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INFLATION UNPLEASANT AND UNPREDICTABLE
ĐORĐE ĐUKIĆ, Professor of the University of Belgrade Faculty of Economics Inflation - Unpleasant And Unpredictable
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When we are confronted by a major economic problem, such as the current issue of persistently high inflation, we very often reach out to economic history in the belief that it will provide us with an answer to the question of how long the torment we currently feel could last. The problem with the current inflation is that combination of causes differ from any we’ve previously seen, says Đorđe Đukić, full professor at the University of Belgrade Faculty of Economics.
What are the most important
sources feeding inflation? Are they still only at the global level, or are they now also at the national level?
- Pre-existing sources of inflation on the supply-side that are caused by the partial or complete breaking of supply chains for key industrial components, such as microchips, following the outbreak of the conflict in Ukraine, will persist for many years to come. This is made worse because cost inflation resulting from rising geopolitical instability will be fed by high and unstable prices of energy inputs, metal commodities and food, as well as high costs due to a chronic shortage of highly qualified workers (talented individuals) in production sectors. These are
FUTURE
FORECASTS
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The optimistic expectations of financial markets are based on previous events … However, postpandemic economic conditions differ completely compared to the past
factors at the global level, but also at national levels. So, countries that suppress inflationary hotspots on the demand side by leading a restrictive monetary policy won’t be able to do the same with cost inflation in the near future. At the national level, countries that have lost or renounced their monetary sovereignty have essentially tied their own hands, because they are unable to lead even an independent monetary policy in the battle against inflation. By maintaining a fixed exchange rate of the national currency, they create the appearance that inflation is mostly imported, thereby fleeing from accountability for a much higher increase in consumer prices compared to the same, for example, in the eurozone.
How well have U.S. and EU mon-
etary policies been set to respond to inflationary pressures?
- Following the most aggressive hike in the key interest rate since the 1980s, through the increasing of the key interest rate four times, each by 75 base points, the U.S. Federal Reserve System (FED) resorted to an interest rate increase of 50 base points in mid-December 2022. However, reducing the degree of aggressiveness in tightening monetary policy at the December 2022 meeting of the FED Board of Governors, as well as increasing the key interest rate to a level of 4.25-4.50%, the highest since 2007, doesn’t mean that the FED will stop there. And this is despite the demonstrating of more moderate inflationary pressures and somewhat more moderate annual growth of U.S. consumer prices of 7.1% in November 2022, as well as optimistic expectations among investors that inflation rate reductions will continue and inflationary expectations will stabilise in 2023, after reaching their highest level in 2022.
There is major disagreement between FED Chairman Jerome Powell and key players on Wall Street regarding just how long interest rates will remain elevated in 2023. In late November 2022, Powell informed the public that the FED will continue to maintain high interest rates and the restrictive monetary policy for some time, in an effort to successfully combat and suppress inflation. He thus signalled a further interest rate hike, with no
indication of when a downward turn will appear. In contrast to this, financial markets expect a gradual reduction of the key interest rate could occur as early as the end of 2023. The annual inflation rate in the eurozone totalled 10% in November 2022, five times higher than the target rate. It stood at 11.3% in Germany. The increase of the European Central Bank’s key interest rate from 2 to 2.5% in mid-December 2022 does not provide the basis to expect inflation to slow during 2023. Why? Energy prices rose by around 35% in November compared to the same month of 2022, and rising cost inflation is unavoidable in the year ahead. Following a decline compared to the peak seen in August, gas prices are now seven times higher than they were in the 2020-2021 period, electricity prices are up tenfold and the conflict in Ukraine is certain to escalate further.
Economic history teaches us that, in the case that relatively high single-digit or double-digit inflation rates in relation to the target rate – mostly at a level of 2% annually – are rooted, i.e., become inert, it is necessary for monetary and fiscal authorities to implement a coordinated anti-inflationary policy over a long period, one much longer than the period during which high inflation was generated
What kinds of repercussions do such
policies have on economic growth and recessionary pressures that are distributed differently (higher in the EU than in the U.S., China etc.)?
- There’s no doubt that the FED and ECB’s increasing of key interest rates takes a toll in the form of an unavoidable recession during 2023. That will de facto be the price for the poor evaluations of those two central banks, as well as other central banks, that the inflation experienced during 2020-2021 would be a temporary phenomenon caused by one-off expansive monetary and fiscal policy measures to maintain economic activity during the pandemic. The U.S. economy will most likely only enter a milder recession in late 2023, with declining activity appearing gradually in individual sectors, and won’t hit the entire economy at once (“rolling recession”). One indicator of the coming recession was the recently realised greatest ever difference between yields on short-term government bonds in relation to ten-year bonds since the dot-com bubble of the ‘90s.
The eurozone is most likely to enter an extended recession during 2023, accompanied by large differences between individual members in terms of intensity. According to the most optimistic scenario provided by multiple institutions, real GDP growth in the eurozone in 2023 could be slightly above zero – reaching 0.2-0.3%. In contrast, predicted real GDP growth for China in 2023 stands at 4.8%, according to a consensus among economists that was published by Bloomberg in mid-December 2022, which
represents a marked upward shift from the estimated 3.2% for 2022. This comes on the back of the swift re-opening of industrial regions that were completely isolated due to the pandemic, accompanied by the halting of production. China’s rate of inflation stood at an annual level of just 1.6% in November 2022, which additionally impacts beneficially on economic growth. According to the latest calculations of the IMF, approximately a third of the world economy will record at least two consecutive quarters of declining economic activity in 2022 and 2023, with the value of lost production amounting to four trillion U.S. dollars by 2026.
What’s the outlook today when it
comes to inflation returning to its previous state, and why?
- Over the course of the previous five key interest rate cycles in the U.S., the period between the highest interest rate level and its first reduction averaged 11 months. So, this relates to periods when the inflation rate demonstrated a greater degree of stability, which now isn’t the case. The optimistic expectations of financial markets are based on previous events linked to normal business cycles. Swap traders expect that, following the increase of 50 base points in the first half of 2023, the FED will opt to reduce the interest rate by 50 base points by as early as November 2023, and that this rate will total 4.5% by year’s end 2023. However, post-pandemic economic conditions differ completely compared to the past, so monetary authorities will have to maintain a high degree of caution after making short-term reductions in the inflation rate in the period ahead. New disruptions, such as a complete halting of the production of certain metals due to high energy costs (e.g., aluminium) or strikes by miners, such as those at the Chilean copper mine that’s the largest in the world, could have a chain reaction causing a new explosion in production and retail prices.
