12 minute read
GROWTH CONTINUING DESPITE CHALLENGES
TRADE | TOURISM | TELECOMMUNICATIONS 2021 UROŠ KANDIĆ,SECRETARY OF STATE AT THE MINISTRY
OF TRADE, TOURISM AND TELECOMMUNICATIONS
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Unlike many European countriesm where we saw images of empty shelves and shortages of products even at the start of the pandemic, the supply of the Serbian population has been continuous, orderly and timely, with price stability preserved.
In contrast to numerous past economic crises during which the biggest challenge was to stimulate demand, the current pandemic has primarily brought problems on the supply side, because the burning issue is to maintain production under conditions of the limited movement of people.
In that sense, the greatest threat to the retail sector, especially since the outbreak of the pandemic, was reflected in the danger of whether, and at what prices, retailers would be able to procure goods, given the huge shocks to global supply chains, and sell to consumers with limited movements due to health reasons.
Despite all the challenges, Serbia’s retail sector has provided the population with continuous, orderly and timely supplies throughout the pandemic, alongside the preserving of price stability. Unlike many European countries, where we saw images of empty shelves and shortages of product even at the start of the pandemic, in Serbia there has been a wide range of goods on offer the whole time, especially consumer goods. I must emphasise that state support measures for the entire economy, thanks to which production and employment were
maintained, also contributed greatly to the stability of the retail market. Moreover, the turnover of retail trade increased by 4.3% in 2020, and a growth trend of three per cent compared to the same period of last year continued in the first two months of this year. Additionally, with 348,000 employees in the wholesale and retail trade sectors in 2020, levels of employment were preserved in this sector, which accounts for around 15 per cent of the total number of employees. Trade is certainly among the sectors not to be hit as hard by the crisis, a large contribution to which was provided by shifting the focus from traditional channels to E-commerce, as a response to the limited operations of physical retail outlets. New trends will certainly also change consumer habits in the long run, while online sales are expected to continue growing.
The number of e-transactions realised doubled last year, to 14 million, as did the value of e-transactions, which increased from 17 billion dinars in 2019 to 32 billion dinars last year.
There were individual problems with online deliveries at the start of the crisis, due to the increased volume of work, but the delivery process stabilised quickly. However, with the expansion of E-commerce we have seen that retailers’ competitiveness will depend to a great extent on the logistics of delivery, which is very demanding both financially and organisationally.
There will certainly be a lot of challenges in the period ahead that will impact on the speed of the recovery of the entire economy, and thus also on trends in the retail sector. We should particularly keep in mind the present uncertainty regarding the shifting world oil price, which is on the rise, and the rising price of food globally, which is also caused by increased demand due to the pandemic. The Government of Serbia will monitor the situation on the market and, if the need arises, react in a timely manner, within the scope of its legal competencies, with the aim of ensuring the orderly supplying of the market and the maintaining of price stability.
Despite the great growth of online orders to retail chains, less than one per cent of total sales of consumer goods on the market are realised electronically. However, large retailers that sell clothing or appliances realise around 20 per cent of their sales revenue through online orders
No development WITHOUT DIGITALISATION
The global pandemic caused by the novel coronavirus has changed the world in which we live, and it has also changed us. While it has proved disastrous for some areas of life, such as tourism and hospitality, it has had a positive effect on others. COVID- 19 has, among other things, led to an expansion of E-commerce, digitalisation and telecommunications, spheres that will continue developing rapidly even when we leave this disease behind us
“Digitalisation and the development of new generation networks are just as crucial to economic and social development as the raising of the level of digital skills is essential to addressing the future challenges of the labour market and the economy in general. Digitalisation is a priority of the Government of Serbia, which is why we launched the project to construct broadband infrastructure in rural areas where operators have no commercial interest in doing so,” said Minister of Trade, Tourism and Telecommunications Tatjana Matić, before noting that the aim is for all settlements in Serbia to get a network by 2025.
Ambassador Jan Braathu, Head of the OSCE Mission to Serbia, confirmed that broadband infrastructure and 5G technology are the future, and that the OSCE Mission is working intensively in these fields, together with the implementing of projects to develop digital literacy and digital skills.
EVER MORE GIRLS ENROLLING IN IT STUDIES IN SERBIA
“The greater inclusion of girls and young ladies in technological domains is essential for combating the digital gender gap, but also for economic growth in the digital future,” said Serbian Trade, Tourism and Telecommunications Minister Tatjana Matić, speaking on the occasion of International Girls in ICT Day.
Speaking during the formal opening ceremony for Hack#teen, a competition in developing technological solutions for girls of primary school age, Minister Matić stated that the percentage of girls enrolling in IT studies in our country increased from 25.7% in 2016 to 29.3% in 2020. Although Serbia is recording a higher participation of girls in ICT education than the European average, it is still necessary to continue working on overcoming prejudices that view this area as primarily a male field and to encourage girls to develop their interests and talents in the direction of professions that are not only the most sougth-after, but also the best paid.
INVESTING IN NETWORK DEVELOPMENT WILL REJUVENATE RURAL AREAS
Serbian Trade, Tourism and Telecommunications Minister Tatjana Matić and A1 Telekom Austria Group COO Alejandro Plater have discussed the importance of developing networks in the Republic of Serbia and investing in ICT. During the talks, Minister Matić stressed the importance of the Project to Construct Broadband Infrastructure in Rural Areas, which will impact on the overall economic growth of underdeveloped parts of the country. The Minister also reiterated that the implementation of the first phase of the project will secure ultra-fast broadband access for about 500 settlements, or approximately 80,000 households in rural areas. Matić expressed her expectation that works on the networks will begin in September this year and be completed by September 2022.
COO Plater agreed that digitalisation and technological development are crucial, especially the development of infrastructure in rural areas, including investments in the network that his company is interested in making.
