2006 INVESTMENT CLIMATE STATEMENT GREECE

UNCLAS SECTION 01 OF 12 ATHENS 000131

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SUBJECT: 2006 INVESTMENT CLIMATE STATEMENT GREECE

REF: STATE 202943

This cable transmits the 2006 Investment Climate
Statement for Greece.

--------------
INVESTMENT CLIMATE STATEMENT
January 2006
--------------

A.1. Openness to Foreign Investment
--------------

Greece, a member of the European Union, provides a
reasonably hospitable climate for foreign
investment. Greece's membership in the EU's
Economic and Monetary Union offers currency
stability. Greece's infrastructure has improved
significantly in the last three years, and the
ongoing liberalization of the energy and
telecommunication markets offer investment
opportunities. Greek businesses are among the
leading investors in Southeast Europe, and Greece is
actively trying to position itself as a hub for
Balkan trade. The economy is projected to grow by
approximately 3-3.5 percent annually over the next
three years. Growth has been financed by private
sector borrowing and public sector absorption of EU
structural adjustment funds, which totaled roughly
24 billion dollars for the 2000-2006 period. A
similar amount of EU funding, approximately 24
billion USD, has been allocated for Greece for 2007-
2013, and the Greek government has budgeted 3.5
billion during the same period for infrastructural
projects.

The Greek government encourages private foreign
investment as a matter of policy. Investments are
screened only when the investor wants to take
advantage of government provided tax and investment
incentives. In such cases, foreign and domestic
investors face the same screening criteria. Greece,
which restricted foreign and domestic private
investment in public utilities, has opened its
telecommunications market and is in the process of
slowly liberalizing its energy sector. Restrictions
exist on land purchases in border regions and on
certain islands (on national security grounds). Also
U.S. and other non-EU investors receive less
advantageous treatment than domestic or EU investors
in the banking, mining, broadcasting, maritime, and
air transport sectors (these sectors were opened to
EU citizens due to EU single market rules). Foreign
investors can buy shares on the Athens Stock Exchange
on the same basis as local investors.

Major investment laws are:

-Legislative Decree 2687 of 1953 which, in
conjunction with Article 112 of the Constitution,
gives approved foreign "productive investments"
(basically manufacturing and tourism enterprises)
property rights, preferential tax treatment and work
permits for foreign managerial and technical staff.
The Decree also provides a constitutional guarantee
against unilateral changes in the terms of a foreign
investor's agreement with the Greek Government, but
the guarantee does not cover changes in the tax
regime.

-Law 3299/2004, the investment incentives bill,
provides grants to cover up to 55 percent of
qualifying investments (generally those made in less-
developed regions of Greece). Through a combination
of incentives and corporate tax breaks, the new law
attempts to boost entrepreneurship, foster
technological change, and achieve regional
convergence throughout Greece. As well, the law is
intended to simplify procedures for the evaluation of
investment projects.

-Law 3389/2005 on Public Private Partnerships (PPP)
lays the foundations for the wide provision of
services and the undertaking of construction work of
public benefit in collaboration with and co-funded by
the private sector. This law is designed to
facilitate public-private partnerships by creating a
market-friendly regulatory environment.

-Laws 89/67 as amended in November 2005, 378/68,
27/75 and 814/78 provide special tax treatment for
offshore operations of foreign companies established
in Greece.
-Law 468/76 governs oil exploration and development
in Greece. Law 2289/95, amending this legislation,
allows private participation in oil exploration and
development.

-Law 2773/99 opened up 34 percent of the Greek energy
market in compliance with EU Directive 96/92
concerning the regulation of the internal electricity
market. Law 3175/2003 is also a major step towards
the deregulation of Greece's electricity market since
it harmonizes Greek legislation with the requirements
of the EU's Directive 2003/54/EC on common rules for
the internal market in electricity. The Greek
government passed new legislation in November 2005,
which completes Greece's harmonization with EU
Directive 2003/54/EC and provides for the gradual
deregulation of the electricity market by 2007.

-Law 2364/95 as amended by Laws 2528/97, 2992/02 and
3175/03 governs the natural gas market in Greece.

-Law 2246/94 and supporting amendments have opened
Greece's telecommunications market to foreign
investment.

