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New Incentives to Foster Tourism Investment

Red tape, leading to delays and the disappointment of investors, has lead to less-than-expected investment in the Greek tourism sector over the past years. But now Economy and Finance Minister Giorgos Alogoskoufis and Tourism Development Minister Dimitris Avramopoulos, say the Greek government is now willing to offer substantial incentives in order to attract investment in the tourism sector.

The ministers also say they favor stronger promotion of the Greek tourism product abroad so as to tap the new interest in the country as a result of the Olympics, along with the creation of a friendlier investment environment and the cutting of bureaucratic red tape.

The ministers hope these initiatives will help tourism recover some of its losses predicted for this year. Even with a good show during the Olympics, market sources insist that this year we’ll see as much as an 8% reduction in the number of tourism arrivals when compared with the year before. For the Greek economy that would mean 20,000 fewer jobs, revenue losses of 800 million euros and a 0.7 percent reduction in the GDP growth rate.

To the above, tourism professionals say we should add the estimated 2 billion euros lost during the crisis of the previous two years.

These same professionals place the blame squarely on government. In the seven years since Greece was awarded the Games, they say, no comprehensive operational plan has been drawn up to develop the industry. Any spasmodic policies were blindly conceived, with no consideration for the competition, international trends or rapid changes in the world tourism industry, the add.

And while the new tourism development minister says these problems will be addressed in its a new 10-year plan in the fall, local professionals are skeptical as Greece’s tourism product cannot be changed overnight.

Tourism Minister Dimitris Avramopoulos stresses that the target is to exploit the post-Olympic period to the full, by creating a stable taxation framework, attractive incentives for new investments, new inspection mechanisms and a more decisive means of promoting Greece abroad. Regarding the latter, the minister says for the first time in recent memory government will begin its advertising and promotion campaign for 2005 in the fall of this year and the budget will almost quadruple and reach 30 million euros.

(For this year, Spain had a total advertising budget of 180 million euros and Turkey 115 million, but Greece had only 8 million for its entire advertising campaign abroad, but it’s not known how much of this eight million went to advertising and how much to rents and other expenses of GNTO offices abroad.)

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