Pursuing Sustainable Growth Serbia's Investment Perspectives
20th Annual meeting of the EBRD Board of Governors EBRD Business Forum
Pursuing sustainable growth Serbia’s investment perspectives
Vesna Arsić State Secretary for International Economic Relations Government of the Republic of Serbia Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Key country data Ministry of Economy and Regional Development
Official Name: Republic of Serbia Area: 88,361 km2 Population: 9.5 million Official Language: Serbian State Form: Democratic Republic Capital: Belgrade (1.6 million) Currency: Serbian Dinar (RSD)
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. GDP growth rate and GDP per capita (EUR) Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Inflation (CPI) Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. First recovery in the region Ministry of Economy and Regional Development
Average GDP growth GDP growth rate rate 2001-2008 2009 2010 2011*
Bulgaria 5,6 -4,9 0,4 2,6
Romania 6,2 -7,1 -1,9 1,1
Hungary 3,4 -6,7 1,3 2,0
Serbia 5,4 -3,1 2,0 3,0
Croatia 4,5 -5,8 -1,3 2,0
Slovenia 4,4 -8,1 1,0 1,7
*Source: EBRD, January 19, 2011
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011.
The basis for sustainable growth Ministry of Economy and Regional Development
• Pro-investment and export-oriented economy • Reindustrialization • Completion of strategic public infrastructure projects • Starting an intensive investment cycle in energy sector • EU and WTO accession, integrated regional growth
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Targeting export growth and elimination of foreign trade deficit Ministry of Economy and Regional Development
In 2010 exports rose by 24% to 7,4 bn EUR
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Targeting export growth and elimination of foreign trade deficit Ministry of Economy and Regional Development
Export-import coverage ratio rising from 32,8% in 2004 to 58,6% in 2010
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Trade by economic groupings in 2010 Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Top export destinations 2008-2010 Ministry of Economy and Regional Development
in mn EUR
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. FDI stocks in SEE 2006 - 2009 Ministry of Economy and Regional Development
Source: UNCTAD – World investment report July 2010
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. FDI origin by country and sector 2000 - 2010 Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Investments in transportation infrastructure – Corridor X Ministry of Economy and Regional Development
• A major part of the Corridor X highway already built, but some sections missing: • towards FYR Macedonia and Greece • towards Bulgaria • towards Hungary • Belgrade bypass
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. National Roads Strategy 2010/11 Ministry of Economy and Regional Development
• Infrastructure is crucial for equal regional development opportunities; • The National Roads Strategy envisaging further upgrade of the road network;
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Investments in energy sector Ministry of Economy and Regional Development
• The South Stream gas pipeline • The high capacity underground gas storage • Construction of thermal power plants Kolubara B TENT B 3
TE TO Novi Sad • Capacity expansion of existing TPP • Construction of hydro power plants Djerdap 3 Great Morava
Upper Drina (with Republika Srpska)
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Serbia’s Free Trade Agreements Ministry of Economy and Regional Development
European Union EFTA Russia Kazakhstan
CEFTA Turkey Belorussia USA preferential trade
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Free Zones in Serbia Ministry of Economy and Regional Development
• Fiscal benefits (exemptions from any tax burden for FDI, VAT, company profit tax, property tax, income tax, etc.) • Free of customs duties for goods, equipment, raw and construction material • Efficient administration, (one stop shop) • Simple and fast customs procedures • Local subsides for using the infrastructure Providing a set of services to users under preferential terms
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Supportive investment regime Ministry of Economy and Regional Development
• National treatment of foreign companies; • Free transfer of financial and other assets, including profits and dividends; • No industry restrictions on foreign investment; • Business legislation reforms in line with the EU legal framework;
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Favorable tax regime Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Financial incentives overview Ministry of Economy and Regional Development
Large-Scale Projects Standard-Scale Projects
Manufacturing and Export- Export-Related Manufacturing Related Services Services