Consumers in the eurozone are signalling to the ECB that it hasn’t done enough to curb inflation. According to the latest ECB survey, expected inflation over the next 12 months has risen to 5.4%, and is set to remain at a level of 3% over the next three years. This is one piece of evidence proving that the ECB has, for many years, been facing the biggest challenge in convincing the market that it really intends to combat inflation in a credible way.
New disruptions, such as a complete halting of the production of certain metals due to high energy costs (e.g., aluminium) or strikes by miners, such as those at the Chilean copper mine that’s the largest in the world, could have a chain reaction causing a new explosion in production and retail prices
What are the consequences of en-
during and relatively high inflation? If we observe the economic history of the modern age, does it appear as an aberration or a rule?
- Economic history teaches us that, in the case that relatively high single-digit or doubledigit inflation rates in relation to the target rate – mostly at a level of 2% annually – are rooted, i.e., become inert, it is necessary for monetary and fiscal authorities to implement a coordinated anti-inflationary policy over a long period, one much longer than the period during which high inflation was generated. This is not a time to treat inflation using the same prescription that’s applied to typical business cycles, but rather a time of inflationary hotspots caused by a combination of factors not seen historically – continuing the massive printing of money due to the pandemic, enormous budget expenditure aimed at preventing the collapse of thousands of SMEs and helping the unemployed, lasting negative effects of supply chain disruptions for the producers of final products, huge transport costs and an unprecedented spike in energy prices, following the escalating of the conflict in Ukraine, that will not return to level seen prior to that conflict in the near future.
NIS has long since ceased to be just an oil company, as it has taken strides to enter into the production and trade of electricity, while it also deals with renewable energy sources. NIS simultaneously implements numerous CSR programmes and is among the leaders of the field in Serbia
At this company that’s considered one of the country’s leading employers, investors and exporters, the management pays special attention to investing in the community, in their belief that this is how one invests in the future. Sustainable development, for them, means having a responsible attitude towards operations, future generations and the natural environment.
The previous year was marked by an energy crisis, yet NIS nonetheless recorded good business results. Will the Serbian market continue to be regularly supplied with petroleum products? The oil industry is among those that are often exposed to challenges. The crises that we endured in 2014 and 2020 strengthened us and ensured that we were better prepared to face the latest events. In business, just like in life, you must always be prepared that not everything will go according to plan. That’s why we must always, first and foremost, know what our own priorities are. When it comes to business, the absolute priority for us during this year was to preserve the regular/orderly supply of the market, as well as the social stability of our employees. NIS is a company that has special importance for Serbia and we are continuing, despite all the challenges, to provide a significant contribution to the country’s energy security.
More than three billion euros has been invested in the company’s development since 2009, which ranks you, according to official data, among the country’s leading employers, investors and exporters. What do the figures show?
These investments enabled us to build a modern and efficient company. Apart from that, NIS has long since ceased to be just an oil company, as we have taken strides to enter into the production and trade of electricity, while we also deal with renewable energy sources. Moreover, we expanded our operations to other countries of the region in several business segments and we now have, for example, a network of more than 400 petrol stations in Serbia, Bosnia-Herzegovina, Bulgaria and Romania.
Best testifying to our successes are the results. A study conducted by consulting firm KPMG showed that, in the period from 2010 to 2020, NIS’s average annual direct contribution to the country’s GDP was 5.1%. Through the paying of taxes, we contribute an annual average of more than 1.1 billion euros, or around 15.3% of the country’s total tax revenue, to the budget of the Republic of Serbia. All this clearly testifies to the success and modernisation of the company following 2009, and that was made possible thanks to good cooperation and understanding among the shareholders.
The figures are indeed impressive, but NIS isn’t just about its business results. The company also invests significantly in the development of communities and improving citizens’ quality of life...
We aren’t just NIS employees; we are first and foremost citizens of this country. By investing in the community, we also invest in the future of our children. Anyone who thinks doing business successfully is possible without the support of the community doesn’t know what a modern business is. I can state with satisfaction that, since 2009, we’ve invested more than 4.2 billion dinars through various CSR programmes. We are dedicated to protecting the environment, supporting the youth, educational and scientific institutions, investing in public health and social protection, supporting the development of culture and professional sports, as well as philanthropic and volunteering activities.
We are particularly proud of the “Common Cause Community” [Zajednici zajedno] programme, through which we cooperate
with local communities nationwide across Serbia, but also our “Energy of Knowledge” [Energija znanja] programme, under the scope of which we grant scholarships to the best students and form partnerships with educational and scientific institutions.
Your “Common Cause Community” CSR programme has also marked the previous year, as well as the campaign “For new hopes to be born” (Da se nove nade rode). Are reproductive health, birth rates and babies among your priority topics?
Those are priority topics for the future of any society. When it comes to this issue, we joined the initiative of the Government of Serbia, because increasing the birth rate is a national priority. Within the framework of this year’s “Commom Cause Community” cycle, we allocated 118.5 million dinars for the equipping of health institutions at all levels of healthcare that deal with reproductive health and increasing the birth rate in 13 municipalities and cities participating in this programme. We will thereby enable the healthcare sector to receive modern devices and have improved working conditions.
Our support also relates to the cofinancing of costs for couples in the in vitro fertilisation process. Under the scope of the campaign „For new hopes to be born“, we also donated funds to procure equipment for eight maternity wards in the south and east of Serbia, while we will bring cheer to the 225 babies born first in 2023 at 15 maternity wards in Serbia by gifting welcome packages containing essential products for new-born babies in their first days after arriving home from the maternity ward. Our desire is for our example to also represent an invitation for others to contribute to our shared goal – of our new hopes being born.
Apart from your enviable business results, you are also proud of the members of the NIS Volunteer Club, who have already implemented more than 60 humanitarian activities. You have said that they are not only the strength of NIS, but also the energy of the communities in which they live? Employees are every company’s most important resource, just as the people who
comprise any community are its greatest strength. Our company’s volunteer club now has more than 1,650 members, who are ready to engage in working on all issues that are priorities for the community. During the years marked by the COVID pandemic, they were engaged in supporting the most vulnerable among their neighbours, colleagues etc. The priority for this year has been environmental activities carried out under the slogan “Change the circumstances in your surroundings” [Promeni okolnosti u svojoj okolini]. This is also perhaps the best message. Let’s not wait for the changes that we want to happen, rather let’s initiate them with our activities.
