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Ministry of International Economic Relations
of the Republic of Serbia
2006 SERBIA!
INVEST IN
Dr Milan Parivodić, Minister - Vienna, November 6th, 2006
Location
Crossroads of 2 Pan-European transportation axes: VII (Danube) and
X (high-ways)
Vicinity of other European
capitals
(1-2 hours by plane)
Vicinity of regional capitals
(3-6 hours by car)
Free Trade – Exports from Serbia!
South East Europe Free Trade Area – market of 58 million consumers
Customs free exports to Russian Federation – market of 150 million consumers
Customs free exports to EU –
market of 462 million
consumers
General System of Preferences
for exports to USA
Macroeconomic Indicators
2001
2002
2003
2004
2005
5,1
4,5
2,4
9,3
6,5
1,375
1,933
2,569
2,938
3,273
3,518*
93.3
16.6
9.9
11.4
16.5
9,3*
-0.5
-3.6
-2.9
-0.1
1.7
0,8*
Exports (in EUR mn)
1,965
2,197
2,522
3,135
3,665
4,500
Imports (in EUR mn)
4,783
5,945
6,601
8,804
8,533
10,200
-5.9
-12.1
-10.1
-13.0
-10.0
-10.4
165
475
1,360
966
1,481
4,000*
106.5
81.7
73.0
58.7
50.5
34.9*
GDP growth (real, in %)
GDP pc in USD
Inflation
(yearly average, in %)
Budget balance
(in % of GDP)
Current Account
(in % of GDP)
FDI (net inflow, in USD mn)
Gross public debt
(in % of GDP)
2006
6,7
(H1)
(Q1)
*estimates
FDI Inflow in Serbia 2000 – 2006
(million USD)
4000
4000
3500
3000
2500
2000
1481
1360
1500
966
1000
500
0
475
50
2000
165
2001
2002
2003
2004
2005
2006*
* estimation
Free Zones in Serbia - Benefits
►
Currently 3 Free Zones: Pirot, Subotica, Zrenjanin
(New Law on Free Zones adopted in 2006)
►
Imports of goods and services are exempt from VAT and
custom obligations
►
Equipment and raw material are also VAT and custom duty free
►
No customs limitation regarding duration of the storage of goods
►
Reduced customs procedure
►
Goods can temporarily be taken out of the free zone to the Serbian
market for the purpose of finalization, repair, refinement and
commercial presentation
Stable Financial Sector
Competitive banking market – 37 banks operating
HVB / Unicredito Bank, Raiffeisen Bank, Volksbank,
Hypo Alpe-Adria-Bank, Erste Bank, ProCredit Bank,
Banca Intesa, Findomestic Banca (BNP Paribas),
Societe Generale Bank, Credit Agricole, Alpha Bank,
National Bank of Greece, EFG Eurobank, Laiki Bank,
Piraeus Bank, LHB Banka, OTP Bank, Sanpaolo IMI
Leasing -
Raiffeisen Leasing, Hypo Leasing, TBI Leasing, S-Leasing,
Volksbank Leasing, SB Leasing, Procredit Leasing
Stable Financial Sector
Credit rating BB- (Fitch Ratings; Standard & Poor’s)
Debt / GDP ratio app. 34.9% in 2006
Coface country risk rating – C in 2006 from D in 2005
Hermes investment insurance 12.5% in 2006 from 14% in 2005
Foreign currency reserves increased to $10,308 billion in October 2006
from $524 million in December 2000
Strict Central Bank supervision under Basel II
Valuable Human Capital
Number of graduated students from universities in Serbia
1998
2,880
1999
2,692
2000
2,699
2001
2,678
2005
3,121
9,982
11,228
11,968
11,879
14,099
students from technical faculties
Source: Statistical Office of the Republic of Serbia
Investment Incentives in Serbia
Large investment projects: 7 mill € and 100 new jobs (cumulatively):
10 year tax holiday!
