The Investors Guide Belgrade 2008 by CorD Magazine

GUIDE

BELGRADE

THE INVESTITORS GUIDE

December 2008

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BELGRADE

Impressum

CONTENTS

VESNA PERIĆ SIEPA

VERICA KALANOVIĆ Minister for NIP

DRAGAN ĐILAS Mayor of Belgrade Business Centre of SEE

INVESTMENTS Belgrade: Regional Centre

Managing Director Ana Isaković a.isakovic@aim.rs Editor in Chief Tatjana Ostojić t.ostojic@aim.rs Editor Assistant Miroslava Cvejić – Kovačević m.cvejic@aim.rs Art Director Tamara Ivljanin t.ivljanin@aim.rs Design Assistant Tatjana Radojičić Editorial contributors Marica Vuković, Zorica Mihajlović, Novo Tomić, Smiljana Vidić, Danijela Jovanović, Vida Bratun, Mark R. Pullen, Sanja Gavrić, Gordana Petrović, Maja Avakumović, V. Spasić, Zorica Paunović, Jelena Vukić, S. Ćurić, Živko Baljkas, Gordana Bulajić Proof reader Mark R. Pullen Photo Marko Rupena, Časlav Vukojičić i Stanislav Milojković Translators Snežana Bjelotomić Sales Executive Marija Urošević, m.urosevic@aim.rs, Marija Savić, m.savic@aim.rs Editorial Manager Tanja Banković t.bankovic@aim.rs Subscription Maja Reljić, m.reljic@aim.rs General Manager Ivan Novčić i.novcic@aim.rs Financial Director Ana Besedić a.besendic@aim.rs Printing ROTOGRAFIKA, Segedinski put 72, Subotica The Invesrors Guide Belgrade 2009 is published by: alliance international media Kneginje Zorke 11b, 11000 Beograd, Serbia Phone:+(381 11) 308 99 77, 308 99 88 Fascimile: +(381 11) 244 81 27 E-mail: office@cma.rs www.cma.rs ISSN no: 1451-7833 All rights reserved alliance international media 2008

SLAVOLJUB VUKIĆEVIĆ the State Secretary in the Ministry of Infrastructure

MIROSLAV ČUČKOVIĆ Member of the City Council

This issue is audited by

ABC Serbia

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WE CREATE

ATMOSPHERE Messer Tehnogas is the leading producer of industrial and medical gases in Serbia. The company has two air separation facilities, as well as facilities for the production of hydrogen, carbon-dioxide, nitrogen suboxide and several nitrogen generators, in addition to facilities for the production of acetylene and filling stations for technical and medical gases. Messer Tehnogas also has over 70 retail facilities, its own engineering department, assembly and service teams, as well as an extensive fleet of tanker cars and lorries, which makes it possible for the company to provide logistical support to its clients, 24-hours-aday, 365-days-a-year. Messer Tehnogas A.D. is a daughter company of Messer Group GmbH, which is headquartered in Germany and is the leading global producer of industrial and medical gases. The Group has over 9,000 employees, a billion euros of annual revenue and more than 100 years of experience on the gas market. During the last 11 years of doing business in Serbia, Messer Tehnogas has become a modern European company. Messer has at its disposal 300 of its own technologies for gas application in areas such as water purification, freezing and storing food, fish ponds, fizzy drinks production, still liquids packaging, greenhouses,

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waste water treatments, as well as in the application of oxygen, nitrogen suboxide and other gases in medicine, metallurgy, cutting and welding, petrochemical and chemical industry, recycling of dangerous waste materials, etc. It is worth mentioning that Messer is the only company on this market which, in addition to other relevant standards, has GMP for medical gases – oxygen and nitrogen suboxide. The demand for these gases in neighbouring countries is the result of the quality that the company offers. Messer Tehnogas continues to expand its exisiting activities: it is opening up new markets, modernising its production and distribution capacities and investing in new projects. One of the biggest investments made in Serbia in 2006 was Messer Tehnogas’s investment worth €44 million. The company invested this money in a new air separation facility in Smederevo that produces oxygen, nitrogen and argon mostly for client company U.S. Steel Serbia. Messer Tehnogas is doing its utmost to maintain its position as the market and technology leader, as well as to maintain and improve the quality of its products at very competitive prices while strengthening its position with the company’s buyers and growing together with them. www.messer.rs

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CONTENTS 48 MILAN VUKOVIĆ Belgrade Secretary for Urban Planning and Construction Affairs

52 NENAD MILENKOVIĆ President of New Belgrade Municipality

54 INFRASTRUCTURE Bypass in Two Years

56 INDUSTRIAL ZONES Targeted by Investors

58 REGISTRATIONS One-Stop-Shop

60 URBAN PLANNING Easier Construction Permits

63 EDUCATION

ECONOMICS Crisis Reduces Investments

BOBAN KOVAČEVIĆ Director of Parking Services Interest in Car parks

Poor Educational Structure

64 COMMERCIAL REAL ESTATE Foreign Investors Leading

68 RESIDENTAL CONSTRUCTION Valuable Real Estate

70 IT SECTOR Growth Despite Crisis

72 DRAGAN VUČIČEVIĆ Director of the Sava Centre

74 TOURISM More Hotels Needed

76 RETAIL Belgrade – a Mecca for Shopping Malls

INVESTMENTS Invest in Belgrade

GUSTAVO NAVARRO Country Manager of Holcim (Srbija) d.o.o.

79 BANKS Banking Metropolis

80 SPORT Ready for the Universiade

84 SPORT FC Red Star & FC Partizan: Privatisation Stars

86 SPORT Belgrade’s Race through History

90 CULTURE Hidden Treasures

92 JASNA DIMITRIJEVIĆ Director of the Tourist Organisation of Belgrade, TOB

96 NEW YEAR FESTIVITIES

PRIVATISATION Tough Road to Right Owner

ANĐELKO TRPKOVIĆ Director of the Belgrade Fair Best in the Western Balkans

Bregović Takes Belgrade into 2009

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comment

Past and future combined

Vesna Perić Director of the Serbian Investment and Export Promotion Agency (SIEPA)

n attractive geographic location, economic potential, infrastructure, workforce, quality of life and opportunity for the further development of the city were the crucial criteria that won Belgrade the title of the ’South European City of the Future’. Over the last few years, our capital city has become an appealing destination for foreign tourists and investors. More and more people are talking and asking about Belgrade and its versatile offer. The interest shown by the foreign media towards Belgrade is greater than ever. - Well-known foreign companies who chose to open their head offices in Belgrade are most responsible for such growing popularity. City authorities aim to make the business start-up process easier and to contribute to a better business climate. The city is developing at a fast rate, and the people who live here play a role that is as important as those who financially invest in it. The citizens of Belgrade contribute to the success of international companies they work for through their experience and, when night falls, they are the ones who create the city’s unique atmosphere in many restaurants and bars. A city’s quality of life influences an investor’s decision to invest in a city as much as do its economic factors. Foreign investors are interested in projects in all sectors, but mostly in the service sector, hotels and real estate. Investors are not only drawn in because of a good connection to the rest of Europe via a network of regional and main roads, the airport, and two navigable rivers, but also because of the possibilities that a city is on its way to becoming the economic, political and cultural centre of the region. Still, we should not delude ourselves that Belgrade is guaranteed the title of regional centre, since other towns are developing too. Problems persist and there is a lot of work ahead of us. Above all, we should reconstruct the existing infrastructure and develop it further. All who live in the capital city eagerly await the completion of promised projects, whether the Belgrade bypass or a bridge across the Sava River. We should also continue working on improving Belgrade’s image in the world. SIEPA actively assists our participation in leading business and tourist fairs abroad in order to promote the economic and cultural potential of our capital. Belgrade has a fine history, but its future depends on us and on our ability as a society to establish long-term plans and to invest the necessary efforts to make them happen.

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INTERVIEW

Dragan Đilas, Mayor of Belgrade

BUSINESS

CENTRE OF SEE “Investment conditions in Belgrade are the most favourable in this part of Europe – the corporate profit tax is only 10 per cent and the benefits for reinvesting and creating new jobs are outstanding” By Tatjana OSTOJIĆ

or our Investors Guide to Belgrade, we speak to the newly appointed Mayor of Belgrade, Dragan Đilas, about the City Assembly’s investments aimed at improving infrastructure and creating a business environment that will attract more foreign investors. Bearing in mind that Belgrade has been declared the ‘City of the Future of Southern Europe’, what will the City Assembly do to preserve or advance this status? We are going to do our utmost to promote the advantages that led to this significant acknowledgment. One of these advantages is certainly a favourable geographical position, but we also have plans for a new capital project with the goal of additionally advancing the transport infrastructure. Constructing Corridor 10 rail and road routes and the Belgrade bypass will significantly improve connections between Europe and the Middle East via Belgrade. Building the two bridges across the Sava and Danube rivers, constructing an inner transport semi-ring and completely replacing the tram infrastructure will speed up traffic through the city. Aside from that, we are going to build the Makiš II waterworks, which will resolve the problem with water supply. The city will continue investing in new infrastructure, as well as revitalising old facilities and, thus, creating appropriate conditions for potential investors. At the same time, we are going to work on raising the level of utility standards and the humanisation of everyday living. As one of the greenest capital cities in this part of Europe, Belgrade will continue to take care of its parks, forests and other green areas, while special care will also be dedicated to the Belgrade Fortress, a renowned monument in our cultural heritage, as well as Ada Ciganlija, which is a precious venue for recreation and relaxation not far from the city centre. How competitive is Belgrade in relation to other cities in the region in terms of attracting foreign investors? Investment conditions in Belgrade are the most favourable in this part of Europe – the corporate profit tax is only 10 per cent

As one of the greenest capital cities in this part of Europe, Belgrade will continue to take care of its parks, forests and other green areas, while special care will also be dedicated to the Belgrade Fortress, a renowned monument in our cultural heritage, as well as Ada Ciganlija and the beneﬁts for reinvesting and creating new jobs are outstanding. Furthermore, we offer tax incentives, such as loans for investing in ﬁxed assets in amounts of up to 80 per cent of the sum invested; we provide ten-year tax exemption for investments

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over seven million Euros; the procedure for company registration has been simpliﬁed and the city administration is now more efﬁcient than ever before. Belgrade has a very well educated workforce that is quick to learn, multilingual (the percentage of people who speak English is the highest in Central and Eastern Europe) and is knowledgeable when it comes to computer technology. Some 8,000 students graduate from the Belgrade University each year, with a third of them becoming engineers. With an official population of 1.5 million inhabitants, Belgrade is one of the biggest cities in Southeast Europe. In addition to national markets, export orientated companies can export to the markets of South Eastern Europe, Russia, the EU and the U.S., which have a combined total of over a billion consumers. Belgrade is a city where many large production companies have found their place – Microsoft, Coca-Cola, Ball Packaging Europe,

jobs, taxes and contributions, which in turn bring money to the city budget, thus making new investments in infrastructure possible. We are definitely going to continue investing in infrastructure. The remarks of investors probably concern the poorly-developed transport infrastructure, which will be one of our priorities next year. With the new bypass, the first section of which was recently completed, new bridges and extended roads, investors will find it much easier to do their business here and reduce costs, while our fellow citizens will have a more comfortable life in the city. Investors also object to the time-consuming process of acquiring various permits, from those needed for setting up a

Investing in infrastructure can be illustrated via a very simple cycle – infrastructure brings fresh investments, which in turn bring new jobs, taxes and contributions, which in turn bring money to the city budget, thus making new investments in infrastructure possible. We are definitely going to continue investing in infrastructure Metro Cash & Carry, Banca Intesa, Peugeot and many others. Belgrade needs to become the regional distribution retail centre for the Western Balkans, in order to increase the influx of foreign capital. Is the global financial crisis going to affect the Belgrade economy and citizens and, if so, to what extent? The wave of the global ﬁnancial crisis will certainly come here. The year ahead of us will probably be more difﬁcult than this one, since the crisis is going to engulf other countries too. However, if we exert additional efforts we could make our country more attractive for foreign investments. Serbia is one of the few countries to have enjoyed a high economic growth rate in the last few years. The question is whether we are going to be able to continue at this pace. Bearing in mind conditions that other economies have found themselves in, four per cent growth could be considered satisfactory. The Government of Serbia will have to preserve macro-economic stability by exercising a rigid monetary and fiscal policy. One of the safety guarantees that Serbia can provide is high foreign currency reserves, which are three times higher than the volume of local currency reserves. Investors often complain about poor infrastructure in the city. How much time will Belgrade need to construct appropriate infrastructure that will satisfy the needs of existing and future investors? Investors always want conditions to be as good as possible, not only when they are coming to this market but later too. A lot of money has been invested in infrastructure in the last few years, although the public didn’t quite understand when it comes to this issue. Investing in infrastructure can be illustrated via a very simple cycle – infrastructure brings fresh investments, which in turn bring new

company to building permits. How much has the Belgrade City Government done so far to shorten the period for obtaining permits? What is the average time spent waiting for a permit to be issued? The Business Registry Agency is in charge of registering companies. As far as I know, the whole procedure lasts no longer than 18 days, according to data from the World Bank, which is much shorter than the European average. The process of registering a typical limited liability company in Belgrade lasts 18 days. It is carried out in ten phases and costs very little. The Government has announced a comprehensive reform of legislation and the abolishing of redundant laws, acts and regulations [the Regulatory Guillotine]. We estimate that at least a third of laws in Serbia are redundant. In 18 months, which is how long the reform will last, bureaucracy will be eliminated and administration costs drastically reduced. In this way we are going to improve the business climate in the country. December 2008 The Investors Guide Belgrade 9

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INTERVIEW

Verica Kalanović, Minister for the National Investment Plan (NIP)

NATIONAL PROJECTS ARE THE PRIORITY „The Belgrade bypass project is a key project of transEuropean Corridor 10 and is of essential importance for solving the problem of traffic jams in our capital city.“ By Miroslava CVEJIĆ - KOVAČEVIĆ

he projects concerning construction of the Belgrade bypass and Pančevo bridge are just some of the reasons why we wanted to talk to the Minister for National Investment Plan, Verica Kalanović. The minister told us how much the latest global economic crisis and the restrictive state budget for 2009 will affect the projects implemented by this ministry.

In which way will the global economic crisis affect implementation of the projects within the National Investment Plan? We are already feeling the global crisis in the sense that the Government is forced to make next year’s budget much more restrictive than last year’s. However, these budget restrictions should not jeopardize the country’s development or stop the implementation of large national and regional projects. By implementing these projects we are going to create conditions for the arrival of foreign investors and increase the employment rate in the country. The money budgeted for the National Investment Plan is going to be quite reduced. The budget has not been ﬁnalised yet, but according to the latest information, we are going to receive more than half of the funds than last year. This means that when selecting the projects proposed by the ministries and local self-governments for next year we are going to choose those that are the priority of priorities, so to

speak. On the one hand, I am quite satisﬁed with the fact that we are going to be able to implement signiﬁcant projects like the construction of Corridor 10, while, on the other, I am sorry to see many quality projects like the Svračkovo acummulation or construction of housing for refugees not being implemented this year. What large projects in Belgrade are forseen by the National Investment Plan? The projects that are being implemented or will be implemented in the territory of Belgrade are projects of regional or national importance. The Belgrade bypass project is a key project of trans-European

The National Investment Plan’s strategy rests on two main pillars – infrastructure and human resources Corridor 10 and is of essential importance for solving the problem of traffic jams in our capital city. Sector 4 of this bypass has been opened for traffic recently. In the following period, sections 5 and 6 are also going to be finished, and they connect Orlovača to Bubanj potok. Next year, a detailed plan will be drafted covering the conclusion of the Prokop railway intersec-

tion. This investment has been estimated to be worth 35 million euros, but the exact amount will be known once a cost and debt analysis is conducted. Revitalizing Pančevo bridge is also very important, since this bridge connects South East and Central Europe. The work on this bridge is mostly financed by the National Investment Plan with RSD1.6 billion, and the revitalised bridge has to meet all safety and related standards. The next project that NIP will finance will be constructing a bridge near Vinča, in order to round off the Belgrade bypass and eliminate some of the transport that is currently clogging the city centre. Also, we are currently implementing the project of converting the Obrenovac bridge and making it suitable for passenger and freight transport. However, as a reponsible state, we need to take care of balanced regional development. The differences in the development level of the various regions in Serbia are the largest in Europe. This is certainly a limiting factor for FDIs and improving the living standard of our citizens.

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Verica Kalanović, Dragan Đilas and Milutin Mrkonjić at the Bypass How much can the National Investment Plan help in attracting foreign investment? Serbia has a lot of potential, whether we are talking about human resources, natural, production and development capacities, geographic location and the proximity to the European market, as well as a dynamic development of its private sector. As a country, we need to provide appropriate conditions for foreign investors to come and in that way make Serbia more competitive in comparison to other countries in the region. In the last few years, Serbia has noticably improved its investment climate and promoted investment opportunities. However, there is no municipality in Serbia that can independently revitalize its infrastructure and secure all

necessary prerequisites for foreign investments. It is vital for the state to give the initial ’ﬁnancial injection’ when it comes to investing in infrastructure. Hence, the

The National Investment Plan’s strategy rests on two main pillars – infrastructure and human resources Ministry for the National Investment Plan is focused on investments in transport, utility, energy, environmental and many other types of infrastructure. Building the infrastructure is a precondition for developing

NIP AS A PREPARATION FOR EU FUNDS As of last year, Serbia has been able to apply for money from the EU pre-accession funds (IPA) in two segments – assisting transition and building institutions, and cross-border cooperation. Once Serbia is given EU candidate status, we will be able to use funds for regional and rural development, as well as for development of human resources. The experiences of the countries that have used pre-accession funds show that the percentage of funds that have been actually granted varies. NIP is a good exercise for a successful application for pre-accession funds, because it operates in a similar fashion. What you need to do is to submit a good application, then carry out the appropriate procedures during the implementation period and, in the end, achieve the anticipated results. NIP is insisting on results, so the time when projects yielded only political gain is long gone.

the economy, drawing in FDIs, reducing the unemployment rate and improving the living standard of Serbian citizens. At the same time, we have to set priorities among national, regional and local projects. What national and regional projects that are going to be implemented in the following period are considered the priority? Ever since the National Investment Plan was set up, all projects have been receiving the same treatment, regardless of their importance, effect and the number of users. The Ministry for the National Investment Plan has deﬁned a way in which the projects should be managed, so all project applications for the year 2009, some 4,000 of them, will be split into three groups: national, regional and local. National projects, like the construction of Corridor 10, revitalizing railway transport and infrastructure assistance to FIAT, will satsify the needs of most citizens and the country as a whole, and will be given the highest priority. 50 per cent of NIP’s budget will be set aside for these projects. The remaining money will be distributed on regional and local projects that ought to satisfy the needs of a large number of citizens. When selecting which projects to ﬁnance, we are December 2008 The Investors Guide Belgrade 11

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INTERVIEW governed by real needs and priorities, and we are closely cooperatimg with other relevant ministries and local self-governments. Only those national projects that enjoy the support of relevant ministries and which are in line with their strategies will be taken into consideration and subsequently approved for ﬁnancing. The same goes for regional projects. These projects need to be supported by the municipal assemblies and city assemblies in order to be implemented. What is the realistic timeframe for conclusion of these projects? Large national projects, like Corridor 10, should be completed in the next four years, while it will take more time to revitalise the railway. In 2010, NIP will provide money for only those projects that can be technically implemented, and those that don’t fulﬁll this criterion will be given money to write planning documentation and technical and economic feasibility studies. NIP is operating in a similar way as does EU funding – if the money assigned to a certain project is not spent, it will be returned to the budget. The National Investment Plan is no longer run in accordance with this and that wish, but in line with needs and priorities.

Verica Kalanović visits Pančevo Bridge

How much are ministries and local self-governments actually ready to set the priorities and implement projects in a proper manner? The National Investment Plan’s strategy rests on two main pillars – infrastructure and human resources. We are completely aware of just how important it is to invest in human resources and in raising their capacity, whether we are talking about the planning phase, setting up priorities, proposing projects or preparing and implementing them. In the previous period, there were plenty of both good and bad examples in the implementation of projects. Some ministries, municipalities and cities have been implementing projects much faster and better than others. This shows that we still need to work a lot on raising the capacities and knowledge level when preparing and realising projects. One of the strategic aims of the Ministry is to provide help to local self-governments and institutions with writing projects. In this way we are going to be able to use all means at our disposal. There is one thing that I would like to point out – in comparison to the period that is behind us, the awareness that people have today about the signiﬁcance of investing and their involvement in it has been raised a lot.

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INVESTMENTS

BELGRADE: REG I Economists say that the capital of Serbia has the most favourable geographical position in the region, as well as a large market and qualified manpower. A special advantage that distinguishes Belgrade is the fact that knowledge of the English language is at a higher level than in other cities in the region

By Smiljana VIDIĆ Photo Stanislav MILOJKOVIĆ

large market is the main asset of Belgrade when it comes to attracting foreign investors. The Serbian capital owes much to its attractive geographical location, good quality and educated workforce and low corporate profit tax. Ironically, foreigners see an advantage in the fact that the capital of Serbia is still not subjected to EU regulations and offers lower business costs. Although Belgrade is not lagging behind any of the capital cities of Southeast Europe, extensive bureaucracy and corruption are the main obstacles to opening the market and attracting foreign capital. The Belgrade Chamber of Commerce (PKB) claims that Belgrade is a metropolis in expansion. Zorica Obradović, Secretary of the PKB’s Economic Policy Centre, says that foreigners are primarily interested in

acquiring the market and when it comes to that Belgrade is unparallel in the region. “Foreigners are interested in the security and stability of their investments. If it weren’t for the problems of waiting too long to obtain various licenses and combating the grey economy, Belgrade would attract far more foreign investors,” she insists. Economic expert Goran Nikolić says that the Serbian capital has the most favourable geographical position, a large market and

qualified manpower. A special advantage that distinguishes Belgrade, he claims, is the fact that knowledge of the English language is at a higher level than in other cities of the region. “Belgrade has a central position in Southeast Europe which may be of interest to investors, because from here they can quickly reach other parts of the region. Belgrade has good infrastructural connections: highway, airport and rail routes, and we should not forget the two rivers which

AUSTRIAN ADVANCES Zorica Obradović, Secretary of the Belgrade Chamber of Commerce’s Economic Policy Centre, says that since 2000 between six and seven billion Euros have been invested in Belgrade. According to her, more than four-fifths of foreign direct investments in Belgrade have come from EU countries. “With regard to the origin of foreign capital in Belgrade, it mostly comes from Austria, Greece, Germany, Norway, the Netherlands, Slovenia, and Italy. The most important investments, according to the number of realised projects, were made by Telenor, Philip Morris, Banca Intesa, Kolinska and Coca-Cola. Foreigners in Belgrade are interested in financial services, brokerage, real estate, telecommunications, sectors which bring a quick return on investments, while the interest for production is slight,” concludes Obradović.

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IONAL CENTRE can be used to transport goods in an easy and relatively cheap manner. This is something that Bucharest and Sofia don’t have,” says Nikolić.

CAPITAL ADVANTAGES According to Nikolić, it makes sense that capital cities are also the largest markets in each country, but Belgrade’s advantage is the fact that it borders the wealthiest part of Serbia, Vojvodina, which is an extended market for investors to sell their products. “The great advantage of Belgrade lies in the fact that it was the capital city of the former Yugoslavia and after the breakup of the country Belgrade maintained the connections with the former parts of the country. Many foreign investors have chosen Belgrade for the head office of their company, because they find it easy to run their business operations in the whole region from there,” says Nikolić. The geographical position of Belgrade is a factor that economic expert Milan Kovačević also views as an advantage. He says that today’s Belgrade has returned to the old glory days when the city was an important intersection for air, road and rail transport in Southeast Europe. “When we are talking about the advan-

tages of Belgrade, I would like to point out the language, which attracts more investors from countries that have Slavic roots, who invest here rather than in, let’s say, Bucharest. The main drawback is that Belgrade still has no consensus on accession to the EU. If it weren’t for this problem, I am sure that we would have been quite far ahead of Bucharest and Sofia, which gained a lot on their competitiveness simply by joining the EU,” says Kovačević. Kovačević says that despite the fact that Serbia is not part of the EU, the economic parameters do not differ greatly from neighbouring cities that are in the Union. “Belgrade still has an advantage in relation to the capital cities of Romania and Bulgaria and I won’t even go into how much Belgrade is ahead of the capitals of the former Yugoslav republics,” Kovačević concludes. Economic expert from the Centre for Free Market, Aleksandar Stevanović, believes that Belgrade is not losing much as a result of the fact that Serbia is not an EU member. On the contrary, “Belgrade can offer something that the Union cannot, or is not allowed to. EU membership alone does not necessarily make you competitive. Belgrade is, as we all agree, more popular than Sofia and Bucharest, even though they are

Milan Kovačević capitals of countries that are part of the Union. Reducing levels of corruption and making significant infrastructural investments would mean more to the Serbian capital city than joining the EU,” concludes Stevanović. PKB official Obradović stresses that not being an EU member does bring certain advantages to Serbia. As an example, she cites the fact that the entire textile industry moved from the EU countries to the U.S. where the December 2008 The Investors Guide Belgrade 15

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INVESTMENTS

Goran Nikolić workforce and production are cheaper. According to her, the advantage of Belgrade is the fact that Serbia has signed a free trade agreement with the CEFTA countries (Albania, Montenegro, Bosnia & Herzegovina, Moldova, Macedonia and Croatia).

CEFTA AGREEMENT “Serbia is part of CEFTA and is the only country that has a duty free agreement with Russia, so foreign investors can export to Russia via the Serbian market, which makes them ten to twenty per cent more competitive to start with. Belgrade doesn’t have the regulations and directives that other European cities need to adhere to, which is where foreign investors should see their chance. They find it cheaper to organise production here, because they don’t have to meet standards relating to salaries, environmental norms and the like,” explains the Centre for Free Market official. The Serbian capital, according to Aleksandar Stevanović, has advantages in relation to neighbouring capitals. However, he disagrees with political statements claiming that Belgrade is a regional leader. “Belgrade has

great human resources, a good ge-ographical position and is much better than the small capital cities in the neighbouring countries, because it has a large market. But it is certainly not the leading capital city,” Stevanović says. He says that the first problems encountered by investors who want to build in Belgrade are posed by local authorities, who are quite hostile towards them. “The procedures are complex, construction land is expensive and corruption is high,” concludes Stevanovic. “Truth be told, you have the same level of corruption in Sofia and Bucharest. There, as well as here, you can’t finish anything in one place and in order to obtain even the simplest of permits you must bribe a certain number of people. Another problem is that the commercial courts practically do not function and if you want to sue and see any justice done you need to set aside a ‘century’ to do that,” our interlocutor points out.

CHEAP AND SKILLED LABOUR The main quality of the Serbian capital lies in the qualified and relatively cheap workforce and this is Belgrade’s advantage in relation to other capitals in the region, Stevanović says. “When it comes to a skilled labour force, you cannot compare Belgrade to Sarajevo, Skopje, Tirana, Sofia and Bucharest! Only in Belgrade do you have top managers and highly educated professionals who are willing to work for €1,000 or €1,500 a month,” Stevanović says. Regarding infrastructure, Belgrade offers more or less the same conditions to foreign investors as the aforementioned cities, but the city is lagging behind Budapest. On the other hand, the capital of Serbia has a low profit tax – only Podgorica and Banja Luka have lower profit tax rates, but even they are only lower by one per cent, which doesn’t mean that investors will run to Montenegro or Republika Srpska. Vesna Perić, Director of the Serbian Investment and Export Promotion Agency (SIEPA), points out that the biggest Greenfield investments in Southeast Europe have been implemented in the terri-

GATE TO THE EAST; DOOR TO THE WEST Belgrade is the capital of the Republic of Serbia. It rises over the Sava and Danube rivers and occupies a central position in Southeast Europe, which provides the city with a unique position in the European surroundings. Two navigable international rivers, an international airport, Pan-European corridors 10 and 7, links to the main rail routes and four railway stations make Belgrade the main communications and logistics intersection in the region. Linking Europe and the East for centuries, Belgrade sums up the different cultures and civilizations and has long been considered ‘the gate to the East and the door to the West’. More recently, the city was given a prospective status when the Financial Times declared Belgrade ‘the city of the future in South East Europe’.

tory of Belgrade, which “confirms that Belgrade is attractive for foreign investors.” She says that despite Belgrade having the highest price per square metre of office space in the region, demand for it is far greater than in any other city in the Balkans.

BELGRADE OR ZAGREB Belgrade has always been ‘racing’ Zagreb and you can often hear a debate about which of the two cities is the leader in the Balkans. Economists agree that Belgrade has more economic potential than Zagreb, a higher number of inhabitants, a more convenient geographical position and a better airport, but the political stability so far has been more in favour of Zagreb. And it is this criterion that contributes the most to having prestige in the region. During the socialist period Belgrade had great economic advantages over the capital cities of Bulgaria and Romania, but these countries are today members of the European Union and are becoming increasingly popular with investors. During this year alone, €3.5 billion was invested in Sofia. The biggest investor country is Austria, followed by Germany, Greece and Italy. Most money has been invested in the construction industry. As the Mayor of the Bulgarian capital, Bojko Borisov, recently said with pride, the unemployment rate in Sofia is below one per cent. In contrast, Belgrade’s unemployment rate stands at 15.22 per cent. When it comes to attracting foreign investors, Budapest is lagging behind all of the cities of the region because the Hungarian capital joined the foreign investment bandwagon last. Significant investments of around five billion Euros per year only came to Romania in 2004. Frequent worker strikes reduce Bucharest’s attractiveness, despite Romania’s full membership in the EU and NATO. Other advantages of the capital city of neighbouring Romania are exactly those that apply to Belgrade – a highly skilled, productive and cheap workforce. The capital of Albania has just begun to open up to foreign investors. Experts expect investments to be made in Tirana this year, mainly in the energy sector, as well as natural resources and tourism. The construction of hydro and thermal power plants, as well as the privatisation of state electricity, oil and insurance companies are expected – thus providing an opportunity for foreign companies wishing to invest in Tirana. When considering Belgrade, economists unanimously agree that repressing the grey economy and investing in infrastructure would turn the city into a centre of the region.

