Professional Documents
Culture Documents
2013
8 th E D I T I O N
INTERNATIONAL
BUSINESS
SECTOR in Serbia
Over 2,500 foreign & jointly-owned companies & 37 foreign business associations
Business Sector
in Serbia 2013
CONTENTS
IS A ATTRACTIVE Group
PLACE FOR INVESTORS, BOŽIDAR H.E. MR. PEKKA ORPANA,
LAGANIN, Director of the Serbian
Investment and Export Promotion Agency
Ambassador of Finland in Serbia
52 SETTING CLEAR GOALS,
H.E. MR. LAURENT LOUIS
(SIEPA)
35 EUROPEAN QUALITY,
SERVICE AND WARRANTY,
STOKVIS, Deputy Head of Mission,
Embassy of the Kingdom of the
EDITOR IN CHIEF
Saša Marić, s.maric@aim.rs
Foreign Investors Council, Serbia
ART DIRECTOR
Ilija Petrović, i.petrovic@aim.rs
14 BETTER WORK, BETTER LIFE,
ADECCO
SIMPLE, SANJA IVANIĆ,
Director of the French-Serbian
Chamber of Commerce in Serbia
KAMSVAG, Norwegian Ambassador
to the Republic of Serbia
ASSISTANT EDITOR
Christen Bradley Farmer, c.farmer@aim.rs 18 INNOVATION
OF LIFE,
IN THE SERVICE
38 REFORM: BOTH ADOPTION
AND IMPLEMENTATION,
BILJANA NAUMOVIĆ,
Director of AstraZeneca’s branch in
55 LEVELLING
FIELD,
THE PLAYING
MICHAEL SCHMIDT, Executive
MS. PATRICIA RADUT,
Economic Counsellor at the Embassy of
EDITORIAL CONTRIBUTOR Serbia Director of the German-Serbian Romania to Serbia
Mirjana Zec, m.zec@aim.rs Business Association
r.ristanovic@aim.rs
25 COMMITMENT TO IMPROVE,
H.E. MR. ALAIN KUNDYCKI
Head of the Office for Economic
Affairs, Embassy of Hungary to Serbia 59 TRANSPARENCY PAVES THE
ROAD TO THE EU, H.E. MR.
BERTIL CHRISTER ASP, Ambassador of
GENERAL MANAGER
Ivan Novčić
i.novcic@aim.rs
Ambassador of Belgium to Serbia
43 JOBS FOR IT EXPERTS,
INDIA
Sweden to Serbia
FINANCIAL DIRECTOR
26 TOWARD BASIC ELEMENTS,
ALEXANDRE ADDOR,
Ambassador of Brazil to Serbia 44 READY FOR BUSINESS,
EYAL NAOR, Deputy Head of
60 RMODEST, BUT WITH
POTENTIAL, SPAIN
61 INVESTORS
Ana Besedić
Mission Embassy of Israel FOLLOW
27 REAL
a.besedic@aim.rs
REFORMS ARE OPPORTUNITIES, H.E. MR.
EDITORIAL MANAGER
Tanja Banković, t.bankovic@aim.rs
REQUIRED, H.E. MR. ANGEL
SIMEONOV DIMITROV, Bulgarian
Ambassador to Serbia
45 A STEADFAST FRIEND, PAOLO
TOSCHI, Head of Economic
Affairs at the Embassy of Italy to Serbia
JEAN-DANIEL RUCH Ambassador of
Switzerland to Serbia
PRINTING
Rotografika d.o.o.
28 ENSURING CONTINUITY,
H.E. MR. ROMAN WASCHUK, 46 SECURING WORLD,
KENTARO OTANI, Second
63 EXPANSION
BOSPHORUS,
FROM THE
TURKEY
64 DESTINATION
Segedinski put 72, Subotica Ambassador of Canada to Serbia Secretary, Embassy of Japan in FOR SERBIAN
Serbia INVESTORS, UKRAINE
29
Guide to International ASSISTANCE FOR THE
47 FOCUS 65 EUREWARD,
Business Sector in Serbia 2013 UNDERDEVELOPED, REFORMS ON PROCESS IS ITS OWN
published by: CZECH REPUBLIC ORDINARY PEOPLE, MR. ALEXANDER
alliance international media H.E. MR. KIM KWANG-KEUM, BROOKS Head of UK Trade & Investment,
30 PROGRESSIVE PARTNER,
Makenzijeva 67, Ambassador of the Republic of British Embassy to Serbia
11000 Belgrade, Serbia CHINA Korea
66
Phone: +(381 11) 2450 508, BRITISH AMERICAN
31 DIRECTION, 48 COURAGEOUSLY,
Fax: +(381 11) 2450 122 CONTINUING IN THE SAME TO PROCEED EVEN MORE TOBACCO, THE LEADING
E-mail: office@aim.rs SVETLANA UK INVESTOR IN SERBIA, THANOS
www.allianceinternationalmedia.com BOŽINOVIĆ, Economic cooperation H.E. MR. LJUBISHA GEORGIEVSKI, TRIMIS, General Manager, British American
ISSN no: 1451-7833 advisor at the Croatian Embassy in Ambassador of the Republic of Tobacco South-East Europe d.o.o.
All rights reserved Belgrade Macedonia in Serbia
alliance international media 2013
Much Work
The following pages contain opinions, suggestions and objections made
by the representatives of over 35 embassies and international business
associations that operate or want to operate on the Serbian market
A
s chance would have it, we were preparing the business environment in Serbia, with the aim of advanc-
eight edition of the International Business Sector ing communication and exchanging ideas between these
in Serbia 2013 at the same time as the Kopaonik groups. The following pages contain opinions, sugges-
Business Forum, also known as the “Serbian Davos,” tions and objections made by the representatives of over
was taking place on the Kopaonik Mountain. Judging by 35 embassies and international business associations
the reports and the news from Kopaonik, the expecta- that operate or want to operate on the Serbian market.
tions of the Serbian government and the challenges that We have asked them each identical questions about the
Serbia had been facing in terms of improving the invest- current state and the future of the business sector in
ment climate were identical to those contained within Serbia. The questions pertain to the topics that are of
the following pages. crucial interest for this segment and, by extension, for
Serbia needs to define a new concept of its econom- the country’s economic future. Our interlocutors agree
ic policy, and it also has to carry out its reindustrializa- that, in the last few months, the Serbian government has
tion and redefine the state’s role in it, all with the goal of taken the first steps in reforming the public adminis-
expediting its development. Also, as always when we are tration and reducing red tape, and that the government
talking about business dialogue, there is a need to clear- should not stop at that since it still has a lot of work to
ly define and separate what is the state’s and what the do –work that should have been done a long time ago.
market’s job. Foreign investors haven’t changed their re- Apart from that, Serbia is expected to obtain the
quirements for years and these requirements - predict- date of the beginning of the EU accession negotiations
ability of doing business, reducing red tape, fighting cor- which will certainly change the business climate in the
ruption - are either not met at all country. Lack of stability, predict-
or only very slowly being fulfilled. Serbia needs to define a new ability of doing business and the
In the first seven months of possibility of long-term planning
2012, net investments in Serbia
concept of its economic policy, have been some of the major ob-
amounted to €105 million. and it also has to carry out its jections made by foreign inves-
According to the data compiled reindustrialization and redefine the tors to the Serbian government
by the National Bank of Serbia state’s role in it, all with the goal of over the years.
(NBS), FDI in Serbia declined by expediting its development We have asked our interloc-
€120 million, although, only a utors whether positive changes
year earlier, Serbia had broken the record in terms of have been made so far and what direction such activities
the highest amount of FDI in the region - €1.8 billion. On should take in the future. Also, we have asked the repre-
the other hand, projections for this year are not too bad. sentatives of the international business sector to tell us
Serbia could attract as much as €2 billion in FDI, most- what the investors from their respective countries cite as
ly owing to the investments in energy and car industry the biggest problems they have been facing in Serbia and
announced by the United Arab Emirates and the sale of what is the solution to those problems.
state-owned property that is not used. Experts say that We would like to use this opportunity to express our
this is a realistic figure assuming that we have macro- gratitude to their Excellencies, the highest representa-
economic stability and institutions dedicated to meeting tives of embassies and foreign business associations in
the investor requirements. Belgrade, as well as to the heads of the leading foreign
What is before you now is the eight edition of the companies in Serbia, for giving us their friendly and pro-
International Business Dialogue. This is a tradition- fessional advice, suggestions and opinions and for con-
al publication that assembles foreign investors, insti- tributing to the quality of this publication which matches
tution representatives and other factors relevant to the the previous ones. CorD Team
A
t the end of last year, SIEPA try in the region that could boast of good news about
released the information investments by brands like Fiat, Benetton, Bosch,
that the investment level Swarovski or Continental. The National Bank of Serbia
in Serbia had been dropping and has yet to release the cumulative data for last year, but
that it might continue to drop in the result is certainly going to be worse than the an-
2013 unless major changes were nounced one. This year, we plan to return to the level
not made. Although the fore- of at least €2 billion and we have objective reasons to
cast was grim, the announced believe that we are going to accomplish that.
investments in Serbia this year
could still constitute the need- ► Prevailing opinion is that a lot has been done on
long and turbulent pre- and post-election cycles. investor calls for fighting crime and corruption
In 2011, Serbia received €2.2 billion in investments were justified demands. What is your view of this
which was a better result than in some other EU coun- problem in the context of SIEPA’s efforts on pro-
tries, and it certainly broke the record compared to re- moting Serbia as a good investment destination?
gional countries which are not EU members. In a short - Apart from doing promotional work, SIEPA is also
period of time, we managed to become the only coun- engaged in operative field work: it works in invest-
solved for the most part. The parliamentary parties that don’t for promotion of its investment potentials which is validat-
see European integration and the arrival of foreign investors ed by the fact that substantial investments are about to be
as Serbia’s strategic aims are virtually non-existent. Some made by the Middle Eastern, African and Asian countries.
political parties, which now form What are the chances of some of
the government, had also been in these projects being implement-
power previously, while the pivotal ed in 2013?
political party has been proving it- - We have seen that those coun-
self by being dedicated to reforms tries that had diversified export
on the road to the EU member- markets, and those from which the
ship. Also, many investment pro- investors came, have overcome the
cesses which were initiated during crisis faster than those which de-
the last government’s administra- pended on one market alone. This
tion have picked up the pace dur- is something that Serbia has been
ing this government’s term. working on. And for the first time,
On the other hand, laws evolve, the results of this work are seen
particularly in a transition country Today, we have the Financial Incentives publicly. We have initialled several
like ours. As long as these chang- Programme for investors, which arrangements, primarily those in
es are for the better or in accord- wasn’t entirely our idea, but we have the energy sector which are going
ance with the society’s demands, copied it from the competition, but to be implemented this year. The
they should not be considered a
necessary evil. We are maintain-
this programme has been generating biggest of them is certainly the
South Stream. Then we have an
ing the constant dialogue with the excellent results agreement with the German com-
Foreign Investors Council and their suggestions about chang- pany RWE, as well as a ratified agreement with Italian part-
ing certain laws are carefully listened to and taken onboard. ners. Also, at any given time, SIEPA has close to 100 invest-
ment projects which our advisors are working on.
► Thanks to a variety of incentives, Serbia has had an ad-
vantage over other regional countries in terms of attract- ► What are the key points that SIEPA will use to promote
ing investors. Do we have enough potential to provide even Serbian investment potentials?
more incentives or is the strategy for attracting new inves- - Apart from the usual comparative advantages of Serbia, we
tors going to take a different direction? are certainly going to add to that new government measures
- Serbia is a small country with limited resources, so incen- for investors, like incentives for ICT industry which have al-
tives are also something that we should conserve. Our com- ready attracted attention and received positive comments.
petitors, like Slovakia or the Czech Republic, sometimes pro- We have been involved in creating this incentive programme.
vide 50% of the value of a foreign investment. This is how We also expect for the country to be given the date of the
they have implemented large-scale projects like Kia, Hyundai beginning of accession negotiations, so we are anticipating
or Volkswagen and how Slovakia became the biggest car Serbia’s investment rating to go up. ■
T
he Foreign Investors In that respect, we would like to encourage the
Council, established in government to continue with legislative reforms, but
Serbia in 2002, was created also to work on increasing the efficiency of the pub-
in order to provide feedback and lic administration.
insight to the government from
the business and investor com- ► Are you satisfied with your cooperation with the
munity in Serbia. FIC President Serbian government since its formation?
Costin Borc expresses his overall - We have enjoyed a fairly good cooperation with
satisfaction with the efforts and the government, at least in terms of the govern-
signals made by the government ment’s willingness to listen to us and respond to
concerning reforms, but there is a need to speed our initiatives. We highly appreciate that high gov-
up the pace and efficiency of their implementation. ernment officials participated at the promotion of
the latest White Book edition and the FIC’s tenth
► One could say that there is a general consensus anniversary, expressing readiness for dialogue
about the new government's making progress in and joint work. Also, positive changes have been
reducing public administration and improving the noted in the recent period since the government
climate for foreign investors. Do you think all of frequently invited relevant stakeholders, includ-
that is sufficient, and what should the government ing the FIC, to take part in different public hear-
do next? ings and WGs. The new government initiated its
- We at the FIC saw the novel make-up of the new mandate with steps which gave an important pos-
government and initial set of measures for fiscal itive signal to investors, such as measures to sta-
consolidation as highly positive. However, this is bilize public finance, also, we have seen positive
just tip of the iceberg, an ice- steps in the tax sphere, with
berg which needs to be melted In order to make significant the cancellation of 138 para-
to improve the business envi- progress, we need to see fiscal charges and changes
ronment. In order to make sig- systematic reforms which would in the VAT and corporate tax
nificant progress, we need to make the public sector more laws. We are encouraged by
see systematic reforms which
would make the public sector
transparent and sustainable the fact that the current gov-
ernment remains committed
more transparent and sustainable. Also, we need to the continuation of economic integration with
positive change in the business regulations, in other EU and harmonization of the domestic framework
words, cutting the bureaucracy, improving law en- with EU directives. We do hope that these initial
forcement and continuous EU harmonization. steps will be followed by serious systemic reforms
Moreover, the question of capacity of public ad- in 2013 and we encourage the government to con-
ministration is essential in this regard. As an ex- tinue with its activities.
ample, the new government dismantled certain
agencies and reassigned their responsibilities to ► In the past ten years, the FIC has always had
line ministries. However, we see that some minis- concrete suggestions how to reform the business
tries have not yet developed the capacities to take environment. Looking back, how many of these
over these new roles, and this is not the good sig- suggestions were taken onboard, and did previous
nal for investors. governments take them seriously?
I
n uncertain economic times, it - Various studies have confirmed that there is a direct
is critical for companies to en- correlation between variations in GDP and the level of
sure that they have the right use of an HR company’s work. In years of growth, sup-
kind of staff, and for individuals to ply and demand of agency workers increases propor-
be hired by the right kind of com- tionally, and diminishes when the economy falters. The
panies. This is the work of Adecco crisis affected the different European staffing markets
in Serbia, committed to providing at different times, depending on the openness of their
the most appropriate balance of economies, the maturity of their markets, and their
supply and demand in the labour dependence on certain segments of the economy. The
market. In this interview, we speak situation in Serbia is similar, but Adecco succeeded to
to Marko Kolenc, Adecco Country have constant strong growth trend, and we are proud
Manager Serbia, Dragan Simonovic, of having surpassed our business goals for 2012. We
Adecco Sales Director, and Jelena are well positioned for the future. In an environment of
Stevanovic, Adecco Permanent economic uncertainty we will continue to build on our
Placement Director about how strengths – our leading global position and the diversi-
Adecco strikes that balance. ty of our service offerings.
• Marko Kolenc, Adecco Country Manager Serbia, ► According to official data, unemployment rate in
T
he Vojvodina Investment tations in terms of increased dynamics of commu-
Promotion - VIP found it- nication with potential investors?
self recently on the list of - It is absolutely important for Vojvodina to be pre-
the top five global agencies that sent in Brussels, at the very source of the informa-
are engaged in attracting for- tion about the EU funds, to be able to lobby and fos-
eign investments judging by the ter good relations with decision-makers in terms
way they promote their regions of EU funds, as well as with the representatives of
online. This acknowledgment is other regions who are in Brussels, since all of that
a result of the work on promot- promotes Vojvodina and boosts economic cooper-
ing Vojvodina as an investment ation. It is a well known fact that the level of utili-
destination both through tradi- zation of European funds is quite high in Vojvodina
tional means and new technolo- which is something to which the European Affairs
Director of gy. “The acknowledgment that we have received is Fund of Autonomous Province of Vojvodina has cer-
the Vojvodina a result of recognizing the fact that online activi- tainly contributed. As you know, European develop-
Investment ties, social networks or a dynamic website – which ment funds are not that easily accessible and you
we are about to launch in a new version – are to- need to engage all active participants at the local
Promotion - VIP
day one of the most important channels for pro- and regional levels in order to prepare them for ap-
moting everything, including a country, a region plying for these funds. This is important for the VIP
and investment micro-locations”, says Aleksandar in the sense that more funds mean faster harmo-
Stojkov, director of the VIP. “We have done a lot. We nization of legal and financial regulation with EU
did the Search engine optimization (SEO), launched standards, faster infrastructural development, fast-
the company blog, we have active profiles on so- er economic and social development of local self-
cial networks Facebook, Twitter, LinkedIn, Google+, governments, and fulfilling all of the prerequisites
You Tube and Pinterest, we have enhanced our link for the arrival of foreign investors.
strategy, and we have dem-
onstrated an innovative ap- Some local authorities are better ► Vojvodina is certainly one
proach to digital market- organized than others and that they of the most attractive in-
ing via the VIPIS informa- can fulfil the minimum conditions vestment destinations in
tion system which gives us the region. Which special
a more direct contact with
for the arrival of investors benefits for new investors
users of our services. would you like to single out?
