InFocus Austria by Diplomacy&Commerce magazine

Austria - 2020 -

AUSTRIA & SERBIA

MORE THAN PARTNERS

H.E. NIKOLAUS LUTTEROTTI Austrian Ambassador to Serbia

MIHAILO VESOVIÄ&#x2020;

Vice President of the Chamber of Commerce and Industry of Serbia

ERIKA TEOMAN BRENNER Austrian Commercial Counsellor

HIKING IS A THING

Boasting one of the largest unspoiled landscapes in western Europe, Austrians love walking and hiking. This may account for the popularity of its roughly 56,000 km of mountain paths. Austria boasts 13 peaks which are in excess of 3,000 meters and 34 peaks which exceed 2,000 meters.

T HE CAPITAL OF PSYCHOANALYSIS Viennese psychiatrist Sigmund Freud is best known as the founding father of psychoanalysis, which has heavily influenced modern psychology as well as other domains of science and culture. Alfred Adler and Freud are oftern considered fathers of moder psychoanalysis and Vienna its capital.

CAVE. ICE CAVE

If youâ&#x20AC;&#x2122;re into caves, Werfen, Austria is home to the largest ice cave in the world. It extends for over 42 km. The Eisriesenwelt (German for "World of the Ice Giants") is a natural limestone and ice cave located about 40 km south of Salzburg.

WALTZING VIENNA

In 1820, the Austrian Imperial Court welcomed the waltz. The dance, which had its origins in the popular triple-time dance, appeared first in the inns and then in the theaters on the outskirts of Vienna before it appeared at the Imperial Court.

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EIN ACHTEL, BITTE!

The magic words for wine drinkers in Vienna are ein Achtel (an eighth of a liter, 0.125l), which is the most common serving size in Vienna. Vienna's most famous wine district is Grinzig, a Bohemian quarter or a village.

INNOVATORS IN ENERGY DRINKS

The energy drink â&#x20AC;&#x153;Red Bullâ&#x20AC;? was created in Austria. It is now the single highest-selling energy drink on the planet. Austrian entrepreneur Dietrich Mateschitz was inspired by an existing energy drink called Krating Daeng in Thailand, took the idea and modified the ingredients to suit the tastes of Westerners.

THE HOME OF THE POSTCARDS

Postcards were first published in Austria. In October 1869, the post office of AustriaHungary accepted a proposal of an "open post-sheet" made of stiff paper with one side reserved for a recipient address, and the other for a brief message, and 3 million cards were mailed within the first 3 months.

THE AUSTRIAN HOLLYWOOD

Austrian film directors Ernst Lubitsch, Billy (Samuel) Wilder, and Fred Zinnemann played an important role in the creation of Hollywood shortly before and after World War II. Wilder directed and produced Some Like It Hot, a 1959 romantic comedy starring Marilyn Monroe, Tony Curtis, and Jack Lemmon.

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INTERVIEW

IN THESE TOUGH TIMES WE ARE TOGETHER

H.E. NIKOLAUS LUTTEROTTI Austrian Ambassador to Serbia

If anything, the crisis caused by pandemic has highlighted even more how dependent we are and how much we need close cooperation and solidarity. In other words, for Austria EU-enlargement and Serbia’s accession process remain a top priority!

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ustria has pursued a strategy of early and strict lockdown during the Covid-19 pandemic, followed by a controlled re-opening of public life. In fact, Austria has been one of the first European countries to respond with very restrictive measures to the pandemic through a policy of social distancing and self-isolation as well as the gradual closure of businesses, shops, schools, universities, restaurants and

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bars, sports facilities and parks. “Seven weeks later it seems that our measures are paying off. Today, the situation in Austria looks promising: the epidemiological curve of new infections has flattened and over the last two weeks the number of new infections has been constantly less than 100 per day. These developments allowed the Austrian government to start with the next, equally challenging, phase of a controlled and gradual easing of

measures on 14 April”, says H.E.Nikolaus Lutterotti, Austrian Ambassador to Serbia, to whom we talked in detail about the effects of pandemic on a number of issues including bilateral relations with Serbia. Naturally the first question was related to the response of the Austrian government to postpandemic situation. “The government has been very clear that it reserves the right to pull the “emergency brake” at any time and

