Georgios Papanastasiou (Alpha Bank Srbija), President of the HBA Management Board

Many Opportunities for Further Cooperation

The crisis provides an incentive to Greek investors to seek markets where they could expand their activities. In this sense, Serbia is becoming more attractive as there is finally clear consensus in the country on the importance of attracting foreign investors in order to reduce unemployment, and, even more importantly, the willingness to put to use their 'knowhow' and to develop a competitive economy.

A number of steps have been taken in Serbia with the aim of making the environment for foreign investments attractive, and it is necessary to work constantly on that for the market to become stable and predictable, believes Georgios Papanastasiou, the new President of the Management Board of the Hellenic Business Association (HBA) and President of Alpha Bank Srbija.

Although the situation in Greece has set certain challenges for parent companies in the domestic market, it has also spurred the interest of these companies to seek other emerging markets with attractive environments for investment. Serbia is very interesting for Greek companies in this context estimates Papanastasiou.

Greek in Serbia is present in the banking sector, food and beverages, telecommunications, retail trade, tourism, construction, heavy industry and the service sector, while tourism and energy impose themselves as two particularly prospective, where the possibility exists for even greater development.

You were recently appointed the president of the HBA Management Board. Could you tell us something about the new management’s ambitions?

The Hellenic Business Association of Serbia is one of the largest investment organisations in Serbia and represents roughly 80 Greek and Serbian companies, small and large, operating in Serbia and employing over 20,000 people. Precisely due to the fact that their presence is in the interest of both Serbia and Greece, our primary objectives remain the same, and that means increasing the number of members of the Association and strengthening ties between them, as well as strengthening the image of the Association among institutions in the country.

At the same time, we also have broader ambitions aimed at achieving better and stronger economic interconnectedness between the two countries. Additional objectives of the new management include more visible activities of the Association in the media, as well as lobbying actively for Serbia as an ideal business destination in order to attract further Greek investments.

How much have the challenges faced by companies in Greece and the fiscal austerity measures in Serbia affected the volume of the activities of Greek companies in Serbia and their investment plans?

The challenges Greece faces certainly affect the decisions of parent companies when it comes to additional investments abroad, but, on the other hand, also act as catalysts for further international expansion, in the hunt for alternative sources of profitability and growth.

The lion’s share of Greek investments in Serbia was realised in the period between 2001 and 2008, and, to this day, Greece remains one of the biggest investors in Serbia. Despite the fact that Serbia is in a period of transition during which it has had to comply with EU regulations, this does not impact negatively on the plans of Greek investors in the first place, because Serbia and Greece historically have good diplomatic and economic relations.

Ultimately, a good geographical position, low tax rates, an educated workforce, and attractive subsidies for investors are the main factors that are undoubtedly on Serbia’s side when it comes to the attractiveness of the business environment.

Could we safely say that the Serbian public’s initial fears about the future of Greek companies in Serbia have been eradicated?

I would say this with certainty, and the success of Greek companies that have invested in Serbia, to date, clearly supports this stance. In recent years, Greece has held one of the top positions on the list of foreign investors in Serbia (currently ranked third), with total invested capital of over 2.5 billion euro – a figure which is increasing constantly.

Greek companies in Serbia operate in various sectors – banking, food and beverages, telecommunications, retail, tourism, construction, heavy industry, providing various services, etc. Four Greek banks operate in Serbia today – Alpha Bank, Eurobank, Vojvođanska banka, and Piraeus Bank – and these banks hold a little less than 15% market share of the Serbian banking sector, which indicates that economic relations between the two countries are stronger than ever.

Are you satisfied with the support of the Serbian institutions regarding the aforementioned issue?

Personally, I am happy to see that representatives of Serbian institutions and government officials are almost always ready to provide constructive support with specific issues related to companies that are members of our Association. However, on the other hand, I believe that the HBA should participate actively in formal consultations in relation to the adoption of new laws that impact the economy and doing business in Serbia. By forging a relationship of this kind we could strengthen relations between the Association and Serbian institutions, and in turn, provide economic benefits for both countries.