We are mindful of the fact that even local self- - Existing investors underline that Vojvodina is com-
governments, which are our important partners petitive due to the availability of its locations and
in attracting investments, need to educate them- workforce, the infrastructure, lower operational
selves in that respect so we held a seminar about costs, proximity to the EU market, substantial fi-
Internet promotion. The aim of this seminar, which nancial and tax relief, customs incentives and es-
was called “Think Globally, Attract Locally – Local pecially corporate profit tax which stands at 15%
Self-Governments on the Internet,” was to teach lo- and is among the lowest in the region. Also, there
cal authorities how to use the Internet to provide is good access to foreign markets thanks to Serbia
more efficient services to their clients, how to com- concluding free trade agreements with CEFTA and
municate with the citizens, promote locations and EFTA countries, Turkey, Belarus, Kazakhstan and
attract investors.” Russia, which enable free access to a market of 150
million consumers. Vojvodina did well in accept-
► Over a year ago, the Autonomous Province of Vo- ing the concept of increasing the role and impor-
jvodina opened an office in Brussels. How would tance of the region and its competitiveness which
you rate its work so far, and did it meet your expec- is reflected through the permanent promotion of its
A
straZeneca is a British- Considering all of this, we are fully aware that
Swedish multination- if we want to produce medicine that mankind really
al pharmaceutical and bi- needs, we cannot do it alone. We have been close-
otechnology company with head- ly cooperating with our partners in the patient care
quarters in London. This is the chain in order to better understand the challenges
fifth biggest pharmaceutical com- they are facing and to work together toward ensur-
pany in the world measured by ing the continued progress in healthcare.
2009 prescription drug sales
(after Pfizer, Novartis, Sanofi, ► Where is AstraZeneca focusing in terms of re-
and GlaxoSmithKline). In 2010, search and production?
Reuters released the list of the - Life without health is anything but easy. Bearing
biggest pharmaceutical compa- in that mind, we have directed our knowledge and
nies in the world, with AstraZeneca taking the 5th energy toward creating drugs that transform the
place. The company operates in over 100 countries, lives of patients. Our current portfolio and future re-
including Serbia. It has a portfolio of products for search are focusing on curing some of the most se-
major disease areas including cancer, cardiovascu- rious health issues in the world – cancer, cardio-
lar, gastrointestinal, infection, neuroscience, respira- vascular diseases, neurological disorders, schizo-
tory and inflammation. AstraZeneca was established phrenia, respiratory illnesses, diabetes and serious
in 1999 following the merger of the Swedish compa- nosocomial infections. In doing all of that, we are
ny Astra AB and the British company Zeneca Group. looking to join forces with scientific institutions and
researchers, regulatory bodies and governments in
► You are engaged in an area that combines the order to improve healthcare together since health is
interests of science, health and business. In which the link that connects us all.
way are these, seemingly conflicting areas, recon-
ciled? ► What direction have your operations in Serbia
T
here are very gest donor of aid to Serbia by far. Considering all
specific rea- this, I believe it is a logical step for Serbia to orient
sons for which itself towards the EU.
investors choose a We applaud all positive developments in the
country as an in- areas of stability, predictability and the ability for
vestment destina- long-term planning, as they help not only foreign
tion. Chief among but also domestic investors. One should also not
them, for Andreas Haidenthaler, Austrian Embassy forget that other investment destinations also work
Commercial Attaché, are stability and predictabil- on improving their business climate. Serbia, as any
Bureaucracy ity. The Serbian government has been working to investment destination, is in a constant race with
improve these areas through its reform process, international competition. Investment is not a gift,
The problems but there is still much work to do. but something a country must earn, and the mo-
faced by Austrian “To put it very bluntly and simply, the next steps ment you stop improving conditions you are falling
companies are [for reforms] should be a continuation of these first behind the competition. And as long as the wait-
the same as those initial steps. We have seen some improvement, but ing period for a construction permit falls under the
that all companies overall there is still too much red tape, too many category of long-term-planning, Serbia definitely
in Serbia, cumbersome administrative procedures and too has room for improvement.
whether they be much bureaucracy. It is clear that reforms cannot The problems faced by Austrian companies are
Austrian, foreign change things overnight, so it is even more impor- the same as those that all companies in Serbia,
or Serbian, are tant to continue on the reform path. whether they be Austrian, foreign or Serbian,
facing: too much Last autumn our office conducted a survey are facing: too much bureaucracy and red tape,
amongst Austrian companies in Serbia about the non-transparent tender procedures, a slow ju-
bureaucracy and
business climate and the top priorities of Austrian dicial system and corruption. Investors look for
red tape, non-
investors. Amongst these top priorities was the stable, predictable circumstances. They want to
transparent continuation of Serbia on know with whom they deal
tender its EU-accession path. It Serbia, as any investment and they want to know that
procedures, a is therefore fair to say that destination, is in a constant race their investment is safe and
slow judicial joining the EU would defi- with international competition productive. Investors don´t
system and nitely add to the attractive- come to a country just be-
corruption. ness of Serbia as an investment destination, and cause it offers a slightly lower tax rate, investors
therefore improve the business climate. Austria always look at the bigger picture. And they ask
has always supported Serbia’s way towards the other investors about their experience in a par-
European Union, and we are extremely happy that ticular country. In other words, the best way to at-
Serbia has managed to receive candidate status. tract new investment is to make existing inves-
For us, Serbia belongs to Europe. Serbia does 57% tors happy by creating stable, predictable, effi-
of its foreign trade with the EU, EU companies are cient and transparent business conditions. And
the biggest investors (with Austria being the big- yes, advancing towards the EU certainly helps to
gest investor overall) and the EU is the single big- attract investment.” ■
I
Serbia
sincerely hope about our comparative advantages, and we should
that Serbia will use them to better position ourselves in the eyes of
obtain the date potential investors. Investors are eager to shorten
of the beginning of and simplify the business start-up procedures, they
accession negoti- need a simple and clear legal framework, they al-
ations since it has so need their inquiries to be swiftly dealt with and
done a lot in the they need a one-stop shop for obtaining the re-
process of the ac- quired documentation. Still, the predictability in do-
cession to the EU. ing business and the possibility of projecting your
The European Commission's latest report own business future is the foundation that is close-
about Serbia's progress is, in my opinion, an ob- ly correlated to the political and economic situa-
jective view of the reform results. The report rec- tion in the country. Announcements about new in-
ognizes the progress made in many segments, as vestments in the automobile and electronics indus-
well as the challenges stemming from the need for tries, as well as in agriculture and energy, show that
maintaining economic stability, increasing employ- foreign investors' interest is growing. I believe that
ment, balancing public finances, fighting corrup- changing the urban planning and construction leg-
tion and, lastly, political challenges that arise from islation would be an additional impetus for inves-
the need for continuation of the Belgrade-Priština tors to invest in Serbia since, as I understand it, the
dialogue, finding new and even more comprehen- focus is on shortening the procedures and reducing
sive political solutions through the dialogue, as well the number of required building permits.
as implementing agreed solutions. The Serbian Investments from BiH in Serbia are very small,
government has a serious approach to tackling amounting to around US $100 million. On the oth-
these challenges and I think that dedication to re- er hand, the single biggest investment in BiH came
Accession form and the European path will not go unnoticed. from Serbia with Telekom Serbia acquiring the
I am absolutely That would also be an impetus for Bosnia and Republic of Srpska Telekom for €646 million in
confident that Herzegovina (BiH) to resolve the remaining unset- 2007. Serbia is the second biggest individual inves-
tled issues and embark on the same tor in BiH. The two countries have
obtaining the date
(for accession
road. I am absolutely confident that Serbia is the second concluded economic cooperation
obtaining the date (for accession ne- agreements. What attracts inves-
negotiations) gotiations) would mean a great deal
biggest individual tors from Serbia [to BiH] is certain-
would mean a for advancement of the business investor in BiH ly the proximity of the market, lack of
great deal for climate in Serbia. In that case, the a language barrier, tradition in doing
advancement country would be distinctly positioned in the eyes business and cooperation between the companies
of the business of investors who would be able to see their busi- from the two countries. Also, we should not forget
climate in Serbia. ness prospects clearly and decide on long-term ar- that BiH has a quality workforce, natural resources,
rangements. production capacities and a currency that is pegged
I believe that a lot will be resolved once the date to the euro. The potential of economic cooperation
of the beginning of the EU accession negotiations between the two countries is huge and, in order to
is obtained. Serbia and BiH have been experiencing utilize this potential, we need to turn to the future
a reduced FDI influx as a result of the global eco- in all segments of our lives, as well as to foster a
nomic downturn. Improving the business environ- constructive and pragmatic way of thinking. We are
ment should be a permanent task for the relevant neighbours, and hence we are naturally inclined to-
institutions in both countries. We should not forget wards each other. ■
Podgorica Office
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81000 Podgorica
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Tel. +382 20 246 166
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D
uring Serbian op cooperation in producing car parts for the hold-
President To- ing company Amkodor. The negotiations are pro-
mislav Niko- gressing nicely. Serbian companies are planning to
lić’s official visit to make investments in the Belarusian agriculture.
Minsk on March 12 What does Serbia mean to us today? We have
and 13, his Bela- a free trade regime where finished technological
rusian counterpart products with a high added value comprise between
Alexander Luka- 70% and 80% of the Belarusian exports. Serbian co-
shenko noted: “We operation with Belarus is as equally lucrative. Our
are not starting our foreign trade balance is practically zero.
cooperation, but rather continuing it. We have accom- Serbia exports over 160 products to Belarus, in-
plished certain results both in economy and trade.” cluding petrochemical products, metal products,
Following the Belarusian President’s official vegetables and car batteries. Belarus also has a
visit to Serbia in 2009 and the signing of the Free mutually beneficial and equal cooperation with
Trade Agreement, the trade exchange between the Serbia which is not conditioned by any political or
two countries grew threefold to US $150 million. In economic demands.
coming years, the plan is to increase this amount to Various instruments are used in developing
US $500 million. the bilateral relations. This year, we are going to
In Serbia, we have been successfully conquer- hold the seventh session of the Intergovernmental
Tenders ing the tractor market – 70% of the basic tractor Committee for Trade and Economic Cooperation
We are willing models. In terms the tip trucks used in Serbian and the sixth session of the Business Council.
to work as mines, 90% of them come from As far as Serbia’s accession to
competitors, Belarus. Close to 90% of the trolleys the EU goes, we primarily respect
in Belgrade have been produced in
Belarusian goods have a the decisions made by the Serbian
but under fair
Belarus, while we took the “bronze very competitive price/ government and the wishes of the
terms. I do
hope that the
medal” when it comes to the sales quality ratio Serbian people. We are willing
of Belarusian refrigerators and to work as competitors, but un-
terms of tenders washing machines last year. der fair terms. I do hope that the terms of ten-
launched in In Serbia, we are successfully involved in the ders launched in Serbia won’t be such as to suit
Serbia won’t assembly of tractors in Novi Sad and buses in Western companies only. Belarusian goods have
be such as to Kragujevac. We are also working on launching an a very competitive price/quality ratio. For in-
suit Western assembly facility for MAZ trucks with gas engines, stance, Belarusian trams are almost half as ex-
companies only. and we are considering the possibility of launch- pensive as the Spanish ones which have been de-
ing other facilities in Serbia that would produce livered to Belgrade.
Belarusian appliances. We have also been negoti- We would like to invite Serbian partners to co-
ating about Belarusian organizations participating operate more actively with Belarusian companies.
in large-scale infrastructure projects like the South If they wish to use consultancy services, they can
Stream and modernizing Serbian railways. turn to the trade and economic office of the embas-
Also, there are plans for collaborating on in- sy. We provide them with consultations, give them
vestments. The Belarusian side is interested in ac- contact details about business partners and set up
quiring several factories in Serbia in order to devel- direct meetings. ■
Serbia’s joining the European Union would send a clear signal H.E. Mr. Alain
to foreign investors that the administration in Serbia will Kundycki
abide to EU-standards and regulations Ambassador of
Belgium to Serbia
T
he Serbian au- most important reasons for many Belgian compa-
thorities have nies to have started activities in Serbia is the expec-
shown their tation that one day Serbia will become a full fledged
interest to improve member of the EU.
the business cli- As mentioned before, we welcome the commit-
mate in Serbia and ment of the Serbian authorities to improve the busi-
this would have a ness climate in Serbia, which would have a crucial
great positive im- and positive impact on the overall Serbian economy.
pact on the overall Nonetheless there is still much room for improving
Serbian economy. the business conditions in Serbia.
Nonetheless there is The main and frequent complaints voiced by in-
still much room for improving the business condi- vestors are the oversized and complicated regulatory
tions in Serbia as can be seen by the country’s low framework that is inconsistently implemented, as well
position in international rankings dedicated to the as the conflicting regulations emanating from sepa-
business climate. rate regulatory bodies at national, regional and local
It is very encouraging that the Serbian govern- level. The slow bureaucracy and the lengthy and cum- Complaints
ment has started tackling overall, systemic reforms bersome procedures especially for building permits
The main
that are undoubtedly the basis for any successful at- are a further matter of concern of investors. Long im-
and frequent
traction of foreign investment. In this respect, the ju- port and export procedures at border crossings are
dicial reform, the intensified fight against corrup- detrimental to companies, especially those trading in
complaints voiced
tion and the reform of the public administration are perishable goods. Every company has to deal with the by investors are
of the greatest importance. These reforms should state institutions; the lack of coordination and com- the oversized
be, and to our understanding indeed are, the priority munication between Serbian public institutions are a and complicated
of the Serbian government on which the main focus complicating factor of doing business in Serbia. regulatory
should be concentrated. An equally important item The recommendations to the Serbian authori- framework that
and one which the business cli- ties are firstly to open the com- is inconsistently
mate can be rapidly improved, With the Serbian accession to munication channels with the implemented,
is the cutting of red tape. the EU, investors would have the investors. Ample and time- as well as the
Serbia’s joining the
European Union would send
certainty that matters would be lyevant consultations with all rel-
stakeholders and this
conflicting
regulations
a clear signal to foreign in- dealt with in well-established in an open and mutual bene-
emanating
vestors that the administra- and predictable manner, which ficial dialogue would prevent
tion in Serbia will abide to EU- would be often in contrast with many unnecessary problems
from separate
and misunderstandings from regulatory bodies
standards and regulations. current practices in Serbia at national,
Furthermore the economic and happening in the first place.
commercial cooperation between companies and Inadequate and incomplete legislation results in al- regional and local
their divisions established in the EU on one hand ienating foreign investors, which is as well detrimen- level.
and those in Serbia on the other, would become tal for the Serbian economy. The actual implemen-
much easier in every respect. With the Serbian ac- tation of agreed recommendations is another point
cession to the EU, investors would have the certain- where work can be done. The idea of a single window
ty that matters would be dealt with in well-estab- for foreign investors would help the investors bet-
lished and predictable manner, which would be of- ter in addressing the administrative procedures they
ten in contrast with current practices in Serbia. The have to undertake. Improved coordination and com-
Serbian accession to the EU is of great significance munication between Serbian public entities would
also for Belgium and its’ companies. One of the also be a valuable improvement for investors. ■
F
or any coun- I think the government has been trying to show
try to attract its commitment to a stable economic environment.
foreign in- There are no magic solutions or measures. Both in
vestment, the first priority is for it to project stabil- the economic and in the political and social fields,
ity and predictability. Brazil and Serbia, separated a sense of security is needed for the economy to
by an ocean and thousands of miles, both must receive the investments which represent long-term
face this reality. In the words of H.E. Alexandre commitments. Stable rules for the economic agents
Addor, Ambassador of Brazil to Serbia, stability and the stable rule of law and human rights give
and predictability are the “basic elements” which human beings the feeling of stability they need to
are required for a country’s economy. In looking at make efforts to develop the country.
Serbia’s position and progress toward attracting Our two countries are far apart, and there is
Magic solution
more investment and gaining a date for the be- very little information about each other - even
There are no ginning of EU accession talks, he notes that the more so, the knowledge Brazilians have about
magic solutions effort made by the Serbian government has not Serbia is very limited. We have been trying to at-
or measures. Both gone unnoticed and that the process will reap its tract the attention of Brazilian business to in-
in the economic own rewards. vest in Serbia, but so far
and in the political “Stability and predicta- Both in the economic and in there have been no compa-
bility are the two basic ele- nies from my country here.
and social fields, a the political and social fields,
ments which any econom- The knowledge that there
sense of security
ic agent takes into account a sense of security is needed are hundreds of compa-
is needed for the when planning to invest. for the economy to receive the nies from Italy, Germany,
economy to receive Once in the EU, with stand- investments which represent long- Croatia, Slovenia, Russia
the investments ards in force for the quality term commitments investing here should help
which represent of products, rules of compe- to convince enterprises
long-term tition, labour practices, budget expenses and many from other countries also to get interested. There
commitments. other aspects will help to consolidate a framework have already been two or three groups of engi-
precisely of stability and predictability, and this will neers and managers from FIAT Brazil who came
happen even before full membership, when direct to visit the factory in Kraguevac, and this could
negotiations start. Furthermore, as is well known, create a good atmosphere for other businesses
the EU represents the largest market in the world to notice the great potentialities of Serbia as a
and is setting trading agreements with the other market not only for exports of Brazilian goods,
most important economic and trade powers. All this but also for the production here and exports to
will make Serbia more attractive for investment, several other countries which can be reached
both by its own citizens and by foreigners. from Serbia.” ■
A
member of battering of the business climate. The guarantees
the European for that will come with the opinions of the EC and
Union since the attention foreign investors will pay to seeing a
2007, Serbia’s near working free market economy and long-term attrac-
neighbour, Bulgaria, tive tax policy. A good base for that is the success-
has gone through ful completion of work connected with the Interim
the processes of negotiation and reform that were Agreement (IA) and the Enhanced Permanent
a prerequisite for joining the EU. As a result, the Dialogue (EPD) with the EC and, of course, the im-
major hurdles and challenges which await Serbia plementation of the new free market rules. Besides
along this path are well known to Bulgaria, and that, the message for foreign investors should be
the country’s experiences, successes and setbacks one of less bureaucracy and state in business, and
in this effort are material from which Serbia may a free market.
