Greece

COUNTRY REPORT

By:
Sanah kanchwala
Royal wings

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Map of Greece

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Table of contents

Key facts---------------------------------------------------------------------

Market overview-----------------------------------------------------------

2010 debt crisis-------------------------------------------------------------

Analysis of economic scenario-------------------------------------------

Investment sectors---------------------------------------------------------

Climate of investment and trade----------------------------------------

Marketing product and sevices -----------------------------------------

Business travel---------

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Key facts
Table 2: Greece - key facts

Country and capital

Full name The Hellenic Republic
Capital city Athens
Government
Government type Democratic
Head of state President Karolos Papoulias
Head of government Prime Minister Kostas Karamanlis
Population 11,305,118
Currency Euro
GDP per capita $32,000
Internet domain .gr
Demographic details
Life expectancy 79.3 years (total population)
76.8 years (men)
82 years (women)
Ethnic composition Greek (94%), Albania (4%)
Other foreign citizens (2%)
Major religions
(2001 census) Greek Orthodox (98%)
Muslim (1.3%),
Others (0.7%)
Country area 131,957 sq km
Languages Greek (99%)
English, French (1%)
Exports Food and beverages, manufactured goods, petroleum products,
chemicals, textiles
Imports Machinery, transport equipment, fuels, chemicals

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Market overview
Macroeconomic perspective

Overview
The economy of Greece is the 27th largest in the world by nominal gross domestic product (GDP) and
the 34th largest at purchasing power parity (PPP), according to data by the World Bank for the year
2009. Per capita, it is ranked 24th by nominal GDP and 23rd at PPP according to the 2009 data.

A developed country with the 22nd highest human development and quality of life indices in the
world, Greece is a member of the European Union, the Euro zone, the OECD, the World Trade
Organization and the Black Sea Economic Cooperation Organization. The public sector accounts
for about 40% of GDP. The service sector contributes 78.5% of total GDP, industry 17.6% and
agriculture 4%. Greece is the 31st most globalized country in the world and is classified as a
high-income economy.

Greece has emerged as one of the fastest growing economies in the EU. Since the mid 1990s, it
has recorded strong GDP growth, significantly outperforming EU averages. From 1997–99, real
GDP growth averaged around 3.5% per year, which went up to 4.2% during 2000–07.
Financial sector liberalization and low interest rates encouraged a rapid expansion in consumer
credit, which led to a spurt in consumer demand. Large scale investments, along with consumer
demand, have been responsible for this growth.
Because of this recent economic success, the gap in real per capita income between Greece and
the EU-15 has narrowed significantly. However, the Greek economy, like the rest of the EU
nations, received a setback in 2008; GDP growth plummeted to 2.9% in 2008, from 4% in 2007.
Industrial growth had slowed and the market capitalization of the Athens, after reaching a high of
$265 billion in 2007, contracted by 65% in 2008 following the financial crisis.
To fight the current economic downturn and support small and medium-sized enterprises
(SMEs), the government has introduced measures such as state guarantees and interest rate
subsidies.
Furthermore, the government has also proposed tax cuts for tourism enterprises. However,
deteriorating public finance and rising external debt has been putting additional pressure on it.
Moreover, there are serious imbalances that pose a threat: the external current account has been
widening, which has made the situation regarding the balance of payments extremely adverse for
the economy; rigidities in the product and labor market have contributed to the persistence of the
inflation differential with the Eurozone.

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The evolution of the Greek economy during the 19th century (a period that transformed a large
part of the world due to the Industrial revolution) has been little researched. Recent research
examines the gradual development of industry and further development of shipping in a
predominantly agricultural economy, calculating an average rate of per capita GDP growth
between 1833 and 1911 that was only slightly lower than that of the other Western European
nations. Greece faced economic hardships and defaulted on its loans in 1826, 1843, 1860 and
1893.]Other studies support this view, providing comparative measures of standard of living. The
per capita income (in purchasing power terms) of Greece was 65% that of France in 1850, 56%
in 1890, 62% in 1938, 75% in 1980, 90% in 2007, 96.4% in 2008, 97.9% in 2009 and larger than
countries such as South Korea, Italy, and Israel. The country's post-World War II development
has largely been connected with the so-called Greek economic miracle.

In 2004, Euro stat, the statistical arm of the European Commission, after an audit performed by
the New Democracy government, revealed that the budgetary statistics on the basis of which
Greece joined the European monetary union (budget deficit was one of four key criteria for
entry), had been massively under-reported by the previous Greek government (mostly by not
recording a large share of military expenses - although it was claimed that the differences were
due to accounting practices, i.e., recording expenses when material was received rather than
when ordered). However, even according to the revised budget deficit numbers calculated
according to the methodology in force at the time of Greece's application for entry into the Euro
zone, the criteria for entry had been met. Official Euro stat calculation according to the current
methodology is still pending for the 1999 budget deficit (entry application reference year).

Economic reforms and growth

The Greek economy

Greece is a developed country, with a high standard of living and "very high" Human
Development Index, ranking 22nd in the world in 2010,[17] and 22nd on The Economist's 2005
worldwide quality-of-life index. According to Eurostat data, GDP per inhabitant in purchasing
power standards (PPS) stood at 95 per cent of the EU average in 2008.[18] Greece's main
industries are tourism, shipping, industrial products, food and tobacco processing, textiles,
chemicals, metal products, mining and petroleum. Greece's GDP growth has also, as an average,
since the early 1990s been higher than the EU average. However, the Greek economy also faces
significant problems, including rising unemployment levels, inefficient bureaucracy, tax evasion
and corruption.

In 2009, Greece had the EU's second lowest Index of Economic Freedom (after Poland), ranking
81st in the world. The country suffers from high levels of political and economic corruption and
low global competitiveness compared to its EU partners.

Although remaining above the euro area average, economic growth turned negative in 2009 for
the first time since 1993. An indication of the trend of over-lending in recent years is the fact that
the ratio of loans to savings exceeded 100% during the first half of the year.

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By the end of 2009, the Greek economy (based on data revised on November 15, 2010 in part
due to reclassification of expenses) faced the highest budget deficit and government debt to GDP
ratios in the EU. The 2009 budget deficit stood at 15.4% of GDP. This, and rising debt levels
(127% of GDP in 2009) led to rising borrowing costs, resulting in a severe economic crisis.
Greece has been accused of trying to cover up the extent of its massive budget deficit in the wake
of the global financial crisis. This resulted from the massive revision of the 2009 budget deficit
forecast by the new Socialist government elected in October 2009, from "6-8%" (estimated by
the previous government) to 12.7% (later revised to 15.4%). This revision (which, as claimed by
members of the previous government, at least in part reflected the Socialists' failure to control tax
collection during their first months in office) has seriously undermined Greece's credibility
leading to higher borrowing costs for Greece.

The Greek labor force totals 5.05 million, and on average work the second most hours per year
amongst OECD countries, after South Korea. The Groningen Growth & Development Centre has
published a poll revealing that between 1995 and 2005, Greece was the country whose workers
worked the most hours/year among European nations; Greeks worked an average of 1,900 hours
per year, followed by the Spanish (average of 1,800 hours/year)

Analysis through IS-LM Model

As the Government Debt is increasing, Government Spending is increasing which in turn,

increasing the amount of demand for goods at each individual interest rate. An increase in
government spending by the national government shifts the IS curve to the right. This raises the
equilibrium interest rate and national income, as shown in the graph above. The equilibrium level
of national income in the IS-LM diagram is referred to as aggregate demand. Thus the model
indicates one of the major criticisms of deficit spending as a way to stimulate the economy:
rising interest rates lead to crowding out – i.e., discouragement – of private fixed investment,
which in turn may hurt long-term growth of the supply. Thus crowding-out results in reduction in
private consumption or investment because of an increase in government spending. If the
government spending is not accompanied by a tax increase, government borrowing to finance the
increased government spending would increase interest rates, leading to a reduction in private
investment. Further, if government deficits are spent on productive public investment (e.g.,
infrastructure or public health) that directly and eventually raises potential output, although not
necessarily as much as the lost private investment might have. The extent of any crowding out
depends on the shape of the LM curve. A shift in the IS curve along a relatively flat LM curve
can increase output substantially with little change in the interest rate.

Thus as the interest rate are rising hence Greek 10-year bond yields spread increased to 400 basis
points in January 2010, which was at the time a record high. High bond spreads indicate
declining investor confidence in the Greek economy. Despite increasing nervousness
surrounding Greece’s economy, the Greek government was able to successfully sell €8 billion in
bonds at the end of January 2010, €5 billion at the end of March 2010, and €1.56 billion in mid-
April 2010, albeit at high interest rates.

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2010 debt crisis

In the first weeks of 2010, there was renewed anxiety about excessive national debt.

Some politicians, notably Angela Merkel, have sought to attribute some of the blame for the
crisis to hedge funds and other "speculators" stating that "institutions bailed out with public
funds are exploiting the budget crisis in Greece and elsewhere".[30]

On 23 April 2010, the Greek government requested that the EU/IMF bailout package (made of
relatively high-interest loans) be activated. The IMF had said it was "prepared to move
expeditiously on this request". The initial size of the loan package was €45 billion ($61 billion)
and its first installment covered €8.5 billion of Greek bonds that became due for repayment. On
27 April 2010, the Greek debt rating was decreased to BB+ (a 'junk' status) by Standard & Poor's
amidst fears of default by the Greek government. The yield of the Greek two-year bond reached
15.3% in the secondary market. Standard & Poor's estimates that in the event of default investors
would lose 30–50% of their money. Stock markets worldwide and the Euro currency declined in
response to this announcement.

On May 1, a series of austerity measures was proposed. The proposal helped persuade Germany,
the last remaining holdout, to sign on to a larger, 110 billion euro EU/IMF loan package over 3
years for Greece (retaining a relatively high interest of 5% for the main part of the loans,
provided by the EU).On May 5, a national strike was held in opposition to the planned spending
cuts and tax increases. Protest on that date was widespread and turned violent in Athens, killing
three people. Nonetheless, overall reaction to the unprecedented harsh measures has been rather
modest.

The November 2010 revisions of 2009 deficit and debt levels made accomplishment of the 2010
targets even harder and indications signal a recession harsher than originally feared.

Japan, Italy and Belgium's creditors are mainly domestic institutions, but Greece and Portugal
have a higher percent of their debt in the hands of foreign creditors, which is seen by analysts
from Swiss business school IMD as being more difficult to sustain. Greece, Portugal and also
Spain have a 'credibility problem', because they lack the ability to adequately repay due to their
low growth rate, high deficit, less FDI, etc.

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Analysis of economic scenario

current strength current challenges

 Increasing investment in large scale  Rapidly deteriorating economic

infrastructure projects conditions
 Stable banking syste  Poor state of government finances
 Exports turning uncompetitive

Future prospects Future risks

 Increased investment with PPP  Labor market rigidities and unrealistic

taking effect and revamping wage hikes
public entities  Widening current account deficit
 Liberalization of government
dominated service sectors

Investment sectors

 Tourism
 Energy
o Wind
o Solar
o Geothermal
o Biomass/Biofuels
o Licensing Procedures
 ICT
 Life Sciences
 Food & Beverage
 Environmental Management

Tourism
Greece is one of the top tourism destinations in the world. The number of tourism visits over the
last decade has shown a steady increase. From 14.2 million international visitors in 2004, more
than 17 million people visited Greece in 2008, and it is expected that in a few years this number
will reach 20 million, almost twice the country’s population.

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TOURISM IN GREECE

A Global Brand, A Timeless Destination

Greece is one of the top tourism destinations in the world. In fact Lonely Planet placed Greece
among its top 10 destinations for 2010 and Greece ranks second in England’s 2008 Telegraph
Travel Awards in their Best European Country ranking.