NIS has woven the principles of sustainable development deeply into its business processes, while in parallel it is also among the pioneers of reporting that encompasses the area of sustainability. What is sustainable development for NIS?
Sustainable development, for us, means having a responsible attitude towards operations, future generations and the natural environment. There are four foundations of sustainable development for NIS: economic progress, the development of human resources, the protection of the environment and safety in the workplace, coupled with strong support for the development of the community. I think that work on all four foundations should be carried out simultaneously, and that this synergy yields the best results. For example, environmental protection measures are part of every NIS business project. Thus, since 2009, we’ve invested approximately 900 million euros in ecological and other projects that have significant positive effects on the protection of nature. Emissions of gas into the atmosphere have been reduced significantly, which is why the Pančevo Oil Refinery is the first energy plant in Serbia to receive an IPPC permit, which serves to confirm that our production is in compliance with the highest environmental standards of the country and Europe.
It was back in 2011 that we published our first verified Sustainable Development Report aligned with the standards of the world’s leading organisation in the domain of sustainable business – the Global Reporting Initiative (GRI), and we’ve been reporting regularly to all interested parties since then. We want a dialogue with all stakeholders, and that’s why we’ll continue striving to present, completely transparently, all our efforts and achievements to the broadest sections of the general public.
LOCAL NEWS
“The banking sector supports women’s entrepreneurship in various ways, mostly through mentoring and training, as it was revealed as the key factor” ~ VLADIMIR VASIĆ,
SECRETARY GENERAL OF THE ASSOCIATION OF BANKS OF SERBIA
INCREASED REVENUES, NEW INVESTMENTS AND EXPANSION FOR NELT GROUP IN 2022
Nelt Group will achieve a consolidated turnover of 1.15 billion euros in 2022, achieving growth of 14% compared to the previous year. New partnerships in distribution and logistics, along with an investment cycle in Angola, create space for the further development of the company on the European and African markets. By investing 20 million euros in the production facility for the Candy Factory sweet programme in Angola, Nelt shifted its focus to its own brands and thus ensured long-term sustainability on a market where it has been operating for 11 years. Over 5,000 people are part of Nelt teams around the world today. In 2022, over 2.5 million euros were additionally invested in extraordinary salary increases, as well as 1,500 hours of education through 258 training programmes.
IKEA OPENS ITS FIRST PLANNING STUDIO IN SERBIA
IKEA Serbia opened its first Planning Studio in our country with the aim of making its products and services even closer and more accessible to as many people as possible. From today, IKEA inspiration and home decoration solutions can be found in New Belgrade, within the Roda MEGA Center, at 35 Đorđa Stanojevića Street. The IKEA Planning Studio will allow customers to find inspiration for home decoration and, with the expert help of an IKEA advisor, design their kitchen, plan a wardrobe and get advice on furnishing any room.
CISCO PRESENTS LATEST IT TRENDS
Company CISCO held a conference in Belgrade at which the latest world trends in the field of information technologies and Cisco solutions were presented. Through presentations and demonstrations of new Cisco technologies, the most interesting implementations in Serbian companies, about 500 users and partners had an opportunity to expand their knowledge and get ideas for the development of their business. 20 years of operation of the Cisco office in Serbia were marked, with the emphasis on continuous investment in education through the Cisco Networking Academy and cooperation with universities, expansion of the partner network, cooperation with state and private companies, as well as active participation in various organisations through the dissemination of experience and practice world technological trends.
“Construction of the Moravian Corridor, 112 km long and connecting half a million people from the Niš highway to Čačak, will be completed at the beginning of 2025” ~ GORAN VESIĆ,
SERBIAN MINISTER OF CONSTRUCTION, TRANSPORT AND INFRASTRUCTURE
postings Placements &
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The new Ambassador of Greece to Serbia joined the Diplomatic service of the Greek Ministry of Foreign Affairs in 1997 and has since served in various capacities in Greek Diplomatic Missions abroad, including the Embassy of Greece in Brussels (19992002), the Embassy of Greece in Tirana (2002-’04; Head of the Consular Section), the Permanent Representation of Greece to UNESCO (2006-‘10), the Embassy of Greece in Damascus (2010-’12; Deputy Head of Mission) and the Embassy of Greece in Rome (2015-‘19). Prior to her appointment as Ambassador of Greece to Serbia, she served as Head of the Directorate for Personnel and Administrative Organisation at the Greek Ministry of Foreign Affairs (2020-‘22). Ambassador Levanti holds a Degree in Political Science from the Athens School of Law, Economic and Political Science and an MA in International Relations from the Geneva Graduate Institute for International Studies - IUHEI. Apart from her native Greek, she speaks English, French and Italian.
H.E. MONS. SANTO GANGEMI, NEW APOSTOLIC NUNCIO TO SERBIA
Pope Francis has appointed Archbishop Santo Rocco Gangemi as the new apostolic nuncio to the Republic of Serbia. Born in Messina (Italy) on 16th August 1961, Monsignor Gangemi was ordained a priest on 28th June 1986 and remained incardinated in the Diocese of Messina. He graduated in church history studies and entered the diplomatic service of the Holy See on 1st July 1991, going on to serve Papal Representations in Morocco, Italy, Romania, Cuba, Chile, France, Spain and Egypt. He was appointed titular archbishop of Umbriatico and apostolic nuncio to the Solomon Islands by Pope Benedict XVI on 27th January 2012, after which he was also named apostolic nuncio to Papua New Guinea on 24th March 2012. Pope Francis appointed him apostolic nuncio to Guinea (5th February 2014) and Mali (5th February 2014) and, prior to his arrival in Belgrade, he served from 25th May 2018 as apostolic nuncio to El Salvador. Apart from his native Italian, H.E. mons. Gangemi also speaks French and Spanish.