learn. Bulgarian Ambassador to Serbia Mr. Angel The majority of our investors have the feeling
Simeonov Dimitrov offers his advice for the process that they are not treated on equal terms with in-
and his view of Bulgarian businesses in Serbia. vestors from big Western states and perhaps from
Stability
“The steps toward reform taken by Serbian gov- same Eastern ones as well. Sometimes the rea-
ernment are in the right direction. They can be effec- sons for that feeling are subjective and connect- When Serbia
tive should they be the start ed with the quality and ad- starts accession
of a comprehensive policy by ministrative capacity of negotiations, this
the government towards the The majority of our investors have the managerial teams, but will be a good
necessary administrative re- the feeling that they are not treated more often they are a con- sign for foreign
forms. Our opinion is that the on equal terms with investors from sequence of the heavy ad-
investors – for a
next steps should be deep- big Western states and perhaps ministrative system and higher level of
ly coordinated with the DEC
and IMF. Unfortunately fur-
from same Eastern ones as well certain bureaucratic hur-
dles put up by biased rep-
general stability
ther reforms will be not at- resentatives, mainly from of the state and
tractive for the population as they would mean cuts local administration. Along with the positive exam- essential battering
in the state and local administration. A real reduc- ples, there are unsuccessful investments as well, of the business
tion of the bureaucracy can be expected after the but until now we are not aware of Bulgarian in- climate.
actual implementation of reforms and changes in vestors having broken Serbian laws. When Serbian
the heavy administrative procedures now in place. journalists are covering such cases, we expect
Up until now, the government has declared its read- them to be concrete rather than to come up with
iness to undertake the reforms while in same time negative generalizations about Bulgarian busi-
postponing some of them. nesses. To go ahead the economical tasks and re-
When Serbia starts accession negotiations, this sults should be main estimate for Bulgarian inves-
will be a good sign for foreign investors – for a high- tors and better implementation of the IA, EPD and
er level of general stability of the state and essential SSA of course.” ■
I
n looking at the progress which Serbia is mak- tiating a comprehensive trade agreement with the
ing in terms of reform and its EU accession EU, slated to be a transatlantic first. Serbia's con-
plans and aspirations, H.E. Mr. Roman Waschuk, vergence with EU standards means a more familiar
Ambassador of Canada to Serbia presents a ration- and predictable set of rules, which generally makes
al and measured view. He highlights areas in which life easier for Serbia's third-country (non-EU) part-
there have been positive steps, but one of the major ners too.
stumbling blocks investors encounter seems to be Coming from a country where non-partisan sen-
the aspect of continuity in dealing with the Serbian ior public servants provide continuity in both poli-
government. In this way, the Canadian Ambassador cy analysis and operations, in support of decision-
Reform
gives voice to the need for greater openness while making by more changeable elected political lead-
In looking at the bringing home investors’ concern for having more ers, I would like to see better retention of senior
reform efforts of streamlined and predicta- expertise in ministries and
Serbia, further ble procedures. This process Canada is currently in the agencies, while respecting
may not always be easy, but the prerogative of ministers
steps to reduce final stages of negotiating a
the number of it is, in his view, a necessity. to direct (and if necessary
“In looking at the reform
comprehensive trade agreement redirect) policymaking and
permissions with the EU, slated to be a
efforts of Serbia, further the allocation of funding.
required to build transatlantic first. Serbia's
steps to reduce the number Losing knowledgeable
anything from
new factories to
of permissions required to convergence with EU standards Serbian government inter-
build anything from new fac- means a more familiar and locutors, already familiar
hydro power plants tories to hydro power plants with key project files is one
would seem to be would seem to be need-
predictable set of rules, which issue that is raised with us,
needed. ed. Plans to cut through red generally makes life easier for as is its flipside: the need
tape have already been an- Serbia's third-country (non-EU) to brief up their successors
nounced by the Construction partners too on the full range of compa-
and Energy Ministries. These ny activities, so as to avoid
are very welcome developments. But streamlining decisions being taken without having the project’s
in any country always means overcoming adminis- "big picture". In areas where Serbian law already
trative inertia, so ministerial and stakeholder moni- works well and is serving to attract investors (min-
toring of its implementation will be key. ing is a case in point), the old English adage "If it
Canada is currently in the final stages of nego- ain't broke, don't fix it" comes to mind.” ■
Underdeveloped REPUBLIC
I
n the period be- 36%. Serbia’s import from the Czech Republic makes
tween 2000 and 2.2% of the total Serbian imports. In the first six months
2011, the total of 2012, the total trade exchange between the two
FDIs made by the countries amounted to US $262.8 million with Serbia
Czech Republic in exporting US $72.9 million worth of goods (a 2.5% drop
Serbia amounted to compared to the same period last year). Serbian im-
around US $25 mil- port also fell by approximately 4.7% and amounted to
lion which doesn’t US $189.9 million. Serbia’s deficit in trading with the
put this country in- Czech Republic stood at US $117 million.
to the category of In 2011, the export to import ratio in trading with
leading investors in the Czech Republic stood at 36.7% and it grew to
Serbia. In the same 38.4% in the first six months of this year.
period, the privatization of the Požarevac-based The consolidation of intergovernmental agree-
company Litas by Connex from Morava was one of ments between the two countries was completed in
the bigger Czech investments. In September 2008, 2002. The following agreements are considered im-
the Czech rubber company ČGS Mitas bought Ruma portant for the economic cooperation: the Agreement
Guma from the US tire producer Galaxy. A con- on Economic Cooperation (2005), the Agreement on
sortium of Czech companies called Inekon offered Customs Cooperation (2001), the Double Taxation
to participate in modernization and reconstruc- Agreement (2006) and the Agreement on Reciprocal
tion of the railway on the Corridor H, i.e. the Niš- Promotion and Protection of Investments (2001). The
Dimitrovgrad section, with the Czech Export Bank protocol covering income tax and property tax, which
(ČEB) providing a €120-million credit line under fa- accompanies the Double Taxation Agreement, was
vourable terms to the Inekon Consortium. signed in September 2009. The protocol signed by
The bilateral economic relations between Serbia the Serbian and Czech governments, which accom-
and the Czech Republic are most- panies the Agreement on Economic
ly based on a trade exchange that has This year the Czech Cooperation, was signed in May 2010 Trading
been constantly growing since 2009, Republic plans to while the Agreement on Amending the
with Serbia’s export to the Czech implement four new Agreement on Reciprocal Promotion
In 2011, the export
Republic being rather modest and with projects, with one of and Protection of Investments was to import ratio in
trading with the
a trading deficit on the Serbian side.
The structure of export goods poses
them benefiting SMEs signed in June 2010.
In late February this year, the Czech Czech Republic
a special problem because Serbia is exporting low- Republic expressed an interest in helping underde- stood at 36.7% and
processed products to the Czech Republic while im- veloped areas in Serbia. One of the first projects was it grew to 38.4% in
porting high added value products from this country. the Czech Republic’s donating a laboratory for qual- the first six months
In 2011, the total trade exchange between Serbia ity control of milk and cheese in Sjenica. The Czech of this year.
and the Czech Republic stood at US $590.9 million, ambassador to Serbia, H.E. Ms. Hana Hubáčková,
with Serbia exporting US $158.9 million worth of goods said, on the occasion, that the Czech Republic had
to this country which is a 17.7% growth compared to been helping the municipalities under the jurisdic-
the year before. Exports to the Czech Republic make up tion of the Office for Sustainable Development of
1.3% of the total Serbian exports. The Czech Republic Underdeveloped Areas to the best of its abilities and
is the 20th biggest foreign trade partner to Serbia. In through many smaller projects. This year, she added,
2011, this country imported a total of US $432 million the Czech Republic planned to implement four new
worth of goods and its development rate was around projects, with one of them benefiting SMEs. ■
I
n 2012, China took a second loan in the amount of US $715 million is
56th place out of now awaited to build new capacities, a new block in
164 countries to the thermo-power plant, and increase the capacity
which Serbia export- of the Drmno strip mine from 9 to 12 million tons of
ed. When it comes coal a year. This means that, after almost 25 years,
to the 204 countries EPS (Electric Power Industry of Serbia) would be
from which Serbia getting a new 350-megawatt facility. The works are
imported, China took expected to start in 2014 and last for three years.
3rd place. China’s In this way, Serbia would eliminate power short-
share in Serbia’s ages and stop importing energy.
overall export and Also, Serbia is currently negotiating with a
import in 2012 was 0.06% and 8.2% respectively. Chinese partner about constructing a hydro-elec-
The Chinese population makes up 20% of the to- tric power plant on the Danube River called Đerdap
tal global population, with GDP per capita over US 3. The Chinese company in question is Sinohydro
$5,000 and the country has entered a crucial phase Corporation. This is a company that has built the
of increased consumption thus becoming the fast- biggest dam – called “The Three Gorges” – on the
est growing global economy. China has opened its Yangtze River, as well as the most powerful 32-gen-
market and created good business opportunities for erator 22,500-megawatt hydropower plant. This is
other countries. the single most expensive construction project in
Three years ago, Serbia signed a Strategic the world which cost US $25 billion to implement.
Partnership Agreement with China which is the ba- Also, the two sides have been considering forming
sis for cooperation between the two countries in dif- free customs zones for Chinese companies and set-
ferent areas, primarily in construction and energy. ting up an investment fund with the Chinese side
Following this Agreement, the implementation of securing 90% of the funding. The money would be
several joint projects began with money coming from invested in Serbia’s processing industry.
a loan granted by Exim Bank of China. The plan is to Chinese companies have expressed an interest
continue developing the cooperation by construct- in building motorways in Serbia. The representatives
Infrastructure ing a transport and energy infra- of CICO Company (Chongqing
structure which will be funded
Chinese companies have International Construction
Chinese companies
with a new US $1.8 billion loan. been operating in Serbia for Corporation) from Chongqing
have been
Chinese companies have several years where they have are willing to build the Corridor
operating in Serbia
for several years
been operating in Serbia for sev- been building motorways, M21 motorway, that is the seg-
eral years where they have been ment from Novi Sad to Ruma,
where they have bridges and tunnels
building motorways, bridges and which also entails building a
been building tunnels. The projects are realized along the same tunnel on the Fruška Gora, as well as building the
motorways, principle – Serbian and Chinese governments agree Ruma-Šabac-Loznica segment. Another Chinese
bridges and on implementing joint projects, Exim Bank of China company, China Shandong International Economic
tunnels. approves a loan and the construction companies & Technical Cooperation Group Ltd., wants to build
from both countries are engaged as contractors. Corridor XI sections from Obrenovac to Ub and from
Since this format has proven to be successful, new Lajkovac to Ljig, as well as the so-called Morava
deals have been made. The Chinese are interest- Corridor from Pojate to Preljina. The construc-
ed in building more motorways and energy facilities tion of the 50-km long segments from Obrenovac
while the Serbian government has asked for a new to Ub and from Lajkovac to Ljig will be funded by a
US $1.8 billion loan. Exim Bank of China has already €300-million loan granted by Exim Bank of China.
granted a billion dollar loan for the revitalization of The total of Chinese loans for construction of mo-
the Kostolac thermo-electric power plant, for which torways should amount to around €850 million. ■
T
he latest World corruption in economy has grown stronger. All of this at the Croatian
Bank da- has sent a signal to foreign investors that they can ex- Embassy in
ta shows that pect more security in the future. This is very important
Belgrade
Serbia is on a good since the global capital market has been agitated and
path in terms of the upset by the global economic crisis with capital be-
administration re- coming scarce, finicky and “scared.” The capital now
form and reducing seeks “safe havens” and destinations which could yield
the red tape. In only long-term profit in a predictable environment. Hence, Procedures
one year, Serbia has it is very important to continue the process of reducing
moved nine plac- and simplifying bureaucratic procedures, to create an it is very important
es up – from 95th to 84th among 185 countries on environment conducive to healthy well-regulated mar- to continue the
the “Doing Business Indicators” list. The country has ket activities and to provide guarantees that all market process of reducing
also made a significant progress in improving busi- participants will have equal treatment, as well as to and simplifying
ness start-up procedures and activities (from 91st to continue fighting corruption via system institutions as bureaucratic
an excellent 42nd place) which is the result of the a measure of a good anti-monopoly policy while exer- procedures,
aforementioned reduction in red tape and procedure cising a balanced economic policy. Of course, all of this
to create an
simplification. The same or doesn’t apply only to Serbia,
environment
even bigger progress should Croatia strongly supports the path but to most transitional and
conducive to
be made in areas like issuing that each regional country has regional countries. healthy well-
building permits, protecting taken toward the EU membership Until recently, just like
investors, taxes, cross-border most other investors, our in- regulated market
cooperation, agreement im-
since it benefits the entire region vestors in Serbia have been activities and to
plementation and resolving insolvency. In short, the mostly objecting to complicated procedures in obtain- provide guarantees
country should continue moving in the same direc- ing various permits and to the lengthy procedures and that all market
tion at a faster pace and with even bigger resolve. the work done by border inspectors during export and participants
Croatia not only expects but also strongly supports import. Sometimes, they objected to the lack of trans- will have equal
Serbia in obtaining the date of the beginning of the parency in public acquisitions and pointed out to be- treatment,
EU accession negotiations. Croatia also supports the ing discriminated against in ranking. With the new as well as to
path that each regional country has taken toward EU law enacted and implemented, we believe that things
continue fighting
membership since it benefits both that specific coun- will change for better. Some investors have also com-
corruption via
try and the entire region. The EU accession process plained about inability to receive or not having the
will certainly have a positive effect on improving the same access to development funds and incentives for
system institutions
business climate in Serbia since, by definition, the ac- hiring in undeveloped areas. Still, most of our investors as a measure
cession process entails introducing and implementing and businessmen are satisfied with the Serbian mar- of a good anti-
high criteria through reforms in all segments. I am ket and are aware of the efforts and progress made. ■ monopoly policy
confident that obtaining the date of the begin- while exercising a
ning of (accession) negotiations will trigger and balanced economic
move the business community and citizens alike
to reach for European norms and standards. karanovic/nikolic policy.
R
ed tape and legal uncertainty, and a more secure and predict-
unnecessary able financial and economic market will also make
b u re a u c r a - Serbia a more attractive market for serious inves-
cy is a huge problem tors.
in Serbia. This ex- The EU approximation process will give the nec-
tends from the dai- essary discipline that allows Serbia to transform in-
ly life of the citizen to the modern, developed society with strong eco-
to the ease of do- nomic and legal reforms that continuous opinion
ing business and thereby to the attractiveness of polls show is what citizens want.
the Serbian market for foreign investors. Serbia un- Attracting foreign investors is important. But it
fortunately is still scoring very low in internation- is equally important to develop the business climate
al comparisons. The very quick steps taken by the for the SMEs and entrepreneurs upon which sus-
government to reduce para-fiscal charges was a tainable growth of the Serbian economy will rest.
welcome step and a very good, initial signal. We are We experience an increasing interest in the
now eagerly awaiting the next steps. Serbian market. The gaining of the candidacy sta-
Further measures to reduce the cumbersome tus last March had a positive effect on the Danish
and time consuming bureaucracy will by itself also companies seeing Serbia as a longer term partner.
be a decisive and welcome step in the fight against And we hope to see more of these in the future. It
Bureaucracy
corruption. The new public procurement law is a is vital that the course of the policy be defined and
The problems welcome development and in line with EU stand- adhered to. It is not easy to gain trust and credibil-
faced by Danish ards. The next important step will be its full imple- ity in this respect and it is, therefore, important to
investors mentation and subsequent enforcement. realize this and maintain the course.
include lack of The digitalization of communication with the The problems faced by Danish investors in-
transparency, public administration should be developed and pri- clude lack of transparency, uncertain legal pro-
uncertain legal oritized, including one-stop cedures, red tape and cum-
shops for routine enquir- We have seen some reassuring bersome bureaucracy, the
procedures,
red tape and
ies and permits. Too much moves by the government tax system, and a very slow
needless time and money indicating long-term commitments process in getting building
cumbersome
bureaucracy, the
are spent every month wait-
to attracting foreign investments permits. To this I will add
ing in multiple lines dealing non-transparent tenders
tax system, and a with issues that should be registered automatical- and tender processes. Hopefully the new law on
very slow process ly. This is both an irritating and unnecessary burden public procurement will help the latter, but it is a
in getting building for individual citizens as well as for companies and complaint often met.
permits. other employers. The time citizens spend queuing Several government bodies and councils exist in
up for papers, permits, or payments is often time Serbia throughout the country that offer great help
taken off work. to the foreign investors. However, the primary and
It is our hope that Serbia very soon will get a final goal must be to reduce or simplify the legis-
date for starting negotiations. The bold and decisive lation. Higher emphasis must be put on the imple-
steps taken so far bode well. The accession process mentation of legislation in this area. We see many
will be of huge importance in transfor¬ming the so- cases of excellent new laws that are in accordance
ciety to the benefit of the citizens of Serbia. A high- with the EU standards being adopted. If the imple-
er degree of transparency and accountability, less mentation fails they will have little impact. ■
TIKKURILA ZORKA d.o.o. | Hajduk Veljkova bb, Šabac | Inftel: +381 15 368 851 | info.rs@tikkurila.com
www.tikkurilagroup.com/serbia Sector in Serbia | APRIL 2013 | 33
| www.zorkacolor.com
International Business
FINLAND
Lean and Efficient
H.E. Mr. The reforms related to the business
Pekka Orpana environment are a very important part of
Ambassador of the negotiations and the progress in the
Finland in Serbia implementation of those reforms will certainly
make Serbia more and more attractive
I
n looking at the to the business environment are a very important
overall econom- part of the negotiations and the progress in the im-
ic and reform sit- plementation of those reforms will certainly make
uation in Serbia, Finland presents itself as a good Serbia more and more attractive also for foreign in-
example of a smaller country whose systems, pri- vestors. Of course it will also help the growth of do-
or to joining the EU, needed to be both lean and ef- mestic investments and encourage domestic entre-
ficient, making the way toward accession smooth preneurship.
and attractive to both the EU and potential inves- I think that the trend is very positive and the
tors. According to Finnish Ambassador to Serbia confidence of foreign companies towards Serbia
Pekka Orpana, Serbia is making positive moves as an investment destination is growing. The
and should continue doing so to achieve its urope- Serbian government has issued during the past
an aspirations. months various improvements related to taxation,
“The reform of the public administration and registration and permission procedures which are
public companies is crucial in order to make certainly steps forward. Serbia is in a very good
Serbia economically sound and competitive. The position to build a stable and predictable busi-
Improvements civil service and the man- ness environment follow-
The Serbian agement of public compa- ing and implementing the
government nies need to be based on The Serbian government has European Union require-
has issued professionalism and conti- issued during the past months ments and standards both
during the past nuity. Small countries like various improvements related at national and local levels.
