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National Logistics Strategy – A master plan for business development in Greece

Publiziert am 21.März.2014 von Abraam Kosmidis
Greece is making a great effort to convert itself into a country whose economy can compete in the fierce international economic environment. It struggles to steer out of a six-year recession, as well as to battle with high levels of unemployment, especially amongst young people. The goal is to boost the Greek economy by creating an investment – friendly environment. One method to achieve this goal is to enhance the logistics sector in Greece. The country’s geostrategic position is such that it can become a great transport hub in the area of South – East Europe, in the same way that the Netherlands is in Northern Europe. This point of view has been adopted by the World Bank, whose technical assistance and expertise was requested by the Greek Ministry of Development and Competitiveness and the Ministry of Infrastructure, Transport and Networks. On October 2013, the World Bank presented a report which included ways to improve Greece’s business environment as far as it concerns its logistics sector. The report with the title “Greek Logistics: Unlocking Growth through Regulatory Reform and Complementary Measures”, in its first part presented the real situation in Greece regarding the effectiveness of its logistics industry. It also thoroughly explained the reasons why the bad policies of the past had lead Greece to a very low position in the Logistics Performance Index (LPI, ranking 2012).

The second part of the report was devoted to propose reforms that could set Greece a significant player of the regional logistics and trade “game”. These reforms are divided into two basic categories:

  • Modernization of the country’s logistics industry
  • Improvements on the existing infrastructure (railways, ports and highways).
Greece realized the importance of having an efficient logistics policy that would finally turn the country into a gateway of the greater region. The Greek government exploited all the World Bank’s suggestions and moved forward with the formation of the “Logistics Permanent Committee (LPC)”. This committee was formed on March 2013 and its participants are experts on the logistics industry coming from both the public and the private sector, so that more opinions and views will be incorporated. The main objective of the LPC will be to establish a National Logistics Strategy for Greece (NLS). The LPC is also responsible for making suggestions to improve the steps involved during a logistics process (e.g. licensing and approval procedures for logistic companies) as well as for making suggestions to improve infrastructure performance. The LPC will be the communication channel between the Ministry of Development and the Ministry of Infrastructure and the involved stakeholders belonging in the public sectors. The World Bank will provide its assistance and support, as some of its members will participate in the LPC meetings.

National Logistics Strategy: necessity and benefits for the Greek economy

The international trade has very rapidly developed during the last 20 years, because of the fact the products produced in Asian countries – such as China and India, had to travel to distant markets. As a result of that, the logistics activities have significantly increased. It is calculated that logistics contribute to the world GDP by 5,4 trillion Euros. As mentioned above, the effectiveness of Greece’s logistics is ranked very low compared to other neighbor countries (such as Turkey and Rumania). If this situation would go on like this, then Greece would not be considered as a significant mercantile partner of the wider area. Therefore, it was necessary for a National Logistics Strategy to be established. Other countries such as Germany, Ireland, and Turkey have successfully implemented similar National Logistics Strategies. In general, a NLS defines a vision and outlines the resources needed to achieve this vision. More specifically for Greece, NLS defines the vision of creating such a logistics industry that could contribute to the economic recovery and growth (nowadays the logistics sectors only contribute to the national GDP by 10%). The NLS outlines one main long term objective: Greece must take advantage of its geographical location in order to become the central transit point of South – East Europe. Other objectives defined by the NLS are:
  • Compliance to the national legal framework inside the EU legislation.
  • Simplification of all the procedures involved throughout the whole chain supply (licensing of logistics companies, operation of warehouses, procedures concerning customs)
  • Modernization of Piraeus and Thessaloniki ports in order to become the gateway ports of Central Europe.
  • Encouragement of outsourced logistics activities
  • Encouragement of 3rd party logistics activities.
  • Promotion of logistics business parks.
  • Completion of the on-going infrastructure works.
  • Protection of the environment by reducing the emissions of CO2.
Some of the above objectives have a long term span while others have shorter expected that the first results will be visible after a 2-3 years period. The Greek authorities have to overcome structural rigidities that overruled the country’s political life for years. However, the first step was made: a National Logistics established and is implemented. The Greek policymakers are expecting that ultimately the NLS would help to the creation of an “extrovert” environment regarding the logistics sector and to the enhancement of the general idea that Greece is a country interested in foreign investments.