The number of tourism visits over the last decade has shown a steady increase. From 14.2
million international visitors in 2004, more than 17 million people visited Greece in 2008, and it
is expected that in a few years this number will reach 20 million, almost twice the country’s
population.

A New Tourism Investment Era

The increasing number of tourists and the evolving profile of today’s traveler demand a host of
new tourism offerings and infrastructure projects.

In Greece, investors will find a wide spectrum of opportunities, a welcome environment for new
investment, and some of the most beautiful locations in the world.

A Unique Landscape
Greece has more than 15,000 kilometers of coastline, 190,000 beaches, and 6,000 islands and
islets. In addition, visitors are discovering the diverse selection of sailing and cruising options,
incentive travel, and weekend breaks, opening up new opportunities in niche and attractive
markets.

Pristine beaches, iconic mountains, a wealth of history, timeless traditions, spectacular

landscapes, and renowned hospitality draw visitors from around the world to the land where
democracy was born and dreams are fulfilled.

Greece’s Mediterranean climate is ideal for year-round tourism and one of the core priorities of
Greece today is to create a dynamic, sustainable, four-season tourism infrastructure that responds
to the diverse and challenging needs of the 21st Century.

According to the 2009 Travel & Tourism Competitiveness Report published by the World
Economic Forum, Greece holds the 24th overall position among 133 countries, 3rd place in the
prioritization of travel & tourism sub index, 9th place in the number of World Heritage cultural
sites, 5th place in tourism infrastructure and 1st place in the physician density subindex.

A Core Economic Sector

Tourism accounts for 18% of Greece’s GDP, directly or indirectly employs more than 900.000
people, and is the leading source of the country’s invisible receipts (36% in 2007).

Currently, more than 9,000 hotels operate in Greece. Due to Greece’s many islands and islets,
more than 6,000, the geographical range of tourism destinations is extensive. In addition, the
wide variety of natural landscapes, extensive number of historic sites and villages, and wide-
ranging number of activities mean that opportunities are virtually limitless.

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Approximately 85% of arrivals originate in Western Europe: 21.2% from the United Kingdom,
17.5% from Germany, 8.8% from Italy, 5.3% from France, 5.2% from Holland, and 7.5% from
the Scandinavian countries.

Increasingly, however, significant numbers of visitors from Eastern Europe and China are
making Greece their preferred destination, creating a wider base of origin countries and new
demands for services, facilities, and attractions.

Tourist Arrival

Source: Greek National Tourism Organization and National Statistical Services of Greece

Priorities
Although the country’s tourism infrastructure is well developed, Greece is committed to
expanding its tourism offerings and establishing itself as a 12-month destination. Its
Mediterranean climate is ideal for activities such as year round golf and trekking and it is
estimated that one million Europeans would consider Greece as a second home destination.

At present, 70% of arrivals are in the May-October period and visits are disproportionately
concentrated in Crete (21% of total bed capacity) the Dodecanese islands, which includes
Rhodes (17%), the Ionian Islands, which includes Corfu (12%), Attica, which includes Athens
(9%), the peninsula of Halkidiki (6.5%), and the Cyclades islands, which includes Santorini and
Mykonos (6%).

Among the targeted sectors for expansion include the development of integrated resorts and
residential real estate, golf courses and sports tourism, wellness and health tourism, upgraded and

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new marinas, conference centers, agrotourism products, religious tourism, thermal spas and
thalassotherapy centers, gastrotourism, and a wide range of thematic offerings related to
Greece’s rich cultural and historical heritage.

Historically, hotels in Greece have been small in size, with the average number of beds per hotel
standing at 76. Larger hotel units with more diverse offerings will be a welcome addition to the
current accommodation infrastructure.

A Legendary Opportunity
Most of the hotels in Greece are categorized as 1- and 2-starhotels, meaning there is plenty of
room for investors to establish 4-and 5-star properties. And, according to the Greek Hotel
Branding Report, branded hotels in Greece account for 4% of the total number of hotels and
19% of total availability of rooms, while in other European countries this figure lies between 25
and 40%.

Hotel chains that operate as franchisors will discover attractive opportunities to establish a
network of two-, three-, or four-star hotels in Greece.

Breakdown of hotels by star rating at key tourist destinations 

Source: National Statistical Service

Dual Opportunity: Both small and large operators exist side by side within Greece’s diverse
tourism market.

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As the world addresses diverse and challenging questions related to energy production and
supply, Greece is in a pivotal position to chart its energy future, emerging as a strategic energy
hub in Southeast Europe and a desirable location for investment.

A Sustainable Investment

The energy policy of Greece favours major private sector investment.

It is estimated by the World Bank that investment of more than 30 billion Euro will be required
by 2020 in the upgrade and building of power plants, in transmission and distribution, and in
renewable energy sources (RES).

Greece’s comprehensive energy policy, to establish sustainable, competitive, and secure sources
of energy, has established an encompassing regulatory and market framework for the energy
sector. This, in combination with Greece’s wide-ranging investment regulatory framework,
provides for exceptional opportunities for investment in a number of areas.

Recent legislation (Law 2773/1999) provides for the deregulation of the electrical energy market
and as such, domestic production, transmission, and distribution in the energy field is open to
private investors.

This sweeping change has transformed the electricity and energy market in Greece into one of
the most exciting sectors of growth and opportunity in Europe. While previously all electricity
production, transmission, and distribution was under the monopoly of PPC, today companies
from around the world are taking advantage of this tremendous market opportunity.

Among the companies currently active in Greece are: Hellenic Petroleum, Motor Oil, Public Gas
Corporation (DEPA), Prometheus Gas, Public Power Corporation (PPC), Public Power
Corporation (PPC) RES, Mytilineos Group, Terna, Global Energy, Energy Solutions, Solar
Cells Hellas, Next Solar, Enova, EDF, Edison, Conergy, EGL, Acciona, Enel, Eurus Energy,
Gamesa, Rokas-Iberdrola, Endesa, WPD, Atel. These companies are involved in mainstream
electricity production, gas distribution, and the expanding field of renewables.

Greece’s strategic geo-economic location, between energy producers in the Middle East,
North Africa, and the Caspian Sea region, as well as on the vital transport routes of the
Aegean Sea and the Eastern Mediterranean, mark it as the expanding hub between East
and West.

Greece has initiated crucial, major ventures in oil, gas, and alternative sources that literally put
the country at the heart of the Southeast European energy axis.

Three decisive projects are laying the groundwork for a diverse, competitive, and secure energy
supply: the Burgas-Alexandroupolis oil pipeline, the Interconnector Turkey-Greece-Italy (ITGI),
and the South Stream natural gas pipeline. With these transformative projects Greece is emerging
as an oil and gas conduit, supplying the markets of Southeast and Western Europe as well as
those as far away as North America.

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Burgas-Alexandroupolis Oil Pipeline
The Burgas-Alexandroupolis oil pipeline will contribute significantly toward the decongestion of
the sensitive Bosporous Strait and provide a new, export channel for Black Sea oil to European
and North American markets. The Greek-Russian-Bulgarian mega project will see the
participation of Greek companies with 23.5% and the Greek state with 1%. The 279-kilometre
pipeline, from Burgas in Bulgaria to the northern Greek port town of Alexandroupolis, is slated
to have an initial annual throughput of 50 million tonnes of oil, and with an annual capacity of
more than 50 million tonnes. The cost of the project is estimated at 800 million Euro.

Interconnector Turkey-Greece-Italy (ITGI)

The Interconnector Turkey-Greece-Italy (ITGI) gas pipeline will be a key conduit for Caspian
and Iranian gas to reach the markets of Western Europe. Operation commenced in
2007.Currently, Greece is connected to Turkey and Italy via an undersea pipeline that will be
connected to the wider European gas network by 2010. The project is made up of two parts:
onshore and offshore (Poseidon Pipeline) with preliminary budgets of 900 million Euro
(onshore) and 350 million Euro (offshore). The onshore section is to be part of the Greek
National Grid and the offshore section is to be built by the Poseidon company, a joint venture of
Edison and DEPA. The total length of the pipeline, from Komitini to the Ionian Sea, is 590
kilomteres. Completion date is to be 2012.

Source: Hellenic Gas Transmission System Operator S.A

South Stream
The South Stream Pipeline, with an end point in Italy, is a major project to supply Russian gas to
Western Europe. The pipeline is to pass through Greece and may connect to the Interconnector
Turkey-Greece-Italy (ITGI).

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Source: Hellenic Gas Transmission System Operator S.A

Greece imports LNG from Algeria by sea, further diversifying energy sources.

Current plans also call for the upgrade and development of new electricity interconnections with
neighbouring countries, further enhancing cross-border exchanges between Greece and its
neighbours. These plans create significant investment opportunities in the electricity
interconnection market.

In addition to acting as a strategic transport hub, Greece is also a favorable location from which
to develop energy investment in the greater area of Southeast Europe. The Energy Community of
Southeast Europe, based in Athens, focuses on the creation of a unified energy market in the
Balkan region, through the establishment of common market rules and regulations, to be
integrated at an appropriate date within the EU energy market. Signatories to the Energy
Community Treaty, created in cooperation with the European Union (of which Greece is a
member) include: Croatia, Bosnia and Herzegovina, Serbia, Montenegro, FYROM (Former
Yugoslav Republic of Macedonia), Albania, Romania, Bulgaria, UNMIK on behalf of Kosovo.

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Electricity Production in the interconnected system for 2010:

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TRANSMISSION LINES IN SOUTHEAST EUROPE

Source: Hellenic Transmission System Operator S.A.

Natural Gas

Natural gas was introduced to Greece in 1988 when the Public Gas Corporation (DEPA) was
established. DEPA is 35% owned by Hellenic Petroleum and 65% by the Greek State.

Today, the de-regulated energy market in Greece provides for companies to participate in the
transmission and distribution of natural gas. Natural gas has become an important component of
Greece’s energy policy as the country diversifies to include cleaner and more competitively
priced energy sources.

The construction of the natural gas transportation grid is one of the largest energy infrastructure
projects to have taken place in Greece in recent years. There are three entry points for the natural
gas transportation system:(1) At the Greece-Bulgaria border, where natural gas enters via a
central pipeline from Russia; (2) At the Greece-Turkey border, where the National Natural Gas
Transportation System interconnects with the Turkish system; and (3) At the island of
Revythousa in the Gulf of Pachi near Megara, where there are facilities to receive, store, and
gasify Liquid Natural Gas (LNG) that is exported by tanker from Algeria. The National Natural
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Gas Transportation System transports gas from the entry points to consumers in mainland
Greece. There are currently three Gas Supply Companies (EPA) operating: EPA Attikis, EPA
Thessalonikis, EPA Thessalias.

The National Natural Gas Transportation System consists of:

• the gas transportation central pipeline. The high-pressure central pipeline (70 bars) is 512 km
long. It extends from the Greek-Bulgarian border (Promahonas) to Lavrio in Attica and from
Thessaloniki to the Greek-Turkish border (Kipoi).
• Transportation branches total 689 km in length. The branches set out from the central pipeline
and supply the areas of Eastern Macedonia and Thrace, Thessaloniki, Platy in Imathia, Volos,
Viotia, Inofyta, Attica and Corinth. In 2007 construction work began on branch lines toward
Western Thessaly and Evia, adding 119 km.
• The Natural Gas Metering and Regulating Stations
• The Control Center and the Load Distribution Center Operation
• Operation and Maintenance Centres in Attica, Thessaloniki, Thessaly and Xanthi.