Finland and Serbia need to taxation, registration and So far there have not
months various
to have a lean and efficient been many investments
improvements
public sector with pro-
permission procedures which are from Finland to Serbia.
related to taxation, fessional and non-politi- certainly steps forward Some Finnish companies
registration cal civil servants with long are at the moment con-
and permission term carriers. Efficient and non-bureaucratic ad- sidering Serbia as an alternative location for in-
procedures which ministration also helps to increase domestic and vestments in manufacturing, but they still seem
are certainly steps foreign investments, which is the key requirement to wait to see more concrete track record on re-
forward. to boost the Serbian economy. forms and the development of economic situation
When Finland started the negotiations to be- in the region. Our investors have not had any ma-
come a member of the EU in the beginning of the jor problems in Serbia, which is a very important
1990s, we witnessed a boom in foreign investments message to new potential investors from Finland.
to Finland. That was clearly because of increased The problems our investors have had are linked to
confidence amongst investors on the political and customs procedures that require a lot of paper-
economic stability and its continuity in Finland. Also work, time and additional costs. The word spreads
Serbia will benefit from the same when it starts the around very fast amongst investors both on good
EU-membership negotiations. The reforms related and bad news.” ■
V
erano Motors is Peugeot’s general agent - Apart from the Belgrade show-
for the territory of Serbia, Montenegro and room, also known as The Blue
Bosnia and Herzegovina. Since Peugeot is Box, which spans across 11,000
a French company, Verano Motors says that they square metres and is the biggest
are operating in line with the French quality and showroom in Southeast Europe
credibility standards. “This implies a proactive ap- according to Peugeot’s standards,
proach and constant innovation in sale and after- we have two sister companies
sale segments, as well as new investment activ- in Bosnia and Herzegovina and
ities,” says Milan Vukasović, Executive Director Montenegro. In Serbia, we have
of Verano Motors, and he adds: “As the exclusive business units in Novi Sad and Niš
agents of Peugeot for almost the entire region, we and 11 independent dealerships.
undertook to honour the manufacturer’s policy to
the smallest detail which means giving our clients What would you single out as
►
the treatment that they would get if they purchasedespecially interesting from Ve-
a Peugeot car anywhere else in Europe. This also rano Motors’ product and service
involves the after-sale segment since we have an range?
obligation towards our buyers which doesn’t end - We have a large stock of almost all models from
with the sale. A responsible approach to servic- our line-up. I would like to single out the Peugeot
ing Peugeot cars means adhering to deadlines, re- 301 which ideally corresponds to the current eco-
placing parts and giving warranty for original parts,
nomic situation on the car market. This is a spacious
repairs in line with Peugeot’s standards and con- and efficient family sedan which has the best quality/
stantly training our service staff.” price ratio (its price is under €10,000). Then we have
the Peugeot 208, the new leader in
► Verano Motors is Peugeot’s agent In our market, Peugeot B-segment and a successor of leg-
for most of the region. What novel- has been recognized as endary 206 and 207, but with many
ties can we expect to see in the fol-
a good partner when it improvements and innovations. The
lowing period? business community has recognized
- It is the beginning of the car
comes to fleet sales the Peugeot 508 as a good partner.
show season in Europe, and Verano Motors in But, I would especially like to single out the Peugeot
Serbia has prepared certain novelties that cov- 2008 and RCZ sports coupe as our exclusive models.
er a wide range of target groups in terms of per- We are very proud of our delivery vehicle line-up which
formance, taste and price range. Apart from the fulfils a variety of our clients’ needs in terms of the
further commercialization of the new model in size, condition and type of goods that are transported.
B-segment of the city car class – Peugeot 208,
and a spacious family sedan with an exception- ► How do you respond to the challenges of your
W
ith the ly insist on higher predictability in doing business
aim of ra- and in the reduction of red tape. Starting acces-
tionalizing sion negotiations will certainly play an important
the public admin- role in that.
istration, the government ordered the ministries The new government has made some positive
in September last year to reconsider the need for steps forward and has tackled a number of chal-
certain regulatory bodies, agencies and organiza- lenges. However, there are many unsettled issues
tions to exist, all within the scope of their jurisdic- and the solution is not simple. The government will
tion. Also in late September last year, the Budget have to consider the complex relation between the
System Act, which controls public sector revenue public debt and economic growth, to clearly define
and spending, was amended, while, at the same the state's role in today's economic framework and
time, a law that restricts salaries in the public sec- to develop a strategy that is not based in the pub-
Accession tor was enacted. Of course, any solution that re- lic debt and one which is not conducive to infla-
We do hope and sults in the reduction of spending in the public sec- tion while, at the same time, investing efforts in
believe that Serbia tor has our support. However, the increasing productivity which
will obtain the date reform effects are limited since the continuation of reforms should be the basic priority in
of the beginning agencies are just a drop in the will have a social effect the near future. Also, the con-
of accession ocean when it comes to the num- which is not going to be tinuation of reforms will have a
ber of administrators of public au- easy at the time when the social effect which is not going
negotiations
this year, since
thority at the state level. It is cer-
tainly important to continue with
average salary is low and to be easy at the time when the
average salary is low and un-
acquiring EU reforms, but that entails a serious unemployment high employment high.
candidate status and a comprehensive analysis and rationalization. As we said earlier, generally speaking, inves-
has more than We do hope and believe that Serbia will ob- tors, including the French ones, consider stabili-
only political tain the date of the beginning of accession nego- ty, predictability in doing business and the possi-
importance. tiations this year, since acquiring EU candidate bility for long-term planning as important. We ex-
status has more than only political importance. pect the government to cope successfully with its
Candidate status also has a special meaning for economic and social challenges and to continue
investors who have to decide whether to come to on its road towards the EU which requires certain
Serbia or not or increase their existing presence, measures, a vision and determination. We see no
which is something that benefits Serbian citizens reason why we shouldn't be optimistic about 2013
too. Apart from that, the road towards EU mem- bearing in mind that the Serbian political elite un-
bership is an important impetus to continuing with derstands the seriousness of the crisis in Serbia
reforms, since the investor associations especial- and the necessity of conducting reforms. ■
T
arkett is the leader in providing innovative We work to last while giving priority
and sustainable solutions for floor cover- to our values – a positive customer
ings and sports surfaces. In Serbia, Tarkett attitude, team spirit, empowerment
is a part of an international company of the same and accountability, respect and in-
name with a 130-year experience. “Considering tegrity and commitment to the en-
the stiff competition on the global market, the key vironment. We care about sustain-
prerequisite for achieving success is innovation ability, and we pay a lot of attention
and constantly improving our client service,” says to developing talents in our employ-
the company’s director general, Miroslav Okuka, ees and to team building.
at the beginning of this interview. “We have been
creating flooring solutions in several segments – ► What are the advantages of
healthcare, education, the residential sector, re- Tarkett’s product range in Serbia
tail facilities and offices. Our research and devel- in comparison to the competition?
opment experts have been abreast of the latest - Since we are a part of a large company with ex-
trends in technology and equipment and have been tensive experience, our basic advantage is that
participating in all major global exhibitions and we offer complete solutions for floor coverings
fairs in this industry. Tarkett’s designers are co- with the widest floor covering range on the mar-
operating with them, as well as with our market- ket – from vinyl flooring, multilayer parquet floor-
ing team who is carefully listening to and analyz- ing, and textile flooring to sports flooring. The so-
ing the needs and wishes of our lutions that we offer are modern
clients, in order to create high We have four factories in and innovative and our products
quality, visually attractive and ef-
Bačka Palanka where we are manufactured in line with the
fective floor coverings for Tarkett highest quality standards. For in-
and thus exceed customers’ ex- manufacture vinyl flooring, stance, during our parquet pro-
pectations at the same time as parquet and textile flooring duction process, we have over
providing top experience for the 50 control points. We offer top of
people who use our products. The innovative at- the line service to our clients which is partly due
mosphere is fostered by all employees – from pro- to the fact that we produce locally. We have four
duction operators to support workers.” factories in Bačka Palanka where we manufacture
vinyl flooring, parquet and textile flooring. In or-
► What are Tarkett’s basic operative guidelines? der to facilitate the purchasing selection and de-
- Tarkett’s strategy rests on four pillars – offering cision making process for our clients, our market-
the ultimate customer experience, fostering entre- ing team has developed iPhone, iPad and Android
preneurial spirit, long-term operations and gener- applications.
ating a profitable growth while providing exception-
al service to clients. All of Tarkett’s employees are ► Tarkett is known for being one of the most suc-
expected to work with passion while providing an cessful exporters in Serbia. What are your export
exceptional service to our clients, offering creative markets?
solutions and superior value. Also, we encourage - We export over 90% of the products we make in
the entrepreneurial spirit in our employees so that Serbia. Our biggest markets are Russia, Ukraine,
each and every one of them is given an opportuni- Kazakhstan, Belarus, Romania, Bulgaria and the
ty to exceed expectations and take responsibility. former Yugoslav republics. ■
A
s a pow- gotiations. The process of negotiations in itself rais-
e r h o u s e es positive expectations about the future econom-
and found- ic and social development in Serbia. Reforms, and
ing member of the specifically the adoption and implementation of new
European Union, legislation, would be closely monitored by the EU
Germany has long during the negotiation process. In addition, further
experience of the financial assistance, especially in the infrastructure
needs and bene- area, would make Serbia a more attractive location
fits of the EU for to invest.
individual coun- Despite the recent change in government and
tries. Serbia, now difficult economic environment, no radical chang-
in the midst of reforming its systems, regulations, es by the government have been undertaken in
and institutions ahead of EU accession talks, may the last months. The tax increases are moderate
learn much from the German example and look and, if accompanied by the right reform measures,
to Germany for key insights and advice on how to are in the interest of the business sector. One ex-
best complete the process. According to Michael ception is maybe the drastic hike in the electrici-
Schmidt, Executive Director of the German-Serbian ty prices for large consumers at the beginning of
Employment Business Association, the key test is not only the the year; although announced in advance and in line
adoption of reforms but also their implementation. with Serbia’s international obligations, this has so
As unemployment Mr. Schmidt points out several areas in which he be- far only affected very few companies and not yet led
is the biggest lieves more work should be done in order for Serbia to a more efficient and more liberalized electricity
economic to align itself with the EU as well as attract German market. It is important that the government pursue
challenge Serbia investment in future. a consistent and all-embrac-
faces today, “As unemployment is the Despite the recent change in ing reform policy in this ar-
reforms should biggest economic challenge
Serbia faces today, reforms
government and difficult economic ea. The same applies for the
support for renewable ener-
focus on making
should focus on making new environment, no radical changes gies, which should be pre-
new employment by the government have been
employment more flexible dictable and foster invest-
more flexible and and cost-effective, by reduc- undertaken in the last months ments in this sector.
cost-effective, by ing labour fringe costs and We will soon publish the
reducing labour reforming the labour law. Bringing institutions in results of our annual survey amongst the 250 mem-
fringe costs and line with EU standards will directly benefit produc- bers of the German-Serbian Business Association
reforming the ers and consumers, by improving the quality, com- (DSW). As in the previous years, the absence of the
labour law. petitiveness and export-potential of Serbian prod- rule of law, an inefficient public administration, the
ucts. The recent concerns about food safety are a fight against corruption and organized crime and
case in point. The reforms in tax legislation and an- the lack of transparency in public procurement pro-
nounced reforms in the tax administration are an cedures are, despite of the recent progress in some
important step and should be consistently imple- of these areas, still viewed as critical. We view the
mented. Improving state finances and reducing the start of accession negotiations to the EU, which will
grey economy is a prerequisite for further reforms. probably much closer monitored than negotiations
Recent political developments give hope that of previous entrants to the EU, as an important cat-
Serbia will soon start the process of accession ne- alyst for reforms in all of these areas.” ■
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R
Commercial Affairs
and Head of the egardless in Serbia. The recent decisions of the Serbian govern-
of the eco- ment demonstrate that there is political will to resolve
Office for Economic
nomic prob- these issues, for the benefit of both local and foreign
& Commercial Affairs
lems which have hit entrepreneurs. Whichever the next steps may be, they
of the Embassy of Greece in these last should be in the direction of further simplifying pro-
the Hellenic Republic years, the coun- cedures and processes, as well as creating an envi-
in Serbia try remains stead- ronment that will be friendly to the potential investor.
fast in its European The benefits of EU accession, especially in the
Investment climate
commitment and in fields of trade and investments, are numerous and
its encouragement well-known. Free movement of goods, persons and
of the aspirations of capital will facilitate investments, business establish-
Serbia, one of its closest Balkan neighbours and ment, imports, exports and all aspects of business
business partners, to join this family of EU coun- operations. The EU aquis, with which Serbian legis-
tries. Much still remains to be accomplished, but lation should and will finally fully comply, as well as
the will to change and adapt for the European principles and best practices,
future is one factor which Ms Sophia Greece is among the once adopted, will give a strong boost
Tsamicha, General Counsellor and
largest investors in to the Serbian economy, providing the
The closer Serbia Head of the Office for Economic and necessary predictability and stability
gets to the EU, the Commercial Affairs of the Embassy of
the Serbian economy, that potential investors are looking for.
more predictable the Hellenic Republic in Serbia, sees with an estimated I think it is quite obvious that, as
and stable as vital and present. total investment value I mentioned earlier, the closer Serbia
investment climate It is true that bureaucracy has been of about €2.5 bn gets to the EU, the more predictable
many times reported as one of the and stable investment climate will be
will be and the
main obstacles of the Serbian business environment. and the more attractive Serbia will get to foreign in-
more attractive
Licensing and permitting procedures, ownership vestors. Therefore, I believe that the express politi-
Serbia will get to rights and the like have somehow made it a bit more cal will to push the accession process forward and
foreign investors. difficult for foreign companies to establish themselves the commitment to the European perspective of
the country will largely contribute to achieving the
aforementioned targets.
As you already know, Greece is among the larg-
est investors in the Serbian economy, with an esti-
mated total investment value of about €2.5 bn. Our
companies have been active in Serbia already from
1996 and have experienced a series of changes and
adaptations. It is only normal that, during these
changes, some issues have come up, in a relative-
ly small number of cases. The majority of them had
to do with problems or rather misinterpretations
of the provisions of various investment contracts.
However, with the support of and in cooperation with
the Serbian government, we have managed to tackle
the vast majority of these issues. I am certain that in
the near future, the few remaining issues will also be
resolved, for the mutual benefit of the Greek inves-
tors and the Serbian economy. ■
P
iraeus Bank A.D. Beograd, a member of alty of customers,
Piraeus Bank Group, has been present on despite the crisis in
the Serbian market since May 2005, with Serbia and events in
particular know-how in the areas of large corporate Greece.
banking, retail banking, microfinance and SMEs. On a global scale,
Combining business development and social re- 2012 was good for
sponsibility, Piraeus Bank places special emphasis Piraeus Bank Group
on its relations with the social, cultural and natural as well. The bank
environment. acquired two Greek banks, Agricultural Bank and
The business philosophy of Piraeus Bank Serbia Geniki Bank. With this, Piraeus Bank S.A became
is meeting the highest international standards and the third largest bank in Greece, after National
values in providing banking products and servic- Bank of Greece Group and Alpha Bank Group, with
es, with the application of the latest techniques and a market share of 19%.
technologies. The bank achieved good business results pri-
Piraeus Bank, as a universal bank, is commit- marily due to its good capitalization and adequate
ted to establishing long-standing business rela- liquidity, but also due to efficient cost controls.
tions with customers and taking a proactive role in Growth in total deposits was accomplished without
the development of the Serbian compromising the principles of
market. At present, the bank Piraeus Bank’s key policy good corporate governance and
has 42 branches and 550 em- principles for 2012 - liquidity, conservative risk management
ployees. approach.
