Guide to the Foreign Investors Council / 3 SPECIAL EDITION CONTENTS

Guide to the STABLE BANKING SECTOR PHARMACEUTICALS RECESSION RESISTANT FOREIGN COMMENT - Radovan Jelašić, Gover- MARKET ANALYSIS 6 nor of the National Bank of Serbia 50 by Erste Group PREPARING FOR THE END OF THE CRISIS INVESTORS INTERVIEW - Aleksandar BUSINESS 8 Radosavljević, FIC President and 53 NEWS COUNCIL CEO of Carlsberg Srbija ADVANTAGES IN CRISIS 2009/2010 INVESTING IN SCIENTIFIC INFRASTRUC- INTERVIEW TURE 54 - Michael Kefalopoulos, General INTERVIEW - Božidar Đelić, Deputy Director of Mellon d.o.o. FASTER REFORMS REQUIRED IMPRESSUM 14 Serbian Prime Minister and Minister of Science & Technology INTERVIEW - Nenad Vuković, EDITOR IN CHIEF LEADERS 56 Member of the FIC Board of Direc- Tatjana Ostojić 20 tors, President of Henkel Serbia [email protected] SEEKING CONSISTENCY BUSINESS NEWS EDITOR INTERVIEW - Kjell-Morten Johnsen, 59 Mark R. Pullen 22 FIC Vice President, CEO of Telenor EU-STANDARD LAWS YEAR OF CRISIS & REFORM BUSINESS - Jelena Pejčinović ART DIRECTOR INTERVIEW - Nebojša Ćirić, 60 (FIC), Executive Secretary of the Tamara Ivljanin [email protected] 26 State Secretary in the Serbian ADCPI Committee Economy and Regional BUSINESS EDITORIAL Development Ministry 61 NEWS CONTRIBUTORS WORLD ECONOMIC FORUM REGULATING A CHANGING INDUSTRY Mark R. Pullen, Ana Stojanović Switzerland INTERVIEW - Vera Nikolić Dimić (Vip Mobile), Head of the FIC Tel- PHOTO 30 on top 62 Slobodan Jotić NEW FIXED-LINE OPERATORS ecommunications Committee and INTERVIEW - Jasna Matić, Serbian Coordinator of the Telecommuni- TRANSLATORS cations Working Group within the Snežana Bjelotomić 32 Minister for Telecommunications and Information Society Regulatory Guillotine Project PROJECT MANAGERS UNPARALLELED GEO-STRATEGIC POSITION PREDICTABILITY IN THE HR SECTOR Vesna Vukajlović, INTERVIEW - Slobodan INTERVIEW - Miloš Mirić (Holcim) [email protected]; - Head of the FIC HR Committee Tanja Milićević, [email protected]; 36 Milosavljević, Serbian Minister of 64 Maja Vidović, [email protected] Trade and Services SEEKING CLARITY GENERAL MANAGER REVITALISING REAL ESTATE INTERVIEW - Ivan Rakić Ivan Novčić (Ernst&Young) – Head of the FIC [email protected] COMMENT - Đorđe Pavković 66 Taxation Committee and FINANCIAL DIRECTOR 41 Bugarski (Hauzmajstor) – Head of Ana Besedić the FIC Real Estate Committee Coordinator of the Tax Working [email protected] HERE TO STAY Group within the Regulatory EDITORIAL MANAGER Interview - Luiz Heeren, Member Guillotine Project Tanja Banković, [email protected] 42 of the FIC Board of Directors, BUSINESS PRINTING General Manager of British 69 PROMOTION Rotografika d.o.o. American Tobacco East Balkans LAWS TO SUIT THE ECONOMY Segedinski put 72, Subotica INTERVIEW - Milica Subotić (JPM) Guide to the Foreign Investors ADOPTED LAWS Council 2009 published by: MUST BE IMPLEMENTED 70 - Head of the FIC Legal Committee alliance international media BUSINESS Knjeginje Zorke 11b, INTERVIEW - Mihailo Crnobrnja, 11000 Belgrade, Serbia 44 Editor of the FIC White Book and CE’s Top 500 Phone: +(381 11) 308 99 77, director of the FEFA Institute 72 308 99 88 Fascimile: +(381 11) 244 81 27 BUSINESS AIMING FOR A E-mail: office@ Serbia’s ranking up BETTER BUSINESS FRAMEWORK allianceinternationalmedia.com INTERVIEW - Ana Firtel Vlajić, www.allianceinternationalmedia.com 47 OPEN & CONSTRUCTIVE DIALOGUE 74 Executive Director of the Foreign ISSN no: 1451-7833 INTERVIEW - Werner Herics, Mem- Investors Council All rights reserved alliance international 48 ber of the FIC Board of Directors, media 2009 Deputy Managing Director of Poli- MEMBER CONTACTS This issue is tika Newspapers and Magazines 78 audited by ABC Serbia 4 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 5 Stable banking sector

Banks in Serbia have high adequacy of capital at their disposal, which allows them to absorb any COMMENT external and internal pressures

y accepting the Vienna Initiative, banks The NBS performed this assessment on the basis of operating in Serbia have confirmed their direct field analysis and not merely on the basis of banks’ confidence in the domestic macroeconomic statements. This increases the credibility of both the data “ policy and stability by opting not to reduce their obtained and the conclusion: that in the case of negative loan commitment. Stress tests conducted as scenarios, however unlikely, the Serbian banking sector is Bpart of the Vienna agreement confirmed that the public and ready for them. businesses, particularly depositors, can have full confidence NBS stress tests have shown enhanced responsibility of in these same banks and the arguments of the National the banks in terms of credit risk, whereby the difference Bank of Serbia (NBS), as the regulator, at the time of the between the volume of banks’ reserves and the level emerging economic crisis, when the world began to seriously envisaged as necessary by the NBS is minimal. Additionally, if banks maintain a conservative approach and monitor potentially bad loans in the future, the NBS will have less need to conduct field analyses and will be able to rely on the reports of commercial banks. NBS stress tests have shown Thanks to the banking sector itself, Serbia is a rare enhanced responsibility of the country, if not the only, where the state and taxpayer did not have to spend a single penny of bailout funds to maintain banks in terms of credit risk the stability of its banking sector. This confirms that the

NBS was right to lead prudent monetary and supervisory policies, implementing significant restrictions during good times in order to be able to relax gradually during bad ones,

lose confidence in financial institutions. Banks in Serbia which arrived with the global economic crisis. have high adequacy of capital at their disposal, well above The stress tests conducted by the NBS showed that the prescribed 12 per cent, which allows them to absorb foreign investors in Serbia can do business without fearing any external or internal pressures occurring in the case for the stability of the banking sector, and - bearing in mind “ of continuation of the crisis and specific macro or micro that 75 per cent of the sector is ‘in the hands of ’ banks disturbances. from the EU – they can count on a quality of service that is The first challenge, in October last year, which came the same in Serbia as in other European countries. in the form of a sudden temporary withdrawal of foreign savings, was successfully overcome by the banking sector. Now stress tests conducted in 12 large banks have shown that none of them need additional emergency capitalisation, Radovan Jelašić, which means they can successfully face all additional risks. Governor of the National Bank of Serbia

6 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 7 INTERVIEW

ALEKSANDAR RADOSAVLJEVIĆ, FIC PRESIDENT AND CEO OF CARLSBERG SRBIJA PREPARING FOR THE END OF THE CRISIS “These are times when our moves need to be bolder and I think the crisis will really help us to implement much needed reforms”

8 / Guide to the Foreign Investors Council By Tatjana OSTOJIĆ Photo Slobodan JOTIĆ

even years after its establishment, the Foreign Investors’ Council (FIC) is half way there – says Aleksandar Radosavljević, FIC President and CEO of Carlsberg Srbija. Today, the SFIC has over 120 members, most of them for- eign investors, and the Council’s mission is to advance the business environment in Serbia. As 2009 is a year marked by a great deal of activity among FIC members, we spoke to the FIC President about the current economic situation and the FIC’s plans.

 At the beginning of this year you said that foreign investments in Serbia had been put on hold. Has the situation improved in the meantime?  There were quite a few investments that below average. We can now say that this year Nevertheless, economic stabilisation certainly were supposed to be made at the beginning of has been very demanding and our expectations awaits us and recovery will probably take place 2009; additional investments by existing inves- that we would experience aggravated business at the end of 2010, according to current esti- tors in Serbia who planned to expand their pro- conditions came true. mates. This will lead to many companies reacti- duction capacities here. However, it was very Everybody’s talking about the recovery now, vating their investment plans. clear at the beginning of the year that many so 2010 has been dubbed the year of stabilisa- A good thing is that FIC members have been plans would have to be changed from the core. tion; not the year of an enormous increase of active in Serbia for some time now and have Most investors decided to wait, in order to get investments in Serbia. long-term plans for this country. They will be a good perspective of the economic climate in I have to say that the crisis was experienced quick on their feet when it comes to deciding the following period. As it turns out, we were differently by different industries. Some were to invest again. Relevant analyses and estimates unfortunately right. hit harder, some less severely. Certain products have already been carried out and I am confi- Bearing in mind the way in which the crisis has were very much in demand. In the first quarter dent that they will react swiftly. If things go as been developing since the beginning of 2009 of this year, stocks with certain buyers were they are supposed to, the first investor activities and considering realistic recovery expectations, significantly depleted, hence the increased de- will be noticeable in 2010. I don’t think that substantial investments will mand. I expect this demand to decrease, since This market is being very carefully monitored be made this year. This pertains to existing nobody will have as much stock as they used and analysed. It is viewed in a broader aspect, investors in Serbia, of course, as well as new to. Everybody is quite cautious when placing due to the CEFTA (regional free trade agree- investments that were planned for Serbia. new orders and making new purchases – that ment) and the fact that Serbia is at the core of Truth be told, we do need to acknowledge that goes for both producers and the general pub- this agreement means that the country is con- the Serbian authorities concluded a contract lic, who suffered the most from the crisis and sidered as quite a good investment location. with Gazprom, though that is practically the will exercise more caution than before. All of Many companies are currently feeling out the only large investment that materialised. After this is very noticeable in terms of the number situation on the Serbian market. With the first this, the level of executed investments was way of granted loans and low spending figures. signs of recovery, planned investments will start coming to Serbia again. POLITICAL (IN)STABILITY  Bearing in mind the complexity of the e have never commented on politics in such a way as to link it to invest- economic situation in Serbia, what is the “Wments. Of course, each investor will consider the political environment be- main role played by the FIC today? fore investing, but I do believe that the economic atmosphere is even more impor-  One of the greater roles – and by that I also tant, i.e. evaluating Serbia as an economic destination. Things have changed for the mean the most important role – is the transfer better with regard to politics; certain changes took place that had a positive effect of the know-how that these companies gained on the economic environment. Still, I do believe that Serbia’s economic potential is doing business on other global markets. Of of crucial importance when it comes to deciding whether an investment should be course, the aim is to implement this know-how made or further developed.” in Serbia to assist and expedite development of the business environment here, i.e. to facilitate

Guide to the Foreign Investors Council / 9 INTERVIEW that we have been talking about a lot.

 FIC members have been very active re- cently: meeting officials of government and relevant ministries, analysing the eco- nomic situation, giving suggestions with regard to the passing of new laws, etc. What prompted this burst of activity?  We came to an understanding that when cri- sis strikes we need to pull together. The crisis calls for reforms to be even tougher, faster and more rational. Implementing reforms is very difficult, particularly when things are not tak- ing their normal course. These are times when our moves need to be bolder and I think the crisis will really help us to implement much needed reforms. The FIC has contributed in that respect by fully engaging our members in accordance with their interests and expertise in certain areas. On the other hand, I can see that certain ministries have picked up their pace too. A concrete example of this is the so- called regulatory guillotine. We’ve been talking about this for the past two years, without much progress being made. However, at the begin- ning of this year the Ministry of Economy be- came very involved in this matter and found a true partner in the FIC. We expect the first re- sults to be visible by the end of 2009. This will lead to an improved business environment in the areas covered by the regulatory guillotine. It takes two to carry out reforms and I think that, at this moment, the other side has quite good understanding of the fact that comprehensive reforms are necessary in every single business aspect. A lot still needs to be done, but we are all aware that we need a lot of strength, pa- tience and dialogue with all relevant players to make things better. Serbia ought to start think- We were quite happy to respond to an invitation from ing about what we are going to do when the crisis subsidies and development becomes the the Serbian Ministry of Economy to take part in the number one topic again, i.e. how prepared we will be to use the end of the crisis to our advan- Regulatory Guillotine tage. As you know, the crisis has engulfed other countries too and they all pulled together in or- der to come out of this crisis stronger than be- fore, so we are in for tough competition when the arrival and setting up of the business opera- laws, all with the aim of helping Serbia to join it comes to attracting new investments. tions of investors that are yet to come to Serbia, the EU in the following period. I think that cre- so that we can focus our efforts and energy on ating a better business environment should be  The FIC released a statement following creating added value and not administrative fac- viewed as an obligation and social responsibility the recent meeting between the IMF and tors. On the other hand, I am sure that foreign for foreign investors. Of course, this environ- the Serbian government, in which you ex- investors have enough knowledge and experi- ment can never be ideal, but there is plenty of pressed your support for the government ence to help with the needed reform of Serbian room for improvement and this is something in conducting reforms to state adminis-

10 / Guide to the Foreign Investors Council government’s unyielding stance when it comes the economy? to conducting administration reforms. I think  Raising VAT would lead to goods and serv- The crisis calls for reforms that this is where great potential lies for do- ices becoming more expensive at a time when ing things differently and not overburdening the purchasing power of Serbian consumers is to be even tougher, taxpayers. There shouldn’t be any exceptions quite reduced. As such, it is only natural to as- when it comes to taxes, but that was not the sume that a hike in VAT would result in reduced faster and more rational case when it came to mobile telephone opera- consumption and the public buying even less. tors. Additional taxes were imposed in this sec- All of this would lead to even more constricted tor, which made it inferior to other industries. space for companies to manoeuvre, forcing Our opinion is that taxes should be applied them to revise their business operations again, equally, across the board. including expenses, in order to secure funds to tration. You also pointed out the potential fulfil their financial obligations. negative effects of imposing new taxes  It is highly likely that VAT will go up by and expressed hope that the tax on mobile a single per cent next year.  What were the most notable FIC activi- telephony services would be abolished by  It’s true that the budget deficit has become ties in 2009? the end of this year. a major burden and that the quickest ‘fix’ is to  The first thing I have to mention is the latest  When it comes to the Serbian government raise VAT. However, we should first see just White Book, which is due to come out soon. and the IMF, we were very clear in voicing our how effective that could be. It remains to be Producing this book remains our number one objection to notions of raising existing taxes. seen how the Serbian authorities will design activity, since it brings together all our activities We think that would only diminish already their future measures and policies aimed at and the efforts we exert aimed at advancing the weakened consumer activities and aggravate bringing all declared goals together. business environment in Serbia. Secondly is our the economic environment in the long-run. activity in terms of the Regulatory Guillotine. The FIC also positively assesses the Serbian  How would a higher rate of VAT affect We were quite happy to respond to an invita-

Guide to the Foreign Investors Council / 11 INTERVIEW

“With plenty of good will and commitment, many things will advance quite quickly.”

tion from the Serbian Ministry of Economy to take part in this project, as we had discussed it a lot beforehand. When the moment came for us to step in, we did so wholeheartedly. The FIC expects the first stage of the project to be completed by year’s end and for the first results to be revealed. Thirdly, I would like to mention the visit to Serbia of a delegation from the Eu- ropean Roundtable of Industrialists. This gave us an opportunity to exchange opinions on the subject of investing in Serbia with the highest state officials. I think we made the link between Serbia and Brussels much stronger through this exceptionally constructive dialogue, which was full of understanding and expectations that more European investments will be made in Serbia. Brussels expects the investment en- communication was better, as the economic complex, but we are also working on that. vironment in Serbia to improve, with more re- situation prompted us accordingly. forms to ensue.  Could you give us some insight into the  How long do you think the FIC will con- upcoming White Book?  Are you satisfied with your level of com- tinue to exist in Serbia?  The 2009 White Book sees us draw com- munication with the Serbian government?  An organisation like the FIC will remain as parisons between 2008 and 2009. I can tell you  You can never communicate enough; it is al- long as its existence makes sense and as long as it straight away that certain things have been re- ways good to talk. The most important thing is fulfils a certain purpose. The Council will remain peating and will be repeated in the future, but that we understand each other; that we hear and present in Serbia until the economic environ- also that quite a lot has already been done. At listen to each other and try to find joint solutions ment attains a certain, expected level. It will take this moment the FIC is very busy: we have if possible. Of course, everybody, including the quite a long time for that to happen and we still quite a few committees and taskforces, which state, advocates their own interests, but it is vital have a lot of work to do in Serbia. With plenty we formed because FIC members expressed that the FIC - as an organisation and a group of of good will and commitment, many elements a desire to be more actively involved and bet- individuals - is given an opportunity to express will advance quite quickly. It will take more time ter organised and this is one of our qualities. opinions directly to state officials. This year our to resolve the current problems, as they are too Of course, none of this happened overnight. Rather, it is the fruit of several years of la- FIC ROLE bour, starting from the council’s foundation under the leadership of Christoph Greussing, n terms of the stages that the FIC has gone through, we are currently half way through to the time when Boško Kostić was there - so to speak. We have demonstrated our prospects as a channel linking for- “I chairman of the FIC, followed by Stein-Erik eign investors to both state authorities and the society they plan to take their business- Vellan. I think the entire FIC strategy has been es to. I think FIC members have clearly expressed just how interested they are in this implemented well from the very beginning and country and how satisfied they are that they are members of the FIC, which all tells me we – the current members of the board – are that the FIC is on course when it comes to fulfilling its mission. There are still many is- continuing such successful practices. However, sues that we have to deal with within the council itself, but I think we are on course to the end is nowhere in sight and a lot still needs ensuring we can do that in an effective manner.” to be done. 

12 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 13 INTERVIEW

BOŽIDAR ĐELIĆ, DEPUTY SERBIAN PRIME MINISTER AND MINISTER OF SCIENCE & TECHNOLOGY INVESTING IN SCIENTI

“We set an investment target of €300 million and have provided €200 million so far.”

By Tatjana OSTOJIĆ Photo Slobodan JOTIĆ Deputy Serbian PM and Minister of Science Foreign Investors Council and the Serbian & Technology, the Ministry of Science and government, as well as planned government t is said that one of the main advan- Technology will not stop there and has al- reform steps. tages of Serbia over other invest- ready planned significant investments in this ment destinations in the region is the sector for the coming year. In addition to  How would you rate co-operation be- country’s skilled and affordable work- the issue of investing in quality workers, our tween the Foreign Investors Council force that speaks foreign languag- interview with Deputy PM Đelić includ- (FIC) and the Serbian government? es.I However, according to Božidar Đelić, ed the topics of co-operation between the  We can say that co-operation has been very

14 / Guide to the Foreign Investors Council FIC INFRASTRUCTURE

The compliance of Serbian legislation with EU laws and regulations varies from sector to sector

good since the Council was founded seven years ago and that it improved considerably last year. It’s good that we have a representa- tive group of investors that are very important for Serbia – because of the jobs they create, as well as the technology and management skills they bring to the society. This relationship is open and transparent. I think the the effect the Council has had on our society is such that it goes beyond their primary goal. welcome, regardless of their origins. That is sion of the list of products that investors can the strategy Serbia has been following over export to Russia, as well as the signing of a  How much do you think the Serbian the past few years. free trade agreement with Belarus, the con- government appreciates the FIC’s sug- Our relationship with the European Union, clusion of free trade agreements with Turkey gestions? membership of which is our strategic goal, and - we hope soon - with Iran and Ukraine,  I think that the presence of top state of- has been continuously strengthened. The are all part of the environment that should ficials at the presentations of the White Book, CEFTA was formed to enable investors in make Serbia a transit and investment country, coupled with the fact that we have included Serbia to export to the region, with few ex- suitable for export worldwide. representatives of the Council in the work of ceptions. CEFTA is the fastest growing trade the National Competitiveness Council from organisation in Europe now and those who  To what extent do our laws comply with the very beginning and, more importantly, the invested in Serbia have had the most success, EU legislation at this juncture? fact that we have acted according to their rec- since the greatest surplus has been achieved  Though, Serbia still has no EU consensus ommendations, shows a very positive attitude there. Finally, the strengthening of our rela- over the implementation of the signed Stabi- of the government. tions with the Russian Federation; the exten- lisation and Association Agreement, due to It would be much better and more efficient if all parties involved in this process provided REGIONAL INVESTMENT RECORD specific suggestions about the things that im- his very difficult year has brought $1.4 billion worth of foreign direct investment. pede their work, like the FIC does, rather than We had only one large investment – that of Gazpromneft in the Serbian Oil merely offering comments like “the environ- “T Industry. The rest of the money came from new smaller investments and the addition- ment in Serbia is not good enough”. al investments of existing investors. Since 2003, Serbia has attracted more than a billion Our common goal is to attract as many in- dollars worth of foreign investment every year and in certain years, when there was vestors as possible, and there is a consensus privatisation and increased economic activity, the figures were five to ten per cent of over Serbia’s need for a large inflow of for- GDP. This is a record for the region and our goal is to maintain that rating.” eign investment. Absolutely all investors are

Guide to the Foreign Investors Council / 15 INTERVIEW

…there is consensus over Serbia’s need for a large inflow of foreign investment

over, whenever a given product has been only slightly changed it must go through the en- tire procedure again. The Economy Ministry started the so-called Regulatory Guillotine process last year. This is an 18-month project, running until June 2010, and we will consider how far this project has progressed at the European Integration Council in October this year. Of course, we will also see to what extent we must further engage the National Plan for EU integration so that our entrepre- neurs have better conditions that should also Božidar Đelić talking to our Editor protect both consumers and the state. Obviously, we still have plenty of problems, such as the smuggling of some goods, and co-operation issues with The Hague tribunal, by candidate countries so far, which they used therefore the Tax Administration Customs is Serbia’s decision to unilaterally implement to legalise their conditions in order to begin further activated. Then there is the issue of the Agreement of 30th January this year negotiations. However, Serbia has already our insolvency system. It is vital that condi- is part of a strategic direction and desire to been implementing this plan for a year. We tions be changed. That is part of the obliga- identify itself not only as a country that will are doing so in order to develop a coordinated tions we accepted in our negotiations with become a full EU member in the foreseeable system with the EU and be attractive to inves- the IMF, aimed at protecting creditors from future, but as a country committed to the co- tors, but also because it has political weight dishonest debtors. Specifically, we will intro- ordination of its own economic and financial with our European partners. duce changes that will make blockade system system with EU standards, regardless of the I have to say that legal compliance varies from not function by the principle that the first one immediate political difficulties. sector to sector. A great task lies ahead of us who blocks is given priority. This has led to As this should be a reality and not merely until the end of 2009 - especially in the fields damaging phenomena, such as preventive a slogan, we have ensured that, on the one of environmental protection and agriculture. blocking. Furthermore, workers cannot be hand, the Stabilisation Agreement includes a Entrepreneurs often express their indignation paid without the payment of taxes. We arealso series of reforms and alterations to customs because goods certified for sale in the EU obliged to active the bankruptcy institute. that have helped investors to lower their ex- must pass a complete retest in our country, It is very important for foreign investors that penses in their business this year; and on the due to the non-compliance of our technical the state they deal with is as cheap and ef- other we have a National Plan for EU integra- regulations and often somewhat different ficient as possible. I have not heard of any tion. This document has only been adopted standards under expensive conditions. More- foreign investors’ collectively evaluating our administration as lacking quality. On the con- BRAVE REFORM MOVES trary, we have realised that it was lacking and taken specific steps in the adoption of the t this moment we are in discussions with the IMF. There will be intensive discus- new Law on Construction on 31st August, sions about the programme to ensure that it becomes a reality in the follow- “A which is in line with the new Constitution ing two months. We are ready to make a number of brave moves concerning the re- and allows private ownership of construction form of the pension system and we will take care to stop a wave of early retirement. land. Furthermore, we envisage much clearer We will work on reduction of the state administration’s scope. The Serbian government relations and the possibility of swifter action has opted to move the burden of public finance onto the expenditure side, as opposed on the part of local governments and cities, to revenue, to the greatest possible extent. We are seeking efficiency in the state work such as Belgrade, in terms of the implementa- and its scope and are not looking for tax increases. In this way, Serbia is showing that it tion of investment processes. It is possible for is very important to maintain the best possible economic environment.” a company investing in infrastructure of pub-

16 / Guide to the Foreign Investors Council lic importance to be granted cost reductions in municipal taxes. The Serbian government is determined to put pressure on the largest public companies, such as Telekom, EPS and utility companies, in order to keep their serv- ices effective and acceptable to top investors.