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INTERVIEW

Prof. Slavoljub Vukićević, Ph.D. the State Secretary in the Ministry of Infrastructure

CORRIDOR 10 DEVELOPMENT CHANCE

„Whenever crisis strikes, the world gets rid of something that it can live without, but infrastructure projects are something that we just can’t live without“ By Miroslava CVEJIĆ-KOVAČEVIĆ Photo Marko RUPENA

he Ministry of Infrastructure is currently applying for several projects with the National Council for Infrastructure, which has Serbian President, Boris Tadić at its helm. Thanks to the understanding that the President has shown for these projects, they have been granted the status of first class national importance. These are projects concerning Corridor 10, which pertains to construction of the railway and road infrastructure, as well as Corridor 7, the water corridor, which encompasses the Danube River and all navigable waterways in Serbia: the rivers Sava, Danube, Tisa, and the hydrosystem Danube-Tisa-Danube, says State Secretary for the Ministry of Infrastructure, prof. Slavoljub Vukićević, Ph.D. in a interview for ’The Investors Guide – Belgrade’. What other projects are considered important by the Ministry? Most of them complement the previously mentioned projects and are of prime importance for Belgrade. We especially mean the Belgrade bypass, and the first section is already finished thanks to the enthusiasm that the Minister of Infrastructure, Milutin Mrkonjić brought to it. The project, which had been dormant for many years, was finished in a very short period of time. Most of 18 Belgrade The Investors Guide December 2008

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the section, 7.5 kilometres of it, is already being used. Our citizens can already feel the benefits of the finalised Belgrade by pass section. Transit traffic through Belgrade has been reduced by about 15 to 20 per cent , and positive signs can be seen regarding environment and pollution. Completion of the project improves ecological performance a great deal, as new projects require. When we consider infrastructure, the central project, or shall we say, the number one national infrastructure project, is definitely Corridor 10. The corridor is a part of a panEuropean route which is defined by relevant legal acts and is of European importance. These acts include the European Agreement on the Main International Railway Lines, the Agreement on European Railways for Combined Transport Lines, the Agreement

be put in place with the assistance of European financial institutions. The question is how the current financial tendencies in the world will be reflected in it. We think that the interest shown by Europe for this project is great, so I don’t think that it would be impossible to find the necessary financial means. The length of Corridor 10 in terms of railway infrastructure is 769 kilometres, and it includes the following railway lines – Belgrade-Šid, Belgrade-Subotica, BelgradeNiš, Niš-Preševo and Niš-Dimitrovgrad, as well as Belgrade’s railway node which is a part of the corridor and which will cost 4.69 billion euros to build. Of course, this is huge money and it is a well-known fact that such grandiose projects could never be financed by national economies alone. We need to include the stakeholders whose interests

countries should be interested in the most. There is a special group of countries that has been formed by the International Union of Railways’ (UIC) High Speed Directorate with the aim of promoting high-speed rail in South East Europe, as well as to ascertain priority railway routes, deﬁne joint parametres, strategy and the dynamics of high-speeds. Every railway in Serbia was constructed with the help of foreign money. Even the railways that were built at the end of the 19th century were built through a concession. When it comes to constructing the Horgoš-Belgrade-Požega motorway we want to keep this concession going, with certain conditions amended. We are going to resolve certain problematic issues that currently exist among the concessionaires by the end of this month. I don’t know whether

The available data shows that constructing Corridor 10 is a development chance because quite a lot of companies and workers are involved in it on the Fast Track and Railway Network, the Agreement on Pan-European Priority Transport Corridors, and the Agreement on the High Performance Network in South East Europe. All of these acts closely deﬁne the legal and technical aspects of Corridor 10. We are lucky that the Republic of Serbia is practically in the middle of the European transport routes and we should make use of our favourable geo-economic position in order to intensify work on this corridor. This is what the National Council for Infrastructure has been doing so far, in addition to insisting on certain projects being completed as soon as possible so that Corridor X may be implemented with the appropriate ﬁnancial assistance of the relevant European institutions. The Belgrade – Novi Sad route is a part of the Horgoš-Subotica-Novi Sad- Belgrade-Požega motorway and this section of the road will be included in the concession. Bearing in mind the global financial crisis, do you think that your Ministry will have enough money to finalize the projects which implementation has already begun? The money that will be used to build Corridor 10 will partly come from the budget. This is an investment which will

Branko’s Bridge will be realized through constructing such projects, and this is the whole of Europe, so to speak. The European Union is very interested in building a railway network through Serbia, especially because the commercial speed of trains in Europe is at least 130 kilometres an hour, while the minimal projected speed ranges from 160 to 200 kilometres an hour, give or take 20 kilometres. This is something that the groups of south-east

ENERGOPROJEKT ENGAGED IN PROKOP The Serbian company Energoprojekt is carrying out works on building a transport bedplate, in accordance with earlier concluded contracts. Foreign investors also want to participate in building this facility, and they are especially interested in its commercial potential. We have been contacted by Chinese and Israeli companies, as well as Russian and German ones.

the concession contract with Austrian Alpina will be terminated or changed and then concluded on new grounds, but one thing is sure – all unresolved issues about the concession are going to be settled by December 31st, 2008, which is the deadline by which the concessionaire has to submit appropriate bank guarantees. Because of the conditions of the global financial crisis, we are perfectly aware that it is difficult to get a bank guaranteee, but this is a risk that such a job brings. Other projects that are implemented by the National Council for Infrastructure are so significant that regardless of the global economic crisis, they are definitely going to find somebody to finance them. There are quite a few countries that are involved in these projects. Of course, the conditions under which all of that takes place are somewhat worse than what they used to be, but in my opinion the financing will be secured. I have talked to colleagues from the Ministry December 2008 The Investors Guide Belgrade 19

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INTERVIEW is in charge of securing financial means, while the Ministry of Infrastructure is in charge of providing the design. Our engineering companies are already working on it, and I primarily mean CIP (Institute of Transportation). The projects will be finished on time, in order for the construction work to begin next spring. Building the station in Prokop is a huge development opportunity for Belgrade, because the city will get a magnificant station that will be built in accordance with global standards. Also, this is will alleviate the problems in the Sava Amphitheatre which is located in the city centre and which, according to some plans that have already been written or are currently being written, will be one of the most attractive locations / retail centres in this part of Europe. A chance to get on board with the construction of this shopping centre will be offered to potential investors via a tender. What is the most important for us is for the traffic from the old Belgrade railway station to be relocated to Prokop. This will lead to higher quality railway traffic and related services. Also, commuting will be more comfortable for passengers and consumers of railway services, on the one hand, and, on the other, we are going to offer an opportunity to interested companies to take part in a tender for construction of one of the most attractive business premises.

of Economy and I can see that they have already established contacts with the international ﬁnancial institutions. Could Corridor 10 be viewed as a chance for our country to get out of the economic crisis? The available data shows that constructing the Corridor 10 is a development chance because quite a lot of companies and workers will be involved in it. In order to implement a 100-million-euro investment in railway track systems, we are going to need 2,000 people and we expect that out of the 4 billion euros spent on building the railway infrastructure, 2 billion will remain in Serbia. On the other hand, by constructing the railway section of Corridor 10, the transit of passenger and freight vehicles will be reduced, and there are around 1,200 freight vehicles that pass through Serbia on a daily basis. If only 5% of those vehicles used combined transport, that would be 65 vehicles or four trains a day. So, the projects pertaining to corridors 7 and 10 are projects that will revive the economy, both national and international. If we take this into consideration, then we

Corridor 10 will be partially financed from the state budget. This is an investment which will be put in place with the assistance of European financial institutions can safely say that the projects will be implemented within optimum deadlines. By implementing these projects, Serbia will become a huge construction site that will hire tens of thousands of people. This is not just wishful thinking, but the reality. How far along is the Prokop project? Quite a lot of interest has been shown towards this project. By visiting this construction site, Prime Minister, Mirko Cvetković practically made the continuation of work on Prokop ofﬁcial. The Ministry of Economy and Regional Development

How much can your Ministry help in attracting foreign investments? By promoting the projects that are being implemented, the Ministry is relaying a message to the public about just how important these projects really are. Also, the Ministry will make it possible for potential investors to establish contacts with relevant companies in the Republic of Serbia, that is, with public enterprises. The Ministry is open for contact via our PR department, so, we are practically open 24 hours a day for anybody who wants to know in more detail what is being implemented in Serbia when it comes to capital investments and infrastructure facilities. Regarding the railway, I can say that the French are quite interested in investing in certain development projects. However, what we aim to do is to carry out joint venture investments in order for more domestic companies to be hired to implement these projects. Every signiﬁcant contractor or company that comes to our market brings global experience. We would like to see a domestic company included in an investment project, if possible. This is how they can prepare themselves for the future.

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INTERVIEW

Miroslav Čučković, Member of the City Council in charge of investments

LOCATIONS

FOR ALL “The job of the local government is made much easier by incentives provided by the State. These incentives, primarily subsidies for Greenfield investments, are very competitive compared to other countries.” By Miroslava CVEJIĆ-KOVAČEVIĆ Photo Marko RUPENA

ach investor that comes to Belgrade also visits Bucharest and Sofia. They don’t have favourites. As the local government, we have prepared everything that we need,

in an administrative and legal sense, to prepare for investors. They will receive everything they want from us in record time, i.e. not longer than two months to find a location and issue a work or construction licence. For example, it took Jeep Commerce ten months from the moment we started negotiating to the opening of their production facility. The factory was

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opened in Krnjača. It covers four hectares and employs 150 people. The company invested €15 million in the facility, says Miroslav Čučković, member of the City Council in charge of investments. How would you describe the current investment climate in Belgrade? Bearing in mind the current situation and the global ﬁnancial crisis, I would say that the situation in Belgrade is quite good. Only 20 or so days ago one of the best German companies in the rubber industry, Continental, made an investment of €11 million in the city. They also hired 250 workers and will implement an investment programme worth €4 million. This company, by the way, bought Kolubara Univerzal from Veliki Crljani in the Municipality of Lazarevac. Aside from this investment, several German and Austrian automobile companies and textile producers have also arrived. Moreover, we had meetings with Italian companies and I would especially like to mention the Merloni Group, Indesit and Berlota Group. Major investors have expressed interest in investing in renewable and semi-renewable energy - wind turbines, small hydro-electric power plants and gas thermo-power plants – and shopping malls. We’ve also met German company Fili, which is engaged in steel laser cutting. They want to open a Belgrade facility stretching over 100 hectares. What production locations can you offer potential investors? We are offering all sorts of locations. Our job is to offer investors a wide range of locations in accordance with their production activity or the industrial branch they belong to. In terms of the electrical or machine industries, let’s say, we offer locations in industrial zones close to the Obrenovac A and Obrenovac B thermo-electric power plants. For fruit and vegetable processing, for example, we offer locations in the Mladenovac and Grocka industrial zones and if we are talking about a cargo centre or similar facility, then we have locations close to the airport in Surčin. Of course, now that this phase of the Belgrade bypass has been completed, new locations have sprung up which are suitable for all sorts of production activities. Also, locations in North Belgrade are quite popular, together with those along the Pančevo and Zrenjanin roads. So, I would say that the current investment climate is good, since we have prepared well and become competitive with the capitals of neighbouring countries. What incentives does the city offer investors to entice them to Belgrade? The job of the local government, our job, is made much easier by incentives provided by the State. These incentives are very competitive compared to other countries. When we say incentives, we primarily mean subsidies for Greenﬁeld investments. Depending on what kind of production facility is going to be opened, the subsidies per employee range from between €2,000 and €10,000, provided that the company employs over 50 people. In the production sector these subsidies range from €2,000 and €5,000. We have managed to group private landowners together, which is important if we have an investor who wants a large portion of land owned by several owners. So, the city authorities have decided to bring both the investors and landowners together and

not meddle in the land prices, thus creating an institutional climate where investors are not hassled. Bank representatives are also present at such meetings, so the landowners can carry out relevant transactions via them. Before we had even begun with the story of industrial zones, an acre of land was sold for only €50. Now an acre of land in more attractive suburban locations can be sold for up to €10,000. What are the most sought after locations currently, aside from the ones you offer? Every investor has a different interest. For example, if you have a company that produces boilers for electrical energy facilities we can offer a location in Grocka, which is three times cheaper. However, this location will not be suitable because the investor would like to be close to the industrial zone near the Obrenovac thermo-electric power plants, as he will save on transport. At the same time, a company that processes apples and makes fruit juices will not ﬁnd Obrenovac suitable, since there are no apples there. He would prefer Grocka. You claim that all of locations you offer investors are attractive?

In the following two years we will extend existing industrial zones and introduce newly formed ones. So, whichever road you take to come to Belgrade there will be contemporary production facilities everywhere you look, just like in major European cities Investors come to us, tell us what they do and then the City Assembly informs them what parts of the city would be suitable for them and where they can ﬁnd unoccupied land. As soon as we ﬁnish our conversation with them, we give them a car and take them to the location so they can see for themselves what it looks like. This is why we are so competitive in comparison to our neighbours. We have locations for any type of industry at our disposal. Of course, these need to be clean industries and new technologies, since we have zero tolerance for so-called ‘dirty’ industries. In the following two years we will extend existing industrial zones and introduce newly formed ones. So, whichever road you take to come to Belgrade there will be contemporary production facilities everywhere you look, just like in major European cities. Can you tell us where these newly-formed zones are situated? They are situated along the bypass, Corridor 10, in the municipalities of Mladenovac and Grocka and near the Obrenovac B thermo-electric power plant. In the Municipality of Surčin alone we have 3,500 hectares of land available for industrial zones. If we add to that other locations, we have a total of 5,000 hectares. We should also mention locations in Sopot and Čukarica. December 2008 The Investors Guide Belgrade 23

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INTERVIEW What does Belgrade need to do to become even more attractive to investors? This is where we co-operate with and seek support from the State. The first thing we need to take care of is infrastructure. We need to finalise construction of the Belgrade bypass, the bridge near Vinča and the bridge over Ada. We also need to start putting together the relevant documentation for the Borča – Zemun Bridge that will connect the industrial zones of Krnjača and Borča with Corridor 10. Bearing in mind that the City of Belgrade has new Articles of Association, we are going to try to shorten administrative procedures within the entire territory of Belgrade. So, the process of transforming a land plot into construction land administered by the city will be shortened. We also plan to shorten the time needed to obtain building permits and other relevant urban planning documents. What deadlines are we talking about here? Up to 60 days. This is something that we are adamant about. The state has already announced that it will categorise facilities so that if there is a firm like the aforementioned German company, Fili, which plans to build a factory on 100 hectares of land, on the one side, and an ordinary citizen looking to build a barn, on the other, then you need to sepa-

We are definitely going to support recycling and waste management. I would like to use the example of Austria – a country that has no rubbish tips whatsoever. We are striving to eliminate them in Belgrade too rate these two cases. The person who wanted to build a barn would get a permit in one day or maybe an afternoon. Of course, we are going to upgrade the relevant software in our Urban Planning Secretariat and Institute for Urban Planning, thus ensuring that investors will be given an opportunity to see the land plots on the Internet too. Following the big investment made by FIAT, there has been heightened interest shown by car and car parts manufacturers for investing in Belgrade, in addition to telecommunication companies and companies that are engaged in so-called green or renewable energy resources. Then we have hyper-markets that we find particularly interesting, since we think that they will raise competitiveness in the sector that will lead to lower prices for shoppers. Which companies are planning to invest in Belgrade?

WORLD STUDENT GAMES Bearing in mind the funds we have at our disposal, the Universiade will be perfectly organised. Some 8,500 young students from abroad are going to participate in these Games. When they go back to their countries and finish their studies, they might end up as senior state or company officials. They need to have a good opinion of Belgrade, hence the money invested in the Universiade will return to us in the future.

Spar and IKEA, in addition to Metro Cash & Carry, which is already present here. Berlota Group wants six million square metres to build a shopping mall. They are interested in Zemun polje and a location along the Obrenovac Road, as well as some locations in the Municipality of Čukarica. IKEA has announced that they are negotiating with the Serbian Government about building a production facility and retail centre in Belgrade. They have been offered locations in Zemun Polje, Bubanj Potok and elsewhere. What about other construction activities? We have some announcements that the Greek company Lambda plans to build flats (covering an area of 60,000m2), a five-star hotel and a business centre (30,000m2 each) on the site of the former Beko factory near Kalemegdan. What benefits are granted to investors who decide to build here? We are going to introduce a range of so-called Brownfield locations. These are abandoned factories, hangars and halls that we will offer at a very competitive price to investors, so they can reconstruct these facilities to suit their needs. Will these benefits be sufficient for Belgrade to develop even further, bearing in mind the economic crisis? We are thinking of new benefits, but I would like to keep this a secret since we are battling our competitor cities in

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neighbouring countries. We are thinking of giving investors land free of charge in exchange for them building the infrastructure that land is lacking. In the case of Surčin, we need to be build a sewage system that costs €4 million. We are also contemplating giving certain land plots in Surčin to investors who will build sewage works there. How can Belgrade maintain its status as the ‘City of the Future of South East Europe’? Foreign investors say that having a high quality, relatively cheap workforce is especially important for Serbia and Belgrade. In order to maintain the status of ‘City of the Future of South East Europe’ we need to remain attractive when it comes to the quality of our workforce. In that respect, we are going to invest, whether directly or indirectly, in know-how. We are going to revitalise schools, universities and kindergartens. Also, we will provide scholarships for the most talented students from the Young Talents Foundation. Our citizens are the most important resource in Serbia and Belgrade. We should not forget health too, since foreign investors are providing money for health checks which will indirectly have a positive inﬂuence on the overall health of Belgrade’s citizens. Also of great im-

In order to maintain the status of ‘City of the Future of South East Europe’ we need to remain attractive when it comes to the quality of our workforce. In that respect, we are going to invest, whether directly or indirectly, in know-how

There are some plans, but nothing concrete has been done as yet so I wouldn’t like to talk about it much. We have been visited by certain companies. What countries do they come from? Mostly from Italy, though there are some Austrians too. These are the countries that have a lot of experience in this sector. Constructing an electrical energy plant that will use household waste as fuel is profitable both for the city and its 1.5 million inhabitants. Since we have all necessary conditions at our disposal, we will try to find an investor that is willing to build a recycling facility. This is not something that should be subsidised, since it is a very good and profitable job. Are the Belgrade authorities interested in supporting any other branches of industry? Let’s say that we would like to give our support to renewable energy sources. We have heard from a German company from Freiburg, which calls itself ’the global sunshine centre’. They want to build several solar panel factories here, while company Glompa Berlotta is interested in building a small hydro-electric power plant on the Topčider River. We know that the city has been providing agricultural subsidies. Are you still doing so? We will grant favourable loans to small agricultural estates in border municipalities with rural territory. As a city, we would like to help old arts and crafts shops and the opening of greengrocers, especially in the municipalities of Savski Venac, Stari Grad and Vračar.

portance to maintaining one’s image is the flawless organisation of global events, whether we are talking about sporting events or cultural gatherings. How will the global financial crisis hit Belgrade? Should we brace ourselves for a drop in investments in 2009? We’re optimistic because global companies will now start looking for a location in the East, where they can run their businesses for far less money than in the West. Nevertheless, it is important for the city to do everything in its power to help major investors, who are willing to invest in infrastructure, by eliminating any obstacles that might prevent them from investing here. The City Assembly has already introduced some timesaving measures and we are going to try to make them even stricter. I am confident that we are going to strike a balance between public sector productivity – particularly among public enterprises – and the realistic financial situation in Belgrade. Does the city have any plan about which branch of industry it will support and advance the most? We are definitely going to support recycling and waste management. I would like to use the example of Austria – a country that has no garbage dumps whatsoever. We are striving to eliminate them in Belgrade too. Are there any plans to build recycling centres? December 2008 The Investors Guide Belgrade 25

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ECONOMICS

CRISIS REDU

INVESTME N “It is necessary to secure enough foreign currency to cover the current account deficit, but we also need to invest some money because the Serbian economy is yearning for investments” - Goran Nikolić, economic expert; “What is going to follow is the dawn of a new age of competition between governments and countries” - Siniša Krneta, Belgrade Stock Exchange By Danijela JOVANOVIĆ

e are no longer wondering whether a country is going to feel the consequences of the global financial crisis, but rather how hard national economies are going to be hit by the crisis. While developed countries are slowly entering recession, Serbia is definitely going to a face slowdown in economic growth. Cash is becoming an extremely expensive commodity, loans are becoming less accessible and investments even more desired. “The recession has already engulfed Es-

tonia and Lithuania, while the slowdown is noticeable in almost all the countries of the region,” says economist Goran Nikolić, an expert associate of the Serbian Chamber of Commerce’s Centre for Scientific and Research Activities. In Ukraine, the credit risk (CDS – Credit Default Swop) grew from 400 basic points at the beginning of 2008 to its current level of 1,900 points, which is one of the worst credit ratings in the world. Credit risk in Hungary grew from 100 to 500 basic points. Still, bank assets make only 90% of the GDP in Central Europe, which is quite low in comparison to West Europe (250%),

so it seems that these countries have not been overly exposed to the crisis. According to Nikolić, the main challenge here is external financing, as estimates show that there will be a sharp drop in the influx of private capital to the region in 2009. “In Serbia, CDS is 550 points, while Serbia’s bonds concerning its debt to the London Club, on which we pay an interest rate of 6.75%, are sold at 75 per cent of their value on the Luxembourg Stock Exchange with a 9.3% yield. At the beginning of this year, this was six per cent,” Nikolić adds. The economies of Southeast Europe, just like many other new or transitional economies, are isolated – partly due to the weak development of their financial markets. To add insult to injury, these economies have been exposed to the debacle over subprime loans, felt by advanced economies, because they have less sophisticated markets. Still, these economies cannot avoid the consequences of the global economic slowdown, more expensive loans and a reduced appetite for risk taking.

TRANSITIONAL PROBLEMS Foreign direct investments (FDI) have been covering a good share of the current account deficit. In Latvia, for example, FDI was close to 26% of the national GDP in the third quarter of 2007. Additionally, governments and central banks in transitional countries will not be able to launch strong programmes of financial support, as has been done by their Western counterparts. Several banks have already gone bankrupt; stock exchanges have suffered huge damages and CDS (the costs of insuring public debt in case of bankruptcy) has grown strongly: in Hungary it is 418 basic points (BP), in Serbia it stands at around 500 BP, Bulgaria 417 BP, the Czech Republic 22 BP, Romania 483 BP, Ukraine 1.944 BP, Russia 733 BP, Estonia 433 BP, Latvia 662 BP, Lithuania 428 BP and Slovakia 108 BP. Ac-

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UCES

E NTS cording to relevant estimates, the current account deficit in 2008 is also quite high: in Hungary it stands at 5.5% of GDP, in Serbia 18%, Bulgaria 24.4%, the Czech Republic 2.2%, Romania 13%, Ukraine 7.2%, Russia 6.5%, Estonia 11%, Latvia 15%, Lithuania 15%, Slovakia 5.1%, Poland 5.1%, and Belarus 6%. The European Commission warns that the EU’s GDP will stagnate next year and that state finances will be under tremendous pressure. A gradual recovery is expected to start in late 2009.

WHAT ABOUT SERBIA? The Government of Serbia has adopted a set of measures aimed at boosting confidence in the country’s financial system (increasing state guarantees on savings deposits ranging between €3,000 to €50,000, abolishing taxes on savings and capital gains tax, to mention just a few measures). Serbia’s central bank, the National Bank of Serbia (NBS), has cancelled banks’ required reserves on loans that they extend

IMF EXPECTATIONS Due to the upheaval on the global financial market, Serbia has reached an agreement with the IMF about a standby arrangement in order to protect the national economy and financial market. The IMF delegation, which spent three weeks in Belgrade in October and November, said that Serbia’s 2009 budget, which is being prepared in unfavourable conditions due to the global financial crisis, would have a deficit of RSD50 billion. As the IMF says in a press release, Serbia will still struggle with its exports, since the crisis is already noticeable in the metal processing industry. The IMF delegation also gave its view on the way in which the situation has been developing in Serbia and estimates that next year’s economic growth will be 3.5% and inflation rate 8%.

abroad, thus stimulating the influx of capital. Additionally, NBS decided to convert 10 per cent of the required foreign currency reserves into Dinars, thus releasing close to €350 million, which made the Dinar stronger for a few days. The central bank has also increased the reference interest rate by 2 per cent to 17.75%. “The U.S. crisis, which spilled over to the EU, has brought negative consequences for our country too. Due to a large foreign trade deficit, we are now among the most vulnerable countries of Eastern Europe,” says Goran Nikolić. Following reduced liquidity at a global level, Serbia could be hit by a weaker capital influx, which would lead to a reduced number of cross-border loans and FDI that could, in turn, negatively affect the value of the Dinar and cause a drop in foreign currency reserves. A likely credit rating decline will raise the risk premium on foreign loans and, by so doing, reduce their influx. Serbia could also be hit a by a slowdown in global demand for goods that bring the country a comparative advantage: prices of basic metals and food are dropping and these products comprise two-fifths of our total exports. However, the lower price of energy products will compensate for the loss generated by lower food and metal prices. A favourable factor is that our banks do not have any mortgage securities, nor are they shareholders in bankrupted financial institutions. As a result of more expensive financing from abroad, the price of domestic loans will go up – since more expensive financing sources will affect interest rates on the Serbian market.

IMPACT ON INVESTMENTS The crisis will lead to lower investments, because there will be less free capital available. According to Nikolić, the fact that Serbia is still undergoing the privatisation process is a good thing as it ensures that the country will have some revenue that

ESTIMATES According to estimates, the influx of private capital and loans to transitional countries, including Turkey, will drop markedly from $322 billion in 2008 to an unbelievable $262 billion in 2009. Bank loans are also going to be reduced, from $155 billion to $74 billion in 2009. “Although FDI could go up slightly, to around $90 billion in 2009, this will not be sufficient. Portfolio investments are relatively small - $8.5 billion this year,” Nikolić says. According to the EBRD, growth in South Eastern Europe will be reduced from 7.3% in 2008 to 4.5% in 2009, due to the reduced influx of foreign capital. can be used to finance the trade deficit. According to UNCTAD’s ‘World Investment Prospects 2008 – 2010’ study, investment plans by global companies have been reduced by 10 per cent compared to last year. Even companies that were heavy on investing will invest less than planned. “Portfolio investments were much lower in 2008. For example, in the first eight months portfolio investments amounted to $99.8 million, which – coupled with the psychological factor – led to a sharp drop in shares and indices on the Belgrade Stock Exchange. Since the beginning of this year, i.e. in the first ten months of 2008, Belex 15 dropped by 71.5%, while Belexline fell by 63.4%,” explains Nikolić. He adds that successful companies have been suffering unjustifiable losses in trading with shares that they have been trading with for years on the stock exchange and which are now depreciated. Domestic investors are fearful. The crisis has had a negative psychological impact on them, while professional foreign investors have real problems on large markets and have consequently shifted their focus away from small and underdeveloped markets like Serbia. December 2008 The Investors Guide Belgrade 27

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ECONOMICS Business Operations Director of the Belgrade Stock Exchange, Siniša Krneta, says that it is quite obvious that the global financial crisis, which has now turned into a global economic crisis, will not spare anybody. “Belgrade and Serbia will certainly be no exceptions. It is primarily up to national governments to cushion the negative affects of this crisis, considering that Belgrade and Serbia are not immune to such global trends,” Krneta points out.

INVESTING IN BELGRADE “Everybody who has invested in Belgrade, as well as those who are preparing to invest, has much reduced investment potential at their disposal. Even those who haven’t been affected much by the global economic crisis are more careful when it comes to new investments. Such prudence is proportional to the general risk associated with doing business within individual national frameworks. And Serbia is not high on that list,” Krneta explains. He thinks that in conditions of a globally reduced investment level, it will take great effort and creativity to create an attractive investment environment. “We are quite late in doing that, so it will be all the more difficult to create such an environment, bearing in mind that this is a universal task for all governments in the world,” Krneta warns. According to him, a new age is starting – the age of competition between governments and countries. “We have a government and a country that desperately need investments and new deals. In addition to qualifying for the football world cup, we are going to qualify for the most attractive

Siniša Krneta Belgrade Stock Exchange

The Government of Serbia has adopted a set of measures aimed at boosting confidence in the country’s financial system (increasing state guarantees on savings deposits ranging between €3,000 to €50,000, abolishing taxes on savings and capital gains tax, to mention just a few measures) investment environment championship, since, regardless of how deep and strong the crisis is, investors should continue to invest if they want to be called investors in the future,” Krneta concludes.

STRONG GROWTH Deputy Chairman of Erste Bank’s Executive Board, Slavko Carić, says that in Ser-

DINKIĆ’S STATE INCENTIVES Serbia plans to provide subsidies for FDI until the end of 2010 – Serbian Economy & Regional Development Minister, Mlađan Dinkić, announced. However, experts are divided on whether Serbia should even stimulate FDI or not. “In theory we shouldn’t, but practice shows that this functions well in a system where everybody else is offering incentives. All countries that have recorded significant industrial growth have been providing various subsidies for FDI,” Dinkić says. According to the minister and deputy PM, if Serbia hadn’t offered greater incentives than Romania there would be no investment by FIAT. Dinkić reminds that the system of incentives and subsidies was introduced in Serbia back in 2006 and that the results have been good, since the first significant Greenfield investments have already started coming to Serbia with 60 per cent of them being made in the production sector. He added that incentives and subsidies were not the only things that drew investors in, adding that a good business environment, stable banking system and a stable, risk-free state were also important. Dinkić expects that the biggest Greenfield investments are going to be made in the car industry in the following period, while IKEA and American Citibank are also expected to come. The value of foreign direct investments made in Serbia since 2001 is estimated to be around $17 billion, with $5 billion made in the banking system, $2.6 billion worth of investments in the production sector, close to $2.4 in telecommunications, $1.7 billion in retail, while the real estate sector has received $1.6 billion worth of investments. The biggest investors are Austria (with $2.5 billion) and Greece ($2 billion).

bia and the region of Central and Eastern Europe corrections on the international financial markets have been mostly amortised. “The region of Central and Eastern Europe is one of the fastest growing regions on the continent,” Carić says. Erste Group analysts estimate that growth in the region, despite the new circumstances, will be strong – at a level of 4.3% in 2009, albeit lower than that of 2008 (5.4%). This growth rate is much higher than estimated growth in the Euro zone, which is expected to be in the region of 0.5% next year. Carić notes that Serbia is still importing more and exporting less, which means that the country has a high foreign trade deficit and is dependent on the influx of foreign capital.

OPPORTUNITIES “We have big chances, provided that we create conditions to become the most attractive regional country when it comes to investing, which, in turn, would lead to some of the capital in a developed country spilling over into our country, in search for a safe haven,” Carić says. According to him, this should include subsidies and other stimulating factors, such as tax reliefs. Then we should introduce measures that would contribute to our companies becoming more open and construction licences being much easier to obtain. We need to take

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ECONOMY AND CITIZENS “In terms of the crisis’s impact on the economy, the most important thing is for company directors and owners to be prepared for the crisis which, according to some estimates, will be in full swing in the first half of 2009,” Slavko Carić says. According to him, these preparations entail reducing unnecessary costs and undertaking more intensive activities to increase production and business efficiency. Siniša Krneta recalls that Serbia mostly exports to EU countries. “These are countries that are in recession, realistically speaking. If we add to this our export structure, then we can easily conclude that our economy will have problems in maintaining the level of cross-border sales. This does create a problem, since people who are considered domestic consumers are also employees in these companies. Since the companies will have less, so will the consumers. This is a new problem. The countries that will be able to break the vicious cycle will be those capable of drawing in new investments that will result in competitive products and services that will find their way to the buyers. Judging by everything we see, this will not be easy at all,” Krneta concludes. some other steps in order to come out of the group of countries called ‘developing’ and join the group of countries with a clear EU perspective. Carić points out that establishing the partnership with FIAT is a good example of that. “If, for example, IKEA came to Serbia and if this company would not only invest capital and hire people, but insist on 50% of the products sold in its stores being of Serbian origin, that would be a huge step forward on the road,” Carić says.

PESSIMISTIC AND OPTIMISTIC Serbian Chamber of Commerce expert Nikolić points out that if the worst case scenario happens then a reduced FDI influx could jeopardise the financing of current account deficits in many regional countries. This would lead to reduced foreign currency reserves and stressful devaluation. Still, due to a relatively low level of indebtedness, the economies of these countries will be exposed to less risk than those in the West. The foreign currency reserves in the region are more than sufficient to cover the short-term foreign trade debt. Central banks in the region have taken steps against excessive borrowing abroad by making the monetary condi-

tions much stricter and, thus, preventing their economies from over heating. Interest rates have already been raised, leading to slower economic growth but also keeping inflation under control. The foreign currency reserves of Serbia and other regional countries, as well as the reserves in commercial banks, have not suffered losses due to the global crisis. Current account deficits in regional countries will go up, but indebtedness and foreign liquidity indicators will be mostly stable. Commercial banks began to adapt to the new global situation on time and they are increasingly turning to financing from domestic deposits, bearing in mind that financing from central banks is expensive.

ECONOMIC CONSEQUENCES “There is no savings crisis, but there is definitely a crisis in the economy,” says Nikolić, adding that the current account deficit is also ‘in the red’. “We have been spending more than we produce for years, but this was balanced out by taking loans. Now the loans that economy will be able to take out will be significantly lower. These cross-border loans have been financing domestic spending to a large extent, both investment and current spending. Domestic banks cannot substitute this from deposits,” Nikolić says, adding that the Ministry of Finance and NBS need to invite banks based in Serbia to show their plans for 2009, in order for them to see how high

Slavko Carić, Erste Bank stable source of financing and it is highly likely that the Ministry of Finance has already anticipated this. The repayment of loans granted by the World Bank has already been reprogrammed, while certain funds have already been taken for constructing infrastructure. The question that remains is how Serbia can improve the national economy. Sooner or later, the state will need to provide money to be invested in the economy.