During the previous year,
capital adequacy, asset Strong capital and high li-
Piraeus Bank continued its up- quality and cost containment quidity have enabled Piraeus
ward trend, despite the glob- - will remain priorities for bank to be a reliable partner to
al economic crisis and a very 2013 as well both local economy and citizens.
competitive Serbian banking The bank is still in process of in-
market. The bank has started 2012 with a capital vesting since it hasn’t reached expected volume of
increase of €20 million. By doing so, it remained activity. The bank will continue to invest in business
very well capitalized with a Capital Adequacy in Serbia, especially in the areas which are offering
Ratio of 21.68%, almost two times higher than greatest potential for growth.
the obligatory minimum. The average monthly li- Piraeus Bank’s key policy principles for 2012
quidity ratio was also very satisfactory. - liquidity, capital adequacy, asset quality and cost
At the end of year, gross loans reached €611.95 containment - will remain priorities for 2013 as
million, including cross-border loans to the Serbian well. At the same time, the bank is working on the
market booked through Piraeus Bank’s London preparation of next steps for business growth and
branch. The bank had total investments in the increase of client base, as well as on new products
amount of €500 million, while deposits record- in order to meet ever-changing customer needs.
ed growth to €312.21 million. During the last three Also, one of the bank's strategic orientations is to
years, total savings in Piraeus Bank has doubled. help SME sector in overcoming the consequences
From the amount of €157 million at the end of 2009, of the economic crisis and support local communi-
they grew to €312 million at the end of 2012. The ties’ through various corporate social activities. We,
increase in deposits was a result of trust and loy- at Piraeus Bank, believe that 2013 will be better. ■
A
Affairs, Embassy of s a long-stand- because these companies would be convinced, that they
Hungary to Serbia ing and val- could expect a continuously improving and predictable
uable trade business environment in Serbia. Hungary experienced the
partner to Serbia, largest inflow of FDI during the decade before the EU inte-
Hungary has already gration, so we can expect the same tendency in Serbia too.
passed through the As I mentioned, there have already been steps for-
EU gates and stands ward in improving stability and predictability which re-
ready to help Serbia ceived a positive response from foreign investors, but
in the process of re- much more is needed. When foreign companies are
form. In the view planning their further investments, they often rely on a
of Duskó Karagics, variety of competitiveness and investment climate re-
Head of the Office for ports (such as the Global Competitiveness Report, or the
Stability Economic Affairs, Embassy of Hungary to Serbia, there Doing Business Report), but Serbia unfortunately has
has been progress but more is needed. not achieved significant progress in these reports dur-
“The new Serbian Government, after its formation, ing the last year, and performed poorly in regional com-
had decided about many measures, the aim of which parisons also. The most important message for foreign
was to develop the business environment, and these investors would be the quickest beginning of accession
were received very positively by the corporate sector. negotiations. Of course, this does not primarily depend
In my opinion as regards reform, among further steps on economic but rather political terms, but it would sur-
which should be taken is a comprehensive reform of ly guarantee investors that Serbia has irrevocably cho-
the labour market, because sen the European way.
the current system is very in- The beginning of accession During the past ten years,
There have flexible and a major obsta- negotiations would surly guarantee significant investments arrived
already been cle to the creation of jobs.
investors that Serbia has irrevocably from Hungary to Serbia, and
steps forward in Frequently mentioned prob- also trade relations between
improving stability lems are the variety of bu-
chosen the European way
the two countries became very
and predictability reaucratic obstacles such as the tax reporting proce- intense, making Hungary now the fifth largest export-
which received a dure and the issuing of construction permits, so seri- er to Serbia. This proves that Serbia is very attractive for
positive response ous measures are needed in these fields too. Hungarian companies, but this doesn’t mean that there
from foreign Hungary had joined the European Union in 2004, so are no existing problems. I already mentioned the vari-
investors, but our country has still fresh memories about the positive ous bureaucratic obstacles, and in addition, Hungarian
much more is effects of the integration process. For foreign companies companies often complain that it is difficult to compete
and investors the setting of the starting date of the ac- with domestic firms in public procurement procedures.
needed.
cession negotiations would be a huge positive message, Despite the fact that significant progress has been made
in recent years, the veterinary and phytosanitary inspec-
tion and control on the borders still represent a major
problem because they place companies exporting perish-
able foods into a difficult situation. Hungarian companies
MINI PANI is at the very top of the Serbian baking industry. For over a decade, we also take issue with drug price controls, and companies of
have been successfully implementing our franchising strategy which meets all of the two countries sometimes face barriers in foreign ex-
the requirements of the franchise code of ethics according to the European Fran- change turnover. We understand that Serbia wants to pro-
chise Federation which has ranked us first among the existing franchises in Serbia. tect its internal market and domestic firms, but some-
times its means are counterproductive. Our role is to draw
Mini Pani doo, Hipodromska bb; 24000 Subotica the attention of the Serbian authorities to these problems,
tel.+381 24 621 521; fax. +381 24 621 522
but we are ready to share our experiences too, because
info@minipani.com; www.minipani.com
not so long ago we were in the same situation.” ■
IT Experts
The trade exchange between Serbia and India has been
recording constant growth since 2006, with Serbia having a
pronounced trade deficit
A
s one of the tile looms, molds for rubber or plastics, aluminum
founders of waste and scrap and others.
The Non- In 2012, Serbia exported to India US $3 mil-
Aligned Movement, lion worth of goods as follows: cigarettes, sorting,
India has been one screening, separating and washing machines and
of the most impor- their parts, aluminum waste and scrap, heterocy-
tant trade partners to the former Yugoslavia until clic compounds, switching devices for telephony
gaining independence. Following the well-known and telegraphy, pipe fittings and plastic hoses, ma-
Tripartite Agreement (between Yugoslavia, India chinery parts and accessories. The following com-
and Egypt), the trade exchange between these panies from Serbia exported to India - Philip Morris,
countries was intensive with an extensive use of Operations, Prva Iskra Oprema – Barič, Cezar
customs tariff concessions. We exported plastic Belgrade, Zdravlje Leskovac, Slitter Kragujevac,
masses, electrical machinery and equipment, pa- Decode Novi Beograd and others.
per and cardboard, copper and copper products, In 2011, Serbia imported coffee, diesel fuel, het-
Trade exchange
iron, steel and steel products, aluminum, steam erocyclic compounds, network station telephones,
boilers and accessories, vehicle parts, and parts for yarn, raw zinc and others from India. The biggest trade
electrical car batteries to India. We imported from In 2012, Serbia imported from India US $164.2 exchange between
India tea, pepper and other condiments, soybean million worth of goods namely: network station tel- Serbia and India
oil cakes, organic chemical products, raw hide and ephones, coffee, heterocyclic compounds, raw un- was recorded
leather, silk and products made of alloyed aluminum, medicine, sin- in 2011, when it
other fabrics. India has been Serbia’s gle yarn, Ferro Silico Manganese,
amounted to US
The trade exchange between partner since the raw zinc, sesame seed and
$168.4 million
Serbia and India has been record- establishment of the Non- granite. The biggest importers
ing constant growth since 2006, were: Hemofrarm – Vršac, PIN
(of that amount,
Aligned Movement Serbia exported US
with Serbia having a pronounced Computers – Novi Sad, Grand
trade deficit. The biggest trade exchange between Prom Belgrade, CT Computers Belgrade, Impol $7.7 million worth
the two countries was recorded in 2011, when it Seval Sevojno, Zdravlje Leskovac, Sirmium Steel of goods to India
amounted to US $168.4 million (of that amount, Sremska Mitrovica, and Strauss Adriatic Šimanovci. and imported US
Serbia exported US $7.7 million worth of goods to In April 2012, the Indian company Embassy $160.7 million).
India and imported US $160.7 million). Group started implementing a long-awaited in-
In 2012, the trade exchange stood at US $167.2 vestment in Serbia’s IT sector by building an IT and
million with Serbia exporting US $3 million worth technology park in Inđija. The investment is val-
of goods to India and imported US $164.2 million ued at close to €600 million, and, during the ini-
goods from this country. tial stage, the investment will amount to around €40
In 2011, Serbia exported the following prod- million. The park is supposed to span across 25,000
ucts to India: gunpowder, sorting, screening, sep- square metres and employ 15,000 people. The pro-
arating and washing machines and their parts, tex- ject is expected to be finished in five years’ time. ■
I
srael believes in Naturally, this will raise the issue of competi-
Serbia and in its tiveness of the Serbian economy and its produc-
capability to re- ers on the European market; the period of negoti-
alize the econom- ations could be wisely used to adjust and meet the
ic potential it holds. standards in order to be able to compete, export
We, at the Embassy and equally participate at EU market as an active
in Belgrade, will do player. Personally, I believe that Serbia can achieve
our best in order to all of that.
support the need- Criticism about slow procedures, endless bu-
ed steps, by any reaucracy and lack of long term planning in Serbia
Serbian government, intended to bring the Serbian is familiar to us, but after visiting every region in
economy back to where it really belongs. this country, conducting many visits and business
I think that there should be a continuation in meeting, my impression is that the needed change
the direction of reducing ‘red tape’, creating fa- is now understood and desired at all levels of the
vorable investment climate in the branches of the economy. To me, as a believer in Serbia, that is an
Government and focusing on fields in which Serbia encouraging sign.
holds an added value - such as agriculture, energy Alongside vision, entrepreneurship and busi-
and IT sector. ness dedication, the main concerns of the poten-
I think more can be mutually done, in order to tial investor are to be able to meet his objectives
expose the Serbian potential to Israeli investors as soon as possible, pay back his investment and
and encourage joint venture projects. Coming from become profitable. In cases where the investment
Israel, which is known as the “Start-Up Nation”, I turns out to be a success story, a “magic circle” is
recognize a need to develop and nurture entrepre- created, and a positive Buzz spreads around the in-
neurial culture in Serbia, and to support it through ternational business community. These outcomes
Positive Buzz the government. The Serbian upgrade the investment des-
In cases where the Innovation Fund is a good My impression is that the needed tination’s reputation, making
investment turns example, and we are proud it more visible and intriguing
that we had the possibility to
change is now understood for other players; help to re-
out to be a success and desired at all levels of the
contribute – by sharing the inforce a better branding for
story , a ,,magic economy. To me, as a believer in the investment destination.
Israeli experience.
circle,, is created, As a candidate coun- Serbia, that is an encouraging sign Israeli investors, in differ-
and a positive Buzz try for joining the European ent fields, did not pull their
spreads around Union, Serbia has access to funds, credits and ten- businesses out of Serbia, but rather enlarged their
the international ders - and this will be even more available as the engagements in recent years, despite the world
business procedure advances. Joining the EU would contrib- economic crisis. Israeli companies have invested
community. ute to stability, predictability and the ability for long- more than €1 billion in Serbia over the last 10 years.
term planning, strengthen legal protection of in- I am convinced that by further understanding
vestment, and raising the interest of foreign inves- the investors’ needs, removing bureaucratic bar-
tors in the Serbian market. riers and providing the necessary atmosphere,
As Serbia advances in the European Integration Serbia can expect bigger Israeli investments which
process, transparency and effectiveness of the will in the long run create more jobs, greater rev-
economy will be desired, thus hopefully leading to enues for local and foreign registered companies,
greater competitiveness, fewer complicated proce- and a great contribution to the recuperation of the
dures and less burden of bureaucracy. Serbian economy. ■
I
taly has long June European Council sends a strongly positive Strategy
been a staunch signal in that regard.
supporter of In order to successfully send the appropri-
Serbia, both in eco- ate messages to Serbia, we should continue ask-
nomic terms – with ing ourselves from the EU side the following ques-
many large and tion: what is our strategy for Serbia’s future? Are we
small investments pursuing it coherently and effectively? Italy has no
in the country – as doubt. Serbia belongs inside the European Union.
well as in terms of This is why we have been working hard for many
Serbia’s European aspirations. Looking at the road years at supporting Serbia’s EU perspective and we
ahead, Paolo Toschi, Head of Economic Affairs at will continue to do so. The key is to continue giv-
In order to
the Embassy of Italy to Serbia, underscores the ing a realistic European perspective, one of sta- successfully send
need for Serbia to carry on relentlessly in efforts bility and prosperity, to Serbian institutions and in the appropriate
to open the market to new opportunities. particular to Serbian citizens. Keeping this mes- messages to
“The overriding concept I would like to stress, sage alive throughout the next steps leading to the Serbia, we should
when it comes to future work June European Council is funda- continue asking
needed to support growth, is that Italy has no doubt. Serbia mental. Accession negotiations ourselves from
Serbia can show the world that belongs inside the European should start soon. the EU side
it’s open for business first and Union. This is why we have All these positive develop- the following
foremost through EU integration. ments will greatly improve trust question: what is
To make this happen, domes-
been working hard for many in Serbia by international mar-
our strategy for
tic players need to openly em- years at supporting Serbia’s kets. A crucial role is played by
EU perspective Serbia’s future?
brace collaboration with local and the rhythm of reforms associated
international players. Recent his- with EU integration, which make
Are we pursuing
tory with Italian investments proves that this is a the Serbian business environment business-friend- it coherently and
successful recipe for putting Serbia on the world lier by the day, in particular when focusing on in- effectively? Italy
map of financial and industrial investments. FDIs creasing productivity and competitiveness.” ■ has no doubt.
provide Serbian players, be it institutions or com-
panies, with more opportunities and more instru-
ments to step in the direction of a prosperous fu-
ture. This requires focusing on open competition as
a force for progress, and favouring transparency in
all business areas. Many steps are being taken in
the right direction.
All in all, I believe we can say that Serbian au-
thorities have been able to correctly identify EU in-
tegration as a top priority, and pursue it actively. We
count on the mid-April report by High Representative
Ashton and Commissioner Fuele to positively reflect
this momentum. Italy will do its utmost so that the
W
hile there have been some significant and known all over the world. Of course, that helps
Japanese investments in Serbia, eco- foreign investors very much to get into business in
nomic and trade relations could per- the country.
haps be further developed and enhanced by in- I can see that Serbia is really trying to join the
creasing the exchange of information between the EU by taking measures to secure business con-
two countries. In the view of Kentaro Otani, Second ditions in line with the EU standards. In that con-
Secretary, Embassy of Japan in Serbia, the progress text, the efforts taken by the Serbian government
which Serbia is making in aligning its systems with for tackling corruption are very visible and will have
European standards, both as a part of the EU ac- positive effects on potential foreign investors, in-
cession bid and as part of the ongoing reform pro- cluding Japanese business people.
EU standards cess, represents a step in the right direction. Clarity, As far as the Japanese-Serbian economic rela-
For Serbia, joining transparency, and coopera- tionship is concerned, a lack
the EU means tion will be key to this effort. The efforts taken by the Serbian of information about each
that the business “While some initial ac- government for tackling corruption other in both countries is the
tions have recently been tak- most imminent problem. In
environment in
en, further reform efforts are
are very visible and will have the field of business, it goes
the country is fully
highly required. Serbia has positive effects on potential without saying that poten-
harmonized with to strive hard to reform more foreign investors, including tial investors must be well
the EU standards, and cannot return to the pre- Japanese business people informed about the realis-
which are well reform situation since many tic situation of the country
established and people abroad keep an observant eye on the situ- to be invested in, as well as its perspective in me-
known all over the ation in Serbia. At the same time, the government dium and long term. Our embassy with the help of
world. may also pay attention to the importance of pre- JETRO (Japan External Trade Organization) organ-
senting the achievement to other countries and at- ized a business seminar for Japanese companies in
tracting the attention of the business people there. Dusseldorf in 2010 to be acquainted with the busi-
The country should make the improved Serbian ness environment in Serbia. The embassy also or-
business environment known to them so that they ganized a seminar on cutting-edge Japanese tech-
would take it well in their decision-making process. nology for coal thermal power generation in Belgrade
For Serbia, joining the EU means that the busi- in 2012. I think through such activities, business cir-
ness environment in the country is fully harmonized cles of both countries are expected to know better
with the EU standards, which are well established about the potentials of future cooperation.” ■
T
he Republic been made to a great extent. And the government
of Korea has should continue to create a programme which will
contributed in contribute to macroeconomic stability, cutting bu-
a meaningful way to reaucracy, improving infrastructure as well as cre-
the advancement of Serbian business and H.E. Mr. ating incentives.
Kim Kwang-keum, Ambassador of the Republic of Since the 1960s the Republic of Korea has im-
Korea, shares his view of how the economy is de- plemented long-term economic plans which have
veloping. yielded good results, and thanks to it Korea has
“A system with transparency guaranteed in achieved such a remarkable success that led to the
all governmental and business sectors should be advancement to the club of the developed countries.
made, so that there will be no breeding ground for In case of Korean Yura, a company operating in
corruption to grow. Also, collusion between political Serbia, which generally marked a great success,
and business circles should be cut off, so that busi- it has faced certain minor problems related to bu-
nessmen can concentrate on their activities without reaucracy, one of which is referring to the length
political consideration. of certain procedures. The
Reforms
In addition, the reforms SIEPA is doing a good job in Serbia Investment and The reforms should
should be focused on or- Export Promotion Agency be focused on
dinary people, their safe-
introducing the investors and (SIEPA) is doing a good job ordinary people,
ty and the raising of the liv- following up their business activities in introducing the investors
their safety and
ing standard. Further steps at the beginning, but it is necessary and following up their busi-
the raising of the
should be made in fighting also to set up a supervision system ness activities at the begin-
living standard.
against organized crime and to expedite the process ning, but it is necessary also
Further steps
corruption. A system of fair to set up a supervision sys-
transactions should be implemented, and red tape tem to expedite the process. should be made
in the business arena rooted out. Judiciary reform is The information system for integrated recep- in fighting against
necessary in order to pursue democratic procedure. tion of registration applications was successful- organized crime
Definitively getting the date would highly con- ly introduced in the Serbian Business Registers and corruption.
tribute to enhancing the national image of Serbia Agency (SBRA) thanks to the donation of the Korean
and send a clear positive signal to foreign investors. Government, in value of US $3.2 million. The pro-
Complying with EU standards in all fields would in- cedure of registration with the SBRA has been ad-
crease stability and predictability of business envi- ditionally shorten, which has further enhanced the
ronment. SBRA’s one stop-shop business registration system.
Stability, predictability and long-term planning Thus, I do believe that said donation has been con-
are very important for foreign investors. It is cer- siderably contributing to attracting more foreign in-
tain that a positive development in these fields has vestments to Serbia.” ■
A
ccording structure and on purchasing necessary technology
to the da- and equipment.
ta collated Delta Holding has been negotiating about buy-
by the Macedonian ing a land plot in order to build a supermarket in
Statistical Office, Skopje. The company plans to invest €100 million in
Serbia is the sec- the construction of a supermarket chain, a distribu-
ond biggest for- tion centre and a bottled water factory in Macedonia.
eign trade part- This investment has ended up in court, but the lit-
ner of Macedonia. igation result is expected to be positive so that the
In 2011, the trade investment process can continue.
exchange between As far as the Macedonian investments in
the two countries amounted to US $831 million, Serbia go, in 2007, the Macedonian company Pord
which is 7.25% of Macedonia’s overall trading with Mašinoprojekt acquired the Vlasotince-based com-
the world. In 2012, Macedonia was ranked the 7th pany Miloš Dinamić at an auction for €320,000 (the
largest export partner to Serbia, and the 18th big- company produces machine and drip moldings).
gest import partner. Seavus Group (on paper a Norwegian company, but
Although the Macedonian ambassador to in practice Macedonian) has a software and IT prod-
Serbia, H.E. Mr. Ljubiša Georgievski agrees that the uct research & development facility in which it has
Serbian government has made the first steps to- invested close to €280,000.
ward reforming the public administration and re- The privatization of chemical company Župa
ducing red tape in the last few months, he also says Kruševac by the Macedonian company Vektra-M has
that it is awkward for an ambassador in Serbia to been overturned by the relevant authorities. Also,
tell the Serbian government what to do: “But, let me the privatization of Jugoremedija Zrenjanin by the
give a bona fide answer – you should proceed with Macedonian company Jaka from Radoviš shared the
Trade reforms even more courageously.” same destiny.
