22 Apr
By Maja Mandrapa Gasic*
Bilateral economic cooperation between Serbia and Nordic countries consists of two elements: cooperation between governments and official institutions and cooperation between companies. On the governmental level, political relations are good, there is no single open question. We are particularly grateful for all the help Serbia has received from Nordic countries trough different development projects.
Trade cooperation strengthens
Trade is today’s point of interest. Bilateral trade volumes were in constant rise in the last decade, but a considerable potential for further expansion remains. In 2014 trade between Serbia and Sweden amounted to 220 mil. EUR, which puts Sweden at the top of the list of trade partners in the Nordic region. Denmark is second with 123 mil.EUR, while Finland (99 mil. EUR) and Norway (32 mil. EUR) are marked third and fourth respectively. Except with Norway, Serbia traditionally records a trade deficit with Nordic countries.
Serbia is committed to improving its trade balance and supporting domestic exporters and in order to ensure better position in Nordic markets, Serbian exporters receive support from our Ministry of Trade, Tourism and Telecommunication, Ministry of Economy, Serbian Chamber of Commerce and Serbina Investment and Export Promotion Agency. One activity should be particularly emphasised when speaking about recent steps to increase trade volumes. In march 2014 Swedish National trade council came to Serbia and delivered a taylor-made seminar for the Serbian companies planning to export to Sweden – free of charge and sector-specific. Helping companies to export their goods to Sweden is in mutual interest, not only pushing up Serbian exports but Swedish exports too – because of value chain dynamics and high percentage of companies whose business model follows import-in-order-to-export logic. This seminar was a usefull tool for giving a boost to cooperation between the companies.
Another important tool we are using to foster business partnerships is networking. Respecting the importance of networking of business communities of Serbia and Nordic countries, Ministry of trade, tourism and telecommunications is welcoming all the initiatives of private associations formed both in Belgrade and Scandinavia with the aim to enhance the cooperation. One example of it is Swedish-Serbian Business Council established in Stokholm in 2014. We would welcome similar associations with other Nordic countries.
Serbia is home for many Nordic companies
So far, around 200 companies from the Nordic Region are active on the Serbian market, one third of which are from Sweden. We would like to increase this number especially in the export oriented production sectors. Some of the most prestigious Nordic and global companies now operating in Serbia are: Telenor, Karlsberg, RAPP Marine, Ericsson, Tetra Pak, Grundfos, Tikkurila, etc. to name just a few. With the total transaction value of 1,53 billion EUR, acquisition made by Telenor Norway was and still is the largest foreign direct investment in Serbia. In 2014 Telenor bought KBC bank and introduced mobile banking in Serbia, being one of the first offering this service on the market. We would like to invite more Nordic and global companies to consider doing business in Serbia.
The most important advantages of doing business in Serbia are the following:
- Serbia is an EU candidate country (since March 2012);
- Serbia follows FTA regimes with EU, EFTA, CEFTA (regional), Russian Federation, Belarussia and Kazahstan and with Turkey (covering markets of almost 1 billion people);
- Serbia offers financial incentives for employment and skilled workforce in many sectors;
- Serbia has favorable geographic position. Due to its position Serbia is considered a gateway to Europe. Three very important European corridors, No. 7 (The River Danube), No. 11 (international highway Temisoara-Bar) and No. 10 (an international highway and railroad), intersect on Serbian territory, providing excellent transportation connections with Western Europe, Eastern Europe and the Middle East.
Serbia is unique in Europe in terms of its FTA regime with Russian Federation. This FTA as well as one with Turkey gave results that are largely visible in only few years of its implementation. The trade exchange with Turkey, for example, doubled in 2010 -2014 period thanks to the benefits of FTA. The recent arrival of Halk Bank, a very first Turkish bank to enter the Serbian banking sector, is promising for expecting more Turkish companies to do business in Serbia in the future. In 2014 trade exchage between Serbia and Turkey amounted to 618 mil. EUR, but we would welcome higher level of Turkish investments too.
EU – the most important parner
European Union is our most important trade partner. Almost two-thirds of our exports go to the EU. Among the most vibrant Serbian exporters to the EU are actually companies owned by EU capital and having set production in Serbia for the advantages offered here. No surprising that largest investors in Serbia originate from the EU.
Serbia is absolutely dedicated to finishing the necessary economic reforms which will bring us closer to macroeconomic stability. Another key driver of reforms is introduction of EU standards. Stack of reform laws have been passed in our Parliament in 2014 (on labor, privatisation, bankruptcy, real estate trade, public service officials, etc), with the purpose to increase the competitivenes of our economy and improve the business climate for investors. Harmonization of Serbian legal system with the EU is steadily under way, and numerous standards in key areas are already fully met or close to be so, as laid down in the documents of the screening process. We do believe Serbia will soon enter the negotiation with the EU Commission opening and closing chapter by chapter of negotiation framework.
Financial incentives & other advantages
Financial incentives for companies creating employment in Serbia are another quite significant advantage. Investors can apply and receive the non-refundable grants for each new job created in Serbia. The grants are ranging up to 7000 EUR per job position, are designed for labor intensive industries like textile and wood-processing industry and particularly favoring investors willing to invest in underdeveloped areas (devastated regions) of our country. Ministry of Trade, Tourism and Telecommunications is determined to attract investors in the tourism sector in which Serbia has a lot to offer – ski centers, thermal spas, rural tourism, city breaks, culinary tours, etc.
One of the main advantages of investing in Serbia is availability of skilled work force at a reasonable wage in almost all larger cities. This contributes to the fact that costs of operating in Serbia are much lower than in other countries in the region. Serbia ranks well compared to region in terms of taxes, energy prices, free custom zones and transport options. The list of factors favoring doing business in Serbia would not be completed without adding that Serbia has concluded bilateral agreements on investment promotion and protection with all Nordic countries, including Sweden. Double taxation is also precluded by the corresponding agreements.
Sectors in which Serbia is competitive or can be competitive with additional investment are agriculture and food production, textile, machinery and metal industry and pharmacy. Good perspectives are to be found in IT sector, engineering and electronic industry, automotive industry, chemical industry, renewable energy sector and clean technologies.
* Assistant Minister, Sector for Bilateral Economic Cooperation, Ministry of Trade, Tourism and Telecommunications of the Republic of Serbia