Serbia could also be hit a by a slowdown in global demand for goods that would bring the country a comparative advantage: prices of basic metals and food are dropping and these products comprise two-fifths of our total exports their placements are going to be, how many loans they can take abroad and how high their budgets are, in order for us to get a clear picture of incoming and outgoing finances. If the influx of capital is reduced, this applies to everybody – companies will not be privatised that easily and we can see that happening already. The Government has introduced a new privatisation measure whereby a company needs to pay 30 per cent up front and the remainder in five instalments. The key issue here is that we need to secure foreign currency to cover the current account deficit, but we also need to invest some money because the Serbian economy is yearning for investments. At this moment, it is crucial to secure a

“This doesn’t need to be budgetary funding. The central bank can lend money to commercial banks,” Nikolić says, outlining that a higher inflation rate, which could appear as a by-product, is a lesser problem in this case. All central banks are ’pumping out’ huge amounts of money, so the inflation rate in Germany and the U.S. is virtually nonexistent. In this context, the monetary policy can become more relaxed and certain measures can be applied to ensure the liquidity that has been missing. Still, the impact on the financial system and foreign currency exchange rate can be pretty strong. It is quite possible that the Dinar exchange rate will continue to depreciate next year too. December 2008 The Investors Guide Belgrade 29

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INTERVIEW

Boban Kovačević, Director of Parking Services

INTEREST IN

CAR PARKS Together with the Secretariat for Community Housing and public enterprise Ada Ciganlija, we are working on the development of a first class marina in Belgrade

By Vida BRATUN Photo Časlav VUKOJIČIĆ

peaking in an interview for the Investors Guide to Belgrade, Director of Parking Services, Boban Kovačević, announced that Belgrade will get 12 new underground garages downtown in the following period. He believes that this will resolve the major problem of parking in the Serbian capital. Foreign investors have expressed interest in the construction of the underground garages, says Kovačević, and they will be given a chance to participate in this project.

You are the director of one of the few successful public utility companies in Belgrade. What is your recipe for success? I’ve been working in Parking Services for the last eight years. Before I was appointed the Director, I was a Deputy Director General and I can freely say that I took part in making Parking Services what it is today. I am a part of something that is good, but I bear responsibility for those things that may not be as they should. Parking Services is managed by a team and I, as the Director General, am only the first among equals. I only make decisions when the team cannot reach an agreement. These are very rare situations, because if it wasn’t so we wouldn’t be a successful company. Responsibility is assumed in any case. Managing a public company is very important, but it is equally important that all employees in Parking Services are included in this joint mission. The key to success, in my opinion, is in

speed. Public enterprises are doomed to be slower than private ones, because there are procedures and legal frameworks that must be adhered to. Yet, on the other side, the citizens are interested in seeing the results of our work quickly. What is the role of Parking Services and how do you contribute to improving the quality of daily life in Belgrade? As a public utility company founded by the city we have to manage the parking resources. These resources are very lim-

Public company Parking Services exists because of the citizens. And we who work in and manage the company want to make Belgrade better than it is ited and the users often assign all the traffic problems to Parking Services, which is only partially true. Whether something is good or not they always point the finger at Parking Services. It seems to me that we came to the point where we are managing existing resources very well. We are in a position to realistically understand the problems in Belgrade and participate in proposing global solutions together with everybody that should be concerned about city traffic.

Have any potential foreign investors expressed an interest in co-operating with your company? Three years ago we were among a group of people who launched an initiative for the then Mayor of Belgrade, Nenad Bogdanović, to form a working group to address the issue of the construction of a large number of underground garages in the city. This is what foreign investors are mostly interested in. The current mayor, Dragan Djilas, has authorised the Directorate for City Construction and Parking Services to implement a plan for Belgrade to gain 12 underground garages in the downtown area in the coming period on the basis of the findings and documentation which was drafted by a working group. There are urban development projects for each location. Pioneering work is ahead of us. The idea is for these 12 sites to be made available through a public offer to all those interested in investing in the construction of underground garages in Belgrade under predefined criteria. Foreign investors are seriously interested in doing this job. Which locations have been earmarked as sites for the construction of the underground garages? A lot has been done already. From some seventy potential sites for the construction of the underground garages, the team of representatives from all city services has narrowed this down to 12 potential locations. The sites are located in Skerlićeva Street, Vračar District, Makedonska and Francuska streets. The most important thing is to ﬁnd a way to do this work so the city, the investors and the citizens are happy with it. Belgrade will get new parking capacities, the investors will get expected earnings, the bank will gladly assist with such a project and the citizens will have somewhere to park.

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What specifically are the foreign investors interested in when it comes to Parking Services; co-operation or privatisation? They are interested only in co-operation, but in the widest sense of the word. Regarding the privatisation, I really saw no indications in that direction. Paying a parking place via a mobile phone has been quite a success. Have you been contacted by other countries and cities keen to introduce a similar concept of charging for a parking place? Before introducing this option, our management team thoroughly researched every option in this segment available in Europe and the rest of the world. It seems that we did a good job. We found the correct measure for Belgrade, taking into account its speciﬁcity. Belgrade’s Parking Services is the most well organised company in the ﬁeld of parking, not only in Serbia but in neighbouring countries too. By the nature of things, Parking Services is now perceived as a trendsetter. Aside from Belgrade, charging for parking places now exists in Novi Sad, Subotica, Niš, Inđija, Šabac, Kikinda, Požarevac, etc. Interest has been shown by neighbouring

Before introducing this option, our management team thoroughly researched every option in this segment available in Europe and the rest of the world. It seems that we did a good job countries and we have established branch contacts with all the countries of the former Yugoslavia. This billing system already exists in Zagreb and in most Croatian towns. We have been given an opportunity to carry out complete traffic studies related to parking that can serve as a basis for setting up these and similar systems. We have already done that for several towns in Serbia and there are contacts with partners from Russia, Italy, Macedonia and elsewhere. We are currently holding talks which will likely give rise to successful co-operation. Can you earn decent money from this concept? The concept is definitely something that regulates the situation with parking. So, the first and primary benefit is regulating the traffic and, of course, customer satisfaction. And one of the benefits is the money.

What are the company’s future plans? Public company Parking Services exists because of the citizens. And we who work in and manage the company want to make Belgrade better than it is. This means that we are really working hard on the projects that are assigned to us. I primarily mean the construction of 12 underground garages. In a short period of time these garages could neutralise the evident disparity between the demand and capacity of parking places available in the city centre. We want to re-route heavy transport vehicles away from the downtown area and we are going to try to facilitate and simplify existing parking capacities for our users. What has been done about that? Our major, tangible contribution to solving this problem is the construction of a customs terminal in Block 53, close to December 2008 The Investors Guide Belgrade 31

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INTERVIEW sists of the following: our controllers, who are on the streets, have a camera on their computers that can take photos of improperly parked vehicles. When they take a photo of the vehicle, the photographs are sent to the dispatch centre and the software does everything else – it attaches the address, the exact position and time. There is a police officer and one dispatcher in our dispatch centre. The two of them will have the opportunity to see all improperly parked cars downtown in real time. They will be able to see where the impound vehicle is at that very moment

panel will contain displays that will show the number of available parking spaces in all city garages and parking lots. In a word, the idea is that the information panels are very important and powerful media for communication with the drivers. In this way, they facilitate and improve the trafﬁc and parking in the capital. By the end of this year we expect to put up thirty information panels. ‘Parking Service’ is also going to be engaged in building the city marina.

Construction of the city marina at Čukarički rukavac is a capital project implemented by Parking Service on behalf of the city the Belgrade-Zagreb motorway. Thanks to this customs terminal, the majority of heavy lorries that bring goods to be cleared in Belgrade will not need to enter the city. Every day between 250 and 300 heavy transports are cleared by customs. The terminal has parking for 200 lorries, an enormous capacity for storage, a building used by customs, over 100 freight forwarders that have their own offices, car washes, restaurants, car mechanics, etc. This is really a small city. We like to say that this is the Knez Mihailova Street of the freight forwarding business. The implementation of a project entitled ‘Video surveillance of impound vehicles’ is due to start soon. This will also mark a novelty in this field. We are very proud of this and the project already exists in the draft version. This is something no one in Europe has done as yet. What does it involve? The main problem in determining priorities when it comes to impounding improperly parked vehicles is to analyse the whole picture. The system con-

and, in this way, it will be easy to determine priorities. The nearest impound vehicle will pick up the nearest incorrectly parked car. We are going to implement this system in the first quarter of next year and I am sure that the citizens of Belgrade will be able to experience a visibly improved traffic flow. What other novelties are you going to introduce to your system? We are going to put up information signs in parking zones, which will be a solution for providing complete information to the user. They will be set up in specific areas that indicate entry into a certain zone - red, yellow, green. The Traffic Secretariat and Parking Services have noticed that people have trouble discerning which parking zone they are in, despite the existing horizontal and vertical traffic signs. Therefore, an information panel will be clearly lit up in the colour corresponding to each parking zone and it will be visible from afar. In addition to these features, the information

Construction of the city marina at Čukarički rukavac is a capital project implemented by Parking Service on behalf of the city. The Secretariat for Community Housing, which is responsible for cleaning up the area (a prerequisite for laying the pontoon bridge) is working together with public enterprise Ada Ciganlija. We are working hard on including Belgrade on the nautical map of Europe by giving the city a ﬁrst class marina. This infrastructure facility is something that the Serbian capital city is lacking and it is totally absurd that Belgrade, which has tens of thousands of motor boats, has no petrol station on the water, let alone other facilities that a contemporary marina has to have. We are currently in the design phase and are obtaining the necessary permits for cleaning and constructing the marina complex. We expect to begin cleaning up the area in the middle of next year and the first phase of this important project for the rivers of Belgrade will begin at the end of next year.

THE PARKING PROBLEM Of course we can solve the problem of parking in Belgrade. By applying these ’soft’ measures that involve fast solutions and cost relatively little, we are in a position to use existing resources to the maximum. Now we have to make large investments to reach a final solution. These investments should definitely take two directions, one in raising the capacity for so-called stationary traffic and the other in working on improving public transport, which certainly includes the construction of new, high capacity passenger transport modes, primarily the subway. 32 Belgrade The Investors Guide December 2008

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INVESTMENTS

INVEST IN BELGRADE Connecting Europe and the East for centuries and pooling different cultures and civilisations, Belgrade has long been known as ’The Gateway of the East and the Door to the West’. 34 Belgrade The Investors Guide December 2008

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and political center and a significant market with over 1.7 million citizens. The real capital of Belgrade is its educated population, which is willing to accept and apply new technologies and is open to learning foreign languages, as is no other country in the region. Another quality of the work force, aside from its qualifications, is its competitiveness and high level of productivity. Serbia and Belgrade are becoming an increasingly attractive location for international investors. The total value of foreign investments in the country since 2001 is $8.9 billion, with $4.4 billion made only last year. A large number of multinational companies are doing business in the country. The list of leading foreign investors includes companies like Telenor, Mobilcom, Phillip Morris, Banca Intesa and InBev, and other large investment projects are being prepared.

TOTAL INVESTMENTS

By Miloš ĆURČIN, SIEPA

elgrade occupies a central position in South Eastern Europe, giving it a unique place within the European setting. Two international navigable rivers, an international airport, the intersection of pan- European corridors 10 and 7, connection with the main railroad directions and four railroad stations make Belgrade the main communication and logistic intersection of the region. Connecting Europe and the East for centuries and pooling different cultures and civilisations, Belgrade has long been known as the ’the gateway of the East and the door to the West’. Today, Belgrade is a large industrial, commercial, tourist, cultural, educational

According to sources at the National Bank of Serbia, Belgrade securely holds first place in Serbia measuring by the influx of foreign investments. The total value of investment projects in the capital is around $3.5 billion, with foreign companies mostly interested in the service sector - banking, trading, telecommunications, but also in the development of real estate and manufacture. Belgrade is developing into one of the most attractive investment locations in this part of Europe. The capital of Serbia has attracted over $3.5 billion in direct foreign investments since the beginning of democratic reforms, primarily in the service sector, but also in other branches such as real estate construction or manufacture. Numerous multinational companies have their main branches in Belgrade today - Telenor, Mobilcom, Banca Intesa, METRO Cash & Carry, Microsoft, Ball Packaging Europe and many others.

THE CITY OF THE FUTURE OF SOUTH EUROPE The most important validation of the great industrial potential that Belgrade represents was the South European City of the Future award, presented in 2006 by prestigious FDI Magazine, published by The Financial Times. Among competing cities from Slovenia, Croatia, Bosnia Herzegovina, Macedonia, Albania, Bulgaria, Romania, Greece, Turkey, Cyprus and Malta, the Serbian capital was selected based on a series of positive indicators, including economic potential, business expenses, human resources, traffic, information and communication technologies,

FINANCIAL INCENTIVES INVESTMENTS IN THE PRODUCTION SECTOR: Total assets: €2,000 - €5,000 per new work place Minimum value of investments: €1 million - €3 million Minimum number of new work places: 50 INVESTMENTS IN THE SERVICE SECTOR: Total assets: €2,000 - €10,000 per new work place Minimum value of investments: €500,000 Minimum number of new work places: 10 INVESTMENTS IN THE RESEARCH AND DEVELOPMENT SECTOR: Total assets: €5,000 - €10,000 per new work place Minimum value of investments: €250,000 Minimum number of new work places: 10 quality of life, and investment promotion strategy. Aside from the fact that it represents recognition for essential reforms of a business environment, this award has a significantly broader meaning- it serves as a reference to international investors in search of locations with the best conditions for investment. Serbian industry has recorded an extremely high average rate of growth at 7% over the past three years, and Belgrade is creating 1/3 of the country’s national product, which amounted to over $31 billion in 2006. Telecommunications, construction, traffic and trade are the sectors that record the largest growth. In the next several years, an intensive average rate of growth of the gross domestic product at 7% has been predicted. The investors in Belgrade have direct access to the E75 international highway, which represents a part of European traffic corridor 10, connecting Central and South Europe with East Central Europe. New capital projects are planned for the next several years, which should additionally improve transportation infrastructure in the city. This includes the construction of at least two new bridges over the Sava and Danube rivers, and the implementation of the Internal Major Half-ring project, which should significantly speed up the traffic flow in Belgrade. Merchant transportation can be carried out on the rivers, thanks to the fact that Belgrade has access to two navigable rivers – the Danube and Sava. They are a part of international Corridor 7, which connects all of the Danube through the Rhein-Main-Danube sysDecember 2008 The Investors Guide Belgrade 35

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INVESTMENTS

Today, Belgrade is a large industrial, commercial, tourist, cultural, educational and political center and a significant market with over 1.7 million citizens tem of channels, from the North Sea to the Black Sea. Nikola Tesla International Airport is situated 18 km away from the center of Belgrade and has an ideal geographic position, situated on the intersection of the main air routes. A large number of world airlines have regular flights from the Belgrade airport.

BUSINESS EXPENSES

MAIN INVESTORS The largest foreign investors are presented here based on their choice of business headquarters, which are situated in Belgrade, although a part of their investments is implemented in other cities too. Information on the size of their investments was obtained from research conducted by SIEPA and include the implemented and the announced investments.

Company

Country of origin

Sector

Telenor

Norway

Telecommunications

Mobilcom

Austria

Type of investment Privatization

Amount of investment (€ M) 1.513

Telecommunications

Greenfield

570

Banca Intesa Italy

Banking

Takeover

508

Mercator

Retail

Greenfield

240

Lukoil Russia Blok 67 Austria Associates Engel Group Israel

Energy

Privatization

210

Real estate

Greenfield

180

Real estate

Greenfield

160

Alpha Bank Metro Cash & Carry

Greece

Banking

Privatization

152

Germany

Wholesale

Greenfield

150

OMV

Austria

Energy

Greenfield

150

Slovenia

City construction land that is stateowned can be leased from the City for a period of 99 years. In most cases, the land is leased through public auctions, by paying a fixed price, and regular monthly installments. Business expenses are very favorable in Belgrade in comparison to other big cities in Central and Eastern Europe. First, tax rates are among the lowest in this part of Europe, average income is approximately at the level of neighbouring countries, while most utilities cost less than in the region. Profit tax is extremely low. The revenue tax is one of the most favorable in Europe, and the value added tax, income tax and social security contributions are lower than in many countries of Central and Eastern Europe. Belgrade offers a vast market potential to all investors. There is the possibility of duty-free export to the markets of the European Union, Russia, South East Europe, and the USA, for a long list of products. On the other hand, due to an intensive growth of living standard, the Serbian market is becoming more attractive to foreign and domestic investors. All companies that intend to invest in Belgrade have a number of financial and tax incentives available for their projects. One of the most important is the assistance provided by the State in the shape of non-refundable assets for new investments from €2,000 to €10,000, as well as a large number of tax relief plans. Investment projects from all sectors, except for trade, tourism, hotels, restaurants and agriculture, can apply for non-refundable grants from the State budget. Grants are offered to finance investment projects in the manufacture, international trading services and research and development sectors.

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REGIONAL EMPLOYMENT PROGRAMMES Financial help for employment of at least five new workers for an indefinite period is secured through regional employment programmes. Grants are approved in the amount of RSD 100,000 or approximately €1,220 per one new work place. Projects of strategic importance for regional development, which employ those from the categories of workers who have more difficulty finding jobs, are given priority in the public bid. Through the Severance to Employment project, financial help was provided for employment of new workers who are left without a job due to technological, economic or organisational changes, starting from September 1st, 2006. Grants are approved in the amount of RSD 100,000 or €1,220 for employers who certify that their total number of employ-

Service, or if they don’t have the appropriate skills. The National Service is contributing to total training expenses up to the amount of RSD 70,000 or €860.

TAX INCENTIVES An income-tax-free period of ten years is available to companies that invest over RSD 600 million (about €7.5 million) of their basic assets in other companies’ basic assets or that hire at least 100 workers on a long-term basis during the investment period. In the case of franchise investing, the franchise company is relieved from paying income tax for a period of up to five years, from the day of the arranged completion of the franchise investment in total. Income tax can be reduced by 20% of an investment in basic assets during one year, while with certain branches (agriculture, fishing, manufacture of knitting ma-

All companies that intend to invest in Belgrade have a number of financial and tax incentives available for their projects ees will be higher after hiring new workers. State subsidies for internship for periods of six, nine or twelve months, depending on education level (high school, junior college, college) are arranged through internship programmes. The current financial help is as follows: RSD 10,000 or €120 for interns with a high school diploma; RSD 11,000 or €135 for interns with a junior college diploma; RSD 13,000 or €160 for interns with a college diploma. Prequalification and requalification programmes are organised at the request of the company, provided that there are no workers with requested professions in the records of the National Employment

terials and fabrics, clothes, leather processing, basic metals, standard metal products, machines and appliances, radio, TV and communication equipment, medical, precise and optical instruments, motor vehicles, trailers, semi-trailers and other transportation facilities, recycling and cinematographic and video production) this reduction is 80%. Income tax is reduced up to 100% of the gross income of a newly employed worker in the period of two years from the day of employment, under the condition that the number of employees was not reduced in that period. Losses from business related, financial and non-related business transactions that are listed in the an-

nual tax balance and that also may relate to a future balance period can be transferred to an account for a maximum period of ten years. Fast amortization, at rates which can go up to 25% more than the regulated rates, applies to basic assets used to prevent air, water and land pollution or to assist noise mitigation, energy preservation, forestation, the gathering and use of waste as well as raw industrial materials or fuel; scientific research, education and personnel training. Fast amortization also refers to computer equipment.

REVENUE TAX The basis for the revenue tax balance is reduced for a fixed amount of RSD 5,000 or €65 per month. Revenue tax relief when hiring new workers on a long-term basis, is valid for the following periods: three years: a) for interns under 30 years of age and b) persons with disability; two years: a) for persons under 30 years of age and b) persons over 45 years of age; one year: for all persons, regardless of their age or other criteria. Social security income relief, when hiring new workers on a long-term basis, is valid for the following periods: three years: a) for interns under 30 years of age and b) persons with disability; two years: a) for persons under 30 years of age, b) persons over 50 years of age and c) persons over 45 years of age. Tax relief is 80%. Import of equipment based on the investment of a foreign investor is free of duty and other import taxes, except for passenger motor vehicles and entertainment and slot machines.

THE MOST IMPORTANT TAX RATES VAT

General rate – 18% / Special rate – 8%

Revenue tax

10%

Deduction tax

20% (dividend, corporate profit shares, author’s fees, interests)

Income tax

Salaries – 12% / Other – 20%

10/15% (if the annual income is under or Annual income tax over the 8 average annual salaries in the country) Property tax

Progressive rates from 0.4% to 3%

Social insurance contributions

Pension and dissability insurance – 11% Health insurance – 6.15% Insurance in case of unemployment – 0.75% December 2008 The Investors Guide Belgrade 37

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INTERVIEW

Gustavo Navarro, Country Manager of Holcim (Srbija) d.o.o., Member of the FIC Board of Directors

MARKING PROGRESS “Belgrade has experienced solid growth in the construction sector since 2002 and it remains the biggest building site in Serbia” By Mark R. PULLEN

n order to get the lowdown on FDI trends, business reform progress, the construction industry and the affects of the global financial crisis on the Serbian capital, we spoke to Foreign Investors Council Board Member Gustavo Navarro, Country Manager of Holcim (Srbija) d.o.o.

Holcim arrived in Serbia back in 2002 (FDI purchase of 70% of the Novi

Popovac cement plant). What were the main obstacles you faced at that time; how has the situation changed and what advice would you give to a wouldbe investor today? When we have arrived you could still see the scars of the events which occurred in the last decade of the 20th century. Beyond 2000, Serbia managed to stay on the right track, despite several paramount political challenges that arose in the meantime. Since our arrival, we have witnessed tangible and substantial improvements, as

well as potent economic growth in Serbia. Numerous facts support this claim: Serbia has registered stable economic growth year-on-year, with average annual GDP growth amounting to five per cent; in recent years inflation has been reduced to a reasonable percentage; the privatisation process, although accompanied by certain challenges, has almost been completed; there is a constant inflow of foreign direct investment, which indicates that Serbia remains attractive to foreign capital. On the other hand, certain challenges remain.

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By all means, greater political stability would lead to a signiﬁcant acceleration of economic, regulatory and social progress. However, taking into account all of the aforementioned facts, such a socio-economic context remains favourable for our company. Based on our own experiences and those of other multinationals, we encourage foreign investors to take a good look at Serbia. The perception of Serbia is substantially more positive amongst companies that have been operating on this market than those who never tapped into the country. As such, one could conclude that Serbia may be one of the best kept secrets of Southeast Europe. How important is the Serbian Government’s announced ‘regulatory guillotine’ process, aimed at streamlining the regulatory framework; and how would you assess the investment process in Serbia at present, from initial bid to final acquisition? The Foreign Investors Council strongly supports the revival of the initiative to launch the regulatory guillotine project in order to ﬁght ‘permitology’ and red tape and, thus, help investors in their everyday business and encourage new direct investment. This project proved quite a success in other countries, where it involved three parties: World Bank technical assistance, local authorities and the business community, whose role was to provide information on the greatest obstacles to doing business. Undertaking the regulatory guillotine project would help improve the overall business environment, as well as attracting new investors to this market. However, mere implementation of improved legislation, though beneficial, is not enough to create a favourable business environment unless two other things happen simultaneously: disposing of obsolete and redundant legislation whilst putting in place adequate bylaws and modernising the administration in a way that goes hand-in-hand with the adoption of modern laws. Therefore, the FIC trusts that the government will successfully start and complete these projects within a reasonable time frame. This would certainly be enthusiastically greeted by the foreign investor community.

Serbia has probably one of the fastest growth rates in the region. We believe that this is largely due to some favourable changes implemented by the government, which may have been motivated by the feedback of the FIC and other committed investors already present in the country What specific work is the FIC undertaking in order to help improve the situation on the FDI front? The Foreign Investors Council has worked passionately from day one. I believe that we have consistently managed to provide the Serbian authorities with valuable insights and suggestions on how to improve the investment climate through the annual White Book, joint regulatory efforts, direct dialogue and many other avenues we have pursued. To that effect, we are pleased to see that Serbia is continuing to improve and we humbly take some credit for this. Perhaps the last twelve months or so have been somewhat challenging for the realisation of our plans and efforts, as we lacked a counterpart on the government side due to a couple of elections in

TIMELY ACTION

ENHANCEMENT

DEVELOPMENT

Serbia should proactively continue to co-ordinate timely measures and the policies of all relevant state bodies and institutions, aimed at offsetting the impact of the global financial meltdown on the local market.

The image of Serbia as a business friendly location needs to be promoted internationally. Serbia should also define which type of investments it wants to attract and, then lobby intensively.

The Belgrade ring road, as a part of current infrastructure developments, would help real estate development in suburban areas and alleviate the city centre and bridges across the Sava and Danube rivers.

this period. The number of FDI projects in 2007 rose by 174% compared to 2006, to 63 in total. In comparison, the number of FDI projects in Romania in 2007 rose by six per cent compared to 2006, in Turkey by 43% and in Bulgaria it fell by 12%. As such, Serbia has probably one of the fastest growth rates in the region. We believe that this is largely due to some favourable changes implemented by the government, which may have been motivated by the feedback of the FIC and other committed investors already present in the country.

GREENFIELD GENERATION Following Holcim’s initial acquisition of the Novi Popovac cement plant, the company opted to make an additional Greenfield investment in Belgrade back in 2006. What prompted that decision at that juncture and how would you describe the experience, in terms of procedures and city regulatory requirements? After the initial acquisition of Novi Popovac cement plant in 2002, Holcim continued making substantial investments in our business - more than $90 million have been invested in Serbia so far (allocated mainly to modernisation of the technological process, environmental protection and infrastrucDecember 2008 The Investors Guide Belgrade 39

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INTERVIEW ture) and until 2010 another €83 million will be invested in the clinker capacity of the plant (the rest will go towards the enhancement of already existing production capacities). Holcim Srbija invested €11.78 million in 2006 alone, with the focus on Greenfield investments in the RMX business. We decided to make such an investment, since by that time many of the issues that we faced at the beginning had been resolved and we saw an opportunity for new investments. Issues such as title and the cadastre presented obstacles for us, but the new constitution provided solutions to these impediments. Why do you think Serbia still lacks the level of Greenfield investments it requires and what tangible steps could be taken to improve the situation? Although experts claim that CEE countries will only be affected indirectly by the global economic downturn in the short run, the fact is that the adverse affects of the credit crunch have spilled over to all countries worldwide, including Serbia. Serbia should continue to proactively co-ordinate timely measures and the policies of all relevant state bodies and institutions, aimed at offsetting the impact of the global financial meltdown on the local market in an effort to protect living standards and attract higher inflows of Greenfield investments. Currently, inflow of Greenfield investments to Serbia is modest; privatisation has been the major source of FDI so far. Even though an attractive macro and microeconomic framework is already firmly established in the country, as well as the path towards stability and economic development, it is high time for Serbia to promote this competitive advantage abroad. The image of Serbia as a business friendly location needs to be created and promoted internationally. Serbia should also define which type of investments it wants to attract and, accordingly, should lobby intensively, not only at the state level, but also at a corporation level, in order to attract new investments. In this era of globalisation, there is intense competition and only nations that outperform others will manage to generate FDI.

BUILDING BELGRADE It seems that Belgrade is one big building site these days. Is the city yet experiencing the levels of construction that it requires or is demand still outstripping supply? Belgrade has experienced solid growth in the construction sector since 2002 and it remains the biggest building site in Serbia. This is primarily due to large ongoing infrastructure projects (Ring Road) and the

The construction industry in Serbia has already been fully affected by the global financial crisis. The ability of real estate developers to borrow money in order to finance projects has been drastically reduced in the recent period development of sizeable commercial and retail sites. However, Belgrade remains far from exploiting its full real estate potential due to large infrastructure projects that are on hold, such as the Light Metro and Sava Bridge, as well as commercial/retail projects (Dorćol Marina, for example). These long-term development plans will surely lead to an increasing demand for cement, which will favourably inﬂuence the whole industry. In other words, the real construction/real estate boom in Belgrade and Serbia is yet to happen. As a building materials supplier, how much does transport infrastructure effect your work and how important is the Belgrade ring road system that’s currently under construction? It is very important, if not critical. The building material industry is heavily inﬂuenced by transport infrastructure, since our priority is to satisfy customers as soon as needs for our products arise and at the lowest possible cost. Investment in rail or road infrastructure (Corridor 10) could substantially improve our ability to access customers across the country in distant areas and improve the overall development of the construction industry. The Belgrade ring road, as part of current infrastructure developments, would help real estate development in suburban areas, such as Šimanovci or Ostružnica, and alleviate

congestion in the city centre and bridges across the Sava and Danube. Do you expect the global financial crisis to have a knock-on effect on the construction and civil engineering industry in Serbia? The construction industry in Serbia has already been fully affected by the global financial crisis. The ability of real estate developers (active in the country) to borrow money in order to finance projects has been drastically reduced in the recent period, with only a handful of banks in Serbia providing long-term financing – and that at very high interest rates. The banking sector and availability of competitive financing is the backbone of the real estate industry anywhere on the planet. We can only hope that Serbia will not suffer more when compared to the European average. We strongly encourage Serbia’s authorities to continue to co-ordinate the timely measures and policies of all relevant state bodies, aimed at offsetting the impact of the global financial meltdown on the local market. At any rate, over the mid to long-term Serbia remains one of the most attractive real estate markets in Europe, where demand by far outstrips supply. Therefore, we remain optimistic about the potentials of the local market as soon as the world’s economic and credit conditions start improving.

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PRIVATISATION By Marica VUKOVIĆ

Inex: Main bussiness building

With just weeks to go until the scheduled completion of the privatisation process in Serbia, some 270 Belgrade-based companies are awaiting sale

rivatisation in Serbia should be completed by the end of 2008, yet there are still around 900 companies left to be sold. According to data of the Serbian Privatisation Agency, 270 companies are from Belgrade – a city where more than half of the country’s GDP is generated. Since 2002, when the privatisation of public and state property commenced, a total of 1,800 companies have been sold – 400 of which were from Belgrade. Some 22 companies were privatised via tender, with the remainder going under the hammer at auction. Interested parties were initially offered only successful companies, with the aim being to launch, re-launch or boost the domestic company’s production and safeguard the planned economic growth, but also because it was the fastest way to fill the state’s coffers: funds from the sale of 70 per cent of the capital of public enterprises is paid into the national budget. Of the 25 Belgrade-based companies that still haven’t been privatised, the following are to be offered through a tender procedure: Prva iskra Barič, Janko Lisjak, Petar Drapšin, JAT Tehnika, JAT Catering, JAT hotels - Slavija , NIN, Prosveta, Rad Holding and the Public Enterprise for City Construction Belgrade. Currently, 13 companies are undergoing reconstruction. These include: Generalexport, Rekord, Inex, DMB, IMR, PIM, Lola sistem, and KMG Trudbenik. The privatisation procedure has yet to be decided for seven companies, among which are Beo Zoo, which will probably be granted the status of a public company under the ownership of the City of Belgrade, City Hall’s media company Studio B and the Goša Institute. The remaining public enterprises will be sold at auction.