H.E. BASSEM JOUMAN AGHA, NEW AMBASSADOR OF SYRIA TO SERBIA
Born in Damascus on 28th November 1970, Bassem Jouman Agha graduated from the French Language Department of the Faculty of Philology and Humanities in Damascus. Joining his country’s diplomatic service in the mid-1990s, he has served as Attaché at the Embassy of the Syrian Arab Republic in Paris (1995-’99), Consul at the Embassy of the Syrian Arab Republic in Rome (2001-’05), Consul at the Embassy of the Syrian Arab Republic in Vienna (2006-’07), Consul and Deputy Ambassador at the Embassy of the Syrian Arab Republic in Vienna, Slovakia and Slovenia (2009-’14) and Deputy Permanent Representative of the Syrian Arab Republic to the UN Office in Vienna (UNOV), the International Atomic Energy Agency (IAEA), and the UN Industrial Development Organization (UNIDO). Returning to Damascus, he held the position of Chief of the Protocol Department at the Ministry of Foreign Affairs and Expatriates of the Syrian Arab Republic from 2015 to ’16, before being appointed Head of Mission of the Embassy of the Syrian Arab Republic in Warsaw from 2016 to ’22. Prior to arriving in Belgrade, he served (2020-‘22) as Head of Expatriates and Internal Affairs Department at the Ministry of Foreign Affairs and Expatriates of the Syrian Arab Republic. A widower and father of two, Ambassador Jouman Agha speaks Arabic, French, English and Italian.
Hemofarm presented new successes and investments in 2022. Since 2006, STADA Group has invested over 400 million euros in Hemofarm. The company has continued its growth in 2022 and ends the year with exceptional business results; it was said at the festive cocktail party that the regional leader in the pharmaceutical industry arranged for friends, business partners and associates. Hemofarm celebrated 62 years of successful operations, emphasising that the good health of every individual is the company’s basic mission and its greatest asset. The greatest success in 2022 is related to business in an extremely demanding environment, in which the Hemofarm company delivered its products to all markets where the STADA Group operates in the required quantity and in the expected quality. Since 2006, when Hemofarm became part of the STADA Group, more than 400 million euros have been invested.
MK Group Engaged In New Real Estate Projects
MK Group has brought completely new real estate concepts to the market during the past year. They showed just how much expertise in tourism coupled with the successful management of investments can prove to be a winning combination for those purchasing their real estate properties
On the occasion of the opening of one such complex, we spoke with Aleksandra Stojanović, Investment Director and Chief Corporate Affairs
Officer, who is simultaneously spearheading this investment cycle.
When MK Group last year launched the implementation of its plans on Kopaonik, one of the primary goals was to restore the
“shine” to Kopaonik, as a beloved holiday spot in Serbia throughout the entire year, and I believe we’ve fully succeeded in those plans. Apart from that, we’ve also brought innovations to this mountain in the form of new and different real estate properties. We utilised the decades of tourism knowhow that we possess and decided to apply it to the creation of luxury complexes ~ Aleksandra Stojanović.
How successful has the new model you’re discussing proved to be in the region and what is unique about these projects? I would single out projects like Woodside (29,000m2) on Kopaonik or Petram (83,000m2) in Savudrija, which offer owners not only the purchasing of apartment units, but rather also provides a special level of luxury and comfort in tourist destinations, or rather a “second home” in the ambience of a mountain or coastal resort.
You also opened the doors to the new wing of the Hotel Grand in December?
With a capital investment that totalled almost 30 million euros at the end of 2021, MK Group successfully completed the reconstruction of Grand Hotel Kopaonik. This also proved to be an excellent starting point for a new investment cycle, namely the construction of a new wing: Grand Residences.
What distinguishes this project from the others on the market? This is about a new, luxuriously equipped wing with 40 apartments decorated superbly, its own reception desk, spa centre, parking garage, and ski hub right at the exit leading to the slopes, an a la carte restaurant and a top service available to residents. This project is a response to the demands of today’s tourists, who want a “home away from home”, along with the services they would receive at a high-class hotel. I would say that this is also precisely our primary target group: modern tourists seeking superior comfort and service.
It is extremely important to note that the owners of apartments in this wing have all the services and facilities of the Grand itself at their disposal, while on the other hand they enjoy the complete privacy that’s provided by this separate wing.
Great Plans For Jubilee Year
Čačak-based company Slovas, a leader in trade in the stainless steel industry and the production of processing equipment, has spent a full three decades satisfying all the needs and demands of its customers across the region and throughout Europe, and for the year in which it it is commemorating its jubilee, it plans to build a new business and service centre complete with new equipment
Despite not hiding his satisfaction with everything the company’s achieved to date, Slovas director Slobodan Vasilijević doesn’t hide his desire to achieve even better results with the new generation, with his own children and those of his employees. That’s why he announces that the company’s jubileee year will be marked by the construction of a new production plant with new equipment.
You are awaited by a major jubilee year for the company. We congratulate you on your perseverance, strength and tenacity, on everything that has been achieved over these three decades. How do you view the path that you’ve traversed since establishing Slovas? We celebrate 30 years of our existence and successful operations next year. No path is easy, but you must have a desire and vision, a goal that you want to achieve, determination and tenacity, but also a love for the work that you do. Without that, and particularly without determination, tenacity and devoted work, there can be no results. From this vantage point, I can say that no year was easy, but nothing is difficult when you see that the company is developing, progressing. Years are just numbers, which is why we are heading towards new victories with new enthusiasm.
What forms the basis of your company’s success? I founded the company in 1993, immediately after graduating from college. It wasn’t easy to start during that time of crisis, sanctions, wars and hyperinflation, without working capital. There were many challenges, but that’s also why Slovas today boasts 10,000 customers and more than 24,000 products. The company’s core activity is trade in stainless steel and the production of processing equipment, and we don’t have our own specialised production programme, but rather we make products in accordance with the demands and needs of the market and customers.
Our customers come from Serbia, the countries of the former Yugoslavia, Germany, Austria, Italy, France, Sweden, Russia, Ukraine etc. We acquire new customers year after year, between 15 and 20 on a monthly basis. We have amassed 30 years of operations, which is enough for us to show the quality of our products and services, our relations towards customers, adherence to all standards, delivery deadlines etc. This testifies the most about us and represents our best recommendation. The year that’s behind us was marked by intense growth in the volume of business we do with Austria, Germany, Italy and some other countries, thus today exports account for more than 45 per cent of our sales.
How do you keep pace with the demands and expectations of the market? Our production programme expands constantly, such that today we have over 24,800 items, because we introduce new products in accordance with the requirements of the market and customers. In order to satisfy our customers, we must offer them the maximum possible choice, so that they can acquire everything they need in one place, instead of having to search in multiple locations. It is only in this way that we can rely on them remaining loyal to us over the longer term.