 You have announced significant invest- ments in science and technology?  When I talk with investors, and I do try to have regular contacts with various investors they say that Serbia is interesting because of its geographical position, favourable tax sys- tem, trade relations and costs. Human capital is mentioned as a key factor for additional in- vestment. My job is to improve that. Only eight per cent of Serbia’s citizens are university-educated; the country invests only 0.3% of GDP in science. Recognising that, in the last 12 months we worked on the draft strategy that is currently undergoing public debate. We will organise a meeting with the FIC to discuss elements of that strategy, which can be found at www.nauka.gov.rs in Serbian and English. This strategy was devel- oped by domestic and foreign experts and its core objective is to enable Serbia to attract the best and most advanced technology inves- tors, in order to be able to export more high- quality products with additional value and knowledge. We cannot be satisfied with the current situation, because we usually export stock exchange goods. Serbia still exports just 20 per cent of itsGDP, which is way below our goal of 50 per cent to start with. Sectors such as electronics, information technology and automotive industries should represent a much greater percentage of export. In accordance with the proposed strategy, Serbia should increase budget allocations for science and technology from 0.3 to one per Priorities: Agriculture and food, energy and energy efficiency, cent of GDP in the next five years. We set an investment target of €300 million in sci- information technology, material sciences, nano-science and entific infrastructure and have provided €200 million so far. Our negotiations with the EIB bio medicine (European Investment Bank) will have been completed by the end of September and, to this end, we have set aside €25 million from the IPA funds for 2010. We are negotiating priorities. Agriculture and food, energy and ther encouragement of companies to employ with the World Bank on €50 million and the energy efficiency, information technology, experts who are more expensive because of Development Bank of the Council of Eu- material sciences, nano-science and bio medi- their advanced knowledge. The attraction of rope on about €35 million. cine are among them. technology companies and the establishing of We have set seven priorities. In the future We agreed with the Ministry of Finance to development centres wil follow. The plan is to funding cycle that opens next year, we will propose tax incentives for investments in sci- form incubators of technological companies direct all additional resources towards these ence and technology. We will suggest the fur- in all four of the leading cities. 

Guide to the Foreign Investors Council / 17 18 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 19 LEADERS

Dimitris Frangetis, Chairman of takes and use such knowledge to re-establish a solid financial evident in our industry. We the Executive Board of Piraeus in the future. During this diffi- environment in Serbia. After have witnessed a substantial Bank AD Beograd cult period, Piraeus Group re- this I see a bright future for the fall in consumption and, con- PIRAEUS BANK GROUP mains strongly capitalised and automotive business in Serbia. sequently, a drop in sales and REMAINS STRONG DURING continues a wide range of suc- General conclusions about services in the ICT sector. This, DIFFICULT PERIOD cessful and profitable activities. what is going to happen in the in turn, has led to stunted de- Similarly, Piraeus Bank Belgrade future are yet to be drawn, but velopment and, in certain cas- continues developing its oper- we have to differentiate among es, declining revenue figures. ations and has actively contrib- individual regions in the world. This is why many of the big- uted to every practical expres- In some parts of the world gest global companies are fac- sion of its long term commit- we have very positive signals, ing pronounced problems in ment to Serbia: from participa- while in others the impact of terms of maintaining their tion in the IMF agreement to the financial crisis on our busi- profitability. Aside from re- lending to the Public Sector. ness is still huge. I hope that in duced consumption, a fair- this part of the world we will ly major problem arose from Andreas Binder, CEO of be able to overcome the dif- the fact that the ICT industry is Mercedes-Benz Serbia and ficulties in a faster way. And I known for its high level of in- Montenegro am convinced of that possibil- vesting, i.e. for the frequent in- POSITIVE SIGNALS ity, because I do not see that terconnecting and underwrit- Serbia is very dependent of ing of capital, which requires other markets. As such, I be- funds. All of this goes hand in lieve that we can move fast- hand with relatively high bor- he global economy seems er through this painful experi- rowing levels; hence the prob- Tto have left the period of ence and continue with the de- lems experienced by the two severe liquidity and credit cri- velopment. But in such difficult biggest investment banks sis behind. Only months ago times one of the most impor- were inevitably reflected on some major financial institu- tant things is the way we treat the industry as a whole. Still, in tions faced serious problems our clients. We do not sell on- a certain way the crisis assisted and relied on government sup- ly cars, but also a special expe- companies to a certain extent, port to continue operating. rience. Mercedes-Benz is an ex- in terms of prompting their Business confidence dropped clusive brand and all our cus- management to start making sharply, while the perception tomers are exclusive too. much more rational business and pricing of risk changed dra- decisions in comparison to the matically Branko Radujko, CEO of past, as well as to optimise op- More recently, conditions de- Telekom Srbija erational costs. veloped gradually from those he automotive industry has VISIBLE EFFECTS When it comes to the mobile of crisis into recession, which Tbeen hit extremely hard OF THE CRISIS telephone tax, we should not most countries are now facing by the financial crisis through- expect mobile telephone op- in stronger or milder forms. This out the world and this has al- erators to applaud the idea of has an impact on both com- so severely affected the Serbian introducing this tax and we, panies and individuals and, ul- market. However, recently there as a group, presented a whole timately, affects banks again. have been some positive sig- series of arguments against Despite certain indicators of re- nals from the market and for the application of this tax. covery, there is still substantial that reason I am very optimistic However, it should be said uncertainty as to how long and when it comes to the local mar- that the first effects of this how deep this recession will be. ket. I have to say that our new taxation are not as dramat- As we know, the positive ele- E-Class has achieved great suc- ic as we anticipated, particu- ment of an unpleasant situa- cess – not only in Serbia, but on larly bearing in mind the fact tion is the opportunity to learn. other markets too. However, we that we changed the prices Given the seriousness of the have to restore the confidence and most of the burden was crisis and the degree of ex- of our customers in other mod- transferred to the end-users. treme behaviour noticed be- els, especially commercial ve- We do hope that the need for fore, an interesting question is hicles. We also have to gain the this tax will not last long and whether market participants support of financial institutions he effects of the global that it will bring the anticipat- will in fact learn from past mis- supported by the government “Teconomic crisis are quite ed revenue.” 

20 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 21 INTERVIEW KJELL-MORTEN JOHNSEN, FIC VICE PRESIDENT, CEO OF TELENOR SEEKING CONSISTENCY “You could look at some of the neighbouring countries and argue that Serbia is at least as prepared for the EU as some of them were upon entry. From that point of view, we would hope that the agenda will move on.”

By Mark R. PULLEN

iscussing steps that the Serbian government could make to improve the busi- ness climate yet further in the country, Kjell-Morten DJohnsen, FIC Vice President and CEO of Telenor, says: “it’s not always a question of having to do something new and shiny and glossy; it’s just about being predicta- ble and staying on course.”

 How much do you think the relevant Serbian authorities listen to the foreign investor community and how much do they take on board the suggestions of the Foreign Investors Council? I think they definitely listen: people show up to the presentations of the White Book, attend our meetings and listen. When it comes to government action in response to suggestions, execution varies. This spring we saw people reacting extremely quickly in response to a deteriorating situ- ation. On that point we would have liked to have been listened to more, but I think the circumstances dictated the approach much more than what people would have wanted to do in a more normal setting. In short, people are ready and willing to listen and participate in discussions, but in an extreme case like that of this spring, the ability to take our recommendations on board and implement them as a matter of policy is much harder.

 Prior to the IMF visit, we saw in the Serbian press that the FIC was encour- aging the government to avoid raising

22 / Guide to the Foreign Investors Council taxes. Does the association generally  Have you had firsthand experience operate proactively or is there more of of similar business associations else- a tendency to react? The idea is that what’s where in your career?  If you have the opportunity, I think its  I was a member of the board of the As- much better to come forward with your good for a wide group of sociation of European Businesses in Rus- point of view before a decision has to be sia. We were particularly active, with a large taken. If you reduce yourself to the situa- investors will be good for number of events in the business commu- tion where you’re only responding once a nity and also in dialogue with the govern- decision’s already been made, then you’re the economy as a whole ment – often on practical issues affecting not relevant. As such, the extent to which small and medium-sized companies, where we can participate at an earlier stage and we tried to help them navigate their way give our opinions and advice – in the in- through what was a tricky landscape in terests of all investors – is an important Russia. In addition, I also participated in factor. That’s why we seek a dialogue with, what’s good for a wide group of investors the Foreign Investors Council during the for instance, the IMF, which is playing an will be good for the economy as a whole. terms of three prime ministers there: start- important part. The approach we take is to be heard in that ing with Fradkov, going through Zubkov We share the same objectives; we don’t debate. Now, with the budget planning for and on to Putin, when he became prime want to do things that would harm any pri- 2010 coming up, we think it’s important minister. We had meetings with the prime vate companies in Serbia – regardless of for us to participate in that dialogue at an minister every October and then working whether they’re Serbian, German, Norwe- early stage. groups going throughout the year, which gian, British… Generally, the idea is that we used to try to shape some of the agen-

Guide to the Foreign Investors Council / 23 INTERVIEW

For investors, it’s key that they see that there is a path towards membership that they can rely on or believe in

more is borrowed and debt begins to pile up, then we end up with not a very nice scenario a few years down the road. From what I hear and see in discussions, it looks like the government is taking it all very seriously. They didn’t take it quite se- riously when it came to taxes on mobile telephony, but other than that it doesn’t look like huge tax hikes are being made on individual industries. das there. In comparison, I would say that  To what extent do you think the glo- I think the Serbian Government is a bit bal downturn will affect the Serbian  So, you’d say that the Serbian gov- more open to dialogue than the Russian economy in the long term? ernment is heeding advice to build government was. In Moscow that attitude  If you want to be optimistic, then you necessary infrastructure and carry out is a little bit more “we know best.” will believe that we will have a stream- reform in order to be ready to compete lined public sector going forward and once the crisis subsides?  Perhaps it’s more a case that the Ser- that the government will be careful to  I don’t think the Serbian government, bian government can’t afford to mar- avoid the temptation of raising taxes too or any other government for that matter, ginalise the FIC, considering the value much (we all know it’s tempting to raise can know in minute detail how they should of your members’ investments? taxes in order to get cash for the budget, prepare for what’s coming after the crisis.  It’s true, I would guess, that foreign inves- but in reality this could push greater parts Moreover, Serbia’s not an export-driven tors have proved more important to the Ser- of the economy into the grey and black economy, so here it’s completely different bian economy than they have to the Russian, economy, which is never good). If we to the case in Germany or Sweden, for ex- but going forward I’m not sure that there is get that kind of an approach, then when ample. Here, investors are more important such a big difference, as foreign investors growth picks up again we could actually and only then maybe export proceeds. are likely to become increasingly important see some positive results from the proc- I think it’s in the nature of someone who for Russia over the next few years. It all de- esses going on now. runs a business that relies on people in the pends on the situation. That said, I’m pretty If, on the other hand, you have this kind street – for instance, we (Telenor) have al- sure that if you go to the U.S. and try to talk of ‘lockdown’ situation where people try most three million customers in Serbia – to to the government about what they should to keep expenditures going and people ar- consider that they have to do well in order do for foreign investors you won’t be heard gue that we cannot cut spending because for us to do well. As such, the tendency is much there either. demand will fall further and more and to want to be optimistic that things will go well, people will be responsible and we will IMPORTANT - MACROECONOMIC STABILITY come out of this in good shape.

or us, it’s also extremely important that we have macroeconomic stability. That’s  Though the crisis situation prevails, Fone of the key things to do now and that’s why we accepted that we had to pay we also see Serbia progressing towards this extra tax for 2009, as it’s like our extra contribution to making sure that macr- the EU – with the country set to be oeconomic stability is maintained. However, we insist that the tax on mobile teleph- added to the White Schengen list at the ony is viewed as a temporary measure that should end with this year. Without the end of the year and the EU having al- means to make this economy move forward in a normal way, it doesn’t matter how ready increased the size of its delega- much you try to attract investors. tion here. As such, do you see a wave

24 / Guide to the Foreign Investors Council of fresh investment coming to Serbia once the crisis subsides – both as a result of the upturn and Serbia’s progress towards EU candidate status?  I would hope more investment will come. For investors, it’s key that they see that there is a path towards membership that they can rely on or believe in. I think we should look at how the EU has expanded over the years and conclude that it would be natural for Serbia to join. Indeed, you could look at some of the neighbouring countries and argue that Serbia is at least as prepared for the EU as some of them were upon entry. From that point of view, we would hope that the agenda will move on. Whether or not that will trigger a huge wave of investment depends on a couple of factors: first of all, how inves- tors are treated here now (for that it will be important that current foreign investors act as ‘ambassadors’ and speak positively about investing in Serbia); secondly, the oppor- tunities that you see here: some of the country’s most in- teresting companies have been sold (we bought one and there could be another privatisation coming up in our sec- tor too at some point). There probably aren’t many other large-scale assets out there in Serbia, so the country should seek to attract people looking to set up small and medium- sized enterprises. I happen to think that SMEs are more important for the economy than big flagship firms… In the long run, allowing SMEs to develop and prosper is key. I also think that to some extent you need that to relate to new concepts, ideas and competencies that do come with a foreign investor. If just money comes in and not compe- tent players, then nothing much is going to happen. You need a competent investor able to steer a business, which can lead to other companies developing and simply think- ing differently.

 In your opinion, what do the state authorities need to do in order to make Serbia more attractive to foreign investors?  At the end of the day, it’s not always a question of having to do something new and shiny and glossy; it’s just about being predictable and staying on course. You can’t run after prospective investors selling yourself all the time; I’m not sure that having huge adverts in The Economist is going to entice a huge number of investors to come in. That said, there are many places where big companies and relatively big medium-sized companies get together and exchange views and if people have positive opinions about Serbia in those settings then that can be worth much more than any ads in illustrious newspapers. So, I think it’s enough to be predictable and show that the government wants to give investors protection. This doesn’t mean protection against the markets go down, because we should suffer when the market goes down just like anybody else, but having protection for your investment in the frame- work within which we operate. 

Guide to the Foreign Investors Council / 25 INTERVIEW NEBOJŠA ĆIRIĆ, STATE SECRETARY IN THE SERBIAN ECONOMY AND REGIONAL DEVELOPMENT MINISTRY YEAR OF CRISIS & REFORM “It is expected that the business administrative costs of all companies in Serbia will be reduced through the Regulatory Guillotine by at least 25 per cent by 2011.”

in the Ministry of Economy and Regional Development.

 The FIC has been actively involved in the working bodies tasked with carrying out the Regulatory Guillotine. How is this process advancing? The purpose of this reform in our ministry, and other ministries, is to create an attractive environment for investment and business in Serbia; an environment easier and simpler for foreign and domestic investors. In addi- tion to highlighting business problems, for- eign investors also provide recommendations for overcoming these problems. With this in mind, the government devised a Comprehen- sive Regulatory Reform (CRR), the so-called “Guillotine”. A unit with a number of people was formed within the Ministry of Economy. This unit is tasked with implementing this re- form on behalf of the government. They co- operate with all institutions that have a lot of regulations, such as the Ministry of Finance, Directorate of Metrology and the ministries of the economy, agriculture, etc. Meanwhile, they are obliged to liaise with foreign and do- mestic investors to see which laws, decrees and regulations should be amended, reduced By Tatjana OSTOJIĆ or eliminated. This is called the Regulatory Photo Slobodan JOTIĆ Guillotine because it is planned that a govern- erbia’s Economy and Regional ment undertaking it is committed to eliminat- Development Ministry is tasked ing unnecessary laws. A parliamentary session with leading the comprehensive re- The IMF has accepted – as will also be dedicated to the elimination of un- form of legislation that is popu- necessary laws, while certain legal provisions larly referred to as the Regulatory was expected – to increase within existing legislation should be adapted. SGuillotine. This reform should free the The idea is to simplify the whole business sys- Serbian business system of all unnecessary the budget deficit from 3.5 tem to the maximum extent possible. legal acts and bylaws, as well as amending certain regulations and making the country to four per cent  Initial results of the Regulatory Guil- attractive to foreign investors. The progress lotine are expected by year’s end. of this process was just one of the issues dis-  CRR is divided into five phases. The first is cussed with Nebojša Ćirić, State Secretary the preparatory phase: forming units and de-

26 / Guide to the Foreign Investors Council fining guidelines. The second phase involves an inventory to determine which regulatory bodies have the most regulations and which have the fewest. For example, the Ministry of Finance has the most regulations – with 649, while the Ministry for Diaspora, the National Investment Plan (NIP), the Agency for Envi- ronmental Protection and the National Em- ployment Service have the fewest. Thirdly is an analysis phase, where laws, decrees, regula- tions, instructions, decisions, orders and some other documents are analysed. The unit for Comprehensive Reform will analyse some 2,163 regulations in fields from the financial and fiscal system, economics, agriculture, en- vironment and planning, labour and employ- ment, Pension and Disability Insurance (PDI), medical care, justice, education, culture and information, health, sports and public admin- istration. Companies and private individuals can make recommendations to amend regula- tions on the CRR website. About 500 referrals have been received so far. The CRR unit has prepared the ordinance for the cancellation of 200 unnecessary regulations, which is cur- rently in the procedure. Most objections have been made to tax procedures, building per- mits, employment procedures and inspections of new products.The CRR unit is working on recommendations that will be submitted to regulators, the EU Integration Office and the Secretariat for Legislation by 30th October refers to laws, while the third applies to legis- tiveness and, therefore, the attractiveness of 2009. The government is expected to adopt lation under the jurisdiction of independent Serbia to foreign investment. All companies the recommendations no later than 15th De- bodies, whereby members internally, or with in Serbia are expected to reduce their business cember 2009. There are three groups of rec- the recommendation of the government or administrative costs through the Regulatory ommendations: one applies to regulations to just the CRR, take decisions on regulations. Guillotine by at least 25 per cent by 2011. We be repealed, the second relates to regulations We expect this process to be completed by also expect the speeding up and cheapening that should be amended and the third group the end of the year and implemented early of administrative procedures, as well as the includes regulations that should be kept. Rec- next year. introduction of a one-stop shop. ommendations are also practically divided in a three pack. One package applies to ministries  To what extent will the Regulatory  Is CRR covering all regulations or is and government, where government may re- Guillotine make Serbia more attractive for this just the start of a universal action? voke certain regulations or modify decrees. foreign investment?  In general, the economy and the political The second package is for the assembly and  These measures should increase competi- environment are living things. As such, cer- tain outdated regulations should be completely LACK OF LARGE INVESTORS eliminated, some should be changed, some existing regulations should be amended and n interesting trend of the year of economic crisis has seen numerous car parts some should be kept. For example, the new Amanufacturers come to Serbia. They have come because of the presence of Fiat, Law on Bankruptcy is fully in accordance with but also because of the desire to outsource production capacities from the Czech EU regulations. However, there are a bunch of Republic, Romania or Germany to Serbia. For example, Leoni bought a bankrupt factory laws, regulations or specific acts or regulations in Prokuplje where it plans to employ about 2,000 people and create a regional centre. that should be amended. In any case, as the In terms of greenfield investments, we had a break in January, February and March, but process of EU accession progresses, a certain it was the same everywhere in the world. After that an increased interest of foreign in- section of regulations will surely have to be vestors reappeared. modified or amended with legal acts.

Guide to the Foreign Investors Council / 27 INTERVIEW  The FIC has provided strong support to the government for a thorough reform I think it is realistic to start considering the privatisation or of public administration. However, some think that increasing the tax burden transformation of large systems once we see the economic would have a negative affect on compre- hensive economic development. crisis is at, or reaching, an end  The IMF has accepted – as was expected – to increase the budget deficit from 3.5 to four per cent. National budget deficits are between six and ten per cent in countries  To what extent have foreign and do- loans, which have only gained in importance. of Western Europe and our wider region. mestic investors been affected by the An important part of the government pro- However, this is about the credibility of the economic crisis and has the Serbian gov- gramme was to stimulate demand, particularly government and, perhaps even more impor- ernment prepared the right package of for domestic products. With the stabilisation tantly, it is about economic stability. We really measures to overcome its affects? of the macroeconomic scene, we started to took a firm stance that there should not, and  We had a stroke in October last year, when help individual sectors. We introduced a pro- must not, be an increase of VAT, because the withdrawal of foreign savings started. that would represent an additional burden on However, this crisis has shown that the bank- the economy. Some firms would see this as a ing and financial system, as well as the entire signal that they should go into the grey zone monetary system generally – including the and begin avoiding payment of VAT, which is NBS, are very stable and one of the main pil- absolutely unacceptable. We felt that savings lars of the Serbian economy. For example, we should be made on the state side, i.e. the pub- have a great situation when it comes to for- lic sector, through cost reductions, restructur- eign exchange reserves and foreign currency ing in terms of reducing employee numbers savings in the first six months, marked by a and optimising costs – both at the republic positive trend. Before the formulation of the level and that of local governments. government’s measures, we had had many meetings with large exporters, medium-sized  When do you expect the privatisation companies and small enterprises. of large public companies to resume? At the end of January the programme of the  The general consensus was that we should government measures for overcoming the cri- start with the partial or total privatisation of sis was developed, targeting at a few things. A some state enterprises. A case in point is the crucial problem was the insolvency of the Ser- privatisation of Galenika, which is a process bian economy, because banks stopped lending that’s in progress. The government should abruptly as a result of the global economic cri- adopt a privatisation strategy that will then sis. Then we tried to reactivate the banking sec- go out to tender. We had the will and start- tor in Serbia and succeeded through subsidised ed the process. We selected a consultant for loans. One group are liquidity loans, which are the implementation of the initial public of- already providing great results. Over €900 mil- fer for Telekom, which was supposed to be lion was placed in the economy and there are gramme offering discounts of €2,000 for the launch pad privatisation that would set a requirements to approve more than a billion the purchase of a new tractor. Then there is good example. We should have seen citizens euros. This measure is a complete success, as a programme adopted in July that supports given the opportunity to receive free shares proven by the fact that pressure on liquidity the production of rail vehicles and saw the and also buy Telekom shares on the Belgrade has been quite reduced in the last few months. Economy Ministry provide RSD2.1 billion to Stock Exchange (BSE), while institutional The second group of measures are investment support this industry. investors should have got the opportunity to buy Telekom Srbija shares on the London SUBSIDISED LOANS Stock Exchange. However, this process was halted because of the global economic crisis he IMF has made recommendations and an increase of value added tax was rec- that saw all exchanges head into freefall. We ommended. Meanwhile, we thought the budget deficit problem should be resolved T devised a similar process for the Belgrade Air- through comprehensive public sector reform. The IMF came up with a suggestion re- port. I think it is realistic to start considering lating to subsidised loans and we believe that this programme should be continued in the privatisation or transformation of large 2009. We will see whether there will be some changes later on, but there won’t be any systems once we see the economic crisis is at, changes until the end of the year. or reaching, an end. 