ATTRACTIVE OPTIONS There is no doubt that the easiest way to find an appropriate buyer is to sell companies that have significant assets or

TOUGH ROAD

RIGHT OWN 42 Belgrade The Investors Guide December 2008

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own attractive business premises. These are companies like the Belgrade Fair, Belgrade bus station, Lasta bus company, the Institute for School Textbooks, Agricultural Combine Belgrade (PKB), etc. The privatisation of the Belgrade Fair has been in the pipeline for more than two years. No decision has been made on the privatisation method and it remains to be seen whether Belgrade Fair will be sold through a tender or whether a strategic partner will be sought, as was the case with Kragujevac-based carmaker Zastava, which established a joint venture company with Italian FIAT. The Belgrade Fair, established back in 1958, occupies prime riverside space along the Sava covering 198,000 square metres. The Fair employs 242 workers and generates income from organised exhibition and fair events, rental of their space for concerts, trade shows, regular trade and storage of goods. A few years ago it was estimated that the company was worth around €50 million, but its market value is much higher today. Two companies have expressed an interest in buying the Belgrade Fair: Italy’s Rimini and Austrian Reid Exhibition, the largest exhibition organiser in the world, as well as two investment funds. The Belgrade Hippodrome was a public enterprise until it became the property of the City of Belgrade last year. As a result, the law on privatisation doesn’t apply to the race track any longer. The law stipulates that the sale of public capital is term deposited to the end of this year. British Arriva, French companies Keolis and Veolia, and Israeli firm Kavim have all expressed interested in acquiring the transport company Lasta. The tender was announced back in November 2007, but the initial deadline for the submission of bids was extended twice because the interested companies sought additional information about the financial results of Lasta and it’s planned social programme. Last summer, the Ministry of Economy and Regional Development put the process

D TO

NER 026-055.indd 43

RIVER FREIGHT

WANTING IN APPEAL

The privatisation of one of the most valuable companies in Belgrade, Yugoslav River Shipping (JRB), is in progress. The Privatisation Agency has announced that only one foreign company has submitted a bid. The first tender for the sale JRB was cancelled because an agreement could not be reached with the first and second ranked bidders. JRB is the fourth largest transport company in the lower Danube. Four years ago the value of JRB was estimated at €45 million.

The majority of the companies awaiting privatisation are not the most attractive to buyers and will most likely be forced into bankruptcy. Some of them were offered for sale at earlier tenders or auctions which failed. Any company that doesn’t find a new owner will be closed down, because the new law on bankruptcy stipulates that the bankruptcy will be carried out through either a liquidation of the company, the sale of some parts of it or a change in the company’s operational activities.

of privatisation of this enterprise on hold due to the global financial crisis, which led to interested buyers withdrawing. The company deals with transport, catering, tourism, trade, services and the produc-

Rad. The head offices of the largest public enterprises are located in Belgrade and the state hasn’t even started with their privatisation processes. Six public companies, five of which are from Belgrade, adopted the

Currently, 13 companies are undergoing reconstruction. These include: Generalexport, Rekord, Inex, DMB, IMR, PIM, Lola sistem, and KMG Trudbenik tion of rubber. There won’t be much difficulty in privatising the Institute for School Textbooks, which is completely owned by the state. It has already been decided that only a minority stake of 25 per cent of the enterprise will be sold, but there are no announcements of whether the privatisation will be carried out by the end of the year or whether the state will decide to remain the sole owner of the enterprise. The Institute for School Textbooks has several facilities and a well-developed sales network. It owns two administrative buildings, one of which is situated at the attractive location of Obilićev Venac in the heart of the Old Town, five bookstores in Belgrade, two in Novi Sad and Niš and one in Kosovska Mitrovica. The process of privatising Agricultural Combine Belgrade (PKB) is still in its very infancy and the privatisation advisor has yet to be selected. Some 64.96 per cent of PKB is publicly owned, while the state owns 34.7 per cent and private shareholders control 0.3 per cent.

LACKING ATTRACTIVENESS The financial crisis has deterred investors interested in buying the property of Belgrade companies that have been declared bankrupted and which own premises in downtown Belgrade that were previously much coveted. This refers principally to the business premises of Jugoeksport, Ineks and

privatisation strategy and, consequently, one of the first companies scheduled to be privatised by the end of this year was JAT Airways. However, the invited tender was unsuccessful simply because no bids were submitted. The indifference of foreign airlines can be found in the fact that the airline industry as a whole is going through a crisis that has only been worsened by the global financial crisis. Hence, the Serbian Government has decided to continue with the restructuring of the national airline and the decision on how to privatise it will be made at a later stage. The tender for sale of JAT Tehnika, which has been taken out of JAT structures, was also unsuccessful and no decision has been made on whether it will be repeated or whether the company’s status is going to be changed. When it comes to other large public companies, a tender for the sale of pharmaceutical company Galenika was announced for the end of November and the sale should be completed in the first half of next year. The privatisation of Telekom Serbia through stock market floatation is being prepared, while the privatisation method for Nikola Tesla Airport still needs to be decided. The privatisation of certain parts of the Electric Power Industry of Serbia (EPS) is planned to begin in 2010. However, all of these plans depend in events on the world’s financial markets and on picking the best moment for sale. December 2008 The Investors Guide Belgrade 43

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INTERVIEW

Anđelko Trpković, Director of the Belgrade Fair

BEST IN THE

WESTERN BALKANS “At least four companies that are engaged in organising fairs have expressed an interest in acquiring the Belgrade Fair.”

By Sanja GAVRIĆ Photo Časlav VUKOJIČIĆ

he Belgrade Fair is one of the best and most attractive fairs in Eastern Europe, according to Director of the

Belgrade Fair, Anđelko Trpković, speaking in an interview for The Investors Guide to Belgrade. The Belgrade Fair will end this year with 220,000 square metres of space, which, according to Trpković, is a respectable area of

land even for the top European fairs, let alone the fairs in the region. The Belgrade Fair holds the second largest Book Fair in Europe, in terms of the number of visitors, and one of the biggest trade fairs in the Balkans – The Construction Fair.

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eters – we can rightly say that we are currently the best fair in the Western Balkans. Our goal, however, is to promote ourselves as the best and the nearest fair in the entire region. We want to cover the complete market of Croatia, Bosnia & Herzegovina, Montenegro, Macedonia, Romania, and Bulgaria. All neighbouring countries must be aware of the fact that something is happening at the Belgrade Fair, something very important for them,” says Trpković. What are the most important annual fairs that are held in Belgrade? Judging by the number of visitors, Belgrade’s Book Fair is the second largest fair in Europe, after Frankfurt. One of the most important fairs and the largest in the Balkans is the Construction Fair, called ‘The South East Europe Belgrade Building Expo’ (SEBE). This fair is held over an area of around 40,000 square metres and is a reputable international fair. The Building Expo has more than 1,100 exhibitors and about 50,000 visitors. Also, the Technology Fair that is held here is the oldest fair organised in this area and it was the foundation for all other fairs of that type. At the Technology Fair you can see equipment for large industrial plants, modern control machines, robotics, electronics, energy sector developments, etc.

MARKETING PERFORMANCE The Director of the Frankfurt Fair asked me what our biggest problem was. I told him that our biggest problem was that the Belgrade Fair had been organising the second largest Book Fair in Europe, after Frankfurt, and they didn’t even know that we existed. Even the organisers of the Book Fair in Vienna, which was held in mid-November, say that we are in the league ahead of them, because they are not so large. Unfortunately, we – as in the state – haven’t done much to promote the Belgrade Fair. Additionally, Belgrade, as a host of fair events, is lacking adequate hotel accommodation. Belgrade currently has only 3,500 beds in hotels with three or more stars. At the moment, large hotels are being renovated and five star hotels are being built. So, in two to three years time Belgrade will have more hotel capacities at its disposal.

& Herzegovina and Republika Srpska. Their presence proves that the Belgrade Fair has the leading regional position in this segment and, accordingly, this year’s Furniture Fair was visited by more than 80,000 people. This fair is important because it presents both the equipment and the end products. We are thinking of turning this fair into two separate fairs - one for product users and another for those who are engaged in the production of furniture. By

The position of Belgrade is very important, because around 20 million people live within a 400 kilometre radius, which makes the cost of visiting the Belgrade Fair quite minimal Trpković stresses that more than 18,000 people visit the Belgrade Fair on a daily basis and this year the Fair has generated profit of between €1 and €1.5 million. “Last year’s profit was about 1.5 million euros, but this year it’s somewhat lower because of the significant resources we have invested in the renovation of space. This year the Belgrade Fair had 110 fair days and 137 days for assembling and disassembling the area. This means that we have been active 250 days a year, while the remaining time was spent on maintenance activities for the fair’s premises. The Belgrade Fair covers a total of around 100,000 square metres of covered property and 25 hectares of open land. “Compared with fairs elsewhere in the region, such as the Zagreb Fair or fairs in Romania and Hungary – and considering the number of fairs that we organise each year, quality of service, numbers of exhibitors and financial param-

The Belgrade Car Show is also one of the biggest fairs. It is presented under the auspices of the International association of automobile manufacturers and Belgrade is one of just 21 cities in the world that has been granted the right to organise an official car show. Many world cities would like to have this right, but Belgrade succeeded in being given this right as a result of its tradition. After all, the former Yugoslavia was a large industrial country that had a developed car production industry and I believe that the automotive industry still has a future Serbia. This fair puts us shoulder to shoulder with cities such as Paris, Detroit, and Tokyo. This is one of the most frequented fairs and has up to 160,000 visitors, as was the case this year. In November we had the Furniture Fair. During the fair, exhibitors from Croatia had a group presentation on an area of about 800 square metres. Slovenia presented itself on more than 300 square metres, as did Bosnia

the end of this year we will have fairs covering energy, ecology, ethnic food, business databases, exposes and the New Year Fair. How many exhibitors have you had at the Fair and how interested are foreign companies in exhibiting here? Each year, the Belgrade Fair attracts about 5,000 exhibitors and around 15 per cent of the participants come from abroad. Our fairs are known for attracting the market leaders in the relevant participating fields. However, companies that are registered in Serbia or have their branches here are not classed as foreign participants but rather are treated as domestic companies. Still, every year we find new foreign exhibitors who come to the Belgrade Fair for the first time. The first step for every exhibitor is staging a national presentation at the fair and after that they exhibit independently. The fair is very imDecember 2008 The Investors Guide Belgrade 45

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INTERVIEW year employ a lot of people. For example, 3,850 people worked on the Furniture Fair this year. I am sure that in Serbia there is no company that provides so many people with an opportunity to earn money and improve their household budget. More than 4,500 people were hired to work at the Book Fair. Also, while the fair lasts the city’s hotels are full, more people visit restaurants and taxi drivers certainly beneﬁt too.

portant to all of them, because once they come and show what they have it will take them only four hours of touring the fair to find out what is currently happening in this region, what the is demand like, who the key ‘players’ are and whether this market is interesting to them or not. The practice has shown that all who come to our market have been given an opportunity to advance their business.

come to the Belgrade Fair they are in awe of the way it looks, because they probably do not expect to see such a well equipped and organised space. Everybody is pleasantly surprised, not only with the quality of service and low prices, but with the people who work here and speak at least one foreign language. It is said that an image speaks a thousand words. Well, at the fair we try to send thousands of

…serious companies are interested in acquiring the Belgrade Fair. Because of the financial crisis, buyers are looking for a safe and good investment and the Belgrade Fair is all of that What kind of service does the Fair provide to the exhibitors and at what price? It is important to mention that we have invested more than two million euros in a contemporary design of the fair in the previous period. Prices at the Belgrade Fair, in terms of the services we provide, are three to four times cheaper than anywhere else in Europe; and in relation to the region we are cheaper by about 30 to 40 per cent. It is true that we are selling square metres, since this is a measure we can adopt, but we essentially offer contacts that will help the exhibitors achieve even more significant business results. In 2004 we had nine million euros of turnover and in 2008 it was 17 million euros. I have to admit that when foreigners first

images to different addresses in the world to show that Belgrade can be a fair centre for at least one part of Europe. Is the fair important for the development of the city in which it is held? Germans have conducted a survey on the impact of trade fairs in towns in which they are held. According to their information, for each euro invested in organising a fair, 12 euros are generated for the city’s economy. This primarily pertains to states that have undergone transition. In our case, it is even more money than that, because when someone comes to Belgrade from Central Serbia he is buying what he doesn’t have in his home town, unfortunately. On the other hand, fairs that are held during the

FAIR SPACE In 2004, the Fair stretched over 140,000 square metres. But this year that figure is around 220,000 square metres. The increase in space means that in four years time we have created more new trade fairs, which we haven’t had until now. And this is our success. Of course, years of experience and tradition are also to ‘blame’. The Belgrade Fair dates back to 1937 and since then we have had enough time to learn from our own experiences and mistakes, as well as from the experiences of others. We are proud that the Fair is growing in space, numbers of exhibitors and visitors. Only the number of employees is being reduced. Four years ago we had 259 workers and now we have 225.

What are the competitive advantages of the Belgrade Fair? The Fair will face its upcoming privatisation as the best company in Serbia and the company with the brightest future. We will be handing over to the future owners a company that is successful. And the only thing that the new owner could do is to additionally promote the fair at an international level as the best and the nearest fair in Eastern Europe. The position of Belgrade is also very important, because around 20 million people live within a 400 kilometre radius, which makes the cost of visiting the Belgrade Fair quite minimal. A visitor needs up to 350 euros to come here, which includes the costs of arriving by car, hotel accommodation for one night, a tour of the fair, food and the return journey home. Anywhere else in Europe this would cost at least 1,500 euros. Has the global financial crisis affected the fair’s business operations? We are probably going to feel the crisis by the end of next year, because we have already completed preparations for our operations for the first half of 2009. So, we have completed organising the Construction Fair, which will be held in April 2009. This means that we have a six-month advantage. I think that the crisis will lead to different decisions being made, but the work will not stop. We are just going to take more care about the results and costs that will certainly have to be more rational. I believe that no large companies will withdraw from participating in the biggest trade fairs to be organised in Belgrade. We have three great fairs coming up in 2009: the Tourism Fair is booked solid, as is the Building Fair and the Car Show. For the first time ever, cars at the Car Show will be displayed in four halls and not two, as was the case before. Also, four new brands will be shown for the first time ever in Belgrade. The first half of next year will be more successful than this year. Is the financial crisis likely to lead to the postponing of privatisation until better times arrive? The interest shown by potential buyers

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This year the Belgrade Fair had 110 fair days and 137 days for assembling and disassembling the area. This means that we have been active 250 days a year, while the remaining time was spent on maintenance activities for the fairâ&#x20AC;&#x2122;s premises is still strong; we still have serious companies that are interested in acquiring the Belgrade Fair. Because of the crisis, the buyers are looking for a safe and good investment and the Belgrade Fair is all of that. Since the buildings within the Belgrade Fair were constructed over 50 years ago, the future owners would have to build new capacities. Therefore, we expect an investment of at least 35 to 70 million euros. At the moment, at least four companies that are engaged in fair activities have expressed an interest. These companies are the biggest

organisers of trade fairs in the world and the largest fairs that operate in the region, the fastest growing fair group and the most beautiful European fairs. It is in the competition that they have among themselves and the ďŹ ght for the Belgrade Fair that we can discern the true value of this company. When do you expect the Fair to be privatised? We have prepared all necessary documentation for the privatisation and could complete the process tomorrow if neces-

sary, but the decision is in the hands of the Serbian Privatisation Agency and the relevant ministries. The Fair is managed by the Government of the Republic of Serbia through a set of special measures that were introduced in 2000. The status is renewed every six months. The deadline for privatisation is the end of this year, but I believe that, because of short deadlines, it will be extended. The Fair insists that the future owner is a company has been present in this branch for at least ten years, not ďŹ ve, as stipulated by law.

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INTERVIEW Milan Vuković, Belgrade Secretary for Urban Planning and Construction Affairs

MASTER PLAN FOR BELGRADE “Certainly one of the most crucial and most important laws that should resolve the current issues is the restitution of land and the way in which land is obtained.”

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By Gordana PETROVIĆ Photo Stanislav MILOJKOVIĆ

roperty and the status of land in Belgrade is an issue that often worries investors. According to Milan Vuković, Belgrade’s Secretary for Urban Planning and Construction Affairs, this is related to urban planning and construction which, in turn, touches upon solving the legal property relations. “Since 2006 the Constitution views property in terms of land and it defines what direction laws regulating this area should take. Certainly one of the most crucial and most important laws, it should resolve the current issues is the restitution of land and the way in which land is obtained. In any case, everything is resolved at a higher level through both the Ministry of Environmental Protection and Urban Planning and the Ministry of Finance. On the other hand, Belgrade cannot resolve these issues without a general strategy and the determination shown by the state of Serbia to act in that direction,” Vuković says.

When will changes to the General Plan of Belgrade for the period up to 2021 be ready and will these changes affect investors? The City Assembly began to change the Master Plan in 2005, primarily due to the need for the interests of the city to be reassessed in certain areas. Since we are talking about a big area, some 77,000 hectares, it was logical that there were quite a few requests for changes to be made. A year ago we started to divide the changes into two categories: the most important things for the city pertaining to completing infrastructural facilities on one side – known as the ‘second phase’ of changes – and, on the other side, all other changes that belong to the so-called third phase. The Secretariat provided certain remarks and these remarks should be now extended in a technical manner by Belgrade’s Department of Urban Planning, which devised the Master Plan. When this phase is completed, the Planning Commission will give its opinion of draft changes to the Master Plan and, following that, the plan will be subjected to a public hearing that will last for a month. After that, the Commission forwards its opinion to the City Assembly for adoption. Concerning the impact on investors, I would like to point out that it is important that this plan has an effect on the City of Belgrade and the state of Serbia, i.e. these changes should make it possible for Belgrade, through its Directorate for City Construction Land, to invest in infrastructure facilities. These changes actually allow the development of roads which, according to the existing General Plan, were not made. On the other hand, certain construction complexes will be opened on sites owned by the City of Belgrade where some kind of construction will be possible in the coming period.

MOST WANTED LOCATIONS The desirability of a certain investment location is dependent on the activity that is to be carried out there. If we are talking about shopping malls, service centres and storage facilities, the most desirable locations are definitely along the main roads, from the motorway to the new bypass and a section of the motorway that leads out of Belgrade towards Surčin and Ruma, which is also quite in demand. The most sought after locations for residential construction are definitely those in New Belgrade, Vračar, Stari Grad and Dorćol. Belgrade has something to offer, though the offer is not the most important thing here: a market principle of profitability is. The most important thing to investors, both foreign and domestic, is that the rules and procedures are familiar and that there are no differing interpretations.

What is your plan for the Savski plaza? Everything that happens in the riverside area, i.e. the activities carried out by the City of Belgrade concerning the city’s port and marina, should be carried out during the second phase of changes to the General Plan. Belgrade also has agricultural land. Will this land be categorised as ‘city construction land’ and, if so, when will that happen? This doesn’t happen automatically. Rather, it is done through land registries for speciﬁc locations. The Ministry of Agriculture carries out the conversion of land, from agricultural to industrial, and controls it. For this we need a comprehensive plan and the Ministry of Agriculture has to determine how much to charge for the conversion. Does this inhibit investors in any way? Investors can be inhibited by many things. The fact remains that the legislative elements should be made more contemporary. Constitutional category and laws did not stipulate the ownership of land, but rather the right to use it. This also applies to investors who have privatised certain plots of land. This is a matter that should be solved by the law on the restitution of construction land. We should point out that investors spend years reviewing investment opportunities in a certain country or region. They have their own consulting teams and are familiar with all elements of the law on privatisation from 2002. This is inhibitive in a way, but I believe that they are aware of all obligatory relations that they enter into and that it is not possible to resolve them at this time and in this instance. I expect future legislation will be made in accordance with that of the EU and, in this respect, investors will be secured. December 2008 The Investors Guide Belgrade 49

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INTERVIEW How much progress has been made to changes of the Law on Planning and Construction? A new law is currently being written. There won’t be any changes and amendments made to the existing law, but rather we are going to pass a new one. It will certainly determine some things that have been disproportionate in the existing law or have prevented its application. On the other hand, the new law will certainly improve the land registry situation and I expect that the relevant ministry will submit the law’s proposal for ratiﬁcation by the Serbian Parliament this winter. Will this law allow investors to become owners of what we call today ‘urban construction land’? No. That can be resolved only through the law on planning and construction. The use of city land is regulated by laws that pertain to land, which are under the jurisdiction of several ministries. The law on the restitution of land and buildings implies a budget reserve. In the next few years the state will need to compile a plan for the budget funds for restitution and return of something that is physically impossible to return. I think that there is no other way of resolving this issue. Of course, we should make an assessment because huge assets lie in this ﬁeld. Are there any benefits Belgrade can offer to attract more investors? It should all come from the national level, in terms of the speed of adopting laws that regulate this area. I hope the City of Belgrade, through its institutions, will make this area transparent and that everyone will be clear on how it works. Next year we intend to put all plans on our website and are going to co-operate with the City of Belgrade Building Directorate and Urban Planning Bureau. We will also probably include the land registry book. Together we will invest in software so that everybody can see where and what can be built. We will do our utmost to become clear and transparent. On the other hand, plans for detailed regulation need to be drafted. The moment we mention ‘detailed regulation plans’ everybody immediately thinks of a slow procedure which takes years to complete. Due to political instability or frequent elections and change, these things really did take years to complete. However, the existence of these plans will make the City of Belgrade’s offer of available locations more straightforward. The speed at which investments are completed on a location that has a detailed regulatory plan and one that doesn’t is very different. This is what discourages investors. Hence, we need to create a plan showing what is possible and what the deadlines are.

any limitations in that direction. Market should be free and competitive. Nevertheless, we should introduce some kind of ﬁnancial accountability and discipline in terms of construction guarantees. The question, however, is who is going to issue general licenses for investors? I think that some level of guarantee needs to exist. I’m definitely not in favour of returning to the socialist system, when investors had to have a bank proof of having appropriate financial structures in place, because that would lead to a monopoly again. In that case we would have a small number of investments; if the investment was in the region of two to five million Euros the guarantee would cost the investor a lot, which would also lead to price increases in residential construction. Despite that, I maintain that some kind of guarantee needs to be provided. Which areas will the Secretariat for Urban Planning try to improve in the coming period? If investors, engineers and the Secretariat’s personnel start applying the law and bylaws we will no longer see the ‘congestion’ that’s been evident so far. It’s quite natural for investors and construction designers to want the best. Our job is to ensure the optimum conditions by meeting the requirements in a fast and efﬁcient manner, while protecting national resources. Belgrade is witnessing very intensive construction levels and this is a great area for an administration that is not quite prepared. If I said that we need a dozen more employees I would be branded biased. I can’t really anticipate how intense construction will be in the coming months. We will try to deal much more quickly with the cases we’ve fallen behind on, so we can do our work within the deadlines provided by law. I expect we will be given an opportunity to acquire computer and software equipment in order to be able to work quicker. We will try to set up a one-stop-shop to assist our clients and investors. I can’t confirm that this will be done in a month or two; it’s more likely to be 2009 before you notice an improvement in the work of the Secretariat of Urban Planning. We also have the Public Facilities Sector, which will have a department to deal with major investments in the City of Belgrade and elsewhere in the Republic of Serbia. This will be a separate department and the Mayor’s idea is for this sector to have a section for large investors. The large investment sector needs to be somehow organised on the basis of how many square metres are to be built and the financial investments that are to be made. Major investors will not go through a shortened procedure, but will rather be treated separately from those cases where a permit is required for putting up glass windows on one’s balcony. We are not going to yield to anyone and we are going to play a fair game. My idea is to go as far as suspending an investor who cannot provide a building of a certain quality. By doing this we would secure better permeability.

Investors can be inhibited by many things. The fact remains that the legislative elements should be made more contemporary

Should we make the criteria for investors more stringent and insist that an investor must have a licence or provide a deposit before he commences work? This area should be regulated by law in accordance with Serbia’s intention of joining the EU. A liberal market does not have

INVESTMENTS The interest shown by new investments is constant. Both foreign and domestic investors are inquiring. You can see that for yourself. Autokomanda is very interesting, as is the Hotel Yugoslavia and the surrounding areas, Savski Plaza, Belgrade Port, the wharf.... All of these locations have the potential to attract huge investments. 50 Belgrade The Investors Guide December 2008

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INTERVIEW

July 2008 125

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INTERVIEW Nenad Milenković, President of New Belgrade Municipality

MUNICIPALITY OF THE FUTURE

“The whole area of the so-called Sava Amphitheatre is very interesting to investors” By Vida BRATUN

ew Belgrade has become one of the most interesting locations for investors over the last few years. This has resulted in the great economic development of our municipality, says Nenad Milenković, President of New Belgrade Municipality, speaking for The Investors Guide to Belgrade. According to Milenković, the developed infrastructure in this part of town, coupled with excellent roads and the proximity of the airport, are the main reasons why the city across the river has experienced such good business results.

What other factors have led to such great interest being shown by investors; what is your recipe for success? Since its very foundation as a new city, New Belgrade was built in accordance

with certain plans. Today this is the foundation of regulated construction which, in turn, is something that we have become renowned for. New Belgrade has become the most interesting location for investors

AVERAGE EARNINGS €600 “The average net salary in New Belgrade, according to the latest data, is just under 50,000 dinars, or close to 600 euros. In Serbia, there are only a few smaller municipalities with such levels of average income and they tend to have a large and successful company in the municipality contributing to their average. We are the biggest municipality in Serbia, with a high number of different companies, and we are at the top when it comes to average earnings. Sometimes we take the first place, sometimes not, but we have always been among the top three municipalities in Serbia.”

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in the last eight years because we have a lot of land available for construction, well-developed infrastructure, busy but high-capacity roads, coupled with our proximity to the airport, the best hotels and regulated property and legal relations. Of course, this has positively effected the development of the municipality and thus we have achieved such economic progress and development. What is the current situation in the municipality regarding the construction of office buildings, since we often hear that land plots in New Belgrade have already been allocated for bespoke building projects? There is still around 12 per cent of land available for construction in New Belgrade, so there is still the potential for further development and anyone who wants to invest is always welcome. Of course, we should not forget that when we say development we do not only mean building new ofﬁce buildings, but also the arrival of high-quality companies that will lease ofﬁce space in existing buildings. The properties that are built or are currently being built in New Belgrade are the best business premises in the region. There is, of course, also an industrial zone close to the airport, which is just beginning to develop. What next? Where will new business centres and residential buildings be built in your municipality? Although we are proud of the fact that New Belgrade is becoming a regional business centre, our desire is to create a balance between economic development and the needs of the citizens who live here. In the coming period, we are going to put more emphasis on the development of supporting infrastructure - constructing parking lots, sports facilities, parks, new nurseries and schools. New Belgrade will continue to be the best place to work, but also to live in.

and, following an agreement reached with the city authorities, the inhabitants of ‘cardboard city’ are going to be re-located to Ovča, where relevant infrastructure is currently being built. It is important to point out that the whole project is being carried out in co-operation with Roma organisations and that we’re not talking only about relocation, but also the complete integration of these people into society. We’re working on enrolling children from the settlements into nurseries and schools, providing adequate medical care and the like.

We are the biggest municipality in Serbia, with a large number of different companies. And we are at the top when it comes to average earnings Do you already have some companies interested in this site and, if so, who are they? The whole area of the so-called Sava Amphitheatre is very interesting to investors, but the decision on allocating these sites will have to wait for a serious debate that will include both the city and the municipality and, of course, citizens. The most important thing is to have planned development, in order for the quality of life of New Belgrade’s inhabitants not to be jeopardised. We recently received a special award for planned development in the competition for selecting a Serbian municipality of the future. I think that is the most important development quality of New Belgrade and the quality that we need to preserve.

Since its very foundation as a new city, New Belgrade was built in accordance with certain plans. Today this is the foundation of regulated construction which, in turn, is something that we have become renowned for How do you allocate urban land plots? On the basis of an existing plan and via the public procedure which entails a competition and bidding by interested investors. This procedure is implemented by the City Directorate for Construction and Land Plots. Has the construction of business centres in the municipality led to a higher employment rate among the people living in the municipality and, if so, to what extent? New Belgrade today has 40,000 more jobs than eight years ago. It is important to emphasise that the investment structure was such that these jobs are attractive high-quality positions that attract qualiﬁed staff. What is the final solution for the Roma settlement known as ‘cardboard city’, which covers a very interesting urban riverside location? The problem of slums is present in several locations in the municipality, but the settlement below Gazela Bridge is the most talked about. We have found a solution for this particular problem

GRADINA Company was founded in 1990 as a limited liability company with Mr. Đuro Đurđević at the company’s helm, as the proprietor and director. By investing in modern equipment and technology, personnel and associate training, as well as making the company stronger by hiring competent personnel, GRADINA has experienced constant growth in the quality of work and business operations. During its twenty years of existence, the company has implemented over 1,000 projects – from the simplest jobs to the most complicated projects, architecturally and in terms of construction – covering a total area of 999,000 square metres, constructing both residential and business premises. We possess the ISO 9001:2000 quality control certificate and our slogan is ‘The House for the Only Life We Have’ REFERENCES: Universiade 2009 residential block - New Belgrade Yugoslav Drama Theatre - Belgrade Delta City Honda Car Showroom Residential and business block - Block 23 Residential building at 12 Đakovička Street Residential building at 6, 27th Marta Street

CONTACT: 8 Masarikov trg, Zemun, The11080 Investors Guide Serbia 2009 Belgrade 53 Tel/Fax: +381 (0)11 2192723 / 2192721 / 3163723, Email: office@gradinazemun.rs

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INFRASTRUCTURE

BYPASS IN

TWO YEARS

Part of the bridge over the Sava river in Ostružnica all the way to the Ibarska motorway, which is 7. 7 km long, was opened on November 10 this year in the presence of state officials By Maja AVAKUMOVIĆ

he Belgrade bypass, 47 km long, stretching from Batajnica to Vinča and including a new bridge over the Danube will link all the major and international roads that intersect Belgrade. It will relieve the center of the city of freight trucks. Already, the completed section connecting Ostružnica to the Ibarska motorway has reduced traffic on Gazela Bridge by 20 per cent. Nearly 20,000 trucks and 10,000 cars no longer commute through the center of the city. When the bypass is completed in 2011 as part of international Corridor 10 it will include a railway bridge over the Danube and freight and railroad traffic will be displaced from the city centre.

HISTORY The need for a bypass around Belgrade has been evident since the middle of the 20th century, and the Corridor itself was included in the Master Plan of the City of Belgrade in 1972. The Dobanovci - Bubanj Potok section is a basic part of the Serbian

section of Corridor 10, which runs from Salzburg through Ljubljana, Zagreb, Niš, Skoplje and Veles to Thessaloniki. The Batajnica – Dobanovci bypass lies on a branch of Corridor 10 that runs from Budapest through Novi Sad to Belgrade. Corridor 10 is thus the pan-European traffic corridor

CORRIDOR 10 IS A PRIORITY FOR THE GOVERNMENT Although three shifts of workers were organised this summer, this part of the bypass was not opened on October 1, as the Minister for Infrastructure, Milutin Mrkonjić had announced it would be on many occasions during inspections of the construction site. Nor was it opened on October 15, as the contractors guaranteed at the meeting in the Government at the beginning of the year, but a month later. This part of the bypass is now mainly finished. When a calculation was made, it turned out that around RSD 9.2 billion had been invested in these 7.7 km over the last 17 years. Funding should not be a problem in the future, because the new Serbian Government has marked the completion of Corridor 10 as a top priority.

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that connects South East Europe with the countries of central and western Europe. Construction of the bypass around Belgrade began in 1990, but work was often interrupted by the crises of that decade. According to the Putevi Srbije public enterprise and the investor, initiator of the tender and controller in this project, €160 million was invested in the bypass from the beginning of the 1990s until 2005. The European Investment Bank approved a loan

time) was provided by the National Investment Plan, RSD 158 million from the Republic’s budget, and RSD 300 million from the budget of the City of Belgrade. When the debts were paid, the National Investment Plan Minister met with the contractors and the Serbian Government in January 2008. The contractors undertook that all work would be finished by October 15 and the Government provided guarantees that the financial obligations toward them would

five of them stand out when it comes to their size: Sveta Petka (405 meters), Železnička Reka (406 meters), Kijevski Potok (561 meters), Topčiderska Dolina (676 meters) and Pružni Prelaz (over the railroad in Požarevac, 452 meters). Four tunnels are planned on the road from Dobanovci to Bubanj Potok, in Lipak, Železnik, Straževica and Beli Potok. This first stage of the motorway is based on the construction of a single carriageway 11.5 km long and for use by two-way traffic. The

The need for a bypass around Belgrade has been evident since the middle of the 20th century of €105 million in 1998, but it was withdrawn as a result of the NATO bombing. On November 10 of this year, a section of the Belgrade bypass and Corridor 10 was opened to traffic in the presence of state officials, President Boris Tadić, Prime Minister Mirko Cvetković, Minister for Infrastructure Milutin Mrkonjić, Mayor Dragan Đilas and many others. The 7.7 km stretch of motorway connects Ostružnica to the Ibarsksa motorway and includes four bridges as well as the Lipik and Železnik tunnels. President Tadić stated that Serbia could not weather the global financial crisis if investments for development were suspended and added that the construction of bridges, roads and tunnels must not stop because re-building infrastructure leads to the creation of new jobs. The construction of this important section of motorway from Ostružnica to Orlovača has taken a long time. In 2007, its financing was transferred from the Republic’s budget to the National Investment Plan.