Suppliers
Natural gas is supplied to DEPA by the Russia’s Gazexport (a subsidiary of Gazprom) and the
Algeria’s Sonatrach. Supply contracts expire in 2016 (Gazexport) and 2020 (Sonatrach). The
Gazexport agreement guarantees the supply of 2.8 billion cubic metres annually. The Sonatrach
agreement provides for the delivery of between .51 and .68 billion cubic metres annually.

Transportation System
The natural gas transportation system is comprised of several basic components:

• Main high-pressure pipeline for the transportation of natural gas (70 bar) from the Greek-
Bulgarian border to the Attica region—a total length of 512 km
• High-pressure branch lines to Eastern Macedonia and Thrace, Thessaloniki, Volos and Attica—
a total length of 440 km
• Metering and regulating stations for metering the amount of gas supplied and regulating its
pressure
• Remote control and telecommunications systems
• Operational and maintenance centers in Attica, Thessaloniki, Thessaly, and Xanthi

The expansion of the transportation system from Komotini to the Greece-Turkey border (at
Kipoi) has entered the final study phase (12/08).

Distribution System
The mandate of the Gas Supply Companies is to expand, operate, and maintain “city networks”
as well as to distribute gas to domestic, commercial, and industrial users (with an annual
consumption of up to 100 GWh Gross Calorific Value). DEPA holds 51% equity of the Gas
Supply Companies through its 100%-owned subsidiary Gas Distribution Company (EDA) and
private investors hold a 49% share and have management control.

The distribution system consists of:

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• Medium pressure (19 bar) networks in Attica, Thessaloniki, Larissa, Volos, Inofyta, Platy
Imathias, Katerini, Kilkis, Serres, Drama, Xanthi, Kavala, Alexandroupolis, and Komotini 
• Low pressure (4 bar) networks in Attica, Thessaloniki, Larissa, Volos, Inofyta, Kilkis, Xanthi,
Komotini.

DEPA will concede the use of these networks to new Gas Supply Companies (EPA) as they are
established.

Expansion of Networks, New Gas Supply Companies

The strategic development laid out by DEPA is to increase the share of natural gas in the national
energy market. Initiatives are under way to increase urban gas consumption rapidly through the
establishment of new EPAs and through the extension of networks to new industrial areas and
through the promotion of investment in gas-powered power production.

New Applications
In combination with efforts to increase natural gas consumption in conventional uses, DEPA is
endeavoring to develop new natural gas applications:

• The cogeneration of power and heat is an area where natural gas can significantly improve
competitiveness through the reduction of total energy costs.
• Noteworthy technical advances in power production using natural-gas fuel cell technology
achieve greater energy efficiency and improved environmental performance.
• The use of natural gas in greenhouses is widely practiced throughout Europe and offers
opportunities in Greece. Natural gas assists in the production of carbon dioxide (which is
produced during the combustion of natural gas), thereby promoting photosynthesis and plant
growth.

Cogeneration

Cogeneration plants are able to use all raw material fuel types, including biomass, as a source of
energy. The dominant fuel used today, both for environmental and economic reasons, is natural
gas. The efficiency of a cogeneration plant may exceed 90% and cogeneration offers energy
savings of between 15%-40% compared with energy derived from more conventional means.

Cogeneration produces approximately 4% of total electricity in Greece, a percentage that is

expected to increase significantly in the near future. A number of factors are key to the
expanding role of cogeneration in Greece:
• The de-regulation of electricity generation has attracted many project proposals, most of which
are gas-fuelled
• Electricity demand in Greece is expected to grow at 3.5% annually from 2010 to 2020.
According to Greece’s Energy Regulatory Authority (RAE), 6,000 MW of additional capacity
will be needed by 2015.

Four important changes in the Greek natural gas system:

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• Major structural gas projects are being carried out to connect Greece and Italy with the Caspian
region (supply)
• The de-regulation of the gas market with new tariffs
• The Greek government is promoting the use of gas for electricity production and for heating,
complying with supply policy and environmental commitments
• European policy and support schemes toward the creation of a single electricity and gas market
in Europe

Since 1990, Greece’s PPC has converted a number of power stations to cogeneration mode and is
becoming far more receptive to the cogeneration model. In addition, conditions for the
development of CHP (Combined Heat & Power) is improving both in legal certainty and fuel
supply (Law 3486 implements the electricity liberalisation directive and developments in the gas
infrastructure).

The food sector is currently benefiting most from CHP; not far behind is the refinery sector. In
the past, the most efficient CHP installations were refineries, due to their continuous operation,
inexpensive fuel (distillery by-products) and favourable power-to-heat ratio.

The Hellenic Association for the Cogeneration of Heat and Power estimates that the total
potential for CHP is more than 700 MW in the industrial sector and 100-300 MW in the services
sector under current CHP policies.

HACHP states that the market prospects for cogeneration in Greece are increasing, a result of the
wider use of natural gas and the financial support for cogeneration installations provided through
EU funds and through the attractive investment incentives of the Greek government.

Renewable Energy Sources (RES)

A Sustainable Future
Greece, and the European Union, have established key priorities and binding policies related to
the production of electricity from renewable sources.

To establish security and diversification of its energy supply, and ensure environmental
protection and sustainable development, Greece promotes the establishment of power using
renewable energy sources.

Increasingly, renewable energy sources play an important role in Greece’s energy production
profile. Current production is based on large-scale hydropower stations operated by PPC.
Renewables account for approximately 5% of electricity production, not including the 5%
contribution of hydropower stations.

The present investment framework calls for a striking increase in production from Wind, Solar,
Geothermal, and Biomass/Biofuels, which are expected to contribute increasingly as a transport
fuel.

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For 2010, the total installed capacity of RES stood at 1736.3 MW, 75% of which came from wind
energy production,, 11.5% from solar, and the remaining 13.5% from biomass and hydro-electric
production units.

Greece’s target is to produce electrical energy from RES at a 29% share of the total electrical
power by 2020.

DEVELOPMENT OF INSTALLED CAPACITY RES - 2020 TARGET

Solid Renewable Energy Source Advantages

- High guaranteed sale prices for renewable.
- Guaranteed demand for 20 years
- High demand
- Binding EU targets for renewable energy production
- Ideal climate conditions

Life sciences
Strong market fundamentals and a top-notch talent pool provide the opportunity
for cost efficient medicine development in Greece.

Strong market fundamentals

Greece’s Life Sciences industry has been developing at a vigorous rate. Start-up and spin-off
companies are emerging with new products and established players are increasingly pursuing

21
international R&D collaborations for the development of competitive, technology-based
products. Essential to this dynamic growth is the Greek R&D infrastructure, which includes
internationally renowned Research Institutes and University Research Groups. Greece is proud to
host world-class research teams, engaged in leading-edge Life Sciences Research and
international collaborations with corporate and research players, in Europe and worldwide.

The Biotech market growth has been exceptionally strong. Total pharmaceutical spending in
Greece, as a proxy for Biotech spending, has grown at an annual pace of 17.5% from 2000 to
2007, while the total annual healthcare expenditure in Greece from 2000 to 2006 has been
growing at 11%. Greece boasts the largest number of pharmacies per capita in Europe, with 94.2
pharmacies per 100,000 inhabitants. The strong growth in pharma spending in Greece is
supported by the social security safety net, through which most pharma expenditures are
reimbursed by the Greek state. The Greek state pharma expenditure covered 90% of the total
pharma expenditure in 2006. The growth in pharma expenditure is estimated to continue as
Greece’s population ages, Greece smoking rate remains high, obesity rises, and sedentary
lifestyles take hold.

Despite the fact that Greece is a net importer of pharmaceuticals, domestic production of
medicines has grown by 11.1% annually from 2000 to 2007. Furthermore, Greece’s highly
effective drug management system has reduced counterfeit medicines to a minimum compared
with other European Union countries.

Healthcare services have also been growing strongly. Private hospitals have increased their
market share and the demand for privately funded health care is proving strong. Obstetrics is one
of the most rapidly growing private healthcare services sectors. Greek private hospitals are
expanding into neighbouring Southeast European countries and analysts estimate that Greece
could become an attractive destination for ‘health tourists’ seeking high quality healthcare
services at competitive rates.

Regional Hub for Clinical Trials

Greece has established itself as a regional hub for clinical trials and most major international
pharmaceutical companies conduct clinical trials in Greece. Approximately 300 protocols are
approved each year, with about 700 state university and research institutions overseeing these
protocols. The average cost per clinical trial per patient stands between €2,000 - €3,000

Concrete Investment Opportunities

Greece offers a unique investment opportunity to international pharma companies to enhance and
support their main growth driver: the development of new medicines. With an exceptional talent
pool at very competitive rates, top universities and research facilities to conduct R&D, and a
competitive overhead structure, Greece is an ideal location for a research team developing and
testing a new medicine or for developing medical and diagnostic devices. And, as underlined, a
conducive environment for clinical trials presents an opportunity for biotech companies looking
to the international market to gain the extra edge over the competition.

Establishing regional headquarters in Greece for the Southeast Europe, Middle East or North
Africa region allows companies to tap into highly educated, strongly motivated human capital

22
with strong multinational corporate ethics.

Biovista Inc. Named Top Innovator in Life Sciences

Biovista Inc. was awarded the 2009 Top Innovator Presentation Award in Healthcare at the 2009
New England Venture Summit, held December 8, 2009 in Dedham, Massachusetts, USA. The
award, which recognizes cutting edge private companies driving the future of innovation, was
granted to Biovista, which competed with over 50 other privately held companies that play a
leading role in innovation in the Technology, Life Sciences and Clean-tech sectors. Biovista's
repositioning programmes leverage the company's technology platform to identify suitable drugs
and reposition them in isolation or in combination with other drugs to therapeutic areas currently
not covered by existing products. By selecting drugs that already satisfy basic toxicity, ADME
and related criteria, Biovista is able to deliver significant value at reduced cost and in
dramatically shorter time frames than is normally the case.

EMBIO Diagnostics Captures 1st Prize in Entrepreneurship Competition

EMBIO Diagnostics won the 1st prize of the 6th Cyprus Entrepreneurship Competition. EMBIO
focuses on the development of sophisticated, portable cell biosensors for the detection of
pesticides, biological warfare, animal/ human viruses & inflammation markers by means of
membrane and genetic engineering. Two landmark products of the company are the Bioelectric
Recognition Assay (BERA) cell biosensors and the Molecular Identification through Membrane
Engineering (MIME) technology, which are widely appreciated as standard analysis tools for
mass screening of chemical and biochemical compounds.

Forth Photonics Funding for Further Growth

Forth Photonics has completed its second round of fundraising with a new investment of €7.6m.
The newly-raised funds are expected to take Forth Photonics’ first product through to full
commercialisation. Forth Photonics will use the funds to commercialise its medical device,
DySIS (Dynamic Spectral Imaging System), which is the only medical device to use dynamic
spectral imaging technology to assist gynecologists in the detection and mapping of precancerous
and cancerous lesions of the cervix. The use of DySIS has been shown in clinical trials to
significantly increase the sensitivity of pre-cancerous lesion detection compared with traditional
methods.

Advantages of Investing in Greece's Life Science market

•Strong market fundamentals
•High quality personnel
•Business-conducive environment
•R&D support
•Attractive investment opportunities
•Attractive funding opportunities

Strong Market Fundamentals

The Life Sciences market in Greece has been displaying strong growth in recent years, with
pharmaceutical expenditure growing at a pace close to 20% annually, supported by a strong state
social security net. This trend is expected to continue, driven by the demographic characteristics
of the Greek population.

23
Human Capital
The Greek workforce has a high percentage of graduate and post-graduate degrees:

Workforce by level of education

Source: National Statistic Service

Greece has one of the highest number of doctors per capita in the world, an important statistic
when using physicians as a proxy for medical workers.