28 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 29 WORLD ECONOMIC FORUM SWITZERLAND ON TOP Serbia dropped eight places in the Global Competitiveness Report, from 85th place last year to 93rd this year

“The strong interdependence among the world’s economies makes this a truly global economic crisis in every sense. Policy-makers are presently struggling with ways of managing these new economic chal- lenges, while preparing their economies to perform well in a future economic landscape characterized by growing uncertainty. In a diffi- cult global economic environment, it is more important than ever for countries to put into place strong fundamentals underpinning eco- nomic growth and development,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, and co-author of the Report added, “Amid the present crisis, it is critical that policy-makers not lose sight of long-term competitiveness fundamentals amid short-term urgencies. Competitive economies are those that have in place factors driving the productivity enhancements on which their present and future prosperity is built. A competitive- ness-supporting economic environment can help national economies to weather business cycle downturns and ensure that the mechanisms ena- bling solid economic performance going into the future are in place.”

The strong interdependence among the world’s economies makes this a truly global economic crisis in every sense

witzerland tops the overall ranking in The Global The rankings are calculated from both publicly available data and Competitiveness Report 2009-2010, released by the World the Executive Opinion Survey, a comprehensive annual survey conduct- Economic Forum ahead of its Annual Meeting. The United ed by the World Economic Forum together with its network of Partner States falls one place to second position, with weaken- Institutes (leading research institutes and business organizations) in the ing in its financial markets and macroeconomic stability. countries covered by the Report. This year, over 13,000 business leaders Singapore,S Sweden and Denmark round out the top five. European were polled in 133 economies. The survey is designed to capture a broad economies continue to prevail in the top 10 with Finland, Germany range of factors affecting an economy’s business climate. The Report and the Netherlands following suit. The United Kingdom, while re- also includes comprehensive listings of the main strengths and weak- maining very competitive, has continued its fall from last year, moving nesses of countries, making it possible to identify key priorities for pol- down one more place this year to 13th, mainly attributable to continu- icy reform. The Global Competitiveness Report’s competitiveness rank- ing weakening of its financial markets. The People’s Republic of China ing is based on the Global Competitiveness Index (GCI), developed for continues to lead the way among large developing economies, improv- the World Economic Forum by Sala-i-Martin and introduced in 2004. ing by one place this year, solidifying its position among the top 30. The GCI is based on 12 pillars of competitiveness, providing a com- Among the three other large BRIC economies, Brazil and India also prehensive picture of the competitiveness landscape in countries around improve, while Russia falls by 12 places. Several Asian economies per- the world at all stages of development. The pillars include Institutions, form strongly with Japan, Hong Kong SAR, Republic of Korea and Infrastructure, Macroeconomic Stability, Health and Primary Education, Taiwan, China also in the top 20. In Latin America, Chile is the high- Higher Education and Training, Goods Market Efficiency, Labour est ranked country, followed by Costa Rica and Brazil. Serbia dropped Market Efficiency, Financial Market Sophistication, Technological eight places, from 85th place last year to 93rd this year. Readiness, Market Size, Business Sophistication, and Innovation. 

30 / Guide to the Foreign Investors Council Guide to the Foreign Investors Council / 31 INTERVIEW JASNA MATIĆ, SERBIAN MINISTER FOR TELECOMMUNICATIONS AND INFORMATION SOCIETY NEW FIXED-LINE OPER “Predictability is the first and most fundamental requirement for foreign investments to come to a country”

Žarko Obradović, Serbian Minister for Education, Jasna Matić, Serbian Minister for Telecommunications & in- formation Society and Branko Rradujko, CEO of Telekom Srbija

By Tatjana OSTOJIĆ end of the year. In order to discuss this is- tax introduced on mobile telephone serv- Photo Slobodan JOTIĆ sue, as well as the current situation in the ices will be abolished by the end of the he Foreign Investors Council telecommunications’ sector, the topic of year. To what extent is the abolition of has given full support to the Telekom Srbija’s privatisation and the ten- this tax realistic? Serbian government‘s imple- der for new operators in fixed telephony,  The joint position of our ministry and mentation of announced re- we spoke to Jasna Matić, Serbian Minister companies in the field of telecommunica- forms of state administration. for Telecommunications and Information tions and mobile telephony, to which this However,T the FIC has also expressed hope Society. tax relates, is that this can only be a tempo- that the new tax introduced on mobile tel- rary tax that will only last during the worst ephone services will be abolished by the  The FIC has expressed hope that the period of the crisis; when the first signs of

32 / Guide to the Foreign Investors Council RATORS

“We will argue for the abolition of the mobile services tax in next year’s budget.”

fiscal revenue and budget stabilisation ap- pear, this tax should disappear. By its nature it is a discriminatory tax that affects only one industry - the very industry that serves and helps the entire economy to be competitive and people to live better throughout the world. At the time of crisis, most countries are promoting telecommunications in the package of anti-recessionary measures, thus it is certainly not a good idea to retain this tax. I think the chances of withdrawing it are relatively good and we will argue for the abo- lition of this tax in next year’s budget.

 Was the introduction of this tax neces- CRISIS AND INVESTMENTS sary? he crisis has greatly slowed the arrival of foreign investment and there has been  It is hard to say. That is a question for a fall of investment worldwide. Generally, there have been no new investments Finance Minister Diana Dragutinović, rather T in Serbia and even existing investors cancelled plans that were started. It seems that than for me. I presume it was a necessary there is a slow recovery at the world level of investment, with investors once again step at a time when fiscal revenues had de- beginning to show interest in expanding their operations or reducing costs and find- creased very much and the stabilisation of ing better locations for their operations. Existing investors that are additionally affect- the budget and macroeconomic situation in ed by the tax on mobile services and falling incomes have also invested less, which the country was required. If there had been can be seen quite clearly in Serbia. macroeconomic destabilisation it would have been bad for this and other industries. Perhaps the fact that we are not the only themselves and operating conditions were cations is indeed a major industry in Serbia; country to introduce such a tax is comfort- impeded, then there was the introduction of this industry is where we have the largest ing. Something similar happened in Croatia an unexpected tax, which is never good. Pre- investors; where the country’s largest privati- as well. However, our position is that the tax dictability is the first and most fundamental sation was recorded through Telenor; where should not remain as a measure next year. requirement for foreign investment to come the largest greenfield investment was made There is no doubt that two things happened: to a country. by VIP. These companies adhere to their the climate aggravated the mobile operators It should also be noted that telecommuni- investment commitments, have outstanding

Guide to the Foreign Investors Council / 33 INTERVIEW

“No other country in the region has a landline monopoly”

lies on this relationship a lot: the exchange of information and consultation with op- erators and appropriate FIC committees. I also know that my fellow ministers consider it very important and truly believe that the FIC has a very useful role for us.

 Administration inefficiency, layers of bureaucracy and the slowness of pro- cedures are among the negative factors that foreign investors in Serbia usually indicate. Will these problems be resolved corporate social responsibility policies and are not in the situation that we are with some through the announced Regulatory Guil- indeed represent a great example of foreign other state enterprises, where there are real lotine and the announced reduction of investors in our country. losses and considerable changes need to be public administration? made. So, it is not a burning issue and we will  Administration must be improved, i.e.,  To what extent do you think the eco- see how it will be resolved. the efficiency of the system must be raised, nomic crisis has affected the telecommu- When it comes to new operators in fixed te- though I am afraid that this is a lengthy and nications sector? lephony, our plan was for it to happen now, painstaking task. When it comes to our sec-  The crisis has affected all sectors, includ- this autumn. We still stick to that plan and tor, we have really tried to improve elements ing telecommunications. Investors have had work on it, so hopefully a tender for three that apply to the business of telecoms op- fewer resources to invest and, of course, new fixed-line operators will come soon. We erators. citizens have been saving. It might have been expect some existing operators in the tele- In conjunction with the Ministry of the En- felt to a lesser extent in telecommunication communications sector to also be interested vironment and Spatial Planning, we have traffic and more on the Internet usage side, in fixed telephony; some leading European prepared a section of the new Law on Plan- especially mobile Internet. Many have felt telecommunications operators that are not ning and Construction that relates to tel- that citizens are not buying better packages in Serbia are interested. People can hardly ecommunications. This will really facilitate or the latest devices. It is true that the crisis go without a telephone and telecommunica- the setting up of essential telecommunica- did not affect telecommunications as much tions has suffered less than any other sec- tions infrastructure. as it affected some export-oriented sectors tor, so we think the crisis will not affect the We are also working alongside the Ministry that have actually been damaged, but tel- tender. This is a large market with significant of Science on the Copyright Law, in order ecommunication players were certainly af- potential. Besides, Serbia is one of the last to improve conditions for IT as well. I think fected as well. countries to maintain a monopoly on fixed it is time to fine tune laws in collaboration telephony; no other country in the region with industry, in order to provide optimum  To what extent did the crisis affect the has a landline monopoly. conditions for work. What we should not privatisation of Telekom, as well as the forget is that after 2000 we found a system arrival of new fixed-line operators?  How would you rate co-operation be- that was legally and institutionally wrong.  I think the crisis substantially influenced tween the FIC and government minis- Considerable changes were made and laws the privatisation of Telekom. The debate tries? were radically amended. Now it is time to whether Telekom should be sold began this  From the perspective of the ministry that slow these processes. Major amendments to spring, but it was the worst possible time to I now head and the Ministry of Economy, law are no longer necessary, but it is really sell. There is no clear determination regard- where I worked before, I really think that the necessary to adopt good laws following ex- ing the privatisation of Telekom. Moreover, FIC plays an excellent role as a consultative tensive consultations with businessmen and the fact that Telekom is profitable means we body and corrective factor. Our ministry re- citizens. 

34 / Guide to the Foreign Investors Council CORPORATE BO ANDERSSON, CEO OF ERICSSON IN SERBIA EMBRACING TECHNOLOGY “Mobile broadband is here and available in Serbia, but now it’s a case of getting people to use it on the same level that people talk over the phone.”  Let me first say that we have very good speakers at such events. We exert a lot of ef- co-operation with the Serbian government, fort when it comes to environmental issues particularly Ministry of Telecommunications and, indeed, the word ‘environment’ covers and Information Society. The ministry has be- a very broad area. We’re talking about power come very transparent in their processes and saving and have a programme that plans to very interested in having contact with us. Being reduce power consumption every year on all the prime leader in the world’s mobile business our equipment by 50 per cent, and we are with a market share of over 40 per cent Erics- ahead of schedule on that programme! We son has vast experience to share and the Min- have a standing agreement with all our us- istry has definitely shown that it wants to share ers that contains a clause by which we take and wants to listen. Accordingly, we have quite back, free of charge, all equipment that they an active dialogue. want to dispose of and then we trash it in an

The transmission of data is bigger than the transmission of voice and, indeed, data actually overtook voice many years ago. This is a global trend that is extremely strong By Mark R.PULLEN Photo Slobodan JOTIĆ

We can’t complain, said Bo Andersson, CEO  Are you finding it quicker to do busi- environmentally-friendly way. of Ericsson in Serbia. “All of our customers ness now that regulatory reform to expe- have reduced their investments and, of course, dite business procedures has begun?  What are the main business objectives this also has an impact on us. But, we are still  I’m not sure that I find it so. I think there that you hope to achieve by year’s end doing a lot of business as the major supplier are a lot of improvements that could be 2010? of mobile communication in Serbia and the done, bearing in mind that this is a country  We have a lot of objectives and never go sole supplier in Montenegro”, explained Bo that wants to move closer to the EU. Howev- for only one thing. That said, our biggest ob- Andersson. er, in some areas we don’t see moves towards jective is to get our local partners to use mo- the EU. I think that the regulatory bodies bile broadband, because this is the next step  How would you assess Serbia’s telecom- and government in general have a little more in the development of the mobile industry. munications market today, compared to to do and could also do it quicker, because Mobile broadband is here and available in other markets in the region? some issues are so easy that they require just Serbia, but now it’s a case of getting people  We can look at two parts of the market. a decision. to use it on the same level that people talk When it comes to technology, Serbia is on a over the phone. Another big issue on the par with Western Europe – that is, the most  You’ve been very active on environ- agenda is helping users and operators in the developed area in the world. When it comes mental issues to date. Are the funds avail- country to lower their operational expenses to the development of revenue on the market, able to continue in that direction? dramatically by taking over the handling of though, there are perhaps some challenges.  Ericsson has taken an extremely impor- their operations. Most of these challenges are based on the low tant position in the world as a driver of en- We do this in many parts of the world and purchasing power of end-users’. vironmental issues. We participate in huge Ericsson has over 200 contracts to run net- conferences that the United Nations, the EU works. The big issue here is that we can do  What do you think the Serbian government or other organisations hold covering this is- it cheaper on the basis of our efficiency and should do to ease business conditions? sue and our CEO is also one of the keynote experience. 

Guide to the Foreign Investors Council / 35 INTERVIEW SLOBODAN MILOSAVLJEVIĆ, SERBIAN MINISTER OF TRADE AND SERVICES UNPARALLELED GEO- I think that administrative efficiency is Serbia’s missing link for it to become one of the most attractive countries for foreign investment in Europe

By Tatjana OSTOJIĆ the year 2009 was definitely the hardest. Photo Marko RUPENA We cannot emerge from the crisis we are in soon if we do not respect the voice of en- ignificant foreign trade chains’ in- trepreneurs and fail to understand and meet vestments were initially announced their appeals in a legitimate manner. In this for 2009, but as our interlocutor context, the Foreign Investors Council is a Slobodan Milosavljević, Serbian real and positive factor that the government Trade and Services Minister, says, needs very much in this situation. Not only allS of these investments were postponed. because of their contribution to globalisa- Nevertheless, according to Milosavljević, tion and the strengthening of the competi- Serbia has genuine advantages over oth- tiveness of Serbia’s economy, or their large er countries in the region, including the number of employees, but primarily because CEFTA region and free trade agreements of their positive evaluation of the Serbian with Russia and Belarus, which will attract business environment and economy. new investors in the future.  How is the Regulatory Guillotine pro-  To what extent does the Serbian gov- gressing and to what extent can Com- ernment appreciate the comments and prehensive Regulatory Reform (CRR) suggestions of the Foreign Investors lead to an increase of foreign invest- Council aimed at improving the invest- ment in Serbia? nates the whole affair. We are one of the ment climate in Serbia at this juncture?  It is an extremely important action of most active and accurate ministries on the  Since the democratic changes of 2000, the Ministry of Economy, which coordi- Regulatory Guillotine process. First of all through the adoption of laws which have NO INCREASE IN VAT begun to be implemented, such as the Law “I am emphatically opposed to an increase in VAT. Increase in VAT certainly lead to a on Electronic Commerce, the Law on Gen- balancing of deficits and their predictability. It is a measure that gives fast results, ac- eral Product Safety and the Law on the Pro- cepted by the IMF, and it provides Serbia not only the planned $500 million, but the en- tection of Competition. Now we are in the tire arrangement up to three billion euros, as agreed with the IMF. However, the meas- procedure’s completion phase and I hope ure carries a great risk of making Serbia unappealing to new investments and a macr- to see the adoption of two laws by the end oeconomic risk that it will initiate additional instability in prices and costs of living. On of this year: the Law on Consumer Protec- the other hand, the Serbian government has decided on a measure which gives results tion and the Law on Trade. Earlier this year in the long term; a measure that is risky, especially politically, because it is unpopular to we adopted the Trade development strategy shed jobs even if they are unproductive and unprofitable posts. But it is a measure that of Serbia. In addition, we adopted dozens Serbia simply must take.” of regulations within the sectors of mar- ket inspection, trade and the Directorate

36 / Guide to the Foreign Investors Council -STRATEGIC POSITION

for Commodity Reserves. I have to say that the biggest problem is the inefficiency of administration in servicing the economy. It I am convinced that this part of Europe cannot is not merely in bad regulations, but also inadequate and incomplete laws and regu- remain uncovered by the leading European lations’ implementation, which I really do not find to be lagging greatly behind Euro- retail chains for more than three to five years pean standards. I think that administrative efficiency is Serbia’s missing link for it to become one of the most attractive coun- tries for foreign investments in Europe. omies of Central and Southeast Europe, in new investment, as well as utilising the vari- Serbia meets all other prerequisites without the Turkish and German spheres of influ- ous advantages that Serbia offers investors. a doubt. Serbia is a “corridor country” situ- ence. It is in our advantage as a point of In addition to the country’s geo-strategic ated at the crossroads of two powerful eco- contact between the two major economies position, we should promote and take advan- nomic and political spheres of influence; in this region that we should seek our op- tage of free trade. It is not well known that two strong and perhaps future leading econ- portunity and our chance to attract some Serbia is offering access to 30 million consum-

Guide to the Foreign Investors Council / 37 INTERVIEW ers in the CEFTA region; that it - quite certain beginning of borders all CEFTA countries recovery of the Serbian econ- except Moldova and that there omy. Although I do not agree is a virtually completely passa- with some of my colleagues in ble free market. Then the Free government on this issue, the Trade Agreement with Russia next two years will be difficult, functions and is almost fully challenging and will bring a completed, while this year we lot of turbulence and disrup- reached a free trade regime with tion to the economy of Ser- Belarus and we are preparing bia, without any doubt. They such an agreement with Turkey will bring the closing of some as well. In addition, Serbia has companies and job losses, but preferential trade treatment with I think crisis tremors will be the European Union, which milder. What will happen in means free trade with 500 mil- some companies will be pri- lion EU consumers. marily a consequence of the problems they faced in 2008  You mentioned the inef- and 2009. That is why it is re- ficiency of Serbia’s adminis- ally encouraging to hear the tration. How do you think it news that US Steel (Serbia) could it be resolved? has relit both blast furnaces.  CRR is precisely how it should be resolved. All the work  You announced the arriv- should have been done faster al of a few investments in and more efficiently. I think that the area of trade last year. a kind of omnibus laws could How many of them have have been adopted and the laws frozen or delayed their ar- could have been amended in rival in the meantime? a parliamentary session. This  Virtually all of them have would indisputably demonstrate frozen and delayed invest- commitment to minimise and ment. This year we have a new reduce administration, corrup- French chain in Niš, MR. Bri- tion, bureaucracy and all those colage, with one object. Diffi- plagues that Serbia and the Ser- cult negotiations with IKEA bian economy are facing; and have been going on, but in to create acceptable European spite of that we all agree that frames. I must admit that I feel Serbia is situated at the crossroads of two IKEA should come. I know very bad about the inability to that all traders in Serbia are quickly and effectively help an powerful economic and political spheres of not coming up roses, but extremely correct and strategic I also know that they have company - and one among the influence: Germany and Turkey been achieving higher profits first investors in Serbia - Vero- than in other countries. This poulos, to resolve their prob- means that Metro, Veropou- lem with the site in Belgrade’s los, Mercartor, etc., will con- Vojvode Stepe Street. substantial assets of citizens and the econ- tinue to re-invest profits generated in Serbia omy from bank accounts, a perhaps insuffi- into the expansion of its retail network. I  To what extent has the economic crisis cient but swift reaction followed and partly am convinced that this part of Europe can- affected investors and have government solved this situation. Today, banks are in- not remain uncovered for more than three measures been timely and adequate? creasingly deciding to invest available funds to five years by the leading European retail  I don’t know if a government member in bills and securities and, to a lesser extent, chains, such as France’s Carrefour, Dutch can be objective, but the government acted in the economy. In my opinion, this is very chain Ahold, Germany’s Bill, UK retailer promptly and specifically this year in order negative. The last two, three months were Tesco or Turkish merchant chains, but to alleviate the crisis. We had a strong at- defined by a halt in the fall of economic everything has been shifted to next year or tack last year that led to the withdrawal of activity and by small, but - it seems to me 2011. 

38 / Guide to the Foreign Investors Council CORPORATE SIX YEARS OF BUSINESS IN SERBIA British American Tobacco – the biggest British investment in Serbia

is the best route to the advancement of a com- munity. For the past five years British American Tobacco has been awarding the BAT Award for the Best Small Entrepreneur in the Vranje Region, aimed at supporting entrepreneurial and innovative spirit in the community through formal recognition of excellent achievement. Additionally, we also initiated a Programme for the Development of Entrepreneurship in partnership with the Serbian Agency for the Development of Small and Medium-sized Enterprises and Entrepreneurship and the National Employment Agency”, adds Heeren. British American Tobacco approach to cor- porate social responsibility also involves active- ly addressing the impacts of its business on the natural environment. Therefore, over the past three years, the Company has successfully been ritish American Tobacco, the Smoking Prevention, Corporate Social conducting an Energy saving project aimed at world’s most international tobac- Investment and Environment Protection. reducing the consumption of energy and water co group, whose quality brands “Since its arrival in Serbia, British American in the Vranje factory, and achieving the most ra- are sold in more than 180 mar- Tobacco has continuously supported the local tional use and conservation of natural resourc- kets, has been present is Serbia community through various Corporate Social es. The project included comprehensive consid- Bsince 1996, and after the privatisation of Investment programmes”, says Luiz Heeren, eration of possible ways to save energy, defini- Duvanska industrija Vranje in September General Manager of British American Tobacco tion of saving methods, monitoring, as well as 2003 become one of the leading foreign in- East Balkans. “One of our largest programmes increasing employee awareness of the impor- vestors in the country. On the 6th anniversary was the investment of more than €150.000 in- tance of rational use of energy. The most re- of the acquisition, the company in Serbia can to the Technical College in Vranje, with the aim cent project directed towards environment pro- be proud of the commercial results achieved of improving and modernizing the education- tection focused on addressing the issue of ir- over the past period, but also of its contri- al standards and bringing this institution clos- responsible cigarette butt disposal, as a recog- bution to the sustainable development of nized environmental problem in the country. the local communities. Alongside Growth, In cooperation with the organizers of Belgrade Productivity and Winning Organisation, Beer Fest, the largest event in the country, Responsibility is one of the pillars of the glo- British American Tobacco’s British American Tobacco wished to contribute bal British American Tobacco business strate- approach to corporate social to solving the problem by building awareness gy. Today, perhaps more than ever before, so- of the personal and environmental impact of ciety expects companies to use their econom- responsibility also involves butt littering, and encourage smokers to make ic strength for broader social goals and to dem- sure they understand that a change in their be- onstrate environmental responsibility, support actively addressing the haviour can bring significant benefits to the en- for communities, high standards of ethical be- impacts of its business on vironment. haviour and greater transparency. With this in “We believe that businesses have a key role mind, the Company’s belief is that Corporate the natural environment. to play in helping societies achieve the neces- Social Responsibility is fundamental in help- sary sustainable balance of economic growth, ing to build sustainable shareholder value. In environmental protection and social progress. Serbia, British American Tobacco’s Corporate We will continue to work hard to do business in Social Responsibility programmes have had a er to the Bologna Declaration. We have also ways that balance the economic, social and envi- wide reach and have focused on a whole range been actively supporting the development of ronmental dimensions of sustainable develop- of issues, including Social Reporting, Underage the SME sector, in line with our belief that this ment of Serbia”, concludes Luiz Heeren.. 