How did you happen to also start working on the design and production of equipment, and the implementation of works? It was from 2006/7 that clients began more frequently asking us to offer them finished products and services, and we came to the realisation that this is the right way to go. In order to use raw materials to make finished products, we first started working with subcontractors, which we have 65 of today. The basic concept of Slovas is that our customers are simultaneously also our suppliers, which means that they procure raw materials from us, then process certain products and services for us, before returning the finished products to us. They practically grow and develop together with us, and acquire a new operational dimension. Slovas today has 65 permanent subcontractors throughout Serbia, who work in accor-
dance with the demands of our customers and markets, and who grow together with us and become more serious companies. Each of those companies specialises in a specific activity, and it’s thanks to this that we don’t need to have our own production, but rather we deal with the servicing, preparation, cutting, processing and delivery of materials. This is how we reduce the price of finished products and gain more products per unit of time, and are thus able to engage more subcontractors...
What did you gain with the 2008 opening of your state-of-the-art service centre for processing stainless steel? The centre was first established in 2008, but to this day we’ve continued to invest in it and replacing the equipment constantly, improving the technology and operations, in order for us to be able to offer customers new and better quality services, in order for us to receive new added value for our products and be able to deliver finished products or services in a relatively short period, depending on their requirements and needs.
We have been investing constantly since 2008, changing and replacing equipment every four to five years, so for the jubilee year of 2023 we plan to build a new business and service centre complete with new equipment. Part of the machinery has already arrived, while the larger part will arrive next year, so we will round off our first 30 years of doing business with a new investment and new technological equipment. It is thanks to this that we will be able to respond to new demands, new needs and new markets.
Can your workers keep pace with all that? Are you satisfied with your staff? Slovas has 42 permanently employed workers, which includes those who’ve been with us for a full 28 years. Employee satisfaction is very important to us, which is why we try to provide them with the best possible working conditions and stimulating salaries that are sufficient for them to provide for their families and remain with us over the longer term. Alongside parents who’ve been working with us for 26/27 years, we’ve also started employing their children, so the second generation of workers has arrived.
That is our great success. I have three children who will one day work at Slovas. My eldest daughter, Anđela, is in the third year of mechanical engineering studies at Queen Mary University of London. She accompanied me on business trips around the world and followed in my footsteps from the sixth grade of primary school. She will complete her studies in another two years, and I hope that she will then begin engaging actively in the company’s work. She will receive some special tasks, on the internationalisation of trade and services, deepening the contacts that she’s acquired during her studies and conquering new markets. I’ve also been introducing my younger daughter to the business world from an early age, as well as my son, who is only 10 years old, but has been in and around the company in some way since the age of four or five. He will also receive specific responsibilities when he grows up, some adequate position, but he must be dedicated and committed. Our wish is to achieve even better results with the new generation, which is why I want to build a new production plant with new equipment in this jubilee year, so that our children can be proud of us and what we’ve created.
Apart from showing that you care for clients, partners and employees, you have shown through numerous donations that you also care about the local community... Our stance is that all those who are in distress should be helped, but I don’t want boast and speak about that. We’ve participated in numerous humanitarian campaigns and helped everyone needing essential help, and that’s our enduring commitment. We believe it is primarily necessary to help with healthcare services and secure the best possible conditions for treatment, because that’s where citizens and users of healthcare services will primarily feel the benefit. I also recommend that my colleagues engage in helping the community in accordance with their own possibilities, because we will then all live better.
REGIONAL NEWS
“There is an opportunity for the region to progress through the Open Balkan initiative if it is properly implemented. The region will be stronger and more dynamic” ~ GABRIEL ESCOBAR, U.S.
DEPUTY ASSISTANT SECRETARY
EU MEMBERSHIP PERSPECTIVE OF WESTERN BALKAN COUNTRIES CONFIRMED IN TIRANA
Leaders of the EU and its member states confirmed with the Declaration in Tirana their complete and unequivocal commitment to the EU accession perspective of the Western Balkans and called for the acceleration of the process based on credible reforms and the principle of results, which, as they emphasised, is in everyone’s mutual interest. The declaration welcomes the progress made by Western Balkan partners on the road to the EU since the EU-Western Balkans Summit of October 2021, it was stated in the second point of the document, which calls on members of the Western Balkans thta have not yet done so to align with the EU’s Common Foreign and Security Policy.
The President of the Board of Directors of the Crnogorska komercijalna bank (CKB), Tamas Kamaraši, was elected as the new President of the Montenegrin Foreign Investors Council (MFIC). At the Assembly of the Council of MFIC, Kamaraši said that, bearing in mind that direct foreign investments are one of the drivers of the economic development of Montenegro, MFIC must assume a significant position in the decision-making process that influences the business and economy of the country. Kamaraši said that MFIC must be the initiator of more intensive cooperation of all important factors in society in order to reach positive legal and systemic solutions.
Olivér Várhelyi, European Commissioner for Neighbourhood and Enlargement Policy, started his visit to Belgrade at Serbian company Elektromreže Srbije (EMS). Energy security is one of the main topics of Commissioner Várhelyi’s visit and a priority at the European level, especially in light of Russian aggression against Ukraine. During the visit to the EMS, the commissioner and ministers Dubravka Đedović and Tanja Miščević were presented with the current state of implementation of the Trans-Balkan electricity corridor, in the presence of the EU and German ambassadors in Serbia, as well as the Serbian ambassador to the EU. The Trans-Balkan Energy Corridor is an energy project co-financed by the European Union that will ensure greater energy stability and efficiency in Serbia.
The First Marketplace At The Right Time
The crisis that emerged as a consequence of the pandemic brought new perspectives in many areas of business, and e-commerce was certainly no exception. It was thus only natural for online sales to experience a boom during this period, and for that to spawn the first marketplace in Serbia
Our plans extend beyond the mere word ‘ambitious’, but we are also more than ready to realise them. Of course, none of this would even be possible if we didn’t have the backing of one of the largest companies in Serbia: Delta
Holding ~ Ananas’s Marija Popović
The pandemic accelerated the development of e-commerce in Serbia, and did it similarly influence the development of the country’s marketplace? One good thing from the side of e-commerce is that this trend didn’t experience a decline in popularity even after the lifting of pandemic measures. On the contrary, it is continuing to grow. In recognising the population’s growing trust in this form of trade, it was concluded that sufficient space and interest existed on our market for the first, genuine, unique marketplace: Ananas. If we’d launched a year earlier, it would have been too soon; and if we’d started a year later, it would have been too late. Ananas’s development happened at the right time, and the crisis triggered by the pandemic only served as an incentive for us to emerge from it as winners.
