Lambis Kounalakis, Minister Counselor, Head of the Economic and Commercial section at the Embassy of Greece

New pathways for cooperation

The construction of the Budapest – Belgrade railway, as well as Chinese investments in the port of Piraeus, will benefit both Greece and Serbia by accelerating the flow of goods through the Balkans

Lambis Kounalakis, Embassy of Greece

Despite the economic crisis, Greek companies and banks in Serbia have managed to maintain their stable and recognisable presence in the Serbian market. The expected recovery of the Greek economy will, no doubt, allow companies to think more ambitiously about their foreign expansion, says Lambis Kounalakis, Minister Counselor for Economic Affairs, Embassy of Greece in Belgrade.

It seems that the excellent bilateral relations are not met with a more significant boost in trade between the two countries. How do you explain that?

Greece and Serbia have always enjoyed excellent bilateral relations, mirrored through important Greek investments in Serbia over the past 15 years. Unfortunately, this high level of business cooperation is not equally reflected in the commercial sector, where our overall volume of bilateral trade, despite our potentials, remains relatively low (about €380 million in 2015), while the trade balance results in a surplus for the Greek side.

How much can exports be boosted by the fact that both Serbia and Greece are on China’s New Silk Road route, thanks to the Port of Piraeus, the construction of the Budapest–Belgrade railway, and the transport of cargo to the Czech Republic?

The construction of the Budapest–Belgrade railway is part of a broader plan to turn the Port of Piraeus, where Chinese shipping giant Cosco Pacific holds a 35-year concession, into a regional hub for trade with Europe. These projects can benefit both Greece and Serbia, as they will accelerate the flow of goods through the Balkans, putting in place a corridor between China and Europe and giving us the opportunity to increase the scale of our trade considerably. They can also create synergies between the EU Trans-European Network, involving the completion of 30 priority projects across EU member states, that will play a key role in facilitating the mobility of goods and passengers within the EU

Greek companies are represented in all economic segments and all parts of Serbia. Which investments have been the most successful in confronting the challenges of the Greek domestic market and the Serbian market?

More than 200 Greek companies, employing about 25,000 people, are currently operating in Serbia, in sectors such as finance, construction, retail, telecommunications and information technology, food and beverage production etc. In the finance sector alone, according to the most recent data (Q3 2015), the four Greek banks that are active in Serbia (Alpha Bank Srbija, Eurobank, Piraeus Bank, Vojvođanska Banka) hold slightly more than 13% of total banking sector assets (€3,3bn of €25bn). They are also well capitalised, with total equity of €778 million of €5.3bn for the entire sector (14.5%).

In order to exploit our economic and trade potential fully, we intend to organise a series of events in Serbia, as well as in Greece.

Although the crisis has undoubtedly impacted the pace of trading, the general impression is that trade between the two countries is increasingly dominated by more complex products. Which specific products are those?

Over a long period, Serbian imports from Greece have mainly consisted of food and beverage products, but also raw materials finished metal products etc. However, during the last few years, we have recorded a significant rise in Serbian demand for more complex Greek products, such as pharmaceuticals, machinery and other manufactured goods. The structure of Serbian exports to Greece is fairly similar, with increasing positive trends in chemicals and manufactured goods.

To what extent has the actual situation on the ground in Greece impacted on the dynamic of Greek investments in Serbia?

Bigger Greek companies have continued to invest in the Serbian market, contributing significantly to the Serbian economy. Greece was ranked 5th among the biggest foreign investors in Serbia in 2014, while total Greek investments in Serbia today exceed a value of €2.5 billion. The expected recovery and growth of the Greek economy, as well as the regaining of international confidence, will no doubt allow companies to increase their competitiveness and elaborate more ambitious business plans in terms of future foreign expansion.

One of the expectations circulating for years is the possibility of certain Greek banks in Serbia merging. Do you think this is a realistic expectation?

Greek banks are among the country’s top banks, both in terms of lending and savings operations, representing major employers, with almost a fifth of total banking sector workers (5,000 employees) and a network of 300 branches nationwide with, almost 1/5 of total banking sector employees (5000 employees).

A possible merging of their operations would create economies of scale and would place Greece among the top three players in the Serbian banking sector. However, such a merger is not among the top priorities of these banks at the moment, as their business plans are currently focused on internal restructuring aimed at achieving efficiency gains.

As a result of the recent growth of the Serbian construction sector, a number of construction companies based in Greece have contacted us to express their interest in expanding their activities in Serbia.

How appealing are large-scale infrastructure projects to Greek construction companies and do you, i.e. the Embassy, receive inquiries from companies in this segment?

More than ten Greek construction companies are currently active in Serbia, most of which have a long-established presence, and some of which have successfully carried out major projects in road and building construction. Major Greek construction companies are involved, as sub-contractors of Corridor Serbia, in the construction of a number of highway routes along Corridor 10, one of the most important pan-European transport corridors, which runs through Serbia and connects Austria, Hungary, Slovenia, Croatia, Serbia, Bulgaria, Macedonia and Greece. The goal of this important project is to create a transport system that will be compatible with the transport systems of the European Union. As a result of the recent growth of the Serbian construction sector, a number of construction companies based in Greece have contacted us to express their interest in expanding their activities in Serbia.

In which areas has your department been providing the strongest support to Greek companies interested in doing business in Serbia, and to Serbian companies interested in exporting their products to the Greek market?

There is strong interest in business cooperation from both sides, especially in the sector of food and beverages, but also in new dynamic sectors of activity, such as construction, building materials and renewable energy sources. In order to fully exploit our economic and trade potential, we intend to organise a series of events in Serbia as well as in Greece, such as sector-specific business missions etc.

Last year saw Serbian tourists spend €242 million in Greece and there are indications that tourist arrangements for the 2016 high season are already sold out. How interested are Greek tourists in visiting Serbia?

Greece is by far the most popular tourist destination for the Serbian people. In 2014, a significant increase was recorded in the number of Serbian visitors, reaching almost a million. At the same time, Greek visitors to Serbia show increasing trends, for example, in December 2015 there was a 10% rise in Greek tourist arrivals and a 20% rise in overnight stays compared to the same period in 2014. These figures are very optimistic, considering that economic conditions in Greece are still not favourable and show that more Greek tourists are choosing Serbia as a holiday destination, as they consider Serbia to be a very friendly country.