It's all aboard a money train for investors -- 'of the right sort'
A "gravy train" for investors in Greece is now boarding. The first passenger was last May -- a new bottling factory on Crete that received $552,000 from the government. Others riders include a textile mill now making curtains and an oil refiner converting olive pits to fuel.
Up to 50 percent of new enterprises can get free money from the Greek government under a new program known as "Law 1116."
The lucrative incentives, available for both foreign and Greek investors, are aimed at boosting rural development, creating jobs, and introducting technology.
Investments have been relatively stagnant for the lat four years, caused by Greek wage rates creeping up to European levels and the political risk of Greece's going socialistic.
But in just a few months Law 1116 has drawn more than 2,600 applications. Only 130 have been approved so far, and those involve $410 million (23 billion drachmas) in total investment, with the government promising $125 million of that. For the first year, however, only $53 million will be allocated. By 1984 , the government hopes to give out $440 million in all.
For 1982, grants will rise to about $72 million, with hopes of the European community's chipping in part of that. This year, the EC supported 40 percent of Lessons from this last package of investment incentives showed that the government could not require detailed knowledge in advance of investments without causing delays.
Law 1116 has its limits, too. Saturated industries, such as textiles, aluminum molding, oil refineries, or certain tourist areas, do not need new investors. And the areas along the National road, running from Patras to Athens and up to Thessaloniki, are not given high priority. The more rural and undeveloped areas get higher grants. Also, medium-size companies with good job creation are emphasized.
"The projects do not necessarily have to be export-oriented," says Stratis E. Stratigis, secretary-general of the Greek Ministry of Coordination. "We need high technology to restructure the economy." But projects are required to have at least 5 percent in exports -- just to ensure high quality in products.
Greece does not want to advertise its investment package, as Ireland did when it joined the EC a few years ago. "We want to be more selective," Mr. Stratigis says, "and not rush into trouble."
"We're now feeling out what trends our entry to the EC will mean," he adds.
One question is whether non-EC companies, such as American ones, will be allowed to withdraw more than the legally prescribed 12 percent of profits out of the Greek operations. The EX mandates that if Greece does not change the rule next year, as expected, the shift must come by 1990. US companies make up the largest amount of foreign investment in Greece -- 24 percent.