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7th Vienna Economic Forum
Move safely into Serbia
DR MILAN PARIVODIC
CHAIRMAN
www.investmentserbia.com
A really positive international
outlook for Serbia
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A political and national consensus on EU accession (70%)
EU candidacy status - probably in 2011
Kosovo problem in a calmer stage – dialogue beginning soon
Better regional cooperation
Better political international relations of Serbia
Good Government macroeconomic handling of the world
crisis
• New free trade agreements (Turkey, Belrus, Ukraine)
• Joining WTO next year
• Visa free travel for Serbian citizens
Rapid European Integration
• EU candidate status expected for 2011
• SAA agreement undergoing ratification by EU Member
States
• Interim Agreement on Trade with EU in force: full free
trade within 5 years: 47.6% of products (current
customs tariff 1.85% on average) liberalized
immediately
• Participation in Instrument for Pre-Accession Assistance
(IPA) and 7th Framework Programme (FP7) ongoing
Free Trade – Exports from Serbia!
Customs free exports to EU – market of 500 million consumers
CEFTA (South East Europe Free Trade Area) – market of app. 30 million
consumers
Customs free exports to Russian Federation and Kazakhstan– market of 156
million consumers
Complete liberalization with
Belarus apart from 3 agricultural
products
General System of Preferences
for exports to USA
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EU member states
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EFTA member states
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CEFTA member states
Key Economic Trends
2005
2006
2007
2008
2009
2010
GDP growth
(real, in %)
5.6
5.2
6.9
5.5
-3.1
GDP per
capita in EUR
2,792
3,144
3,899
4,547
4,093
0.6 (Q1)
1.8 (Q2)
4,138
Inflation
(yearly
average, in %)
Budget
balance
(in % of GDP)
Exports (in
EUR mn)
16.2
11.7
7.0
13.5
8.6
4.4
0.3
-1.9
-1.7
-1.8
-3.4
-3.1 (Q1)
-3.7 (Q1)
3,608
5,102
6,432
7,429
5,961
4,597 (Jan
to Aug)
Imports (in
EUR mn)
8,439
10,463
13,507
16,478
11,505
8,017 (Jan
to Aug)
Current
Account
(in % of GDP)
Gross public
debt
(in % of GDP)
-8.8
-10.1
-16.0
-18.2
-5.7
-10.5 (Q1)
-7.2 (Q2)
50.6
40.1
31.4
26.3
32.4
33.6 (Q1)
35.4 (Q2)
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FDI Inflow
Foreign - Owned Enterprises’ Share in
Exports
(25 Top Serbian Exporters)
Domestic
investors,
28%
Foreign
investors,
72%
 Significant foreign enterprise share in Serbian export is a result of privatization,
restructuring and Greenfield investments .
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Foreign Investor Legal
Treatment
• National treatment of foreign companies
• Free transfer of financial and other assets comprising profits and
dividends
• Invest freely 100% in all industries except minority stakes
allowed in media and in production and armaments
• Corporate profit tax 10%
• Income tax 12%
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Improved Business Law 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
Favourable Tax Regime
• 10-year Corporate Tax holiday for investments over €6 million and 100 employees
• 5-year Corporate Tax holiday for investment in underdeveloped regions
• Corporate Tax reduction up to 80% of the fixed assets investment
• Salary Tax exemptions for employees below 30 and above 45 years of age
• Social insurance charges exemptions for employees below 30 and above 45 years
of age
• Customs-free imports of equipment and certain raw materials
• Double taxation treaties in force with 31 countries, another 14 undergoing
ratification (in the region: all ex-Yugoslav countries, plus Albania, Bulgaria, Hungary
Romania and soon Austria-undergoing ratification).