reverse the openings if the numbers demand it. So far, the numbers have been kept under control after the first lifting of measures. Together with the easing of measures, Austria is further strengthening its containment strategy. This means that we want to be more effective at contact tracking of newly infected people, to provide for more and easier access to testing as well as to receive test results much faster. Our government also decided right after the introduction of the lockdown measures on an economic support and recovery package in the amount of 36 bn € which equals almost 10% of our GDP: 4bn € for immediate emergency measures, 9bn € for state guarantees and liabilities, 15bn € direct support to businesses that have been hit particularly harshly and 10bn € for tax deferrals”, says the ambassador. Which questions were in the focus of the Austrian – Serbian bilateral relations recently given the circumstances? The COVID-19 crisis has obviously been at the centre of our bilateral relations in the past few weeks. I am happy to say that these relations have been extraordinarily good in the course of this crisis and marked by mutual support, good cooperation and understanding. On a political level, we have maintained a regular high-level engagement. On 17 March, Chancellor Kurz hosted a “Videosummit” with the Prime Minsters from the WB6 and EU-Commissioner for Enlargement, Oliver Varhelyi, which provided an important opportunity to exchange views and share

SOLIDARITY

strategies right at the beginning of the Covid-19 crisis in Europe. Our two Foreign Ministers recently spoke over the phone in which Foreign Minister Schallenberg assured Deputy Prime Minister Ivica Dacic of Austria’s continued support for Serbia. Besides providing for special equipment that Serbia had requested through the EU Civil Protection Mechanism, Minister Schallen-

THE AUSTRIAN BUSINESS COMMUNITY HAS A GREAT INTEREST TO SEE THEIR BUSINESSES RECOVER FROM THE CRISIS AND TO SUPPORT THE SERBIAN ECONOMY TO RECOVER AS SOON AS POSSIBLE berg also offered Serbia to transport and treat intensive care patients from Serbia in Austria if needed. Our respective Ministers for European Affairs, Minister Jadranka Joksimovic and Minister Karoline Edtstadler, were in direct contact to discuss the upcoming European Western Balkans “Videosummit” on 6 May as well as the general situation regarding Covid-19. Our two Ministers of the Interior have also spoken and we had regular exchange among police authorities. We worked very well together and managed to coordinate the movement of thousands of people travelling from Serbia to Austria and the other

way round during the crisis. And I must say that it has been handled in a very constructive and professional way. The same is true as far as consular cooperation with the Serbian Ministry for Foreign Affairs is concerned, in particular efforts to repatriate citizens to Austria and Serbia from all over the world. Austria repatriated Serb citizens wherever and whenever possible. And so did Serbia with Austrian citizens that wanted to repatriate to Austria. In the field of judicial cooperation, Austria early on shared expertise with the Serb authorities as far as upholding court procedures during the lockdown is concerned. Our Minister of Justice, Alma Zadić, initiated a video-call with all Ministers of Justice of the region to exchange views. And in the field of agriculture, for instance, we shared know-how and best practices to support smaller farmers in online-marketing and delivery services. As far as our economic cooperation is concerned Austria has been one of the biggest investors in Serbia over many years. Around 450 Austrian companies with over 18.000 employees have shown great solidarity with the measures during the Covid-19 crisis; they were committed to keep their workforce employed and avoid lay-offs. The Austrian business community has a great interest to see their businesses recover from the crisis and to support the Serbian economy to recover as soon as possible. Beyond Austria’s bilateral assistance, of course, we are part of the EU and contribute to the funds that the EU has allocated for Serbia. We are talking about a very significant emergency and recovery package by the EU for

WE NEED TO WORK TOGETHER AND WE – THE EU, AND MORE SPECIFICALLY AUSTRIA – HAVE DEMONSTRATED SOLIDARITY WITH SERBIA AND WILLINGNESS FOR CLOSER COOPERATION 5 AUSTRIA 2020

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Serbia in the amount of 93,4 mn €. Out of 93,4 Mio €, 15 Mio € have been available immediately for medical supply and logistics. 78 Mio € have been allocated for the economic recovery program of Serbia. In addition, Serbia will benefit from further funding that the EU has allocated for the entire region. Overall, the EU has mobilised a package of over 3.3 billion EUR for the benefit of citizens of the Western Balkans. Where Serbia stands today in terms of meeting EU criteria and to what extend if any the developments during pandemic affected the priorities in the EU integration process? The EU accession process of Serbia is not only in the interest of Serbia but also in the interest of the European Union and more specifically of my country Austria. The pandemic has not changed this fundamental set of interests. President Vucic recently, during a meeting with EU Ambassadors, stressed in very clear terms that Serbia will remain on the EU path and that this is a priority. This is a very important and welcome message. The EU is by far the largest investor in Serbia, not only in terms of the economy but also in terms of European investments in strengthening Serbia’s system of justice, health, education, administration, local development, employment and so on. The President, as well as the Prime Minister, have recognized the EU’s significant support for Serbia and particularly the enormous support that the EU’s taxpayers provided to Serbia as immediate emergency relief for Covid-19 and the economic recovery thereafter. Austria certainly encourages Serbia to continue and possibly intensify her reforms as soon as possible in order to advance on the EU accession path even further. In which areas do you see the biggest space for advancement?