Preparation of a new law regarding the logistics sector in Greece

Already the Greek government is moving towards the preparation of the legislative framework that will strengthen the efforts to boost the logistics sector in Greece even more. In the beginning of March, the Ministers of Development and Competiveness and of Infrastructure and Networks have co-presented a law bill regarding the logistics sector. The law will be voted by the members of the Greek parliament within the next few weeks. The law will provide definitions of all the logistics activities, so that everything is done in a transparent way, reducing the limits for corruption. It will clarify and simplify all the licensing and procedures. Most importantly, the law will set the foundation for logistics companies to develop in Greece accordingly to international standards. This law is part of the entire continuous effort of Greece to develop its logistics sector (the establishment of the logistics Permanent Committee and the National Logistics Strategy are two other pieces of this attempt). It has become clear by now that any improvement in the logistics sector will automatically lead to the improvement to other sectors of the economy such as the industry, the trade, the agricultural production, the tourism. This is how the Greek economy will become competitive in the near future. None logistics activity can take place in any country if there is an inadequate and incomplete infrastructure network. The Greek authorities are making efforts to exploit all the available funds in order to modernize the infrastructure (railways, ports, trucking). Due to the economic crisis, the works had severe delays, but the Greek government had taken recently all the necessary actions for the infrastructure works to begin again.


18th Croatian Arbitration and Conciliation Days

Publiziert am 20.März.2014 von Abraam Kosmidis
18th Croatian Arbitration and Conciliation Days Zagreb Partner Richard Kreindler (Frankfurt-International Arbitration) will speak on the subject of "The 2010 IBA Rules on the Taking of Evidence in International Arbitration."
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Biggest M&A deals of Kosmidis & Partners

Publiziert am 20.März.2014 von Abraam Kosmidis

TENGELMANN GROUP

In 2008, Kosmidis & Partners advised TENGELMANN GROUP on the sale of group subsidiary “Plus Super-markets” in Greece to AB (Delhaize group). The Tengelmann group is active in 16 countries and had a combined annual turnover of more than € 11 million in 2009 (source: tengelmann.de). “Plus” subsidiary had ownership and lease rights on approx. 40 stores in Greece and several ongoing contracts with employees, suppliers and other third parties. Kosmidis & Partners’ consulting services focused on the all aspects of said acquisition by AB, i.e. preparation of the contracts, competition law issues, due diligence, preliminary checks, execution of the acquisition transaction. The transaction amounted to € 69,5 million Euros. (mehr …)
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The Impact of New Greek Property and Shipping Tax Laws