FINANCES In 2007, the Ministry for Infrastructure, led by Velimir Ilić, received RSD 11 billion (then valued at €137.5 million) from the National Investment Plan. The Ministry decided that only RSD 721.5 million (around €9 million) would be spent on the bypass. However, the much needed renovation of the Gazela bridge, situated on Corridor 10, could not start before the completion of this section of the bypass. With that in mind, the present Mayor of Belgrade, Dragan Đilas, then Minister for the National Investment Plan, broke the standstill. He first collected about RSD 800 million in order to pay the debts owed to contractors. An additional RSD 300 million (€3 million at the

Dragan Đilas and Milutin Mrkonjić at the Bypass

FINANCIAL CONSTRUCTION PUT IN PLACE The bypass around Belgrade needs to be finished in the next two years. The financial construction is closed. Of the €1.6 billion provided from privatisation income and loans from international financial institutions (World Bank, European Investment Bank and the European Bank for Reconstruction and Development), €195 million was intended for the bypass. However, the National Plan for the construction of road and railroad infrastructure states that the expenses of the bypass could amount up to €310 million. be settled on time and that they would receive an advance payment for the acquisition of materials. As a result, around RSD 5.5 billion was provided from the National Investment Plan, while the City of Belgrade, who took over the financing of the Železnik tunnel, invested around RSD 2.2 billion. The 5.4 km section from Orlovača to Avala road (Sector 5) is yet to be completed, with Energoprojekt building the Straževica tunnel. Another 7.4 km of motorway must be built in order to connect the Avala road with Bubanj Potok (Sector 6). The stretch of motorway from Dobanovci to Bubanj Potok was projected to bypass Belgrade from the west to the south and span 37.3 km long. 41 bridges were projected on this difficult route, the biggest of which is the bridge over the Sava River and consisting of a steel construction over the river and transient concrete constructions on both river banks, with a total length of almost 2 km. All other bridges in the project are concrete, and

second stage of the project includes plans for a full motorway carriageway along the entire route, which is 47 km long. The section of the bypass which goes from the Niš motorway towards Kovin and Pančevo and further towards Romania, however, is unlikely be constructed any time soon. This section was not projected to be finished before 2010 in any case, because the road and railway bridge near Vinča is still in the design stage and property negotiations involving about 70 houses that need to be expropriated on some parts of this route have yet to be settled. That is why the section from Batajnica to Dobanovci could start construction immediately. European banks have provided loans in the amount of €115 million for this section, which is 9.7 km long and should take vehicles from the direction of Novi Sad. This section, with an extremely demanding part in Batajnica, will be constructed with full motorway carriages. It will have eight new bridges and no tunnels. December 2008 The Investors Guide Belgrade 55

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INDUSTRIAL ZONES

Future industrial zone - Grocka

TARGETED BY

INVESTORS The municipalities of Surčin, Grocka, Obrenovac and Mladenovac have been recommended to foreign and domestic investors as the most suitable locations for investing in Belgrade By Mаjа АVАKUMОVIĆ

elgrade has exceptional potential to attract Greenfield investments. We are talking about tens of thousands of hectares of land along the motorways and main roads in the Belgrade suburbs that are going to be transformed into an industrial zone. The municipalities of Surčin, Grocka, Obrenovac and Mladenovac have been recommended to foreign and domestic investors as the most suitable locations for investing, because these municipalities have vacant land plots along the ZagrebBelgrade and Belgrade-Niš motorways, as well as near the Belgrade bypass and the Danube River in Grocka and Sava River in Obrenovac.

CONTEMPORARY USAGE OF INDUSTRIAL ZONES The contemporary meaning of the term ‘industrial zone’ bears no resemblance to the industrial facilities of half a century ago. To-

Modern industrial zones are constructed on the outskirts of cities and the technology they use has to been clean day when we say ‘industrial zone’ we primarily mean storage facilities and warehouses, light processing industrial complexes, car showrooms and service companies.

Modern industrial zones are constructed on the outskirts of cities and the technology they use has to been clean. Many countries owe their development to industrial parks and Serbia boasts 29 of them at present. The team put together by the city government, with Miroslav Čučković at its helm, has a specific task to form industrial entities in Belgrade, provide appropriate infrastructure and define property status. Land that is ‘prepared’ in this way will be handed over to the Serbian Investment and Promotion Agency (SIEPA), which will then offer the land to potential investors. Before all of that is done, legal teams have a lot of work to do in order to regulate the intrinsic ownership relations in Belgrade and make land available for building new factories – generally

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NOVI SAD ROUTE We should not forget that land along the Novi Sad motorway has long since been targeted by landowners and businessmen searching for a space to erect business premises, residential buildings and small factories. The prices here range from between €15,000 and €20,000 per acre. This land is situated immediately next to the motorway and stretches from Zemun’s Altina to Batajnica. If you add to this 700 hectares of a future industrial zone in Krnjača and 600 hectares next to the Pančevo Road, which includes the new cargo port, Belgrade will be able to offer close to 2,800 hectares of land suitable for construction with utility facilities. land that offers poor agricultural yields. As a result of this development, investors will no longer have to spend hours on end in front of municipal counters searching for the owners of land they are intent on buying. The Municipality of Surčin offers the biggest land plots and is one of the most appealing municipalities for investing, due to the fact that it is located only 20 minutes from downtown Belgrade and is in close proximity to Nikola Tesla Airport. Leading companies, like Delta, Nelt, Čelik, Zorasistem, Pepsi, Eurocargo, Greenfish and Intereurope have already ‘populated’ this municipality and hired several hundred local workers.

The Municipality of Mladenovac has close to 56,000 inhabitants and is located 54 kilometres south of Belgrade. Since this municipality is located on the Belgrade-Niš motorway, it is certainly going to be attractive to investors. Mladenovac has three industrial zones – the first is in the south of the town and has good infrastructure. The second is nearby and the third is in the northern part of the town. All in all, there are 270 hectares of land available for investing. Undeveloped city municipalities like Grocka see their chance in setting up industrial zones. Grocka can offer close to 24 kilometres of the Danube riverbank, suit-

to come. Branch offices, warehouses and production factories are all facilities that can be built in the Gornji Zemun zone. The master plan, which is needed in order for the Directorate to commence constructing roads, water and sewage systems, has been adopted by the City Assembly. There are 1.3 million square metres available for construction in this municipality. There is also a part of Belgrade that is located across the River Danube which is not suitable for residential buildings, since it lacks bridges and a proper sewage system. However, investors have spotted the route along the Zrenjanin Road. All that is missing is a bridge across

GOLF COURSES Golf courses stretching over an unbelievable 300 hectares will certainly be a special attraction. This investment is worth around €700 million and Surčin will also get a car track, while some investors are interested in building a go-cart track with 20,000 spectators’ seats on 80 hectares of land. The municipality has well-developed infrastructure with an appropriate gas system. An acre of land in Surčin can cost from a thousand to ten thousand Euros. The Municipality of Obrenovac has 76,000 inhabitants and is located some 30 kilometres southwest of Belgrade. This municipality used to be known for the Urovci industrial zone. However, there is only 1.5 hectares of land available in this part of Obrenovac. A new industrial zone is probably going to be located where the army barracks currently lie. This is a 55-hectare plot with access to the Sava River and negotiations with the Serbian Army are underway about the sale of this land. The third industrial zone in Obrenovac is situated close to the Obrenovac B thermoelectric power plant. Investors will be offered around 200 hectares for investment.

One of the first zones to be set up was the one alongside the Novosadski and Dobanovački roads able for tourist activities, as well as an attractive piece of land located near the ring road, which runs from the Smederevo Road to Bubanj potok and is close to the Belgrade bypass and a new bridge across the Danube. This municipality could attract investors that are engaged in fruit and vegetable processing. The municipality has at its disposal some 100 hectares of land that could be turned into an industrial zone.

SLOVENIANS AND AUSTRIANS There are few other zones that are worth mentioning. One of the first zones to be set up was the one along the Novosadski and Dobanovački roads. It covers 385 hectares of land, which has partial infrastructure facilities. Coca-Cola and Ball Packaging have already built their facilities here, but there is still enough space left for other companies

Ada Huja, which is due to be built. Lately there has been significant interest shown in land along the Ibarska Motorway in the direction of Niš. This area offers good profit potential to those buying land next to the motorway, which is suitable for building petrol stations and related facilities. The demand for such plots is huge. Bubanj Potok is already ’sold out’ because of its proximity to the motorway. Due to its proximity to the Belgrade bypass, the old Obrenovac Road is also considered an ‘investment Mecca’. An acre of land near Makiš is now worth from €10,000 to €15,000. The same price goes for land on the right of the old Obrenovac Road towards Ada Ciganlija. Investors who buy land here and do absolutely nothing with it are perfectly aware of what they are waiting for. Slovenians and Austrians are the ones that buy the most. December 2008 The Investors Guide Belgrade 57

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REGISTRATIONS

ONE changes to the regulations on establishing the one-stop-shop system within 60 days.

TEN STAGES

Proposed amendments to the regulatory framework are due to be finalised by the end of this year, which would shorten the period for registering a company from the current 23 down to 10 days By Vladan SPASIĆ

ainstaking queuing at various counters has always been viewed as a normal thing in Serbia, even when it comes to registering a company. However, in an effort to change that norm, proposed amendments to the relevant regulations are due to be finalised by the end of this year, which would shorten the period for registering a company from the current 23 down to 10 days. One of the main reasons for this action was a 2007 ‘Doing Business’ report, compiled by the World Bank, according to which it takes 23 days to start doing business in Serbia. This deadline is certainly not something to brag about. The first step is to carry out the procedure of obtaining a tax identification number or PIB, which is done in the Tax Office and takes seven to ten days, sometimes even longer. Ružica Mačukat, deputy registry of-

Before you do anything, it is advisable to log onto the Agency’s website, www.apr. gov.rs, in order to read the guidelines for registration ficer in the Agency for Business Registries (APR), says that reducing the time required to establish a company was prompted by a Serbian government conclusion about setting up a one-counter-registration system, or one-stop-shop, and establishing companies, which was adopted a few weeks ago. The decision is binding for all relevant institutions - the Tax Administration, Ministry of Finance, the Health Care Fund and the Pension and Disability Insurance Fund, which need to prepare their proposals for

“Once these changes are implemented, interested parties will get a PIB number together with the registration of the Agency for Business Registries and, after they open a bank account, they are ready to do business. After that they need do contact the Health Care Fund, the Pension and Disability Insurance Fund (PIO) and employment services. However, they can start doing business even before they do that. It takes another four days to complete what they need to do in the above mentioned funds. So, the first step in establishing a onestop-shop system is issuing registration papers and assigning the PIB number, which will shorten the time spent in the IRS – currently between seven to ten days, if not longer. The aim it to enable clients to obtain both of these documents in one place. After that we plan to improve the procedure even further by making it possible for future company owners to obtain necessary papers from the Health Care Fund and the Pension and Disability Insurance Fund (PIO) in the Agency,” says Mačukat. Registering a limited liability company is done in ten stages. or steps. The first step is a visit to a court or municipality’s office (one day), the second is the bank (one day), the third is the Agency (two to three days), the fourth a seal engraver (one day), the fifth is the tax administration (seven to eleven days), the sixth is again a bank (one day), seventh is back to the APR (one day), the eighth is the Employment Fund (one day), ninth is the Pension and Disability Insurance Fund (two days) and tenth is the Health Insurance Fund (one day). Before you do anything, it is advisable to log onto the Agency’s website, www.apr. gov.rs, in order to read the guidelines for registration, the forms that you need to fill in, fees that need to be paid and to check whether somebody else has already registered a company with the same name. Most of your time is spent at the IRS. The Belgrade Chamber of Commerce says that the IRS assigns a PIB number and conducts the registration of taxpayers on the basis of an application for registration and accompanying documents, which are different for companies and entrepreneurs. Companies need to submit a PR-1 Form,

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E -STOP-SHOP the application for registration of authorised persons and business units, which contains identification data, information about the registration, bank accounts, the person authorised to represent a company, managing director and the company’s representatives in separate business units. The taxpayer is required to report to the IRS any changes and supplements to the information contained in the application for the registration within five working days from the date of the changes being made by using the PPR-1 Form called ‘Application for change – supplement to information on the registration of legal entities and business units’.

COMPANY TYPES There isn’t much difference between company types in Serbia and in other countries. The company can be registered in one of the following legal forms - a shareholding company - opened and closed (A.D.), limited liability company, Ltd. (D.O.O.), Limited partnership (KD), general partnership, co-operatives and co-operative alliance. Of course, there are different company forms for entrepreneurs. Banks and insurance companies are registered as shareholding companies with the National Bank of Serbia, while leasing companies are registered in the form of shareholding or limited liability companies, as well as representative offices in the Agency for Business Registers. A general partnership is a company founded by two or more individuals or firms in the capacity of partners under a common business name, which guarantee

on the collateral of their entire property that they will carry out their obligations. The partner’s share in a partnership company can be in cash, property and rights, as well as in the work or services that are carried out or should be carried out. Limited partnership is a company founded by two or more individuals or firms in the capacity of partners under a common business name, of which at least one person is re-

erty that the company is going to carry out its obligations. No member of the company is solely responsible for liabilities, but is responsible only up to his share that is not brought to the company. A stake in a limited liability company can be in a form of cash or non-monetary, including work performed and services rendered in the company. The stakes of the company members do not need to be of equal value.

Most of your time is spent at the IRS. The Belgrade Chamber of Commerce says that the IRS assigns a PIB number and conducts the registration of taxpayers on the basis of an application for registration and accompanying documents, which are different for companies and entrepreneurs sponsible for the company’s liabilities and at least one person has a limited liability to the value of that person’s share in the company. A limited partnership provides its entire property as a guarantee. The partner with limited liability equivalent to their share in a limited company could be financial and non-monetary, including the work performed and services rendered in a limited partnership. A limited liability company is established by one or more or more individuals or registered persons (maximum 50), in their capacity as company members in order to carry out certain activities under a common business name. A limited liability company guarantees with its entire prop-

A shareholder company is founded by one or more individuals or registered persons in the capacity of shareholders in order to carry out certain activities under a common business name, where the core capital is established and divided into shares. A shareholder company provides its property as a guarantee for fulfilling its obligations. Shareholders are not liable for the company, except up to the value of their contracted share which has not been brought to the company. A stake in a shareholder company may be in cash or property rights in exchange for shares, though it may not be in work performed and services rendered in the company, whether existing or future. Exceptionally, a non-financial stake in a closed shareholder company can be in the form of work performed or services rendered in the company, providing the company’s foundation act stipulates so. In a closed shareholder company shares are issued only to its founders or a limited number of other people. Such a company can have a maximum of 100 shareholders. A closed shareholder company can register shares via a public offer or offer shares for sale in any public way. An open shareholder company is a company whose founders invited a public call for registration and payment of shares at the time of its establishment, through a public offer and prospectus issued in accordance with the Company Law and the law which regulates the securities market. December 2008 The Investors Guide Belgrade 59

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URBAN PLANNING

EASIER CONSTRU C The Belgrade Secretariat for Urban Planning and Utility Affairs says that investors should be given rules that they are familiar with By Vladan SPASIĆ

oth investors and authorities agree that the process of obtaining the necessary permits for construction of business premises in Belgrade must be accelerated. The new Minister of Environmental Protection and Spatial Planning, Oliver Dulić, announced the adoption of a new law on planning and construction. He pointed out to two main problems: the long licensing process and a lack of relevant business rules. Foreign investors, meanwhile, are complaining about the long procedure and the fact that they are often unable to own the land they are building. The City Secretariat for Urban Planning and Utility Affairs says that investors should be given rules that they are familiar with. Laws need to be harmonised and updated and the stability of the economic, political and legal system needs to be secured while procedures for issuing permits and improving the information channel should be simplified.

Milan Vuković, Belgrade Secretary for urban planning and community affairs, says that the draft law on planning, land usage and construction is expected to begin being compiled in the next few days and will be prepared by the end of the year. Asked

“The problem is not in the law, but its compliance with other regulations – laws on security, transportation, environmental protectionfire protection” about plans to introduce the idea of a onestop-shop, Vuković replied that pooling the licensing process could only be implemented if the law was harmonised. “Our goal is to for the Secretariat to secure all the necessary conditions for a project design in a particular location to-

gether with an investor, which are currently being obtained in our Secretariat and in certain utility companies. Once we establish better communication at the city level, the investor will be given information about the conditions set up by the Secretariat and utility companies in the Secretariat alone,” explains Vuković. Minister Dulić recently outlined the new law on planning and construction. Warning that any construction company that has been cheating citizens would be closed down, Dulić said the law will be very rigorous towards municipalities, institutions and companies that do not comply with the law. He announced that the problem of land ownership – an issue that he believes has been a long term hindrance to the arrival of investors – would be resolved soon. Director of the U.S. Agency for International Development, Michael Harvey, says that the fact a company cannot become the owner of the land on which it builds is the main problem for investing in Serbia. He pointed out that, despite the global crisis, Serbia can attract capital from abroad,

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U CTION PERMITS but only if we clearly determine the rules of the game.

PROCEDURE Vuković says that the time required to obtain permits for the construction of office space depends primarily on initial plans. If there are no required urban plans for a location, the investor must draw them up. This may take between six months or three years and, according to Vukovic, does not depend on the Secretariat. Rather, it is a required legal procedure and there must be democratic decision-making with public inclusion when it comes to these plans. How this will be carried out depends on the policy and the speed of decision-making sessions and on local assemblies. Every investor should obtain information on whether the construction of any sort is allowed on the plot at all. All data can be obtained from the Secretariat on the basis of future steps that the investor needs to take. When asked whether the state could speed up the work by doing the plans itself, Vuković said that this would cost money. “This is a complex job and several things need to be done - from determining what we want to do with a site, to securing money

for the equipment and making arrangements with the relevant utility companies,” says Vuković, adding that he would not like to speculate how much time all of this may take and saying that deadlines need to be stipulated by the relevant law. Serious investors, whether domestic or foreign, have knowledgeable service depart-

has to obtain condition assurances from all utility services - water, post office, electrical distribution and proof of ownership. If he doesn’t have all of that, everything will be postponed. “Around 80 per cent of the jobs that an investor should do depend solely on him and not on the relevant services. Many say

“A serious investor, either domestic or foreign, does not decide overnight whether he is going to invest. He analyses the market influences, monitors the situation, enters the procedure on time and meets all the requirements that the system sets before him” ments at their disposal that know which plot of land to ‘attack’. In the event that the required planning documents exist, then the first step is to issue an Act on urban conditions. The law stipulates a 30-day deadline for this process and, as Vuković says, everything can be done in that time providing the investor does not make any errors, as is often the case. In order to obtain this Act, the investor

‘Oh, I have a man who will finish it all’, they wander left and right and in the end they see that not everything is going according to their plan when a lot of time has already been lost. The investor must understand that public companies don’t view these jobs as their priority. They may take tenth place in their job description. Under optimal conditions, it takes 10 to 15 days to perform all of these tasks, and this cannot be December 2008 The Investors Guide Belgrade 61

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URBAN PLANNING any shorter,” insisted Vuković. Once this initial process is completed, the concept for the project is drafted. This stage depends solely on relations between investors and the architectural and building companies that they hire. Then the project concept needs to be issued with a certificate of compliance by the Secretariat. If the project is complete, it takes

CONTROLLING INVESTMENTS “In recent months a review of all investments and possible oversights in the procedures was carried out. This was justified and useful, but it halted a lot of investments. On the list that was given to me by the relevant department for inspection one can see quite serious domestic and foreign investors. At first glance, it is not their fault, nor the administration’s. However, an oversight has been made and we must ascertain who is responsible for it, rather than assigning blame to an investor, the whole collective or the relevant services,” says Secretary Vuković.

Every investor should obtain information on whether the construction of any sort is allowed on the plot at all All data can be obtained from the Secretariat on the basis of future steps that the investor needs to take only a few days to obtain a certificate. After that, the investor needs to obtain approval for construction. To get this approval he needs to come to the Secretariat with resolved property and legal relations and an established land plot. By law, the deadline is two weeks, but the Secretariat warns that it could take up to a year, again not because of their oversight, but the investor’s. The fifth step is drawing up the project, which is something the investor does. Only then does he come to the Secretariat to be issued with a construction permit. This is the last step before construction begins.

OVERSIGHTS Vukovic claims that about 80 per cent of requests that arrive at the Secretariat are incomplete. When asked whether this was because investors or administrators were incompetent, he says that it is because investors are trying to buy time, i.e. they first send an application to the Secretariat and then subsequently acquire and submit the required documents. He argues that the deadlines stipulated by the Construction and Planning Law can be adhered to only if investors submit documentation that is in accordance with the existing regulations. “The problem is not in the law, but its

compliance with other regulations – laws on security, transportation, environmental protection, fire protection…” he says. Legally speaking, the whole procedure should take about a year for a major investment. It is important to apply laws and to start on time. “If you go diagonally, then problems arise. Everybody is saying that the problem is in the Secretariat. You may find what I am going to say unbecoming of a Secretariat employee, but there are all sorts of investors, contractors and project designers who try to achieve something by yelling, threatening, doing this or that. Nobody comes to see me without really wanting to complete the job. I usually see them, but before that I want to see their case and when you see the case it usually turns out that they haven’t provided all the documentation. However, when I tell them this they just shrug their shoulders,” Vuković says. Asked whether a one-year average for the procedure was in line with regional trends, Vuković insists that construction is currently most intensive in Belgrade, where close to a million square metres are being built. As such, it is difficult to compare it with others. “A serious investor, either domestic or foreign, does not decide overnight whether he is going to invest. He analyses the market influences, monitors the situation, enters the procedure on time and meets all the requirements that the system sets before him. There isn’t anywhere, according to my experience from neighbouring countries and the EU, where you can obtain permission in a shorter period of time,” explains the Secretary.

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EDUCATION

POOR EDUCATIONAL STRUCTURE Belgrade is one of the cities with the lowest unemployment rates in Serbia

good percentage, particularly compared to other parts of Serbia. During the same month, the unemployment rate in Novi Pazar was 47.9% and 50.8% in Lebane. In the first eight months of this year, slightly over 37,000 people found a job in Belgrade. In terms of the educational levels of the people looking for jobs, the picture is still unfavorable, as it has been for many years. More than one third or 34,537 people from the list of the Belgrade NES branch have only a high school diploma, while 22,049 have finished only primary school. Only 11,212 of the unemployed in Belgrade have a college diploma.

ENGINEERS AND IT EXPERTS MOST WANTED The most wanted professionals in the market in the past several years have been economists, then IT experts, programmers, PC service experts, licensed construction and machine engineers, and a license is more and more a condition for employers to offer a job to someone in the first place. Pharmacists find a job relatively easy. There are not many of them among the unemployed, and they don’t stay long in the records of unemployed persons. Foreign language professors, primarily English and German, then professors of mathematics and physics are wanted among the highly educated professionals. By Gordana BULAJIĆ

WEAK TERRITORIAL MOVEMENT OF WORK FORCE

ccording to official information, in the first three quarters of this year, the unemployment rate in Serbia decreased significantly in comparison to the previous year. How the global financial crisis will affect this sensitive area, we will discover in the following months, when information on the latest developments in the labour market is released.

Of all highly educated people, it seems that the archeologists, ethnologists, historians and art historians have the least success in finding a job. Employers rarely require these professionals, but it is fortunate that there aren’t many of them registered at the unemployment bureau. We should add forestry and agricultural engineers to the groups of least wanted in Belgrade, but who are much more wanted in the provinces.

THE LIST IS 10% SHORTER In September this year, 726,465 names were contained in the records of the National Employment Service, while in the same month in 2007, this list included 808,000 people, which is 10% higher. 55% of the registered unemployed were women. The average age of the unemployed in Serbia is 39.5 years, and almost a quarter of those without employment were young people under 30 years of age. On average, a person will wait for 4.2 years for employment. Trends similar to those of the republic were recorded for Belgrade as well. 101,388 unemployed persons were registered in August in the Serbian capital, and the unemployment rate in comparison to the same month last year decreased from 15.39% to 13.5%. Most of the unemployed in Belgrade are women, with 58,214 included in the records of the National Employment Service. Slightly over a third of those unemployed have never worked before.

POOR EDUCATIONAL STRUCTURE Belgrade is one of the cities with the lowest unemployment rates in Serbia. This is because Belgrade is a city with a strong industry when compared to other parts of Serbia; this is the administrative center, and plenty of foreign companies that do business in our country have their branches in the capital city. The unemployment rate was 13.5% in August. That is high in comparison to the European Union, where the average unemployment rate is 6.9%, but for our situation, this is a

Although certain efforts have been made, the educational system in Serbia is still uncoordinated with the needs of the industry and the labour market General practice doctors are considered to be in surplus in Belgrade. Unlike their colleagues with a specialization, there are plenty of general practice doctors in the records, much more than in the provinces where this profession is desperately needed. However, the work force in Serbia is known for its weak territorial movement, so these doctors are often not willing to go to places which are about 50 km away from Belgrade, in order to find employment, especially those with families and apartments in Belgrade. The general rule is: the higher the education, the higher the chance of finding a job. Still, certain professions that don’t require a long period of education found their place on the list of professions that are very much needed in the capital city. This includes carpenters, cutters, masons, construction workers, welders (especially those who have a certificate), bakers, cooks, butchers and pastry makers. December 2008 The Investors Guide Belgrade 63

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COMMERCIAL REAL ESTATE

FOREIGN INVESTORS LEADING The biggest, highest quality office space – a total of 415,000 square metres of Class A and B property – is located in the centre of Belgrade’s Old Town [Stari Grad] and across the river in New Belgrade

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By Sanja GAVRIĆ

elgrade currently boasts around 520,000 square metres of class A and B business premises. Of this, around 295,000 square metres are considered Class A, while about 220,000m2 is Class B. In the first six months of this year alone, 65,000 square meters of business space was built – marking an increase of 18.5% compared to the same period last year. The top foreign investors in Belgrade come from Austria, Greece, Slovenia, and Croatia, followed by domestic investors. According to data compiled by Colliers International, the largest good quality business premises, i.e. a total of 415,000 square metres of class A and B properties, are located in the centre of Belgrade’s Old Town [Stari Grad] and across the river in New Belgrade. Colliers International notes that only last year the occupancy of Class A office space was about 90 per cent and a similar trend is happening this year too. Currently, around 9.8% of Belgrade Class A office space is available, while about 10 per cent of Class B space is up for lease. “It is mostly office space, while there are almost no free retail facilities. Also, shopping centres are full and it is impossible to find free space in the main high streets - Knez Mihailova Street, Kralja Aleksandra Boulevard or Požeška Street in Banovo Brdo. The newly built space will be at the same level as last year’s, when 140,000 square metres was built. Several large buildings are planned for construction in 2009. The construction of business buildings in Mihajlo Pupin Boulevard, the building opposite the Arena and a few smaller projects, mainly in New Belgrade, will create an additional 100,000 square metres. According to certain estimates, by the end of 2010 about 340,000 square metres of Class A and B office space will have been built in Belgrade. This will make a total of 860,000 square metres to be offered to the market,” notes Colliers International.

REGIONAL CENTRE Real estate experts claim that Belgrade has enough office space. Compared to major European cities, the amount of office space is much lower, but it is sufficient if we take current needs into account. On the other hand, the plan is for Belgrade to expand and become a broader regional centre that will attract many international companies which are ready to leave expen-

sive markets. However, the question is how large companies will react to the current world financial crisis. Experts who closely monitor current world and domestic events insist that there are no indications that the construction of office and commercial space in Belgrade will slow down. On the other hand, Belgrade real estate

lacks sufficient bridges,” explains Katarina Lazarević. The Alka Agency co-owner explains that commercial space in Belgrade has been built to the highest European standards in order to meet all the requirements of foreign and domestic clients. “These facilities are covered by cameras, sensors,

shopping centres are full and it is impossible to find free space in the main high streets - Knez Mihailova Street, Kralja Aleksandra Boulevard or Požeška Street in Banovo Brdo agencies are already feeling the impact of the crisis on the domestic market. Katarina Lazarević, co-owner of real estate agency ‘Alka’, says that the world crisis is slowly affecting rental and sales of business premises in Belgrade. “The market is stagnating, because in the last few weeks leasing and sales of business premises have slowed down. The business premises that were built in Belgrade last year are more than we actually need at present.” The biggest business premises have been built in New Belgrade – a part of this city that is popular for numerous reasons. “Among other factors, New Belgrade is an excellent location, has good quality infrastructure, wide boulevards and excellent transport links to the city centre. However, the only problem is heavy traffic, especially on Branko’s Bridge. Belgrade

security personnel and caretakers. Moreover, each facility has appropriate parking places, the latest technical equipment and regular maintenance. The only issue is that the rental prices are rather high,” says Lazarević.

PARKING SHORTFALLS The price of business premises in Belgrade is about 20 per cent higher than the cost of residential buildings. As such, a square metre of a business property in New Belgrade costs between €2,500 and €3,000 and can even increase to as much as €5,000 for the most attractive locations. The biggest premises are the most popular for rent. “Banks, insurance companies and other large companies generally buy or rent commercial buildings. The money for purchase December 2008 The Investors Guide Belgrade 65

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COMMERCIAL REAL ESTATE

PRICES Class size (m2) A - downtown 100-500 A - downtown 500-1.000 A - downtown 1.000-1.500 A - wider downtown A - suburb B - downtown B - wider downtown and suburbs

or rent is usually provided from a loan. When it comes to leasing office space, the price is €15 to 20 per square metre, but in some cases it can be as little as €10 per square metre. The price depends on what is being offered: the classification of the building, whether the property offers a complete service, parking, security, etc. Office space is usually rented for a period of five or more years. When it comes to business premises in Belgrade’s Old Town, finding parking space is a big problem. There aren’t many garages in downtown Belgrade, so companies usually rent street side parking places. There aren’t enough parking spaces in public garages and it is not possible to reserve a parking place long-term. In downtown Belgrade, clients usually take the entire business building, since that suits them better. However, such facilities are few and far between and you have to wait a long time for a business building to be constructed and they are usually sold in advance. Facilities with an average size of 1,000 square metres and at least 10 parking places are the most desired. However, the prices of such premises are not calculated

lease price (monthly, € m2) 21 18 16-18 17 10-12 14-18 11-14

per square metre, but are expressed as a lump sum. Prices sometimes reach a figure of several million euro,” says Lazarević.

