Greece in a new investment era January 2011
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Contents
1. Reforms and fiscal consolidation in fast-forward mode 2. Greece’s competitive advantage 3. Growth sector opportunities 4. Invest in Greece Agency’s service offering
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1. Reforms and fiscal consolidation in fast-forward mode
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Greece is decisively tackling the challenge of fiscal consolidation
Greece is taking
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The Greek government is implementing an Economic and financial Program that represents the government's firm response to the current challenges that the country faces
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The Program is supported with a €110bn financing package provided by Euro area Member States and the IMF
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The Program includes both structural and fiscal reforms that will help Greece overcome deep-rooted structural deficiencies that persist in public fiscal management, the economy and the financial sector
•
The Program foresees a fiscal effort in the order of 12 GDP percentage points or approx. €30 bn from now until the end of 2013
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“The strength of the program so far has not only been its ambitious and front loaded adjustment effort, but above all, [it has been] the government’s determination―this is clearly the government’s program―and the socially well-balanced nature of the adjustment,” Thomsen said.
concrete steps to confront the recent fiscal consolidation
November 2010, “The program is off to an impressive start, but it is now at a crossroad, where further progress will depend on difficult structural reforms” Poul Thomsen, head of the IMF team 3
Greece is at the forefront of positive changes
Crisis
Opportunity
Reforms Trade
Investments 4
Greece is taking concrete steps… Concrete steps are being taken to boost economic activity
New projects in the pipeline
New investment framework
• Acceleration of the implementation of the EUfunded NSRF 2007-2013 • Concessions of state owned real estate assets • New Highways under construction • Urban regeneration programs supported by EIB • New regional airports to be concessed • Ambitious privatization program under way to reach €7bn by 2013 • Piraeus Port Investment plan • Railways restructuring • Restructuring of the state owned banking system
• The Fast Track Law, which aims to dramatically accelerate big investments projects has been voted by the parliament • A new Investment Incentives Law covering almost all business sectors • A new bill to reduce all procedures of business start ups in just one step • A new framework to promote investments in the Renewable Energy Sector (RES) has already been passed by the Parliament
Structural reforms • Rationalization of Health spending • Modernizing of State enterprises • Enhancing Tax administration •Opening up access to services, trades, and professions. •Strengthening of the Banking and insurance supervision. •New framework for fiscal monitoring •New framework for supporting tourism and commerce •Program to support exports •Acceleration of the Land Registry •Liberization of the energy market
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‌following a strict roadmap to growth GDP growth rate & Consumer Price Index Real GDP
Nominal GDP
CPI %
4.4%
4.6%
2.2% 1.3%
2.9% 2.1%
2010e
2011f
-1.3%
2.7% 2.1%
1.5% 1.1% 0.5%
2009 -1.1%
3.3%
2012f
0.7%
2013f
1.0%
2014f
2015f
-1.5%
-2.4% -3.0% -4.2% Source: Ministry of Finance
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Strong austerity measures are already yielding results Increase of revenue (â‚Ź m) Special consumption duty (alcohol, tobacco, fuel, luxuries)
2,000
Special contribution (income, profits, estates)
1,100
Source: Ministry of Finance
1,750
Payroll
1,700 1,600
1,000 Government investments
VAT
Other
Pensions
Defense
Income from government investments
Tax audits
Decrease of expenses (â‚Ź m)
1,100
850 550
250
Reduction of grants
950
Consumer spending
900
Social contribution
400
Source: Ministry of Finance
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‌driving down the deficit Government deficit Deficit (₏ bn)
36.2
Deficit (% of GDP)
15.4%
22.4
21.9 9.4%
9.4% 12.1 5.7%
14.5 6.4%
17.0 7.4% 14.9 6.5% 11.4 4.9% 6.4 2.6%
2006
2007
Source: Ministry of Finance
2008
2009
2010e
2011f
2012f
2013f
2014f 8
Greece’s initiatives are the key drivers for resuming growth
Long-term growth drivers In Progress Fiscal Consolidation Deficit, Administration, Tax Evasion
In Progress Structural Reforms Labor, State Assets, Business Environment, Regulation
Being planed Business Reforms Legislation, Liberalization, Privatizations, PPP, FDI
Source: Ministry of Finance, Eurobank EFG Equities Research, Sept.2010
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…with a new batch of initiatives coming up shortly
Public companies
Hospital expenditure 5 fronts to tackle within 2011
Healthcare funds Social contributions Tax evasion 10
Greece rebounding: a very credible expectation
The economic recovery will be initially driven by: i) the fading-out of the shock effect of the austerity measures (which are front-loaded in the IMF/EU adjustment programme); ii) the pick-up in exports, especially tourism and shipping revenue, as the world economy, and especially emerging markets, rebound; and iii) the recovery of business sentiment, which in conjunction with declining risk premia/financing costs, will support a pick-up in investment (after a severe 3-year recession)
Source: National Bank of Greece
Source: Eurostat and National Bank of Greece
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Financial analysts expect several sectors to grow significantly in the next few years Room for investment: 1-5 year horizon
Property development
Infrastructure Toll roads & concessions Marine/port developments Existing & New airports
Airport development Tourism REIT& REIC formation & flotation Gaming sector / Casinos
Estimated investments €10bn
Estimated investments €5bn
Energy projects
Water & Waste
Capacity replacement (generation) New business (RES) Transmission/Interconnection investments Natural gas
Water resources management Waste management Utility companies
Estimated investments €20bn
Estimated investments €5bn
