Mixed feelings as Greek privatization goes off track
In what is anticipated to exacerbate an already melting interest from global investors in its government-sponsored privatization program, crisis-hit Greece is mulling over halving its privatization revenue goal.

Under the strain of a heavy sovereign debt crisis, Greece established the Hellenic Republic Asset Development Fund (HRADF) last July and announced a huge privatization program aiming to raise 50 billion euros to help cover the country's ballooning debts.

But Athens may well be far from realizing this goal. Speculations that the Greek government may slash its privatization productivity were raised by the country's daily Kathimerini last week. If the speculations are indeed true, such a decision will mean more than a simple "measure in bad times" for Greece as the country's leaders had pinned much of their hopes on this privatization program. It is also likely to break the spirit of foreign investors who gave considerable thought to entering the program.

As it sought to entice foreign entrepreneurs to invest in the debt-stricken country, Greece last year introduced a mammoth 50 billion euro privatization program. It suggested selling shares in such strategically important companies and sites such as the Athens airport, Hellenic Petroleum and ATE Bank. Kathimerini said the privatization revenue target for 2020 is now set to be cut to as low as 25 billion euros.

The Greek privatization story becomes even more interesting following a survey by business consultancy firm BDO last week which found that Greece was considered a riskier place to invest in compared to civil war-torn Syria. BDO surveyed 1,000 CFOs from medium-sized companies who were planning foreign investments. Global investors have shook off worse-than-expected problems in Greece thus far but it is not certain how much longer they will keep such optimism to invest in the country.

The Greek Parliament on Wednesday narrowly approved a privatization measure while Athens said the debt load would increase sharply. The recession in Greece looks sets to enter its sixth straight year in January. Athens has only raised about 1.6 billion euros since May 2010 with two privatization contracts having gone to Turkish companies. In İstanbul, businesspeople from both sides discussed potential joint investments in March of this year. At the time, representatives from both HRADF and the Hellenic Federation of Enterprises (SEV) left İstanbul with increased hopes of seeing new Turkish investments in their country. But the past seven months seemed to have wiped out much of this vigor.

Evaluating the current Turkish appetite to invest in Greece, Turkey's Young Executives and Businessmen's Association (GYİAD) Chairwoman Burcu Akdarı confirmed the loss in interest to Sunday's Zaman. "I can say Turkish investors are still warm to the idea of investing in Greece but the difference is they think twice nowadays. … The majority do not expect either Greece or the EU to overcome their problems in a short period," she stated. Akdarı said Turkish entrepreneurs kept a close eye on investment fields such as tourism, gaming companies and electricity over the past one year. "And some of these Turkish firms, including large-size holdings, invested in Greece, braving short-term risks," she said, adding however, that ongoing conflicts in Turkey's neighboring region along with the EU crisis have discouraged Turkish firms from "investing in close range." A possible recovery in investor sentiment for a solution to the Greek crisis will encourage Turks to further focus in this country, according to Akdarı.

According to Confederation of Businessmen and Industrialists (TUSKON) Vice President Ahmet Ciğer, who is also a strong supporter of investing in Greece, Turks have lost interest in Greek privatizations, but only to some extent. He believed most Turkish firms have opted to wait and see rather than hastily enter their western neighbor's privatization programs. "We still consider Greece as a strategic market to invest in. We suggest that our members concentrate on long-term investments. … Greece is not only a country we can profit from in the long term but opens doors to reach out to even more European customers," he explained.

Though Ciğer agreed with Akdarı that Turks may have lost much of their desire to be involved in Greek privatizations, he has faith that this will change in the long run. "We are living in days where investors feel compelled to scrutinize the environment they plan to invest in more than ever before. So a decline in interest in Greece, for now, is understandable," he adds. (Cihan/Sundays Zaman) CİHAN
Last Modified: 2012-11-04 16:00:01
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