COMMERCIAL SPACE

In terms of commercial space in Belgrade, foreign branch offices and companies are mainly interested in downtown, i.e. Knez Mihailova Street, to be more precise. Such locations are quite rare and the lease prices are astronomical. “Other commercial facilities are located in shopping centres, with the most attractive being in New Belgrade. They are sold before they are even built and the price is high for both leasing and buying. Large storage space is something that Belgrade is lacking. There aren’t enough distribution centres in the capital city and existing such facilities have been leased a long time ago. However, the problem is the fact that these distribution centres fulfil the needs of old clients and these needs have changed over time, so these old centres should be modernised and equipped to suit contemporary business needs. We need to build distribution centres in all points of ac-

MOST DESIRED Projects in the planning stage or preconstruction phase include: Delta Hotel/ Office in New Belgrade’s Block 20; Delta Autokomanda; Marina Dorćol; Beko Site – a hotel that will probably have residential and business premises; The Interior Ministry building in Knez Miloš Street, where a shopping mall, hotel and a business building are going to be built; Stari Mlin, business building and hotel; Ušće kula II, and Luka Beograd (The Port of Belgrade), where residential and business premises are going to be built. Facilities that are currently being constructed are: Airport City phase III; Sava Grad; Atlas Project in Tošin Bunar – New Belgrade and Mali Kolektiv in downtown (Terazije). The most sought after facilities are: GTC House; GTC Avenija 19; Atrium; Airport City phase I and II; Lukoil / Monus; Ušće Tower; Napred/Grawe; European Business Centre; Hypo Plaza; the Belgrade Office Park and MPC building. 66 Belgrade The Investors Guide December 2008

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cess to the city, along motorways and major roads. We expect that we will be able to use land and fields beside the highway all the way to the Nikola Tesla Airport, following the adoption of regulatory plans. Only after the adoption of new laws will we be able to build large distribution centres,” Lazarević adds. According to Lazarević, long procedures for obtaining the necessary construction permits are a major obstacle for investors. “Because of our protocols, builders have to wait for a very long time to get a permit – sometimes as long as several years. In the meantime, the site in question remains empty. The crisis did not deter investors. We have more investors than ever before. However, when they come here and begin with the procedure, they get so disappointed with bureaucratic obstacles that many return to where they came from. There aren’t enough builders in Belgrade. There is a problem with making land registry books available in electronic form; Serbia is still quite a disorganised country. A potential investor can gain an insight into the real estate market via the Internet everywhere in the world except Serbia. Investors don’t have sufficient information about the situation in our country, whether there are regulatory plans for a part of the city, what the plan is, what and where they can build, what the is procedure for obtaining the necessary permits, etc. These

Other commercial facilities are located in shopping centres, with the most attractive being in New Belgrade things still don’t work in our country and when they come here they are faced with long procedures for obtaining a permit and, let’s face it, a builder needs a huge number of such permits,” says Lazarević.

WEAK DEMAND According to experts, demand for Class B and C business space is weak and set to grow even weaker. Business premises of Class C are regarded as being badly maintained spaces without adequate parking, which is something that modern companies do not look for. So, we can expect all buildings that are currently in the C Class category to be renovated and upgraded to Class B. However, the market share of Class B premises will grow – especially following the construction or renovation of existing facilities in the parts of the city that currently have inadequate infrastructure and which are mostly located outside the central business zone. It is also important to mention that in 2006 the

Katarina Lazarević, Alka demand for business space in Belgrade was modest and resulted in only 25,000 square metres being rented or bought by a handful of international companies who had their foothold on the Serbian market. Last year the Serbian capital had about 100,000 square metres of A Class business space. When you bear in mind how many square metres were built in a year and how many are going to be built, it is clear that Belgrade’s real estate market is in a continuous ascent.

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RESIDENTIAL CONSTRUCTION

VALUABLE REAL ESTATE

Belgrade needs at least 100,000 square metres of additional residential space By Sanja GAVRIĆ

xperts estimate that the Serbian capital has an existing shortfall of housing for the next three years, when supply and demand is expected to finally achieve a balance. Foreign investors rarely participate in the construction of housing, with the building work usually being done by domestic businesses, but also successful athletes! Co-owner of real estate agency Alka, Katarina Lazarević, says for the Investors Guide to Belgrade that there are quite a few investors interested in constructing residential buildings in Belgrade, but virtually no foreigners. “Once they start the process, foreign investors get easily discouraged by the long and painstaking procedure of obtaining building permits. It takes at least a year and sometimes up to two years to get the necessary

documentation. This is not the usual practice in Western countries,” says Lazarević. “On the other hand,” she continues, “apartments in Belgrade are quite expensive at the moment. The price of a newly-built apartment ranges from €1,800 per square metre in suburbs up to almost €5,000 in downtown Belgrade. If you want to buy an apartment in downtown Belgrade it will cost you between €2,500 and €3,000 per square metre on aver-

age, with the same price also applicable to elite parts of the city like Senjak, Dedinje and Vračar, where the price can go up to €5,000. “Apartments in New Belgrade are also too expensive, especially if you are looking into an area near the Belgrade Arena, where a square metre can cost up to €4,000. If we are talking about suburbs, like Borča, Ovča, Mirijevo, Žarkovo or Vidikovac, a square metre in a new building costs around €2,000.

INVESTORS PROFIT = TEN PERCENT Construction company bosses are reluctant to talk about the structure of their revenue and expenditure and even less in the mood to talk about the kind of profits they make. According to some calculations, investors generate profit of about ten per cent for each constructed building. In order to obtain required project documentation, pay a fee to the Directorate for City Construction, pay for electricity, water, telephone and heating connections and pay a tax on the transfer of absolute rights, technical approval and operating permit, investors set aside about 46 per cent of their investment. Investors then set aside an additional 44 per cent for the building, i.e. the material, labour and depreciation costs, thus leaving them with net profit of ten per cent.

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However, due to the global financial crisis which will lead to a reduced influx of capital to Serbia and the fact that taking out a housing loan these days is not easy, let alone cheap, these prices will not be able to be sustained much longer,” Lazarević points out.

REAL ESTATE TURNOVER Lazarević says that following the further impact of the financial crisis and the reduced interest in loans, citizens will not be in a position to afford an apartment. Vendors will eventually come to terms with this and reduce prices. The crisis also affects the sale of real estate, since the sale of apartments in the city centre is not moving an inch these days. “Vendors are hesitant to drop prices, since there is a shortage of apartments on the market; the demand is much higher than the offer. Belgrade lacks large residential blocks. One of the rare such construction sites in Belgrade is the University Centre in New Belgrade, in Block 70 to be precise, which is being built for the participants of the 2009 World Student Games that will take place in Belgrade. The price of apartments in this block is quite affordable, close to €2,000 per square metre. This is the best way to increase the offer and thereby reduce the exuberant prices of apartments in our capital city,” Lazarević adds. According to the Alka co-owner, the state needs to provide a number of concessions in order to stimulate residential construction and make it easier for investors, especially those coming from abroad. “There is a way to stimulate the residential housing market. The first and most pressing problem is in regulation plans that need to be changed and made more accessible for investors. Also, paying land registration fees and covering construction

to the state. The authorities should shorten and facilitate the procedure for obtaining building permits. Foreign investors will not wait two years for the return of money they invested in building residential buildings in Serbia. It is also worth mentioning that if foreign investors were to start building here more, there would be plenty of cheap apartments to choose from. Now we only have expensive ones” Lazarević says, add-

NO INFORMATION ON THE NUMBER OF INVESTORS Nobody knows the exact number of investors who are building apartments in Belgrade. The registry of the Construction Association of the Belgrade Chamber of Commerce contains information pertaining to 4,000 companies that are in some way related to building. These include construction design companies, engineering firms and building entrepreneurs. The IRS also does not have specified records about the tax paid by companies that build apartments in Belgrade.

ing that the fact that city authorities provide no guarantees to somebody who wants to buy an apartment is also a major problem for potential investors. Buyers are not protected, since there are no bank guarantees or other guarantees.

POPULAR LOCATIONS

Most new residential housing projects are currently being built in New Belgrade and the city centre expenses are quite a serious problem. The prices are astronomical; the fee for using city land is huge and on top of that you need to pay VAT. This is what makes the apartment prices high. Regardless of the living standards of people in Serbia, apartment prices here are comparable to those in European cities. So, according to the calculations of investors, a third of the money invested in construction is spent on paying various fees

that are sold at realistic prices. Most new residential housing projects are currently being built in New Belgrade and the city centre. New Belgrade is quite popular with investors, since this part of the city has good infrastructure, wide streets and excellent connections to downtown Belgrade. On the other hand, the construction of small, five to six storey buildings has become quite popular in the city centre districts of

During the last few months, amidst the global financial crisis, many potential buyers in Belgrade were faced with a dilemma over whether to delay their purchase – in the hope that the prices of apartments would go down – or buy. Real estate experts insist that only those constructors who stand stoutly behind their projects, i.e. those who offer good quality apartments at realistic prices, will survive. Some experts believe that the level of supply and demand in Belgrade will balance itself out in three years’ time, when we can expect apartment prices to be a bit more realistic. One and two-bedroom apartments in suburbs like Mirijevo or Žarkovo are still the most popular on the market. Real estate agencies say that foreigners seldom buy apartments and, if they do, they insist on buying apartments

Vračar and Zvezdara. A positive factor for the construction business in these parts of town is that there are many old buildings that are quite rundown but are built on excellent locations. The owners of these houses tend to sell them to investors in exchange for an apartment in a new building that will be built on the site. In a matter of months, a new building with 20 or so apartments and underground garages can be erected on that spot of the crumbling home. In order to stabilise the costs associated with building apartments in Belgrade, experts say that the construction of new housing is necessary. Real estate experts say this is possible only if rundown houses in the city centre are adjusted to urban plans, which is something that the city government needs to get involved with. Because property and legal relations are not properly defined and there is a lack of regulation and urban plans, we can still see small single-storey houses occupying sites where new residential buildings should be. And the owners of these decrepit houses are asking for up to 30 per cent of the value of a new building as compensation for the loss of their houses. December 2008 The Investors Guide Belgrade 69

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IT SECTOR

GROWTH

DESPITE CRISIS The global economic crisis did not bypass the IT industry, hitting more developed than developing countries By Zorica PAUNOVIĆ

nalysis and perspectives of investing in the IT industry in Belgrade have the same importance as a survey conducted on the whole territory of Serbia, since IT development is mostly concentrated in Belgrade, Niš, Novi Sad and partly in Kragujevac. There are a total of 1,500 IT companies registered in Serbia, with almost 60 per cent of them in Belgrade, where we also find the highest concentration of qualified professionals, better telecommunications and transport

infrastructure and a local self-government that offers better conditions for investors. The development is not balanced, rather selective, just like the overall economic development in Serbia. The global economic crisis did not bypass the IT industry, hitting more developed than developing countries. The Serbian Government sees as an advantage in the country being much more interesting to foreign investors for several reasons: a cheap workforce, a substantial number of highly qualified workers, investor subsidies (the lowest profit tax of only 10%, ten-year-tax relief for investments exceeding €7.5 million,

tax reliefs for investments in fixed assets applicable to 80% of invested funds, tax reliefs for each new employee in the period of two years). Since 2000, total FDI in Serbia has amounted to $17 billion, with $2.4 billion invested in IT alone. However, ‘the tightening of the international economic belt’ will affect the position that the Serbian IT sector will find itself in. The 500 top IT companies, with an annual budget of over $5 billion, claim that if IT services are offered for free the savings generated from that would bring no business advantages. The key development issue is diversification, i.e.

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looking up to companies that are better than yours. The Ministry of Telecommunications an Information Society says that in 2009 the IT market in Serbia will grow by 18.8% to a level of €676 million. Annual investments in computer equipment, programmes and services in Serbia currently stand at €62 per capita, which is five times lower than in Slovenia and 3.5 less than in Hungary. If we manage to achieve 25% growth, Serbia will triple its consumption of IT technology by 2012. Even then, investments in computers, programmes and services will be five times lower than in the EU and the whole of Western Europe. Even if state stops playing the role of a ’great employer’, the domestic IT industry will not fare much better since it has always been left to its own devices. Advisor within the Ministry of Telecommunications an Information Society, Slobodan Marković, says that the state should eliminate obstacles for the market appearance and create a stable environment for investing, in addition to securing a transparent and predictable legal framework, easier business operations through eliminating bureaucratic procedures, providing an adequate communication infrastructure, carry out the liberalisation of the telecommunications market, give a balanced offer of new technologies for Internet access, apply the best practice cases in e-government in as many municipalities and institutions in Serbia as possible at the level of local and central governments and round off the legal framework for e-signature and e-documents.

WHY INVEST IN BELGRADE’S IT SECTOR If we take territory as an example, we can say that both Serbia and Belgrade are on the threshold of the EU. Serbia also has benefits stemming from the Free Trade Agreement with Russia and subsequent tax-free access to the market of 150 million people. The total costs of the qualified and educated workforce are some 30 per cent lower than in Western countries. We have an excellent education base, our people speak English well, companies have important knowledge about the West Balkan markets and they are able to localise on the East European and Russian markets. There are currently 3,000 IT engineers engaged on foreign projects, mostly writing programmes and providing services. This sub-sector generates close to $100 million, while the total value of the Serbian IT market in 2007 was €460 million, which is 37.1% higher than in 2006. Company Mineco Computers spent several years analysing the Serbian IT market and came to the conclusion that the annual growth of the IT market in 2008 will be in the

region of 20 per cent, to around €550 million. Although this growth might seem impressive to many European countries, when it comes to the Serbian IT market this is quite a negative indicator, since it shows a slowdown in IT investments where the investments per capita will be only 10 per cent of that in Europe. When it comes to the structure of IT investments, companies from Belgrade and Serbia invest 69 per cent of their money in equipment and this is a dominant investment, followed by IT services with 20 per cent and package software with 11 per cent. “The current situation is induced by economic events on the global level, but also condition that the domestic economy has found itself in. During the last few months, increasing liabilities and huge losses generated by negative fluctuations in the foreign currency exchange are the biggest problems in Serbia’s IT sector. The increasing liabilities might even bring dozens of IT companies in Serbia to their knees, while total losses from negative fluctuations in the foreign currency exchange are estimated to be over two million Euros in October. A balanced growth rate will continue in 2009, so the value ratio between equipment, programmes and services will remain the same. Although sales figures will continue to be based mostly on selling equipment, the total revenue will record a strong growth in the IT services sector. So, if you want to earn money, you should invest in IT services,” says Mineco’s Milovan Matijević.

INTERESTED INVESTORS When it comes to Belgrade’s IT Sector, the recommendation is to invest in software and Internet companies that have managed to penetrate the market with their specialised business solutions adapted to domestic laws and business conditions. These companies

INVESTMENTS 254 new IT companies were founded in Serbia in 2007, 69 of which were founded by foreigners. Almost 60 per cent of these new companies are registered in Belgrade. The advice for 2009 is copied from the prestigious IT and communications consultancy, Gartner, a company that has an annual turnover of $1.5 billion. It says: “in 2009 you should invest in IT departments, i.e. 31 per cent in expert personnel, 27 per cent in hardware and 25 per cent in software.” are providing solutions for the banking sector and revised legal regulations with commentaries. In Serbia, IT companies should arm themselves with a strategy and perseverance, in order to become successful. Bearing in mind the fact that all IT companies in Belgrade are privately-owned, none of them want to divulge how far along they are in negotiations with foreign investors. Most major IT companies find the foreign partners by themselves – as was the case when Siemens IT Solutions and Services bought Belgradebased Ibisys. Saga is currently negotiating with Russian companies and Pexim just concluded the investment process with Polish investors. ComTrade is an exception to this rule, as it has been investing in IT sectors in Albania, Romania, Bulgaria and Croatia. The company has a 10 per cent market share in Southeast Europe. A consortium comprising CT Computers (a daughter company of ComTrade Group) and MPSoft was recently awarded a €10 million contract in Albania. The global financial crisis has also affected Serbian IT and IT companies have either postponed or slowed down acquisitions and sales negotiations. December 2008 The Investors Guide Belgrade 71

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INTERVIEW

Dragan Vučičević, Director of the Sava Centre

CITY OF CONFER Thanks to the high level of provided services, the Sava Centre was awarded the ISO 2001 Quality Certificate. This opens up myriad opportunities for organising professional conferences and cultural events in line with European standards and could make Belgrade one of the leading conference centres in Europe

By Zorica MIHAJLOVIĆ Photo Časlav VUKOJIČIĆ

he international conferences held at the Sava Centre provide a significant boost to the economy of Belgrade - essentially because the many foreign attendees generate foreign currency revenue by spending their money here during the two, three or five days of a conference. “At the time of the Annual Assembly session of the European Bank for Reconstruction and Development, which was held three years ago, in only three days of the AGM the participants spent a total of €3.5 million,” says Dragan Vučičević, Director of Belgrade’s Sava Centre. According to Vučičević, “there haven’t been any cancellations of international conferences as a result of the global financial crisis, but the purchasing power of the man on the street will decline, so I expect certain cultural events to be cancelled - meaning less revenue for Belgrade’s top conference centre.” The financial crisis will be also felt by those who rent business premises in the Sava Centre, since there have already been some announcements of higher heating prices, for starters. In its 31 years of existence, this huge structure in New Belgrade has become the biggest conference, cultural and business centre in the country. Since 1977, when the

first conference was held (The First Conference of European Safety and Co-operation), the centre has hosted summits of the NonAligned Movement, ministerial meetings, conferences of bankers and international organisations, and gala events. In the last few years, there have been many international scientific conferences held at the Sava Centre. Over 8,000 domestic and foreign assemblies have taken place, with close to 1.6 million people participating. Vučičević was appointed the Director of the Sava Centre a month ago. The previous director, Jasna Dimitrijević, is now at the

as possible. According to Vučičević, the real image of Serbia is much better than the one currently perceived.

INTERNATIONAL CONFERENCES “Both foreigners and friends who have been living abroad for a long time often have a completely different view of what Serbia looks like and what is it like living here. Each conference or international assembly that is held in Belgrade is an opportunity to show these people the real truth about our country,” Vučičević says. The Sava Centre is a venue for many do-

“Each conference or international assembly that is being held in Belgrade is an opportunity to show these people the real truth about our country” helm of the Tourist Organisation of Belgrade, which leaves Vučičević expectant that these two institutions are going to have a better bond with the joint goal of generating as much revenue from conference tourism as possible. The aim is to make the conference tourism offer that will include the most attractive places and events in the capital city and Serbia as a whole, as well as to offer conference guests as many interesting activities

FORGOTTEN Last year saw the staging of an exhibition in the UN building to mark three decades of the Sava Centre. The exhibited photographs showed the most important international conferences held in the centre. This came as a surprise to many local politicians, since Serbia, as a part of the then Yugoslavia, was a well-known conference location in the 1980s. A lot of time has passed since then and during the last few years the management of the Sava Centre, as well as Serbian politicians and scientists, have been expected to make the centre one of the leading conference locations again.

mestic conferences. At the end of November the Association of War Veterans of Serbia is going to hold its conference, attended by over 400 participants. There are many charity events being held at the centre, which it hosts free of charge. Quality and affordability are the reasons why many specialised conferences have been taking place in this well-known New Belgrade venue for decades. There is an international climate change conference on December 3rd. Of 39 such conferences held around the world, 26 of them have taken place in Belgrade. Come January, 1,000 young mathematicians will assemble at the Sava Centre. Then there is a conference on brands and in March a foreign investment conference will be held. “I would like to especially point out the Rector’s Conference in April, which will include 700 participants,” says the Director of the Sava Centre, adding that such an eminent conference is yet further recognition of the centre’s quality in organising such events. The autumn of 2009 is reserved for medical conferences and the European Ophthalmologic Conference and an oncology confer-

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RENCE TOURISM ence with close to 2,000 participants will take place. However, ordinary citizens will perhaps find April’s Wine Festival the most interesting.

CONFERENCE EXCHANGE “We organise international conferences via the international conference exchange, of which we are members. The most important thing in this business is to organise some sort of specialised conference for the first time. If you can do something like that properly, they are going to hire you again and again,” Vučičević explains. The 150 employees of the Sava Centre have already begun preparing for next year’s World Student Games, as the Sava Centre will provide the location for the Universiade International Press Centre in July 2009. An international conference entails participants arriving by plane, paying for their hotel accommodation, residence tax and participation fee. When you put all of that together and add dining in restaurants and shopping, each of them will spend around €500. With an improved tourist offer that includes touring the city and surrounding areas, but also going out at night, this amount can go up to as much as €1,000 per person. “Aside from the conference organisers, airlines, hotels, caterers, shops, taxi drivers and tour agencies, the republic and city budget (with their taxes and fees) also benefit. This is why we mention significant foreign currency revenue that can be generated from conference tourism,” Vučičević adds. Asked what Belgrade will do to become the conference centre of Southeast Europe, Vučičević says that Belgrade is the conference centre already. “We are better than the other former Yugoslav republics, but also Romania and Bulgaria. With a better economic situation we will solidify our leading position. However, in order to be more regularly included on the international conference map, what Belgrade needs the most is appropriate hotel accommodation. The Sava Centre can hold 5,500 people, but the problem is that Belgrade has only 3,000 beds in luxury accommodation. In order to develop conference tourism even more, Belgrade needs to have more four and five star hotels, good roads, as well as attractive tourist destinations to supplement the conference economy.

TECHNICAL CAPACITIES Business practitioners who come to the Sava Centre are quite happy with the technical conditions they find in the centre, since all halls have modern equipment. New audio and video technology has been installed; there is translation equipment, conference systems, as well as cable and telephone connections. A large hall that seats 3,650 has been reconstructed, while the central hall and amphitheatre can seat 1,100 and 460 people respectively. Most of the centre’s space is taken up by 15 smaller halls that can be adapted to suit the special needs of each conference. Foreigners that come to the Sava Centre are pleasantly surprised by how welcoming our people are; the dynamics of the city and especially the domestic cuisine. Field trips to Fruška Gora, Sremski Karlovci, Veliko Gradište, Golubac and Lepenski Vir have proved to be among the most lucrative ways to take the conference participants out of their hotel rooms and into the Serbian countryside. Thanks to the high level of provided services, the Sava Centre was awarded with the ISO 2001 Quality Certificate on its anniversary on May 14th. This opens up myriad opportunities for organising professional conferences and cultural events in line with European standards and could make Belgrade one of the leading conference centres in Europe. “We are a public enterprise that is engaged in cultural activities. And we are one of the few public enterprises not financed by the

IMAGE PROMOTION “The Government of Serbia, ministers and the Mayor of Belgrade can do a lot to help Belgrade host an international event,” insists Vučičević. “Lately, our scientists and esteemed members of specialised associations have been the main promoters of the Sava Centre. The Eurovision Song Contest, which was held in Belgrade, certainly improved Serbia’s image and showed that this is the fastest way to eliminate prejudices about our country.” state budget. Our annual revenue is in the region of €6 million, which is enough to cover our everyday maintenance expenses and salaries. Half of this money comes from renting business premises. However, we need to turn to sponsors or the city authorities if we want to bring the Berlin Philharmonic Orchestra or the Bolshoi Theatre, bearing in mind that both are very demanding productions. We also compete for public funding, just like any other cultural institution. If we were to charge a realistic price for our tickets then they would cost up to €500,” our interlocutor says. According to him, the city authorities need to provide their assistance with larger investments too. The project covering investments in the centre’s infrastructure has already been submitted, but the extent to which it will be implemented depends solely on how much money will be available in the 2009 budget.. December 2008 The Investors Guide Belgrade 73

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TOURISM

MORE HOTELS NEEDED

Hotel Hyatt

Belgrade is currently lacking five-star hotels and the plan is to build three luxury hotels in the near future. Once we increase the number of luxury hotels, other hotels will become more interesting too, primarily the three-star category. There are 20 such hotels in Belgrade at present By Jelena VUKIĆ

elgrade can currently accommodate 11,155 paying guests in its hotels of various categories. There are 51 hotels with a total of 6,800 beds at the moment. This includes five five-star hotels, together with the Hotel Metropol, which is currently undergoing reconstruction. In addition to hotel accommodation, there are 40 hostels offering 894 beds during the winter season and 3,319 beds in the summer months, when students and pupils who are studying in Belgrade vacate their student homes and make room for guests. There are also three motels with 329 beds and, additionally, there is the possibility of foreign tourists

staying in private accommodation, which numbers 42 units or 200 beds. The category of private accommodation is in a phase of development and anyone who has private accommodation to offer will be considered for inclusion in this category by the commission set up by the city’s Secretariat of Economy. Belgrade is currently lacking five-star hotels and the plan is to build three luxury hotels in the near future. Hotel ‘Yugoslavia’ will become part of the exclusive chain of Kempinski Hotels, which bought this facility from Alpe Adria Hotel. Kepminski plans to open a luxury five-star hotel in 2011 following the complete renovation of the existing hotel facilities. According to a project

design by U.S.-based company Adrian Smith & Gordon Gill, the new hotel will have 280 rooms, several restaurants, a wellness centre and luxurious boutiques.

NEW HOTELS Belgrade will also get a world-class Crown Plaza hotel on the site of the existing Hotel Kontinental, formerly InterContinental. The plan is for this new hotel to start receiving guests by the summer of 2010. The new hotel owner, company ‘Delta Real Estate’, has announced that it will invest around €35 million in renovation works. Following the completion of the Universiade World Student Games in the summer of 2009, Hotel Kontinental will close down and

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the renovation will be carried out in the following ten to twelve months. Delta Real Estate has signed an agreement on the opening of the Crown Plaza Hotel in Belgrade with one of the world’s leading hotel groups IHTIntercontinental Hotels Group. Hotel InterContinental Belgrade will become part of the so-called mixed-use complex which Delta Real Estate is building in New Belgrade’s Block 20. The location is in close proximity to the existing Delta Holding building and Hyatt Regency Hotel and Delta real Estate plans to construct a 35-storey commercial building that will include the Hotel InterContinental (13 floors) and a shopping mall that will sell luxury world brands. All three units will be connected by an underground garage. Works are scheduled to commence during the first half of 2009 and reach completion in 2010. Hotel Putnik, located in New Belgrade, plans to expand its capacities to 90 rooms and 12 suites. Guests will be able to take advantage of a swimming pool, gym, aerobics room and a wellness centre. Five million Euros will be spent on renovating the hotel.

tion about wellness and recreation centres, pedestrian zones, cycle lanes and places of interest that are in the close proximity to luxury hotels. “When an average businessman comes to Belgrade on the weekend and visits the Tourist Information Centre to inquire what he can see during his stay, he needs to be given the appropriate answers,” says the TOB Director, adding that these es-

could go up from 700,000 to a million by 2010. Although this is in line with the ‘Strategy for the development of tourism in Belgrade’, experts from the Institute of Economic Sciences insist that Belgrade could have up to two million overnight stays by 2018, adding that such an achievement would depend on whether low-cost airlines will become operational in the country or not. Although the Open Skies Agreement was signed two and a half years ago, formally allowing citizens to use low-cost companies, not much use has come off it, since only two budget airlines – one Norwegian and one German – are operating in line with that principle, while there are 60 such companies in Europe. “We expect that these airlines will become operational here too in the next three years, which will increase the interest of European citizens in Belgrade even more. People will want to come to Belgrade to finally see the city that they’ve heard so much about during the last 15 years. If a return ticket were to cost €139, like anywhere else

Hotel Continental

Hotel Moscow

sentially business visitors should be encouraged to attend events like Bemus, BITEF and the October Salon.

in Europe, then that is entirely possible,” says Dimitrijević. The further development of conference tourism will certainly contribute to a better occupancy of Belgrade hotels. The Conference Bureau of Serbia has been established and a Conference Bureau of Belgrade is soon to follow. These are all prerequisites for the city and the country to be presented as a reliable conference destination. Moreover, these new bureaus will ensure that all required information will be made available to those interested in holding a conference in Belgrade. “The fact remains that Belgrade and Serbia are the destinations of the future and that business people from various branches need a new market, new country and new city. It is up to us to take advantage of that chance. Belgrade and the surrounding areas are the place for that and in the coming period there will be great interest shown for organising conferences, assemblies and fairs,” Dimitrijević concludes.

says Jasna Dimitrijević, TOB Director. According to Dimitrijević, serious attention should be paid to business visitors to Belgrade. Brochures covering what to see and where to go in Belgrade must be made available for them and include informa-

Belgrade is currently lacking five-star hotels and the plan is to build three luxury hotels in the near future

THREE-STAR HOTELS According to the estimates of the Tourist Organisation of Belgrade (TOB), interest in other hotels will undoubtedly increase once the number of luxury hotels is increased. This primarily applies to three-star hotels – of which there are currently 20 in Belgrade. The number of three-star hotels should be higher and, since the existing hotels are mostly situated in the city centre, a good idea would be to build these hotels in other districts. “It is very important to have a private accommodation, because it completes the tourist offer to a large extent. More and more young tourists, who come to cultural events in Belgrade and the surrounding areas by train, stay in hostels. It is interesting that Belgrade is often promoted as a city of fun, although only ten per cent of tourists come for that reason. On the other hand, 16 per cent of visitors to Belgrade come to attend sporting events, while 64 per cent of foreign visitors are in the Serbian capital on business. At the TOB we believe that this disproportion is an excellent indicator of what should be done in order to increase the number of tourists who come for entertainment, which includes culture and sport,”

INCREASING OVERNIGHTERS According to Dimitrijević, the price of accommodation in Belgrade is also important. She claims that prices in Belgrade are comparable to other regional countries. The biggest problem, however, is the price of flights. This is the single most restrictive factor affecting the arrival of foreign tourists. Opening up to budget airlines would contribute significantly to estimates which claim that the number of overnight stays

VISITORS The first eight months of this year saw around 786,000 overnight stays in Belgrade, of which about 300,000 were tourist excursions. The greatest number of these visitors came from the former Yugoslav republics, followed by Scandinavian countries, the Russian Federation, France, Italy, Great Britain, the Czech Republic and Greece. We are expecting a heightened interest from Greek tourists, since a new direct flight between Belgrade and Thessaloniki was set up ten days ago.

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RETAIL

BELGRADE – FOR SHOPPI There are currently 14 hyper-markets and 31 shopping malls in Belgrade. But when it comes to the amount of retail space, Belgrade still lags behind other European cities By Dragana NIKOLIĆ

ver the past few years, Belgrade’s development has been rapid, and the city is slowly but surely becoming a metropolis. There are currently 14 hyper-markets in the Serbian capital, mostly in Novi Beograd and Zemun, and 31 shopping malls across the city. A few years ago it would have been difficult to imagine that so many mega-markets would spring up in such a short time. Last year, Delta City, Idea and Intereks were built in Novi Beograd, and the Zira shopping mall opened

in downtown Belgrade. On any given weekend, over 10,000 people pass through Mercator, M Rodić, Tempo or Imo Centar, the same number of people who visit museums in this country. Retail experts say that the era of the shopping mall is upon us.

FOREIGN CAPITAL The Slovenians were the first to build hyper-markets constructed with foreign capital. Seven years ago, Mercator opened a shopping mall in Novi Beograd, and the retailer recently opened another in Zemun, stretching over 52,400 square metres. The

company states it plans to build new malls in Belgrade and other major Serbian cities. The Greek company Veropoulos opened two hyper-markets in Belgrade on over 10,000 square metres, as did the German company Metro (8,000 square metres on Zrenjaninski put and 13,000 square metres in Zemun). Slovenia-based Merkur opened a hyper-market on 10,000 square metres, followed by Croatian Agrokor with 12,500 square metres and M Rodić with two retail facilities with a total surface of 18,300 square metres. Delta opened two Tempo centres in Belgrade that stretch over 26,000

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– A MECCA ING MALLS Mercator shopping mall square metres. This year, Verano Company opened the Zira shopping mall. „Since it was built in May this year, Zira has recorded increasingly strong results when it comes to the number of people who visit us, as well as to turnover. On average, between four and five thousand people visit Zira every day, and during weekends this number goes up to ten thousand. The largest number of people came to Zira during our so-called shopping parties, organized in midOctober when we had 20,775 visitors in one evening“, says Jova Srećo, Marketing Director of Verano. He adds that several factors contributed to such good results – in addition to a good location in downtown Belgrade and sufficient parking space, an important detail in Belgrade, Zira offers a wide range of services, a pleasant atmosphere, well-known global clothing brands, home products, cafes, a restaurant and playgrounds -- in other words, an extensive offer.

The largest shopping mall in the Balkans, Delta City opened a year ago in Novi Beograd which, despite being on the outskirts of Belgrade, is rapidly becoming the capital’s business centre. Stretching across 30,000 metres,

Delta City recently marked its first anniversay and has been visited by 12 million people thus far, which is six times the population of Belgra the mall is the size of 15 football fields. It has 125 shops, 18 kiosks,15 cafes and restaurants and 1,290 parking spaces. It can hold up to 200,000 people, the population of Novi Sad.