Guide to the Foreign Investors Council / 39 CORPORATE ALEKSANDAR KOZLICA, COUNTRY MANAGER OF G4S ANTICIPATING THE NEW LAW “It is very important that foreign investments are safe”

By Ana STOJANOVIĆ Photo Slobodan JOTIĆ “The crisis is an opportunity for new ideas. Administration must leksandar Kozlica, Country Manager of G4S, is of the opin- be more efficient, cheaper and faster.” ion that Serbia desperately needs foreign investments. “This is a small, developing country with perspective, to advanced knowledge of ecos- nesses, which is good. What remains is to de- Aserious needs and plans of association with nomic conditions and general security, which velop clear legalisation covering commercial Europe. Investments from Europe, America or people expect in a country. I would also point activity. About 40,000 people are currently any other side are good,” says Kozlica. out the need for better marketing. employed in this industry and in Serbia there are no proper schools for the education of  Do you think the economic crisis is the  What does the Serbian government still these personnel. Rather, there is the school of main reason we are seeing fewer foreign need to do? Governing Affairs. G4S has its own academy investments?  Develop incentives, accelerate bureaucrat- and we are educating our staff for different  Unfortunately it does not depend only ic formalities, fight corruption and work on needs. Our average security officer has at least on us. The fall is mainly caused by the glo- promotion. The crisis is an opportunity for secondary education and we have employed bal economic crisis. However, Serbia has to new ideas. Administration must be more ef- more than 4,000 people. become more attractive than its competitors ficient, cheaper and faster. Our co-operation (the surrounding countries), which are exert- with state authorities is correct and necessary.  To what extent did the economic crisis ing serious efforts to attract investments. Ser- It is essential to adopt laws that will allow the affect your business? bia has its advantages, such as geographical security industry to function. There were sev-  A fall in living standards comes with crisis location, but economic and security precon- eral draft laws introduced on a few occasions, and, therefore, so does an increase in criminal ditions are also necessary. It is very important but they were withdrawn from th e procedure. activities. The number of serious thefts and that foreign investments are safe – from a tax All the surrounding countries have such laws burglaries increases and the age structure of all and our activity is part of the infrastructure criminals lowers. On the other hand, our poten- PLANNING AHEAD related to foreign investment. tial customers experience problems with budg- eting and so we try to offer them “Security So- e plan to enter cash process-  How do you rate the physical security lutions” that provide them with an appropriate Wing service and offer our bank- market in Serbia? scope of protection that’s within their budget. ing sector and retail clients the possi-  We currently have quite a chaotic situation. The number of clients we have broken con- bility of entrusting money processing to There is a vast number of companies, three tracts with because they became insolvent is us, thus helping them to reduce their of which are serious market players. There very small, principally because our portfolio of costs. Next year we are entering the are two multinational companies: one is G4S, customers is very good. These are mostly for- cash centre project and also plan to de- of which we are a member, and the other is eign companies and banks, which have gauged velop our offer in electronic systems. In Securitas. Others are local companies. How- their security needs precisely. However, the addition, my personal mission is to have ever, there are no standards or conditions crisis halted their further investments in Serbia a group of young managers in Serbia required by the state for engagement in the and that has affected our business this year. As who will work in one of the 110 coun- security industry. The police in Serbia have such, we are focusing our development on the tries where G4S operates. moved out of all essentially commercial busi- diversification of our services. 

40 / Guide to the Foreign Investors Council Revitalising real estate “The main aim of the Real Estate Committee is to improve real estate market conditions through the establishing of dynamic communication and co- COMMENT operation with all relevant state and city institutions”

state authorities, city municipalities and other institutions that he FIC continuously co-operates with the state are able to influence the improvement of market functioning and its institutions, with the goal of improving Serbia’s business conditions and climate in the in the best way and in the best interests of all. “ best possible manner. Accordingly, the FIC Real We have already identified several issues that this committee Estate Committee was re-established in August should try to improve through co-operation with all market 2009T after a dormant period of time, due to the aspirations of players. They are summarised here: FIC members to actively facilitate the improvement of condi- 1.Overall regulatory framework, especially the adopted tions for doing business on the real estate market. Construction Law. Here the committee will seek its chance to The main aim of the Real Estate Committee is to improve real provide feedback regarding the law’s implementation, as well estate market conditions through the establishing of dynamic as the future Law on Managing and Maintaining Properties, the drafting of which we strongly encourage and support; 2. Permit issuance, Land Development fee, Land Status Law and Leasing – where we would like to see the simplification The idea is to transfer the of the permits process in the near future, as well a decrease suggestions and remarks of of existing construction start-up costs and later operational costs, with the goal of further expanding the market and all committee members to all bringing more investments to this market; relevant institutions 3. Building discourse, communication and long term co- operation with the state, relevant ministries, city authorities and all other important institutions, with regard to strategic

issues with the goal of improving the real estate market in communication and co-operation with all relevant state and the best interests of all;

city institutions, particularly the ministries of environment & 4. Developing relations with other organisations dealing with spatial planning and infrastructure, in order to share common real estate. issues and problems that all real estate market players face To summarise, the Real Estate Committee is a newly re- in their daily operations. Members of this FIC committee established committee of the Foreign Investors Council that “ are operating in various segments of the real estate market. will be very active in following period, in order to compensate We have investors, developers, various financial institutions for the gap of activity we had in the past without an organised - like banks, insurance and leasing companies, real-estate approach and influence on the real estate market, brokers and property management companies. All of them are which is extremely necessary in Serbia. operating in this market with different goals. The idea is to transfer the suggestions and remarks of all Đorđe Pavković Bugarski (Hauzmajstor) committee members to all relevant institutions – starting with Head of the FIC Real Estate Committee

Guide to the Foreign Investors Council / 41 INTERVIEW LUIZ HEEREN, MEMBER OF THE FIC BOARD OF DIRECTORS, GENERAL MANAGER OF BRITISH AMERICAN TOBACCO EAST BALKANS HERE TO STAY “Only a complete disruption of the internal environment … could cause BAT to deviate from its long term goals and strategy, i.e. to be in Serbia for good.”

By Mark R. PULLEN as a perspective investment destination”. crisis. The crisis has affected all major busi- peaking for the Guide to the FIC, ness variables and for FMCG companies it is BAT’s Luiz Heeren says that,  Which economic events would you clear that a drop in demand and the shrink- among other things, major foreign say marked this past year, aside from the age of liquidity were probably the most rel- investors in Serbia should “use in- general financial crisis? evant factors. ternational conferences and fo-  It is difficult to generally disassociate any For the Tobacco Industry specifically, the rumsS to act as true ambassadors of Serbia event of the past year from the financial most important event is related to the new

42 / Guide to the Foreign Investors Council excise law that has brought further excise pressure, thus significantly affecting the in- dustry’s performance. In order to compensate for the financial cri- sis and additional tax pressures, the tobacco industry was forced to introduce measures that included, amongst others, making inter- nal cost adjustments in the past year.

 To what extent do you think the Ser- bian government adheres to agreements reached with foreign investors?  I believe that the Serbian Government tries very hard to stick to previous agree- ments. This year we had two examples of that, which came despite parallel attempts to deviate from original agreements. On the minority shares issue, we witnessed some verbal attempts to deviate from prior agreements and force companies into a situ- ation where market driven prices would not be respected. It seems that this direction has now been abandoned by the Government and there are fair attempts to try to put laws able to properly handle the problem in place. That said, I believe there are solutions in this area that can yield positive results for both the government and foreign investors; we “It is difficult to generally disassociate any event of the past are ready to share our views on this with the Serbian Government. year from the financial crisis. The Furthermore, there was initially an attempt in the Serbian Parliament to completely crisis has affected all major business variables” change excise duty on the tobacco industry from what was agreed with 90% of the in- dustry’s players towards the end of 2008. It - use international conferences and forums took almost five months to change that, but  How can foreign investors, as a col- to act as true ambassadors of Serbia as a per- at least an agreed excise structure was finally lective, influence the government when spective investment destination. achieved. it comes to passing relevant laws, regula- tions and other acts aimed at improving  What kind of overall scenario would  The last White Book made several the business environment in Serbia? be needed for BAT to consider revising references to certain laws that could im-  I believe that some of the ways foreign its plans? prove the buisness of your industry in investors can help and influence change in  BAT does business in more then 180 Serbia, noting that the problem was that Serbia, thus contributing to a better business countries worldwide and is in Serbia for the they weren’t implemented and relevant environment, are as follows: long term. Plans and investments are revised bylaws had not been adopted. What is - Use the FIC and, therefore, the White constantly – in light of market potential, the situation like today in that respect? Book as a list of genuine proposals that can competition, business environment, politi-  As an example, a lack of clarity in some improve the business environment in all ar- cal risk, etc., just like in any other market. It provisions of the Advertising Law has creat- eas of the Economy; is a constant exercise of adjusting business ed problems for the tobacco industry in the - share positive experiences and exam- operations to economic, political and social past. the situation in this area has been im- ples from other markets that have recently variables. proved over the past year and we expect that passed through transition and where newly Only a complete disruption of the internal announced amendments to the Advertising introduced laws and changes worked for the environment i.e. disrespect to laws, conflicts, Law will define clear rules able to create a benefit of the country; etc., could cause BAT to deviate from its level playing field and avoid any confusion in - offer expertise in several business and long term goals and strategy, i.e. to be in Ser- this area in the future. economy areas; bia for good.. 

Guide to the Foreign Investors Council / 43 INTERVIEW MIHAILO CRNOBRNJA, EDITOR OF THE FIC WHITE BOOK AND DIRECTOR OF THE FEFA INSTITUTE ADOPTED LAWS MUS “We need to muster all political, economic and other strength to expedite the transition process“

By Ana STOJANOVIĆ business climate in Serbia, the White Book are not being implemented in practice’. In its Photo Stanislav MILOJKOVIĆ also offers recommendations on how to latest White Book, the FIC agrees with the Eu- he unique nature of the FIC overcome certain problems. ropean Commission. It is vital to adopt laws, White Book lies in the fact that  At the meeting of the FIC Managing Board but it is equally important to implement these is written by the very compa- we agreed that this year’s White Book would laws in practice. nies that make up the council. focus on the recommendation to concentrate “The FIC has a unique and es- more on implementing laws and not merely  The objection that some laws were not tablishedT procedure when it comes to writ- adopting them. Personally, I think that both the being implemented was also mentioned in ing the White Book, which has been com- government and parliament have boasted about last year’s White Book. ing out for seven consecutive years,” explains how many laws have been adopted too much,  That’s right. This objection was noted in last Mihailo Crnobrnja, editor of the White Book while their implementation takes a back seat. year’s White Book, but the difference is that and director of the FEFA Institute. This is precisely what the European Commis- in this year’s edition it has been given priority. sion is objecting to in its annual reports, when it The second overall suggestion is to expedite  Aside from commenting on the current notes: ‘you have adopted certain laws, but they the reform process, which is something the

44 / Guide to the Foreign Investors Council ST BE IMPLEMENTED government keeps talking about but doesn’t do enough. The FIC has been actively participating in Comprehensive Regulation Reform (CRR), i.e. the so-called Regulatory Guillotine. We ex- pect the CRR will actually ’cut’ something by the end of this year. The third suggestion per- tains to increasing the flexibility of the business system and bringing it more in tune with the quality of investments and the economy. This is where the Ministry for Environmental Pro- tection and Spatial Planning has actually done something. Nonetheless, it is not enough to take just one step forward; we need to advance the business climate as a whole. We cannot expect investments to be made in Serbia if an investor needs 340 days to obtain various permits. The whole process of obtaining an operating permit in Serbia is much longer than in neighbouring The overall suggestion of the White Book is to expedite countries. The FIC is trying to encourage and the reform process, which is something the government assist in the creation of a proper investment environment - and not only in the interests of keeps talking about but doesn’t do enough of foreign investors, if I may add. Furthermore, we are always keen to offer our know-how and experience. The Council is trying to help the economy become more adaptable and competi- there is always sufficient period of adjustment organised. The government can and must cut tive for foreign investors. The Global Economic left and adequate information provided for the costs and the FIC will support and encourage Forum recently issued its annual global competi- companies to conform to the new regulation. it in doing so. When it comes to budget rev- tiveness list and Serbia was 93rd this year, despite The issue is when these two conditions are not enue, the government needs to choose between taking 85th place last year; we dropped six places met. The example of applying this so-called several different instruments, so to speak. One despite the efforts exerted by the government. mobile telephone tax is indicative, in a sense, criterion is economic efficiency, while another Unlike Montenegro, which climbed from 65th that our government is also making decisions one is political accountability. The FIC supports to 62nd place. There is an obvious lack of politi- without prior consultations, but without giv- tax reforms that will bring more predictability cal will to push forwards at the desired pace. ing enough space to the companies to adapt. on the one hand, and more social justice in al- On the other hand, the government has its own locating budget revenue on the other.  FIC members often note that doing busi- problems that need sorting out. ness in Serbia needs to be more predict- The government cannot solve everybody’s  What recommendations will the FIC of- able. problems by using a ‘source’ or taking out a loan. fer the government this time around when  My opinion as an economist is that there are What the government can do is to start saving. it comes to advancing Serbia’s investment many governments in the world that are doing This process has already begun and we will see climate? quite unpredictable things. What we are talk- how it will end. For example, I find the explana-  In simple terms, to continue with the tran- ing about here is only the level of predictabil- tion that Serbia actually needs 26 ministries quite sition and transformation of the economy – a ity. When, for example, Singapore is changing implausible. France has a third less ministries process that is running out of breath. a policy it doesn’t always consult businessmen than Serbia, despite having a far bigger popula- The latest White Book offers over a hundred in advance. And let me remind you that Singa- tion. Ministries are not the problem though - it suggestions at different levels of concreteness. I pore tops the competitiveness list. Nonetheless, is rather the way in which the administration is have already mentioned the overall recommen-

Guide to the Foreign Investors Council / 45 INTERVIEW dation to implement existing laws. The second what Serbia aspires to become. Our transition recommendation is that laws be accompanied is still ongoing and some segments, like priva- by relevant bylaws, because we are currently see- tisation, are nearing their end. However, there ing that many laws cannot be implemented be- are still certain segments that are seemingly per- cause they are missing such bylaws. Aside from manent problems, like the issue of stabilisation, the aforementioned recommendations, there are while there are other segments that haven’t even many other suggestions that are divided by sec- been tapped into, like insurance, health, schools, tors and chapters. I would like to mention just universities, etc. The ‘wave’ that originated from a few: we have six recommendations regarding the global downturn can easily sweep our struc- the Law on Enterprises. The first relates to har- tures aside, simply because they are not solid monising the Law on Securities with the Law enough. on Enterprises, while the second one pertains to explaining and simplifying the way in which  What is your view of the government’s managing boards operate. When it comes to anti-crisis measures? money laundering, we recommend that the state  If I comment on the government’s measures form required administrative capacities in order from an economist’s point of view, I would say to implement laws in a more efficient manner that the government could have done more and adopt relevant bylaws without which the and better. However, if you asked my opinion law itself is inefficient. In terms of the work- as an ex-politician then I would say that this is force, we recommend a detailed revision of the the maximum that could have been done in the existing Law on Labour in order to eliminate current constellation of powers. The coalition the current defects and bring more stability to The flexibility of the government is not an overly strong government the labour market. We also appeal for more at- business system needs to and its members sometimes fight like cat and tention to be paid to the education system, with dog. One minister says one thing about a certain consideration given to the economy’s needs. be improved and brought topic, then another says completely the oppo- The FIC has also given 14 recommendations on site. How can the prime minister implement a environmental protection. I would like to men- more in tune with the firm, brave and uncompromising policy in such tion just two: to provide economic incentives a situation!? The coalition government is built for companies that are environmentally con- quality of investments on compromises and won’t stand for an un- scious, i.e. firms that properly store their waste and the economy compromising policy. and dispose of their packaging; to include local In addition to the government’s set of anti-crisis administrations in the ascertaining of environ- measures, it has had to lay out its plan of what mental impacts. When it comes to energy issues, to do after the crisis subsidies. A crisis creates the FIC is appealing for a more market-oriented energy prices to be formed on an economic ba- a kind of positive destruction: what should be approach, as opposed to a social one, and for sis. In the telecommunications domain we offer gone tends to go and brand new possibilities are 10 recommendations, most of which pertain to for what should come. When it comes to social POST-CRISIS harmonising domestic regulations with those of aspects, a crisis is a negative occurrence. At the the EU. same time, it can bring long-term positive out- do believe that the crisis will subside comes to the economy, pending that the gov- in Serbia in the second quarter of I  How much has the economic crisis made ernment encourages projects that have a clear next year. However, it is extremely dif- Serbia’s problems more pronounced? future. However, the government is primarily ficult to predict when the recovery will  Quite a lot. However, these problems were concerned with patching up holes, because of begin at present. This largely depends not only brought on by the economic crisis, the negative political and social consequences. on the measures the government takes, which was felt by almost every country in the Serbia invests indefensibly little money in sci- the economy’s capacities, the strength world. Even China had to revise its growth rate ence, research and overall education; very lit- to implement these measures and the prediction, reducing it from 12 per cent to ‘just’ tle is invested in discovering the country’s real speed at which Western economies re- seven per cent. Serbia has recorded growth, comparative advantages and their development. cover. Export is an important ingredi- but now we are facing a decline without actu- Why should we be ashamed of the fact that ent of our recovery, despite both ex- ally knowing how steep this descent will be: 5%, agriculture is our comparative advantage?! We port and FDIs currently being reduced. 3%, 1% or 0%. What affects Serbia the most need to muster all political, economic and other Moreover, these two components de- is the fact that the transition process is still not strengths to expedite the transition process and, pend on how fast the EU will recov- complete. We still haven’t completed the trans- thus, create a system that the FIC expects and er, since the Union is our biggest trade formation from a self-governed state economy recommends; a system where the state will sup- and investment partner. to a liberal-capitalist social economy, which is port the economy and not vice versa. 

46 / Guide to the Foreign Investors Council BUSINESS SERBIA’S RANKING UP Serbia’s Doing Business ranking has improved thanks to the introduction of the One-Stop-Shop Registration System he World Bank’s 2010 Doing company and tax registers will set in motion the capital required in the amount of €500 (for lim- Business Report records Serbia as registration procedure. The Agency will elec- ited liability companies).Nowadays, by setting having achieved unprecedented tronically transmit application data to the Tax up an online communication network between progress in the business start-up Administration and the latter will send the tax state agencies and establishing a one-stop-shop field over the last year, with the identification number required for completing business registration desk at SBRA, the state has Texception of the segment covering loan ap- registration to the Agency within 24 hours. upgraded its client services and removed admin- provals. The result sees Serbia climb the rank- Within a maximum of five days, the company istrative hurdles for setting up a business. ings by 35 places, from last year’s position of owner will receive a certificate of registration Following the successful integration of several 108th to 73rd out of 183 economies rated. This at the Agency’s desk, together with a tax iden- procedures into one, the number of institutions result was accomplished thanks to the introduc- tification number (PIB), as well as registration that citizens must deal with has now been cut tion of the one-stop-shop system for company with the Pension and Disability Fund (PIO) and and the number of procedures they are required registration, which was launched by the Serbian Health Insurance Fund (RZZO). to complete in order to start their own business Business Registers Agency (SBRA) on 6th May Despite considerable improvements over the has been cut from 11 to seven. Downsizing the this year. Setting up а single desk for business last four years, company registration was still administration has resulted in considerable time registration both downsized the number of ad- taking 23 days, requiring a whole set of pro- savings, shortening the procedure by ten days, ministrative procedures and lowered the time cedures – including the filling out of various and today companies planning to invest in Ser- required to register a company and set up a forms, applying for a tax identification number, bia will spend an average of just 13 days on pa- business in Serbia. As of late, a single applica- registering with various funds, opening a com- per work required to launch operations.  tion filed with the Agency for registration in the pany bank account and depositing the minimum

ASCO VIDAK was established as a Limited Liability Company under the 100% ownership of ASCO from Kavala, Greece. ASCO VIDAK was founded in 2006, by taking over the assets of company Milan Vidak, and since then it has seen constant investment activity aimed at achieving the following:

■ Reorganisation of all production facilities and re-releasing into process ■ modernisation of existing, and purchase of new, equipment targeting the introduction of new technologies, having as a consequence the expansion of standard production programmes and the launching of new products on the market. ■ Production and processing of industrial gratings for horizontal and vertical applications, which is also the main product of parent company ASCO S.A.

The main products of Asco Vidak are drawn wire and a wide range of wire products that can find applications in civil engineering, agriculture, the paper industry, etc. The Company owns 36 hectares of land, of which factory facilities cover 16 hectares. It also has its own industrial railway, directly connected to the Novi Sad – Bogojevo railway. The Company also owns an iron foundry in Novi Sad and Sports Centre Metalac Asco Vidak in Futog. Capital invested so far has exceeded €15 million. Our main goal is to offer the best possible quality of products on the market and fulfill the needs of our customers through a flexible sales policy.

Železnička 5 , 21410 Futog, Srebia Tel: +381 21 895 090; +381 21 895 768 www.ascovidak.com Guide to the Foreign Investors Council / 47 INTERVIEW WERNER HERICS, MEMBER OF THE FIC BOARD OF DIRECTORS, DEPUTY MANAGING DIRECTOR OF POLITIKA NEWSPAPERS AND M OPEN & CONSTRU “I think the implementation of comprehensive reforms is a crucial step towards approaching the European Union.”

By Ana STOJANOVIĆ ccording to Werner Herics, Member of the FIC Board of Directors and Deputy Managing Director of Politika Newspapers and Magazines, Athe Serbian government is the number one point of contact for the Foreign Investors Council and its members. How well co-oper- ation with the government is developed and what is needed to make Serbia more attractive for foreign investors, were some of the ques- tions for our interlocutor.

 How would you assess the relationship between the FIC and the Serbian govern- ment?  I think the dialogue between the government of Serbia and the FIC is very open and construc- tive. I see the FIC as a partner of the govern- ment of Serbia; as an institution that does not teach the government, but rather indicates pos- sible barriers and difficulties faced by foreign in- vestors. We offer experience and starting points for solutions from our mother countries, while we strive to find the best option for the Serbian market. In this course of action the government is the number one point of contact.

 What is still needed to make Serbia a better business environment? INVESTMENT IN SERBIA

n general, we are not dissatisfied “Iwith our investment! Like all pub- lishers, not only in Serbia, this year is proving very difficult for us. However, we see the Serbian market as having potential and we want to build our po- sition here.”

48 / Guide to the Foreign Investors Council AGAZINES UCTIVE DIALOGUE  I think the implementation of compre- tiveness for investments to prevent it from be- hensive reforms is a crucial step towards ap- ing in a disadvantaged position compared to its proaching the European Union. The process “I am afraid that there is neighbours. of approaching European standards should contribute to the strengthening of state institu- barely any country that’s  To what extent can the positive experi- tions that are essential for smooth operations. attractive for investments at ences of foreign investors attract other in- Simultaneously, important factors like legal vestors and, similarly, to what extent can predictability or transparency of economic the moment…” a negative experience prompt investors to frameworks will improve for investors. abandon investments?  The best way of advertising is by word of  Compared to other countries in the re- mouth! Of course, our home market accurately gion, how attractive is Serbia for foreign pand further. Serbia had been on the way to observes the successes and failures of potential investors? catching up with its neighbours, but the crisis investors in Serbia. Of course, people talk with  I am afraid that there is barely any country halted that. That said, Serbia is generally very each other. It can produce pro and contra ef- that’s attractive for investments at the moment, attractive for investors because it has a large fects. However, the arrival of any serious enter- because a large number of companies are try- market with considerable potential. However, prise to Serbia will be conditioned by feasibility ing just to ensure their existence, let alone ex- it is important to increase the country’s attrac- studies, i.e. due diligence, market analysis, etc. 