Doctors per 1,000 habitants

So
urce: World Development Indicators Database

24
Conducive Business Environment
Greece's government has given increased emphasis to R&D activities and is committed to
investing in the advance of technology by developing the country’s considerable intellectual
capital. Innovation is a key priority and the private sector is increasingly devoting more
resources to foster new and marketable products and services. Cooperation among universities
and business, the public and private sector, and research and production has been growing in
recent years, providing the impetus for advances in innovation. The Thermi Incubator in
Thessaloniki and the Technological Parks in Athens, Thessaloniki, Patras, Volos, Herakleio and
Ioannina are examples of institutes that support cutting edge R&D in Greece.

R&D Support

The Institute for Molecular Biology and Biotechnology (IMBB)

The Institute for Molecular Biology and Biotechnology (IMBB) was founded in 1983 and is one
of the Institutes of the Foundation for Research and Technology – Hellas (FORTH). FORTH,
among Greece’s leading and largest Research Centres, comprises seven Research Institutes,
located throughout the country. FORTH has become one of the top European research centers,
thanks to its high impact research results and its valuable socioeconomic contribution. Its track
record in nurturing startups/spin-offs and establishing RTD partnerships with industrial partners
are also notable. IMBB was ranked first in evaluations of Greek Research Institutes carried out
by the Greek Secretariat for Research and Technology.

Biomedical Research Foundation of Academy of Athens (BRFAA)

Established in 2003, BRFAA supports basic science and clinical research through its research
programmes in immunology, gene expression, cell biology, stem cells, cancer, metabolic
diseases, development and the function of the cardiovascular and the nervous systems. It
comprises of two Basic Sciences Centres focusing on the understanding of basic aspects of
biological pathways and Centres for Immunology and Transplantation, Neurobiology,
Experimental Surgery, Clinical Research and Environmental Health.

Attractive Funding Opportunities

International investors planning to penetrate the Greek biotechnology and pharmaceutical
markets may benefit from funding opportunities provided both from public and private sources.
A number of National Strategic Reference Program funding programmes allow for the
enhancement of technology development realisation of R&D projects, for the spawning of spin-
offs and spin-outs.

In addition, international companies will find in Greece an entire range of seed capital funding,
venture capital funding and private equity funding required to finance growth. The Athens stock
exchange is an attractive option for drawing equity capital, as there are many listings with
international tranches.

Food and beverages

25
Food and beverage is the most dynamic and high-growth sector in Greek
manufacturing, accounting for 25% of turnover, 24% of employment, 25% of
total invested capital, and almost 25% of added value.

A Natural Growth Industry

Food and beverage is the most dynamic and high-growth sector in Greek manufacturing,
accounting for 25% of turnover, 24% of employment, 25% of total invested capital, and almost
25% of added value. Foreign companies have experienced high rates of success in this sector
since the Greek market has shown robust growth for almost a decade. In addition, Greece serves
as an ideal bridge to the emerging markets of Southeast Europe and the Eastern Mediterranean.

Growth in the sector averaged 20,6% during the last decade and food and beverage companies
are the leading exporters in Greece, accounting for almost 20% of total export sales, with
revenues of exceeding 2 billion Euro. The leading markets for Greece’s high-quality products
include Germany, Italy, Spain, UK, and the United States.

Many multinationals are enjoying the benefits of being based in Greece. Giants such as Nestlé,
Coca Cola, Kraft Foods, Barilla, Cadbury, and General Mills manufacture a wide range of
products and find that local and regional markets are receptive to new product lines as well as
established favourites.

Greece’s food and beverage companies have created a large sales and distribution network in
Southeast Europe, a strength that is reinforced by the dynamism of the Greek enterprises
operating in the region. Topping the list of products exported are vegetables, fruits, olive oil,
dairy products, fresh seafood, canned fruits, olives, raisins, wine, and tomato products.

There is abundant opportunity to create value added in many product categories, especially as the
global interest in healthful foods, snack foods, and convenience foods continues to expand.
Honey and nut based snacks, macaroni products, marmalades and pickled goods, as well as novel
seafood and meat products demonstrate a significant potential in numerous markets. And as
consumption of olive oil grows, Greece is ideally positioned to respond in this sector as it the
third largest producer of olive oil in the world.

Advantages of Investing in Food and Beverage

•Low operating costs
•Abundant raw materials
•EU production standards and regulations
•Access to the emerging growth markets of Southeast Europe where Greek F&B companies have
developed an extensive production and distribution network
•Global trend to the Mediterranean diet
•Highly experienced and qualified labour force
•Familiarity of Greek consumers with international food products, brands and tastes

Investment opportunities include boutique and niche market goods, the entire gamut of mass
market items, products marketed as “Mediterranean,” and the exploding organic food sector.

26
 
Specialty goods such as saffron of Kozani, mastiha from Chios, and spirulina as a nutritional
supplement are being recognized for their superb quality. In addition, well-known products
including ouzo, feta cheese, and Greek pistachios are establishing themselves in new markets
worldwide.

R&D Support
Greece’s universities and research institutes focus heavily on providing assistance to the food
and beverage industry. A number of highly specialised research centres assist manufacturers and
processors in developing innovative solutions to meet the needs of today’s marketplace.
 

Environment management

Greece is embarking on a long-term plan to overhaul its waste management practices

Integrated Solutions to Lead the Way

Greece is embarking on a long-term plan to overhaul its waste management practices. New
technologies are needed to deal with an increasing burden of waste and that meet the demand for
disposal, energy generation, recycling, and building new, closed-loop systems that limit waste
generation.

According to EU directives, all Member States, including Greece, should recycle 55-80% of
packaging material by 2011 and decrease organic urban waste by 25% through composting
processes at source by 2010. This should increase to 50% by 2013 and 65% by 2020.

Since there is insufficient domestic capacity to meet the needs of the market, investment
opportunities are exceptional. The Greek government, local waste management authorities, and
private waste management service companies need the expertise of foreign firms to fill this
significant gap.

Advantages of Investing in Waste Management

•Binding EU commitments to recycle packaging material and other products, and decrease
biodegradable waste and other urban solid waste that is sent to landfill
•Insufficient local capacity; foreign expertise is required
•Solutions needed to deal with an increasing waste burden
•Integrated waste management facilities are needed
•Need for innovative solutions that create energy from waste
•Favourable Public-Private Partnership (PPP) and EU financial framework

Investment opportunities in waste management are exceptional. The expertise of foreign firms to
meet the demands of the local market is a necessity since domestic capacity to meet this need is
insufficient.

27
Greece produces more than 5 million tons of residential and commercial urban waste annually.
This is equivalent to 455 kilograms per person. The region of Attica produces almost 39% of
Greece’s urban waste, followed by the region of Central Macedonia (16%) and the city of
Thessaloniki (9%).

Contributing to the increasing amounts of urban waste are the growth in tourism, increased urban
development, a shift in living standards, and a change in consumer habits and behaviour.
 
The quest for more efficient waste management has led to recycling programmes in a number of
municipalities, and although these initiatives have shown increased participation and promising
results, the demand for more comprehensive and effective programs remains.

In 2008, 525,000 tons of packaging material were recycled/recovered from a total production of
1,050,000 tons. A total of 19 centres for sorting and recovery were established in Athens,
Thessaloniki, Heraklion, Chania, Kalamata, Patras, Zakynthos, Schimatari, Lamia, Karditsa,
Corfu, Katerini, Magnesia, and Ioannina.

The ten recycling systems throughout Greece today deal in packaging material, vehicles, tires,
lubricants, batteries, and electrical and electronic equipment. Currently, 15 companies deal in the
management of hazardous waste.

The authority responsible for the planning and implementation of alternative waste management
in Greece is the National Organization for the Alternative Management of Packaging Materials
and Other Products (EOEDSAP) of the Ministry of the Environment, Energy and Climate
Change.

Targeted Opportunities
Opportunities for investment and cooperation may be identified in a number of areas:
•Selective collection at source and the recycling of municipal waste
•Collection and treatment of various products and materials, including batteries, tires, waste oils,
and electrical/electronic products
•Creation of disposal facilities for municipal waste
•Construction of transfer station networks, recycling centres, sanitary landfill sites for residual
waste; mechanical, processing and compost units; rehabilitation of existing landfill sites
•Implementation of integrated waste management systems and solutions in specific regions
•Management of clinical and hazardous waste
•Implementation of coastal rehabilitation projects
•Supply of mechanical equipment and know-how that suits the local environment

Other areas where investment is needed include innovative technologies for asbestos removal,
treatment and disposal; physiochemical treatment of liquid industrial waste, waste minimisation
techniques for industry, and sewage sludge processing with energy recovery.

Waste to Energy
A highly promising area is technology to transform waste to energy. Investors may cooperate

28
with Greece’s research and technology institutes and councils to develop effective solutions that
foster sustainable development.

Existing Waste to Energy Facilities

Currently, Greece operates two waste to energy facilities, one in Athens, the capital of Greece, at
the Ano Liosia Hygenically Controlled Landfill and one in Thessaloniki, the second largest city
of the country, at the Tagarades Hygenically Controlled Landfill. The Ano Liosia facility
produces heat and power from biogas and has an installed capacity of 23.5 MW. The Tagarades
power plant produces electricity from biogas and has an installed capacity of 5 MW, capable of
covering the energy needs of 80,000 residents.

Composition of Urban Waste in Greece

Source: Ministry of the Environment, Energy and Climate Change

Source: Ministry of the Environment, Energy and Climate Change

29
Market challenges

Infrastructure
The holding of the 2004 Olympic Games in Athens was a major catalyst for Greece to initiate a
number of changes and improvements in a variety of areas. One of the greatest beneficiaries was
the infrastructure of Greece.

The program to improve infrastructure continues today as Greece invests heavily in strategic
projects that will facilitate transport, logistics and telecommunications, so the flow of goods,
services, and information is done efficiently, promptly, and cost effectively.

Road Network
During the last decade, the road network has seen substantial

. One of the largest infrastructure projects in Europe is the Egnatia Highway, a new East-West
highway corridor connecting the port of Igoumenitsa on the Ionian Sea with Alexandroupolis,
near the Turkish border.

The PATHE highway system has also been substantially upgraded and connects the southern
port of Patras, Athens, and Thessaloniki and continues north to the border with FYROM. The
third major highway system in Greece is the Ionian Highway that connects Patras with
Igoumenitsa.

Within the greater Athens area, the new Attika Highway Ring Road has substantially changed
road transport in the capital region and is an important logistics route, connecting the airport with
logistics centres, sea ports, and rail stations.

Although these main arteries are of a high standard, many of Greece’s secondary roads are still
in need of improvement and are benefiting from the many PPP projects in transport.

Airports
Greece has 40 airports, 15 of them international. Many of these airports, especially on the
islands, primarily serve tourists and handle charter flights. In 2001, the Athens International
Airport opened and is considered to be one of the best airports in Europe. For a map and list of
airports in Greece visit the Hellenic Aviation Authority site at http://www.ypa.gr/

Currently, many of Greece’s airports are undergoing significant infrastructure and facility
upgrades.

Ports
With hundreds of islands, Greece has many seaports, 12 of which are international. The port of
30
Piraeus is one of the busiest in Europe and is the main cargo port of the country, followed by
Thessaloniki, Patras, and Igoumenitsa. Greece has more than 140 ports that serve passengers and
cargo.

Currently, there is in place a nationwide programme to upgrade the ports of Greece to meet the
needs of cargo shipping, security concerns, and the country’s 17 million annual visitors.

In November 2008, China’s Cosco signed an agreement to run the Port of Piraeus in a 35-year,
4.5 billion Euro deal that is slated to significantly increase the port’s cargo capacity and
efficiency. In addition, the agreement will position Piraeus as a leading point of entry for goods
from Asia destined for the European market.

