompanying
the efforts for financial rationalisation have resulted in the
creation of a favorable investment and business
environment and create additional investment
opportunities.
Greece has a reform-oriented, outward looking economy
that is focused on long-term, sustainable growth. Greece
plays as the economic hub of Southeast Europe.
Greece in the Context of Crisis
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At present Greece is in the middle of a deep financial and developing crisis
that has been expanded to all areas of the country and affects all the parts
of business and economic activity. The crisis is absolutely connected with
the global economic crisis that started form the United States of America in
2008. The intensity of the crisis led many economists to consider it the
most severe recession since the Great Depression of the 1930s (World Bank
[1], IMF [2],).
The recent clues show that deficit of Greece is 10, 8% of GNP and the public
debt 367, 3 billion. The recession about 2011 had to do with the decrease of
investments about 20% and the unemployment the first semester of 2012
has been about 22,6% (Governor`s Annual Report of the Bank of Greece
2011 [3], (Hellenic Statistical Authority –Unemployment Rate Q1 2012)
[4]).
The recent studies (ACCI [5], FEIR[6], GCPCM[7]), show that all the sectors
of the business activity have been affected by all the effects of economic
crisis. To the business repercussions areas the alteration has been affected
negatively, especially to the overwhelming majority of businesses to the
first steps of function. The rate of businesses that has been affected very
much from the economic crisis overcomes the 80%.
Greece in the Context of Crisis
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The effects to the economic crises are
especially important and apparent.
More specifically in 2010 the
restriction of business activity had
been located to the manufactures and
the industry, whereas 2011 has been
expanded to the fields of trade as to
other services too, that make an
important rate of the total added value
of economy.
It is mentioned a decrease of the
activity especially from young
presumptive businessmen
and as a basic reason (46%) of the
suspension is preferred, the reduction
of turnover is a total problem, because
it had been reduced in 2011 in
connection with 2010 about 1/3. A
problem also appears to the 38% of
the total firms with a bigger frequency
to smaller businesses.
Πίνακας 3: Αριθμός επιχειρήσεων και απασχόληση στην Ελλάδα και ΕΕ-27 (2010)
Αριθμός επιχειρήσεων
Απασχόληση
Ελλάδα
Ελλάδα
Αριθμός
ΕΕ-27
Μερίδιο
Μερίδιο
(%)
(%)
719.952
96,5
92,1
Μικρές
22.832
31,5
Μεσαίες
2.893
Πολύ μικρές
επιχειρήσεις
Μικρές και
μεσαίες
Μεγάλες
Σύνολο
Αριθμός
ΕΕ-27
Μερίδιο
Μερίδιο
(%)
(%)
1.447.218
57,6
29,7
6,6
438.792
17,5
20,4
0,4
1,1
264.427
10,5
16,8
745.677
99,9
99,8
2.150.438
85,6
66,9
563
0,1
0,2
362.055
14,4
33,1
746.240
100
100,0
2.512.493
100,0
100,0
Πηγή: Observatory of European SMEs, European Commission.
SMEs in Greek Economy
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In particular, more attention needs to be placed on small
and medium-sized entrepreneurial (SME) firms and how
they perceive and respond to the crisis.
SMEs play an important role not only in Greek and
European competitive economic development, but also for
the world economy because they account for 97% of
businesses worldwide; they employ most of the labour force
and are responsible for the majority of the total sales
volume (Mulhern [8], Papaoikonomou & all [9].
SMEs firms are vital, since they are an important part of all
economies and are essential for economic recovery.
In periods of prolonged economic crisis the companies and
especially the SMEs ones are affected negatively. They show
signs such as the decrease of sells, the shrink of profits, the
indulgence of financing, the difficulty of covering the
obligations towards the suppliers.
Greek Investment Law
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Greece’s Investment Incentives Law governs the
terms and conditions of direct investment in
Greece and provides for incentives, available to
domestic and foreign investors, dependent on the
sector and the location of the investment.
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In February, 2011, the Greek Parliament voted on
and passed the Investment Law, which
establishes new objectives, new procedures, and
new financing tools, and creates the necessary
conditions for a healthy and outward-looking
business environment.
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The purposes of the Investment law is to promote
economic growth in Greece by introducing
investment aid schemes to improve
entrepreneurship, technological development, the
competitiveness of enterprises and regional
cohesion and Promote green economy, the
efficient function of existing infrastructures and
the deployment of the country’s human resources
The Law
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Contains a defined annual budget and an aid ceiling.