When Greece joined the European Monetary Union
("Eurozone") on January 1, 2001, it committed to
serious structural reforms to meet EMU convergence
criteria. To this end, the Greek Government has
opened the telecommunications market and the energy
market has undergone some deregulation. Since
February 19, 2001, about 34 percent of eligible
consumers of middle and high-tension voltage have had
the choice to obtain their electricity from producers
other than the state monopoly, the Public Power
Corporation (PPC). To this end, the first private
electricity generation plant (a 120MW power plant by
the Terna-GEK contracting company) was put in
operation in July 2005, and a second one (a 400MW
power plant by Hellenic Petroleum) in January 2006.
Two other private 400MW power plants should be
integrated into the system by 2007 and another one by

2008. The electricity market in Greece will have to
be completely deregulated by 2007. However, serious
questions exist regarding the efficacy of the GoG
privatization efforts, which continue to include a
level of government ownership in many, if not most,
reformed enterprises.


The New Democracy government, which assumed power in
March 2004, has pledged to undertake fiscal and other
structural reforms to enhance the competitiveness of
the Greek economy. The new administration has been
gradually adopting an economic policy mix designed to
achieve fiscal consolidation, implement tax reforms,
reduce red tape in business transactions and expedite
market deregulation. One of the government's
immediate goals is to privatize several state-owned
enterprises, including listing the Postal Savings
Bank and the Athens International Airport in the
Athens Stock Exchange, as well as allowing private
ownership of ports and port service facilities. The
plans also include the further reduction of the
state's share in the Agricultural Bank and the
Emboriki Bank. The government has not yet finalized
its plans on the future exploitation of the venues
for the 2004 Olympic Games, but there are proposals
to lease some of them to private concerns. Foreign
and domestic investor participation in privatization
programs is not subject to restrictions.
International consultants are usually hired to act as
advisors to the Greek government on the sale of state
entities, and the bidding process follows
internationally accepted norms.

A.2. Conversion and Transfer Policies
--------------

Greece's foreign exchange market is in line with EU
rules on free movement of capital. Receipts from
productive investments can be repatriated freely at
market exchange rates. Remittance of investment
returns is made without delays or limitations. As of
January 1, 2001, Greece became part of the European
Monetary Union.


A.3. Expropriation and Compensation
--------------

Private property may be expropriated for public
purposes, but only in a nondiscriminatory manner and
with prompt, adequate and effective compensation.
Due process and transparency are mandatory, and
investors and lenders receive compensation in
accordance with international norms. There have been
no expropriation actions involving the real property
of foreign investments in recent history.

A.4. Dispute Settlement
--------------

Greece accepts binding international arbitration of
investment disputes between foreign investors and the
Greek State, and foreign firms have found
satisfaction through this arbitration. International
arbitration as well as European Court of Justice
judgments supersedes local court decisions. Greece
has an independent judiciary. Unfortunately, the
court system is a highly time-consuming means for
enforcing property and contractual rights. Foreign
companies report that Greek courts do not always
provide unbiased and effective recourse. The Greek
judicial system provides for civil court arbitration
proceedings for investment and trade disputes.
Although an investment agreement could be made
subject to foreign legal jurisdiction, this is highly
uncommon, particularly if one of the contracting
parties is the Greek State. Foreign court judgments
are accepted and enforced, albeit slowly, by the
local courts. Although there are some problems with
corruption in the judiciary, the Greek government is
energetically prosecuting corrupt judges and
attorneys.

Commercial and bankruptcy laws in Greece are in
accordance with international norms. Under Greek
bankruptcy law, private creditors receive
compensation after claims from the state and
insurance funds have been satisfied. Monetary
judgments are usually made in the country's currency
(euro) unless explicitly stipulated otherwise.
Greece has a reliable system of recording security
interests in property.

Greece is a member of both the International Center
for the Settlement of Investment Disputes and the New
York Convention of 1958 on the Recognition and
Enforcement of Foreign Arbitral Awards.

A.5. Performance Requirements/Incentives
--------------

Greece is in compliance with WTO TRIMS requirements.
Investment incentives are available on an equal basis
for both foreign and domestic investors in productive
enterprises. The monetary value of an incentive is
inversely proportional to the level of development of
a given region; in other words, the less developed
the region where the investment will occur, the more
generous the incentive. The new Investment
Incentives Law, 3299/2004, funds up to 55 percent of
investments made by older or newly established
companies. The incentives provided are combinations
of grants, interest subsidies, subsidies for the
creation of new jobs as well as for leasing
equipment, and tax exemptions.
Additional tax incentives are extended to foreign
investors if they establish export-oriented
businesses, or if they save foreign exchange through
import substitution (Law 2687/53). The Hellenic
Center for Investment (ELKE),a quasi-state entity
established as a one-stop shop for assisting
investors, is responsible for reviewing projects
valued over 8.8 million euros ($11.1 million),or 3
million euros ($3.8 million) if there is at least 50
percent foreign participation, for which government
incentives are sought.