Our plans extend beyond the mere word ‘ambitious’, but we are also more than ready to realise them. Of course, none of this would even be possible if we didn’t have the backing of one of the largest companies in Serbia: Delta Holding, which is prepared to turn Ananas, as a company, into the Amazon of the Balkan region.
With the launching of Ananas, Delta Holding signalled the creation of a regional giant of online commerce. How much time and money is required to achieve that goal?
Ananas isn’t just yet another in a long line of online shopping sites, as we’re developing an entire ecosystem that comprises various different operational areas. In addition to the marketplace, there are also logistics, retail, “adtech” and “fintech”. Online sales are just the end product, what we see as customers, while Ananas has its own logistics alongside that. Packages are collected in three ways: from parcel delivery lockers at NIS filling stations; from “Paket Zone” locations (at cafés and shops with which we cooperate); through delivery to the customer’s address.
Ananas has its own internal IT team and retail section, in order for every customer to be able, when clicking on ananas.rs, to quickly and easily check out all available products; in order for us to be able to implement promotional events and apply discount sales within deadlines of just a few hours; in order for every order marked “A direkt” on the platform to reach the customer in less than 24 hours; in order for us to be able to enable each of our partners to quickly list their products on the platform, as well as offering storage and handling services and marketing support.
You’ve already entered North Macedonia. What’s next? Is expansion eased by the CEFTA agreement and existing legal regulations? Ananas is currently the largest regional project. Also testifying to this is the fact that, by October 2022, we’d already taken the first step in that process with the acquisitions of North Macedonian websites PaoPao and Grouper. Our regional expansion isn’t stopping there. Expansion to at least two more neighbouring markets is already planned for 2023. Considering that our goal is to be present in the countries of the Balkans, a major obstacle to the expansion of e-commerce across the region is represented by customs and administrative procedures. They impede and prevent cross-border movement of goods intended for consumers between countries in the region, and in our view the solution is in the implementation of the CEFTA agreement, or the Open Balkan initiative in the domain of the free movement of goods.
Science For Safer Agriculture
Certis Belchim is a branch of the Japanese company Mitsui & Co. Ltd, a subsidiary of Mitsui AgriScience International SA/NV. Four joint R&D companies – Nippon Soda, ISK Biosciences, Kumiai and Mitsui Chemicals Agriculture – enable Certis Belchim a stronger market position
We work hard to make our products safer, through the so-called biorational solutions and we want science to be in service of production - says Mr. Vasojević and explains to our magazine why he feels honoured and privileged, both as a manager and as a graduate engineer in agriculture in the field of crop protection
You are in the process of establishing a new company that will become a new force in crop protection, built on strong foundations and with great opportunities for conquering new markets. How far along are you in this process?
Certis Belchim combines the strengths of two prominent crop protection companies, offering a richer product portfolio and additional resources to provide the highest level of technical support and customer service. Synergy and integration are underway according to planned dynamics. The new company will certainly strengthen the company’s position in biorational, environmentally friendly products, meeting the requirements of sustainable agricultural production.
Certis Belchim is a branch of the Japanese company Mitsui & Co. Ltd, a subsidiary of Mitsui AgriScience International SA/ NV. Association with four large Japanese companies for research and development - Nippon Soda, ISK Biosciences, Kumiai and Mitsui Chemicals Agriculture, enables Certis Belchim to further develop sustainable solutions in crop protection and give it a stronger market position. These companies bring innovative, exciting new solutions for crop protection both globally and in our region - Serbia, Montenegro, North Macedonia and Albania.
You do business all over the world and you know that there are no universal solutions for all markets. Crop protection is a dynamic area of agriculture that requires a holistic approach, quick adjustment and flexibility?
In 2022, together with our Japanese and European partners, we also presented several new products to our market that will soon become the standard in crop protection. We invest in the development of new products through testing that we conduct, both in Serbia and around the world. The concept of ecologically sustainable and professional crop protection is based on the functional integration of conventional (traditional) and ecologically acceptable agriculture, with applicable biorational solutions in crop protection.
From the very beginning, our company understood the necessity of conducting testing and the enormous importance of knowledge as the result of testing products in real time. As the company developed, so did the importance of the permanent testing station. We are one of the few companies that can boast of having state-of-the-art testing and research stations in Belgium (Londerzeel) and France (Fronton).
How much are we in Serbia ready to follow world trends and accept those technologies that can make us a part of the world competition for achieving high yields?
In our country there are already serious professional producers and companies that are already playing that game. They have already reached the top with excellent yields and product quality. We see our role as a company to share and connect as much as possible, and to do everything in our power to help make things much better for the producers who need to make progress. This is the only way we can get better average yields. We see that as a huge challenge.
Team Deserves The Credit For Good Results
German company Gruner first began operating in Serbia way back in 2007, as a small enterprise based in a rented production hall. It recently opened its fourth production plant in the town of Vlasotince, thereby earning its place among the ranks of the most substantial businesses and most important employers in southern Serbia
Serbia is a country of good, diligent and professional people who want to work, learn more and advance. Those are the key reasons for our involvement and investment in the Republic of Serbia to date - reveals Gruner Serbia
Manager Vladica Stanković, speaking in this interview for CorD Magazine.
You recently expanded the company’s production capacity from 7,000 to 11,500 square metres. Have you also announced the hiring of new workers?
As you know, we’ve been present on the market of the Republic of Serbia for 15 years, and during that time we’ve succeeded in expanding our capacities from production that implied assembly to the independent production of plastic parts and metal parts, and equipping our tool shop. All of our parts, both plastic and metal, are built into our products.
We will use part of the newly opened plant for the production of plastic parts, while the other part is reserved for the tool shop – for the maintenance and production of tools. This project has lasted since 2019, and we’ve so far hired 200 new employees, so the number of workers now exceeds 750, which – together with all Gruner subsidiary companies – comprises 60 per cent of the total workforce. We are a small family company and that’s also how we conduct ourselves. We do everything to ensure our employees feel like they are part of the Gruner family, as part of the team, because the most important thing for achieving good results is teamwork.