Publiziert am 16.März.2014 von Abraam Kosmidis
The Impact of New Greek Property and Shipping Tax Laws Greek tax laws have undergone major changes over the past year or so as part of the range of measures designed to combat the financial crisis and to meet the obligations of the bailout agreement. This has helped some, but forced others to make some difficult decisions. The removal of the property tax attachment to electricity bills was a popular move that benefitted many. Its replacement by a broader real estate ownership tax and the reduction in the rate of property transfer tax from 8-10% down to 3%, which came into effect in January 2014, has had the desired effect of stimulating movement in the property market, but this has not always been for positive reasons. A large number of property owners have made the decision to divest themselves of their assets to avoid the higher tax burden on ownership. One result of this is that revenues from property taxes in 2014 may be as high as €3.8 billion for 2014, compared to the 2009 figure of only €500 million; another is that property prices have collapsed. Casualties and beneficiaries There was much resistance among Greeks to the introduction of the new 3% transfer tax as it removed the tax burden from the few with large landholdings and onto the shoulders of the many - the 87% of the population who are home-owners, who would on paper share the tax burden more fairly but in reality have found it crippling. The new unified property taxes follow the model set by the troika in its €240 billion bailout package, where the tax burden is moved from property transfers to ownership. This applies not only to commercial and residential property, but to farms, sports fields and vacant land. Transfer tax revenue is therefore expected to drop in 2014 to only €2.65 billion, compared to the €2.90 generated under the old law. The government plans to cover this shortfall with cuts in investment spending. The beneficiaries of this property market slump are the foreign buyers, who are attracted by lower prices as well as by the lure of residence permits, which are now granted to non-EU investors buying property valued at over €250,000; but not all foreign buyers are going for the more expensive properties. Prices at the end of 2013 had already fallen by 32% since 2008, and they are still falling. This is the second steepest property price decline in the EU after that of Croatia. Greek prices are forecast to drop by another 20% in 2014. A Bank of Greece survey shows an average annual rate of change to residential property prices of -29.9%. Homes are generally on the market for 10 months before being sold at 20% below the asking price. Some Greek real estate agents estimate the decline in property prices to be nearer 50%. With the exception of luxury property and property in the more popular tourist resorts, the quantity of sales has dropped considerably since the market’s peak in 2005. Property analyst Christos Bletas said that in Athens ‘the lack of interest displayed last year… hasn’t been experienced since the second world war.’ Greeks have traditionally seen property as the securest of investments. This is no longer the case, and the sevenfold increase in overall property tax has meant that for many people their home has become a huge financial drain on their diminishing resources. According to the Hellenic Property Federation (POMIDA), which is ‘fighting against the new burdens place upon real estate property owners due to the debt crisis,’ more than 500,000 people want to sell, but around 300,000 residences remain empty—a golden opportunity only for foreign buyers of holiday homes. The biggest buyers are the British and Russians, closely followed by the Germans, Turks and Chinese. However, the Hellenic Realtors Federation has warned that the new taxes could result in a freezing of transactions that would lead to a collapse of the market. Shipping news Greek commercial ship-owners may be among the richest people in the country, but they have traditionally enjoyed special tax concessions on their ships. This is because of the high-risk nature of the business. However, these concessions, which are enshrined in the constitution and have been respected by governments without exception since the 1940s, have now been reviewed as part of the enforced reassessment of the country’s tax laws. Until this year, most of the ship-owners had conformed to an agreement made in 2013 with the Minister of Finance to contribute voluntarily to the country’s finances. Legislation rushed through parliament by Antonis Samaras’ coalition government before Christmas 2013 has now imposed on them a mandatory tripled tonnage tax. The President of the Union of Greek Shipowners (UGS), Theodoros Veniamis, said this was a ‘constitutional deviation’ and that ‘a negative climate has been created for any type of business investment inGreece.’ The ship-owners have said they are willing to wait for the government to reconsider, although in February 2014 the Merchant Marine Minister, Miltiadis Varvitsiotis, said that the tax was an emergency three-year measure only. This is not good enough for the UGS, which has threatened to move their fleet abroad and to sail under a foreign flag unless the policy is reconsidered. Unemployment in Greece is now 28%, the highest in the EU. Against a background of economic and social marginalisation, after four years of austerity under the bailout agreement, and facing further fiscal shortfalls in 2014, Prime Minister Samaras is sticking to his guns as far as the ship-owners are concerned. He has refused to make further unpopular spending cuts in other sectors that have already made considerable sacrifices. This decision to demand a greater contribution from one of the richest sectors of the economy has drawn praise from Giorgos Stathakis, the opposition Syriza party shadow minister for development, who called it ‘a positive step’. Vassilis Antoniades, MD of the Boston Consulting Group, which has undertaken a recent study on Greek shipping and the Greek economy, said: ‘The shipping industry is a significant contributor to Greece in terms of jobs, cash and economic activity, and it stands to lose all three if it changes the regime for attracting shipping companies to the country.’ Greek shipping employs around 200,000 people and is estimated to have brought more than €140 billion foreign exchange into Greece over the past decade. The industry accounts for around 7% of the country’s GDP, so there is a real fear of the consequences of the government getting this wrong, even though the policy is justified by the ship-owners wealth and the country’s need.
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Enterprise Greece: An initiative to facilitate new investments