There are no performance requirements for
establishing, maintaining, or expanding an
investment. However, performance requirements come
into play when an investor wants to take advantage of
tax and/or investment incentives. Local content,
import substitution, export orientation, creation of
new jobs, energy conservation, environmental
protection and technology transfers are considered by
the Greek authorities in evaluating applications for
investment incentives. Companies that fail to meet
the specified performance requirements may be forced
to give up the incentives they were initially
granted. All information transmitted to the
government for the approval process is treated
confidentially. Offset agreements, co-production, and

SIPDIS
technology transfers are commonplace in Greece's
procurement of defense items.

U.S. and other foreign firms may participate in
government-financed and/or subsidized research and
development programs. Foreign investors do not face
discriminatory or other de jure inhibiting
requirements. However, many potential and actual
foreign investors assert that the complexity of Greek
regulations, the need to deal with many layers of
bureaucracy, and the involvement of various
government agencies discourage investment.

Foreigners from EU countries may freely work in
Greece. Foreigners from non-EU countries may work in
Greece after receiving residence and work permits.
There are no discriminatory or preferential
export/import policies affecting foreign investors,
as EU regulations govern import and export policy,
and increasingly, many other aspects of investment in
Greece.

A.6. Right to Private Ownership and Establishment
-------------- --------------

Foreign and domestic private entities have the right
to establish and own business enterprises. They may
engage in all forms of remunerative activity,
including the right to establish, acquire, and
dispose of interests in businesses.

Private enterprises enjoy the same treatment as
public enterprises with respect to access to markets
and other business operations, such as licenses and
supplies. Access to credit has traditionally been
easier for public enterprises, which could borrow
easily from state-controlled banks. Liberalization
of the banking system and increased compliance with
EU norms, however, have gradually forced state banks
to operate in a more market-oriented fashion, making
it easier for the private sector to obtain credit.

A.7. Protection of Property Rights
--------------

Greek laws extend protection of property rights to
both foreign and Greek nationals. The Greek legal
system protects and facilitates acquisition and
disposition of all property rights. As for
intellectual property, Greece is a member of the
Paris Convention for the Protection of Industrial
Property, the European Patent Convention, the World
Intellectual Property Organization, the Washington
Patent Cooperation Treaty, and the Bern Copyright
Convention. As a member of the EU, Greece has
harmonized its legislation with EU rules and
regulations. The WTO-TRIPS agreement has been
incorporated into Greek legislation as of February
28, 1995 (Law 2290/95). The Greek government has also
signed and ratified the WIPO Internet treaties, which
were incorporated into Greek legislation in 2003
(Laws 3183 and 3184/2003)

Greece's legal framework for copyright protection is
contained in Law 2121 of 1993 on copyrights and Law
2328 of 1995 on media. Implementation and
enforcement of these provisions however, has been
deficient and intellectual property problems have
long plagued Greece, resulting in its ranking on the
Special 301 Watch List from 1994 until 2003. Despite
the significant progress, which led to Greece's
removal from the Special 301 Watch List in May 2003,
enforcement of IPR laws remains a concern. Greek
legislation provides for heavy civil and criminal
penalties against pirates, however, enforcement is
spotty. Getting an IPR violator sanctioned,
criminally or civilly, is still time-consuming and
difficult. The courts continue to treat IPR
violations as nuisance crimes and rarely impose
punishments severe enough to act as a deterrent.
Additionally, understanding of IPR issues among the
population as a whole is low.

The music and software industries bear the brunt of
IPR violations in Greece, although audiovisual piracy
also occurs. Unlicensed sharing of a licensed copy
among multiple computers is the largest problem for
the software industry. For optical media, Greece is
not believed to be the source of the majority of
pirated CDs, VCDs and DVDs being sold in the country,
but rather a link in the chain of an increasingly
regional copying and distribution network. Although
the Business Software Alliance (BSA) has publicly
acknowledged the Greek government's 2002 achievements
in combating software piracy, it maintains that
Greece still has the highest rate of software piracy
in the EU, estimated at 62 percent of programs in
use.