PUTTING ON THE PADLOCK Unlike newly-built shopping malls that are chock full with shoppers, the former retail symbols of Belgrade like Staklenac, City Passage and Millennium are not as frequented as they used to be, while in Čumićevo Sokače and shopping centres in Balkanska and Sremska streets, shoppers are few and far between. Most old shopping malls in Belgrade are nearly empty, with virtually no buyers, and many have decided to close. Although these shopping areas were attractive 10 to 15 years ago, strong competition, a lack of strategic planning and the hyperproduction of small shops have caused sales figures to decline steadily.

It took 18 months, 74 million euros and 52 companies to construct Delta City. In addition to shops, the mall has bowling alleys and is currently constructing a multiplex cinema with six screening halls. The mall will bring substantial benefits to the local economy, creating 1,500 new jobs.

FUTURE PLANS Delta City recently marked its first anniversay and has been visited by 12 million people thus far, which is six times the population of Belgrade. The success of Delta Holding follows years of expansion, and today it is the third largest company in Serbia and one of the first five companies in the region. Nor does the company intend to slow down. Its founder, Miroslav Mišković, says that new shopping malls will follow – one in Belgrade and two each in Novi Sad and Niš. Recently, Delta opened a shopping mall in the capital of Montenegro, Podgorica, as well as in Banja Luka. The centre of Belgrade is also attracting large-scale investors. The area of Belgrade known as Autokomanda may soon rival prices in Novi Beograd. MPC Properties recently announced that it had won a tender to rent three hectares of land in Autokomanda with its offer of RSD2.2 billion. After the company completes construction of an Ušće shopping mall, it plans to build a business complex on three plots of December 2008 The Investors Guide Belgrade 77

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RETAIL Delta Holding three years ago. The company has announced that whoever is assigned the newly available land, Delta Holding will start building the largest shopping mall in the Balkans at this location. The entire project will cost close to 200 million euros and will be completed by 2011. „Even if the commission decides to assign the land to MPC, we are going to implement our plan to construct the largest shopping mall“, Delta Holding stated. Construction is due to start next year. Once the shopping mall is finished, the price of a square metre in nearby facilities could jump by 30 to 50 per cent. An acre of land here now costs between 50,000 and 100,000 euros and could go up by 50 per cent. A simple calculation shows that a square metre of residential

Jova Srećo, Verano land in Autokomanda that cover a total of 90,000 square metres. The company has announced that the project design will be finished in two months’ time. However, the Directorate for City Land says that the bids have just been opened and that the relevant commission has 30 days to decide to whom the land will be leased. MPC may have been premature to declare its victory of the tender before it became official, but whoever is given the right to build between the motorway and the circular intersection, 180,000 square metres of land are available for construction at this location. The opening price of the Directorate’s tender was RSD1.7 billion, and according to the published announcement, three land plots of 56,500, 18,000 and 6,000 square metres will be available for building. Neighbouring land plots were taken by

Zira shopping mall

The total trade space in Belgrade is 3.4 million square metres, with 30 per cent of it occupied by retail facilities space in this area will jump from the current 2,000 euros to 3,000 euros. A similar increase is expected in the price of business premises, with the cost of a square metre rising up to 5,000 euros. Novi Beograd experienced that price increase when properties close to Delta City rose by roughly 30 per cent in the year after the shopping mall was built.

NOT ENOUGH RETAIL SPACE According to data from the Serbian

SPACE Our market is becoming increasingly popular with foreigners. Large retail chains like Ikea and Plaza Centres have expressed interest in opening shops here. Although more and more shopping malls have opened in Belgrade lately, we still don’t have enough retail space per capita. According to studies conducted by the Ministry of Trade and Services, only 0.5 square metres is assigned to each buyer. The plan is to double this number by 2012. Chamber of Commerce Belgrade Trade Association, out of the total number of registered companies, 38.9 per cent of them are engaged in retail. Of the 52,793 shops in the city, one third of them are small shops – 17,553. The total trade space in Belgrade is 3.4 million square metres, with 30 per cent of it occupied by retail facilities. Currently, there is a surplus of 1,300 retail facilities. But in terms of the amount of available retail space, Belgrade lags significantly behind other European cities, according to a survey conducted by the Belgrade Faculty of Economy, conducted for the Strategy for Development of Retail Activities in Belgrade for the Period up to 2015. Unlike Vienna or Budapest, with 1.4 and 1.6 square metres of retail space per capita respectively, Belgrade has 0.68. A professor at the Belgrade Faculty of Economics and project manager for the Strategy Survey, which was recently presented in the City Assembly, says that retail facilities in Belgrade are scattered and that we lack in super-markets, hyper-markets, discount shops and shopping malls, i.e. large retail facilities. When asked whether these large shops will lead to the demise of small ones, Lovreta replies that they won’t. The fact remains that some of them will not be able to survive the competition and the battle with large retailers, but Belgrade is still going to be left with a sufficient number of small shops. In addition, the shops in Belgrade are not evenly distributed. Around 95 per cent of wholesale facilities are located in eight out of seventeen municipalities. All large retailers are in Novi Beograd, Palilula or Zemun where there was enough space to build. A consumer survey shows that 50 per cent of Belgrade residents travel to another part of the town to shop and 40 per cent usually buy food. Hence, certain measures have been put in place to allocate these facilities in a more even way. Plans to establish a Council for Planning and Development of Retail Activities will address the issue of shop locations.

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BANKS

BANKING

METROPOLIS Of the 35 banks that are currently active in Serbia, only six don’t have their headquarters in the Serbian capital By Slađana ĆURIĆ

ost of the 35 banks that are operational in Serbia have their head offices in Belgrade, with only six directing their Serbian operations from provincial cities. According to the latest data from Serbia’s central bank, the National Bank of Serbia (NBS), Serbia’s total banking network comprises 2,564 branch offices, sub-branches, counters, agencies and bureau de change offices. This figure is 78% higher than at the end of the first quarter of this year. Almost 30 per cent of them are located in Belgrade. The Serbian ‘Wall Street’ is represented by New Belgrade’s Zoran Đinđić Boulevard, which is home to the headquarters of the leading banks in Serbia– from Intesa to Raiffeisen. This part of the city is known for its business blocks which house not only banks but also other financial institutions, such as insurance and leasing companies. The many banks operating in Serbia have a combined total of close to 567 branch offices and 1,657 sub-branches. The leading banks in Serbia have the largest number of branches: Komercijalna banka has over 250, Intesa has 240, EFG has 201, etc. A third of these branches are located in the Serbian capital. Banca Intesa owns close to 29,941 square metres of business premises in Serbia. And what space the bank can’t buy, it simply leases. Indeed, Intesa has leased some 22,159.44 square metres of office space in Serbia. In Belgrade the bank owns and leases around 15,000 square metres. This bank employs 2,447 people, 639 of whom work in Belgrade and almost half have some level of higher education. Raiffeisen Bank, one of the leading banking groups in Central and Eastern Europe, became operational in Serbia back in 2001. The bank has around 100 branch offices in

Serbia, 25 of which are in Belgrade. When it comes to the number of branch offices and sub-branches, Greek Eurobank EFG is among the most comprehensive, with 201 offices. EFG is the successor of Nacionalna štedionica (the National Savings Bank) and it owns huge business premises. This bank has donated funds to both the Botanical Gardens in Belgrade and the Newlyweds Park in Ada Ciganlija. Hypo-Alpe-Adria Bank came to Serbia in 2002 as part of Hypo International Group, the most successful regional bank in the Alps & Adriatic Region. Today it is one of the most important financial institutions in Serbia and it’s headquarter are located in New Belgrade’s Ušće Business Centre on the confluence of the Danube and Sava rivers. Aside from retail activities with the public, Hypo-Alpe-Adria has introduced many business product innovations to the Serbian market. It was the first bank to provide leasing services, housing mortgages, long-term

BANK PROLIFERATION Almost every single street in Belgrade has a bank branch office. As is the case in any other city, the branches are located right next to each other. As such, all 35 banks have several branches each in downtown Belgrade.

business credits and cross-border loans. The bank has around 100 branch and sub-branch offices and invests heavily in residential and business premises. It has close to 1,000 employees and an 8.55% market share. Société Générale Bank is the veritable old stalwart of foreign banks in Serbia, having come to the country over 30 years ago. On 12th February 1991 the bank was established under the name of Société Générale Yugoslavia and was the first European bank with foreign capital in Serbia. Since then, the bank has started to offer retail services and has opened four branch offices in Belgrade. Today, this French bank has close to 100 branch offices, 250,000 clients and over 1,000 employees in Serbia. “Both Société Générale Group and Société Générale Bank in Serbia completely trust this country and are confident about its future development. They are dedicated to doing business in Serbia long-term,” says Goran Pitić, Chairman of Société Générale’s Management Board in Serbia. “Over a year ago, the bank moved to new business premises in New Belgrade. This new facility covers over 6,344 square metres and is worth €10 million. We are continuing to expand our network in Serbia and Société Générale Group will provide assistance to its branch office in Belgrade through various loans, know-how and products.” December 2008 The Investors Guide Belgrade 79

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SPORT

Volleyball team Serbia defends the silver in Bangkok

READY FOR T

UNIVERSIA

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The student sports competition strengthens the unity of spirit and body, education and sport and is an event that truly deserves to be respected By Željko BALJKAS

n order to adapt to the current financial capabilities of our country, the Universiade – Belgrade 2009 is not going to be as large as we wanted it to be, but is definitely gearing up to become a massive sporting event and the biggest sports competition ever held in Belgrade and Serbia. It’s six months until the formal opening of the 25th university games in the Belgrade Arena which will take place on July 1st. By the time the Belgrade Universiade opens, the organisers - the Organisational Committee led by the Serbian Deputy Prime Minister, Božidar Đelić and the Company Universiade – Belgrade 2009, the sport associations in Serbia and an army of volunteers need to make up for lost time and provide appropriate accommodation and facilities for the student athletes who will arrive from all over the world. At its October session that took place in Belgrade, the International University Sports Federation (FISU) ascertained that the standards, as set by the international sporting federation, have been met. The Organisational Committee agrees with this assessment.

RESPONSIBILITY

THE

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The number of sports at this year’s Universiade has been reduced from the planned 21 to 15, or 13 compulsory and 2 optional sports. This, however, does not alter the fact that the Belgrade Universiade is the largest sporting competition ever to be held in Belgrade and Serbia. The Director of the Universiade – Belgrade 2009 Company and former basketball player, Zoran Jovanović is convinced that ’team play’ will yield the desired results. „To be at the helm of the team that is preparing next year’s largest sporting event in the world carries a huge responsibility and this is not just a phrase that is usually said in these situations. As an athlete, I have learned a lot that I use as guidelines today. One of these things is that if you are playing an important game, you should consider it a privilege, and there is no time to relax when you are bestowed with a privilege. You also shouldn’t feel stage fright, which can diminish your performance. We have very

Zoran Jovanović, Director of the Universiade little time left until the Universiade, and there is a huge job ahead of us. Only if we play well, methodically and as a team, can we get the results we want. Of course, we are probably going to have to bring some creativity and imagination into all of this since we have limited funds and short deadlines“, Jovanović says.

CHALLENGE Despite the reduced number of sports, the Universiade remains not only a great organisational challenge but also a good quality sporting competition. „As a member of a national team, I also participated in the Universiade and I am well aware of the fact that this is a huge event. Aside from its budget and global popularity, the Unversiade can be compared to the Olympics in every respect. Considering that athletes up to 28 years of age who are at the peak of their athletic strength, are participating in this event, and bearing in mind that most of today’s top athletes are studying at faculties

CHALLENGE FOR PUBLIC SERVICE The Universiade will also be a great challenge for national television. The Radio and Television of Serbia (RTS), as national broadcaster, will play the most important role in producing and creating TV footage that will be sent to the world. Many TV stations have expressed interest in broadcasting the 25th Universiade, from local to regional stations, all the way to global TV stations and channels. Universiade – Belgrade 2009 has signed contracts with Eurosport, Brazilian TV station, Globo, Korean KBS, Chinese CCTV and others. December 2008 The Investors Guide Belgrade 81

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SPORT

THREE JUBILEES IN BELGRADE Despite being more modest than the previous Universiades, this one will break the record when it comes to the number of participating athletes. Three jubilees will be celebrated at this year’s Universiade – 25th Universiade (the silver jubilee), 50 years since the first Universiade in Turin and 60 years from the establishment of the International University Sports Federation (FISU). and colleges, then it is easy to conclude that the people who compete at the Universiade are actually Olympians, and often Olympic champions. In addition, the Universiade assembles athletes from most countries in

the world, as does the Olympics. For example, we expect close to 9,000 competitors to come to Belgrade, while in Bejing last year only 1,500 more athletes competed. So, in an organisational sense, these two events stand shoulder to shoulder. What sets them apart, and this is something that sports certainly benefit from, is the fact that the Universiade is not yet gripped by the professionalism that pushes human and athletic limits to the maximum, which, according to many people, jeopardises the Olympic spirit. Free of such pressure, and with far fewer financial interests, the world student games are considered a purely sporting event that can be enjoyed without such burdens. The event will last for twelve days in July and be watched by sports fans in Belgrade and in

other cities involved in the organisation, as well as by guests from abroad. The event is a profitable one, just not in the usual sense of the word“, says the Director General of the Universiade – Belgrade 2009.

PROFIT FREE “The Universiade is not geared toward making a profit. Despite conventional thinking, even the Olympic games don’t bring measurable profit in most cases and huge money is invested in them. Still, we cannot discuss the Universiade without considering what it means for the country and host city. Above all, decision makers in the ruling structures need to concentrate on sporting facilities during the organisational period. Even if no substantial investments are made

University village in Belgrade

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or new infrastructure built, it is quite obvious that the benefit that Belgrade, as well as other cities that will host the competitions and training sessions, will be noticable through improving sporting venues and the city itself. We are already talking about resolving many transport and construction challenges in the context of the Universiade, which will definitely improve Belgrade’s image“, Jovanović adds. Even greater contribution will be made to the 25th Universiade via TV and radio coverage and press reports that will travel the world, promoting the country and host city. „Some things cannot be measured and this is something that most people deal with. However, this kind of event is more than welcome in a country that still needs to improve its image and gain

a well-deserved place in Europe and the world. In an atmosphere free of political interests, over 10,000 participants and guests will gain a picture of Serbia that is worth more than any marketing campaign. We speak a lot these days about the necessity to draw in foreign investments, and every sporting event that draws foreign business people to the country creates a potential investment“, Jovanović says. He adds that this is an investment into our future and our young people. „I don’t need to specifically point out who is getting what from the Unversiade, but our efforts are geared to make sure our students get as much out of this as they can, since this is their event. Everything that is going to be used during the Universiade, from the furniture to computer equipment, will be given to student dorms and other university organisations, which is something that the state hasn’t had enough money for. Although I am mostly engaged in the financial side of organisation, the most significant aspect of this event, in my opinion, is our volunteers. We can learn a lot from them because they are doing their job with such strength and enthusiasm without ever asking whether there is something in it for them. It is quite clear that they need more such events, that they are yearning to make friends and to invest their powers in achieving joint goals. It seems that we have been underestimating

Despite the reduced number of sports, the Universiade remains not only a great organisational challenge but also a good quality sporting competition them all this time and that we are not aware how important it is for them to meet thousands of their peers in their own city, in their country. This is what our efforts are all about and this is why we feel that it is worthwhile to do this job“, Zoran Jovanović concluded.

POSSIBILITIES Reducing the Universiade format has meant adapting the event to the financial realities of our country, especially because of the global financial crisis. „Of course, this event cannot be prepared without authorities at all levels as well as at sporting instutions and universities truly applying themselves. Though we are finalising the preparations for the Universiade during difficult times for the

PROGRAMME AND HOST CITIES The programme of the 25th Universiade will include 15 sports – 13 compulsory and 2 optional. According to the decision made by the the International University Sports Federation (FISU), the following are considered compulsory sports – athletics, judo, football, basketball, fencing, volleyball, swimming, rythmic gymnastics, diving, sports gymnastics, tennis, table tennis and water polo. The Organisational Committee of the Universiade – Belgrade 2009 has decided to organise competitions in taekwando and archery with the significant assistance from the international taekwando and archery associations. The Organisational Committee and FISU have agreed not to include the following sports – kayaking, karate, handball, wrestling, shooting and rowing. In addition to Belgrade and its sports facilities, the Organisational Committee has decided that some team competitions will take place in Inđija, Pančevo, Zrenjanin, Novi Sad and Smederevo. The sport facilities in these towns, with some yet to be completed, meet all FISU and international sport federations’ standards. world, with restrictive budgets, for me, as Director General of the company Universiade – Belgrade 2009, it is really important to have quality and constructive cooperation with the Executive and Organisational Committees since much depends on their decisions. Of course, we, in the company, need to be ready to implement their decisions. I would like to say that we don’t have time to argue or feel sorry for ourselves because the plans that we have been preparing for a long time now have to be changed because of the reduced budget. The only thing that we can do with the time we have at our disposal is to carry out certain modifications in order to preserve the best conditions and quality possible while remaining within our budget. I would just like to illustrate how hard this is by saying that the budget for the next Universiade that will take place in Shenzhen, China is several times higher and I won’t go into Kazan, Russia which will set aside a huge amount of money for the Universiade in 2013. We think that we are going to have an excellent Universiade which will be organised with a smaller amount of money“, Jovanović said.

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SPORT

PRIVATISATION

Stadium Partizan

Stadium Crvena Zvezda

Both the ’red & whites’ and the ’black & whites’ will be at the centre of attention once the law on sport is adopted and their privatisation begins By Živko BALJKAS

nce Partizan’s shares are floated on a stock exchange, Red Star will buy them all – this is how Dr. Božidar Cerović, Professor at the Belgrade Faculty of Economy and football aficionado, commented jokingly a decade ago. Even back then there were talks about inevitable privatisation in sport with certain football clubs already ‘taken over’ by entrepreneurs in an attempt to take these clubs out of the sate of crisis and money shortage that has been a constant companion of Serbian sport for two decades. The new owners also wanted to get some return on their money or turn a profit by selling players and laundering money.

ACQUISITION OF CLUBS The acquisition of clubs has always been ahead of legal regulation, with Serbia lacking a law on privatisation in sport to this day, despite the fact that this law should have been seen as important by federal and republic ministries, secretariats and authorities that take care of sport; things that haven’t changed to this day. A working group put together by the Ministry of Youth and Sport began working on the draft law on sport that should be completed by January 2009. According to the group’s announcements, the law will be sub-

jected to a public hearing, then revised and sent on the path that it has travelled three times during the last eight years (once as a federal law in the former state) – i.e. the path to an approval by the Government and inclusion in the parliamentary procedure. This last hurdle has evaded the last two draft laws on sport; governments have come and gone even before the draft laws have managed to make it to the National Parliament, leaving the Ministry of Youth and Sport to start all over again. Last year the section of the law pertaining to the privatisation of sport was simply omitted from the law on sport.

STRATEGIC DECISION This was a strategic decision for two rea-

sons: first and foremost is that the genesis of sports property is quite complex, as is its privatisation. We learn something from the experiences with privatisation in other areas, but also from the practices of other countries that have already carried out privatisation in sport. “We have decided 2008 should be the year of privatisation in sport,” said Minister of Youth and Sport, Snežana SamardžićMarković, in a statement for Politika daily a year ago. She continued: “We spoke to the Ministry of Economy and Regional Development and found that the privatisation could be carried out in accordance with a special law and an existing model. However, we can only privatise the section

EUROPEAN MODELS The process of privatising sporting clubs, primarily football teams, started back in the 1980s in Western Europe and was carried out mainly through recapitalisation with some privatisations still going on. Civil and non-profit organisations have gradually but successfully transformed themselves into shareholding companies only in England. Floating shares on a stock exchange is not only the result of ideological reasons, but also pragmatic ones – since huge amounts of money are involved in English football. This model was also used by UEFA in forming the Champions League, which generates a lot of revenue from TV broadcasts and marketing. Some of the biggest European clubs have been contemplating forming their own European league, just like the NBA. Thanks to the fact that clubs can float their shares on a stock exchange, more and more clubs have just one owner instead of several small shareholders. The most profitable Spanish clubs, like Real Madrid or Barcelona, don’t have just one ‘boss’, but are collectively owned and the biggest financier makes the final decision. The situation is the same in Germany, the Netherlands and Switzerland.

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STARS IN SPORT of a sporting organisation or club that is owned by the state, which is why we need to define how high the state’s investment in sport is, which is definitely not easy to discern. When implementing a privatisation procedure it’s very important not to change the purpose of a facility, i.e. to stop a sporting facility from being turned into a shopping centre or a hotel, but we also need to consider the other side of the coin, so to speak. Certain sports and clubs will be less attractive for privatisation. Unfortunately, these are mainly ladies clubs or amateur sporting organisations. As such, we need to put in place certain mechanisms in order to preserve these sports, primarily through encouraging investments in sport and promoting school sports”. Now it seems that year 2009 could be the year of privatisation in sport. The working committee that consists of representatives of the Minister of Youth and Sport, sporting organisations, the Securities Commission, the Privatisation Agency, the Provincial Secretariat for Youth and Sport, the Republic Sport Bureau and other relevant organisations, should use one of the existing privatisation models that have been implemented by other European countries, with more or less successful results.

tough times for these giant clubs whose fan base (more fans – more tickets, jerseys and other souvenirs sold, more sponsorship agreements) has been reduced to relatively small groups of die-hard fans who are still willing to come and see the games of our two biggest clubs, despite the harsh economic conditions. Still, the biggest value of Red Star and Partizan is in their real estate – from stadiums, though both in desperate need of renovation, to office buildings and other facilities (auxiliary football grounds and land in an attractive part of the city).

AWAITING LEGISLATION Back when he was the Secretary General of FC Partizan, Žarko Zečević said that the

In Germany, for example, shareholders can own 49 per cent of shares and clubs 51 per cent, giving the club the final say in the decision-making process. This is something that both Serbia and other transitional countries should view as very important. The Ministry of Youth and Sport says that preserving the club’s basic activity will be a prerequisite for privatisation and, accordingly, will be included in the new law. The law will also include another element that will make it possible for civil organisations to transform themselves into shareholding companies, though it will have to protect the state-owned capital that is present in many sporting organisations. Its value would be expressed in

THE DOWNFALL OF THE BEST The first thing that comes to mind when we think about the privatisation of sporting clubs in Serbia is the big two: FC Red Star and FC Partizan, our strongest football clubs to have traditionally stood shoulder to shoulder with their European rivals. Many say that delaying the privatisation of these clubs contributed to their downfall and bad results of late, while others say that delaying privatisation in Serbian sport has nothing to do with that. It is really not difficult to draw a conclusion from this: many privatisation processes in Serbia were carried out after the value of the privatisation subject was reduced. Nevertheless, both the ’red & whites’ (Red Star) and the ’black & whites’ (Partizan) will be at the centre of attention once the law on sport, which regulates this area, is adopted and their privatisation begins. The two neighbouring clubs are undoubtedly Serbia’s most valuable sporting assets. Red Star and Partizan have strong brands, built by previous generations of the clubs’ players. And just assessing the value of the brand names will be very difficult in today’s

Just assessing the value of the brand names Red Star and Partizan will be very difficult in today’s tough times for these giant clubs whose fan base has been reduced to relatively small groups of die-hards club was eagerly awaiting the law on privatisation and that some people in Serbia and abroad had expressed interest in acquiring the club. The new President of FC Red Star, Dan Tana, decided not to wait for the relevant regulation and announced that the ’red and whites’ would be privatised through an IPO and that the club would be transformed into a shareholding company where none of the shareholders would be entitled to more than 50 per cent of shares. This means that FC Red Star could be completely owned by shareholders, large or small, just like English clubs.

shares owned by the state, which should also apply to real estate (buildings and land) that are state-owned. In the case of our two most popular clubs, it remains to be seen who actually owns what. Only after this is ascertained will the clubs could transform themselves into shareholding companies. Once they appear on the market, their victories and losses will raise or lower the value of shares, while bad business moves, buying players that don’t rise to the occasion or bad coaches could even lead the clubs to bankruptcy and shareholders to losing money. December 2008 The Investors Guide Belgrade 85

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SPORT

BELGRADE’S RACE

In addition to the marathon, the Children’s Marathon and the Ladies’ Race, Belgrade now also has ’The Race through History’. The Belgrade Marathon is counting on its strategic partnership with the city and the state in organising these events By Živko BALJKAS

n the last two decades, Belgrade Marathon Company has acquired the status of a very successful organiser of top quality mass sporting events. Although the company started to develop its activities at a time of war, sanctions and a harsh economic crisis, when everybody was more prone to putting traditional events on hold or even cancelling them; during a time (the 1990s) when both Belgrade and Serbia were left without many branded sporting events, the Belgrade Marathon, the Children’s Marathon and The Ladies’ Race

April in Belgrade is also famous for the Belgrade Marathon and Children’s Marathon. September sees the staging of the Ladies’ Race, while in October we will see the Belgrade Race through History making a comeback

emerged from Humska Street and became firmly rooted in the life of the capital city. An agreement has been reached to bring back the Belgrade Race through History, which is certainly the most original project in the global racing movement. “The products devised by the Belgrade Marathon are intended for the wider population, i.e. citizens of all ages, recreational and professional runners and athletes from other sports. All of these events are taking place out in the open and provide great possibilities to show the world via a direct broadcast or in postproduction just how beautiful Belgrade is. Simultaneously,

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THROUGH HISTORY

the size of the venues for the marathon, the Ladies’ Race and the Kalemegdan race provide numerous opportunities for presenting and promoting sponsors. This makes the programme of our activities even better, since, aside from the supreme sporting

dimension of this event, the sponsors can present themselves at these events, whether we are talking about sports equipment producers, health food and healthy living promoters or manufacturers of natural and energy-boosting drinks,” says Dejan Nikolić,

RACING FOR THE MARKET “Of five key points of the long-term strategy for development of tourism in Serbia, the Belgrade Marathon and Ladies’ Race fit two. These are market orientated events, which are definitely popular in the world and especially Europe. They take place on Saturdays, which makes it possible for globetrotting runners to set aside a whole weekend for a visit to Belgrade to take part in a quality event and return to work on Monday. Hence, we’ve been talking to our tourist officials and are preparing adequate programmes for the foreign guests, which we are going offer on the global racing market and other marathons that we co-operate with and which cannot take all runners that want to participate,” Nikolić says, adding that the Belgrade Marathon has enjoyed good co-operation for quite a few years with sponsors and business partners alike, including PTT, JAT Airways, Radio and Television Serbia, Soko Štark, Reebok and Banca Intesa, which has been actively engaged in the promotion of running and Belgrade.

Director of the Belgrade Marathon.

CHARITY PROJECTS From its very inception, the Belgrade Marathon has been acting as a socially responsible company which promotes not just the city, sport and healthy living, but also implements various charity projects and socially beneficial campaigns in collaboration with UNICEF, Naša Srbija, the Katarina Rebrača Fund, CorD magazine, associations of persons with special needs and relevant ministries. Together with the Children’s Marathon, which moved into the magical space of the Belgrade Zoo several years ago, the Belgrade Marathon is an event identified with the city of Belgrade. The Ladies’ Race is slowly becoming the most important city event dedicated to the fairer sex, while Dejan Nikolić and his associDecember 2008 The Investors Guide Belgrade 87

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SPORT

BELGRADE: ATP TOURNAMENT HOST Novak Đoković and Family Sport are bringing a tennis tournament to Belgrade that is destined to have a bright future. At the beginning of November, Family Sport, a company founded by the Đoković family, with help from City officials, successfully completed a business endeavour in Shanghai that will make Belgrade the host of an ATP tournament. The first ATP tournament in Belgrade will begin on 4th May on the courts of the Milan Gale Muškatirović Sport Centre (better known as 25. maj). Our fellow citizens will be given a unique opportunity to see some of the world’s best tennis players in action. Family Sport has acquired a licence from the Dutch Open, which has been taking place in Amersfoort since 1986. The Belgrade Tournament, under the working title of Serbia Open, will belong to the second tournament category with a prize fund of €326,000. The premier event will take place on the tennis courts of Dorćol, while the plan is for the tournament to move to a new, contemporary court of the Đoković Academy in 2010. This tennis court is currently under construction. Since the Belgrade tournament will take place between the Masters in Rome (27th April) and Madrid (11th May), and bearing in mind it will be played on clay, it is logical to expect that many tennis players who are going to play at the Madrid Masters are going to prepare in Belgrade. There is no doubt that Novak Đoković will use his reputation and connections to bring as many famous players as possible to Belgrade. Many have already been imagining the world number one and ‘King of the Clay Court’, Rafael Nadal, in Belgrade, as well as his fellow countryman, Fernando Verdasco and many other players

who specialise on clay courts. The reputation that Novak Đoković has among his peers was validated at the ATP Board’s session in Shanghai, when he explained why he wanted the tournament to move from the Netherlands to Serbia. The Board made a unanimous decision in his favour and applauded Đoković for his idea, which is highly unusual at such business meetings. Speaking in Shanghai, Belgrade’s City Secretary for Sports and Youth, Igor Miklja, also confirmed his support to the Belgrade Tournament on behalf of the Belgrade City Assembly. More will be revealed about the event once Novak Đoković returns to Belgrade, as Family Sport has decided that Novak should be the one to present the citizens of Belgrade with the tournament which is destined to become one of the most attractive sporting events in Belgrade and will contribute to the propagation and development of tennis in Belgrade and Serbia, as well as promoting Serbia in the world. Speaking on this issue, Mayor of Belgrade, Dragan Đilas, said: “Belgrade will assist the Đoković family and organise the tournament on the 25. maj courts until they build their own tennis centre on the location that they bought from the Belgrade City Assembly. Today, we have the number one and five female tennis players in the world, the number one tennis player in doubles and a tennis player who is only ten points away from second spot. And we are all very proud of them. Bearing in mind that our players all come from Belgrade, let’s have an ATP and maybe even WTA tournament here, let them play in their own city, let our fellow citizens cheer them while they play. This will be the best promotion of our city that will certainly bring new investments and new jobs”.

Together with the Children’s Marathon, which moved into the magical space of the Belgrade Zoo several years ago, the Belgrade Marathon is an event identified with the city of Belgrade ates are preparing the comeback of the ’Belgrade Race through History’, which was so popular in Belgrade during the 1990s. A good activity programme and a first-rate sporting dimension will suit the sponsors’ needs of promoting themselves during this event. April in Belgrade is also famous for the Belgrade Marathon and Children’s Marathon. September sees the staging of the Ladies’ Race, while in October we will see the Belgrade Race through History making a comeback. “The Race through History is a fusion of sport, history and culture, which includes a top quality race with the best world runners participating. This is an opportunity to show the world just how specific and beautiful Belgrade is, as well as for Belgrade to present its history and culture. This event was in the making for four whole years, from 1996 to 1999, primarily as a TV and film project,” Nikolić recalls.

THREE CALENDARS When the top five runners at this year’s New York Marathon were presented in New York in November, three of them were said to have participated in the Belgrade Race through History and two of them had actually won it. They were Kenya-based runner, Paul Tergat, South African Hendrick Ramaa88 Belgrade The Investors Guide December 2008

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la and Abderahman Gumri from Morocco. “This proves that even back then the runners we selected were top quality. Renewed interest shown by Tergat and Ramaala for the new race, in addition to many top runners who have never been to Belgrade before, testifies that the Belgrade Race through History will make a full comeback to the global scene. I expect that we are going to be included in all three calendars – the European Athletics (EA), the International Association of Athletics Federation (IAAF) and the Association of International Marathons and Distance Races (AIMS), since these are more than just dates in a calendar. This will give us an opportunity to present ourselves and for others to see the race via these three associations, their websites, news letters and magazines. We also expect that the Belgrade Race through History will soon be returning to AIMS, not only as an associate member, but as a fully-fledged one. The basic idea is for the top runners to be guides through history and this concept had been developing for a full two years, before we started with its implementation. While preparing the new race, we talked to the City Bureau for Protection of Monuments of Culture, the Institute of Architecture and the Belgrade Institute of History and we are also going to co-operate with other historical, cultural and heritage institutions in Belgrade, in order to present ourselves in the best possible manner. In addition to that, we will set up a fund for reconstruction of the Belgrade Fortress and, together with our sponsors, we are going to participate in the protection of this landmark and its presentation in the years to come,” Nikolić says.

