Greece's weak business climate improving

[Angelo]

Greece's weak business climate improving-World BankReuters,



Tuesday September 16 2008 By Daniel Flynn
ATHENS, Sept 16 (Reuters) - Greece is improving its business environment but has a long way to go to catch up with other European nations, according to the author of a World Bank study.
The Doing Business survey, measuring the climate for small- and medium-sized companies in 181 countries, showed Greece has the worst regulatory framework of any developed nation in the 30-member Organisation of Economic Cooperation and Development.
Tangled red tape and lengthy approval times left Greece ranking 96th in the annual report published last week, beneath Papua New Guinea and the Solomon Islands.
That was a rise of 10 places from the previous year, thanks mainly to reforms by Greece's conservative government, according to Dahlia Khalifa, co-author of the report.
"The improvement this year has been significant and Greece is on track to make greater improvements in the future," Khalifa said in a phone interview from Washington late on Monday. "The government is pursuing reforms and it has an aggressive agenda."
Greece made changes in four key areas, she said. It slashed the minimum capital requirement for starting a new business by 80 percent, and reduced taxes while simplifying payment.
It also increased investor protection by simplifying the procedure to sue company directors, while making it easier for owners to keep a bankrupt company afloat and for creditors to recover their money.
Khalifa said Greece's ruling New Democracy party was liaising with the World Bank on the most appropriate business reforms and the political will was there to make change.
"Greece is in the lowest position in terms of OECD countries but it is improving ... while others, such as Italy and Spain, are slipping," she said.
Italy fell to 65th spot from 59th as it lost ground in four areas: starting a business, employing workers, getting credit and protecting investors. Spain slipped to 49th from 46th spot.
GOVERNMENT STRUGGLING
The report does not measure corruption, which other studies cite as a major concern of investors in Greece. Berlin-based Transparency International ranked Greece 56th in its corruptions perceptions index of 180-nations, the worst in the euro zone.
Khalifa said, however, simplifying business regulations would aid the fight against graft: "Countries which have the fewest procedures have the lowest perception of corruption."
Elected in 2004 with a mandate to tackle widespread corruption and modernise Greece's economy, the New Democracy party has struggled to press ahead with key changes, such as labour and pension reform.
Scandals and unpopular new taxes have sapped its approval ratings to the lowest level since taking office, around 27 percent, and reduced its ability to push through reform in the face of an economic slowdown and union opposition.
A poll published on Tuesday showed the opposition Socialists ahead for the first time in eight years, with most Greeks saying they had more faith in their economic stewardship. Greece's economy -- 2.5 percent of the euro zone -- saw growth slow to 3.5 percent in the second quarter, from 4 percent last year.
"There are areas where Greece still needs to make a lot of progress," said Khalifa, citing the difficulty in setting up a business, which requires on average 19 days and 15 procedures.
For a third year, Singapore topped the World Bank survey, which is based on information from lawyers, auditors and accountants involved in starting and running companies.
(Editing by Stephen Nisbet)


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