The overall trade exchange be- Despite the stability and predict-
The overall trade
tween Serbia and Macedonia in 2012 Serbia is the second ability of doing business and the pos-
exchange between
stood at US $789.6 million which is biggest foreign trade sibility of long-term planning being
Serbia and a 7.5% decline compared to 2011. partner of Macedonia the main objections by foreign inves-
Macedonia in 2012 Serbia exported US $490.8 million to tors in Serbia for years, Ambassador
stood at US $789.6 Macedonia, a 7.6% drop in relation to 2011. Serbia’s Georgievski thinks that there have been some pos-
million which is imports from Macedonia amounted to US $298.8 itive developments: “Thank God for that and you
a 7.5% decline million, a decline of 7.4% compared to the year be- should continue in that direction.”
compared to 2011. fore. The trade surplus stood at US $92 million. Speaking about the possibility of Serbia ob-
In terms of investments, the Serbian media taining the date for the beginning of the EU acces-
company Pink entered the Macedonian market sion negotiations, the Macedonian ambassador to
by acquiring the Macedonian TV station K 15 with Belgrade thinks that that would give a strong impe-
a plan to form a new TV company called Pink 15. tus to the business climate in Serbia and to foreign
According to the Serbian Chamber of Commerce, investors, yet he is skeptical about EU enlargement.
during the initial stages of this TV station’s opera- “The EU is too busy dealing with itself and it doesn’t
tions (in the first few months), the Pink Company have the time or maybe even the will for enlarge-
will invest €8 million in building the required infra- ment,” he says. ■
F
ollowing Mon- following seven years, the company will invest around
tenegro’s de- €100 million in Montenegro with half of that amount
parture from the going towards developing mobile telephony network
State Union of Serbia and Internet technology. Delta Holding from Belgrade
and Montenegro in has invested a total of €172 million and hired 2,200
2006, Serbian invest- people in just under three years. On April 29, 2011,
ments have reached Knjaz Miloš and Imlek opened a €4.5 million business
a substantial amount. and distribution centre in the Grblje Industrial Zone
We should bear in near Kotor. The Tempo supermarket chain has opened
mind that Serbian a €3.5 million store in Nikšić while Simpo from Vranje
companies are co-owners of joint capacities, primarily opened a new furniture production facility in Podgorica
those in the service industry (tourism and commerce), worth €5 million which spans across 3,000 m2. The
which date back to the time of the common state. In the two countries have also agreed to build a modern bor-
period from 2003 to July 2010, Serbian investments in der crossing in Gostun.
Montenegro have amounted to €231.1 million. In accordance with the financial agreement con-
According to the estimates of the cluded with the EU, “Željeznička
Serbian Chamber of Commerce, there Due to not having the Infrastruktura Crne Gore” has be-
is a real possibility for boosting eco- direct payment operations, gun overhauling a segment of the
nomic cooperation between Serbia
the two countries lose Trebaljevo-Kolašin railroad, a project
and Montenegro. The two sides have that is worth €5 million. This seg-
agreed on important conditions that
over €11 million each year ment is 11.4 km long and the project
Overall trade
would ensure such cooperation. These are free movement entails completely replacing and constructing new rails,
of people, goods, services, capital and information, which gravel, sleepers and other materials on the open line Serbia is the
is something that both countries support. The obstacles and at the Kolašin train station. The subcontractors are biggest export and
on that road are mostly of an administrative nature and ZGOP from Novi Sad, Galeb FSU SMG and ABS Minel import partner to
pertain to the goods crossing the border faster, as well from Belgrade. Montenegro (17.6%
as other non-customs barriers which should be removed. Serbia is the biggest export and import partner of export and
Businessmen from both countries point out that the big- to Montenegro (17.6% of export and 28.4% of import). 28.4% of import).
gest problem in cooperation between them is non-exist- The overall trade exchange between the countries in
The overall trade
ent direct payment operations. Technically speaking, such 2012 amounted to US $923 million which is a 9.3% drop
exchange between
operations can be set up by two banks in Serbia and in compared to 2011. Serbia exported to Montenegro US
Montenegro signing a bilateral contract on opening ac-
the countries in
$814.7 million worth of goods (a 9.6% decline), while
counts and carrying payment operations via those ac- import from Montenegro also declined by 3.7% com-
2012 amounted to
counts. Due to not having direct payment operations, the pared to 2011. ■ US $923 million
two countries lose over €11 million each year. which is a 9.3%
Joint infrastructure projects involving both drop compared to
2011.
Serbia and Montenegro are the reconstruction
of the Belgrade-Bar railway and the Port of Bar, karanovic/nikolic
where the two countries have been working on
fully utilizing available capacities, expansion and
modernization. There are other joint projects like
building roads that pass through both countries
bosnia /croatia /macedonia /montenegro /serbia
and energy projects.
karanovic-nikolic.com
Telekom Serbia has become the third biggest
mobile telephony operator in Montenegro. In the
A
fter he was forced to withdraw from basket- tainly attract attention by politicians and the pub-
ball due to an injury, Duško Knežević turned lic alike. There is a constant desire for affiliation
to business. Two decades ago, he founded in every sense of the word. We need to understand
the Atlas Group which, in the meantime, he relo- that we live in a time of global markets, that capital
cated from Serbia to Montenegro. The Group today knows no boundaries and that, from the business
consists of 30 companies that are engaged in bank- perspective, successful operations and social cor-
ing, finance, real estate, education, tourism, health rectness are the only policies that make economic
care and media. In 2010, Mr. Knežević became a sense and benefit society and citizens.
member of the Clinton Global Initiative by under-
taking to get involved in confronting the problems ► Your political adversaries say that you are “an
► You have been often mentioned both in a posi- ► Some Serbian analysts and influential
tive and a negative context. For months, you have Montenegrin media have been accusing you of
been branded a Montenegrin / Serbian tycoon. Why publicly siding with Milo Đukanović by travelling
is that so? with him to China a month before the election.
- I would disagree with you. My name, or the name of Could you comment?
the Group that I lead, have been mentioned publicly - I am not surprised by that since we live in a high-
► Could you comment on the relations between has wisely invested money generated from privat-
Serbia and Montenegro following the appointment ization?
of the new government in Belgrade? What would - I think that more money should have been spent on
you recommend in terms of economic cooperation? infrastructure, since that is the key element for the
- Relations have made obvious progress. We have further development of the economy. Be that as it may,
seen some officials giving very categorical state-
ments about that, like the Montenegrin government
and Prime Minister Ivica Dačić during his recent vis-
it to Podgorica. Nevertheless, I think that no defi-
nite headway has been made in economic coopera-
tion, although there is an opportunity for that which
is becoming increasingly topical. I am particular-
ly referring to the construction of the motorway, the
reconstruction of the Belgrade-Bar railway and co-
operation in energy sector. It would be important
to establish cooperation through using the euro as
a link between the two countries’ stock exchang-
es. I think that with Montenegrin mediation, Serbia
would be able to have a more significant economic
presence in Kosovo. and bearing in mind the very specific environment in
the last 20 years – the transition, the sanctions, the Duško Knežević
► What is the underlying reason for the crisis in wars in the region and the global economic downturn and Bill Clinton
Montenegro? – social needs were often given priority over develop-
- That crisis has erupted mostly because of the re- mental ones which disabled a more adequate use of
duced FDIs on which Montenegro, as a small emerg- the money generated during the privatization.
ing economy, depends a
lot. However, Montenegro I think that no definite headway has ► If you were in a position
has the capacity to attract been made in economic cooperation to decide, would you have
new investors especial- although there is an opportunity for sold Aluminium Combine,
ly considering its renew-
that which is becoming increasingly Bauxite Mines, Nikšić
able energy potential for Ironworks, Saltworks, the
which there is great in- topical. I am particularly referring to hotels in Kolašin and the
terest in China, Italy and, the construction of the motorway, the Avala Hotel in Budva for
as of recently, in the US. reconstruction of the Belgrade-Bar the amount of money ap-
Also, Montenegro’s geo- railway and cooperation in energy sector proved by the government?
graphic position makes it - The tenders, via which
attractive to Turkish and Arab capital. This capital is respective investors were chosen, had an interna-
somewhat more conservative, but it hasn’t been af- tional character and they were public. For that rea-
fected by the crisis that much. Investors from those son, I think that that the money obtained from the
countries see Montenegro as an opportunity for fast sales was conducive to the market conditions at the
access to the European market. time these tenders were launched. What is impor-
tant is the long-term effect, and, in that context, I
► Do you think that Montenegro is ready to compete think that it is more important to pick the right part-
for the projects that would draw in big investors? ners whose presence would help with reaching
- Yes, I do. Montenegro has demonstrated that in strategic goals of economic development, as well as
the pre-crisis period, and currently, we have sub- for those partners to fulfil the required conditions. ■
W
the Kingdom of the ith the pros- Serbia is the first step and that work in at hand now.
Netherlands pect of im- Further progress on the way to the European Union
proving the will be a powerful message to Serbian and foreign inves-
Serbian economy and tors that Serbia is determined to make the transforma-
preparing the country tion necessary to become a member state. It will lead
for EU accession ne- to an improved regulatory environment, an equal play-
gotiations, the efforts ing field, greater competitivity and better recourse to the
made by the Serbian courts if necessary. Foreign direct investment will in turn
government, accord- lead to the modernization of the Serbian economy, create
ing to H.E. Mr. Laurent new jobs, generate income and thus enable individuals
Louis Stokvis, Deputy and the state to realize much needed projects. Though
Head of Mission, accession to the European Union is still a long way off,
Embassy of the Kingdom of the Netherlands, must be by setting the clear goal to become a member state, to
carried on and intensified. Although good work has take the decisions that will make accession possible and
been done and recognized, the path to a better econ- to prepare Serbia for accession, will in itself already have
omy and an easier place to do business is still a long a positive effect on Serbian and foreign investors. The in-
Decision one. The Serbian government must keep its focus on flow of foreign investments often precedes accession, like
the clear goals which have guided it thus far. in Poland, the Czech Republic and Slovakia, just to name
“An important step made by the Serbian government a few countries.
in reform is the drafting of a strategy for the reform of There are mixed feelings among Dutch businesses
the public administration, and I am when it comes to ease of doing business
aware that the Serbian government is
Dutch potential in Serbia. The decisions that the Serbian
working on this strategy. The Minister investors are often small government has taken in order to im-
of Justice and Public Administration and medium enterprises. prove the business climate for foreign
must be commended for having al- They struggle companies are very important. There is
ready published the draft strategies
The decisions addressing complex an effort to reduce red tape, to reduce
on judicial reform and the fight against the number of taxes and other dues, but
that the Serbian
corruption. When the work on the draft
regulatory fields there is still much room for improve-
government has
strategy for the reform of the public administration will ment. I already noted that the Serbian government is work-
taken in order have been finalized under his guidance, a further im- ing on three important strategies, on justice reform, as to
to improve the portant step will have been taken in determining the the fight against corruption and on administrative reform.
business climate strategies for the modernization of Serbian institutions. Further work in all these fields, on the tax regulations, on
for foreign I am looking forward to the day that the strategies will red tape, is of particular importance if one wants to attract
companies are very be agreed and will start to be implemented. However, Dutch investors. Dutch potential investors are often small
important. let’s acknowledge that devising of the right strategy for and medium enterprises. They struggle addressing com-
plex regulatory fields. Nevertheless, one senses improve-
ment even though much remains to be done.
Last year our embassy carried out a modest re-
TMF Services d.o.o.
Bulevar Zorana Đinđića 64a search among our businesses with an aim to identify
11070 Belgrade the most common challenges of the Dutch businesses
Contact: Petrina Makakova in Serbia. On top of the list were issues with tax related
T. +381 11 220 93 00 processes, public administration and lack of legal cer-
serbia@tmf-group.com
tainty. Our research suggested that timely and consist-
www.tmf-group.com ent implementation of applicable rules and regulations
would already greatly improve the business climate for
Dutch SMEs operating on the Serbian market.” ■
The key elements for success are conducting the reforms H.E. Nils Ragnar
with thorough planning, transparency, predictability, Kamsvag
cross-sectorial cooperation and learning, and patience Norwegian
Ambassador to the
Republic of Serbia
T
r a n s p a re n c y tiations for membership in the EU will be signifi-
and predicta- cant in terms of increased focus of the state appa-
bility have long ratus on reforms, as well as intensified exchange
been the bywords with the EU structures in the process of imple-
of foreign investors menting legislation. It will give foreign investors a
looking at Serbia as strong signal about the political and economic di-
an investment destination. In order to achieve it, rection of the country, which is very important for
much work must still be done in carrying out re- potential investors. EU membership will increase
form and furthering best practices. In a statement long-term predictability and stability and provide a
for CorD, H.E. Nils Ragnar Kamsvag, Norwegian common ground for Serbia and its main business
Ambassador to the Republic of Serbia, lays out his environment.
ideas and views as to why reforms are key to this Adoption and implementation of EU-standards
process. Regardless of EU accession talks, the am- and regulation has certainly contributed to stabili-
bassador makes the case for continuing reform for ty and predictability.
the good of the nation. This is also key to the creation of a level playing Reforms
“To realize Serbia’s economic potential Serbia field for competition with respective sectors. To this
needs to improve its business and investment en- end, the government should continue and enhance A date for starting
vironment through simplifying complicated bu- close dialogue with the public and the internation- negotiations for
reaucratic procedures, furthering the rule of law al community in order to pursue reforms so that membership in
and continuing to fight corruption. Serbia’s pub- stakeholders can relate to the reform process in the EU will be
lic administration needs a transparent and predicta- significant in
further modernization and The government should continue ble manner, and provide in- terms of increased
increased efficiency to and enhance close dialogue with put on equal terms. Public focus of the state
meet the future to the best debate and involvement is
of Serbia’s public interest.
the public and the international very important in order to
apparatus on
community in order to pursue reforms, as well
I think the key elements make durable changes that
for success are conduct- reforms so that stakeholders can stand the test of time. as intensified
ing the reforms with thor- relate to the reform process in a During the last ten exchange with
ough planning, transpar- transparent and predictable manner years, Norwegian compa- the EU structures
ency, predictability, cross- nies have invested €1.6 in the process of
sectorial cooperation and learning, and patience. billion in Serbia, making Norway one of the big- implementing
Seeing through necessary reforms of the judicial gest investors in Serbia. Still, few Norwegian legislation.
sector must be a key priority: rule of law, mod- companies are operating here. Those which are
ernized functionality of the judiciary and efficient here, however, are reasonably satisfied with their
dispute settlement mechanisms are important to operations, despite the occasional challenges, red
economic life as well as the citizen and public life tape and bureaucratic inefficiency being some of
in general. them. Such issues could be resolved by speed-
The business climate and investment facilita- ing up bureaucratic processes and ensuring in-
tion in Serbia should be improved regardless of the creased clarity and transparency of the process-
[EU] date-issue. However, a date for starting nego- es themselves.” ■
O
ne can ad- to regulating relations with Kosovo and other coun-
mire the tries in the region that also have a European per-
Serbian ap- spective in front of them.
proach to the issue Serbia’s failure to move significantly higher in
of public adminis- any global rankings of the business environment,
tration reform, but investor relations or corruption perceptions were in-
there are still many dicative of the slowing-down of efforts in this regard.
efforts to be undertaken and gaps to be filled. The extent of tax evasion and the grey economy
Task Public procurement, privatisation procedures is difficult to estimate, but it is clear that this is an
and public expenditure are still areas of con- urgent and crucial area of reform if Serbia is to bal-
In the following
cern. Many concerns were raised over the Ministry ance its books and restore its economy to health.
years, the Serbian
of Finance’s amendments to the Law on Public Further adjustments to the tax code, and to the sys-
authorities will Procurement envisaging the abolition of the Public tem of subsidies, will also be advisable to promote
have very serious Procurement Office and ‘centralising’ everything competitiveness and competition.
tasks standing within the Ministry. The chief concern is that one Polish investors are guided primarily by eco-
in front of them, institution will both organise tenders and monitor- nomic criteria. We are not at all different from oth-
ranging from ing and controlling the process. Criminal charges er foreign investors. Similar to them, we also expect
judicial reform, raised against several former ministers are still not the investment climate in Serbia to improve, not on-
the struggle resolved. There are serious con- ly at the level of political decla-
with widespread cerns in the field of data protec- Serbia must first fulfil the rations, but primarily in the ar-
corruption tion, primarily the government’s
obstruction of the work of the
criteria, and then the date will ea ofUnfortunately,
concrete activity.
a number of
to regulating be set. Serbia should do its Polish investors can observe
Commissioner for Protection of
relations with
Information of Public Interest best to carry out all obligations the abovementioned problems
Kosovo and other
countries in the
and Data Protection. provided in the Action Plan by themselves. They are affect-
A decision on the date of EU ed by the still existing high-
region that also accession talks and every further step on the path level corruption, present barriers and constraints
have a European toward the full membership depend on fulfilment such as limited access to export financing and in-
perspective in front of the criteria set by the European Union. Therefore surance of financial contractual obligations, in-
of them. Serbia must first fulfil the criteria, and then the date complete transition reforms (in economy, legal ad-
will be set. Serbia should do its best to carry out all ministration, and the like), regulations that change
obligations provided in the Action Plan. too often, a non-transparent procedure when it
Serbia should accelerate implementing the comes to public procurement, tenders and admin-
most profound and consistent reforms before the istrative procedures in obtaining obligatory per-
period of accession negotiations. In the following mits, approvals and other documents, privatization
years, the Serbian authorities will have very serious issues, low credibility of available statistical da-
tasks standing in front of them, ranging from judi- ta and methodology that does not correspond to
cial reform, the struggle with widespread corruption European standards. ■
A
mong the is- development, social and economic solid perspec-
sues which tive, therefore a stable business climate. In any
need to be ad- country with this kind of potential, foreign inves-
dressed urgently in tors would ask for simple procedures, equal treat-
Serbia’s bid for EU ment for all competitors, honesty and transparen-
accession, Patricia cy from the authorities. It is rather obvious that a
Radut, Economic clear European perspective for Serbia and the ad-
Counsellor at the vantages of joining the EU will represent solid rea-
Embassy of Romania sons for the foreign potential investors to come and
to Serbia, emphasis- make business here.
es the need for a level playing field for foreign and It is important that the state institutions be cred-
domestic investors, one which is transparent and ible, flexible and efficient in relation with foreign in-
provides equal treatment and opportunity for all in- vestors. That would make Serbia a major busi-
vestors to assess and choose Serbia as an invest- ness destination of the region. In order to achieve
ment destination. In discussing the road ahead for that, the modernization of legislative framework,
Serbia, other factors include reform and clarity in along with implementing laws that facilitate com-
bureaucratic procedures. petition should be a priority for any government.
