By Constantine Michalos*

The ascendance of a one-party government in the Greek Parliamentary elections favours the enormous effort – which is already underway – to boost the growth potential of the Greek economy, as it ensures political stability in the coming years and paves the way for growth-friendly reforms and policies. The new Government faces the challenge to make the most out of this opportunity by means of pursuing an effective and credible economic policy, accelerating reforms, and focusing on measures that encourage investments.

The key priorities for the new Government, which businesses also wish to see implemented as soon as possible, include the following:

• A tax system reform, which is a prerequisite for increasing the competitiveness of the Greek economy and businesses. Interventions such as (a) the reduction of the corporate income tax rate from 28% to 20% within two years, and the dividend tax from 10% to 5%; (b) the introduction of two basic VAT rates of 11% and 22%, against the currently applicable 13% and 24%, while maintaining the low VAT rate at 6%; (c) doubling the time for loss offsets and granting the possibility for 200% over-depreciations for new investments; (d) the gradual abolition of the trade tax and the special solidarity levy; (e) the further reduction of the unified property tax (ENFIA) for business premises; (f) the introduction of a discount for all works on energy, functional, and aesthetic upgrading, maintenance and operation of buildings; (g) suspending capital gains tax on the sale and purchase of real estate and VAT on construction activity for a three-year period will all be essential steps to the right direction.
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  *Constantine Michalos is the chairman of the Union of Hellenic Chambers of Commerce and chairman of the Athens Chamber of Commerce and Industry.

  The reform of the insurance system: which remains mostly unreliable, unfair, and also not conducive to development, as it imposes unbearable non-wage costs. Therefore, the insurance system currently undermines entrepreneurship and employment – that are the same sources from which it is funded. In this regard, the Chambers’ Community has also put forward concrete proposals on the gradual transition to a three-pillar system, in line with the European experience. To this end, the insurance system shall adjust practices adopted by other countries to national needs. The gradual reduction of primary pension contributions from 20% to 15% will give some oxygen to businesses and employees.
• The immediate rationalisation and improvement of the business financing environment. We cannot hope for sustainable growth without healthy banks, credit, or competitive interest rates. Despite the measures implemented, the lack of cheap financing in the economy remains a problem. The main issues still include limited supply to households and small- and medium-sized businesses, as well as high interest rates burdening large companies, compared to their European competitors. It is necessary to improve the outlook for the Greek economy in order to lower the cost of borrowing for Greek companies, compared to the competition; and this will be achieved through a reduction of the Greek bonds’ spreads. As far as banks are concerned, however, it is necessary to adopt drastic measures to remove uncertainty from their balance sheets, aiming to pursue their capital enhancement by attracting new investors.

The Chambers’ Community also seeks to promote a series of reforms and measures that will accelerate growth. These include:

• Taking full advantage of the Public Investment Programme, the Community Support Frameworks, and the Public-Private Partnerships.
• Reforms to improve the business environment through (a) radical simplification and settlement of specific deadlines as regards licensing procedures; (b) establishment of electronic signatures for citizens and businesses alike; and (c) fast hearing of appeals concerning investments before special courts.
• Measures to improve the investment environment: accelerating privatisations, adapting labour legislation to European practices, reforming the Bankruptcy Code, completing national and spatial planning, and codifying land use.
• Reforms aimed to the protection of the environment and sustainable development through (a) a shift to renewable energy sources and less dependence on lignite; (b) a new waste management policy encouraging recycling at source; (c) the reuse of materials and the restriction of disposable plastics; and (d) the treatment of waste residues for energy production.
• A new national policy on the manufacturing industry pursuing (a) the identification and strengthening of dynamic sectors; (b) policies to reduce energy costs; (c) a new investment finance strategy.
• Measures to support Small and Medium Entrepreneurship: flexible financing tools, incentives, and interventions that foster business growth, skills development, extroversion, and access to innovation.
• Education reform: linking universities to the world of production more effectively; collaborating with the private sector to fund research and make use of knowledge to drive innovation.
• A prompt intervention to solve the problem of long delays in the administration of justice, which creates enormous barriers in terms of attracting investment capitals.
• Targeted policies to combat poor education and training, aimed at reintegrating the unemployed population into the labour market.

The Union of Hellenic Chambers of Commerce, acting upon their role as the institutional “voice” of the business community, will continue to maintain open channels of communication with decision-makers. The Chambers will continue to engage responsibly and constructively in the political dialogue, so that the country can make the big step forward.