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Business

Greek companies seek fortunes abroad

Austerity measures, capital controls and high taxes are forcing many Greek companies to move operations abroad. Bulgaria and Cyprus are top of their list of business destinations.

Savas Rombolis, head of the union friendly "Institute of Labor" in Athens, revealed some alarming figures in Greek daily "Ta Nea" recently. Of 11 million Greeks, a mere 3.6 million are employed. A lot more people - 3.9 million to be precise - are unemployed or retired.

Greece is becoming a country of pensioners and unemployed people. One of the reasons for this phenomenon is the fact that more and more businesses fold or move abroad, at a loss of tens of thousands of jobs.

The Greek retail federation ESEE even calls it an exodus. It estimates that since the summer more than 60,000 Greek companies have applied for a tax number in Bulgaria and moved all or parts of their operations there, according to ESEE's chairman Vassilis Korkidis in Greek daily "Kathimerini."

Korkidis, who runs an electrical company himself, added that a further 10,000 company bosses had moved operations to Cyprus.

The temporary closure of Greece's banks and the introduction of

capital controls

have clearly exacerbated the problem, according to the business network "Endeavour Greece." According to a poll conducted by the network in July, 13 percent of business owners had already left Greece at that point, a further 23 percent were looking into ways to move operations abroad.

22.07.2014 DW Wirtschaft Zypern 2

Many firms are moving their operations to Cyprus or Bulgaria

"After capital controls were introduced, many entrepreneurs and business people feared their businesses might not survive, as the Greek economy depends heavily on imports," Anna Zilakou, "Endeavour Greece" spokeswoman, told DW.

She explains that an affiliated soft drinks company, for example, sources all its ingredients in Greece, but the aluminum packaging it needs for the drinks has to be imported and paid for from Athens. But the restrictions on capital flows make that nigh on impossible.

Bureaucracy and taxation main issues

Some companies are simply trying to get away from Greece's notorious bureaucracy and the fact that it is hard to plan ahead in Greece. The country's tax system is also a headache for many business owners - whether capital controls are in place or not.

"Tax laws are changing constantly, so it's impossible to make long-term financing plans," Zilakou explains.

In the first few days after the introduction of capital controls, Greek exporting companies faced near insurmountable obstacles, says Olga Dimopoulou, a Greek-German lawyer who is based in the western German city of Cologne.

"Trucks were stuck in Germany or Italy as their drivers or the business owners had no access to their accounts to withdraw money to get these trucks back to Greece, Dimopoulou told DW.

For those who are not willing or able to move their head offices abroad, there is another option; they can set up a corporate account abroad - in Germany, for example. It means German suppliers can be paid on time, and the account holder has access to that account from Greece, Dimopoulou.

But, she stresses, "the person who would be in charge of the account has to come here to Germany to demonstrate he or she is legitimate. The banks want to see them in person to get an impression of the prospective client."

Alarming polls

Despite assurances to phase out capital controls by the government in Athens, they remain in place at least until the second half of next year. Attempts to raise the issue with politicians, have fallen on deaf ears.

When ESEE's Korkidis tried to talk about the fact that so many companies are leaving Greece in a recent TV debate, left-wing politician Nikos Filis flew off the handle and accused Korkidis of exacerbating the problem by mentioning it on TV.

The latest poll, published in Greek weekly "To Vima" shows that the leftist governing party Syriza would only get 18.4 percent of the vote , while the conservative opposition would likewise only manage a shocking 14.9 percent of the vote.

It means that in the space of two months since the elections, the two main parties have already lost 50 percent of voters, respectively.

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