Railway
The Greek railway system has been placing emphasis on upgrading its infrastructure, with some
notable successes serving passengers in Athens. The improvement of the rail bed and the laying
of new track to improve transport times have been the main priorities.

The rail system is essentially north to south and connects Patra Athens and Thessaloniki. Within
recent years travel time between Athens and Thessaloniki has been reduced considerably, from
more than six hours to just over four. Today, the Greek railway serves destinations outside
Greece that include Sofia, Bulgaria; Bucharest, Romania; and Istanbul, Turkey.

The new suburban railway connecting Athens Airport with the capital is fast and efficient. In
addition, the relatively new Athens Metro system, the first in the city, has been extremely
successful and has had a major impact on improving urban transport. The Athens Metro is
expanding its lines and hours to meet increased demand from passengers. A new metro system is
being constructed in Thessaloniki that is scheduled to begin operation in 2012.

Waterways
The shipping lanes serving Greece’s mainland and islands are, for the most part, highly efficient
and transport large quantities of passengers and cargo every year. In addition to passenger and
cargo ferries, a large number of high-speed catamarans introduced in recent years have reduced
travel times considerably.

Power and Energy

Greece relies on lignite for the majority of its electricity production. In recent years the energy
market has been liberalised, breaking the monopoly of the PPC. As the monopolistic practices of
PPC diminish the private sector is enjoying more opportunities.

In wind and solar, progress is being made as Greece has committed to a minimum 29% of energy
from RES by 2020. In 2007, Greece signed agreements to build the Burgas-Alexandroupolis oil
pipeline, to transport oil from Russia through Bulgaria and the southern natgas corridor that will
transport natural gas from Russia via the Black Sea to Bulgaria, Greece, Italy and from there to
Europe.

31
The Greece-Italy natural gas pipeline, officially called the "Interconnector Greece-Italy (IGI)
comprises a supplement to the Interconnector Greece-Turkey (IGT) natural gas pipeline -- which
is currently under construction. These major projects are transforming Greece into an energy hub
in Southeast Europe.

Telecommunications
As in energy, the liberalisation of the telecommunications market has taken place during the last
decade, resulting in a large number of telecom suppliers in landline, cellular, and Internet
services. Although the Hellenic Telecommunications Organization (OTE) still wields
considerable power, the market is highly competitive and services of a high standard.

Celluar phone penetration in Greece is one of the highest in the EU. Since 2007 Greece has been
making good progress in adopting digital technologies, with the country meeting or exceeding
strategic targets, and the government announced plans to create a nationwide fibre optic network
during the next decade. Greece ranked 6th worldwide and 1st in the European Union for the
annual growth of broadband in 2007 ranked 1st worldwide in 2006.

Once complete, the fibre optic network would allow simultaneous high-definition television
channels, videophone services, tele-education, tele-medicine and other services, and would be an
open-access network that could be used by all telecommunications and content providers. The
project has a tentative budget of 2.1 billion Euro. It is envisaged to reach two million homes in
Athens, Thessaloniki and 50 other large towns and cities, and preparation is underway to develop
high-tech networks for all regional areas.

Water and Sewage Systems

As concerns about climate change mount, Greece is faced with questions about its long-term
water supply, but has managed to avoid serious problems thus far. The concern is greatest on a
number of islands that have limited fresh water resources and must rely on transported water.
Innovative desalination projects using RES technologies are currently being planned for
implementation.

Almost 100% of households have continuous access to water supply and almost 95% are
connected to the sewage system. Relatively new sewage treatment plants serving Athens and
Thessaloniki have dramatically improved the water supply in the Saronic Gulf near Athens and
the Thermaicos Gulf of Thessaloniki. The water quality in Greece is considered to be of a high
quality and water borne diseases are virtually non-existent.

Legal, judiciary, and regulatory framework

Political analysis
Overview
Greece has overcome its turbulent past and is now witnessing political stability as well as
economic prosperity. Despite its

32
economic success, it needs more time to break away from its past, when government intervention
was at its highest.
Greece was conferred membership to the EU in 2001 and successive governments have tried to
ensure the continuation of
economic reforms to meet its targets.
The present ND Party government has a wafer thin parliamentary majority, which has made it
dependent on support from
other parties to bring in important reforms. The economic downturn of the country has further
made it difficult to garner
public support to carry out important reform policies. It was evident when the public took to the
streets to oppose
privatization and pension reforms, besides salary ceilings in the later part of 2008. In view of
rising instability, the country
may schedule an election before the current term comes to an end in 2011.
Table

Analysis of political scenario

Current strength Current challenges

 Democratic principles firmly in place  Troubled relations with neighbors

 Closer integration with the EU  Existence of terrorist groups

Future prospects Future risks

 Continuation of reforms  Narrow majority of the ruling coalition

 Improvement in public administration system  Political and social unrest
 Continued existence of corruption and
nepotism

Current strengths
Democratic principles firmly in place
Greece is considered to be the birthplace of democratic principles and modern democracy was
firmly established in the
country with the adoption of the constitution in 1974. This constitution laid the foundation of the
government. Elections are
considered to be fair and transparent and governments have been voted out of power whenever
popular sentiment has

33
turned against them. The country’s democratic progress is reflected in the voice and
accountability parameter, where
Greece ranked in the 73.6 percentile in 2008 in a study conducted by the World Bank. In 1996, it
had a lower percentile rank of 69.4. However, in comparative terms, peer nation Portugal has a
higher ranking at 88, which indicates Greece’s scope for further improvement.

Closer integration with the EU

EU membership has provided an opportunity for the Greek government to integrate itself closely
with other EU members.
After Greece’s entry into the EU, economic prosperity has become part of the country's political
agenda. Furthermore, reform measures undertaken in this direction will become an important
determinant of the success of any political party. Since joining the EU, Greece has taken
pragmatic politico-economic decisions and large inflows of funds from the EU have
contributed to its economic development.

After the country became a member of the EU, successive governments have been working on
policies for fiscal discipline, resulting in improved financial condition. The government is bound
by the targets set under the Maastricht treaty, which gives it little room to diverge from EU
practices. Therefore, a continuation of the economic policies aimed at fiscal consolidation is
expected, which will give economic and political stability to the nation.

Current challenges
Troubled relations with neighbors. Greece’s relations with its neighbors, especially Turkey, have
shown signs of improvement, but remain far from healthy.

Although there have been improvements in business relations, territorial disputes over the
Cyprus issue have caused political tension. Relations with Macedonia have been tense, as there is
a Greek province by the same name—for this reason, Greece also opposed Macedonia’s
membership of the EU. Meanwhile, dealings with Albania have been difficult since the 1990s,
following huge influx of refugees from Albania into Greece, which has led to deteriorating
relations between the two nations and social unrest in Greece.

Existence of terrorist groups

Greece has been subjected to terrorist violence in the past and, despite a government crackdown,
there continues to be a presence of suspected groups active in the country. Terrorism in Greece is
believed to have been fuelled by extremists from far left organizations, spurred by accusations of
government oppression of minority groups. Besides this, Greece's pro-US stance in international
affairs has become a major issue for some of these groups. In 2009, the US embassy and police
station in Athens were bombed and a number of other attacks took place: the terrorist group
Revolutionary Struggle has accepted responsibility for most of these. Acts of terrorism will
invariably increase the security risk in the country and hamper its growth prospects.

34
Future prospects
Continuation of reforms

Greece has undertaken a number of structural reforms. During its last term, the government was
not able to push through planned reforms to the pension and education systems, but with a new
mandate for change, the incumbent government initiated a number of reform programs, which
will start showing results soon. Similarly, in order to keep pace with its Eurozone partners, the
government may press ahead with the privatization of airways and other public enterprises,
opening up new opportunities for investment.The Greek government is also focusing on
agreements and infrastructure projects being promoted in the energy sector,with the aim of
securing an energy supply for the future, promoting renewable energy sources and protecting
theenvironment.

Improvement in the public administration systemAlong with the reform processes mentioned
above, the government endeavors to improve the public administration system.The culture of the
system is moving away from a formal legal setup to focus on service to citizens. Furthermore, by
reducing unnecessary bureaucracy the government has undertaken regulatory reforms which
should go a long way toward making the system equitable and transparent. This will enhance the
efficiency of public administration, a crucial entity of government.

Future risks

Narrow majority of the ruling coalition

Although the ruling ND government came to power in 2007 for a second term, it managed to get
a small majority of 152 out
of 300 seats in parliament. This has made it dependent on support from other parties to bring in
important reforms.
Moreover, the resignation of two key party members from Karamanlis’s team has weakened his
authority in parliament, while the economic downturn has made it increasingly difficult to garner
public support in order to carry out important reform policies. This was evident when the public
took to the streets to oppose privatization and pension reforms, besides salary ceilings in the later
part of 2008. Deteriorating economic conditions are expected to increase discontent and, in view
of the rising instability in the country, it may go for an election before the current term comes to
an end in 2011.

Political and social unrest

The decline in Greece’s foreign relations with Turkey and an increase in terrorist activities may
give rise to political unrest,
as territorial disputes continue—Greece’s support for the Greek population in Cyprus has long
been a source of conflict.

35
Secondly, Greece is expected to maintain a pro-EU stance and to remain close to the US in
international politics. Such a situation by no means guarantees an abatement of terrorism, as the
US continues to be at the top of the list of terrorist targets: its associates have faced politically
motivated attacks on a number of occasions.

Continued existence of corruption and nepotism

Corruption continues to be a part of the political culture of Greece. The country has been rocked
in the last several years by a series of large political finance scandals, under both Pasok Party and
ND Party rule. The present government of Kostas Karamanlis has publicly criticized corruption
and nepotism. According to the Berlin-based watchdog Transparency International, Greece's
ranking in terms of corruption fell from 46 to 54 in 2007, but made marginal progress in 2008 by
securing the 56th rank, behind almost every other EU nation. The prevalence of corruption and
nepotism may impact some of the benefits of reforms.

Financial system
Overview

Greece is a member of the EU and has relinquished control of its monetary policy authority to
the European Commercial Bank (ECB). The Bank of Greece is the country's central bank and is
responsible for the implementation of monetary policies. Greece began the deregulation of its
financial system in the 1990s, in the run up to its EU membership. The central bank is
responsible for ensuring the smooth operation and stability of the Greek financial system.

Financial authorities/regulators
Central Bank of Greece

The Bank of Greece is the central bank, follows the directives of the ECB and is responsible for
the implementation of monetary policy. It is also the main supervisory agency for the quality of
commercial bank portfolios and the protection of the monetary system against bank failures. In
line with requirements of the 1992 Maastricht Treaty, the Bank of Greece is required to become
independent from the government, and has consequently enforced strict limits on government
use of the money supply as a source of loans.

Commercial banks and specialized credit institutions, such as investment banks, the Agricultural
Bank of Greece, mortgage banks, and the Postal Savings Bank, are the other types of financial
institutions in Greece. Commercial banks include both domestic and foreign owned banks. With
the onset of liberalization in the banking sector since the 1990s, these institutions decide on their
specialization by market conditions rather than legislative constraint.

Hellenic Capital Markets Commission

36
The Greek capital markets are regulated and supervised by the Hellenic Capital Markets
Commission (HCMC). Organized market participants such as the Athens stock exchange, and
market intermediaries like investment firms and agencies involved with the clearing and
settlement of securities function under the HCMC’s regulations.

The HCMC is also responsible for the regulation of mutual fund companies and portfolio
investment companies. In addition to licensing and supervising investment firms, the HCMC is
also responsible for the organized securities market and the issuers of punlic trade securitites.