We are satisfied with the way we’re concluding this year, because we all exerted a lot of effort and determination.
Gruner’s management proudly highlights the great importance of this investment to the company. Does this mean that the decision to invest 23.7 million euros in Serbia since 2007 proved to be the right move? What makes Serbia so special?
This is an extremely important investment and a strategically important move for the company, as we will produce a major part of our semi-finished products and small parts for final products, relays and actuators, here in Serbia. All investments to date, and there have been four of them, were the right move of our owners – Eduard, Wolfgang, Patrick and Martin Spreitzer. Despite Gruner being a family company, all business decisions are brought in agreement with our local management team.
Apart from good and diligent people, here the owners also discovered great potential in political stability, and in the active participation of state institutions in the implementation of these kinds of projects. This relates primarily to recognising the importance of projects, and subsequently providing tangible support and monitoring implementation. It is vital for this trend to continue and for us all, with the help of institutions, to create an even better business climate for new investments.
Although you’ve really invested a lot in production technology, you consider people as being the key to your success. Is that linked to dual education?
Our partnership with the Technical School from Vlasotince, and the dual education project that was launched in 2016, contributed a lot to to our results. A total of 54 students have so far passed through our production facilities and training process, 25 of whom gained permanent employment. We have no intention of stopping and are already working on the inclusion of new profiles that are essential to our operations. For example, we this year enrolled a generation of CNC operators who are very important for our tool shop.
Relations between the school, the municipality and the relevant ministries are at a very high level, and I feel a need to thank everyone who worked with us to start the introduction of dual education and who still participates in it today. I hope that the dual education project will soon also be implemented in institutions of higher education.
Gorda Is Emotion Preserved In A Bottle
A true avalanche has started in Serbia in the context of rakia production. The number of registered distilleries is constantly growing. Among the first, in this new sense, was Gorda, now a fully established rakia and nearly a synonym for this business activity.
In addition to plans to increase manufacturing in the family distillery, our interlocutor shares with us his hope that Serbia will one day, with state support, be branded as a country of topshelf fruit rakia. The potential is immense and beneficial in many ways, since our fruit rakias are a Serbian national brand, authentic and strong, but a lot of work is needed to make it globally recognisable. How, why, and with what specific objective was Gorda created? During the nineteen-nineties Veljko Škorić, my uncle, boldly and decisively laid the foundations of a different approach to rakia. After his death, my sisters established the Veljko i sinovi company and invited me to work together to preserve our heritage for all those coming of age and in memory of those no longer with us. I am happy that Gorda today remains his, and that we have used these wings to continue dreaming and developing our portfolio. For us, Gorda is not a rakia, it is an emotion preserved in a bottle. Our label shows an image of a woman called Gorda from the village Velereč on the slopes of mount Rudnik where, many years later, our distillery was created. For us, Gorda is love, heritage and our tradition. My uncle believed that it is possible to make top-quality slivovitz in Serbia, and that its price should correspond to the price of the finest French cognac. My desire, stemming from his vision, is to make Gorda a globally recognised brand, and to make Serbia the home of the highest quality fruit rakias.
In the increasingly diverse rakia market, it is very difficult to be special, different, and recognisable. What is the secret to your uniqueness? Is it the region, the manufacturing process, the quality of raw materials? We comply with and meet all standards we have set for ourselves. Throughout the years we have perfected the manufacturing process in each of its segments, from raw materials to aging. The fact is that everything you listed is an integral part of the authentic mark of every product made in our cellar. The quality of fruit is an extremely important part of the manufacturing process, with part of our team dedicated to this one segment only.
The microlocale gives a specific note to every fruit rakia made. The processes of fermentation, distillation and aging, as integral parts of manufacturing, take the essence and boon of the fruit, giving the rakia its unique organoleptic mark, while our master blender provides the final creative touch through the coupage of such distillates.
During these winter months people gather with increased intensity, due to various family celebrations and collective holidays. Is there a better gift than a bottle of rakia of the highest quality? We know that a bottle of Serbian rakia connects families and friends worldwide. Wishing to present our products in an even better way, we have recently also redesigned the packaging. We present our buyers with Gorda in a new dress, just as we will also hopefully surprise them with the novelties from our cellar.
A very real phenomenon in our market lately is that some foreign distillates, such as top-shelf whiskeys and cognacs, now see more than strong competition from rakia. How did this occur? Our top-shelf rakias battle the finest ones from around the world on the local market. The development of the segment of fruit rakias during the past decade is an unexpected opportunity to compete in the grand slam of strong alcoholic beverages. One does not miss such an opportunity. This chance was mainly built through quality, and as such may place us on the global map in a different, more serious way. Of course, there is a lot of work before us.
We have learned from the experiences of foreign alcoholic beverages and had the opportunity to see a lot about methods to communicate top-shelf products. Serbia has had and has a top-shelf product, but it does not have the budgets of large corporations for marketing and sales. Despite the fact that those that stand behind us, the producers, are small enterprises, Serbian rakia has found its path.
Since you have touched on the subject, tell us whether and to what extent does the state help make Serbian rakia a globally recognisable brand? Certain steps forward can be seen during the past several years. An association of rakia producers has been established at the national level, and the Chamber of Commerce has also become involved through its initiatives. Giving wind to our sails, a month ago Serbian slivovitz was placed on the UNESCO List of Intangible Cultural Heritage. We believe the state will be more than open for well-elaborated
proposals the moment it recognises its strategic interest in this.
Where I see room for additional cooperation is in a strategy to brand Serbia as a country of fruit rakia of the highest quality. The potential is immense and beneficial in many ways for all of us. Our fruit rakias are a Serbian national brand, authentic and strong, but a lot of work is needed to make it globally recognisable. I also see room in the additional regulation and control of the local market with the aim of eliminating the unregulated sale of rakias. We estimate the grey zone is five to seven times greater than the measurable sale of fruit rakias. We also see a serious risk for consumers in the sale of such rakias of uncontrolled quality.
We need greater support in promoting rakia. Data from last year is showing an export of around EUR 12 million. I believe that with appropriate cooperation and a different approach, in 10 years our exports could reach EUR 100 million. This certainly cannot be an individual task, but a well-designed strategy that should be supported by all of us. If France could do it with cognac, Mexico with tequila and mescal, Italy with grappa, Scotland and, lately, Japan with whiskey, why couldn’t Serbia do it with rakia? All the preconditions are there.