Addresses all sectors of the economy, except those expressly articulated in
Article 2 of the Law (please follow the )
Is mindful of scarce public funds by providing incentives through tax
exemptions, subsidies, leasing and soft loans. For every one Euro of subsidy
provided, three Euros of tax exemptions are provided.
Provides for both the electronic submission of every investment plan and
the submission in hard copy to the Investor Service Offices.
Contains specified and fixed application deadlines (April and October)
except for Major Investment Plans (>€50 million), which are submitted
throughout the year.
Introduces a new evaluation process by establishing the National Register of
Evaluators and Auditors.
Focuses on sustainable investment projects that are environmentally
friendly, promote innovation, regional cohesion, youth entrepreneurship,
and that create jobs.
The new Investment Law provides for aid rates from 15% to 55%
dependent on the Region that the investment is realised, and on the size of
the company.
Investment Categories
1.General Entrepreneurship
2. Regional Cohesion
3. Technological
Development
4. Youth Entrepreneurship
5. Large Investment Plans
6. Integrated, Multi-Annual
Business Plans
7. Partnerships and
Networking (Clustering)
Types of Aid
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a. Tax relief—Tax relief (lasting from 8 to 10 years) comprising
exemption from payment of income tax on pre-tax profits which
result, according to tax law, from any and all of the enterprise’s
activities.
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b. Subsidy—Gratis payment by the State of a sum of money to
cover part of the subsidised expenditure of the investment.
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c. Leasing subsidy —Includes payment by the State of a portion
of the installments paid under a leasing agreement executed to
acquire new machinery and/or other equipment.
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d. Soft loans by ETEAN (National Fund for Entrepreneurship and
Development). The amount to be covered by a bank loan may be
funded by soft loans from credit institutions that cooperate with
ETEAN enterprises.
Subsidized expenditure
The investment plans which
come under the provisions
of the present law in
application of the Block
Exemption Regulation shall
receive aid for the following
expenditure:
(a) Tangible assets
(b) Intangible assets
(c) Research,
development and
innovation projects
Aid Rates
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The country shall be divided into
three incentive zones (A,B, C),
on the basis of the level of growth
compared with the national
average, Incentive zone A, which
shall include the Prefecture of
Attica and the Prefecture of
Viotia.
Incentive zone B, which shall
include the prefectures in which the
per capita GDP is greater than 75%
of the national average.
Incentive zone C, which shall
include the prefectures in which
the per capita GDP is less than
75% of the national average, the
region of Eastern Macedonia and
Thrace, the islands in the regions of
the North and South Aegean and
the Ionian Islands, the islands
belonging administratively to
prefectures of the mainland, and
the border prefectures of Greece.
Aid Rates (2)
Undertakings shall be divided into large, medium-sized, small and
micro enterprises in accordance with the relevant EU classification
(Commission Regulation (EC) No 800/2008 of 6 August 2008,
Annex I, OJ L 214 of 9 August 2008, p. 38).
 The percentage of aid for each investment plan shall depend on
the size of the investment body and the prefecture in which it is
implemented, but shall not exceed 50% of the subsidised cost of
the investment plan.
 The aid percentages have been defined, for the initial application
of the present law, on the basis of the per capita gross domestic
product (GDP) of each prefecture in 2007, compared with the
average per capita GDP of Greece in that year.
(a) In zone A: 15% for large enterprises, 20% for medium-sized
enterprises and 25% for small and micro enterprises.
(b) In zone B: 30% for large enterprises, 35% for medium-sized
enterprises and 40% for small and micro enterprises.
(c) In zone C: 40% for large enterprises, 45% for medium-sized
enterprises and 50% for small and micro enterprises
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Minimum Value of Investment
 for large enterprises: EUR one million (1 000 000);
 for medium-sized enterprises: EUR five hundred
thousand (500 000);
 for small enterprises: EUR three hundred thousand
(300 000);
 for micro enterprises: EUR two hundred thousand
(200 000)
 Especially for the "General Entrepreneurship" category
of investment projects the minimum value of
investment shall be half the above amounts in each
case.
Partnerships and Networking
(Clustering)
 Target Group:
partnerships and
networking
configurations or
clusters.
• These clusters shall be
comprised of at least ten
enterprises in the Region
of Attica and the
Thessaloniki. Prefecture
and of at least five
enterprises in other
prefectures, operating in
the form of a consortium.
 Provides: for any form of
aid.
Partnerships and Networking
(Clustering) (2)
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Universities, research
institutions and legal persons
under private law may
participate up to a rate of
20%.