Insurance regulator

The supervisory system for insurance companies is currently in transition. Prior to 2008,
insurance companies were regulated by a division of the Ministry of Development. Since January
2008 a new supervisory agency, the supervisory commission for private insurance, has been
established. The new agency will supervise insurance companies and intermediaries.

Greek stock markets

The Athens Exchange (Athex) is the only official market for shares, rights, global depositary
receipts, derivatives and bonds trading in Greece for retail and institutional investors. All large
companies’ shares are listed in this exchange. The Athex comprises several markets for which
different listing requirements apply. In the main market, securities of large and more established
companies are listed (a company may apply for listing on the main market if its own funds
amount to at least €12m). Besides Athex, there is the parallel market, where securities of smaller
companies are listed (a company may apply for listing on the parallel market if its own funds
amount to a minimum of €3m).

The Greek derivatives market, Adex, was merged with Athex in 2002. Derivatives listed on the
Adex include futures, options, swaps, repos, reverse repos, and warrants. The Greek market of
emerging capital markets (Eagak) comprises a parallel exchange of emerging markets and
addresses the needs of companies operating through subsidiaries in the
Balkan region and south-east Europe. There is also a market for fixed income securities (ASSE),
where government bonds, corporate bonds and international bonds are issued. The Thessaloniki
Stock Exchange Centre (TSEC) reviews applications
by companies based in northern Greece and south-east Europe for listing on the new market,
Athex, and provides administrative support to Eagak.
The market capitalization of the Athex reached a high of $265 billion in 2007, but contracted by
65% in 2008 following the global financial crisis.

Import and exports of Greece

Year Exports Imports
1975 2.294 5.357
1980 5.153 10.548

37
 1985 4.539 10.134
1985 8.105 19.777
1990 10.961 25.944

As seen in the chart, Greece's balance of trade hasn't been very encouraging, due to the fact that
Greece's exports are continuously less than its imports. Greece's trade barriers has put it into
horrible debt, now over US$400 billion, an overwhelming 125% of Greece's gross domestic
product (GDP). Greece is a member of the European Union (EU), which has helped them out
alot. Although, it still has an enormous trade deficit - $42.8 billion for 2009 – an amount 2.5
times higher than its total exports. In 2008, Greece had a higher trade deficit of $64.8 billion,
which is somewhat reassuring. It stays grounded with the help of loans from the EU, remittances
from Greeks living abroad, tourism, and shopping.

Although the trade deficit might have decreased in 2009, the trade imbalance wasn't as
comforting. Greece’s trade imbalance with America was a negative $1.64 billion for 2009, up by
75.3% from $932.6 million in 2008.

America’s delivery of air combat machinery to Greece accounted for almost half of total Greek
imports in 2009 ($1.1 billion). Other top Greek imports from the U.S. include fuel oil, medicinal
equipment, and steelmaking materials. Greek imports from America that were the fastest-
growing also includes aircraft on the top of the list - as well as animal feeds, railway
transportation equipment, coal, and inorganic chemicals. Greece's fastest-growing exports
include: textile, sewing and working machinery, food and tobacco processing machinery, pulp
and paper machinery, plastic materials, and non-textile apparel and household goods.

Greece's Business Trade Barriers Strength

 Greek exporters delivered $95.6 million worth of vegetables to the U.S. last year.
 Greece shipped $21.9 million worth of dairy products and eggs to the U.S. while spending only
$121,000 on similar food items from America.
 Greece’s industrial sector transports large amounts of fuel around the world.
 A moderately-valued currency, high investment flow potential and average business
environment lead to a slightly positive outlook for Greek investments.

Greece's Business Trade Barriers Weakness

 America exported $1.1 billion worth of military aircraft to Greek importers versus only $19.3
million in military aircraft and parts that Greece shipped to the U.S.
 Some aspects of Greek legislation on the stocking, transport and distribution of petroleum
products violate EC Treaty trade barrier rules.
 The rules forced companies marketing petroleum products to conclude supply contracts with
Greek refineries and prevent retailers from importing petroleum products directly from other
Member States.
 Greece's exports are almost always less than their imports, which causes massive trade
imbalance.
 When it comes to aircraft, U.S. still has a huge competitive advantage over Greece.

38
39
Greece
Country Conditions
Climate for Investment & Trade
Overview
Openness to Foreign Investment
Greece, a member of the European Union, provides a reasonably hospitable climate for foreign
investment. On the upside, Greece’s membership in the E.U.’s Economic and Monetary Union
offers currency stability, the infrastructure has improved significantly in the last five years, and
the ongoing liberalization of the energy and telecommunication markets offer investment
opportunities. Greek businesses are among the leading investors in Southeast Europe, and Greece
is actively positioning itself as a hub for Balkan trade.

On the downside, after a decade of high GDP growth (between 1997 and 2007, Greece averaged
4 percent GDP growth, almost twice the E.U. average), the financial crisis and resulting
slowdown of the real economy have slowed GDP growth to two percent in 2008. It is projected
to shrink by 1.5 to 2.0 percent in 2009 and by 0.3 percent in 2010. Key economic problems with
which the government is currently contending include a burgeoning government deficit (12.7
percent of GDP in 2009) and high public debt (113.4 percent of GDP projected for 2009), both
of which are the highest in the Euro zone. The E.U. recently moved Greece one step closer to
sanctions under the Excessive Deficit Procedure. The E.U. has mandated that Greece develop a
plan to immediately restore fiscal discipline and reduce its deficit to the three percent E.U.
ceiling within an agreed period of time (as yet, undetermined).

Greece’s economy is hampered by extensive government regulation. Many international

corporations state that bureaucracy remains the number one impediment to doing business in
Greece. International organizations such as the OECD, Transparency International, the World
Bank (in its Annual Doing Business and Governance Reports), and the World Economic Forum
(in its Global Competitiveness Report) cite issues with corruption and government regulations
that complicate investment and other commercial activities. As a result, Greece has had
relatively modest levels of foreign investment as a percentage of the economy. It ranked 21 out
of 30 OECD countries in level of Foreign Direct Investment (FDI) in 2008. The
position of Greece in the world indices of the above organizations has deteriorated in the last
year. Greece ranks 109 in 2010 World Bank’s Doing Business index (nine slots down from 2009
index). On economic freedom it ranked 81st out of 179 in the 2009 Heritage Economic Freedom
Index. It dropped to the 71th position on the Transparency Corruption Perception Index in 2009
from 57th in 2008 (in last place, together with Bulgaria and Romania among the 27 country-
members of the E.U.).

Historically, growth has been financed by private sector borrowing and public sector spending,
and absorption of E.U. structural adjustment funds, which totaled roughly 24 billion dollars from
2000-2006. The E.U. has allocated a similar amount of funding, approximately 26.5 billion USD,
for Greece for 2007-2013. The GoG encourages private foreign investment as a matter of policy.
Investments are screened by the Ministry of Economy, Competitiveness and Shipping when the
investor wants to take advantage of

40
government provided tax and investment incentives; foreign and domestic investors face the
same screening criteria. Although Greece previously restricted foreign and domestic private
investment in public utilities, it opened its telecommunications market and is in the process of
slowly liberalizing its energy sector. Restrictions exist on land purchases in border regions and
on certain islands due to national security considerations. Greece is the only E.U. country that
does not have a land registry, which is a barrier to investment. U.S. and other non-E.U. investors
in Greece’s banking, mining, broadcasting, maritime, and air
transport sectors are required to obtain licenses and other approvals that are not required of
Greek and E.U. investors. Foreign investors can buy shares on the Athens Stock Exchange on the
same basis as local investors.

Major investment laws are:

• Legislative Decree 2687 of 1953 which, in conjunction with Article 112 of the Constitution,
gives
approved foreign “productive investments” (basically manufacturing and tourism enterprises)
property rights, preferential tax treatment and work permits for foreign managerial and technical
staff. The Decree also provides a constitutional guarantee against unilateral changes in the terms
of a foreign investor’s agreement with the Greek government, but the guarantee does not cover
changes in the tax regime.
• Law 3299/2004, the investment incentives bill, as amended by Law 3522/2006 and Law
3752/2009, provides grants to cover up to 60 percent of qualifying investments (generally those
made in less-developed regions of Greece). Through a combination of incentives and corporate
tax breaks, this law attempts to boost entrepreneurship, foster technological change, and achieve
regional convergence throughout Greece. Law 3522/2006 introduces grants to newly founded
small enterprises (Greek and foreign) to assist them with operational expenses for up to five
years and attempts to simplify and expedite procedures for the evaluation of investment projects.
Law 3752/2009 encourages investors to take advantage of tax breaks instead of grants and
increases incentives to investment in energy from renewable sources, in modernization of tourist
installations and in high technology services.
• Law 3389/2005 on Public Private Partnerships (PPP). This law is designed to facilitate public
private
partnerships in the service and construction sectors by creating a market-friendly
regulatory environment.
• Law 89/67 as amended in November 2005 by Law 3427/2005 provides special tax treatment
for offshore operations of foreign companies established in Greece.
• Law 468/76 governs oil exploration and development in Greece. Law 2289/95, amending this
legislation, allows private (both foreign and domestic) participation in oil exploration and
development.
• Law 2773/99 opened up 34 percent of the Greek energy market in compliance with E.U.
Directive 96/92 concerning the regulation of the internal electricity market. Law 31 75/2003
harmonizes Greek legislation with the requirements of the E.U.’s Directive 2003/54/EC on
common rules for the internal market in electricity. Law 3426/05 completed Greece’s
harmonization with E.U. Directive 2003/54/EC and provided for the gradual deregulation of the
electricity market.
• Law 2364/95 as amended by Laws 2528/97, 2992/02, 3175/03 and 3428/05 governs investment

41
in the natural gas market in Greece.
• Law 2246/94 and supporting amendments have opened Greece’s telecommunications market to
foreign investment.

When Greece joined the European Monetary Union (EMU) Euro zone on January 1, 2001, it
committed to serious structural reforms to meet EMU convergence criteria. To this end, the
Greek government has opened the telecommunications market, and the energy market has
undergone some deregulation. Since 2001, about 34 percent of eligible consumers of middle and
high-tension voltage have had the choice to obtain their electricity from producers other than the
l state monopoly, the Public Power Corporation (PPC). The electricity market in Greece was to
be completely deregulated by mid-2007. The deregulation process has been slow, and the goal
not yet realized. Only three private producers are operating at this time, due to problems in
arranging financing and obtaining state licenses

The new center-left government of PASOK, elected in October 2009, pledged fiscal and other
structural reforms to enhance the competitiveness of the Greek economy. The new
administration promised to gradually adopt policies and programs designed to achieve fiscal
consolidation and tax reforms, reduce red
tape in business transactions and expedite market deregulation. The new Finance Minister
recently announced plans to raise about 2.5 billion Euros (3.6 billion dollars) from privatizations
in 2010 to help pay down the country’s burgeoning public debt. It is not yet clear which
companies will be privatized under this plan. Greece has stakes in about 20 listed companies
including ATE bank, Postal Savings Bank, gaming firm OPAP and telecoms group OTE. The
state asset sale program will be clarified in the beginning of 2010.

Greece has raised about 8.7 billion Euros from privatizations in the period 2003-2009. Some of
these privatizations have sparked significant resistance from the public; however, the
government thus far is standing firm. The global economic environment may also impact the
private sector’s ability to raise financial resources to buy these firms. Foreign and domestic
investor participation in privatization programs is generally not subject to restrictions. The
previous Greek government had announced in December 2007 that it would cap private
investment in companies of “strategic importance” (corporations which own, exploit, or manage
national infrastructure networks such as telecommunications, energy, etc.) at 20 percent unless
special approval is granted by an inter-ministerial privatization committee. The European
Commission contested the Greek law on investment in strategic firms and sent Greece in
November 2008 a final warning to change the law or face European Court action. Thus far, the
European Commission and the Greek government are still in negotiations on how this issue
should be addressed.