Guide to the Foreign Investors Council / 49 MARKET ANALYSIS by Erste Group PHARMACEU RECESSI

CEE pharmaceuticals are set to post positive growth in 2009 and remain a safe haven for investments

ccording to Erste Group, the upcoming reporting season is expected to confirm that the pharmaceuticals industry of central-eastern Europe (CEE Apharmas) has had a solid performance and re- tained its high resilience to recession. Due to their prudent approach, CEE pharmaceutical VLADIMÍRA URBÁNKOVÁ, companies are expected to retain their invest- PHARMACEUTICAL SECTOR ANALYST AT ERSTE GROUP: ment appeal. The CEE equity markets experi- enced a revival in the 2nd quarter of 2009, but “WHILE THE INCREASING RISK APPETITE WILL TURN THE ATTENTION economic fundamentals will take more time to recover and the optimism of market partici- OF INVESTORS TOWARDS CYCLICAL STOCKS, PHARMACEUTICAL pants is likely to remain fragile in the coming COMPANIES RETAIN THEIR APPEAL AS SAFE HAVEN INVESTMENTS AND period. However, Erste Group says, continu- ing volatility creates interesting trading oppor- SHOULD KEEP THEIR FIRM POSITIONS IN INVESTMENT PORTFOLIOS” tunities. The region’s top pharmaceutical com- panies posted solid results for the 1st quarter

50 / Guide to the Foreign Investors Council TICALS PROVE ON RESISTANT

of 2009, which demonstrated both that the that’s poised to post a positive growth rate and pharma markets of CEE still offer room for While equity markets face only limited risks of downward forecast growth and that the impact of the economic revisions. This should provide CEE pharma slowdown on the sector is rather limited. The remain volatile, sentiment stocks with a solid shield from the still volatile good performance, coupled with investors’ conditions of the CEE equity market – as has uplifted sentiments, prompted a nice recovery is gradually improving already been proven by the 2009 interim re- in the 2nd quarter of ‘09 for the share prices of and the bottom has been sults. Additionally, specific factors – such as the CEE pharma stocks. aging population and broadening availability of The prudent nature of the pharmaceuti- reached already more modern therapies – will keep CEE phar- cals industry ensures that it’s one of the few ma business performances on track and largely

24/07/2009 Rep. Mcap Price Recommendation Performance (EUR terms) Curr. Current Target Company (EURmn) (LC) 1M 3M 6M 12M

A&D Pharma EUR 69.3 2.1 2.9 Hold 5.1% 40.5% -7.6% -9.6% Bioton PLN 1,455.6 0.31 0.31 H old 14.8% 3.3% 55.0% -27.9% Egis HUF 143,724 18,460 21,785 Accumulate 6.1% 53.8% 51.7% 26.3% Intercell EUR 1,160.5 25.5 39.5 Buy 4.1% 15.5% 0.8% -14.6% Krka EUR 2,477.0 69.9 106.5 Buy 2.8% 34.8% 29.9% -25.1% Richter Gedeon HUF 687,723 36,900 41,900 Accumulate 12.5% 30.2% 24.7% 13.2% Sanochemia EUR 21.2 2.1 1.8 Reduce 17.4% 1.0% -15.7% -67.3%

Teva Pharmaceutical LS - 31,408 - - - 5.0% 7.0% 10.8% 20.4% Mylan Inc. USD 2,975 - - - 2.3% -9.5% 13.0% 15.3% Watson Pharmaceuticals USD 2,563 - - - 2.4% 1.0% 21.8% 28.2% Stada Arzmeimittel AG EUR 1,001 - - - -2.4% 15.9% -9.1% -63.6% Ranbaxy Laboratories INR 1,716 - - - 8.3% 53.3% 40.9% -43.8% Recordati EUR 955 - - - 6.1% 5.8% 20.0% -0.8% Dr Reddy Laboratories INR 2,007 - - - 4.5% 42.2% 78.1% 24.2% Erste Group Research, Factset. Based on closing prices as of 24th July, 2009

Guide to the Foreign Investors Council / 51 MARKET ANALYSIS by Erste Group ERSTE RECOMMENDS ● New target prices (HUF 21,785 per share for Egis and HUF 41,900 per share for Richter) point to interesting upside potential. Nevertheless, with respect to their hefty recent gains, both stocks have approached previous target prices. Erste Group analysts, thus, have cut their recommendations from ‘Buy’ to ‘Accumulate’ for both Egis and Richter. Given the steeper stock rally of Egis, as well as Richter’s long-term strategic edge, analysts stick to their stronger preference for the latter stock. ● Although Krka cannot expect to get backup from the currency side (rather the opposite), Erste Group analysts believe that the company’s profitability margins and top line growth will remain superior, beating its regional rivals in 2009. With the newly updated target price arriving at €106.5 per share (only slightly revised from the earlier target of €105.0), analysts stick to their ‘Buy’ recommendation on the stock. ● Factoring in the worse than antici- pated 1Q09 results, along with the di- lutive effect from the recent addition- al capital injection, though improving long-term prospects in the core insulin business, the new 12-month target price for Bioton is PLN 0.31 per share. Accordingly, Erste Group analysts raise their recommendation from Reduce to Hold. Should the future outlook become rosier, with the company de- livering the first tangible results of its rebound, a change of recommendation could be considered.

compensate for the dire economic conditions ment is gradually improving and the bottom investments plans of CEE pharma companies. that are expected to continue in the coming has been reached already. “While the increasing Moreover, the external indebtedness of CEE period. According to Vladimíra Urbánková, risk appetite will turn the attention of investors pharma companies is minimal and they are pharmaceutical sector analyst at Erste Group: towards cyclical stocks, pharmaceutical com- able to finance their investment plans without “We continue to believe that, despite the slow- panies retain their appeal as safe haven invest- tapping financial markets. Consequently, they ing economic growth, the CEE pharmaceuti- ments and should keep their firm positions in are not negatively hit by the still tight availa- cal markets should see a rise, while the catch- investment portfolios,” Urbánková also points bility of credit resources. According to Erste up effect in narrowing the gap in healthcare out. The upcoming 2nd quarter reporting sea- Group analysts, the top CEE pharmas repre- (and drug) spending between the CEE region son will confirm that top CEE pharmaceutical sent a sound long-term value-based investment and the EU-15 average is still in place in the players are well placed to weather the financial and remain a healthy option for those wanting long run.” Erste Group analysts believe that, crisis, with generics remaining in high demand to play it safe and keep a longer term horizon while equity markets remain volatile, senti- and sound balance sheets boding well for the in mind. 

52 / Guide to the Foreign Investors Council BUSINESS NEWS TELEKOM SRBIJA PROFITS RISE

elekom Srbija generated RSD10.2 billion dinars of net profit in the first six months of this year, marking growth of 26.2% over Tthe same period last year. Earnings before interest, tax, depre- ciation and amortisation (EBITDA) amounted to RSD19.1 billion at the end of June, representing 11.6% growth. Moreover, the company’s total revenue grew by 5.1% in relation to the same period last year, amount- ing to RSD42.6 billion dinars at the end of June. The first half of 2009 saw mt:s further solidified its leadership position on the mobile telepho- ny market, in terms of subscriber numbers and financial indicators. The total number of mt:s subscribers stood at 5,041,000, of which 1,240,000 are post-paid subscribers. This represents 14% growth compared to in- dicators from the first half of last year. Mobile Internet (broadband 3G Internet) has also been growing in popularity and at the end of June a total of 20,500 subscribers had bought mt:s Surf sets. In the first six months of this year, mt:s generated net revenue of RSD9.2 billion, which is 34.5% higher than in the same period last year. Operative revenue al- so grew by 2.5%, to RSD21.7 billion. The same period also saw Telekom Srbija settle financial obligations on the extensive €225 million loan tak- en by the company from a group of banks, led by Citibank, in order to acquire Telekom Srpska. Telekom Srbija needs to pay a further €35 mil- lion by the end of this year, in line with the November maturity date. This August the company reimbursed its shareholders with 50% of dividends, while the reimbursement of the remaining 50% is planned for October.

Public enterprise PTT Communications will get RSD3.11 billion dinars, while Athens-based Greek telecommunications company OTE stands to receive RSD779.4 million.

10 years of mts - Vladimir Lučić and Branko Radujko on celebration last year

NEW LOGISTICS DIRECTOR AT CARLSBERG

As of 3rd September this year, Carlsberg Serbia has been joined by Ale- ksandar Đukanović, who has assumed the position as the company’s new logistics director. Aleksandar worked for London-based Intresco Ltd. in 2008 and 2009, where he held the position of operations and logistics manager. Aleksandar began his professional career in 1992 at company MSC (ABB and Minel Jugoslavija) in Belgrade, where he worked as an assistant/associate in the company’s Sales and Export De- partment. He continued his career with stints as operations and logistics manager at companies from Greece, Switzerland, the U.S. and the U.K. Aleksandar was born in Osijek, Croatia, in 1971.

Guide to the Foreign Investors Council / 53 INTERVIEW MICHAEL KEFALOPOULOS, GENERAL DIRECTOR OF MELLON D.O.O. ADVANTAGES IN CRISIS “Serbia was late developing its economy compared to its neighbours, but this is an advantage today since the country has potential for the future.”

and other countries where they operate, forcing them to reprioritise or postpone investment plans. This is evident in the figures published by the Ministry of Trade, according to which Serbia attracted $2.7 billion of for- eign direct investment and privatisation revenue in 2008, while estimates for 2009 linger around the $1 billion mark. Nevertheless, this period also presents many opportunities for those with ready funds to invest and so I believe we will soon see a recovery in the country’s foreign direct invest- ments, provided Serbia manages to maintain its economic stability and provide a facilitating framework to foreign investors.

Most of the issues we are facing today are a direct result of the global financial crisis

 What were the biggest obstacles Mellon encountered when it first came to Serbia and what problems are you dealing with today?  The launch of Mellon in Serbia came soon after the radical changes of the country’s political regime that was limiting economic reform during the 1990s. The country has made great progress since then: transforming the business environment, liberalising prices and foreign trade, undertak- ing wide-ranging privatisation aimed at making the private sector domi- nant within the economy, pushing through comprehensive fiscal reforms, pursuing a tight monetary policy and reforming the banking and financial system. This rapidly evolving environment enabled Mellon to successfully establish and grow its business, inaugurating Mellon Transaction Tech- nologies (MTT), a company that offers advanced front-end and back-end By Ana STOJANOVIĆ transaction solutions and services to organisations with strong consumer ccording to Michael Kefalopoulos, General Director of business, as well as Mellon Transaction Solutions (MTS), a leading pro- Mellon this period presents many opportunities for those vider of world-class, integrated card issuing and acquiring processing with ready funds to invest and he believe we will soon see services. Most of the issues we are facing today are a direct result of the a recovery in the country’s foreign direct investments. global financial crisis, which makes us cautious even though it has not yet had an impact on our bottom line. What we have seen with respect to A How much do you think the economic crisis has our target market – the banking sector, is a shift in our customers’ priori- affected the volume of FDI in Serbia? ties from accelerated credit expansion to increased focus on asset quality,  In times of financial crisis, with such a global impact as the one we’ve which directly affects their spending. This was especially evident in MTT’s been experiencing over the past year, it is only logical that investments mix of product and services that was requested most by our customers. will be held back to a considerable extend. Although Serbia has been one For example, our customers are increasingly procuring our debt manage- of the countries least affected, one cannot overlook the fact that foreign ment and collections call centre services, as opposed to the telemarketing investors may be experiencing liquidity issues in both their own countries services that were quite popular in 2008.

54 / Guide to the Foreign Investors Council  As an FIC member, do you think the climate in Serbia? POLITICAL STABILITY Serbian government is responsive enough  The regulatory guillotine is a measure to the recommendations of investors; what taken by several Balkan countries that was n terms of political stability, the polit- needs to be done to improve the invest- announced by the Serbian government in Iical climate in the country improved ment climate in Serbia? late 2008, as part of a series of incentives considerably following last year’s turbu-  The Serbian government took a number of intended to boost economic activity. In my lent elections, yet there is still much to measures in late 2008 to address the impact of opinion, although the regulatory guillotine is be done to enact the government’s new the global economic crisis, among which were an effective measure in principle, in such a cli- legislation and initiatives. Macroeconomic reducing public administration expenses, decreas- mate a would-be investor will assess a number stability is a much tougher bet to win, as ing the cost of financing, increasing government of other factors before carrying out an invest- foreign investors are likely to be discour- investments and securing funds from interna- ment – with macroeconomic and political sta- aged by decreasing foreign capital inflow tional financing organisations. In my opinion, bility at the top of the list. (being experienced as a result of the cri- such measures may be effective in the short-term, sis) and an increasing deficit in the bal- but more structural and long-term planning is  What questions do interested investors ance of payments. needed to truly advance the investment climate usually ask when it comes to investing in in Serbia. Such planning should address issues Serbia and how competitive is Serbia in tion of Serbia connecting north and south, as like the country’s overall economic policy, public FDI terms when compared to other coun- well as the high level of highly skilled person- spending, fiscal policy, competition and monopo- tries in the region? nel. Of course, it is also important to mention ly policy, public procurement, etc.  Serbia was late developing its economy the low level of tax on profits and new laws compared to its neighbours, but this is an ad- regulating foreign investments in a very effec-  Will implementation of the Regula- vantage today since the country has potential tive way. After all, I would say that Serbia’s a tory Guillotine improve the investment for the future. Another advantage is the loca- great place to invest! 

Guide to the Foreign Investors Council / 55 INTERVIEW NENAD VUKOVIĆ, MEMBER OF THE FIC BOARD FASTER “Current global prob- lems certainly aren’t contributing to the solving of domestic ones. However, I am deeply convinced that business and the de- sire for investment will not stop.” By Ana STOJANOVIĆ enad Vuković, Member of the FIC Board of Directors and President of Henkel Serbia, believes that certain measures taken, such as pro- vidingN funds to maintain economic liquidity, had positive effects that at least allowed part of the economy to overcome the initial effects of the crisis. Here we discuss, among other things, whether another wave of negative af- fects of the economic crisis can be expected this autumn and how the investment climate in Serbia can be improved in this situation.

 To what extent do you think the Ser- bian government’s measures caused a reduction in the negative affects of the economic crisis?  The effects of the global economic crisis have added to the difficulty of solving Serbia’s own economic crisis, which has itself already lasted for twenty years and been a major chal- lenge for the government. The additional negative affects of the global economic crisis significantly reduced interest in investing in Serbia, among other things, and led to domestic companies facing financing problems that simply forced the government

56 / Guide to the Foreign Investors Council OF DIRECTORS, PRESIDENT OF HENKEL SERBIA REFORMS REQUIRED

to take steps that would have been difficult to predict a few months earlier. Finding space to The three most important processes that should be manoeuvre and creating possibilities for the adoption of measures are also conditioned coordinated are abolishing excessive and obsolete by financial capabilities, which Serbia clearly isn’t the best at. I think that certain measures, laws, adopting appropriate bylaws and modernising such as providing funds to maintain econom- administration once modern laws are adopted ic liquidity, had positive effects that allowed a part of the economy to overcome the ini- tial effects of the crisis. However, systemic problems that remained unresolved from the  Some experts predict a new wave of velopment are difficult to predict. Neverthe- previous period are now even greater obsta- negative affects of the crisis this autumn. less, we believe we will achieve better results cles than before and I think they should be What do you expect? than the market within organic sales growth. resolved quickly and bravely in order to create  We expect the difficult market conditions As for consumer goods, we are fortunate to an environment that will attract more invest- prevailing over the economy and financial operate in an industry that is still not as af- ments to Serbia than is the case today. markets will continue throughout 2009. The fected by the global economic crisis. Take general economic climate and its further de- Henkel as an example and you will see that

Guide to the Foreign Investors Council / 57 INTERVIEW

The transition process in Serbia has been going on for many years and the country regularly faces high levels of unemployment or insolvency

proposals presented in the White Book serve to define the current situation, make note of relevant processes taken on a particular is- sue and propose possible solutions that are the sum of the experiences and knowledge that come from practice. To our great satis- faction, the representatives of government institutions do take note of the White Book. As such, I think a formula that works should not be changed, but merely improved. For- our business covers the basic needs of citizens:  What issues do you think the FIC eign investors can best effect the improve- washing powder, soap, toiletries, etc. However, should insist the government address in ment of the business climate in a country by our third division, construction adhesives, is the future? leading through their own business example. feeling the consequences much more. After  The FIC’s role should not be changed in FIC member companies are guided by ideas the operations report for the first half of the the future, simply because the FIC has been of corporate social responsibility and they year, there are no indications of impending fall a partner that’s open for communication with take care of their employees, as well as of the which shows that we had good estimates and all relevant institutions with the aim of en- community in which they operate. a realistic plan for the year of crisis. Our in- suring the creation of a business climate that vestments in adhesives were great, we gained a would provide for additional investments by  To what extent do you expect the Regu- good market position in the minds of users of companies that have already invested in Ser- latory Guillotine to make Serbia more at- these products, which allows us to continue to bia, as well as attracting new investors. I be- tractive to foreign investors? have good results. We are very well aware that lieve the FIC and its members – companies  The Regulatory Guillotine, which is the the situation in our country is not all rosy and that operate worldwide – present a huge base process of the eliminating outdated regula- many of our consumers are facing problems of knowledge and experience that can be use- tions and simplifying complex procedures, and challenges, but that hasn’t all happened just ful to Serbia as it strives to create a modern was greeted with a sense of relief by foreign this year. The transition process in Serbia has and efficient economic system. investors. This is because the simplification been going on for many years and the country of legislation makes working processes more regularly faces high levels of unemployment  Besides contributing to the annual FIC efficient. Although useful, the adoption of or insolvency. Lots of things still need to be White Book, what else can foreign inves- modern legislation is not enough to create a improved and the current global problems cer- tors do to influence the improvement of favourable business environment if activities tainly aren’t contributing to the solving of do- Serbia’s business climate? are not synchronised. The three most impor- mestic ones. However, I am deeply convinced  The FIC asserted itself as an active part- tant processes that should be coordinated are that business and the desire for investment will ner in the creation of a better economic and abolishing excessive and obsolete laws, adopt- not stop. business environment in Serbia. The concrete ing appropriate bylaws and modernising ad- ministration once modern laws are adopted. LEADING BY EXAMPLE We have been working intensively in that di- rection, but there is still a lot of work to be oreign investors can best effect the improvement of the business climate in a country by done. This method has been successfully im- leading through their own business example. FIC member companies are guided by ide- F plemented in neighbouring countries, which as of corporate social responsibility and they take care of their employees, as well as of the are in a similar situation to Serbia, and there is community in which they operate. no reason that it won’t happen in our case. 

58 / Guide to the Foreign Investors Council BUSINESS NEWS

Piraeus Group’s net interest income of €528 to be the largest on the Serbian market, but PIRAEUS NET million improved by seven per cent in first definitely the best. There is a lot to be proud PROFIT AT €128 MN half of 2009 q-o-q. According to Michalis of. Besides enviable growth rates, we have Sallas, Chairman of the Piraeus Bank Group developed a highly professional and cus- Board of Directors, “These developments al- tomer focused team, as well as earning the low for an environment of conservative opti- image and reputation of a reliable partner to mism and provide the underlined conditions both our private and corporate clients. We that – along with efficient management and have positioned ourselves in Serbia as our better asset quality – will enable us to exploit marketing logo says: as the insurance of a the opportunities from a stronger position new generation. in the future.” Piraeus Group has reached an overall number of 3.3 million customers, both in Greece and the region. At the end of June 2009, the Group employed 13,800 peo- HARRISONS MOVES ple and its network reached 877 branches in FORWARD WITH PORTO nine countries. The second quarter of 2009 saw Piraeus MONTENEGRO Bank Group continue adjusting its policies The development of Porto Montenegro in to a macroeconomic frame that remains dif- UNIQA – THE INSURANCE Tivat continues apace and this summer saw ficult, in order to strengthen its balance sheet the formal opening of Pier I, with Peter OF A NEW GENERATION Munk, the lead Investor and mastermind and improve its results. The group’s liquidity UNIQA Group Austria is one of Central behind the concept, presiding over the cer- almost reached historically high levels during Europe’s leading insurance groups, striv- emony. Harrisons Solicitors are proud to the quarter. Non-performing loans increased ing to consciously unite Austria’s identity have been involved as exclusive lawyers to to 4.5%, albeit at a decelerated rate, while with the European format. UNIQA is the the project from the very start. Mark Harri- the level and quality of capital adequacy im- leading insurance group in Austria, with a son pointed out “This will become the larg- proved with total Capital Adequacy ratio at market share of approximately 22%. With est mega-yacht marina in the Mediterranean 11.2%, Equity Tier I ratio at 7.9% and oper- approximately 19,500 employees, 7.1 million and will transform both the Montenegro ating cost further contained at one per cent. customers serviced group-wide and nearly Tourism sector and the yachting world as a Meanwhile, deposits and retail bonds reached 14.1 million policies in 20 regional markets, whole. This blue-chip project, and the full the level of €31.8 billion at the end of June UNIQA is among the region’s most dynamic breadth of legal services we have provided 2009, marking an increase of eight per cent corporate groups. UNIQA group, rated “A” therefore, has attracted many other like- y-o-y and contributing to an improved loan- by S&P’s, entered the Serbian market at the minded international real estate investors to deposit ratio of 107%, compared to 115% a end of 2006. So far it has invested around our law firm and, I objectively believe, has year ago. Equity capital amounted to €3,631 €50 million in Serbia, while the recent ad- placed us at the forefront of the develop- million, loans reached €38,272 million and ditional capitalisation is another sign that the ment of the Montenegrin coastline from total assets amounted to €54 billion - an in- group has belief in its long-term plans on Ada Bojana to Herceg Novi”. Work is ad- crease of five per cent compared to the previ- the Serbian market. With premium growth ditionally underway on Phase I of the on- ous year. Net profit attributable to sharehold- of over 50% in both 2007 and 2008 respec- shore development of Porto Montenegro ers was €128 million and, on a quarterly basis, tively, UNIQA in Serbia achieved the high- with the first group of luxury apartments second quarter net profit increased by 48% est growth rate among all companies in the planned for completion in June 2010. compared to the previous quarter. Moreover, insurance industries. UNIQA’s goal is not

Guide to the Foreign Investors Council / 59 BUSINESS EU-STANDARD LAWS “In the new White Book we outlined, above all, the necessity to create the institutional infrastructure which, coupled with the adoption of bylaws, would allow the implementation of new laws.” he FIC’s ADCPI committee comes to other laws too, given the extensive was founded in 2005 with the number of laws in this area that were adopt- aim of implementing the first ed by the Serbian Parliament this May. Laundry Sustainability Project In the new White Book we outlined, (LSP), which had already been above all, the necessity to create the institu- conductedT in almost all European countries at tional infrastructure which, coupled with the the initiative of the European Association of adoption of bylaws, would allow the imple- Detergent Producers (A.I.S.E.). The LSP-L mentation of new laws. As I mentioned earli- is a sector initiative geared towards promot- er, a set of new laws that regulate the area of ing usage of liquid detergents. The initiative is environmental protection and the managing currently forging ahead in Europe, while the of chemicals in accordance with European first stage of the project entailed complete- standards, was adopted in May. However, the ly replacing common laundry detergents with mere adoption of new laws does not mean compact ones. Our aim is for the LSP1 to their immediate implementation; it is vital to be realised through both the consumers and establish institutions for the implementation the industry joining forces, with the state in- of the adopted laws, which primarily pertain stitutions rendering their support. However, to the Chemical Agency. due to various reasons this hasn’t happened Here I would like to mention the Law as yet. In the meantime, the Association was on Packaging and Packaging Waste, as well joined by cosmetic companies and ADCPI as the Law on Chemicals, which stipulate became an affiliate member of the European that any legal or physical person who pro- Cosmetics Association (COLIPA). duces waste must dispose of it properly. It The main aim of the Association is to en- is of crucial importance to pass relevant by- By Jelena Pejčinović (FIC) dorse principles and standards related to the laws that should clearly define the role of Executive Secretary of production and distribution of detergents certain actors in waste management. We also and cosmetic products; providing assistance support the establishment of new companies the ADCPI Committee to the harmonisation of domestic regulations and the development of existing companies (Association of Detergent with those of the European Union, while op- that manufacture and/or provide a service and Cosmetics Producers posing any form of unfair competition. in the environmental sector, especially those : It is this joint effort in harmonising rele- that are engaged in the recycling of second- and Importers) vant regulations that the Association is cur- ary raw materials. “THE ADCPI IS CURRENTLY rently very engaged in and I would like to Moreover, we have reminded the govern- ENGAGED IN THE JOINT EFFORT outline that we have established close co- ment of the aggravating circumstances we operation with certain departments at the face when importing cosmetic products, par- ON HARMONISING THE RELEVANT Ministry of Environmental Protection and ticularly when it comes to repeating the in- REGULATIONS WITH THOSE OF Spatial Planning, with the goal of modify- spection of goods that have already been is- THE EU.” ing the domestic legislative framework to suit sued with a sanitary permit by a relevant in- the EU’s. Bearing in mind that the industry stitution in the exporter’s country. The com- has been invited to become an active partic- mon practice in EU member states, as well as ipant, ADCPI members have been involved in a number of other countries, entails that in drafting bylaws to facilitate the Law on the sanitary inspection of goods is not dupli- Chemicals. We are confident that co-opera- cated if it has been performed by a compe- tion with the Ministry will continue when it tent institution in the country of export. 