Trademark violations, especially in the apparel
industry, are an area of increased concern. Although
Greek trademark legislation is fully harmonized with
that of the EU, U.S. companies believe the
importation and sale of counterfeit products is
increasing. U.S. companies have reported
difficulties in procuring Greek law enforcement and
customs support in combating this problem.

Intellectual property appears to be adequately
protected in the field of patents. Patents are
available for all areas of technology. Compulsory
licensing is not used. The law protects patents and
trade secrets for a period of twenty years. There is
a potential problem concerning the protection of test
data relating to non-patented products. Violations
of trade secrets and semiconductor chip layout design
are not problems in Greece.

A.8. Transparency of the Regulatory System
--------------

As an EU member, Greece is required to have
transparent policies and laws for fostering
competition. Foreign companies, however, report that
they have encountered cases where there are multiple
laws covering the same issue, resulting in confusion
over which law applies in which situation. Foreign
companies consider the complexity of government
regulations and procedures -- and the perceived
inconsistent implementation by the Greek civil
administration -- to be the greatest impediment to
investing and operating in Greece.

In order to simplify and expedite the investment
process, a quasi-state investment promotion agency,
the Hellenic Center for Investment (ELKE),was
established in 1996. ELKE functions as a one-stop
shop for assisting investors in cutting through red
tape and acquiring the numerous permits needed to
proceed with investments. It also advises the
government on ways to streamline the investment
process and to generally improve investment climate
in Greece. Also the new investment incentives law
3299/2004 simplifies procedures for the evaluation of
investment projects.

Greek labor laws limit working hours, penalize
overtime, restrict part-time employment, and are
restrictive regarding the dismissal of personnel. A
new labor law (3385/2005) passed in July 2005 gives
greater flexibility to employers to ask employees to
work without overtime during peak times, in return
for compensatory time off during non-peak times.
Under current regulations, both private and public
companies are prohibited from firing or laying-off
more than 2 percent of their total workforce per
month without government authorization.

Greece's tax regime lacks stability, predictability,
and transparency. The government often makes small
adjustments to tax levels and has not hesitated to
impose retroactive taxation. Foreign investors
object to the frequent changes in tax policies, but
foreign firms are not subject to discriminatory
taxation. The New Democracy government, which
assumed power in March 2004, has been gradually
adopting an economic policy mix designed to achieve
fiscal consolidation, boost development and restore
the competitiveness of the economy. Tax reforms
approved by Parliament in December 2004 provide for
lower tax rates on corporations' profits (from 35
percent to 25 percent by 2007) and on partnerships
and personal companies (from 25 to 20 percent).
There are also provisions to reduce red tape and
other sundry obstacles that affect business activity.
New legislation gave the Financial Crimes Unit (which
has been restructured and renamed the Special Audits
Service) sweeping power to combat money laundering
and financial crimes.

Generally, in sectors open to private investment,
foreign investment is not prohibited or restricted,
either by law or regulation or by private sector
efforts or practices. Proposed laws and regulations
are usually published in draft form for public
comment before being debated in Parliament.
Unfortunately, the judicial system, although
inexpensive by international standards, is slow and
cumbersome, making the courts a time-consuming means
for enforcing property and contractual rights. The
International Financial Reporting Standards (IFRS)
for listed companies has been introduced as of fiscal
year 2005, in accordance with EU directives. These
new rules should improve the transparency and
accountability of publicly traded companies.



A.9. Efficient Capital Markets and Portfolio
Investment
--------------

Greece has a reasonably efficient capital market that
offers the private sector a wide variety of credit
instruments. Credit is allocated by public and
private banks on market terms prevailing in the
Eurozone and credits are equally accessible by
private Greek and foreign investors. Three American
banks operate in Greece (Citibank, American Express
and Bank of America),serving both the local and
international business communities.

An independent regulatory body, the Capital Market
Committee, supervises the Athens Stock Exchange and
encourages and facilitates portfolio investments.
Both owner-registered and bearer bonds and shares are
traded on the Athens Stock Exchange which was
promoted in 2001 from "emerging market" to "developed
country" status by key western investment firms. It
is mandatory for the shares of banking, insurance and
public utility companies to be registered. Greek
corporations listed on the Athens Stock Exchange that
are also state contractors are required to have all
their shares registered.