Transparency of the Regulatory System

As an E.U. member, Greece is required to have transparent policies and laws for fostering
competition. Foreign companies consider the complexity of government regulations and
procedures and their

42
inconsistent implementation to be the greatest impediment to investing and operating in Greece.
On occasion, foreign companies report that they encounter cases where there are multiple laws
governing the same issue, resulting in confusion over which law is applicable.

In order to simplify and expedite the investment process, a quasi-state investment promotion
agency, the Hellenic Center for Investment (ELKE), was established in 1996. ELKE, reorganized
and renamed Invest in Greece Agency in March 2008, is designed as a one-stop shop for
investors in cutting through red tape and acquiring the numerous permits needed to proceed with
investments. For investors seeking government incentives under Law 3299/2004, the Agency is
responsible for helping investors with projects valued at over 8.8 million Euros (11.9 million
dollars), or over three million Euros (4 million dollars) in cases in which there is at least 50
percent foreign participation. It also advises the government on streamlining investment
and promoting Greece as a favorable investment destination, and improving the investment
climate in Greece. The new investment incentives Laws 3522/2006 and 3752/2009 that amended
3299/2004 are also intended to simplify and expedite the evaluation of projects.

Greek labor laws limit working hours, limit overtime, restrict part-time employment, and are
restrictive regarding the dismissal of personnel. A labor law (3385/2005) passed in July 2005
gives greater flexibility to employers to ask employees to work without overtime premium pay
during peak times, in return for compensatory time off during non- peak times. Under current
regulations, both private and public companies are prohibited from firing or laying-off more than
two percent of their total workforce per month without government authorization

Greece’s tax regime lacks stability, predictability, and transparency. The new administration has
made tax evasion one of its highest priorities. The government often makes small adjustments to
tax levels and has not hesitated to impose retroactive taxation. Although foreign investors object
to the frequent changes in tax policies, foreign firms are not subject to discriminatory taxation.
Generally, in sectors open to private investment, foreign investment is not prohibited or
restricted in any way. Proposed laws and regulations are usually published in draft form for
public comment before being debated in Parliament. The International Financial Reporting
Standards (IFRS) for listed companies was introduced in fiscal year 2005, in accordance with
E.U. directives. These rules improved the transparency and accountability of publicly traded
companies.

Foreign/Free Trade Zones/Ports

Greece has three free-trade zones, located at the ports of Piraeus, Thessaloniki and Heraklion.
Greek and foreign-owned firms enjoy the same advantages in these areas. Goods of foreign
origin may be brought into these zones without payment of customs duties or other taxes and
remains free of all duties and taxes if subsequently transshipped or re-exported. Similarly,
documents pertaining to the receipt, storage, or transfer of goods within the zones are free from
stamp taxes. Handling operations are carried out according to E.U. regulations 2504/1988 and
2562/1990. Transit goods may be held in the zones free of bond. The zones also may be used for
repackaging, sorting and re-labeling operations. Assembly and manufacture of goods are carried

43
out on a small scale in the Thessaloniki Free Zone. Storage time is unlimited, as long as
warehouse charges are promptly paid every six months.

Tariff and Non-tariff Barriers

Greece maintains nationality restrictions on a number of professional and business services,
including legal advice. These restrictions do not apply to E.U. citizens, and U.S. companies
avoid these barriers when partnering with Greek or E.U. businesses. A 1997 Presidential Decree
established a method for fixing minimum fees for audits and established restrictions on the use of
different types of personnel in audits. It also prohibited auditing firms from doing multiple tasks
for a client, thus raising the cost of audit work. The Greek government has defended these
regulations as necessary to ensure the quality and objectivity of audits. Due to these restrictions,
however, the U.S. access to the Greek accounting market remains limited.

Greece has not been responsive to applications for introduction of bioengineered (genetically
modified) seeds for field tests despite support for such tests by Greek farmers and Greece’s
agricultural science community. Recently, Greece extended its ban on all uses of MON810 corn,
a product that the E.U. specifically approved for food, feed and cultivation. Greece has not
approved field release for any biotech
crop, either for research or cultivation. In September 2008, the Greek Ministry of Rural
Development and
Food announced intensified and strict controls for GMOs, aflatoxins, heavy metals and plant
diseases in
grain and feed imports originating in third countries including E.U. members Romania and
Bulgaria. Greek
customs authorities require 100 percent sampling and testing. Importers have protested and
characterized
the measures as “non tariff barriers” and not in compliance with E.U. free trade regulations.
The Greek testing method for karnal bunt disease in U.S. wheat, which initially resulted in a high
incidence
of false positive results, has been improved to the point that it is no longer an obstacle to
importation of U.S.
wheat. Imports of U.S. wheat, however, have not recovered and are close to nil. In implementing
the 2002
Food Supplement Directive (2002/46/EC), Greece restricted the sale of protein based meal
replacement
products solely by pharmacies and specialized stores, limiting the ability of U.S. companies to
sell such
products through direct sales.

Policies
Conversion and Transfer
Greece’s foreign exchange market is in line with E.U. rules on free movement of capital.
Receipts from productive investments can be repatriated freely at market exchange rates.
Remittance of investment returns is made without delay or limitation.

44
Performance Requirements
Greece is in compliance with WTO TRIMS requirements. Investment incentives are available on
an equal basis for both foreign and domestic investors in productive enterprises. More generous
incentives are given to investments in less-developed regions. The Investment Incentives Law
(Law3299/2004) provides new and already-established companies incentives worth up to 55
percent of the overall investment made in these regions. In December 2006, the law was
amended by Law 3522/2006, which increases the incentive to cover up to 60 percent of an
investment in less-developed areas. This amendment also introduces grants to newly founded
small enterprises to assist them with operational expenses for up to five years. The amended law
is also intended to simplify and expedite procedures for the evaluation of investment projects.
The incentives provided are combinations of grants, interest subsidies, subsidies for the creation
of new jobs, and for leasing equipment, and tax exemptions. The Incentives Law was amended
again in March 2009 (Law 3752/2009) to encourage tax breaks instead of grants and to facilitate
investment in energy from renewable sources, in modernization of tourist installations and in
high technology services.
Additional tax incentives are extended to foreign investors if they establish export- oriented or
import substitution businesses (Law 2687/53).
There are no performance requirements for establishing, maintaining, or expanding an
investment.

Performance requirements come into play, however, when an investor wants to take advantage of
tax and/or investment incentives. In evaluating applications for incentives, the Greek authorities
consider local content, import substitution, export orientation, creation of new jobs, energy
conservation, environmental protection and technology transfers. Companies that fail to meet the
specified performance requirements may be forced to give up the incentives initially granted. All
information transmitted to the government for the approval process is, by law, to be treated
confidentially. Offset agreements, co-production, and technology transfers are commonplace in
Greece’s procurement of defense items. U.S. and other foreign firms may participate in
government-financed and/or subsidized research and development programs. Foreign investors
do not face discriminatory or other de jure inhibiting requirements. However, many potential and
actual foreign investors assert that the complexity of Greek
regulations, the need to deal with many layers of bureaucracy, and the involvement of multiple
government agencies discourage investment.

Foreigners from E.U. countries may freely work in Greece. Foreigners from non-E.U. countries
may work in Greece after receiving residence and work permits. There are no discriminatory or
preferential export/import policies affecting foreign investors, as E.U. regulations govern import
and export policy, and increasingly, many other aspects of investment in Greece.
development programs. Foreign investors do not face discriminatory or other de jure inhibiting
requirements. However, many potential and actual foreign investors assert that the complexity of
Greek regulations, the need to deal with many layers of bureaucracy, and the involvement of
multiple government agencies discourage investment.
Foreigners from E.U. countries may freely work in Greece. Foreigners from non-E.U. countries
may work in Greece after receiving residence and work permits. There are no discriminatory or

45
preferential export/import policies affecting foreign investors, as E.U. regulations govern import
and export policy, and increasingly, many other aspects of investment in Greece.

Legal Framework

Expropriation and Compensation

Private property may be expropriated for public purposes, but only in a nondiscriminatory
manner and
with prompt, adequate and effective compensation. Due process and transparency are mandatory,
and
investors and lenders receive compensation in accordance with international norms. There have
been no
expropriation actions involving the real property of foreign investments in recent history.

Corruption and other Bureaucratic Obstacles

Corruption, including bribery, raises the costs and risks of doing business. Corruption has a
corrosive impact on both market opportunities overseas for U.S. companies and the broader
business climate. It also deters international investment, stifles economic growth and
development, distorts prices, and undermines the rule of law. It is important for U.S. companies,
irrespective of their size, to assess the business climate in the relevant market in which they will
be operating or investing, and to have an effective compliance program or measures to prevent
and detect corruption, including foreign bribery. U.S. individuals and firms operating or
investing in foreign markets should take the time to become familiar with the relevant
anticorruption laws of both the foreign country and the United States in order to properly comply
with them, and where appropriate, they should seek the advice of legal counsel.
Exporters and investors should be aware that generally all countries prohibit the bribery of their
public officials, and prohibit their officials from soliciting bribes under domestic laws. Most
countries are required to criminalize such bribery and other acts of corruption by virtue of being
parties to various international conventions discussed above. Public sector corruption, including
bribery of public officials, remains a major challenge for U.S. firms operating in Greece.

Bribery is considered a criminal act and the law provides severe penalties for infractions,
although diligent implementation and enforcement of the law remains an issue in Greece. The
problem has been most acute in government procurement. As a signatory of the OECD
Convention on Combating Bribery of Foreign government Officials and all relevant E.U.-
mandated anti-corruption agreements, the Greek government is committed to penalizing those
who commit bribery in Greece or abroad. The OECD Convention has been in effect since 1999.
The Greek government has tried to fight corruption in public administration and has established a
number of inspection bodies to investigate cases of corruption. The main authority is the Public
Administration’s Inspectors and Auditors Unit, established in 1997, at the Ministry of Interior.
Independent inspection divisions exist at various Ministries and in the Greek Police and the
Hellenic Coast Guard. Investigation procedures and preliminary inquiries on financial crimes
come under the jurisdiction of a special unit in the Ministry of Economy and Finance, the Special
Audits Service (Greek acronym: YPEE). The responsibility for the prosecution of bribery cases
lies with the Ministry of Justice. In cases where politicians are involved, the Greek Parliament
decides whether parliamentary immunity should be lifted to allow a special court action

46
to follow. The Greek Chapter of Transparency International closely follows developments to
press for investigation and prosecution of corruption cases.

International and domestic NGOs as well as U.S. firms believe that anticorruption efforts need to
increase. Mutual accusations of corruption between political parties are frequent and the new
center-left government, elected in October 2009, based its pre-electoral campaign on promises
for increased anticorruption efforts. To show how seriously the new government is taking its
anti-graft platform, the Deputy Minister of Interior was forced to resign weeks after his
appointment on suspicion of favoritism in transfers of policemen and other personnel in the
Ministry.

There were a number of corruption cases in the previous government’s tenure which led to the
resignation

47
Marketing of products and services

 Telephone system: adequate, modern networks reach all areas; microwave radio
relay carries most traffic; extensive open-wire network; submarine cables to off-
shore islands domestic: microwave radio relay, open wire, and submarine cable
international: tropospheric scatter; 8 submarine cables; satellite earth stations—2
Intelsat (1 Atlantic Ocean and 1 Indian Ocean), 1 Eutelsat, and 1 Inmarsat (Indian
Ocean region).