Corporate profit tax 10%
Tax relief for hiring new employees
Tax credit up to 80% of investment amount for investing in fixed assets
Import of equipment as investment is free from custom duties
Non-refundable grants for Greenfield investment projects:
from € 2,000 to € 10,000
per new job created!
Improved Legal Framework
Already adopted Laws:
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Set of Tax Laws
Law on Privatisation
Labour Law
Set of Judiciary Laws
Foreign Investment Law
Foreign Exchange Law
Law on Public Procurement
Law on Planning and Construction
Law on Telecommunications
Law on Concessions
Law on Financial Leasing
Customs Law
Law on Value Added Tax
Bankruptcy Law
Company Law
Law on Civil Procedure
Set of Laws on Intellectual Property
Law on Business Registration
Law on Execution Procedure
Competition Law
Foreign Trade Law
Mortgage Law
Law on Arbitration
Law on Investment Funds
Laws to be adopted:
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New Law on Foreign Investment
Law on Industrial Parks
Law on Denationalization
Law on Factoring
Improved Economic Legal Framework
Specific legislation enacted outlining guarantees and safeguards for foreign investors
Foreign Investment Law
Foreign Exchange Law
Foreign Trade Law
Company Laws
Law on Execution Procedure
Mortgage Law
Bankruptcy Law
Law on Arbitration
Law on Special Authorities for
Protection of Intellectual Property
Improved Economic Legal Framework
Foreign Investment Law
Extends national treatment to foreign investors
Permits free and unlimited transfer/repatriation of profits and dividends
Provides guarantees against expropriation
Duty free import of equipment for foreign investor
INVESTMENT FREEDOM FULLY
GUARANTEED!
Improved Economic Legal Framework
New Foreign Trade legislation is fully in line with WTO requirements
and EU acquis
Foreign Trade Law
Fully affirms freedom of foreign trade
Introduces antidumping, counter veiling and safeguard measures under
WTO rules and EU acquis
Result: 2 instead of 20 permits issued by the Ministry
Improved Economic Legal Framework
Company Laws
New Law on Registration of Companies establishes an independent
Companies Registry
Incorporation of companies and branches within 10 days
Companies Act drafted after OECD model improves:
•Overall corporate governance
• Protection of minority shareholders
• Simplifies procedures for increase of share capital
Improved Economic Legal Framework
Law on Execution Procedure
Speeds up execution procedure
Introduces summary collection procedure (app. 40 days)
Efficient Central Bank mechanism for collection of debts
Quick injunctions are rendered by courts
Principle aim is to enhance financial discipline
Improved Economic Legal Framework
Mortgage Law
Possibility to register mortgage on non-registered buildings
Possibility to register mortgage on building site
Creditor sells assets in an efficient non-judicial procedure
Results: 1. Increase of assets which can be mortgaged
2. Collection of debt 4-6 months upon default
Improved Economic Legal Framework
Law on Arbitration
Fully in line with UNCITRAL MODEL LAW
Regulates international and inaugurates domestic arbitrations
Arbitral award final and binding without court approval
Court review of arbitration award is very restricted
Result: Commercial disputes finally resolved within
several months
Improved Economic Legal Framework
Law on Special Authorities for
Protection of Intellectual Property
Inspections are obliged, to seize infringing goods at the spot, based
on personal professional judgment
Enforces copyright, trademarks, designs, software, architectural
plans, patents
Result: after noticing infringing goods immediate action
can be demanded from the inspections
Improved Economic Legal Framework
Foreign Exchange Law
Reduced bureaucracy concerning current transactions
New forms of financing in foreign trade
Liberalization of capital transactions
Investment and voluntary pension funds may invest abroad
New Constitution Adopted!