Eligible Projects in Projects Projects Realized Automotive, Capital and Labour- in Devastated Electronics, IT Labour- Projects Realized Projects Realized Intensive Regions and Industries Intensive in Other Regions in Any Region Projects Regions of Special Realized in Projects State Interest Regions of Special
State Interest
Up to 25% of Up to 20% of €4,000-10,000 per €5,000-10,000 €2,000-5,000 €2,000-10,000 Grant Amount the total the total job created per job created per job created per job created investment investment Minimum Investment €200 mn €50 mn €0.5 mn €0.5 mn €1 mn €0.5 mn Amount Minimum Number of 1,000 300 50 50 50 10 New Jobs
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Investment incentives in different regions Ministry of Economy and Regional Development
In the municipalities of special interest for regional development: • Incentives from 5,000 to 10,000 EUR for every new job created In the most underdeveloped municipalities • Incentives from 4,000 to 10,000 EUR / every new job created In other municipalities • Incentives from 2,000 to 10,000 EUR / every new job created
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Human resources Ministry of Economy and Regional Development
• 27,000 university and 2-year college graduates, and 75,000 high school graduates yearly • Top quality technical education at both high school and university level • A wide availability of highly qualified staff • Strong command of the English language
“This initiative demonstrates our confidence and trust in Serbia, its industry , management competence, and the skil of its workers.” Sergio Marchionne, CEO
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Technical education Ministry of Economy and Regional Development
Faculty of Mechanical Engineering Faculty of Technical Sciences Faculty of Electrical Engineering Faculty of Traffic and Transport Engineering Faculty of Technology and Metallurgy
• 11 technical faculties for white collar workers • 71 technical schools for blue collar workers
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Success story: FIAT in Serbia Ministry of Economy and Regional Development
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. FDIs in 2010/11 – New comers Ministry of Economy and Regional Development
Name Country Sector Municipality Value € million Jobs Maxim BG Slovenia Metallurgy & Metalworking Inđija 21 200 Credy banka Slovenia Financial Kragujevac 20 PepsiCo Marbo United States Food & Beverage, Agriculture Bački Petrovac 20 100
Tigar Tyres Michelin France Automotive industry Pirot 16 220 Yura Corporation - Nis South Korea Automotive industry Niš 15 1500
Koteks Viscofan Spain Packaging Novi Sad 14 165
Dytech F&F Italy Automotive industry Niš 13 403
Vossloch-Schwabe (Panasonic) Germany Electrical & Electronics Svilajnac 13 400
Calzedonia / Fiorano Italy Clothing Sombor 13 400
Gorenje Tiki Slovenia Electrical & Electronics Stara Pazova 12 250
NORMA Group Germany Automotive industry Subotica 11 500
FALKE Germany Clothing Leskovac 10 600
Tatravagonka Slovakia Machinery & Equipment Subotica 8.4
Farmina Pet Foods Italy Food & Beverage, Agriculture Inđija 8 50 Yura Corporation - Raca South Korea Automotive industry Rača 8 1000 Valy Golden Lady Italy Clothing Loznica 6.4 200 Harder Digital Sova Germany Electrical & Electronics Niš 6.3 70
Bauerhin – IGB Automotive Germany Automotive industry Inđija 5 750
Metech Belgium Metallurgy & Metalworking Smederevo 3.5 100
Sagemcom France Electrical & Electronics Niš 3.3 203 Modital Italy Textile Zrenjanin 3 300
Euro BB Norway Food & Beverage, Agriculture Užice 3 250 Jeanci Turkey Textile Leskovac 2.8 500 Termoprodukt Austria Construction Sremska Mitrovica 1.2 51 Grammer System Germany Automotive industry Aleksinac 1.1 211 Elrad WS - S Slovenia Electrical & Electronics Vlasotince 1 50 Dunkermotoren Germany Electrical & Electronics Subotica 1 50
Labod Slovenia Textile Rekovac 0.8 82
Gruppo Fiorentino Italy Clothing Vlasotince 0.7 60
IMP Holding / JIE engineering Germany Energetics Palilula (Belgrade) 0.5 5
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Improved country ratings Ministry of Economy and Regional Development
• OECD ranking, in Q1 2010, from classification 7 to 6 • Dun & Bradstreet, March 2010, from “high risk” DB5a to “moderate” DB4d • Fitch Ratings, November 2010, from BB- negative to BB- stable • Standard & Poor’s, March 2011, from BB- to BB
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Final remarks Ministry of Economy and Regional Development
Prerequisites for further export-based growth
• Attracting competitive export-oriented investors • Completion of restructuring and modernization/privatization of large domestic companies • Enabling domestic private sector to grow and become more competitive • Finalization of initiated infrastructure projects • Construction of new energy facilities
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011. Ministry of Economy and Regional Development Thank you!
Government of the Republic of Serbia Ministry of Economy and Regional Development www.merr.gov.rs
PRESENTATION RIGHTS RESERVED. COPYRIGHT MINISTRY OF ECONOMY AND REGIONAL DEVELOPMENT. YEAR 2011.