60 / Guide to the Foreign Investors Council BUSINESS NEWS

a chance to supplement their knowledge and range of professional services and solutions ‘FIRST CHANCE’ AT gain professional experience, which repre- to meet their specific business needs. Some KOMERCIJALNA sent a ‘must’ for their further specialisation. clients will be looking to buy specific profes- The interns are also given the opportunity to sional services and we will meet their needs. find permanent employment at Komercijalna However, we have proved that we can add banka, which operates all over Serbia, once considerably more value through the inno- their internship expires. vative application of professional disciplines “Even in this time of crisis, when many com- and sector know-how. Business solutions panies are becoming lethargic and downsiz- generate value for the clients and for us. ing, we see our chance in new businesses with this fresh young workforce that we are going to support by giving them their first big break and chance to prove themselves, as well as al- Komercijalna bank’s ‘First Chance’ pro- lowing them to use their knowledge and skills gramme entails the hiring of young people to contribute to Komercijalna banka’s activities who have no previous experience of working and progress,” says Slavica Đorđević, member Our vision is to position ourselves as the cli- in the banking sector. The programme will of Komercijalna banka’s Executive Board. ent’s trusted advisor with the ability to meet see fifty interns that have graduated banking their needs in each challenging area and inte- (10 university and 40 junior college gradu- grate services around creative solutions when ates) given employment in 13 branch offices WHAT ARE CLIENTS required: We are accessible to our clients of Komercijalna banka in Belgrade, Šabac, wherever and whenever they need us with the LOOKING FOR? right resources; We are able to work interna- Jagodina, Požarevac, Smederevo, Valjevo, Clients are looking for organisations that help tionally as one company from wholly-owned Kraljevo, Zaječar, Novi Pazar, Užice, Vranje, improve their business performance. For EC offices; We have relevant knowledge, innova- Loznica and Priboju. The new programme Harris, this means generating more value from tion, experience and professional excellence; follows the bank’s recent signing of a con- their built assets whether that be in planning, We have the right attitude and approach to tract with Serbia’s National Employment construction or operations. Clients are seek- delivering solutions to our clients.  Service (NSZ). These young people are given ing fewer suppliers that can deliver a wider

Guide to the Foreign Investors Council / 61 INTERVIEW VERA NIKOLIĆ DIMIĆ (VIP MOBILE), HEAD OF THE FIC TELECOMMUNICATIONS COMMITTEE AND COORDINATOR OF THE TELECO REGULATING A CHA “Our networks are developing fast and our market is exceptionally dynamic, thus making it necessary for regulations to provide an appropriate framework”

By Ana STOJANOVIC peaking about the proposed new law to govern electronic com- munication, Vip Mobile’s Vera Nikolić Dimić, Head of the FIC’s Telecommunications Committee, says:S “all these regulations will basically com- pose a new and, we hope, improved regu- latory framework for the telecom business that will more transparently decide on the rights and responsibilities of the relevant in- stitutions, operators and end-users.”

 According to your experience within the Working Group, what are the most common recommendations made by citizens and companies?  The Telecommunications Committee was established within the FIC at the beginning of 2009, following the initiative of telecom- munications operators and with the main objective of facilitating discussion on regu- latory issues among representatives of FIC member companies and providing recom- mendations on how to improve the regula- tory framework for the telecommunications industry. The majority of Telecommunica- tions Committee members expressed their interest in being part of Serbia’s Compre- hensive Regulatory Reform process, known as the Regulatory Guillotine, with the main aim of promoting the abolition of redun- dant regulations and the changing of inef- ficient regulations in telecommunications. The Group has met regularly over the sum- mer and finalised the proposal to tackle some of the issues hindering the telecommunica- tions industry. We addressed several bylaws dealing with certification, the technical con- trol of networks and general procedures that we think could be realised more swiftly

62 / Guide to the Foreign Investors Council MMUNICATIONS WORKING GROUP WITHIN THE REGULATORY GUILLOTINE PROJECT NGING INDUSTRY - in accordance with the best EU practices and in order to give responsible institutions time to deal with the market aspects of the economy. These procedures are also very time consuming and costly for operators. Our networks are developing fast and our market is exceptionally dynamic, thus mak- ing it necessary for regulations to provide an appropriate framework. I would also like to mention that we did not address some of the issues we would possibly address as we have been expecting the new draft of the Electronic Communications Law to be presented in public soon and we thought it would be better to concentrate our efforts on giving some useful suggestions regarding We want to offer appropriate quality to customers and believe the new draft law at this stage. According to that the new Construction Law will make this part more clear the information we have received to date, as expected the citizens are mainly concerned with customer protection issues in the tel- ecommunications field, which are regulated gaged in reducing administrative barriers to  Which new or improved laws or bylaws not only by the Telecommunications Law, doing business and speeding up the harmo- do the industry’s players expect to be adopt- but also by a number of other laws, such as nisation of existing laws with those of the ed by the government in the near future? the Customer Protection Law, Advertising EU. Naturally, all local laws and regulations  First of all, the Draft Law on Electronic Law and some other laws. have to be harmonised internally, as does the communication should be up for public dis- work of institutions and local authorities. cussion this autumn, as the Government Ac-  In your opinion, to what extent can a tion plan envisages its adoption in the first Regulatory Guillotine effect the inflow  A new added tax on mobile telephone quarter of 2010. This law is sector specific of foreign investments to Serbia? operators was recently introduced. To and contains all major provisions relevant to  Foreign investors fully support the Guil- what extent does that tax influence the the operations of telecom companies – start- lotine and the FIC’s bodies are actively in- operations of telecom players in Serbia? ing from the composition of RATEL and its volved in the process. If the Guillotine is  Mobile operators were unpleasantly sur- powers, to withdrawal, the competencies of successfully completed it could decrease the prised with the 10 per cent tax introduced to the Ministry and RATEL, radio frequencies’ red tape that still exists in Serbia. Moreover, all mobile services, voice, SMS and GPRS. usage, market analyses, user protection, etc. it could deliver existing and potential inves- Telecom operators and foreign investors In addition, I would mention the new Con- tors a strong message that they can make re- support the Serbian government’s efforts to struction Law, which is also very relevant for liable business plans and implement them in overcome the consequences of the crisis, but the telecom operators since it contains the a timely manner. More generally, the regula- they opt for legal predictability and the termi- part related to construction of networks. tory framework should support the market, nation of this measure as soon as possible. Of course, we should not forget that in ad- provide the guidelines for it and enable its The affects are already present. The fact that dition to good laws it is also very important smooth functioning, not slowing the invest- we are measuring customer behaviour and are to have fast and uniform implementation of ments down. This is a long term, continuous more careful about our investments show that the same. process that will not be completed with the it is clearly a discouraging measure that will All these regulations will basically compose implementation of the Guillotine process mostly hit low income families and those who a new and, we hope, improved regulatory alone. The state must be continuously en- do not have an alternative to mobile phones. framework for the telecom business. 

Guide to the Foreign Investors Council / 63 INTERVIEW MILOŠ MIRIĆ (HOLCIM) - HEAD OF THE FIC HR COMMITTEE PREDICTABILITY IN THE H By Ana STOJANOVIC “The basic rights of workers must be better he FIC’s Human Resources Committee is among the council’s protected through legal solutions and their more active bodies. Tasked with highlighting anything they consid- application in the field.” er to be in need of attention in theT HR sector through the annual FIC White Book, the HR Committee also offers sugges- tions on how to improve certain legal solutions in this area. This year they also actively partic- ipated in the Regulatory Guillotine process of the Serbian government, which added extra im- petus to our interview with Miloš Mirić, Head of the HR Committee.

 Your FIC committee participates within the working group tasked with analysing regulations related to the labour law as part of the Regulatory Guillotine. How far have you progressed with this project?  The Regulatory Guillotine project has been long awaited. The problem of normalising regulations of the entire society, or in this case the business en- vironment of Serbia, is specific for several reasons. Firstly, the normative framework in Serbia is very complex, built over decades and mostly in a dif- ferent period of social and economic organisation during socialism. We still have a lot of legal norms that mention concepts such as social self defence, the organisation of joint work, self-management bodies and the like. Secondly, Serbia is an admin- istratively young country that was a republic in the state union with Montenegro until just recently. The country’s legal norms, for the most part, are still based on limited national jurisdictions, some even dating back to the time of Yugoslavia. The business community welcomes this project and we were happy to accept the invitation to actively participate in it. The Human Resources Commit- tee participates in the working group for analysis of regulations in the area of labour legislation, alongside members of the American Chamber of Commerce in Serbia, NALED and the Employ- ers Union. The inclusion of various stakehold- ers in the working group’s operations is certainly an advantage, since they offer different views of the problems associated with labour law applica- tions – principally because the companies we all represent are completely different in terms of size, business segment and corporate values. All of this

64 / Guide to the Foreign Investors Council R SECTOR guarantees that the interests of a large number of enterprises in Serbia will be represented in the final recommendations.

 What were the main areas of focus within this project?  The FIC Human Resources Committee per- formed a very detailed and constructive analy- sis of the labour law in Serbia – the domain in which most of our suggestions and objections “We would like to offer concrete solutions lie. The Labor Law was adopted in 2005 and has not been changed since, with the exception of a to overcome the problems we have.” regulation in an article that was changed several months ago. Therefore, the law is almost identi- cal. We have already commented on it on several drum up the needed determination and political are frozen in the decision to extend the GCA. occasions, but this year’s approach had to be consensus. However, issuing of ambivalent sig- In addition to the GCA, we also reiterated our different. We are proud to say that this year we nals to the public only contributes to the general remarks discussed in previous years, mostly in the went a step further in our proposals by trying to unpredictability of the business environment in field of labour legislation and again guided the by take a balanced position that would take into ac- Serbia. The Serbian government adopted a pack- the interests of companies and employees. The count not only the needs of our companies, but age of measures to overcome the crisis and the essence of our proposal is that the basic rights of also the unenviable position of workers in Ser- very complex environment that our society and workers must be better protected through legal bia during times of economic crisis. We focused our economy are currently in. Some of these solutions and their implementation in the field, on issues requiring different treatment in order measures have bore the first results. As the gov- i.e., through enhanced inspection control. Fail- to improve the efficiency of everyday business, ernment has been positively proactive, we would ure to do this discourages those companies that most of which were included in the Labour Law. like, in turn, to offer concrete solutions aimed at regularly and completely pay their obligations to We offered suggestions about determining sala- overcoming the problems we have. In terms of the state. ries, salary compensation, employment, etc. our formal objections, we have achieved absolute consensus within the FIC on criticism of one  What are the basic characteristics of the  Which objections to the labour related thing: the decision of the Minister of Labour and General Collective Agreement? regulations will be found in this year’s FIC Social Affairs to extend the effect of the General  The actually text of the GCA is very outdat- White Book? Collective Agreement (GCA) to all employers in ed and, frankly, I have to admit that the essential  First of all I would like to say that it is easy Serbia. Before I continue, I would like to point purpose of negotiating and adopting such a doc- to criticise others and this is not the purpose of out the fact that most FIC-member companies, ument is very difficult to see. Many of the regu- the White Book. The fact is that the Serbian gov- especially those paricipating in the work of the lations and institutes listed are completely out of ernment is in a very difficult position that sees all Human Resources Committee, are guided by the date. For example, the GCA means a company the problems and their possible solutions locked highest corporate ethical norms and take care of is obliged to consult trade union representatives in a vicious circle; it is very difficult to find pre- their employees as their top priority. Paradoxically, before making any important decisions. Also, cisely where to cut and where to start to solve our employees have all those very benefits that the value system that is promoted through the problems in the first place, then it’s difficult to GCA is partly obsolete and does not represent a COMPANY AND EMPLOYEES UNITE step towards the adoption of values that could help the progress of the Serbian economy. The owadays it is difficult to say if it is the employers or the employees that suffer problem with the decision to extend the effec- more, because we suffer together. In such a challenging economic environment tiveness of the GCA is related to the fact that “N the GCA text itself goes into many parts of the companies must demonstrate initiative and resourcefulness more than ever. The answer Labour Law, changing legal norms beyond the to the question of who can most help a company achieve excellent results is its employ- regular procedure. As such, the predictability of ees. Those companies which accept that as a fundamental value in their business and ap- doing business in Serbia is reduced and it does ply it and communicate successfully with their employees, inevitably acquire a comparative not help when it comes to attracting new foreign advantage over others. So, in times of crisis there is no choice of companies or employees, investments, which have certainly been the en- but companies and employees choosing together towards a shared goal!” gine of development since 2000. 

Guide to the Foreign Investors Council / 65 INTERVIEW IVAN RAKIĆ (ERNST&YOUNG) – HEAD OF THE FIC TAXATION COMMITTEE AND COORDINATOR OF THE TAX WORKING GROUP WITHIN THE REGULATORY GUILLOTINE PROJECT SEEKING CLARITY

“We have once again highlighted the need for clarity and consistency in the application of existing legislation by the tax authorities”

By Mark R.PULLEN lies not in the recommendations them-  The tax workgroup of the FIC exert- peaking in his capacity as coor- selves, but “in the arguments cited to ed substantial effort during the summer dinator of the FIC tax group support our recommendations” in the season to formulate proposals regarding for the Regulatory Guillotine next phase. necessary amendments to the Serbian tax Project, Ernst&Young’s Ivan legislation. These proposals were subse- Rakić says that the true chal-  Do you see an end to your work on quently submitted to the main Guillotine Slenge of this reform from his standpoint the Guillotine project in sight? coordinating team within the Serbian

66 / Guide to the Foreign Investors Council government for their evaluation and po- tential action. However, one should bear in mind that the submission of recom- The process of preparing the 2009 edition of the White mendations on how to improve the fiscal environment in Serbia constitutes merely Book overlapped with the Guillotine process and we have the initial step in a long range of actions required at both ends before clarity on is- tried to summarise our proposals for the Guillotine in this sues of basic taxation can be established; clarity on the rules themselves, but also year’s edition. on the processes and, ultimately, the payment of taxes. In my view, the true challenge will lie in the arguments cited to support our recommendations before the Guillotine Team, the Ministry of Fi- decisions of foreign investors to in- usually provided by the simple fact that nance and the tax authorities alike, which vest in Serbia? said country has at least a solid under- will happen in the next step. Only once  Investment decisions are based on a standing of basic international taxation we have succeeded in this task would I be number of factors. This is primarily po- concepts, regardless of the manner in able to regard the scope of the tax work- litical stability, the rule of law, logistics, which these are locally applied. On top group as exhausted and the mission com- the tax climate, etc. To this end, tax con- of that, an attractive CPT rate is always pleted. Besides, one should know better siderations are of importance when mak- considered a plus and if access to a wide that the adjustment of tax legislation is ing investment decisions, though they are network of DTTs is available then I a continuous and never ending exercise not the decisive element in the equation. think there is very little left to wish for. that is closely linked to a country’s fiscal Even though I firmly believe that invest- Another very important aspect weighing policy. ment decisions are never taken purely on heavily on the decision of an investor is the basis of the tax environment of the the legal and taxation regime applied to  To what extent do taxes influence host country, a great deal of comfort is employment.

Guide to the Foreign Investors Council / 67 INTERVIEW In the current period of economic down- context are tax incentives, which are a turn, when investments are limited and to very important tool in attracting for- a certain extent even rare, Serbia literally The adjustment of tax eign investment and a great teaser to needs to “fight” for every single FDI op- promote your marketplace. However, it portunity with the countries of the re- legislation is a continuous has been largely observed that there is gion, such as Bulgaria, Macedonia and no consistent approach to this matter, Montenegro, which are Serbia’s direct and never ending exercise as tax authorities tend to interpret rules competitors in the race for FDI. To this freely and in an often arbitrary manner. end, a transparent, effective, simple and that is closely linked to This is the area where Serbia still lags far attractive tax system becomes more and behind mainstream European countries more important. a country’s fiscal policy and this is where foreign investors place most of their objections against the Ser-  Considering your joint roles as co- bian tax system. The FIC White book is ordinator of the tax workgroup for the a fine example of suggestions made by Guillotine Project and Head of the foreign investors regarding ways to im- FIC Taxation Committee, which par- prove the overall investment climate in ticular tax rules would you say should Serbia, including the tax system. be amended immediately?  Many foreigners already doing business  Which particular tax rules in Serbia have observed that the amount have been covered in the 2009 of new legislation in many fields, or the White Book and singled out as number and frequency of amendments requiring adjustment? to existing legislation, is overwhelm-  The process of preparing the ing and very difficult to monitor. Even 2009 edition of the White Book though it is imperative that we upgrade overlapped with the Guillotine proc- our legislation, another dimension ess and we have tried to summarise that I believe is equally, if not more, our proposals for the Guillotine in important has to do with implemen- this year’s edition. In this regard, we tation. Here inconsistencies and have once again highlighted difficul- inappropriate interpretations have ties that non-residents face regarding caused more harm than good to the payment of taxes in Serbia, in situ- the system. It is highly significant ations where they have no legal regis- for lawmakers to understand that tration locally. Taking into account the the value of good legislation lies budget deficit, which is being publicly in its uninterrupted, consistent and commented on by government officials, non-discriminatory application. I strongly believe that Serbia should Serbian tax legislators need to be- promptly adjust its legislation to allow come aware of the importance of for more state revenue. In addition, as in the practical dimension of lawmak- previous years, we have once again high- ing, especially if you do not want lighted the need for clarity and consist- to end up having your legislation ency in the application of existing legis- only on paper and never applied lation by the tax authorities, especially in reality. A striking example of in the area of capital tax incentives, many that come to mind in this such as the 10-year tax holiday. 

REGIONAL INVESTMENT RECORD

any foreigners already doing business in Serbia have more, important has to do with implementation. Here in- Mobserved that the amount of new legislation in many consistencies and inappropriate interpretations have fields, or the number and frequency of amendments to ex- caused more harm than good to the system. It is high- isting legislation, is overwhelming and very difficult to mon- ly significant for lawmakers to understand that the value itor. Even though it is imperative that we upgrade our leg- of good legislation lies in its uninterrupted, consistent and islation, another dimension that I believe is equally, if not non-discriminatory application..

68 / Guide to the Foreign Investors Council BUSINESS PROMOTION

SIXT SMARTS ON THE continuing an already established tradition of System with five different lighting functions and STREETS OF BELGRADE supporting sports in the country. Through the the Pre-Safe® preventive occupant protection provision of a significant award fund of €250,000 system. There is a choice of four and six-cylin- per season of the national LAV Championship, der engines with up to 13 per cent more output Carlsberg Serbia plays an important role in ad- than the preceding model, accompanied by fuel vancing the sport, while encouraging boldness consumption that’s up to six per cent lower. The and fair play. design of the C-Class is based on the modern Mercedes idiom, which reflects the technical su- NEW CCLASS: periority of automobiles bearing the star; with taut lines and large, tranquil surfaces. The pro- SUPERIOR SAFETY, nounced wedge-shape of the front end serves to COMFORT AND AGILITY emphasise attributes such as agility and perform- ance. Together with the sporty, high-quality ap- Mercedes-Benz Serbia and Montenegro deliv- pointments, this feature emphasises the youth- ered 10 smart vehicles to AAA-1 rental company, ful, agile appearance of this C-Class. This sporty which is the representative of SIXT rent a car for presence can be enhanced even further with the Serbia and Montenegro, on Friday, 4th September AMG sports package, which includes striking 2009. The delivery of these 10 smart vehicles is front and rear aprons plus side skirts. particularly significant to SIXT company, given the fact that SIXT is reputed as the most pres- GUINNESS BEER tigious car rental company in Europe to have CELEBRATES ITS 250TH recognised the trend towards ecological vehicles with low consumption and excellent inner-city ANNIVERSARY mobility. Safety, comfort and agility are the outstanding The tale of Guinness’s adventures in space, un- attributes of the C-Class. The Saloon excels with derwater and live in a studio with global celebri- GENERAL SPONSORS a multifaceted product concept that meets the ties unfolds as the old Irish stout celebrates its OF THE NATIONAL expectations of various customers. With the 250th birthday. Guinness, the quintessential black Avant-garde, Elegance and Classic lines, Mer- Irish stout beer - officially distributed in Serbia by FOOTBALL TEAM cedes-Benz offers three individual models with Carlsberg Serbia - is this year also celebrating the an emphasis that’s either on comfort or agility. life of Arthur Guinness, visionary, philanthro- All model variants share the latest state-of-the- pist and creator of one of the most recognisable art technology, including the newly developed beers in the world. Guinness has been present in Agility Control package with situation-respon- Serbia since 2007, when Carlsberg took over the sive shock absorber control, the Intelligent Light beer’s distribution. 

