A Blueprint for the New Greece

Greece’s new National Development Plan will be delivered by the end of September, says Minister of Development and Investments Adonis Georgiadis. Set to be a lever for the country’s economic diversification and digitisation, the consolidation of micro-enterprises, and the attraction of green investments, the plan is the key to unlocking an estimated €32 billion earmarked for Greece through the EU Recovery Fund.

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GIG: The effects of COVID-19 have sparked a renewed dialogue focused on the need to change Greece’s development model, with the Ministry having recently published its new National Development Plan. Can you tell us about this plan? What are your objectives in this respect?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: First and foremost, the discussion about a new development plan started before the pandemic struck this year. We established a committee chaired by Nobel laureate economist, Christopher A. Pissarides before COVID-19, and the committee has already presented a roadmap for the development of the economy.

The consequences of COVID-19 on our economy made us move faster in a bid to deliver a ‘new Greece’. We submitted a first draft of the new National Development Plan for public consultation with the aim of delivering a concrete plan by the end of September. This blueprint will then be presented to the European authorities to find ways for Greece to absorb money from the EU Recovery Fund as fast as possible, with the aim of changing the country’s productive fabric and setting goals for the transformation of the Greek economy.

The National Development Plan is the compass that will enable our local administration to again become a lever for the revival of the economy. At the same time, it is a pillar of the National Strategic Plan for the 21st Century. We are moving towards restarting the economy and becoming more competitive and, for this reason, we should not only rely on one sector. Tourism, as you know, is incredibly important for the Greek economy. Surely, we will continue to support the sector, but we shouldn’t solely rely on the Greek hospitality industry.

The new development plan envisages, among other things, assistance to the unemployed for their reintegration into the labour market, tax incentives for investments in listed Greek companies, incentives for mergers and acquisitions of companies, and the acceleration of justice procedures for cases of significant economic interest.

This project focuses on growth, environment and social cohesion, as well as on digital convergence and the improvement of our citizens’ quality of life.

GIG: What are the key challenges that need to be addressed and how can Greece prepare for future shocks based on the lessons derived from this pandemic?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: The biggest takeaway from this pandemic has been that if your economy is dependent on one sector, as is our case, this makes you more vulnerable to crises. On the other hand, Greece has become an example of managing the COVID-19 crisis successfully.

However, our economy has been hit severely because our tourist industry has a large impact on our country’s GDP. And although the real economy wasn’t directly hit by COVID-19, we were stricken in the end. Therefore, we understand that our economy needs to be more balanced in the future.

As an example, back in the 80’s Greece was a significant industrial power. And yet, 30 years later the sector’s size is minimal. Now, we will provide incentives to drive the growth of this sector and find ways to be more competitive. And yes, I know that for many people Greece and industry seem incompatible, but we will make it happen.

GIG: On that note, Prime Minister Mitsotakis recently announced ambitious targets focused on increasing the weight of the industrial sector, as well the volume of outgoing exports. How is the Ministry planning to achieve this?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: The new National Development Plan aims to transform our economy as quickly as possible, and the funding we will receive from the EU Recovery fund, especially the grants, will provide us with the opportunity to fund reforms that will enable a swift transformation of our economy.

Prime Minister Mitsotakis and the entire cabinet are reform-minded. We will not let this opportunity to go to waste. We will use this opportunity for the benefit of our people in the most efficient way.

I have a very strict timeline at the ministry, and together with the other ministries we are proposing ideas to the government that need to be developed by the end of September. This is when we will have the final new National Development Plan, along with all the ministerial proposals, and we will be ready to submit it to the European authorities.

GIG: How is the Ministry planning to support SMEs and entrepreneurs? What steps have been taken so far to support this segment?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: We did help SME’s during the COVID-19 crisis, because the first problem they had was a liquidity crunch. We closed most of the country’s SME’s for a number of weeks during the lockdown and, at first, the market was in a very bad condition. Now, we’re in much better position. We supported the real economy with a forward looking and constantly evolving package. And we will support our society, especially the most vulnerable segments.

99.9% of Greek enterprises are SMEs. Copyright: Pit Stock / Shutterstock.com

Regarding reforms, we have several proposals we will be pushing forward. First of all, Greece’s economy differs from that of other European countries in the sense that we have a vast number of very small sized enterprises.