Precondition for further improvement
of investment climate
Political stability
Economic liberalization
Enables effective implementation of FDI Strategy
Enables free market of city construction land
 Restitution and privatization will lead to the increased offer of this
resource on the market
 High pressure on prices of land as a final outcome
Legal Reform in Progress
Law on privatization/restitution of city construction land
 Freedom of selling/buying city land
 Solidifying property
 City land management
Law on urban planning and construction
 Simplify land planning and construction procedures in line with EU
practices
 Reduce time for obtaining construction licenses
 Eliminate arbitrary behavior of state
Working group: Austrian, German, Swiss and Serbian
experts assembled by the Ministry of International Economic Relations
Law on Industrial Parks – Draft prepared
 Financial assistance for establishment of public/private Industrial Parks
 Certification of Industrial Parks
 Facilitation of permitting
NEW FOREIGN INVESTMENT LAW
(passed by the Government)
OBJECTIVES:
 Improvement of Serbia’s overall business climate!
 State efficiency, FDI competitiveness of Serbia and
predictability for investors
 New, sustainable jobs and new technologies
 Development of underdeveloped regions
HOW?
 Optional “one-stop-shop” on municipal level and central
level and special incentives for major investment
 After-care and customer service for investors
NEW FOREIGN INVESTMENT LAW
(passed by the Government to Parliament)
INVESTMENT ONE-STOP-SHOP
 Efficient and predictable investment
 New legal guarantees
 New investment incentives
 Permanent After-Care
 Coordination of activities among municipalities, public enterprises with
regulatory functions and ministries
agreement between state Project team and Investor
International Recognition
The World Bank 2005:
Serbia 1st in speed of
reform out of 155
countries!
The EBRD 2005:
Serbia fastest
reformer among 27
countries in transition!
US Trade Department
awarded Serbia
“Market of the Month”
title in January 2006!
Financial Times
2006/07: Belgrade –
City of the Future in
Southern Europe!
The World Bank 2006: Serbia 2nd in
relative progress out of 175 countries
- climbed up the list for 24 places!
Major Foreign Investors in the Past Five Years
COUNTRY OF
ORIGIN
SECTOR
TYPE OF
INVESTMENT
app. INVESTMENT
AMOUNT (MIL EUR)
Telenor – Mobi 63
Norway
Telecommunications
Privatization
1,513
Philip Morris – DIN
USA
Tobacco
Privatization
518
STADA - Hemofarm
Germany
Pharmaceuticals
Acquisition
475
Italy
Banking
Brownfield
462
Belgium
Beer
Acquisition
430
Lukoil – Beopetrol
Russia
Oil
Privatization
400
NBG – Vojvodjanska banka
Greece
Banking
Acquisition
385
Slovenia
Retail
Greenfield
240
Switzerland
Cement
Privatization
185
Hungary
Banking
Acquisition
176
Greece
Banking
Brownfield
168
US Steel – SARTID
USA
Steel
Brownfield
150
Metro Cash&Carry
Germany
Wholesale
Greenfield
150
OMV
Austria
Oil
Greenfield
150
Coca-Cola HBC – Vlasinka
Greece
Beverages
Privatization
142
Eurobank EFG – Nacionalna
štedionica
Greece
Banking
Brownfield
130
Lafarge – Beočin
France
Cement
Privatization
126
COMPANY
Intesa – Delta Banka
InBev – Apatinska pivara
Merkator
Holcim – Novi Popovac
OTP Bank
Alpha – Jubanka
(Source: Ministry of International Economic Relations of the Republic of Serbia – September 2006)
Key Investment Opportunities in 2006/07
Methods
Privatization
Greenfield
Energy: NIS (Oil Industry of Serbia)
Brownfield
Mining: RTB Bor
Concessions
Privatization
Insurance: Dunav osiguranje
Transportation: JAT Airways
Hotels: Intercontinental, Slavija, Kopaonik
Textiles: “1st May-Pirot”
Remaining industrial companies
and several smaller banks
in state ownership
Useful Contacts
Ministry of International Economic Relations
www.mier.sr.gov.yu
Serbian Investment & Export Promotion Agency
www.siepa.sr.gov.yu
Privatisation Agency
www.priv.yu