Coincidentally, the crisis was also a catalyst for the international expansion of Greek companies. In that context, do Greek companies consider Serbia an interesting destination?

While the crisis certainly creates opportunity and gives an incentive for Greek investors to seek markets where they could expand their activities, as I have noted, the presence of Greek investments in Serbia preceded the current economic crisis. The crisis just happens to make Serbia even more attractive. And what makes the situation even better for both sides is the fact that there is finally a clear consensus within the country on the importance of attracting foreign investors.

The country’s aim of resolving the problem of unemployment and, even more importantly, the willingness to make use of the investors’ ‘knowhow’, while developing a competitive economy, are clearly helped through the investments of Greek companies.

In the same context, what is your opinion of the efforts exerted by Western Balkan countries aimed at building more infrastructure links and creating a common market?

The global economic crisis has slowed down the development of economies around the world to a great extent, and in this regard, I welcome efforts to create a common market in this region. This type of cooperation could eliminate uncertainty and strengthen the prospects for progress and security of all states that coexist in this common market.

Last year you joined the Alliance of Greek Business Associations of Southeast Europe. What are your expectations from this association?

I expect the set goals to be achieved, and that means creating new jobs, the internationalisation of industry, and the development of international connectivity. The “Alliance” (Federation/Union/Network) was formed after recent economic instability when the Federation of Industries of Northern Greece (FING) undertook the initiative to coordinate Greek business activities in Southeast Europe.

FING, and all five organisations in the region (The Hellenic Business Association of Serbia, Hellenic Business Council in Bulgaria, Hellenic-Romanian Chamber of Commerce and Industry, the Union of Foreign Investors in FYROM and the Greek- Albania Chamber of Commerce and Industry), aim as much to increase the prosperity of Greece, and to strengthen it economically, as they do to further strengthen relations in the region – and not just economic relations.

Serbia has been striving to improve its business environment. Which areas do you think have improved the most, and which are still suffering from obstructions?

A number of steps have been taken in Serbia to attract foreign investment, and it is essential to work constantly to ensure that the market becomes stable and predictable. Serbia’s priorities should be to create a sustainable economic environment, reduce the fiscal deficit and continue its European integration. This includes reform of the judicial system, the fight against corruption, reform of the pension system, accelerating the speed of issuing various permits, as well as stepping up the process of harmonisation with the EU acquis.

How justified are the warnings that the Serbian banking market is too small for all the banks that operate in the country; and can we expect some banks to merge?

According to a recently completed Asset Quality Review (AQR test) by the National Bank of Serbia (NBS), conducted in 14 banks, that represent more than 90 per cent of the country’s banking sector, it was confirmed that all these banks in Serbia operate under regulations and are adequately capitalised to deal with potential risks in the future. The NBS has said that banks in Serbia, including those owned by banks from Greece, are highly solvent and liquid, and that there are no problems in their operations.

The fact is that many foreign banks are currently considering reducing their international presence, and in evaluating this decision the return on investment (ROI) is one of the main criteria. Moreover, it is quite normal for banks to group (merge) together or to leave a market where they no longer have an interest in working.  Therefore it is more important the banking sector in Serbia to remain healthy and profitable, attracting foreign and local capital rather than the number of banks in the country.

One of the HBA’s tasks is to work on encouraging and advancing economic cooperation between the two countries. What are HBA’s main activities in this respect?

In the tourism and energy sectors, there is a possibility for even greater development, but I believe bilateral trade is an area that definitely hasn’t reached the full potential between the two countries.

In my opinion, great potential exists to increase bilateral trade, both because of the large number of Serbian tourists who visit Greece, as well as because of the large number of Greek companies operating in Serbia. These are the areas precisely where the HBA is encouraging most the cooperation by supporting relevant events and striving to bring closer Greek and Serbian business.