A few state-controlled banks dominate the Greek
banking industry. Private Greek and foreign banks do,
however, comprise an increasingly competitive and
generally profitable private sector, holding about 55
percent of the banking system's assets. Private
banks in Greece are in good financial health and are
expanding their market share. State banks have a
large exposure to public enterprises of questionable
financial health. Total combined assets of the five
largest banks are estimated at 158 billion dollars.

There are a limited number of cross-shareholding
arrangements in the Greek market. To date, the
objective of such arrangements has not been to
restrict foreign investment. The same applies to
hostile takeovers (a practice which has been recently
introduced in the Greek market).


A.10. Political Violence
--------------

Greece is a stable parliamentary democracy currently
governed by a pro-EU, conservative government.
Several terrorist groups have been active in Greece
since the restoration of democracy in 1974, including
the "17 November" and the "ELA" organizations. U.S.
and western government and commercial interests, as
well as prominent Greek businessmen, journalists and
politicians have at times been targeted by these
groups. In June 2002, the Greek police arrested 19
suspected members of the "17 November" group and 4
suspected members of "ELA". Most of the members of
the "17 November" and the "ELA" terrorist groups were
convicted and sentenced to 20-years jail terms or
life sentences. It is still too early to assess
whether or not the potential for terrorist activities
against U.S. commercial interests appears to have
eased since these convictions. There has been a
significant upswing in anarchist attacks against
Greek and occasionally US, businesses. Late night
bombing attacks, although primarily directed against
Greek targets, have become more frequent in recent
months, although there have been no fatalities. The
successful staging of the August 2004 Olympic Games,
with the concurrent increase in experience and
technical capabilities of the Greek police, have
provided cause for optimism, however it is yet too
soon to declare the eradication of domestic terrorism
in Greece.


A.11.a. Corruption
--------------

Bribery is considered a criminal act and the law
provides severe penalties for infractions. The law is
impartially applied; diligent implementation and
enforcement of the law remains an issue. The problem
is most acute in the area of government procurement.
Political influence and other considerations, such as
loyalty to old suppliers are widely believed to play
a significant role in the evaluation of bids.
Bribery cannot be deducted from taxes. As a signatory
of the OECD Convention on Combating Bribery of
Foreign Government Officials and all relevant EU-
mandated anti-corruption agreements, the Greek
Government is committed to penalizing those who
commit bribery in Greece or abroad. The OECD
Convention was ratified by the Greek Parliament on
November 5, 1998 and implementation began as of
February 15, 1999.

The Greek Government has tried to fight corruption in
public administration. A number of inspection bodies
have been established to check out complaints and
investigate cases of corruption in the entire
spectrum of public administration, including local
authorities. The main authority for these
inspections is the Public Administration's Inspectors
and Auditors Unit, established in 1997, at the
Ministry of Interior. Besides this main body of
general inspectors, independent inspection divisions
exist at various Ministries and in the Greek Police
and the Hellenic Coast Guard. Investigation
procedures and preliminary inquiries on financial
crimes come under the jurisdiction of a special unit
in the Ministry of Economy and Finance, the Special
Audits Service (Greek acronym: YPEE). The
responsibility for the prosecution of bribery cases
lies with the Ministry of Justice. In cases where
politicians are involved, the Greek Parliament
decides whether parliamentary immunity should be
lifted to allow a special court action to follow. In
recent years, there have been a number of
investigations of alleged corruption; there was even
a special court action against politicians, including
the then Prime Minister, in 1989. The Greek Chapter
of Transparency International closely follows
developments to press for investigation and
prosecution of corruption cases. Greece was in the
47th position on the Transparency International
Corruption Perception Index in 2005 (Greece ranked
22nd among the 25 country-members of the EU).

The fight against corruption and the promotion of
transparency in all government and business
transactions is high on the agenda of the new
government (elected in March 2004). In autumn 2004,
the Greek parliament started investigating a number
of corruption cases relevant to defense equipment
purchases and the Ministry of Defense put all pending
contracts on hold until they could be reviewed. Since
mid-2004, the Greek judiciary is under continuing
corruption investigation. At year-end 2005, thirteen
justices had been dismissed, nine were temporarily
suspended from duty, two were being prosecuted for
money laundering and receiving bribes and were in
prison, 17 were indicted, and disciplinary action had
been initiated against 40 for charges related to
corruption. The Greek Parliament decided in November
2005 to lift the immunity of three of its members who
have been accused of involvement in court bribery and
other criminal cases.