“The measures taken by the Serbian govern- Investments mean a more determined and coher-
ment to reform the public administration and re- ent response at the state institutions level, securi-
duce bureaucracy are indeed essential to boost and ty and prosperity - equally important aspects in the
revitalize economic activities, especially in a time philosophy of business people.
when the global financial crisis is felt deeply as a The conclusions of recent discussions with
result of decreased industrial production and high Romanian companies present on the Serbian mar- Business climate
rate of unemployment. ket revealed that, unfortu- Joining the EU
At the same time it is It is important that the state nately, there has not been
means stability,
equally important to mention institutions be credible, flexible an improvement in proce-
sustainable
that joining the EU remains a and efficient in relation with dures and measures taken by
priority of Serbia, and, from the authorities to encourage
development,
that viewpoint, there are sev-
foreign investors competition. An important social and
eral requirements to be fulfilled in the reform areas signal that Serbian’s authorities should give to busi- economic solid
such as reducing corruption, improving the legisla- ness environment would be the adoption of legisla- perspective,
tive system, including the law on public enterpris- tion that would lead to fair competition among eco- therefore a stable
es and law on public procurement. Therefore the nomic operators. When I say this, I’m referring to business climate.
government should continue to be involved in the the fact that a private company cannot compete with
improvement of the current legislation and subse- a state company (a relevant example is the furniture,
quently in its implementation by making use of all food – sugar, milk, oil areas, etc.). Also, Romanian
instruments at its disposal. investors are discouraged by certain practices that
As Serbia gets closer to the EU, there are impede carrying on economic activities in good con-
more and more chances for the business environ- ditions in Serbia. I think, as well, that impartiality of
ment and economic situation of the country to im- public administration in the development of private
prove. Joining the EU means stability, sustainable economic process is essential.” ■
R
ussia and certain extent. Generally speaking, it seems that the impor-
Serbia have tance of the EU membership is exaggerated – we should not
been going demonize the EU, nor make a fetish out it. This is an organ-
through the same peri- ization where, by default, strong countries have more luck.
od of political and eco- The EU is interested in Serbia as much as Serbia is
nomic development. interested in the EU. That’s why this organization needs
The difference is that to take Serbia’s interest into account since the country is
Russia started to tack- keen on joining it. An enchanting smile on Ms Ashton’s
le its burning issues in face will not suffice.
early 2000, while Serbia Russia has been investing in Serbia’s real sector on a
is dealing with them long-term basis. These are primarily oil and gas projects,
only now. Secondly, Russia has been developing over the as well as energy and transport infrastructure projects. The
last years and the progress has been evident in the coun- implementation of the South Stream project is ongoing.
try’s social and economic situation. Russian companies Lukoil and Gazprom Neft have been
Cooperation between the two countries in fighting cor- successfully doing business in Serbia, with Gazprom Neft
ruption is in mutual interest of both countries. The Serbian being the key investor and a shareholder in the Serbian oil
government is currently considering adopting an anti-corrup- company NIS. The modernization of the Serbian railway in-
tion strategy for 2013-2018 which could lead to the two coun- frastructure is due to start this year. In the last two dec-
tries exchanging experiences and undertaking joint actions. ades, total Russian investments in Serbia have amount-
In terms of public administration reform, the two ed to around US $2.5 billion. Russia plans to increase this
Investment countries could devise measures like increasing the amount by US $1.5 billion in the next three years. On one
In the last state’s role in securing full adherence to the law and de- hand, Serbia is interested in attracting investments, while,
two decades, veloping the institution of accountability, in addition to in- on the other, it wants to find new export markets.
total Russian creasing the availability of information and transparency In creating a better environment for foreign investors,
investments of the work done by civil servants in instances like holding I would like to underline the role that Foreign Investors
public procurements. Council plays. An obstacle that Russian
in Serbia have
Both Russia and Serbia find it im- Russia has been investing companies could be facing in terms of
amounted to
around US $2.5
portant to direct the economy more to- in Serbia’s real sector on investing in Serbia could be that terms
billion. Russia
ward the intellectual potential that our a long-term basis and conditions of tenders are outdated.
two countries possess. Due to lack of detailed information about
plans to increase We have never objected to Serbia’s desire to join the EU. the companies that are being sold at tenders, and following
this amount by US This is a matter of your country’s internal sovereignty. It is the signing of a sales agreement, the buyer faces a problem
$1.5 billion in the important for Russia that Serbia’s aspirations towards EU with legalizing the company’s assets and paying its loans
next three years. accession wouldn’t have a negative impact on the develop- which were taken out by the previous management.
ment of our bilateral cooperation. The problem with ever growing liabilities that Serbian
Serbia’s obtaining the date of the beginning of acces- companies have towards their Russian partners has sur-
sion negotiations would send a positive signal to foreign in- faced recently with the total debt standing at US $580 million.
vestors and improve the business climate. Unfortunately, the We need to step on the accelerator in order to extend
EU is not in a good shape today. The markets are shrink- our cooperation in those economic segments where our
ing, unemployment is high and bureaucracy huge. Joining countries complement each other like agriculture, oil and
the EU will complicate Serbian exports to the non-EU mar- gas, energy, transport, telecommunications, defence in-
ket, like the countries/members of the Customs Union, to a dustry and tourism. ■
T
he Serbian The government would need to be more flexi-
government ble in terms of understanding the needs and neces-
should contin- sities of foreign investors. The legal framework and
ue its reform efforts. the practices of all competent authorities should
Steps made towards reform of public administra- enable foreign investors to have the same level of
tion and bureaucracy reduction are acknowledged stability and predictability as the one they are used
by business people. The government should contin- to in their countries.
ue creating a positive business climate, continuance Despite the fact that, as we said, there are sig-
of the trend of full harmonization with EU practices nificant positive trends in Serbia, there are still is-
and improving competition policy. sues and fields in which changes have to be made.
The start of negotiations for accession should On the one side, we welcome the fact that the
certainly contribute to improving the business cli- government has initiated passing very important
Framework
mate for foreign investors. Namely, from the very regulations dealing with this industry and expecting
beginning of their operations in Serbia, foreign in- feedback and results from a public call for free lo- The legal
vestors would have much more certainty for their cations for development of mini hydro power plants framework and
prospective investments planned in Serbia. This across the Serbia. On the other side, we can point the practices of
process, once commenced, out the problems in the ener- all competent
represents a clear signal that a
The energy sector in Serbia has gy sector, where we have some authorities should
country is inevitably going in a Slovakian companies interest- enable foreign
certainly positive direction and great potential, especially in ed in developing projects. The
investors to have
that full harmonization with the the field of renewable sources energy sector in Serbia has
the same level
EU legislation is only a matter of energy great potential, especially in
of time. Furthermore, the for- the field of renewable sourc-
of stability and
eign investors may take into consideration that in es of energy. However, the problems in realization predictability as
practice the countries at the beginning of their ac- of such projects are various such as the non-exist- the one they are
cession to the EU are in some sense very eager to ent clear guidelines and rules which need to be fol- used to in their
grant certain benefits to foreign investors in order to lowed for the realization of such projects, a lack of countries.
attract them. Last but not least, EU accession funds knowledge of the local municipalities in areas des-
will assist the Serbian economy and budget and, fi- ignated for such projects, undeveloped practice of
nally, Serbian citizens. PPP projects (although the PPP law has been re-
Certainly there have been some positive devel- cently adopted) and the process of obtaining of all
opments. The first positive step is continuing nego- necessary permits and authorizations lasts too
tiations for accession to the EU. The second step is long. We feel discrepancies between different lev-
the “battle” against corruption which, if further pur- els of administration which can create an impedi-
sued, will send a clear signal to foreign investors. ment for predictability of doing business in Serbia. ■
R
educing red the accession negotiations; there were these con-
tape is a very stant doubts whether it would be really beneficial
positive de- for Slovenia to join the EU. However, the answer to
velopment. Cutting that question was: what was the alternative?
back on unneces- The trade exchange between Slovenia and
sary bureaucracy, Serbia exceeds a billion euros. The surplus that
the portion of bu- Slovenia has been recording in trading with Serbia
reaucracy which is diminishing with Slovenia importing more and
needlessly slows more goods from Serbia year-on-year. This means
down business pro- that the competitiveness of Serbian products, and,
cedures, is indispen- by that, Serbian exports to the EU, is going up, and
sable. In that respect, Serbia getting closer to the once a product meets all of the EU requirements it
EU membership will change many things. Hence, can be freely sold in any EU country.
in my opinion, it is an imperative for the country As we said, the trade exchange between the two
to continue along the existing road toward the EU, countries is over a billion euros, and one third of
which also entails conducting reforms. all Slovenian foreign investments have ended up in
Slovenia supports Serbia on its road to the EU Serbia. On top of that, there are 1,400 registered
membership and expects Serbia to obtain the date Slovenian companies operating in Serbia. It is be-
of the beginning of accession negotiations this year. cause of that and especially because of the invest-
We do hope that that will happen in June. This ments, that I dare to say that we are more than the
will have a positive effect on improving the busi- sum of the trade exchange statistics.
ness climate in Serbia. If we consider the statisti- The media have been often pointing out to the
cal data pertaining to all new EU members, includ- problems that Slovenian companies have in Serbia.
Surplus ing Slovenia, we can notice that once a country has Several companies did have major problems and
The surplus that joined the Union, that is, just the Embassy was involved
Slovenia has prior to joining it, FDI goes I am confident that FDI will in their resolution. However,
been recording in
up significantly. The EU’s le- only grow once Serbia proceeds when you consider how
gal framework gives foreign along its way to the EU in a more many Slovenian companies
trading with Serbia investors the much need- operate here, the number of
is diminishing with ed higher level of security.
concrete manner these problems is still rel-
Slovenia importing That’s why I am confident that FDI will only grow atively small. I always say that foreign companies
more and more once Serbia proceeds along its way to the EU in a which are successfully doing business in a certain
goods from Serbia more concrete manner. country are the best promoters of that country.
year-on-year. Every year, Serbia has been making notable pro- I would like to commend the great services ren-
gress in improving the investor climate, and it is very dered to the foreign investors by the line ministries,
important to mention that all processes are rapidly and especially SIEPA (Serbian Investment and Export
continuing. Which direction to proceed? I have heard Promotion Agency). It is very important to have an
this question many times. I think that the path to- agency like SIEPA where investors can obtain all rel-
wards EU membership is the one to take, but it is evant information in a very short period of time. Also,
up to individual countries to decide which road to several Slovenian companies have already been suc-
take and what they consider to be the best option cessfully using employment subsidies and have rat-
available. I remember when Slovenia conducted ed this incentive programme as excellent. ■
N
othing, ac- ulations that apply to the whole of the internal EU
cording to market, comprising more than half a billion people.
H.E. M r. For the business community this implies predict-
Bertil Christer ASP, ability, stability, but also transparency in the busi-
the Ambassador of ness dealings as the same rules apply to the en-
Sweden, is more im- tire EU market. What Serbia can offer in addition to
portant that trans- this is a competent, educated and well- disciplined
parency as a means work force, plus a cost structure that ought to be
for Serbia to ad- very competitive. Let me give you but one example,
vance in its reforms namely the Swedish company Tetra Pak, which is a
and align itself with global company that decided to set up a production
the EU. in Serbia. This production facility is one of the most
The government is on the right track, mak- efficient ones that this company has worldwide.
ing clear that the reform of the public administra- One of the greatest impediments to foreign in-
tion and the reduction of bureaucracy are priorities. vestors in any market is the existence of corruption.
Sweden, being the third largest bilateral donor to This new government has been very clear about its
Serbia in terms of financial assistance, has focused objective to eradicate this cancer that stifles the
this assistance to a large extent precisely on projects country’s development and hinders the inflow of for-
in the area of administrative reform. The projects we eign capital, technologies and know how. To this end
support should be designed to support Serbia on her I welcome very much the government’s ambitious
road to full membership in the EU. An efficient and fight against corruption and I know that this opinion
transparent administration serves the dual objec- is also shared very much by the Swedish business
Corruption
tives in this context of strengthening the state struc- community in Serbia. Fighting corruption means I welcome
ture and also preparing Serbia of course that those involved very much the
to become an active and influ- An efficient and transparent have to be sanctioned, but in government’s
ential member of the EU. administration serves the order to establish a level play- ambitious fight
As a representative of the
Swedish government, I certain-
dual objectives in this context ing field for foreign investors,
it is equally important to have
against corruption
of strengthening the state and I know that
ly expect that Serbia will take efficient institutions that regu-
its rightful place in the family structure and also preparing late the market. It also means this opinion is
of EU nations. We have already Serbia to become an active and that corporate social responsi- also shared very
noticed an increasing interest influential member of the EU bility should be a natural part much by the
on behalf of the Swedish busi- of any business endeavor. The Swedish business
ness community in Serbia as a result of the ongo- Swedish embassy has launched a long term project community in
ing EU process. And I would expect that that interest in this area as we believe that a socially responsible Serbia.
will increase substantially once Serbia starts acces- behavior will help companies operating in Serbia to
sion negotiations. There are very obvious reasons better compete within the EU market.
for this. First, the business community anticipates I often hear complaints from the Swedish busi-
political developments and changes affecting their ness community of too burdensome bureaucracy
business. To this end the very clear signals from and non-transparent regulations. If regulations and
the Serbian government about its EU objectives the rule of law are equally enforced among the mar-
are important. Second, as a full member of the EU, ket players, this will impact on the functioning of
Serbia will have adopted the same rules and reg- the market economy and on fair competition. ■
T
he trade ex- change with the world in 2012, Spain took the 27th
change be- place on Serbia’s biggest export partners list (0.75%
tween Serbia of the total exports) and the 22nd place on the big-
and Spain has been gest import partners list (1.33% of the total im-
constantly growing – ports).
in 2010, it amounted These are just some of the Spanish coun-
to US $234.2 million, tries that have invested in Serbia – Emmsa from
in 2001, to US $303.4 Barcelona, which invested in the joint venture com-
million and, in 2012, to US $ 327.6 million. In 2010, pany Eurolink which produces solid wood floor-
the import/export ratio stood at 42% and, in 2012, ing and furniture components and is located in the
up to 35%. Šabac free customs zone, and Grupo Uralita which
In 2012, the following companies exported has bought the Pfleider Novoterm factory from
the most to Spain: Tigar Tyres Pirot, Hemofarm Belgrade that manufactures thermal and sound-
Vršac, Tetra Pak Production, Methanol & Acetic proofing systems. Other investments by Spanish
Acid Complex, Koteks Viskofan, Mitas doo Ruma, companies in Serbia are Barcelona-based Nikko
Sojaprotein Bečej, and Impol Seval Sevojno. Electronica S.A. investing in Engel Systems from
In 2012, the following companies imported the Niš, Viscofan acquiring Koteksprodukt Company
Trade exchange most from Spain: the Institute of Informatics and from Novi Sad and EIX Hotels buying the Hotel
The overall Statistics, Zora System doo Belgrade, ZZ Trlić Srbija in Vršac. Also, there is a joint investment by
economic relations Ub, Tigar Tyres, Renault Nissan Serbia, Porsche the Spanish company Telvent and Serbian company
between Serbia SCG Belgrade, Koteks Viscofan, DMS in power transmission soft-
and Spain are Hemofarm ad Vršac, Agrokons In 2012, Spain was the 27th ware solutions.
doo Feketić, and Nelt Co Belgrade. The segments of the Spanish
primarily based
Serbia and Spain have con-
biggest export partner and economy that have the bright-
on the small trade the 22nd biggest import est future are railway segment
cluded three intergovernmen-
exchange, lack of tal economic agreements so partner to Serbia (Madrid has the third biggest sub-
variety in traded far which are currently in force: way system in the world, modern
goods, shortage of the Agreement on the Reciprocal Promotion and signalling and ticketing equipment, with trains reach-
higher processed Protection of Investments, the Agreement on the ing speeds of up to 300 km/h), infrastructure (six
goods and Serbia’s Economic and Industrial Cooperation and the Spanish companies are among the top 10 construc-
deficit. Double Taxation Agreement. tion companies in the world), machine building (the
So far, Spanish investments have been relatively country is the third biggest producer of tool machines
modest and they have been made in the wood pro- and cars in the EU), the aviation industry (the first in
cessing, chemical, electrics and food industry, as the world in production of small and medium-sized
well as in tourism. The overall economic relations airplanes and turbo engines), environmental produc-
between Serbia and Spain are primarily based on tion and renewable energy resources. Together with
the small trade exchange, lack of variety in trad- Germany, Spain is the global leader in generation of
ed goods, shortage of higher processed goods and wind energy with the sector consisting of close to 500
Serbia’s deficit. In terms of the Serbian trade ex- companies and having 45,000 employees. ■
W
ithin the of the business environment, but in order to attract
framework foreign direct investment in the long term, Serbia
of Serbia’s must continue to make progress in the field of rule
EU accession, there of law, democracy and fighting against corruption.
has been noticea- The new government has pledged to accel-
ble progress in re- erate the EU agenda of reforms with the aim of
cent years in the opening accession negotiations. A number of laws
field of public ad- aimed at further alignment of national legisla-
ministration re- tion with European standards have been drafted.
form. However, the However, the government continues to lack a con-
Serbian authorities will need to move in a more de- sistent, structured approach to consulting stake-
cisive way to ensure that laws and regulations are holders and needs to develop both its monitoring of
not only adopted but also implemented. Serbia’s the preparation and the implementation of new leg-
overall objective of public reform is to enhance the islation. Political and economic stability, further in-
efficiency, the effectiveness and the accountability stitutional reforms and the improvement of the in-
of the public administration in accordance with the vestment and business climate will be necessary
requirements of the EU integration process and to and essential for proving that Serbia remains con-
support a citizen-oriented public sector. For the sistent on her path to the EU. Investors make long-
Legislation
government, this implies first- term business plans and un-
ly the need to set clear stand- Joining the EU and becoming an certainty jeopardizes that long- The government
ards and to continuously mon- EU member state does not only term planning. Thus, to be able continues to lack
itor the implementation of ac- mean to get the advantages to rely upon consistent regula- a consistent,
tivities and projects, second-
from such a process but also to tory framework, predictability structured
ly to seek the active participa- and sustainability is crucial for approach to
tion of citizens in the process
face its responsibilities any investment decision.