A four-year sponsorship contract was signed be- tween Carlsberg Serbia and the Serbian national football team two years ago at the brewer’s re- cently renovated premises. The Čelarevo Brew- ery again played host to special guests, including the biggest professionals of Serbian football. Led by national team boss Radomir Antić, the squad toured the brewery’s facilities and the first authentic beer museum, while getting acquainted with the complex production process of brands considered some of the best quality beers on our market. Carlsberg Serbia and brand Lav have re- mained general sponsors of the Serbian national football team for the fifth consecutive year, thus

Guide to the Foreign Investors Council / 69 INTERVIEW MILICA SUBOTIĆ (JPM) - HEAD OF THE FIC LEGAL COMMITTEE LAWS TO SUIT THE EC “The FIC Legal Committee plans to directly address certain ministries soon and propose amendments to existing regulations, as well as the adoption of new and better regulations.”

By Ana STOJANOVIC the interests of the economy. Guillotine is to reduce operational costs by he Legal Committee of the removing administrative barriers, reducing Foreign Investors Council is  To what extent do you think the Regu- potential sources of corruption and increas- among the committees that latory Guillotine will improve business ing efficiency. I also think that implementa- have been working intensive- policies in Serbia? tion of the Regulatory Guillotine is actually ly on preparing the new White  Just the fact that Serbia joined the coun- a prerequisite for the creation of a clear and Book,T according to Milica Subotić, Head of tries implementing, or having already imple- predictable legal framework in Serbia, which the Legal Committee, this year’s edition will mented, the Regulatory Guillotine process is certainly missing. The FIC is intensively in- feature new topics, as well. However, our is a clear signal indicating an improvement volved in this process – through its boards, interlocutor thinks that the FIC can, and of the business climate and the operations such as the committees covering tax, telecom- should, take a more active role in passing new of foreign investors – particularly consider- munications and human resources, as well as laws that will ensure future legislation will suit ing that one of the goals of the Regulatory through the work of specially formed work-

70 / Guide to the Foreign Investors Council ONOMY ing groups. We have sent our recommenda- tions for the revoking and amending of exist- ing regulations to the Comprehensive Regula- tory Reform (CRR) Unit. Now it remains to be seen whether these recommendations will be accepted, to what degree they will be im- plemented and what results they will yield.

 Editions of the annual FIC White Book have often addressed the adoption and implementation of laws. What legislative problems can we expect to find in the lat- est upcoming edition of the White Book?  The 2009 edition of the White Book deals with basic provisions of recently adopted laws, particularly those of greatest importance to foreign investors, such as the Law on For- “It is necessary to have a direct approach towards eign Trade, Law on Competition Protection, Law on Personality Data Protection and the communication with official lawmakers in Serbia.” laws on prevention of money laundering and financing terrorism, as well as solutions con- tained in certain laws related to environmental protection. We certainly hope that the Serbian Public Offer (IPO) due to current regulations only thinking about laws, but also bylaws that government and other competent authorities of the Law on the Economy and laws regu- usually aren’t adopted as a responsibility of the will create the relevant bylaws needed to al- lating the securities market, or rather the in- bodies that actually enforce them, which has low implementation of the mentioned laws as consistency of these regulations. Then we will proved to be a poor solution in some cases. soon as possible. The 2009 White Book will deal with latest analysis on the practices of Representatives of certain ministries have ex- include a brief analysis of proposed changes the Securities Commission in the implemen- pressed a very positive approach in this regard to certain laws relating to intellectual property tation of bids to takeover stock companies, recently. This include the Ministry of Trade and we believe those proposals will certainly as well as addressing certain problems relating and Services, in particular when it comes to contribution to the protection of intellectual to foreign operations in terms of the profuse the Law on Competition Protection, and the property in the Republic of Serbia. The legal documentation required by Serbia’s central Ministry of Economy and Regional Develop- framework for PPP will be presented in Ser- bank (NBS) for the opening and maintaining ment – on the drafting of the Law on Bank- bia for the first time and the 2009 edition will of accounts and the like. ruptcy. FIC members were involved in the also certainly see us deal with important issues debate on the drafts presented in both cases, that affect the operations of companies, such  To what extent do you think the FIC’s which we believe is a good sign. Regardless as the impossibility of implementing an Initial members are able to influence the adop- of these good examples, I believe that our co- tion of certain legislative regulations? operation with lawmakers could be formal- ONE-STOP SHOP  I believe it is necessary to have a direct ap- ised further and increased to a certain extent, proach towards communication with official in order to ensure that acts are not adopted n the process of establishing com- lawmakers in Serbia, as well as holding dis- that do not contribute to economic interests. panies, the introduction of a one- “I cussions with experts from all ministries who Accordingly, the FIC Legal Committee plans stop-shop proved a very efficient so- usually work on drafting new laws – in order to directly address certain ministries soon and lution in practice and is to be compli- to be able to contribute to the creation of bet- propose amendments to existing regulations, mented. This idea was supported very ter solutions before a specific legal solution as well as the adoption of new and better strongly in the early stages by the FIC.” has been adopted by parliament. Here I’m not regulations. I am convinced of our success. 

Guide to the Foreign Investors Council / 71 BUSINESS CE’S TOP 500 Six Serbian companies make the region’s elite list

EPS FACILITY

By Mark R. PULLEN COUNTRY ANALYSIS the economies of Central Europe experi- list of the top 500 companies Despite the high level of interdepend- encing significant GDP contraction in 2009 from 18 Central European ence between countries in the region and in- and with only tentative growth of no more countries has been compiled stitutions in Western Europe, there is certain- than two per cent projected for the majority by Deloitte on the basis of ly not a ‘one size fits all’ approach to recov- in 2010, the region remains in a delicate bal- 2008 sales revenues. Besides ery in the region. Assistance from the IMF, ance and country-specific recovery plans are Athe overall Top 500 list, Deloitte has also com- World Bank and EU has helped to stabilise important for its overall recovery. piled lists of the top 50 banks and top 50 in- the region’s economies and it is fortunate that As well as these strategies, Central surance companies in the region. This is the those countries owing the largest proportion Europe’s position as a significant part of third consecutive year that Deloitte has utilised of total debt, such as Poland and the Czech the global economy hinges on an improve- its expertise and international network of of- Republic, are some of the stronger markets ment in the performance of global finan- fices to publish the CE Top 500 list, which has in Central Europe, thus offsetting the ex- cial markets and on increased co-operation now grown to become a relevant indicator of posure to risk of weaker markets in the re- between all countries, regardless of their ge- economic forces in the region. gion to some extent. However, with all of ography, history and political differences. Of

72 / Guide to the Foreign Investors Council Serbia’s best positioned company on the list is petroleum industry player NIS, found in 28th place with sales revenues worth €3,725m

this year’s top 500 companies, the majority hail from Poland (188), which is more than last year. The number of companies com- ing from Romania also increased compared to last year’s list, while the number coming from Ukraine fell as a result of the country’s economic downturn that resulted in big man- ufacturing companies’ decreasing revenues during this year. The Top 500 list contains six Serbian companies. Of those, the best posi- tioned company is petroleum industry player NIS, found in 28th place with sales revenues worth €3,725m, followed by EPS (96), Delta M (101), PTT Srbija (125), US Steel Srbija (183) and Srbijagas (287). the energy and resources sector, which make tire manufacturing industry has been strongly Deloitte also ranked the region’s banks the large size of companies desirable. hit by the recent downturn in the region. Of and insurance companies by total assets and Further regional consolidation in the course, the region’s top companies belong to gross written premiums, respectively. Serbia’s medium term is likely in this sector, espe- the construction and automotive industries, two largest insurance companies found their cially in the oil business, which is the least which are experiencing a decline in the range place among the 50 most successful: Dunav regulated and least used as an instrument of around 20 per cent over previous year(s). osiguranje (46) and DDOR Novi Sad (50). of social policy. Gas and electricity (both In the long run, one of the issues that Unfortunately, there are no Serbian banks widely used for winter heating in the re- needs to be addressed is low productivi- among Central Europe’s Top 50. gion) are still often under heavy govern- ty, which is much lower in the region than ment influence and, as a result of their in- is the case in developed countries. Following MAIN INDUSTRY ANALYSIS ability to set market prices, these compa- a period of continuous, mostly double digit, This year’s list confirmed the dominance nies tend to be starved of capital to invest growth over the last several years, companies of energy and resources companies. First in new capacities, which is sorely needed are now likely to revise their strategies (their place on the list is yet again taken by Polish in the region. The consumer business and so-called value creation concept) and ready oil giant PKN Orlen, followed by Hungary’s transportation industry is represented with themselves for the post-downturn era. Mol and Ukrainian Metinvest, which is also 149 companies on the list. Here increased Most of the top companies in the manu- the best placed representative of the man- interest rates and inflation, coupled with facturing industry are already privately owned ufacturing sector. The largest number of sharp rises in oil and energy prices, caused and boast foreign-invested capital. Others will companies are from the energy and resourc- diminishing profit in the consumer busi- follow suit in an attempt to become competi- es sector (151 companies), while the list of ness sector, including the retailing indus- tive not only across the region, but also on the top companies by revenue in the Adria re- try. In 2008 retailers absorbed part of high- broader, global level. We could expect further gion also continues to be dominated by oil er energy, food and commodity prices, but consolidation in the form of clustering within companies and electrical utilities more than apart from relatively high inflation rates, markets and more regional co-operation and by any other sector. In this respect, the region the revenue growth was mainly driven by partnerships on initiatives that support contin- closely follows EU and, indeed, global trends. an increase in the number of stores. uous improvement of industrial production, There are significant economies of scale in As the centre of the real sector, the en- such as lean manufacturing. 

Guide to the Foreign Investors Council / 73 INTERVIEW

ANA FIRTEL VLAJIĆ, EXECUTIVE DIRECTOR OF THE FOREIGN INVESTORS COUNCIL AIMING FOR A BETTER BUSINESS FRAMEWORK “Our goal is to ensure the adoption of the kind of solutions that will stimulate the economy and enable an adequate and improved economic performance.”

74 / Guide to the Foreign Investors Council By Tatjana OSTOJIĆ Photo Slobodan JOTIĆ

n her role as executive director of the Foreign Investors Council, Ana Firtel Vlajić is perfectly placed to provide us with the inside view of this business asso- ciation and its development since its for- mationI back in 2002. Here we discuss, among other things, the conditions a company must fulfill in order to become a member of the FIC and what companies gain by becoming mem- bers.

 How does a company become a member of the FIC?  A company contacts us directly or the initial contact is made at different events that the FIC organizes and supports. Also, present members refer their suppliers and clients to our associa- The FIC is a platform for companies seeking tion. Since we are extremely interested in hav- ing an open dialogue with everyone, including to influence the legislative framework potential members, our practice is to regularly arrange meetings with such companies. At these meetings we present the association, learn more about the company itself, and give more these meetings with companies to see whether comparative practices on other markets. information on the opportunities arising from all the required prerequisites are met. However, the conditions for the joining of membership. these companies are quite strict. It is required Our goal is to bring together companies that  Last year saw domestic companies start that over 50 per cent of these companies’ cli- will really use the platform offered by the FIC. to become members of the FIC as well. ents are foreign companies and they provide We define points of potential co-operation be- How come? seven references from FIC member companies, tween the company and the FIC in advance,  At last December’s FIC General Assembly an unlike the foreign companies that require only look at ways of incorporating the experience amendment to the statute was endorsed so that three. Thus, we open the FIC membership only and knowledge of the company into our exist- domestic companies that provide consulting or to those domestic companies that promote in- ing initiatives. After meeting potential members, legal services to foreign companies operating ternational business practice. and if the formal preconditions are met, an ap- in Serbia can become members. These changes plication form detailing company information is were brought up by realization that an impor-  What do companies gain as a result of completed. Within this form, the foreign com- tant factor in the process of promoting and in- FIC membership? pany provides three references, preferably from troduction of contemporary business practices,  The answer to this question is something existing FIC member companies. On its regular which these companies are, is not adequately we try to convey to companies that want to be- sessions, the Board of Directors, the body tak- perceived within our association. They are an come members early on. The FIC is a platform ing the decision to admit a new member, con- important link in the chain and have knowledge for companies seeking to influence the legisla- siders the application. The FIC is committed to not only of the business climate in general, but tive framework by promoting industry posi- very transparent, clear and predictable rules of also of specific sectoral problems. By providing tions and views of larger foreign business com- the game on the market and it strives to have active support to foreign investors, these com- munity. There is a different kind of leverage such rules within the Council. The Board rarely panies have identified bottlenecks in Serbian when a certain legislative proposal is provided denies a company, simply because we first hold regulatory framework and gained insight to by a company compared to when a legislative bottleneck is identified by an industry or 120 ACTIVITIES companies. Specifically, what a company prima- rily gets by becoming a member is the ability e have organised a number of meetings on various issues between representatives to use our platform to highlight business prob- of FIC member companies and representatives of various institutions. Some of W lems it is facing with relation to the legislative these meetings saw us comment on drafts of various laws, in order to improve legislative framework. Companies can do that in a great decisions. We then organised a number of meetings at which member companies could number of ways. We have taken efforts to in- gain information about the implementation of certain regulations. troduce various models and activities in order to

Guide to the Foreign Investors Council / 75 INTERVIEW

Presentation of White Book 2008

used as platform for continuous communica- tion with state authorities, as the FIC promotes The FIC has highlighted the necessity of simplifying procedures incorporation of its positions and propos- als into the regulatory framework. The White and modernising the legal framework for many years Book is our trademark, but we do not limit our activities solely to this project. We organize meetings with legislators to hear about reform agenda and comment new regulations, but also enable our member companies to present their sector relate more to problems in execution of meet with implementers – Government agen- problems, views and suggestions to the state in the laws than to law provisions themselves. This cies to review the administrative procedures a satisfactory way. Firstly, FIC members receive is an added value given to the companies and and evaluate the process of implementation of timely information on planned or ongoing the state, which is precisely why the FIC exists: specific laws. regulatory changes. The FIC is actively involved to harmonise Serbia’s market conditions with in commenting on various draft laws and our the market conditions of the rest of the world,  What is the role of the individual mem- member companies can analyse them and give primarily Europe. ber company? suggestions how to improve them during that  The main role of the individual company early phase of formulating legislation. Secondly,  How can legislative framework problems is to assist in identifying obstacles to doing the FIC member companies have the oppor- and possible solutions be indicated? business by analysing bottlenecks in its daily tunity to jointly point out to obstacles or loop  In addition to the activities which are usu- operations. This role comes through its active holes in implementation of different legislation, ally used by associations, such as seminars and involvement in the bodies of the FIC, so called and share experiences gained on other markets. roundtables, we have a very distinctive model specialised working committees, which gather They can set up direct contact with the persons of communication in the form of the annual individual companies into a group in order to responsible for implementation of the different White Book. The White Book analyses the leg- jointly analyse specific regulatory field. The regulation, hear interpretations of specific regu- islative framework in Serbia as it is today; we committees have a crucial role in compiling of lation, and indicate the problems they face by view the changes that have occurred in the pre- the White Book itself. What differentiates the executing these regulation in their daily opera- vious period, point out problems that exist and White Book from similar publications is that tions. I must confess that as Serbia moves ahead give recommendations on how to solve these its content is written by company representa- in reforms, the issues put forward by the private problems. Once published, the White Book is tives and not hired experts. As such, the results

76 / Guide to the Foreign Investors Council of that work are slightly different because they role, simply because they gather representatives relate to proposals that are concrete - simply of various companies, from audit companies to because they stem from the daily operations of food producers, all in the same room around those companies. the same goal.

 How is the FIC organised?  This year has seen FIC members heav-  As in most associations, the highest rank- ily engaged in the working bodies of the ing body is the General Assembly, which gath- Government of Serbia on Comprehensive ers together all FIC member companies. The Regulatory Reform (CRR). Assembly meets annually and takes decisions  The FIC has been highlighting the necessity on strategic issues. It determines long-term of simplifying procedures and modernising the plans, adopts financial reports, work reports legal framework for many years. Indeed, we first and plans for the year ahead. This year we will expressed our support for the process back in hold an electoral Assembly. The Board of Di- 2004, when the so called Regulatory Guillotine rectors, meanwhile, is elected every two years. was initially put on the government’s agenda. Its election process is specific, with teams of Once the proclaimed plans moved to the imple- five to nine members submitting their candi- mentation phase, we became active participants dature, with a prominent candidate for presi- in the process. We affirmatively responded to dent and vice president. On the electoral meet- the Government invitation to analyse specific ing competing teams present the policies they fields and formulate amendments to legislation, would implement and objectives they plan to We expect that the based on the experience we draw from this and achieve. The Assembly votes for the team and other markets. As such, we formed the working not individuals, entrusting the Board mandate CRR process will groups for telecommunications and taxes; we to them for two years. The President of the participated as a member of the working group Board of Directors provides general leader- require a serious on labour issues, and also formed a special task ship of the Council and organizes the activi- force to compile proposals related to customs ties of the Council. The work of other mem- commitment in the future regulations. The phase when business sector bers of the Board depends on an agreement formulates recommendations is coming to an within the Board. The Board makes decisions end. Now Government needs to demonstrate on medium-term plans, as well as issues like courage and make certain decisions on the pro- the launch of various activities or initiatives, Committee deals with the labour regulations, posals they received. In the end, we expect the co-operation with state bodies and other employment, and issues related to the quality Serbian Parliament to adopt new legal solutions stakeholders, participation in various events, of human capital. In May 2008, the Taxation that will make the legal framework modern, etc. Decisions are made at the Board meetings, Committee was re-established so that to analyse simplified and more efficient. which take place once a month. The FIC Ex- the tax system, as well as the implementation ecutive Director manages the small executive of tax policies. This year we formed two new  What are your plans for the year ahead? team and organises the day to day work of the committees in response to the raising interest  Firstly to launch the latest White book in the Council.The key bodies of the FIC are com- of member-companies: the Telecommunica- next two months, then later working on pro- mittees that companies participate in. These tions Committee and the Real Estate Commit- moting the recommendations presented in the are forums for discussion on specific topics. tee, dealing with sectors which are considered White Book. As for CRR, we believe the writing Unlike fixed bodies, committees are formed to be pillars of economic development. This of proposals represents only the first step – al- and disbanded in accordance with the inter- year also marked activation of the association though a demanding and time-consuming step. ests of members. If a certain topic is of inter- of cosmetics and detergents producers and im- I believe and hope that talks with lawmakers are est to the FIC membership, a committee for porters – ADCPI which was formed within the ahead of us, where we will be able to adequately that particular topic is formed. When interest FIC back in 2005. On the other hand, the FIC explain the suggestions we gave and ensure that ceases, the committee ceases to exist, as the currently has two inactive committees: SEMI when the decision makers come to act on these committees should embody the interests of (Serbia Exploration and Mining Initiative) and proposals they have the relevant information. member-companies. CSR Committee. The committees analyse ex- We expect that this process will require a seri- At the same time, the FIC Legal Committee isting laws and the way they are implemented, ous commitment in the future and we intend to and the FIC Human Recourses Committee rep- taking into account the experiences of mem- continue regular meetings with state representa- resent the constant, as they have been perma- ber companies. They try to formulate specific tives and institutions. Our goal is to ensure the nently active since the formation of the associa- proposals on how to overcome problems in adoption of the solutions that will stimulate the tion. The Legal Committee looks at the overall enforcement or how to amend certain legal so- economy and enable an adequate and improved legal framework, while the Human Resources lutions. The committees also play a networking economic performance. 

Guide to the Foreign Investors Council / 77 MEMBER CONTACTS A & P D.O.O. Tel: +381 11 3240 248 E-mail: [email protected] Attorneys at Law Milentija Popovića 7v Maršala Tita 204 E-mail: gm-office@alphabank- Web: www.thecoca-colacom- Cincar Jankova 3 11070 Beograd 11272 Dobanovci serbia.com pany.com 11000 Beograd Tel: +381 11 2012 801 Tel: +381 11 8469 100 www.alphabankserbia.com BD AGRO AD Tel: +381 11 3030 136 E-mail: [email protected] Fax: +381 11 8465 500 Enrolment date: 2006 Lole Ribara bb Fax: +381 11 3038 930 Web: www.deltasport.com E-mail: [email protected] ALTIS CAPITAL 11272 Dobanovci E-mail: [email protected] Enrolment date: 2007 Web: www.pepsi.rs Knez Mihailova 3 Tel: +381 11 2675 165 Web: www.cms-rrhs.com DHL INTERNATIONAL Enrolment date: 2002 11000 Beograd Fax: +381 11 8465 550 Enrolment date: 2004 BEOGRAD D.O.O. ACTAVIS TRADING LTD. Tel: +381 11 3334 801 E-mail: [email protected] COCACOLA HBC SRBIJA A.D. Jurija Gagarina 36 V Omladinskih brigada 21 Fax: +381 11 3334 888 Web: www.bdagro.com Batajnički drum 14-16 11070 Beograd 11070 Beograd E-mail: [email protected] Enrolment date: 2006 11080 Beograd Tel: +381 11 3105 500 Tel: +381 11 2099 300 Web: www.altiscapital.net BEIERSDORF D.O.O. Tel: +381 11 3073 111 E-mail: [email protected] Fax: +381 11 2099 301 Enrolment date: 2007 Airport City Fax: +381 11 3073 253 Web: http://www.dhl.co.yu E-mail: [email protected] ASCO VIDAK D.O.O. Omladinskih brigada 88a www.coca-colahellenic.com Enrolment date: 2002 Web: www.actavis.rs Železnička 5 11070 Beograd Enrolment date: 2002 DUPONT SRB D.O.O. Enrolment date: 2004 21410 Futog Tel: +381 11 2220 660 COFACE SRBIJA D.O.O. Omladinskih brigada 88 AD POLET IGK NOVI BECEJ Tel: +381 21 895 084 Fax: +381 11 2220 663 Makedonska 24/II 11070 Beograd Železnička 13 Fax: +381 21 895 768 E-mail: BDFBelgrade@ 11000 Beograd Tel: +381 11 2090 580 23272 Novi Bečej E-mail: [email protected] beiersdorf.com Tel: +381 11 3228 156 Fax: +381 11 2090 598 Tel: +381 23 771 200 Web: www.asco.gr Web: www.beiersdorf.com Fax: +381 11 3037 391 Web: www.rs.ag.dupont.com Fax: +381 23 773 035 Enrolment date: 2006 Enrolment date: 2007 E-mail: [email protected] Enrolment date: 2009 E-mail: [email protected] BAKLAJA IGRIĆ BELEXPOCENTAR D.O.O.  Web: www.coface.rs EC HARRIS D.O.O. Web: www.nexe.rs MUJEZINOVIĆ IN ASSOCIA OGRANAK HOLIDAY INN Enrolment date: 2008 Bulevar Zorana Đinđića 144v Enrolment date: 2007 TION WITH CLYDE & CO LLP Španskih boraca 74 CORPORATE MEDIA 11070 Beograd AHK  DELEGATE OF Gospodar Jevremova 47/12 11070 Novi Beograd Dragoslava Jovanovića 13 Tel: +381 11 3535 400 GERMAN INDUSTRY AND 11000 Belgrade Tel: +381 11 3100 000 11000 Beograd Fax: +381 11 3535 401 COMMERCE Tel: +381 11 3038 822 Fax: +381 11 3100 100 Tel: +381 11 3240 134 E-mail: belgrade.office@echar- Cara Uroša 9 Fax: +381 11 3038 309 Email: [email protected] E-mail: [email protected] ris.com 11000 Beograd E-mail: [email protected] Web: www.holiday-inn.com Web: www.cmserbia.com Web: www.echarris.com Tel: +381 11 3285 436; Web: www.clydeco.com Enrolment date: 2008 Enrolment date: 2008 Enrolment date: 2006 Fax: +381 11 3034 780 Enrolment date: 2004 BRITISH AMERICAN TO CREDIT AGRICOLE SRBIJA ECOLAB HYGIENE D.O.O. E-mail: [email protected] BALL PACKAGING EUROPE BACCO AD NOVI SAD Milana Tankosića 8 Web: http://serbien.ahk.de/ BELGRADE LTD. Bulevar Mihaila Pupina 165g Braće Ribnikar 4-6 11000 Beograd Enrolment date: 2003 Batajnički drum 21A 11070 Beograd 21000 Novi Sad Tel: +381 11 2076 800 AIRPORT CITY BEOGRAD 11185 Zemun Polje Tel: +381 11 3108 700 Tel: +381 21 4876 876 Fax: +381 11 2076 802 Omladinskih brigada 88 Tel: +381 11 3770 600 Web: www.bat.com Fax: +381 21 4876 976 Web: www.ecolab.com 11070 Beograd Fax: +381 11 3770 752 Enrolment date: 2002 E-mail: [email protected] Enrolment date: 2008 Tel: +381 11 3189 516 Enrolment date: 2004 Founder Web: www.creditagricole.rs EKO SERBIA A.D. E-mail: office@airportcitybel- BANCA INTESA A.D. BE CARLSBERG SRBIJA D.O.O. Enrolment date: 2006 Member of Hellenic Petroleum grade.com OGRAD Proleterska 17 DEKONTA D.O.O. group Web: www.airportcitybel- Milentija Popovića 7b 21413 Čelarevo Bulevar Zorana Đinđića 87/4 Tošin bunar 274a grade.com 11070 Beograd Tel: +381 21 7550 646 11000 Beograd 11070 Novi Beograd Enrolment date: 2005 Tel: +381 11 3108 888 Fax: +381 21 7550 658 Tel: +381 11 3017 741 Tel: +381 11 2061 500 ALAS HOLDING A.D. E-mail: kontakt@bancaintesa- E-mail: [email protected] Fax: +381 11 3111 762 Fax: +381 11 2061 555 Jovana Đorđevića 2 beograd.com Web: www.carlsbergsrbija.rs Web: www.dekonta.rs E-mail: administracija@ 21000 Novi Sad Web: www.bancaintesabe- Enrolment date: 2005 Enrolment date: 2009 hellenic-petroleum.rs Tel: +381 21 457 949 ograd.com CITY EXPRESS D.O.O. DELOITTE Web: www.ekoserbia.com Fax: +381 21 557 236 Enrolment date: 2004 Kumodraška 240 Makenzijeva 24 Enrolment date: 2004 E-mail: sekretarijat@alas- BARLAN S&M COCACOLA 11010 Beograd 11000 Beograd ERICSSON D.O.O. holding.rs ALPINE & ADRIATIC BUSI Tel: +381 11 3093 000 Tel: +381 11 3812 100 Vladimira Popovića 6 Web: www.alas-holding.co.yu NESS UNIT E-mail: [email protected] Fax : +381 11 3812 178 11070 Beograd Enrolment date: 2007 Batajnički drum 14-16 Web: www.cityexpress.rs [email protected] Tel: +381 11 3113 899 ALPHA BANK SRBIJA A.D. 11080 Beograd Enrolment date: 2008 Web: www.deloittece.com Fax: +381 11 3112 249 Kralja Milana 11 Tel: +381 11 3081 100 CMS REICHROHRWIG Enrolment date: 2003 Web: www.ericsson.com 11000 Beograd Fax: +381 11 3081 166 HASCHE SIGLE D.O.O. DELTA SPORT D.O.O. Enrolment date: 2002