Double Taxation Avoidance Treaty Swiss
Serbian – Dividends and Interest
Dividends (previously 20% tax):
• 5% withholding tax if the beneficial owner of dividend is a
company (but not a partnership) holding directly at least 25% of
the capital of the paying company
• 15% withholding tax (in all other cases)
Interest (previously 20%)
• Source country has right to tax up to maximum of 10%
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Double Taxation Treaty-Austria
Royalties and Capital Gains
Royalties (previously 20%)
• 5% tax on royalties – copyright-protected works
• 10% tax on royalties –patents, trademarks, designs, models,
plans, secret formulae or processes, use or lease of equipment
(industrial, commercial, scientific), information on industrial,
commercial or scientific experience.
Capital gains:
• May be taxed only in the state of residence of alienator
• Except companies that derive more then 50% of its value
directly or indirectly from immovable property, where the sale
of shares in such company may be taxed also by the country in
which such immovable property is situated, while the residence
country must provide relief from double taxation (tax credit).
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Financial Incentives for Job Creation
Scale
Large-Scale
Standard Scale
Project
Categories
Manufacturing and ExportRelated
Capital and CapitalLabourIntensive
Intensive
Manufacturing
ExportRelated
Any Region
Underdevelop
ed
Regions/Regio
ns of Special
Interest
€4,000 to
€10,000 per
new job
Auto,
Electronics, IT
and Special
Interest
Regions
€5,000 to
€10,000 per
new job
Other
Regions
€2,000 to
€5,000 per
new job
€2,000 to
€10,000 per
new job
Grant
25% of total
investment
20% of total
investment
Minimum
investment
€200 mn
€50 mn
€0.5mn
€0.5 mn
€1 mn
€0.5mn
Minimum
new jobs
1,000
300
50
50
50
10
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Distribution of Incentives per Industry
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Distribution of Incentives by
Nationality of Investor
Recent Major Foreign Investors
COUNTRY OF
ORIGIN
SECTOR
TYPE OF
INVESTMENT
app. INVESTMENT
AMOUNT (MIL EUR)
Norway
Telecommunications
Privatization
1,513
FIAT
Italy
Automobiles
Joint venture with
State
940
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
COMPANY
Telenor – Mobi 63
Intesa – Delta Banka
InBev – Apatinska pivara
Merkator
Holcim – Novi Popovac
OTP Bank
Alpha – Jubanka
Eurobank EFG – Nacionalna
(Source: Ministry of International Economic Relations
Serbia – September 2006)
Greece of the Republic of
Banking
Brownfield
štedionica
130
FOREIGN INVESTORS SERVICES (FIS):
OUR MISSION
With our unparalleled experience we give focal
Strategic Support and secure best in class
Professional Support to Foreign Businesses
in Serbia and the SEE region developing
jointly your full market potential in the
shortest possible time
www.investmentserbia.com
FOCAL STRATEGIC SUPPORT
• An Advisory Board for your business project
composed of first-class professionals – leaders in
their respective lines of business
• Your Business Strategy for Serbia and the SEE region
developed with our assistance
• We find opportunities and reliable business
partners for you (land, real estate, suppliers,
distributors, etc.)
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PARTNERSHIPS AND SOLUTIONS
• Establishing partnerships for your project
– Central government partnership
– Local government partnership
– Timely issuance of all permits
• Finding solutions to problems
– Start-up problems
– Course-of-business problems
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STAR CLUB
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Partnership assistance rendered by a coordinated group of number 1
professionals:
Lawyers
Accountants
Market researchers
PR and advertising
Construction companies
Large wholesellers and retailers
Suppliers, etc.
Priority access to owners, general managers or managing partners of
best service providing and other companies, saving time and money
FIS IS YOUR RELIABLE PARTNER IN SERBIA
www.investmentserbia.com
THANK YOU FOR YOUR
ATTENTION!
DR. MILAN PARIVODIC
[email protected]
[email protected]
Tel. +381 11 2200590
Address:
PC Usce, 15th floor
Bulevar Mihajla Pupina 6, 11070 Beograd
www.investmentserbia.com