Total estimated investments of €37bn Source: EFG Eurobank
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Investments may contribute up to 1.5% of GDP growth
• A review of only some key sectors, in which Greece holds a competitive advantage, suggests additional growth in the order of 1½ percentage points annually to Greek GDP growth in the medium term
Source: National Bank of Greece
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2. Greece’s competitive advantage
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Why Greece?: 1. Greece is strategically positioned as the gateway to the EU and SEE… •
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Members of the Eurozone, NATO, EBRD, EIB, IMF, UN, OECD, WTO, WHO, Interpol, UNESCO and CERN Access to the strategic and high growth SEE markets with: - Over $1,000bn of GDP - Over 140 million people
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Strong business and cultural ties with the region
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Network of over 4,000 Greek companies present
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More than 3,000 Greek branches of banks covering over 20% of the banking market in SE Europe
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Greek companies in top 3 investors in every market 15
…which makes it ideal for selecting it as a regional hub for the EMEA area Entry point for EU, SEE, ME, NA sales Regional headquarters
Europe
Business operations Africa
Middle East
Back office support Service center
Greece can be the regional hub for strategic growth in SE Europe, Africa and the Middle East 16
Why Greece?: 2. The Greek economy supports FDI World Bank’s country rating as FDI destination Sector Group
Greece’s Score Global average
Health care & waste management
100
96.0
Construction, tourism & retail
100
98.1
Light manufacturing
100
96.6
Telecom
100
88.0
Mining, oil & gas
100
92.0
Agriculture & forestry
100
95.9
Banking
100
91.0
Insurance
100
91.2
Media
100
68.0
Source: Worldbank, 2010
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OECD’s FDI Restrictiveness Index The less the better: FDI Index Scores by Country (closed = 1, open = 0)
Source: OECD 2010
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Why Greece?: 3a. Supportive investment climate
PPP New framework for RES Simplification of the Lifting of cabotage establishment of in marine cruises new companies New investment incentives law Fast Track Law 18
Why Greece?: 3b. Fast Track Process Qualification Prerequisites • The total value of the investment must exceed €200 Case #1 million • The value of the investment must exceed €75 million and, concurrently, the investment must create at least Case #2 200 new jobs • At least €3 million are invested every three years in Case #3 advanced technologies and innovation projects
Case #4
• The investment creates at least 250 new jobs
• At least €3 million are invested every three years in Case #5 actions to promote environmental protection • At least €3 million are invested every three years in actions that create added value for Greece in terms of Case #6 education and R&D 19
Why Greece?: 4.Top talent at competitive rates Top ten countries in ICT Development Index skills 9.94
Average weekly work hours of skilled personnel 41
9.78
40
40
40
9.63 9.36
9.26
9.26
9.2
9.18
9.17
38
37
37
35
9.14
Source: ITU, 2009
Source: UBS
Europe – Middle East
North America 88
75
Gross annual income of engineers (USD thous.)
39
65
62
59
59
57
55 40
39
Asia
Greece
77 50
60 42
35
34
30
29
Source: UBS; Prices and Earnings report 2009
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Why Greece?: 5. Attractive investment opportunities Greek Infrastructure Projects Tourism Renewable Energy Food and Beverage ICT – Life Sciences Environmental Management
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3. Growth sector opportunities
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Investment opportunities: Compelling public projects Infrastructure projects
Privatization
Ambitious privatization agenda:
• Assets worth €7bn privatized up to 2013
• Assets worth €1bn privatized in 2011
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Investment opportunities: Tourism Marinas
Golf courses
Integrated Resorts
Conference Tourism
Health tourism
Athletic tourism
Wellness & spas
Eco tourism
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Investment opportunities: Real estate
(-)
(+)
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Investment opportunities: Renewable Energy Sources • Bound by EU regulations and Kyoto Protocol agreements • National target for RES at 20% of electricity production by 2020 • Increased domestic demand for electrical energy, to surpass 80,000 GWh in 2020 from about 70,000 GWhin 2009 • High feed-in tariffs through 20 – year PPA (power purchase agreement)
€44 bn Investment 210.000 new Jobs Projects with strong cash flows and attractive Returns on Investment
• Ideal conditions for wind and solar energy • Decrease of RES production cost, attractive investment incentives
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Investment opportunities: ICT and life sciences Intense R&D activity…
Thessaloniki
…generates multiple investment opportunities
• Software development
• Drug development
• Microchip and MEMS design
• Medical & diagnostic devices
• R&D lab
• Clinical trials
Larissa
Patras
Clusters:
Athens
Iraklio
• Regional support center
ICT Life Sciences 27
Investment opportunities: Food and beverage
Conducive environment
Support by a thriving agricultural sector Growing organic market of high added value
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Investment opportunities: waste management • Creation of modern, integrated facilities for treating and disposing municipal solid waste • Energy recovery from organic waste fraction • Rehabilitation of the existing dumps • Environmental sound management of industrial, medical and hazardous waste • Construction of suitable transfer station networks and recycling centres • Selective collection at source and further recycling of municipal wastes • Water treatment and sea or brackish water desalination • Wastewater and sewage treatment
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4. Invest in Greece Agency’s service offering
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mature private projects, after
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