STATE ASSISTANCE According to Nikolić, the reinstatement of the race through history is also encouraging to all other institutions that take care of Belgrade’s culture and history, especially in the Kalemegdan area of the Belgrade Fortress. “Together with them, we are going to write a development project which will be presented on television and film, since the history of the Belgrade Fortress is very long and really interesting. Each year we can present one period of Belgrade’s history by using period costumes to re-enact authentic William Kwambai Kipchumba scenes,” Nikolić adds. The Belgrade Marathon is counting on its strategic partnership with the city and the state in organising these events. “The help and assistance provided by the state and the city are very important to us – and I don’t mean just the financial help which hasn’t amounted too much so far, but rather co-operation in making the event as good as possible. We have established good and constructive relations with the Ministry for Youth and Sport, Ministry of Health, Ministry of Labour and Social Policy, and this year also with the Ministry of Economy and Regional Development, which is in charge of tourist activities in the country. We can significantly contribute to the development of tourism, just as we contribute to the promotion of sport and health. We have signed a contract with the Belgrade Tourist Organisation about a joint appearance and promotion of Belgrade at other global events where the Belgrade Marathon is also present. I expect that we are going to establish co-operation with the Tourist Organisation of Serbia too,” Nikolić says. Those who are well acquainted with the global racing movement say that a third ’wave’ of marathons and street races is coming. This was evident in New York on 3rd November, when the global marathon movement start-

Marathon 2008. ed some 35 years ago. For the first time ever, the number of people wanting to participate in the New York Marathon exceeded 100,000. There were 35,000 numbers to be allocated and 105,000 runners from all over the world who wanted to participate. The same thing happened in London, Chicago, Berlin... The increase in the number of people wanting to take part was also noticeable last month, during the Athens Marathon, where close to 5,000 applied, instead of the usual three hundred. These numbers clearly make marathon appeal a significant tourist potential.

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CULTURE

National Museum

HIDDEN TREASURES By Novo TOMIĆ

elgrade is often called ’the city of museums’ because the city’s cultural and artistic treasure is located in 40 or so museums and galleries. However, not all historic treasures are available for viewing. A lot is hidden in depots and many pieces are rarely seen, with some never exhibited at all. There are numerous paintings that are stored in the Museum of Modern Art and priceless pieces in the City of Belgrade Museum that have not been exhibited for over a century. Almost everything that this museum owns is being stored in its warehouses. Museum-goers are also faced with another problem as a result of the fact that

the city’s two biggest museums have been closed down for renovation. The Museum of Modern Art will probably be reopened in November 2009, provided that renovation is completed on time, while the doors of the biggest museum in town – the National – are going to be closed for several years to come, since renovation hasn’t even begun yet. This is definitely not good for Belgrade’s tourist offer, since museums make up a significant part of it.

MUSEUM EXHIBITIONS The management of the National Museum and the Museum of Modern Art are doing their utmost to keep museums opened. The National Museum started to organise large exhibitions that take place in other

The cultural and artistic heritage of the Serbian capital city is scattered around 40 locations, with many pieces not even available for viewing venues. So, the citizens of Belgrade can see an exhibition entitled ‘Vinča – Pre-Historic Metropolis’ in the gallery of the Serbian Academy of Science and Art (SANU) in Knez Mihailova Street, which will be open until 10th January, due to the massive interest shown by the public. This exhibition is a result of efforts invested by the National Museum, the City of Belgrade Museum and SANU. However, it represents just a fraction of the extensive collection of pre-historic pieces that are kept in the National Museum and City of Belgrade Museum dating back to the Stone Age times of the Lepenski Vir, Starčevo and Vinča cultures. The exhibition’s pieces and concept are truly exceptional. It shows that Vinča, the pre-historic settlement near Belgrade, was indeed a me-

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tropolis dating back to the late Neolithic period around 3,000BC. It is also worth noting that the National Museum’s collection of late Neolithic pieces numbers 15,746 objects, which speaks volumes about the richness of pre-historic life in the area of today’s Belgrade and Serbia. If it weren’t for such exhibitions, audiences would not have been able to see many pieces that are being kept in the National Museum. A rich collection of ancient Greek and Roman pieces is tucked away in the museum’s depots, especially pieces that were found at the sites of Roman palaces in Serbia, which includes a bust of the Emperor Constantine the Great, which was excavated several years ago in his birth place of Naissus (today’s Niš) and is considered one of the most beautiful and significant

ings by 20th century Yugoslav painters (close to 3,000 oil and water colour paintings) and 850 pieces by Yugoslav sculptors. When renovation of the Museum of Modern Art is completed you will be able see a three-piece exhibition with very unusual titles: ‘The Hilarious Marble’ (pieces of Belgrade’s surrealistic art), ‘Dada – No Way’ (the artwork of the Yugoslav avant-garde – dadaism, zenythism and constructivism) and ‘Was ist Kunst?’ a collection of conceptual art that emerged between the modern and post-modern art of the 1970s. It is difficult to anticipate what exhibitions will be staged once the museum is re-opened, since its exhibition space can display just a fraction of the artwork that the museum possesses. The Museum of Modern Art has an extremely representative collection of

Museum Nikola Tesla

The National Museum has a very extensive collection of medieval art with many murals and icons and a masterpiece called Miroslav’s Gospel, which is the first Serbian illustrated Cyrillic manuscript, dating back to1180 pieces of Roman portrait art of the period. Aside from Constantine the Great, the following Roman emperors were also born on the territory of today’s Serbia: Maximillian Hercules, Constantius Chlorus, Galerius Maximianus, Licinius and Justinian the Great. As such, it is no wonder that the traces of Roman culture found in Serbia are considered so important. The National Museum has a very extensive collection of medieval art with many murals and icons and a masterpiece called Miroslav’s Gospel, which is the first Serbian illustrated Cyrillic manuscript, dating back to1180. It has the status of a national relic and is considered one of the most beautiful manuscripts in the world. Then there is Queen Theodora’s ring (from 1322) and King Radoslav’s ring (from 1219 or 1220), graphics by Rembrandt and Dürer, paintings by Renoir (‘After the Bath’) and Picasso (’Head of a Woman’), a collection of paint-

20th century Yugoslav artists, probably the best on the territory of the former Yugoslavia, which was partially bought by the museum and partially donated by the artists themselves. This is an extraordinary testament of a former country that existed for a century and left traces that we are not yet fully aware of.

MUSEUM TREASURE In terms of artwork possessed by museums but unavailable to the general public, it is worth mentioning the City of Belgrade Museum, which was founded in 1903 but is still waiting to move into a building of its own. Some 130,000 art pieces that are a testimony to the long and rich history of Belgrade are stored at the depot in Zmaj Jovina Street. They will be exhibited once the museum moves to the premises of the New Military Academy, built in 1900, which is situated over two blocks between Neman-

OTHER MUSEUMS Belgrade’s Museum of African Art offers interesting and significant artefacts from the that large and diverse continent. The Automobile Museum has a Marot-Gardon, a French two-seater from 1897 that has three wheels and a wooden shell, as well as a Charon from 1908 and fifty other classic models. At the Aviation Museum, on the grounds of Nikola Tesla Airport, you can see 200 planes and 130 engines. This museum is considered one of the best aviation museums in Europe. The Nikola Tesla Museum preserves the original legacy of this brilliant scientist. Last, but not least, is the Cinematography Museum, which is famous for its daily screenings of old movies that can be rarely seen anywhere else.

Aviation Museum jina, Resavska and Birčaninova streets. The museum will have 3,000 square metres at its disposal and will move to its building in 2010, in the best case scenario. Until then there is Princess Ljubica Court, which is part of the City of Belgrade Museum, and some of the twenty other collections and museums (the Sekulić Collection of Icons, the Jovan Cvijić Museum, the Ivo Andrić Memorial Museum, the Toma Rosandić Museum, the Banjica Concentration Camp Memorial Museum, the Vinča archaeological site and the Mladenovac Museum). When it comes to museums that are open and fully functional but are somehow in the shadow of the National Museum and Museum of Modern Art, we can certainly recommend the Museum of Applied Arts, which regularly stages fantastic exhibitions and has 132 collections with 30,300 objet d’ art. The Serbian Orthodox Church Museum is also quite interesting. There you can see extraordinary icons and various religious artefacts. The museum has very old relics such as the cloak covering Duke Lazar’s cadaver, works by Nun Jefimija (dating back to 1402) entitled ‘The Eulogy for St. Duke Lazar’, then the charter by Duke Lazar given to the Ravanica Monastery in 1381, the Charter of Tsar Dušan given to the Hilandar Monastery in 1347 or a gown worn by Duke Lazar from 1389, the year of the famous Battle of Kosovo, which Lazar led. December 2008 The Investors Guide Belgrade 91

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TOURISM

Jasna Dimitrijević, Director of the Tourist Organisation of Belgrade, TOB

REGIONAL TO U

Weekend city tours are the most popular. We offer two-hour sightseeing tours of Kalemegdan, Princess Ljubica’s Residence, Manak’s House and other sights By Jelena VUKIĆ Photo Marko RUPENA

he newly appointed director of the Tourist Organisation of Belgrade, TOB, announces the imminent implementation of a campaign that will promote ten tourist locations that are a

must-see in Belgrade. Although these locations have yet to be narrowed down, the promotion campaign will be finalised in 2009, when a new brochure will also be released. What does a typical foreign tourist find most interesting in Belgrade?

Most tourists who’ve visited Belgrade agree that the rivers, the Danube Quay and the Sava Wharf, i.e. the places along these locations, are something that absolutely needs to be seen, in addition to Kalemegdan, Ada Ciganlija, Skadarlija and Zemun. Belgrade’s tourist offer should be supplemented with places that are of architec-

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URIST LEADER tural importance, i.e. the buildings that are signiﬁcant to the history of Belgrade.

In that respect, how important is the Architecture Week event? This is a very important event that is organised by the Belgrade Culture Centre and the Association of Belgrade Architects. This event provides us with an opportunity to promote certain locations that are not included in the usual sightseeing of Belgrade. I am referring to the building of the Federal Executive Council (SIV), which is interesting both to architects and foreign tourists. Then there is the Aviation Centre in Zemun, the St. Antun Church in the Crveni krst district and many other buildings that used to be privately-owned and are located in downtown Belgrade. What other events could be included in Belgrade’s tourist offer? These are deﬁnitely the so-called ‘themed offers’, like the October Salon that is organised annually by the Belgrade Culture Centre. This event is regularly visited by several hundred foreign tourists. The Salon runs through the month of October and we can make a special tour of the Belgrade galleries, i.e. the October Salon, which will show the tourists Belgrade’s contemporary art scene. A novelty in the cultural offer is including the oldest music festival, Bemus, and the international theatre festival, Bitef, on the list of the ten must-sees in Belgrade. By having an adequate and well positioned offer at international music festivals, we can generate interest in other people to start coming to concerts in groups. What does a regular sightseeing tour of Belgrade include? Downtown Belgrade. The weekend tours are the most popular and we offer two-hour sightseeing tours of Kalemegdan, Princess Ljubica’s Residence, Man-

Belgrade’s tourist offer should be supplemented with places that are of architectural importance, i.e. the buildings that are significant to the history of Belgrade ak’s House (the Ethnographic Museum), the City Assembly, Old and New Palace, as well as the royal court complex in Dedinje. In addition to this tour, we also have a more extensive tour of Topčider, the National Library, St. Sava Temple, Slavija all the way to the city centre. We start at Nikola Pašić Square. However, we do feel

ATTRACTIVE DESTINATIONS Aside from Ada Ciganlija, there is Zemun and its quay, which is considered Belgrade’s river therapy. We also have Gardoš, which is an especially attractive location, and Kalemegdan, which is already included in the tourist offer. Kalemegdan is something that tourists want to see first when they come to Belgrade. Avala is also full of potential, but currently there are no tourist facilities that we can use there.

that these tours are insufﬁcient and there are many other tourist attractions that can be presented in a different manner. What else can you include in this standard offer? Museums and galleries, but currently we cannot include the National Museum and the Museum of Modern art, as they are being renovated and adapted. We believe that foreign tourists would be interested in our museums, especially in the event called the Night of Museums, which is visited by tens of thousands of people. Ada Ciganlija is also important when it comes to new tourist attractions in Belgrade. We think that we should not promote Ada Ciganlija or the Belgrade Sea, as it is known, only during the summer, but rather all year around. We have talked to public enterprise Ada Ciganlija about including this spot in the tourist offer throughout the year. For example, this winter there will be an ice rink opened at Ada and we are preparing a tourist guide which is going to show people everything that Ada has to offer, something that they are not aware of or something that we haven’t included in the offer so far. We are also planning to open a souvenir shop December 2008 The Investors Guide Belgrade 93

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TOURISM if it weren’t for its excellent restaurants it would look like a long-forgotten quarter of the city. We have a plan for 2009, together with the City Assembly, utility companies and the Stari Grad municipality, to take care of the locations that we consider as a priority. That is, to renovate the cobblestone roads, put up benches, lanterns and lamp-posts. These are basic utility tasks and, as I said, we consider them to be a priority. Our job would be to make a guide that will contain information about why Skadarlija is considered as the ‘bohemian quarter’ of Belgrade. We need to come up with a certain offer which would include cultural programmes and exhibitions to be held at Đura Jakšić house. Then we can have organised walks through Skadarlija with tourists spending a day or an evening in one of the many Skadarlija restaurants. What else do foreign tourists find attractive in Belgrade? They want to see Belgrade as the vibrant city that it really is; a place where you can see an urban spirit wherever you go, especially in Knez Mihailova Street.

We can see that tourism budgets are being reduced or frozen all over the world. The budget of the Tourist Organisation of Belgrade remains at the same level as last year’s, in terms of programme funding there, to provide better catering facilities and to put up seats near the river in the winter months. Ada has a lot going for it: it is a new experience and something that we are currently developing. Although Avala is included in the tourist offer, it doesn’t seem that it is ready to take tourists? Some ideas remain always in the realm of imagination, while some are taking into account what is profitable for investors who ought to benefit from their investments. What we need to do first is to take care of the infrastructure of Avala and make it possible for people to visit by car or bus. Although we have basic conditions for that, I believe that everything can be raised to a much higher level. The part of Avala that is suitable for field trips needs

to be whipped into shape. We used to have more benches and signposts for tourists and it is our job to reconstruct all of that. Also, you can’t buy any souvenirs there and you don’t have one place where people can ﬁnd out about the history of the monuments and local surroundings. Avala doesn’t have enough catering facilities, with the exception of the foothill. We also need various sports and recreational facilities in the winter period too, which would include some winter sports. Avala has this kind of potential and somebody should recognise this and invest accordingly. We have heard that Skadarlija is also going to be taken care of next year? This is one of the most recognisable bohemian parts of the city. Unfortunately, Skadarlija today is a rundown place and

Tourists will be able to feel the spirit of our city even more if they see Belgrade’s architecture. We should not forget Vinča, which is also quite appealing to foreigners since it is a 7,500-year-old site. Some foreign tourists are interested in the 25. maj Museum and ’Kuća cveća’ (The House of Flowers –Tito’s final resting place). We are working on including this in our tourist offer, bearing in mind the historical story of the times of the former Yugoslavia that is linked to this location. Tourists also find the Babe resort in Sopot quite interesting, as well as touring the monasteries in Belgrade and the surrounding areas. What also attracts attention is the so-called ‘cardboard city’, which is a testament to the spirit of Belgrade and the inability of the city authorities to resolve this problem. Tourists are impressed by the way people in the cardboard city live.

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What is Belgrade missing? A more substantial offer for local tourists. At the Tourist Organisation of Belgrade should work on encouraging the local citizenry to go to the countryside or spend a weekend outside Belgrade and maybe see something out of the ordinary, something that can reﬁne their life. It is quite interesting to see that foreign tourists are no longer interested in visiting the buildings that were bombed during the NATO air raids of 1999, since they are wondering why we haven’t built something in their place after so many years. You claim that in the next four years Belgrade could become the most appealing city in the region when it comes to the offer and quality of the city. Is this a realistic expectation? Yes, since I deeply believe in the strate-

gy for the development of tourism in Belgrade for the period up to 2018. Belgrade has opened its doors and presented itself to the foreign market as an open city and a safe destination. The fact is that more and more foreigners are coming to Belgrade. We have plans and deadlines to ﬁnalise for

We believe that foreign tourists would be interested in our museums, especially in the event called the Night of Museums, which is visited by tens of thousands of people

constructing hotels. And we have many European and global sporting events scheduled, like the Universiada World Student Games. To remind you, we were the hosts of the Eurovision Song Contest and we are organising more and more annual events with several thousand participants. All of this should prompt those who are responsible for the way in which the city functions to do their part of the job when it comes to turning Belgrade into the capital of Europe. The world is faced with a huge financial crisis which inevitably affects the development of tourism. Is your budget reduced and what can you do with the funds at your disposal? We can see that tourism budgets are being reduced or frozen all over the world. The budget of the Tourist Organisation of Belgrade remains at the same level as last year’s, in terms of programme funding. It amounts to around 160 million dinars, which we get from the City Assembly as an indirect budget beneﬁciary. We don’t need more money in order to help Belgrade present itself as the city of architecture and culture and the city that should have neatly tagged locations and resorts on the tourist maps that are accessible to people with special needs. We need to spend the available funds on creative ideas in a way that these ideas are going to be visible and approachable for everybody. Regardless of the budget we have, I believe that there is a will and readiness of all of us to continue working on making Belgrade one of the most prestigious destinations in Europe. December 2008 The Investors Guide Belgrade 95

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NEW YEAR FESTIVITIES

BREGOVIĆ TAKES BELGRADE INTO 2009

The financial crisis will mean a less glamorous New Year’s Eve celebration in Belgrade in comparison to last year’s, since the city authorities have begun to apply prudent measures By Jelena VUKIĆ

nlike the 2007-08 New Year’s Eve celebration, when people danced and sang in front of three stages with 17 Serbian and foreign bands and singers performing, this time around the end of the year will only be officially celebrated in front of the National Parliament. The financial crisis that is shaking up the whole world will mean a less glamorous New Year’s Eve celebration in Belgrade in comparison to last year’s, since the city authorities have began to apply prudent measures. The practice of organising the city’s official celebration in several locations, which was introduced to the city of good fun – Belgrade – five years ago, will not happen this year because the city authorities have decided to spend their money in a more rational manner. According to representatives of the Belef

Centre, responsible for organising the New Year’s Eve celebrations, “Unlike in previous years, there won’t be any foreign musicians coming. An ethno-group from Ruma called Vrelo will be the first to perform, followed

Last year, the greatest number of tourists came from the former Yugoslavia, Scandinavian countries, Germany, the Netherlands, Bulgaria and France by Ana Stanić. Then Goran Bregović and his ‘Weddings and Funeral Orchestra’ will lead the audience into 2009 and after midnight we are going to see Eurovision Song Contest

winner, Marija Šerifović”. The reduced city budget is definitely to blame for less concerts, musicians and the relatively modest New Year’s Eve celebration. However, the organisers insist that everything will be top class.

TOP ENTERTAINMENT Last year the city authorities set aside 100 million dinars for the New Year’s celebration. The biggest chunk of that, 45 million dinars, was spent on lighting and decorating the city, while half that amount was spent on the musical programme, which cost around 22 million dinars - 15 million dinars of which was provided by sponsors. In terms of fees that musicians will receive this year, the city government need not worry since the money will also come from sponsors, while the authorities will only have to pay for renting the stage and audio equipment. “I would just like to repeat what many have said before me, which is that Belgrade is the city of good fun and friendly people. This year too, we will be given an opportunity to send a special message to the world. With sincere feelings, we wish to treat each other better and be more tolerant, to share good and bad and never lose faith that things will get better. This is the message that our capital city and its citizens will send, since they do possess all those qualities – in addition to having huge energy. “Belgrade is a city that knows how to greet the best; how to rejoice, celebrate and show

STREET OF OPEN THE HEART TOB Director Jasna Dimitrijević says that the Street of Open Heart will be opened on 1st January for the 21st time and that this traditional event will be organised by TOB and Atelje 212. “There will be a lot of music, primarily jazz, many fun corners, clowns and entertainers in Svetogorska Street. This entertaining event arises from the need to help each other and apply our humanity,” the TOB Director says. 96 Belgrade The Investors Guide December 2008

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love. The city’s undying optimism and spirit will not leave anyone listless in the New Year’s celebration. Belgrade will be the place where generations will meet and where nobody will be alone,” says the celebration’s executive producer, the Belef Centre.

REPUTABLE ARTISTS The Belef Centre, together with the city authorities as sponsors, have put together a programme which will include the most reputable artists who are going to satisfy even the most demanding of tastes with their versatility and songs. “If we want to be united and live in harmony, which are among the most important prerequisites for success and happiness, then this New Year will be a chance for us to be in one place, in front of the National Parliament, and to celebrate 2009 with Goran Bregović and his Weddings and Funerals Orchestra, Marija Šerifović, Ana Stanić and Vrelo. Katarina Radivojević and Aleksandra Kajganić will be your hosts for the evening,” the organisers say. The entire programme will be shown on big screens, in collaboration with city media company TV Studio B. The citizens of Belgrade will be able to see how people in other European cities are celebrating the New Year, since the screens will be showing im-

ages from other European capital cities and messages coming from the most successful artists and athletes in 2008.

ICE CITY In addition to the New Year’s Eve celebration, the city authorities plan to open a temporary ice-skating rink for youngsters on Nikola Pašić Square. Aside from the traditional and recognisable New Year and Christmas ico-

Unlike in previous years, there won’t be any foreign musicians coming nography, as well as the ever-present Santa Claus, youngsters will be able to try figure skating, a skate school, hockey tournaments, art workshop, a music programme with DJs and many other interesting competitions. There will be no entrance fee and children will be able to enjoy all 600 square metres of the skating rink. The rink will be opened from 20th December to 18th January. Belgrade Mayor, Dragan Đilas, confirmed that the city authorities would provide 11 million dinars for the rink. The

Tourist Organisation of Belgrade, TOB, says that last year close to 20,000 tourists came to visit Belgrade during the New Year’s holidays and that, this year we can expect a lot of tourists from neighbouring countries. “Last year, the greatest number of tourists came from the former Yugoslavia, Scandinavian countries, Germany, the Netherlands, Bulgaria and France. We expect the same number of tourists this year too. The fact is that Belgrade is very interesting to young tourists, since this is a brand new city for them. They used to avoid coming here in the past, fearing that their safety might be jeopardised. Now, though, they view Belgrade as a fresh destination and they always want to come again. They like the relaxed atmosphere here, affordable prices and our people. They see that this is an exciting city and are pleasantly surprised when they see the atmosphere on the streets with cafés and restaurants opened until the early hours of the morning,” says TOB Director Jasna Dimitrijević. Perhaps the best recommendation for foreign tourists when it comes to the 2009 celebration is an article that came out in the Times newspaper last month which says that Serbia is “an undiscovered jewel of Europe” and Belgrade “a new cool European capital city”. December 2008 The Investors Guide Belgrade 97

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DIRECTORY OF CITY CONTACTS

CITY BODIES ASSEMBLY OF THE CITY OF BELGRADE

SECRETARIAT FOR PROPERTY-RIGHTS AND BUILDING INSPECTION

Dragoslava Jovanovića 2, 3229-678 www.beograd.org.yu

27. marta 43-45 Secretary, 750-237 Deputy Secretary, 3292-427

CITY ASSEMBLY CHAIRMAN’S OFFICE

SECRETARIAT FOR TRANSPORT

CITY ENTERPRISES AND INSTITUTIONS Urban Public Transport Enterprise “Beograd”

Kneginje Ljubice 29, tel. 2627-411 Road Maintenance

Nušićeva 21, tel. 3302-800

Dragoslava Jovanovića 2, 3244-415, 3229-975

27. marta 43-45 Secretary, 2754-933 Deputy Secretary, 3035-260

MAYOR

ROADS DIRECTORATE

Dragoslava Jovanovića 2, 3229-678

Water Supply and Sewage of Belgrade

27. marta 43-45 Director, 3309-440

Deligradska 28, tel. 3612-790

MAYOR’S OFFICE

DIRECTORATE FOR PUBLIC TRANSPORT

Mije Kovačevića 4, tel. 2767-666

27. marta 43-45 Director, 3309-457

Živka Karabiberovića 3, tel. 3806-450

SECRETARIAT FOR ENVIROMENTAL PROTECTION

Infostan

27. marta 43-45 Secretary, 3222-681, 3226-106 Deputy Secretary, 3226-106

Parking Services

Dragoslava Jovanovića 2, 3246-764, 3229-787 CITY PUBLIC PROSECUTOR’S OFFICE

Tiršova 1, 3610-157 CITY ADMINISTRATION

Trg Nikole Pašića 6, 3229-678 27. marta 43-45, 3227-241 Tiršova 1, 2688-655 Golsvordijeva 35, 3083-800 Masarikova 5, 3616-211 Mekenzijeva 31, 2453-142 SECRETARIAT FOR FINANCE

Trg Nikole Pašića 6 Secretary, 3229-767 Deputy Secretary, 3232-541 SECRETARIAT FOR THE ECONOMY

Masarikova 5/XVIII Secretary, 3061-555 Deputy Secretary, 3061-530 PRICING ADMINISTRATION

Director, 3061-716 DIRECTORATE FOR BUFFER STOCK

Director, 3061-544 SECRETARIAT FOR HEALTH CARE

District Heating Plants of Belgrade

Savski nasip 11, tel. 2093-000

City Sanitation City Marketplaces

Danijelova 33, tel. 3954-240 Milentija Popovića 9 tel. 2228-000

SECRETARIAT FOR SPORT AND YOUTH

Funeral Services

Masarikova 5/XV Secretary, 2751-071 Deputy Secretary, 2750-546

Greenery-Belgrade

SECRETARIAT FOR INSPECTIONS

27. marta 43-45 Secretary, 2753-459 Deputy Secretary, 2753-459 SECRETARIAT FOR SOCIAL AND CHILDREN’S WELFARE

Tiršova 1a Secretary, 3620-241, 2658-523 Deputy Secretary, 2658-523 ASSEMBLY AFFAIRS AND REGULATIONS SERVICE

Ruzveltova 50, tel. 2701-300 Surčinski put 2, tel. 3129-300 City Housing

Danijelova 33, tel. 3950-429 Belgrade Land Development Public Agency

Njegoševa 84, tel. 244-9494 Belgrade Urban Planning Bureau

Palmotićeva 30, tel. 3331-500 Ada Ciganlija

Ada Ciganlija 2, tel. 3544-634 Belgrade Fortress

Kralja Petra 71/III, tel. 2620-685 SAVA CENTER

Milentija Popovića 9, tel. 220-6000

Masarikova 5/XVI Secretary, 3061-619 Deputy Secretary, 3061-618

Dragoslava Jovanovića 2 Secretary, 3241-909

SECRETARIAT FOR CULTURE

Masarikova 5/XVII Secretary, 3061-699 Deputy Secretary, 3061-699

Masarikova 5, tel. 361-3171

GENERAL AFFAIRS SERVICES

“Tašmajdan” Sports and Recreation Center

Trg Nikole Pašića 6 Secretary, 3241-344 Deputy Secretary, 3232-348 SECRETARIAT FOR EDUCATION

Mekenzijeva 31 Secretary, 2432-482 Deputy Secretary, 2432-482 SECRETARIAT FOR ADMINISTRATION

Trg Nikole Pašića 6 Secretary, 3236-569 Deputy Secretary, 3242-325 SECRETARIAT FOR URBAN PLANNING AND CONSTRUCTION

SERVICE FOR INFORMATION

Trg Nikole Pašića 6 Director, 3222-855 Deputy Director, 3227-600 SERVICE FOR COMMUNICATIONS AND COORDINATION OF PUBLIC RELATIONS

Golsvordijeva 35 Director, 3083-806 INSTITUTE OF INFORMATICS AND STATISTICS

RTV “Studio B”, Public Broadcast Company Tourist Organization of Belgrade

Masarikova 5/IX, tel. 3061-572

Ilije Garašanina 26-28, tel. 3235-063 City Center for Physical Culture

Deligradska 27, tel. 2658-747 “Pionirski grad” Sports and Recreation Center

Kneza Višeslava 27, tel. 3542-094 City Center for Social Work Ruska 4, tel. 2650-329

27. marta 43-45 Secretary, 3227-576 Deputy Secretary, 3229-000

Tiršova 1 Director, 3620-138 Deputy Director, 3620-138

CITY UTILITY SERVICES

SECRETARIAT FOR UTILITIES AND HOUSING SERVICES

AGENCY FOR COMMERCIAL SPACE

WATER SUPPLY AND SEWERAGE SYSTEMS

Golsvordijeva 35 Secretary, 3083-820 Deputy Secretary, 3083-822 ENERGY ADMINISTRATION

Director, 3083-823 WATER ADMINISTRATION

Director, 3083-810

Mekenzijeva 31 Director, 2450-170 Deputy Director, 2450-144 AGENCY FOR COOPERATION WITH NGOs AND FOR EUROPEAN HARMONIZATION

Masarikova 5/XIII tel. 3061-530

Public Utility Company “Belgrade water supply and sewerage”, tel. 3606-606 HEATING AND HOT WATER SYSTEMS

Public Utility Company “Beogradske elektrane” (“Belgrade

Power Plants”), tel. 2093-100 ELECTRIC POWER SUPPLY Electric Power Industry of Serbia Public Company “Elektrodistribucija Beograd”

“Belgrade Electric Power Distribution” tel. 340-5555 TELECOMMUNICATIONS

Telekom Srbija, tel. 977, 9813 GAS

Srbijagas, tel. 2604-130, 312-9237 PUBLIC CITY TRANSPORT

Public Transport Directorate, tel. 3309-000 City Transport Company “ Belgrade”, tel. 629-019 TC “Lasta”, tel. 2180-691 Rail Transport Company “ Beograd” - Beovoz, tel. 337-00-31, 337-00-35 PARKING

Public Utility Company “Parking service”, tel. 3035-400, 3031-707 MAINTENANCE OF STREETS AND ROADS

Road Directorate, tel. 330-9250 Public Utility Company “Beograd-put”, tel. 2765-382 OCCUPATION OF PUBLIC AREAS

Secretariat for Transport, tel. 330-9599 Road Directorate, tel. 330-9250 TRAFFIC REGULATION AND SAFETY

Secretariat for Transport, tel. 330-9599 GREENERY

Public Utility Company “Greenery-Belgrade”, tel. 2630-506 CITY SANITATION

Public Utility Company “City sanitation”, tel. 3294-901 HOUSING SERVICES

Public Company “City Housing”, tel. 3950-300, 3950-301 PROPERTY RIGHTS-LEGAL AFFAIRS AND BUILDING INSPECTION

Secretariat for Property Rights Legal Affairs and Building Inspection, tel. 3228-740 URBAN PLANNING AND BUILDING AFFAIRS

Secretariat for Urban Planning and Building Affairs, tel. 3229-000 CHIMNEY-SWEEPING SERVICES

“Chimney-sweeper” Company, tel. 2632-454 FUNERAL SERVICES

Public Utility Company “Funeral Services”, tel. 2071-333 ENVIRONMENT

Secretariat for Environmental Protection, tel. 3226-106 MARKET SERVICES

Public Utility Company “City Markets”, tel. 3806-450, 3806-451 COLLECTION OF UTILITY CHARGES

- Public Utility Company “Infostan”, tel. 395-424

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