The investment plans
subsidised include joint
operations, such as joint
production facilities and
equipment, quality control,
storage, distribution
networks, transport and
product and service
exhibition and sale facilities
and equipment, joint
trademarks and e-sales
system, joint certification and
quality marks, joint staff
training etc.
Towards to Smart Specialization
Concept
 In a first stage a package of financial instruments and
incentives designed and promoted , such as to fit
properly to the local innovation needs and
entrepreneurs profile
 This will encourage stakeholders to associate in order
to benefit from investment law
 These opportunities should be shaped on the local
data and facts
 Thus, collection , structuring, analysis and
understanding of local evidences have to be done
 Then the competition between entrepreneurs and
their investment plans with potentials should be put
into place, in order to show which of them are able to
discover the most reliable and profitable opprtunities
Foreign Direct Investment
 Despite the severe
economic crisis Greece is
facing since 2010, the
country's performance in
attracting foreign
investment in 2011 was
satisfactory in
comparison with the
previous year.
 The total (gross) capital
inflows to the country in
2011 amounted to 3.3
billion Euros, while net
inflows exceeded 1.3
billion Euros.
Inflows of FDI in Greece during the period
2003-2011 (in million Euros)
Sectoral Breakdown of Foreign
Investment
Total FDI inflows by sector
of economic activity for the
period 2003-2011
 FDI inflows by sector
of economic activity in
Greece in recent years
focus primarily in the
tertiary sector,
followed, with a
significant gap, by the
secondary sector.
 The majority of
developed countries
shows a similar
Total value: 38,231.3 million Euro
structure of FDI.
Source: Bank of Greece 2012
Key Features
 Concentration of FDI in services.
 This trend was dictated primarily by the development
of the country's financial system, the liberalisation of
telecommunications, and the stimulation of trade
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The proportion of secondary sector is relatively low
compared with the potential of the country, a trend
that suggests considerable scope for investment
 Investing in energy (electricity, natural gas) amounted
to 6.2% of total investment in the secondary sector
and represent typical investor interest growth during
this period. The search for hydrocarbons in Greek
territory is expected to play an important role in
investment activity
Manufacturing
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The sectors of manufacturing
with significant investor interest
over the period 2003-2011
include chemicals, food &
beverage, machinery and metal
products.
Key features
The concentration of business in
these areas favours the
establishment of new businesses
(Greenfield Investments) in
Greece, and the investment
cooperation of foreign companies
with Greek companies to produce
end products that meet the needs
of domestic and international
markets.
The chemical industry and
other industrial activities are
the sectors that showed
important increase in 2011
compared with the previous year.
Structure of total FDI
inflows in manufacturing
in the period 2003-2011
Total Value: 9,766.8 million
Euros
Source: Bank of Greece 2012
Services
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The service sectors with significant
investor interest over the period 20032011 include telecommunications,
financial services, trade and tourism.
Key features
• A low percentage (7%) of foreign
investment focused on the least
productive class, that of "real estate",
whereas the majority of foreign capital
went into productive activities with
high value added.
• There is considerable scope for
further development of foreign
investment activity in the tourism
sector.
•There are growing investment trends
in education and health sectors.
• The sectors that showed a significant
increase in 2011 compared with the
previous year are: transport and
storage of products,
telecommunications, financial
institutions, real estate, information
technology and health-education.
Structure of total FDI inflows in services
during the period 2003-2011
Total value: 26,179.3 million
Euros
Source: Bank of Greece 2012
"Invest in Greece, achieve mutual benefits and win –win"
Wei Jiafu
President & CEO
COSCO
“The country has a strong tourism infrastructure. With
the hotel market in Greece dominated by independently
run hotels and domestic chains, we believe there are
wonderful growth opportunities for all our brands
throughout the country.”
January 11, 2010
Patrick Fitzgibbon
Hilton Worldwide’s Senior Vice President, Development Europe & Africa
Hilton Worldwide
name:
adress:
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“I must say, personally, I’m impressed with the improvements
that Greece is going through. Being the largest global supplier
basis software, we are here to help accelerate the process to
increase innovation and growth, because that’s really the
agenda of the future in Greece. We see a market with lots of
intelligent people, we see a market where software would play
a major role, and we are here to make our investments and
accelerate the process. We will invest in Greece. We have
moved our South Europe Headquarters to Athens to show our
focus on this market. We can inspire small startups to leverage
our technology and drive innovation in growth in a global basis
environment.”
Jim Hagemann Snabe
co-CEO
SAP AG
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