TOURISM AND E-BUSINESS PROJECTS CONSIDERED
SERBIA HASN'T ABANDONED 5G NETWORK INTRODUCTION
Serbian Trade, Tourism and Telecommunications Minister Tatjana Matić, NALED Executive Director Violeta Jovanović, and Post of Serbia Executive Director Nebojša Marković have held discussions on projects in the field of tourism and e-business. Speaking on this occasion, Minister Matić announced the formation of the Council for the Development and Recovery of Tourism, while the meeting also included discussion of the importance of implementing the Law on Electronic Document, Electronic Identification and Trust Services in Electronic Business. Consideration was also given to the solution for issuing qualified electronic certificates for the signatures of foreign citizens, but also for domestic citizens who are resident abroad and are unable to come to Serbia or use available electronic services.
The auction for operators for the introduction of the 5G network was postponed due to the pandemic and is expected to be conducted by the end of next year. Preparations are still continuing, because - according to the Ministry of Trade, Tourism and Telecommunications - it is necessary to adopt regulations on the use of the spectrum on a certain frequency and appropriate regulations. Interest in the auction among operators already exists, as there is interest from industry.
It is interesting to note that the 5G network is primarily intended for industry, unlike the 4G network, which is used by consumers of mobile content.
The 5G network will be used the most by the the automotive industry, agriculture and medicine, which already use 5G networks around the world. However, following the global economic crisis caused by the pandemic, the scale of which is not even perceptible, the industry withdrew from conducting assessments of whether investments in equipment for the 5G network are economically justified.
Serbian Trade, Tourism and Telecommunications Minister Tatjana Matić expressed hope that the circumstances will be different during the course of 2021 and that the market around the whole world will stabilise.
MARK ESPOSITO,A CO-FOUNDER OF NEXUS FRONTIERTECH, LANDRY SIGNÉ, PROFESSOR, NICHOLAS DAVIS, WEF/PROJECT SYNDICATE
The Digital Revolution IS EATING ITS YOUNG
We are facing an acute crisis of technological opportunity and access, owing to an invasive business model that has proven incapable of supporting equity and inclusion. The stakes are high, and the market won’t fix the problem.
As massive online platforms have given rise to numerous virtual marketplaces, a gap has opened between the real and the digital economy. And by driving more people than ever online in search of goods, services, and employment, the coronavirus pandemic is widening it. The risk now is that a new digital industrial complex will hamper market efficiency by imposing rents on real-economy players whose daily operations depend on technology.
Fourth Industrial Revolution (4IR) is that the tangible and intangible elements of today’s economy can coexist and create new productive synergies. The tangible side of the economy provides the infrastructure upon which automation, manufacturing, and complex trade networks rest, and intangibles – logistics, communication, and other software and Big Data applications – allow for these processes to achieve optimal efficiency.
More to the point, the tangible economy is a prerequisite for the intangible economy. Through digitalization, tangibles can become intangibles and then overcome traditional limitations on scale and value creation. While heavily transactional and capital-intensive, this process hitherto
has been a positive mechanism for growth, providing some equity of opportunities for small and large countries alike.
But this standard account of the 4IR omits the recent decoupling of the digital and real sectors of the economy. Digitally native companies that benefited from the suspension of traditional factors of production have been growing even faster than they did before COVID-19.
By the beginning of September 2020, Facebook, Amazon, and Apple’s share prices had more than doubled since the start of the pandemic, with Apple becoming the first company ever to achieve a $2 trillion valuation. And while shares of Netflix and Alphabet (Google) – the other so-called FAANG firms – hadn’t quite doubled, they were nonetheless trading at or near alltime highs. Meanwhile, ExxonMobil, the S&P 500’s oldest member and a former icon of the tangible economy, was driven out of the index by Apple’s decision to split its stock. Those who own and run the tech giants are making ever more money while the rest of the world continues to experience economic devastation.
With real-economy assets being positioned far below digital financial assets, a K-shaped corporate recovery has emerged. Digital firms can grow apparently without limit, whereas others’ growth remains circumscribed by the finite conditions under which they operate. This trend is not only challenging neoliberal assumptions about the creation of value; it is also pushing us toward a scenario in which government policies to redistribute value will no longer be plausible options.
To be sure, governments and some within the private sector have proposed remedies, such as a tax on digital assets, while proponents of a laissez-faire approach continue to insist that any form of government intervention will merely introduce more market distortions. But neither camp has offered enough evidence for its preferred policy.
We suggest three other solutions. First, government grants and subsidies can be used to promote technological diffusion, and to close the technology gap between platforms and small and medium enterprises. Rather than expecting the market to provide equitable access to technologies like artificial intelligence, governments can fund programs that reach smaller firms directly, such as through tax write-offs or other measures (as already happens with incentives for consumers to buy environmentally friendly cars). While such outlays would increase public debt in the short term, these costs would be offset by the higher productivity that would come with a more balanced distribution of economic power.2
Second, we should be working toward a more agile, multi-stakeholder model of innovation, so that concerns about inclusion and representation are addressed without curtailing the pace of technological advance. The goal, here, should be to reduce the tensions between winners and losers across the platform economy’s new value chains. Several existing cases have demonstrated that proper representation of stakeholder interests enables policymakers to mitigate the harms and adverse unintended consequences of new technologies without sacrificing speed or flexibility.
Third, it is time to start identifying appropriate areas for “digital protectionism.” Just as some countries use trade tariffs to support nascent local production, digital tariffs could be used to foster local innovation ecosystems. This would not work everywhere. But in places that have reached some threshold of technological adoption and diffusion, such policies could encourage grassroots solutions, creating new community-based approaches to managing how technology is designed, deployed, and funded.