A.11.b. Bilateral Investment Agreements
--------------

Greece has bilateral investment protection agreements
with Albania, Algeria, Argentina, Armenia,
Azerbaijan, Bosnia, Bulgaria, Chile, China, Croatia,
Cuba, Cyprus, Czech Republic, Egypt, Estonia,
Georgia, Hungary, Kazakhstan, Korea, Latvia, Lebanon,
Lithuania, Mexico, Moldova, Morocco, Poland, Romania,
Russia, Serbia, Slovenia, South Africa, Syria,
Tunisia, Turkey, Ukraine, Uzbekistan, and Zaire.
Investments by EU member states are governed and
protected by EU regulations.

Greece and the United States signed the 1954 Treaty
of Friendship, Commerce and Navigation, which covers
a few investment protection issues, such as
acquisition and protection of property and impairment
of legally acquired rights or interests. Also,
Greece and the United States signed the 1950 Treaty
for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on
Income.

A.11.c. OPIC and other Investment Insurance Programs
-------------- --------------

Full OPIC insurance coverage for U.S. investment in
Greece is currently available only on an exceptional
basis. OPIC and the Greek Export Credit Insurance
Organization signed an agreement in April 1994 to
exchange information relating to private investment,
particularly in the Balkans. Other insurance
programs that also offer coverage for investments in
Greece include the German investment guarantee
program HERMES, the French agency COFACE, the Swedish
Export Credits Guarantee Board (EKN),the British
Export Credits Guarantee Facility (ECGF),and the
Austrian Kontrollbank (OKB). Greece became a member
of the Multilateral Investment Guarantee Agency
(MIGA) in 1989.

For the purposes of OPIC Currency Inconvertibility
insurance, it should be noted that since the Greek
drachma was included in the European Union's Exchange
Rate Mechanism (ERM) on March 16, 1998, currency
inconvertibility is no longer an issue. Greece is
part of the eurozone as of January 1, 2001.

A.11.d. Labor
--------------

There is an adequate supply of skilled, semi-skilled,
and unskilled labor in Greece, although some highly
technical skills may be lacking. Illegal immigrants
predominate in the unskilled labor sector in many
urban areas. The total number of immigrants is
estimated as high as one million, nearly one-fifth of
the work force. About fifty percent of them are
undocumented or hold residence permits that have
expired. Greece has started a process to regularize
the status of these immigrants, necessary to
integrate them into society, but this effort has been
marred due to serious bureaucratic problems.
Approximately half of the estimated one million
aliens in the country are from neighboring Albania.

Overall, the 2005 unemployment rate in Greece was
around 10 percent. The Greek government is currently
planning to continue labor law reform in an effort to
introduce a more flexible labor regime. Labor-
management relations in the private sector are
generally good, but difficulties exist in the public
sector, as evidenced by the higher level of strikes,
labor stoppages, and related job actions by public
sector employees.

Greece has ratified ILO Conventions protecting
workers' rights. Specific legislation provides for
the right of association and the rights to strike,
organize, and bargain collectively. Greek labor laws
prohibit forced or compulsory labor, set a minimum
age (15) for the employment of children and determine
acceptable work conditions and minimum occupational
health and safety standards.

A.11.e. Foreign Trade Zones/Free Ports
--------------

Greece has three free-trade zones, located at
Piraeus, Thessaloniki and Heraklion port areas. Greek
and foreign-owned firms enjoy the same advantages in
these areas. Goods of foreign origin may be brought
into these zones without payment of customs duties or
other taxes and remain free of all duties and taxes
if subsequently transshipped or re-exported.
Similarly, documents pertaining to the receipt,
storage, or transfer of goods within the zones are
free from stamp taxes.

Handling operations are carried out according to EU
regulations 2504/88 and 2562/90. Transit goods may
be held in the zones free of bond. The zones also
may be used for repackaging, sorting and re-labeling
operations. Assembly and manufacture of goods are
carried out on a small scale in the Thessaloniki Free
Zone. Storage time is unlimited, as long as
warehouse charges are promptly paid every six months.
A.11.f. Foreign Direct Investment Statistics
--------------
Statistics on foreign direct investment are not
collected systematically. Hence there is a wide
variation in estimated data on investment levels,
which in any case are the lowest in the EU. Greek
statistical data were previously based on records of
investment approvals kept by the Ministry of National
Economy or the Bank of Greece. The lifting of
foreign exchange restrictions resulted in less
monitoring of investment inflows and the Ministry of
National Economy now keeps records of only the
investments that seek government assistance. Bank of
Greece records of capital inflows do not distinguish
among greenfield investments, acquisitions, foreign
borrowing by Greek companies, and other capital
transfers. The Greek Government has claimed for
several years now that a new data system based on
surveys is being set up.