Publiziert am 10.März.2014 von Abraam Kosmidis
The primary concern for the Greek government is to put country’s economy back on track. The Officials are more than interested in finding ways not only to maintain the existing investments, but also to appeal and to support new ones. The government is making every effort to encourage its international trade collaborations and to boost even further the investment environment in Greece. Greece must surpass all the bureaucratic practices of the past which did not let the investments to rise. The present hard times demand a new flexible working environment. In order to achieve the above goal, the government has launched some measures: it proposed the new investment law which allows businesses to start up within a day (see the article of 28 February 2014: Starting up a business in Greece within a day’). The last few months, it focuses on reviewing the existing exports procedures and processes followed by the exporting companies of the country. The exports policy reform is considered to be another major step towards the creation of a stable investment environment in Greece. First of all, it was necessary for a National Exports Strategy to be established. In the recent past, there had been taken some few reluctant actions for creating the “National Strategy for Trading Facilitation (NSTF)” in Greece. The efforts to create a thorough exports strategy have become more intense the last two years (the crisis made clear that an extroverted exports approach is the pillar of the Greek economy – along with tourism). The Greek NSTF is based upon the examples of other countries such as England, Austria and Holland which have applied successfully similar kind of strategies. The NSTF aims to simplify all the pre-customs and customs procedures related to the exports trading, thus reducing the time and administrative costs for the exporting companies. Export Trading becomes more favorable for investors either they come from Greece or even from abroad. More particularly, foreign investors will be interested in investing in Greece, because from now on the country’s legislative framework allows them to easily export anything produced by their investment. The initiative to form a National Exports Strategy must have taken place long time ago as Greece has a great advantage due to its geographical location and it may become the hub for the region’s international trade. The officials expect to achieve the following objectives, after the NSTF is implemented
  • Reduction of the number of days needed to export by 50% by 2015
  • Reduction of the export cost by 20% by 2015
The key presupposition to implement the National Exports Strategy is the formation of a governmental supervisory body (political level), called the “Co-ordination Committee of the National Strategy for Trading Facilitation (CCNSTF). This committee is formed with the participation of the following ministries: Ministry of Finance, Ministry of Foreign Affairs, Ministry of Development and Competiveness, and Ministry of Rural Development. The European Commission and the United Nations Economic Commission for Europe (UNECE) will be invited to hold an advisory role. The purpose of this committee is to make sure that the principles of the NSTF are followed, and to provide the necessary support and guidance to a body called the Operational Steering Committee for Trade Facilitation -OSC (operational level). The OSC will operate under the supervision of CCNSTF and it will be set up with the participation of the above mentioned ministries as well as participants coming from the following business unions: Hellenic Federation of Enterprises, Panhellenic Exporters Association, Greek International Business Association, Exporters Association of Crete, Hellenic Company of Logistics and Greek Federation of Customs Brokers Associations. The Committee will have to monitor and underline the progress done during the implementation of the National Strategy for Trade Facilitation. It must also coordinate and supervise all the involved parties (ministries, business unions, exporters). It can come up with suggestions to improve the efficiency of the NSTF. In addition to the Operational Steering Committee, the Greek government decided to set up a new entity called “Enterprise Greece”. This new company will function supplementary with the OSC, in order to enhance the effort for extroverted entrepreneurship in Greece. The responsibilities of the “Enterprise Greece” are to:
  • Support  the Greek investments in markets from abroad
  • Provide information and advice to the interested investors from abroad on the legislative framework that rules the investments in Greece.
  • Look into the markets of other countries in order to inform the business unions and investors.
  • Provide support and advice to investors who wish to export to other countries.
  • Organize promotion campaigns for goods and products produced in Greece.
  • Cooperate with international trade institutions to form a common trade policy.
  • Make suggestions regarding the improvement of the legislative framework for the exports or the investments in Greece.
  •  Cooperate with the Ministry of Foreign Affairs to organize the business visits of the President of the Hellenic Republic, the Prime Minister and the ministers to other countries.
The law bill was voted by the Greek parliament on 26 February 2014. The new entity is expected to start functioning on 1 April 2014, but its full operation will begin on 1 October 2014. There is a strong political will to reverse the prevailing conditions that ruled the investments so far. Greece needs radical structural reforms, if it wishes to return on the road of development. There are mainly two points that the government may focus on in order to bring the country in developmental orbit: appeal new investments and improve performances of exports. The new investment law is the first of a series of actions towards this direction. The creation of the entity “Enterprise Greece” is the second one – together with the implementation of National Strategy for Trade Facilitation. The government hopes that the NSTF and the “Enterprise Greece” will be a major tool for the boost of the economy, as they both set a stable and friendly environment for the investors – exporters. They both promote the extroverted “climate” that is cultivated in Greece.        
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