consulting
of designing, implementing and monitoring the Most Swiss investors have had a good expe-
stakeholders and
services and thirdly to decentralize competences rience in doing business in Serbia. We are very
and finances. pleased about the ongoing interest of well known
needs to develop
Switzerland strongly supports Serbia’s transi- Swiss companies – such as Nestlé, Holcim, DUFRY, both its monitoring
tion to the EU. However, joining the EU and becom- Baseler Insurance, Ringier, Sika... Nevertheless, of the preparation
ing an EU member state does not only mean to get investors follow opportunities and those depend and the
the advantages from such a process but also to face largely on competitiveness. There, substantial im- implementation of
its responsibilities. It is in Serbia’s vital interest to provements are still overdue. While the govern- new legislation.
attract foreign direct investments. However, inves- ment was quite successful in its macroeconomic
tors and trade are following opportunities. Thus, policy, very concrete, down to earth issues deter-
the role of the Serbian government is to create a mining private investment decisions deserve more
legal framework and to enhance the opportunities attention and hard work. Moving in the direction of
which allow the private business sector to operate open markets, transparent regulations, consist-
and to flourish. Having obtained EU candidate sta- ent tax and legal frameworks and an efficient, in-
tus is a good signal to entrepreneurs and investors dependent and fair judiciary can bring the realistic
in terms of competitiveness and the predictability hope of a much more vibrant investment activity. ■
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A
ccording to trailer factory. Turkish company Arda Burak has an-
the Wo r l d nounced that it will open a paper product factory
Bank data, in Brodarevo near Prijepolje. Another Turkish com-
in 2011 Turkey was pany, Erste, is willing to invest in wood processing
the leading econom- company Savremeni Dom from Kruševac.
ic power in Europe In October 2009, with the aim of attracting
with GDP growth of 8.95% compared to the aver- more Turkish investments to Serbia, the two coun-
age GDP growth in the Eurozone of 1.81%. Last tries concluded an Agreement on Cooperation on
year, Turkey exceeded the global GDP average, and, Infrastructure Projects which is considered the ba-
according to the latest IMF statistics, the Turkish sis for hiring Turkish companies in constructing in-
economy takes the 18th place on the list of the big- frastructure facilities that have strategic impor-
gest world economies. tance for our country. Turkey has also donated €10
So far, Turkey has invested close to €95 mil- million towards adapting the Lađevci military air-
lion in Serbia which is far from the capacity of port for civil aviation. In 2010 and 2011, the Turkish
the Turkish economy, considering Turkish invest- International Cooperation and Development Agency
ments made in other region- (TIKA) invested €30 million in
Investment
al countries (US $9.5 billion in
Turkey has been showing more building infrastructure in an in-
Romania, and US $4.5 billion in dustrial zone near the village of So far, Turkey has
Bulgaria). One of the most sig-
interest in forging strategic Leskova on the Pešter Plateau.
invested close
nificant Turkish investments partnerships and investing In terms of Serbian in- to €95 million
in Serbia was Efes, acquiring in infrastructural and vestments in Turkey, in March
in Serbia which
both the Pančevo and Zaječar construction projects 2008, BOMEX HOLDING from
is far from the
breweries. The Istanbul-based Belgrade bought a magne-
company Jeanci, which produces denim clothing sium caustic factory in the town of Tavşanlı (in
capacity of the
for famous global brands, has made an investment Northwestern Turkey, which is rich in magnesium Turkish economy,
in Leskovac. ore) from the Austrian company STIROMAG. The considering Turkish
Apart from the textile industry, Turkey has been Serbian company invested in construction of a pro- investments made
showing more interest in forging strategic partner- duction facility and exploration of ore reserves in in other regional
ships and investing in infrastructural and construc- the area. countries.
tion projects, energy, agriculture, food processing Turkey is one of the most valuable trade part-
industry and building tourist and catering facilities. ners of Serbia. Trade exchange is the most impor-
Last year, Turkish investors announced investments tant venue of the economic cooperation between the
in various economic segments, totalling €64 million. two countries, while trading in free zones and re-
In January 2012, the representatives of the Turkish finement projects are also developing strongly. The
family-run business Boral Aluminum, SIEPA and overall trade exchange has been recording almost
the Doljevac municipality signed a memorandum on constant growth over the last ten years, with a con-
constructing an aluminium profile, door and truck tinuous and significant deficit on Serbia’s side. ■
I
n 2012, the trade 113,000 ton capacity. MK Group is also the on-
exchange be- ly company in the world that has implemented the
twe e n Se rbi a ZAGA agricultural module which enables real-time
and Ukraine record- centralized insight into the overall agricultural busi-
ed a substantial de- ness operations on large sections of land and in dif-
cline mainly because ferent locations.
the S m e d e re v o The Institute of Field and Vegetable Crops from
Ironworks import- Novi Sad and Ukrainian Sadi Ukraine have signed
ed less iron ore a contract stipulating export of seed worth close
from Ukraine. The to US $1.5 million. This cooperation has been suc-
overall trade ex- cessfully developing for the last eight years with the
change compared to 2011 was reduced by 50 per- Institute's seed used on a total of 10% of the arable
cent. Serbia exported to Ukraine US $131,497 mil- land in Ukraine. The Maize Research Institute from
lion worth of a goods (a 28% drop) and imported US Zemun Polje had been cooperating with Ukraine
$165,469 million (a 55% drop). The export to import for many years. Although the cooperation had been
ratio went up and stood at 80%, while the trade def- stagnating for a few years, it was re-established in
icit amounted to US $33,927 million. 2007 with the Institute signing an exclusive con-
Ukraine is the 21st biggest export partner to tract for the Ukrainian market with Agroukraina
Serbia and the27th biggest import partner. Company from Kiev.
In 2012, we exported mostly floor coverings Belgrade-based ITM has signed a preliminary
(37% of the total export), water heaters (7.4%), mix- contract with Ukrainian company Euroterminal
tures of aromatic hydrocarbons (7.7%), and as- stipulating joint construction of a distribution and
sembled flooring panels (5%). We imported most- logistics facility in Odessa. The plan is to build a
MK Group ly iron ore (35% of the total import), hot rolled wire 15,000m2 warehouse which will cost around €10
With the help of (9.37%), ammonium sulphate (4%) and paper and million. ITM also plans to distribute Serbian confec-
cardboard (3.8%). tionary products in Ukraine.
the European Bank
Since October 2009, Ukraine is the 21st biggest export However, the global econom-
for Reconstruction
and Development
Serbia has made around US partner to Serbia and the27th ic downturn has postponed
$40 million worth of invest- biggest import partner the implementation of this
(EBRD), MK ments in Ukraine. The big- project. ITM has been coop-
Group has built gest Serbian investors are Sintelon-Tarkett from erating with Ukrainian company Mital for years and
the biggest silo in Bačka Palanka and the holding company MK Group has been importing coke, iron and metal profiles
Ukraine of 113,000 from Novi Sad. Sintelon-Tarkett Bačka Palanka from Ukraine which are distributed in Serbia and
ton capacity. is the majority owner of the Ukrainian compa- Southeast Europe.
ny Vinisin. This Serbian company has been pre- In late March 2008, Metininvest Holding from
sent in Ukraine for over a decade and has invest- Kiev opened a branch in Belgrade. This is the big-
ed substantial funds in the company's development. gest privately owned company and the biggest steel
Sintelon-Tarkett has four factories in Ukraine. Novi vendor in Ukraine. It owns 22 industrial companies
Sad-based MK Group has leased about 50,000 acres and exports to 75 countries. Metininvest – SMC –
of land in Ukraine. With the help of the European Belgrade will sell steel products manufactured
Bank for Reconstruction and Development (EBRD), by Ukrainian steel plants Azovstal, Enakievo and
MK Group has built the biggest silo in Ukraine of Makeevski to Croatia and Macedonia. ■
F
or the reform already here could expand their activities.
process, the Elections and changes of government always
government cause a certain level of unpredictability – from
need look no further a democratic point of view, this is welcome. The
than the very clear most important positive signal is that the govern-
recommendations ment’s key policy – continued EU integration – has
of organisations remained in place. There is also welcome increase
such as the EC’s in consultation with business when drafting laws –
Progress Report, the though there is still much more to go in allowing for
World Bank’s ‘Doing proper consultation of draft Laws by relevant stake-
Business’, the holders.
Foreign Investors On less positive note, institutions critical to the
Council or the healthy functioning of the economy –such as the ju-
AmCham. The government’s reform agenda should diciary, National Bank and State Auditor – have not
be driven by a deep and constructive conversa- yet been sufficiently strengthened. Business will not
tion with impartial experts and business leaders. be able to plan sufficiently until it sees a credible
Reforms must benefit the economy as a whole, not strategy for bringing the deficit and national debt
just protected interests or privileged insiders. down to sustainable levels. Serbia’s renewed en-
In my view, Serbia’s economic and social pros- gagement with the IMF will be central to this.
pects depend overwhelmingly on the situation in the Looking ahead, the key to improving the busi-
labour market that is experiencing soaring unem- ness environment is to engage early and serious-
ployment rate. Reform and modernization of labour ly with business stakeholders, to ensure laws are
law – though initially likely to meet resistance – is drafted that best reflect the needs of Serbia’s econ-
the only way to encourage hiring. Spurring the for- omy and citizens.
malisation of employment, by ra- There is not one unifying theme
tionalising employers’ contribu- The most important regarding problems experienced Business
tions and reducing the bureaucracy positive signal is that the by UK investors. Some report dif- Business will
of legal hiring and firing, will boost
the tax base and enable greater
government’s key policy – ficulties in dealing with the pub-
lic sector, whilst others have ex-
not be able to
continued EU integration cellent relations. In many sectors, plan sufficiently
protection of workers’ rights.
It will be the process of EU ac- – has remained in place UK firms are awaiting the enforce-
until it sees a
cession, as much as accession it- ment of global industrial stand- credible strategy
self, which will benefit the business climate. That is ards. British companies proudly apply the same for bringing the
good as it means Serbia’s economy can reform and technical and ethical standards in Serbia that they deficit and national
increase its dynamism long before Serbia becomes do in Britain and worldwide. However they often do debt down to
an EU member. The reforms associated with acces- so at the cost of price competitiveness against less- sustainable levels.
sion negotiations will spur improvements in every scrupulous competitors. The solutions are for bold
area relevant to business: from inspection and cer- reform: particularly of labour law, but also on in-
tification of goods; to improved protection of com- dustrial standards. And urgently boosting the ef-
petition and tax regime enforcement; to harmonisa- ficiency of the courts, and the capacities of inde-
tion with global standards. Such reforms will make pendent monitoring and enforcement institutions,
for a more profitable market and lower business will improve not only the environment for investors,
risk. Thus, more foreign companies would make but the entire economy and the living standards of
the decision to invest in Serbia; whilst those that are the citizens of Serbia. ■
T
he company employs more than 55,000 It is also very interesting to be in Serbia in this
people and owns 46 factories in 39 coun- dynamic transitional period which the country is
tries. In 2012, BAT sold 700 billion ciga- going through on its way towards joining the EU.
rettes and contributed with more than GBP £30 The Serbian tobacco market is a very challenging
billion to the budgets of the countries where it one, where huge investments have been made in
operates. BAT has been present in Serbia for al- the past; it is extremely competitive and the value
most 17 years and during this period the most of the market itself is still very low.
important milestone was the privatization of the
Duvanska Indutrija Vranje ► BAT is already pre-
(DIV) in 2003. BAT has in- Since the privatization of the Vranje sent in Serbia for almost
vested more than €200 factory, we have invested in Serbia 17 years. Looking back,
million in Serbia, out of
which €115 million were
more than €200 million, out of which what are its experienc-
es on this market until
invested in the purchase €115 million were invested in the now?
and modernization of the purchase and modernization of the - We started as a repre-
Vranje factory. As a re- factory, making BAT the largest UK sentative office in 1996
sult of these investments, investor in Serbia and reached a major
some leading global milestone in 2003 when
brands of the company are proudly produced to- Duvanska Industrija Vranje was privatized. Based
day in Vranje. on that, BAT became one the most important
foreign investors in Serbia, and, until today, the
► Since you only recently arrived in Serbia and biggest UK investor in the country. The Serbian
as this is your first interview for the Serbian me- market has a very significant position in our
dia could you share with us your first impres- business operations in South-East Europe, and
sions about Serbia and its tobacco market? that was the very reason why the decision was
- Well, for me as a Greek, Serbia is a country reached for the Vranje factory. So far, the experi-
that I was familiar with even before coming here. ences in Serbia have been mixed. We have a sol-
After a couple of months here, I must say that I id, growing portfolio, yet we are not achieving the
am extremely pleased to be in Serbia – it’s obvi- desirable financial results due to a number of ex-
ous that Serbs and Greeks are very close in many ternal factors, mostly ones that we cannot influ-
aspects, hence I already feel like I am at home. ence, or over which we may have partial influ-
in Serbia, so far?
- Since the privatization of the Vranje factory, we
have invested in Serbia more than €200 million, out
of which €115 million were invested in the purchase
and modernization of the factory, making BAT the
largest UK investor in Serbia. Some of the leading
global brands, such as Pall Mall, Lucky Strike, Kent
or Viceroy are proudly produced in our factory. In
addition, BAT is also one of the biggest tax payers
in Serbia, since we contribute with more than €100
million annually to the Serbian state budget, most-
ly through excise and VAT.
Law?
importance, both for the state and for the indus- ing negotiations regarding the adoption of the
try to adhere to the agreed calendar, because any Interim Agreement and the SAA between the EU
deviation from it would result in a market distor- and Serbia as a result of Croatian full EU mem-
tion along with the simultaneous decreasing of bership this summer?
state revenues coming from tobacco. - A crucial element for any investment is the pre-
dictability of the regu-
► Illegal cigarette latory environment,
trade is one of the along with political
major problems of the and macroeconomic
tobacco industry. How stability. Serbian for-
do you fight against it eign trade predicta-
and what is the situa- bility in the area of to-
tion in Serbia? bacco, with EU includ-
- Having in mind the ed, was established in
dimension of the 2007 when the CEFTA
problem of illicit trade, treaty was incorporat-
both globally and in ed into Serbian legis-
the EU, the coopera- lation. Therefore, any
tion with the states in reduction of customs
which we operate is rates in the area of to-
of the utmost impor- bacco or granting any
tance. This issue is A crucial element for any investment other form of con-
important for the na- cessions (quota) to
tional governments as
is the predictability of the regulatory the EU, would mean
well, since each ciga- environment, along with political and a serious deviation
rette pack sold out- macroeconomic stability from the provisions
side the legal mar- of the CEFTA treaty,
ket is automatical- changing the environ-
ly a loss for the state ment in tobacco busi-
budget, the compa- ness. At the end of
nies and the retailers. the day, for all inter-
As one of the global national companies
tobacco leaders, BAT the local production
does not tolerate any would be substituted
form of illicit trade with imports from the
and in that respect EU, thereby leading
we cooperate with lo- to a higher Serbian
cal governments in trade deficit, de-
the fight against this creased employment
joint issue. locally and, most im-
Until recently, we portantly, to inconsist-
have not had major ency and unpredicta-
problems in Serbia with the question of illegal bility for the industry which invested over €1.2
tobacco products. Recently a new phenomenon billion in Serbia since 2003. Having said this, we
has arisen – the sale of cut tobacco on the green strongly believe that Serbia should not accept
market, as well as on the streets, and even via any changes of its foreign trade regime with the
Internet. Such sales of cut tobacco are against EU – same rules that we established for the EU
the laws of the Republic of Serbia, thus we ap- in 2007 must stay in place. ■
Member of:
A
lthough Serbia has had a great deal of impor- signal to foreign investors that Serbia is on the right
tant investments from the US, more work is path toward EU integration and that it conforms to
needed to support initiatives to cut bureau- EU laws and regulations. This should, in turn, build
cracy and give a real impetus to the private sector. confidence and trust among potential investors
According to Bradley Harker, Senior Commercial coming to Serbia. I would hope that Serbia will take
Officer at the U.S. Embassy to Serbia, the results of advantage of the start date to begin an aggressive
reform efforts have been mixed. While he points out global branding campaign to showcase the many
several positive moves, his opinion shows that much advantages that Serbia offers foreign investors.
more work is needed to create the consistent pro- This is a case of two steps forward and one step
gress which can reassure US and other investors. back. On the one hand, the Serbian government’s
Moreover, and in tandem recent elimination of over
Proactive steps with the ongoing process of I would hope that Serbia will 100 parafiscal charges was
I would like reforms, both for EU acces- take advantage of the start date a positive step. But on the
to see more sion as well as for the health to begin an aggressive global other hand, we have seen
proactive steps
of the economy, attention branding campaign to showcase multiple examples of min-
by the Serbian
should be paid to the coun-
the many advantages that Serbia istries enacting or attempt-
try’s branding, letting the in- ing to enact legislation that
government to vestment community know offers foreign investors damages the investment cli-
reduce red tape that Serbia is on the right track and making sin- mate in Serbia. Overall, I would like to see more
and improve the cere efforts to simply procedures, eliminate the red proactive steps by the Serbian government to re-
business climate in tape, and take its place as a sound and reliable in- duce red tape and improve the business climate in
this country. vestment partner. this country.
“The Labour Law and the Law on Construction By and large, U.S. investors in Serbia have the
should be reformed. Well-considered amendments support of the Serbian government and municipali-
to these two laws would allow for a more-flexible la- ties. The problem, however, is that Serbia must at-
bour force and permit construction in Serbia with- tract new investment in an increasingly competitive
out layer upon layer of stifling red tape – this would international business climate. In my opinion, the
provide immediate and tangible economic benefits Serbian government must dramatically increase its
to Serbia’s economy. support of business entrepreneurship and publical-
A start date for Serbia would provide a strong ly support the private sector in Serbia.” ■