On substance, the areas where we see the biggest space for advancement to EU membership have remained the same. These are reforms on the socalled fundamental issues contained in chapters 23 and 24. There continues to be need to strengthen efforts for real re-

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WE WILL CERTAINLY KEEP A FOCUS ON MAINTAINING THE HIGH LEVEL POLITICAL ENGAGEMENT WHICH IS VERY IMPORTANT forms both on a legislative level as well as on the level of implementation. This is particularly true for the area of the independence of the judiciary, the fight against corruption, media freedom, the domestic handling of war crimes and the fight against organised crime. We are aware that this is a difficult and complex process. But for the advancement of Serbia’s path towards membership in the European Union it is essential. Also, we hope to see the conduct of free and fair parliamentary elections which will lead to a new Parliament that provides the space for genuine political debate across the entire spectrum of political views and will strengthen the system of checks and balances in Serbia. At the same time, we are fully aware that Serbia is facing enormous challenges from the economic consequences of the Covid-19 pandemic which the government

will have to address with determination. However, it is our firm belief that reforms in the area of rule of law are in no contradiction to addressing economic recovery, on the contrary, they will support and enhance further Serbia as a place for doing business and investing. The recovery of the EU’s economy will also play an important role for Serbia’s recovery given that 67% of Serbia’s trade is with the EU and 70% of all FDIs are from the EU. Therefore, there is a need to honour and strengthen this partnership with the EU and there is a lot of merit to stay focused on the EU accession path. To what extent the Austrian support to the Serbian EU integration processes might be affected by the expected restrictions in communication and travel? We have to realize that we are all in this together; we are all facing the consequences of the pandemic. We need to work together and we – the EU, and more specifically Austria – have demonstrated solidarity with Serbia and willingness for closer cooperation. In this sense, Austria will continue to actively support Serbia’s EU integration process. I do not see that Serbia’s EU inte-

and how they assess the measures introduced by the Serbian government?

gration process will be hampered because of Covid-19. As I have mentioned before, Austria and Serbia managed to keep a high-level political engagement throughout the crisis and this will continue. For the time being, there will be less of personal meetings and maybe less conferences with physical presence, but I am certain that this will have no detrimental effect on the EU enlargement process. Given the current economic developments in Austria and Serbia, how would you assess the prospects of further trade exchange and investments coming from Austria? Before the crisis hit us the outlook for developments in our bilateral trade was very promising. This obviously changed because of the economic effects of the Covid-19 pandemic. Many Austrian companies experienced problems in their supply chains, also in cases when they rely on their own overseas subsidiaries in the production chain. What we can reasonably expect is that Austrian companies will try to adapt their supply chains and to look closer at new production locations in Europe. Should that occur, Serbia will definitely be one of the top countries in their

WE HAVE TO REALIZE THAT WE ARE ALL IN THIS TOGETHER; WE ARE ALL FACING THE CONSEQUENCES OF THE PANDEMIC considerations. Regarding our bilateral trade, the same applies: logistics to and from oversea markets caused serious problems, while transportation to and from Serbia was managed on an acceptable level, despite some hiccups at the start of the crisis. In the upcoming months and years, there is a chance that Austrian companies may refocus their exports to their core markets closer to home, while at the same time building up new and promising business relations with Serbian suppliers and partners. In this sense, there is reason to believe that the crisis may turn out to be an opportunity for intensifying our economic relations. How well Austrian companies in Serbia fared in the new circumstances