Gorda rakias are already being exported to a large number of countries, and they are winning awards nationally and worldwide. How proud are you of this? The many awards we have won during the past decade are important as confirmation of being on the right track. We are happy to break out of the borders of the local market in every sense.
At this point it is questionable whether Gorda is a small family company, but it is certainly not a large corporation. Accordingly, what are the next steps in all areas? We have placed most of our focus on increasing our raw materials base, as we are planning to make our sales abroad exceed local sales within five years. All our company strategies are set in this direction, with our agronomists and technologists representing our major cornerstones. Passion moves us on the wings of experience, but reason and dedicated work open new markets. We are aware that this is an enormous challenge, but our company can dream, because only by dreaming can we create and write a different tradition for Serbia.
WORLD NEWS
“Business opportunities are like buses. There’s always another one coming” ~ RICHARD BRANSON, VIRGIN GROUP FOUNDER
JAPAN’S TAKEDA TO ACQUIRE U.S. DRUG START-UP FOR $ 4 BILLION
Japan’s Takeda Pharmaceutical Co. said in a statement that it would acquire a wholly owned subsidiary of U.S. pharmaceutical startup Nimbus Therapeutics LLC for 4 billion dollars. Under the deal, to be completed by the end of March 2023, Takeda will buy the entire stake in the subsidiary, Nimbus Lakshmi Inc., which is developing a drug for psoriasis, a skin disease that causes flaky patches. Takeda will pay an additional 1 billion dollars if the subsidiary’s annual sales exceed 4 billion dollars and a further 1 billion if the sales exceed 5 billion dollars. Takeda said it would disclose the impact of the acquisition on its earnings as necessary. The final clinical trial for the drug is expected to begin in 2023. The substance is also considered effective against other immune-mediated diseases.
BOEING ENDS PRODUCTION OF 747 JUMBO JET
U.S. aeroplane manufacturer Boeing will cease production of its 747 jumbo jets in 2022, the company announced on Wednesday, retiring the iconic passenger aircraft after over 50 years of service amid a coronavirus-induced crisis in the aviation industry. The first aeroplane to be dubbed a “jumbo jet,” the plane with the signature hump could accommodate over 600 people. The 747 made its maiden voyage in 1969. Such large planes have become increasingly unprofitable for airlines struggling with the high cost of jet fuel when smaller jets can provide greater flexibility with lower overhead.
ALGERIA OFFICIALLY APPLIES TO JOIN BRICS
Algeria has submitted an official application to join the BRICS group of major developing economies. Leyla Zeruki, the special envoy of the Ministry of Foreign Affairs for international partnerships, told the Algerian state radio, Al-Shouruk portal reported. Algerian President Abdelmadjid Teboun recently announced that the country is interested in joining the BRICS group of Brazil, Russia, India, China and South Africa, stating that the country essentially meets the criteria for membership. The BRICS alliance, which already encompasses more than 40 per cent of the world’s population, is expected to consider joining countries including Saudi Arabia, Turkey, Egypt, Iran and Afghanistan.
BELGIAN CENTRAL BANK IN LOSS FOR THE FIRST TIME SINCE WORLD WAR II
The Central Bank of Belgium (BNB) predicts that it will have a negative capital position by 2027, meaning that its liabilities will exceed the value of its assets. Also, the BNB stated in a statement that it expects to end this financial year with a loss in the range of 600 to 800 million euros, which is the first such loss since World War II. As a solution, the bank will have to use its financial reserves of 7.08 billion euros, with the fact that they are less than the expected losses until the end of the financial year 2027, which could exceed 9 billion euros.
Leading The Way
Our starting plan for each year is to be better than we were in the previous year, and 2023 is no exception - says Planetsoft Belgrade Director Ivan Topličić, speaking in this CorD Magazine interview
The man at the helm of Planetsoft Belgrade graduated from the University of Belgrade Faculty of Traffic and Transport Engineering before launching his career in business at Delta Holding back in 2008. He joined the Planetsoft team in May 2015, taking on the role of company general manager at the start of 2017. This period has seen Planetsoft rise to the level of regional recognition and partner up with global industry leaders.
How would you evaluate the business results of Planetsoft Belgrade in 2022 and what would you single out as the most significant activities?
In short, as expected. I would say that 2022 was a successful year, despite the challenges we faced. We started the year with the COVID-19 pandemic still underway and witnessed the war in Europe, which disrupted and changed all areas of our business and had a huge impact on the market. However, we still managed to achieve our goals and implement our plans and ideas. Planetsoft saw healthy growth in its business volume and new hirings, while new portfolio items are on the way. The highlights of 2022 include: the expansion of our team to include some talented individuals who share our vision, such as Antović Bojan, our newly appointed sales director; the implementation of a new organisational structure designed to support our future growth. We have adopted a “network” structure with a governing body as the ultimate decision-making entity; the opening of our new company branch in Vienna. Overall, we are pleased with our achievements in 2022 and looking forward to continuing to grow and succeed in the years ahead.
Planetsoft Group has opened its own office in Vienna. How important is expansion to the markets of European Union countries?
It’s crucial for us to enter more competitive markets such as the one offered by the EU. I am not talking about financial gains here; this is important to us in terms of confirmation of our values and the transfer of knowledge. We are ready to compete in the big game in order to learn and improve our skills, knowledge and products, so that we can become an organisation able to lead the way for others to follow.
What are Planetsoft’s plans for 2023?
Our starting plan for each year is to be better than we were in the previous year, and 2023 is no exception. I believe that 2023 will bring some surprises and challenges to our industry, as a result of the events that happened in 2022, but we are not afraid or doubtful about it. We have a bit of healthy paranoia about what could go wrong in 2023, but we are ready and experienced enough to adapt to any changes in any circumstance. Our vision is clearer than ever, and we will continue our path in developing products and services for our customers.
Planetsoft is an IT company that provides an opportunity for young people to practise and cooperate with colleges. How important is this type of support?
Yes, we have collaborations with the Faculty of Electrical Engineering, Department of Software Development, the Faculty of Economics, and the Faculty of Traffic and Transport Engineering. The summer months are booked for internships, and most of our employees come from these institutions. This year has also been successful in that area. Investing in new talents is mandatory and no longer a choice. We need to have the ability to direct and shape talented individuals in the desired direction.