 Radio broadcast stations: AM 29, FM 17 (repeaters 20), shortwave

 Television broadcast stations: 64 (in addition, there are about 1,000 low power
repeaters and two stations in the US armed forces network) (1997)

 Televisions: 2.3 million

Distribution and Sales Channels

It is estimated that 80 percent of Greece's import trade is handled through sales agents or
distributors. Sales agents operate on a purchase basis without affecting imports on their own
account. Agency agreements are not required to be exclusive and can be signed for any period of
time.
Distributors operate on a wholesale (and in some cases, retail) basis with exclusive sales rights
for certain districts or for the entire country.
Importers usually maintain their offices in Athens, Piraeus, or Thessaloniki with branch offices,
subagents, and traveling sales staff covering the rest of the country. Lately there have been
instances of smaller importers joining together to form cooperatives.
Sales agents of foreign nationalities are required to obtain an operating license from a special
committee of the local Chamber of Commerce. The issuance of the license is subject to
verification that Greek nationals are accorded reciprocal treatment in the applicant's country of
residence.
Reciprocity must be proven through a certificate from a Greek consular officer stationed in the
applicant's country. Prospective sales agents are screened for reputation, experience and financial
standing.
Retail and wholesale trade is characterized by small, family-owned and operated businesses,
each of which deals in a narrow range of goods. There are 300,000 trading establishments in
Greece. There are 7,700 corporations and limited liability companies engaged in wholesale trade
and 3,200 corporations and limited liability companies handling retail trade.
There are a few department stores and supermarkets. A considerable volume of retail sales are
still made by small, specialized shops. In the last few years, major European chains have either
purchased existing large department stores and supermarkets or have established their own
outlets.

48
Direct marketing is used in Greece but the limited use of personal checks stands in the way of
its development. There are a few small mail or telephone order services in Greece. Door-to-door
selling exists on a limited scale. Franchising is becoming increasingly popular in Greece, with
most of the franchises in fast food. There is no special law governing franchising in Greece.

Licensing Options
Licensing agreements have to be filed with the Industrial Property Organization and the Greek
tax authorities. All procedures for payment and transfer of royalties to EU and non-EU residents
are handled by commercial banks operating in Greece. No foreign exchange regulations apply to
royalties. The Ministry of National Economy and the Bank of Greece intervene only when a
foreign firm requests an unusually high royalty percentage. Rates over 10 percent are considered
exorbitant and are not permitted.

Agents/Distributors

The key to success in the Greek market is to have an experienced agent or joint venture partner
with suitable experience and an extensive sales network. The ability to offer full after-sales
support to the end-user and spare parts coverage is also crucial.

As the Greek government accounts for most major purchases, it is also essential that local
agents or joint venture partners have the ability to participate in government tenders on behalf of
foreign suppliers. The decisive factor in government purchases is low price and strict adherence
to specifications. Private sector purchasers are more likely to weigh price in relation to the
quality of the equipment or services being purchased.

Before making a commitment to prospective agents or joint venture partners, foreign firms are
advised to obtain background information and credit reports.

Creating a Sales Office

In order to establish any type of business office in Greece, a certified true copy of the company's
articles and relevant agreements must be filed with the Court of Misdemeanors. Then, the local
tax office must receive a copy of these documents in order to record the newly established entity
with the local Merchants' Social Insurance system. Finally, the local Chamber of Commerce
issues the license number under which company will operate in Greece. All traditional types of
business organizations exist in Greece along with some more clearly defined subtypes. These
include the following:

Corporation,
Limited liability company,
General or common partnership,
Limited partnership,
Sole proprietorship or individual enterprise,
Cooperative,
Joint venture or consortium

49
  Under Greek law, joint ventures and consortia are not recognized as different kinds of
legal entities. The law governing joint ventures has been developed through decisions of
the courts and directives issued by the Ministry of Finance. In general, each participant in
a joint venture is liable for his share of the total debt, including taxes. Current tax law
recognizes the existence and special nature of joint ventures and provides specific rules
as to how their accounting records should be maintained.

 Foreign enterprises may establish operations in Greece under any of these categories. In
the case of industrial projects, the foreign investor is generally required to organize a
Greek corporation in order to enjoy all the benefits of Law 2687 (which covers foreign
productive investment) and of other incentives provided by the Greek government.

 If none of the above forms is appropriate, foreign firms may establish branch offices.
This requires the written approval of the Ministry of Development. Such approvals are
issued on the basis of a power of attorney that designates a person who permanently
resides in Greece to act as the foreign corporation's legal representative in the country.

Selling Strategies

The selling factors and techniques that are applicable to Greece are generally the same as those
in other western European countries and the United States.

Advertising Options

Advertising and sales promotion are usually handled by one of many local advertising
companies. Advertising companies use all types of media to reach target groups. The mass media
in Greece includes four state-run and over fifty private TV channels, and more than five hundred
radio stations. There are also eight major national daily newspapers and a large number of
general and specialized industry magazines.

50
Business travel
Greece business etiquette

Etiquette:

Punctuality is expected for meetings, although a Greek host may keep a business visitor waiting
for a short time. French, German and English are often spoken as well as Greek. It is usual to
shake hands to greet a business contact but embracing and kissing colleagues is not uncommon,
although not upon first acquaintance. Business cards are exchanged after introductions have been
made. Business attire is relatively formal; men and women are expected to wear suits and men
should also wear ties. More casual wear is sometimes acceptable during the summer but local
businesspeople tend to dress conservatively.

Hospitality is an important part of Greek culture and visiting businesspeople may well be taken
to lunch. Greeks do not drink excessively but they will appreciate it if foreigners show
enthusiasm to sample Greek wines and spirits. Almost everyone smokes, so visitors should not
be surprised by endless offers of cigarettes. Gifts from abroad are well received but not expected,
unless a visitor is invited to a colleague's home, in which case a gift of wine, sweets or flowers is
usual.

In Athens, the working day is fairly flexible. In general, offices are open Monday to Friday
0830-1630, although shops and banks may have different hours (smaller organizations still close
for a siesta in the afternoon during summer).

Language

Greece is today relatively homogeneous in linguistic terms, with a large majority of the native
population using Greek as their first or only language. The Muslim minority in Thrace, which
amounts to approximately 0.95% of the total population, consists of speakers of Turkish,
Bulgarian (Pomaks) and Romani. Romani is also spoken by Christian Roma in other parts of the
country.

Further minority languages have traditionally been spoken by regional population groups in
various parts of the country. Their use has decreased radically in the course of the 20th century
through assimilation with the Greek-speaking majority. This goes for the Arvanites, an Albanian-
speaking group mostly located in the rural areas around the capital Athens, and for the
Aromanians and Moglenites, also known as Vlachs, whose language is closely related to
Romanian and who used to live scattered across several areas of mountaneous central Greece.
Members of these groups ethnically identify as Greeks and are today all at least bilingual in
Greek. In many areas their traditional languages are today only maintained by the older
generations and are on the verge of extinction Near the northern Greek borders there are also
some Slavic-speaking groups, whose members identify ethnically as Greeks in their majority.
Their dialects can be linguistically classified as forms of either Macedonian (locally called
Slavomacedonian or simply Slavic) or Bulgarian. other place of Bulgarian-speaking people,

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which is much smaller is of the Bulgarophone Muslims of Thrace(Pomaks). It is estimated that in
the aftermath of the population exchanges of 1923 there were somewhere between 200,000 and
400,000 Slavic speakers in Greek Macedonia.

The Jewish community in Greece traditionally spoke Ladino (Judeo-Spanish), today maintained
only by a small group of a few thousand speakers.

Among the Greek-speaking population, speakers of the distinctive Pontic dialect came to Greece
from Asia Minor after the Greek genocide and constitute a sizable group.

Greece Travel Advice

Advice:

Most visits to Greece are trouble-free.

There is a general threat from terrorism, which has been on the increase. Attacks could be
indiscriminate, including in places frequented by expatriates and foreign travellers.

Following a landslide at Tempi on 17 December 2009, part of the Athens-Thessaloniki road has
been closed. Disruption is expected to last some months.

You should maintain high standards of public behaviour in Greece. The Greek police will not
accept rowdy or indecent behaviour, especially where excessive alcohol consumption is
involved. Greek courts impose heavy fines or prison sentences on people who behave indecently.

Visitors should be aware that high temperatures in the summer months (June-August) can cause
forest fires, which can also result in severe pollution and falling ash.

This advice is based on information provided by the Foreign and Commonwealth Office in the
UK. British Foreign and Commonwealth Office
Tel: 0845 850 2829.
Website: www.fco.gov.uk

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Passport And Visa in Greece
Passport required Return ticket required Visa required

British Yes No No/2

Australian Yes Yes No
Canadian Yes Yes No
USA Yes Yes No
Other EU 1 No No/2

Passports:

Passport required by all except:

(a) 1. EU nationals holding a valid national ID card.

Passports must be valid for the following durations:

(a) British and EU passports must be valid for length of intended stay. British passport holders
may stay in Greece until the last day of the validity of their passports.
(b) Australian, Canadian, USA must be valid for at least three months beyond length of stay,
which can be a maximum of three months.

Note: EU and EEA nationals are only required to produce evidence of their EU nationality and
identity in order to be admitted to any EU Member State. This evidence can take the form of a
valid national passport or national identity card. Either is acceptable. Possession of a return
ticket, any length of validity on their document, sufficient funds for the length of their proposed
visit should not be imposed.

Passport Note:

Greece is a signatory to the 1995 Schengen Agreement.

Visas:

Not required by all nationals referred to in the chart above for the following durations:
(a) nationals of EU countries for an unlimited period;
(b) nationals of Australia, Bulgaria, Canada, Romania and the USA for stays of up to 90 days.

Note: Nationals not referred to in the chart above are advised to contact the embassy to check
visa requirements (see Important Addresses).

Visa Note:

(a) 2. EU nationals staying more than 90 days or for employment (including establishing a
business, trade, profession or commercial activity) have to apply in person to the consulate
53
general of Greece for a national visa; (b) Greece refuses admission and transit to holders of travel
documents issued by the area of Cyprus not controlled by the Government of Cyprus, and
holders of UN laissez-passers; (c) Some nationals may have to register with the Aliens
Department of the nearest police station within 48 hours of arrival. Contact the nearest
embassy/consulate to determine whether this is necessary prior to travel.

Working days required:

Three to 14, dependent upon nationality.

Health in Greece
Vaccination identifier Special precautions

Diphtheria No
Hepatitis A Sometimes
Malaria No
Rabies No
Tetanus Yes
Typhoid No
Yellow Fever No*

Food and drink:

Tap water is drinkable in Athens and other cities. Visitors should be wary of drinking tap water
in remote areas, and on many islands. Bottled water is widely available. Milk is pasteurised and
dairy products are safe for consumption. Local meat, poultry, seafood, fruit and vegetables are
considered safe to eat.

Health care:

Members of the European Economic Area (EEA) and Switzerland are entitled to free emergency
medical treatment providing they have a European Health Insurance Card (EHIC). For
emergencies, ring 166 (public ambulance).

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Note:

* A yellow fever vaccination certificate is required from all travellers over one year of age
coming from infected areas.

Other risks:

Visitors to forested areas should consider getting the vaccination for tick-borne encephalitis three
months before date of travel.

Name of the vaccination identifier Special precautions

Diphtheria No

Hepatitis A Sometimes

Malaria No

Rabies No

Tetanus Yes

Typhoid No

Yellow fever No

Greece - Getting There and Around

Flights to Greece

Getting there by air:

Olympic Air (OA) and Aegean Airlines (A3)

Travel by road, rail and water

Getting there by rail:

The national railway company is Hellenic Railways Organisation Ltd (OSE)

Get there by water:

55
Corfu, Heraklion, Igoumenitsa, Patras, Piraeus (Athens) and Rhodes.

Getting around by road:

Car hire: Most major international car hire firms operate throughout Greece.

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