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CONTACT US WITHOUT DELAY! Tel. 011 3089 977 011 3089 988 011 2448 127 e-mail offi [email protected] www.cordmagazine.com MEMBER CONTACTS ERNST & YOUNG BELGRADE GTC INTERNATIONAL DE Founder JT INTERNATIONAL MAR E-mail: [email protected] Bulevar Mihajla Pupina VELOPMENT HYATT REGENCY BEOGRAD KETING AND SALES D.O.O. Web: www.kpmg.rs 115D Vladimira Popovića 38-40 Milentija Popovića 5 Vladimira Popovića 38 Enrolment date: 2002 11070 Beograd 11070 Beograd PO Box 07 6th & 7th floor L ‘OREAL BALKAN D.O.O. Tel: +381 11 2095 800 Tel: +381 11 3130 751 11070 Beograd 11070 Novi Beograd Bulevar Zorana Đinđića 64a E-mail: [email protected] Fax: +381 11 3130 752 Tel: +381 11 3011 234 Tel: +381 11 2050 300 11070 Beograd Web: www.ey.com/eyse E-mail: [email protected] Fax: +381 11 3112 330 Fax: +381 11 2050 301 Tel: +381 11 2205 900 Enrolment date: 2004 Web: www.gtcserbia.com E-mail: belgrade.regency@ Web: www.jt-int.com Web: www.loreal.com ERSTE BANK A.D. NOVI SAD Enrolment date: 2005 hyatt.com Enrolment date: 2003 Enrolment date: 2004 Bulevar oslobođenja 5 HARRISONS SOLICITORS Web: www.belgrade.regency. K&K ELECTRONICS D.O.O. LAFARGE BFC AD 21000 Novi Sad Terazije 34 hyatt.com Nehruova 68b Trg BFC 1 Tel: +381 800 201 201 11000 Belgrade Enrolment date: 2002 11070 Beograd 21300 Beočin E-mail: [email protected] Tel: +381 11 3615 918 Founder Tel: +381 11 2091 900 Tel: +381 21 874 190 ERSTE POSLOVNI CENTAR Fax: +381 11 3615 030 HYPO ALPE ADRIA LEASING Fax: +381 11 2091 901 Fax: +381 21 874 143 Bulevar Milutina E-mail: office@harrison-solici- Poslovni centar Ušće E-mail: administracija@ E-mail: lbfc@beocin-busi- Milankovića 11b tors.com Bulevar Mihajla Pupina 6 rs.kkelectronics.com nesspark.com 11000 Beograd www.harrison-solicitors.com 11070 Beograd www.ser.kkelectronics.com Web: www.lafarge.com Tel: +381 800 201 201 Enrolment date: 2004 Tel: +381 11 2227 000 Enrolment date: 2009 Enrolment date: 2002 Web: www.erstebank.rs HAUSKA & PARTNER Fax: +381 11 2227 099 KAPSCH D.O.O. MARS SERBIA Enrolment date: 2005 INTERNATIONAL COMMU E-mail: leasing.belgrade@ Đorđa Stanojevića 12 Bul. Mihaila Pupina 10 V/605 EUROBANK EFG NICATIONS hypo-alpe-adria.rs 11070 Beograd 11070 Beograd Kolarčeva 3 Banijska 30 Web: www.hypo-alpe-adria.rs Tel: +381 11 2282 679 Tel: +381 11 3132 480 11000 Beograd 11000 Beograd Enrolment date: 2003 Fax: +381 11 2282 679 Enrolment date: 2006 Tel: +381 11 3082 860 E-mail: [email protected] HYPO ALPEADRIABANK E-mail: [email protected] MELLON TRANSACTION Fax: +381 11 3376 807 Web: www.hauska.com A.D. BEOGRAD Web: www.kapsch.net SOLUTIONS E-mail: [email protected] Enrolment date: 2005 Bul. 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Tel: +381 11 3288 845 Web: www.hauzmajstor.rs IKEA D.O.O. www.karanovic-nikolic.com mellongroup.com Fax: +381 11 3288 845 Enrolment date: 2008 Omladinskih brigada 31 Enrolment date: 2003 Enrolment date: 2006 [email protected] HENKEL SRBIJA D.O.O. 11070 Beograd KING STURGE D.O.O MERCEDESBENZ SRBIJA I Web: www.farmer-spaic.co.rs Bulevar oslobođenja 383 Tel: +381 11 2098 802 Bulevar Mihajla Pupina 6 CRNA GORA D.O.O. Enrolment date: 2007 11040 Beograd Web: www.ikea.com 11070 Novi Beograd Omladinskih brigada 33 GIDE LOYRETTE NOUEL Tel: +381 11 2072 200 Enrolment date: 2008 Tel: +381 11 2200 101 11070 Beograd Andrićev venac 2 Fax: +381 11 2072 294 IMMORENT D.O.O. Fax: +381 11 2200 102 Tel: +381 11 3019 001 11000 Beograd Web: www.henkel-srbija.com Đorđa Stanojevića 12/III Web: www.kingsturge.com Fax: +381 11 3019 036 Tel: +381 11 3024 900 Enrolment date: 2004 11070 Belgrade Enrolment date: 2008 E-mail: [email protected] Fax: +381 11 3024 910 HEWLETT PACKARD D.O.O. Tel: +381 11 2287 480 KOMERCIJALNA BANKA Web: www.mercedes-benz.rs E-mail: [email protected] Omladinskih brigada 90B Fax: +381 11 2287 482 A.D. BEOGRAD Enrolment date: 2002 Web: www.gide.com 11070 Beograd E-mail: [email protected] Svetog Save 14 Founder Enrolment date: 2005 Tel: +381 11 2019 900 Web: www.immorent.com/yu 11000 Beograd MESSER TEHNOGAS AD GRAND CASINO BEOGRAD Fax: +381 11 2019 936 Enrolment date: 2008 Tel: +381 11 3080 100 Banjički put 62 Bulevar Nikole Tesle 3 Web: www.hp.rs JANKOVIC, POPOVIC & Fax: +381 11 3440 033 11000 Beograd 11080 Beograd Enrolment date: 2005 MITIC O.D. E-mail: [email protected] Tel: +381 11 3537 200 Tel: +381 11 2202 800 HOLCIM SRBIJA A.D. Čarlija Čaplina 37 Web: www.kombank.com Fax: +381 11 3537 291 Fax: +381 11 2202 810 35254 Popovac 11000 Beograd Enrolment date: 2008 E-mail: [email protected] E-mail: info@grandcasinobe- Paraćin Tel: +381 11 2076 850 KPMG Web: www.messer.rs ograd.com Tel: +381 35 572 202 Fax: +381 11 2076 899 Kraljice Natalije 11 Enrolment date: 2002 Web: www.grandcasinobe- Fax: +381 35 572 207 E-mail: [email protected] 11000 Beograd Founder ograd.com Web: www.holcim.com Web: www.jpm.rs Tel: +381 11 2050 500 METRO CASH & CARRY Enrolment date: 2008 Enrolment date: 2002 Enrolment date: 2009 Fax: +381 11 2050 550 Autoput za Novi Sad 120

80 / Guide to the Foreign Investors Council 11080 Beograd Tel: +381 11 3070 123; Tel: +381 11 3777 254 Fax: +381 11 3070 167 Fax: +381 11 3777 607 E mail: [email protected] E-mail: [email protected] Web: www.nokiasiemensnet- Web: www.metro.rs works.com Enrolment date: 2003 Enrolment date: 2009 MMD CORPORATE, PUBLIC OMV SRBIJA D.O.O. AFFAIRS & PUBLIC RELA Airport City TIONS CONSULTANTS Omladinskih brigada 90a/II Braće Jugovića 5 11070 Beograd 11000 Beograd Tel: +381 11 2071 500 Tel: +381 11 3285 939; E-mail: [email protected] Web: www.mmdcee.com Web: www.omv.rs Enrolment date: 2004 Enrolment date: 2002 NBG LEASING D.O.O. Founder Airport City ORACLE SERBIA & MON national.com Tel: +381 11 3302 100 Omladinskih brigada 88 Omladinskih brigada 88 TENEGRO Enrolment date: 2004 Fax: +381 11 3302 101 11070 Beograd 11070 Beograd GTC House PIRAEUS BANK AD BE Web: www.pwc.com Tel: +381 11 2205 300 Tel: +381 11 2287 982; 2288 Bulevar Zorana Đinđića 64a OGRAD Enrolment date: 2002 Fax: +381 11 2288 241 071; 2288 074; 11070 Beograd Milentija Popovića 5b Founder Web: www.pgbalkans.com 2288 079 Tel: +381 11 2016 800 11070 Novi Beograd PRICEWATERHOUSECOOP Enrolment date: 2004 Fax: +381 11 3019 936 Fax: +381 11 3130 108 Tel: +381 11 3024 000 ERS CONSULTING D.O.O. PROGARD SECURITAS E-mail: [email protected] E-mail: [email protected] Fax: +381 11 3023 040 Airport City D.O.O. Web: www.nbgleasing.rs Web: www.oracle.com E-mail: [email protected] Omladinskih brigada 88a Terazije 33 Enrolment date: 2004 Enrolment date: 2003 Web: www.piraeusbank.rs 11070 Beograd 11000 Beograd NEOCHIMIKI BEOGRAD PATRIMONS D.O.O. Enrolment date: 2006 Tel: +381 11 3302 100 Tel: +381 11 2097 900 Pančevački put 83 Zrenjaninski put 51а POLITIKA NOVINE I MAGA Fax: +381 11 3302 101 Fax: +381 11 2097 914 11210 Beograd 11210 Beograd ZINI D.O.O./ WAZ MEDI Web: www.pwc.com [email protected] Tel: +381 11 2084 942 Tel: +381 11 3318 044 APRINT SERBIA Enrolment date: 2004 Web: www.progard.co.rs Fax: +381 11 2751 950 Fax: +381 11 3317 357 Makedonska 29 PROCREDIT BANK Enrolment date: 2009 [email protected] E-mail: [email protected] 11000 Beograd Bulevar Despota Stefana 68c PS CONFIDAS D.O.O Web: www.neochimiki-sa.gr Web: www.patrimons.rs Tel: +381 11 3301 161 11000 Beograd Imotska 1 Enrolment date: 2005 Enrolment date: 2008 Fax: +381 11 3373 042 Tel: +381 11 2077 906 11000 Beograd NESTLE ICE CREAM SRBIJA Web: www.politika.rs Fax: +381 11 2077 905 Tel: +381 11 3956 800 A.D. PEPSICO EUROPE  MARBO Enrolment date: 2002 E-mail: [email protected] Fax: +381 11 3956 888 Milutina Milankovića 9B Đorđa Stanojevića 14 PRICEWATERHOUSE COOP Web: www.procreditbank.rs E-mail: [email protected] 11070 Beograd 11070 Beograd ERS D.O.O. Enrolment date: 2004 Web: www.ps-confidas.rs Tel: +381 11 3010 410 Tel: +381 11 3600 101 Airport City Belgrade PROCTER & GAMBLE Enrolment date: 2008 E-mail: nestleicecream@ Fax: +381 11 3600 102 Omladinskih brigada 88a Marketing & Usluge d.o.o. RAIFFEISEN BANK A.D. rs.nestle.com E-mail: [email protected] 11070 Beograd Airport City Belgrade Bulevar Zorana Đinđića 64a Enrolment date: 2002 Web: www.marbo.rs Founder Enrolment date: 2009 NLB BANKA A.D. BEOGRAD PERNOD RICARD SERBIA Bulevar Mihajla Pupina 165v Bulevar oslobođenja 211 11070 Novi Beograd 11000 Beograd Tel: +381 11 2225 100 Tel: +381 11 3975 246 Fax: +381 21 2225 195 Fax: +381 11 3974 380 E-mail: [email protected] Web: www.pernodricard.com Web: www.nlb.rs Enrolment date: 2003 U. S. Steel Serbia, d.o.o. Enrolment date: 2006 PHILIP MORRIS INTERNA Nemanja Brković, Tatjana Simić NOKIA SIEMENS NET TIONAL WORKS SRBIJA D.O.O. Bulevar Zorana Đinđića 64a Đorđa Stanojevića 14 11070 Beograd [email protected] / [email protected] 11070 Beograd Tel: +381 11 2010 800 sajt: www.cs.uss.com Belgrade Office Park, Building Fax: +381 11 2010 824 telefon:+381 26 224 459, Radinac, 11300 Smederevo II, Gallery Floor Web: www.philipmorrisinter-

Guide to the Foreign Investors Council / 81 MEMBER CONTACTS 11070 Beograd Web: www.s-leasing.rs Tel: +381 21 4878 111 Tel: +381 11 2017 361 VELUX SRBIJA D.O.O Tel: +381 11 3202 100 Enrolment date: 2003 E-mail: [email protected] Fax: +381 11 2017 380 Teodora Drajzera 34 E-mail: [email protected] SBB SERBIAN BROADBAND Web: www.sunoko.rs Web: www.tetrapak.com 11040 Beograd Web: www.raiffeisenbank.rs Kralja Petra 55 Enrolment date: 2007 Enrolment date: 2002 Tel: +381 11 3670 468 Enrolment date: 2002 11000 Beograd SVETI VID SPECIJALNA Founder Fax: +381 11 2660 841 RAIFFEISEN LEASING Tel: +381 11 3305 252 BOLNICA TITAN CEMENTARA KOS E-mail: [email protected] D.O.O. E-mail: [email protected] Dobračina 27 JERIC Web: www.velux.rs Milutina Milankovića 134a Web: www.sbb.rs 11000 Beograd Živojina Mišića b.b. Enrolment date: 2002 11070 Beograd Enrolment date: 2004 Tel: +381 11 3283 737 31260 Kosjerić Founder Tel: +381 11 2017 700 SIEMENS D.O.O. BEOGRAD Fax: +381 11 3692 720 Tel: +381 31 590 320 VIP MOBILE D.O.O. Fax: +381 11 3130 081 Omladinskih brigada 21 E-mail: [email protected] Fax: +381 31 590 339 Omladinskih brigada 21 [email protected] 11070 Beograd Web: www.svetivid.com Web: www.titan.rs 11070 Beograd Web: www.raiffeisen-leasing.rs Tel: +381 11 2096 005 Enrolment date: 2005 Enrolment date: 2004 Tel: +381 11 2253 333 Enrolment date: 2003 Fax: +381 11 2096 061 SYNGENTA AGRO SERVICES UNICREDIT CAIB SRBIJA Fax: +381 11 2253 334 RESERVOIR CAPITAL SEE E-mail: [email protected] AG D.O.O. E-mail: komunikacije@vipmo- D.O.O. Web: www.siemens.rs Koste Glavinića 2 Knjeginje Ljubice 11 bile.rs Požeška 83a Enrolment date: 2002 11000 Beograd 11000 Beograd Web: www.vipmobile.rs 11000 Beograd Founder Tel: +381 11 3690 994 Tel: +381 11 3286 926 Enrolment date: 2007 Tel: +381 11 2544 686 SLADARA MALTINEX AD Fax: +381 11 3690 160 Fax: +381 11 3285 509 VOJVODJANSKA BANKA Fax: +381 11 3542 503 Industrijska zona b.b. Web: www.syngenta.com E-mail: [email protected] A.D. MEMBER OF NBG www.reservoircapitalcorp.com 21400 Bačka Palanka Enrolment date: 2009 Web: www.unicreditbank.rs GROUP Enrolment date: 2008 Tel: +381 21 752 910 TELEKOM SRBIJA A.D. Enrolment date: 2004 Trg Slobode 5-7 RHINE DANUBE D.O.O. Fax: +381 21 6042 399 Takovska 2 UNILEVER BEOGRAD D.O.O. 21000 Novi Sad SHIPBUILDING INDUSTRY [email protected] 11000 Beograd Omladinskih brigada 88 Tel: +381 21 4886 600 Đerdapski put b.b. Web: www.soufflet-group.com Tel: +381 11 3337 171 11000 Beograd Fax: +381 11 3019 936 19320 Kladovo Enrolment date: 2004 Mob: +381 64 789 Tel: +381 11 2091 800 E-mail: [email protected] Tel: +381 19 801 024 SOCIÉTÉ GÉNÉRALE BANKA E-mail: [email protected] Fax: +381 11 2160 178 Web: www.voban.co.rs Fax: +381 19 800 315 SRBIJA A.D. BEOGRAD, Web: www.telekom.rs E-mail: Belgrade.usce@ Enrolment date: 2003 E-mail: [email protected] CLOSED JOINT STOCK Enrolment date: 2007 unilever.com VOLKSBANK SRBIJA www.shipyardkladovo.com COMPANY TELELINK D.O.O. Web: www.unilever.com Bulevar Mihaila Pupina 165g Enrolment date: 2005 Bul. Zorana Đinđića 50 a/b Omladinskih brigada 88b Enrolment date: 2002 11070 Beograd RIO TINTO 11070 Beograd 11070 Beograd UNIQA A.D.O. Tel: +381 700 700 800 RIO SAVA EXPLORATION Tel: +381 11 3011 400 Tel: +381 11 3779 900 Milutina Milankovića 134G E-mail: [email protected] DOO Fax: +381 11 3132 885 Fax: +381 11 3779 911 11070 Novi Beograd Web: www.volksbank.rs Bulevar Zorana Đinđića 71 Retail banking - stanovnistvo. E-mail: [email protected] Tel: +381 11 2024 100 Enrolment date: 2004 11070 Beograd [email protected] Web: www.telelink.rs E-mail: [email protected] WIENER STAEDTISCHE OSI Tel: +381 11 3110 239 Corporate clients - privreda. Enrolment date: 2009 Web: www.uniqa.rs GURANJE A.D.O. BEOGRAD Fax: +381 11 3116 721 [email protected] TELENOR D.O.O. Enrolment date: 2006 Bul. Mihaila Pupina 165g/I Web: www.riotinto.com Web: www.societegenerale.rs Omladinskih brigada 90 UNITED SERBIAN 11070 Beograd Enrolment date: 2004 Enrolment date: 2002 11070 Beograd BREWERIES Tel: +381 11 2209 901 S & T SERBIA D.O.O. Founder Mob: +381 63 9863 Omladinskih brigada 90b Fax: +381 11 2209 900 Narodnih heroja 43/23 SPECHT D.O.O. Web: www.telenor.rs 11070 Beograd E-mail: [email protected] 11070 Beograd Nemanjina 40/III/8 Enrolment date: 2006 Tel: +381 11 3538 611 Web: www.wiener.co.rs Tel: +381 11 3116 221 11000 Beograd TELETRADER D.O.O. Fax: +381 11 3538 691 Enrolment date: 2003 Fax: +381 11 3117 665 Tel: +381 11 3650 046 Bulevar Vojvode Mišića E-mail: [email protected] WOLF THEISS & PARTNERS E-mail: [email protected] Fax: +381 11 3650 084 39a/III Web: www.heinekeninterna- D.O.O. Web: www.snt.rs E-mail: belgrade@specht- 11040 Beograd tional.com Poslovni centar Ušće Enrolment date: 2003 partner.rs Tel: +381 11 3067 605; Enrolment date: 2003 Bul. Mihaila Pupina 6/18 S LEASING D.O.O. www.specht-partner.com E-mail: office.belgrade@ US STEEL SERBIA D.O.O sprat Đorđa Stanojevića 12/III Enrolment date: 2006 teletrader.com Goranska 12 11070 Beograd 11070 Novi Beograd SUNOKO D.O.O. NOVI SAD, Web: www.teletrader.com 11300 Smederevo Tel: +381 11 3302 900 Tel: +381 11 2010 700; 2010 MEMBER OF NORDZUCKER Enrolment date: 2004 Tel: +381 26 224 730 Fax: +381 11 3302 925 701 GROUP TETRA PAK PRODUCTION Fax: +381 26 221 076 [email protected] Fax: +381 11 2010 702 Trg Marije Trandafil 7 Milutina Milankovića 11b Web: www.cs.uss.com Web: www.wtp.at E-mail: [email protected] 21000 Novi Sad 11070 Beograd Enrolment date: 2008 Enrolment date: 2003

82 / Guide to the Foreign Investors Council