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Collapse of Greek competitiveness according to the World Bank report

04 November 2010 / 15:11:39  GRReporter
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The growth of the Greek economy planned by the government of George Papandreou has become a headlong crash, according to the data presented in the annual World Bank report on doing business regulations in 183 countries. Greece ranks 109th in 2010 and has dropped 12 places down compared to 2009 when it was 97th in the list of the World Bank's investment-friendly countries. Ethiopia, New Guinea and Bangladesh prevail in the list of the World Bank to the Mediterranean country. Bulgaria ranks 51st compared to its 44th place in the last year.

Reforms in the tax system and general economic instability as well as cumbersome tax administration are among the factors that make Greece unusually inhospitable for doing business. In particular, the VAT  and profit tax increase, the imposition of higher taxes on real estate, and the burden of the extraordinary tax on profitable companies are just some of the reasons Greece to loose its competitiveness swiftly. However, in ranking the stability of the tax system the country has climbed from 76th to 74th position and this is the only indicator of positive movement for the last year. The extremely high taxes on real estate transfer, however, slipped the country from 107th place in 2009 to 153rd position this year.

Things are even worse in the Starting a New Business category where Greece has fallen to 149th position among the 183 countries surveyed. The country was 140th in this category last year and instead of moving up after the reforms of the socialist government, Greece has fallen by nine positions. Experts from the World Bank estimated that a new entrepreneur who is determined to start a new business in Greece has to go through 15 different institutions and to wait at least 19 days to get all the necessary permits before starting the business. Things are actually even more difficult. In many cases, entrepreneurs in Greece have to wait for a signature and seal even two months. Long procedures and sluggish administration are not the only factors that play a role in this list. For the past year the price of permissions to start a business activity grew by 20.7 percent and the required initial capital in the different categories has increased by an average of 22.3 percent.

Immediately after taking the ministerial post in October last year, the former Minister of Eeconomy, Competitiveness and Shipping Louka Katseli said that in 2010 Greece will avail the one-stop-shop service. It would guarantee establishment of a company from one-stop shop in a day and Katseli promised that this step would climb Greece to take 43rd place compared with the 97th position in 2009. Today, Greek analysts assume this statement to be a joke, not a real promise. Even countries of much less developed economies such as Afghanistan, Peru, Philippines and Roanda have managed this year to trigger their state mechanisms and launched the one-stop-shop service.

For the fifth consecutive year, the first place in the ease of doing business ranking is for Singapore, followed by Hong Kong, New Zealand, UK, USA, Denmark, Canada (moved up to 7th place from 8th last year), Norway (slipped to 8th place from 7th last year), Ireland (slipped to 9th place from 8th last year) and the tenth place is for Australia.

 

Tags: EconomyMarketsWorld bank
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