Therefore, we will implement a national strategy focused on incentivizing mergers and acquisitions with the aim of scaling-up Greek enterprises, promoting economies of scale, and cooperation.

Another reform we are looking into is the provision of incentives to digitalise the way SMEs work to simplify the business environment.

GIG: Within the context of the Recovery Fund, what specific projects can you name that would be instrumental for the reactivation of the economy?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: The biggest national plan we have now is the decarbonisation of our energy system, and we will be using European funding to push this forward.

This is a huge master plan that will transform the regions of Western Macedonia and the Peloponnese. We are putting an end to the use of lignite in these regions, which means we must undertake a complete overhaul of these economies. We plan to use the additional European funding to make this transformation happen faster and in a more efficient manner.

Another priority is establishing a roadmap for our transition to Industry 4.0, along with the incentives we can introduce to help our businesses make the transition into the 21st century.

GIG: How have the effects of the coronavirus pandemic impacted investment projects that were already in the pipeline in Greece? What about new investments? Do you have any specific targets from an investment perspective?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: In the EY Attractiveness Survey Greece 2020, Greece was ranked 29th in terms of its competitiveness for foreign direct investment (FDI). It improved its performance and climbed six positions, from 35th in 2018, and the predictions for the future were very positive. But this was all before COVID-19.

Until now, COVID-19 has not negatively affected FDI flows. All FDI plans that we have are still moving ahead. Also, the funds under the Partnership Agreement for the Development Framework (ESPA), and the new EU Recovery Fund will be very helpful in promoting investments. These resources will be used, along with private funding, to continue developing projects. We’re optimistic about foreign direct investment.

However, I’ll be very frank; in order to be able to reach our ambitious goals, we have to work even harder to reduce bureaucracy and make procedures easier for investors.

While a lot of legwork has already been made by this ministry, together with the Minister of Environment and Energy, Mr. Hatzidakis, who has implemented many laws to make a business life easier, we have a lot of work ahead of us.

GIG: Yes, a number of reforms have been passed over the past year aimed at reducing red tape and improving the operating environment for investors. What additional changes should we expect?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: You will be surprised by the number of changes you will see. The financial priorities of the New Development Plan include: boosting investment and exports as a percentage of GDP, strengthening wages, and reducing the informal economy, investing in education and knowledge, increasing the size of Greek enterprises, promoting cutting edge technology, innovation and digitalisation, achieving environmental goals, and supporting vulnerable households.

Greece launched tenders yesterday to award rights for frequencies for 5G networks. Copyright: Fit Ztudio / Shutterstock.com

I like to see the glass half full. The EU funding will give us the opportunity to fast-forward reforms. During the period of the memoranda we passed a lot of reforms in the country, but a lot of these reforms were not implemented. Our goal is to really open our economy and implement said reforms. We believe in an open economy. We believe in an open market. And that’s what we’re going to be working on in the upcoming months.

We want to create a synergy between universities and technical schools with companies. In order to produce a labour force with real skills, students will work in the field of a given industry. The idea is for students to work in the real world for up to one a and a half years before they graduate. The state will pay their salary and Social Security contributions. This is something we really need in order to have technical knowledge in a specific field, rather than only academic know-how. We need a radical upgrade of vocational training for both unemployed and employed people.

GIG: Previous to the pandemic, Greece had very clear investment targets and a defined direction, has this been affected? What current targets have you set out to achieve?

Adonis Georgiadis Minister of Development and Investment

Georgiadis: Greece currently ranks in one of the lowest positions in terms of the attraction of FDI in the eurozone; at 11% of GDP in 2018, compared with the eurozone average of 22%. My first target is to converge with the eurozone average. If we reach this number, there will be a significant change, and I think we will achieve this.

Strangely enough, COVID-19 bolstered our reputation; it helped our public image abroad. One of the things that has surprised me is that after the first wave of the crisis, I did get in touch with investment funds. Funds have a new indicator based on a country’s performance during the COVID-19 pandemic that assesses whether or not it was efficient. In this new indicator Greece ranks very high.

Therefore, funds that had not been interested in Greece before, have included Greece in their screening procedure, because we proved to have handled the crisis in an efficient manner. We want to leverage the new image of Greece to continue attracting investments.

In 2010, Greece was seen as a rogue state. The country appeared as a failure more than as a success in the news, and all of a sudden, in the last few months, this has changed a lot. We plan to build upon this new image and set goals for the transformation of the Greek economy.

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