According to UN's trade and development
organization's World Investment Report (which is
based on Bank of Greece records, with all the
limitations as mentioned above),FDI inflows into
Greece in 2004 were 1.35 billion dollars (2.6 percent
of GDP),increased from 661 million dollars (1.5
percent of GDP) in 2003. Outflows for direct
investment abroad were 607 million dollars in 2004
(1.2 percent of GDP) and 47 million dollars (0.1
percent of GDP) in 2003.

Although there is no official estimate of total
foreign investment in Greece, the total stock of
foreign investment is estimated at around $12
billion, or approximately 6 percent of GDP (in 2004).
Until the Greek Government provides more reliable
data, this estimate should serve only as a guideline.
Again highlighting the absence of reliable data, the
U.S. Embassy estimates the total stock of U.S.
investment to be about $4.5 billion, more than one-
third of the total stock of foreign investment. U.S.
firms employ about 11,000 people.

Greece's investment abroad is mainly directed to the
Balkans. According to the Greek Ministry of Foreign
Affairs, Greek direct investment in the Balkans is
estimated at 7.2 billion dollars, one third of which
is invested in Serbia, one third in Romania, and the
remaining one third in the Republic of Macedonia,
Bulgaria and Albania.


Major U.S. investments in Greece:

(Based on 2003 total assets as reported by the
companies. Source: 2005 ICAP - Greek Financial
Directory)

NAME OF AMERICAN COMPANY TOTAL ASSETS
(NAME OF GREEK COMPANY) (2003, US $ MILLIONS)

Apax Partners & Texas Pacific
Group (TIM Hellas) 1,064.3
Coca Cola Hellas Bottling 799.7 *
Philip Morris Group 419.1
(Papastratos)
(Kraft Hellas)
Cinergy (Attiki Gas Supply) 387.7
First Data (Delta Singular) 207.8
Searle (Vianex) 182.0
Crown Cork and Seal 172.7
(Hellas Can Packaging Mfrs)
Abbott Laboratories 125.5
Johnson & Johnson 116.7
Schering-Plough 99.0
Pepsico 94.8
Procter & Gamble 83.6
Bristol-Myers Squibb 77.6
Hewlett-Packard 66.3
Colgate Palmolive 63.1
IBM 52.1
S.C. Johnson and Son 42.1
Heinz (Copais) 33.8
McDonald's 33.8
Dow Chemicals 31.7
Georgia-Pacific 30.8
Marriott (Asty) 29.3
Xerox 29.0
3M 28.3
Ideal Standard 22.6
Mobil Oil 20.2
TOTAL 4,313.6

* amount represents 23.81 percent US ownership of the
Greek subsidiary's total assets


Major non-U.S. foreign investments in Greece are:

NAME OF FOREIGN COMPANY TOTAL ASSETS
(NAME OF GREEK COMPANY) (2003, US $ MILLIONS)


BRITISH

Vodafone 1,605.5
Dixons Overseas Limited 320.0
(Kotsovolos)
BC Partners (Hyatt Hotels Corp.) 276.0
British American Tobacco 72.5
Knorr 21.7
TOTAL 2,295.7


FRENCH

Carrefour 956.6
Lafarge 569.2
(Heracles General Cement)
L'Oreal 81.2
Alcatel (Nexans Hellas) 59.3
Air Liquide 52.0
Pernod Ricard 37.9
TOTAL 1,756.2


GERMAN

Thyssen Krupp (Hellenic Shipyards) 537.6
Siemens Tele Industrie A.G. 318.8
Praktiker 97.0
Bayer 65.4
Beiersdorf 40.8
TOTAL 1,059.6


DUTCH

Shell 369.8
Amstel-Heineken 335.5
(Athenian Brewery)
Unilever 274.3
(Elais Oleaginous Products)
(Unilever Hellas)
Friesland 59.4
TOTAL 1,039.0


ITALIAN

Italcimenti 150.4
(Halyps Building Materials)
Fulgorcavi Halia 119.1
(Fulgor Greek Electric Cables)
Barilla (Misko) 68.8
TOTAL 338.3



RIES