Companies in the service industry were hit hardest by the crisis. Production facilities, on the other hand, were able to keep productivity at levels of around 70-80%. Our subsidiaries are committed to follow the advice of the Serbian government to keep their workforce employed. The fact that Serbia decided on a very significant recovery package was seen as a positive step among the Austrian business community. It is important to see an effective and transparent implementation of these measures. Serbian companies can easily apply for the measures and it is a good sign to both employers and employees that companies to be supported are those that keep their workforce employed. Nevertheless, a number of Austrian companies are classified as large entities and for them many financial measures do not apply which causes some concern in the Austrian business community. On the other hand, one can expect that many of their local customers and suppliers will recover quickly through this package which will eventually improve business prospects for all market players. Which programs will be in the focus of the embassy in the period to come? The Austrian Embassyâ&#x20AC;&#x2122;s activities will gradually adapt to the evolving situation which will depend on the developments with regard to Covid-19. We will certainly keep a focus on maintaining the high level political engagement which is very important. We will also continue to work on the programs we have been focusing on lately, such as dual education reform implementation in Serbia, fostering scientific and cultural exchange between Austria and Serbia or cooperation in the field of environmental protection. We will continue to assist the Austrian business community as well as to support opportunities for further economic presence by Austrian companies in Serbia. And of course, we continue to be at the service of our Austrian citizens who require specific information and consular assistance.

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INTERVIEW

AUSTRIA AND SERBIA ARE MORE THAN PARTNERS MIHAILO VESOVIĆ Photo: Miodrag Mitja Bogdanović

Vice President of the Chamber of Commerce and Industry of Serbia

The fact that the Serbian and Austrian economies have been strongly connected in the last twenty years, on several levels, both through cooperation in trade and substantial and successful Austrian investments in Serbia is very important for the relations between the two countries

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think that the Western Balkans, and even Serbia, as the central country of the Western Balkans, is an ideal partner when it comes to implementing strategic plans of companies that no longer want essential products and their parts to be produced in the Far East. I also think that the localization of production in Europe and the Western Balkan countries will add a new quality to relations with the European Union for all of us, especially with Austria, which is one of our most visible economic partners not only in economic terms but also in a much broader sense. For us, the Austrian Chamber is more than a partner among European cham-

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bers, "says Mihailo Vesović, Vice President of the Chamber of Commerce and Industry of Serbia. Following the most difficult stage in the COVID-19 pandemic, how willing

I EXPECT THAT COME 15TH JUNE WE WILL HAVE RETURNED TO THE PREEPIDEMIC STATE THAT WE HAD AT THE BEGINNING OF THIS YEAR

are the economies of Serbia and Austria to continue their cooperation? Despite the huge difficulties we faced at the very beginning of the crisis – closing down the borders, uncertainty about what will happen to the goods that were travelling from Austria to Serbia and vice versa and the problem with the transit countries like Croatia and Hungary, which had their measures in place – we have managed to overcome all the uncertainty and problems with as little damage as possible. Most importantly, the economic cooperation, import / export and trade have not stopped; they may have slowed down a bit and they may have

become somewhat more expensive, but they have not stopped. Of course, the biggest problem was the health issue, the measures introduced by individual countries, the issue of who carries out the transport, what will happen to the drivers and what with the railway transport. All of this was resolved in two or three weeks with significant involvement of the state and the two respective chambers of commerce that constantly provided the state with the information from the field and explained how important it was to eliminate these problems. Now, everything is much easier as far as external trade is concerned. I expect that come 15th June we will have returned to the pre-epidemic state that we had at the beginning of this year. According to your estimates, how will the current situation affect external trade and the ongoing investment projects? I must say that 2019 was successful not only for the Austrian and Serbian economy, in the sense that both of them recorded growth, but also for cooperation in external trade, above all. The value of external trade was somewhere around 1.25 billion euro. We had a significant growth of exports to Austria of 18%, while the growth of imports from Austria was perhaps lower than the growth of exports, which amounted to 100 euro deficit in external trade. We expect to eliminate this deficit in 2020 and maybe even record a surplus (in external trade with Austria). To some extent, this is the result of the growth of the Serbian economy, but it is also the result of successful Austrian investments, as well as the evidence of strong industrial ties between the two countries and in some ways, the European economy's increased reliance on suppliers in Serbia and Serbian companies which became increasingly present in the Austrian market. Due to the COVID-19 pandemic, in the first three months of this year, we recorded a drop in trade of about 12% and the value of the external trade amounted to 270 million euro. The value of exports fell by some 13% to 130 million euro, while the value of imports de-

clined by 11% to 140 million euro. Unfortunately, the results for the first three months will probably be replicated in the second quarter, and I believe that only in September, the external trade between the two countries will start to grow again and that we will end the year with a rather small decline in external trade. It is important for us that the import to export ration stood at 90% last year, and we hope that it will continue this year as well. However, it is really difficult to give forecasts for 2021 at the moment.

2019 WAS SUCCESSFUL NOT ONLY FOR THE AUSTRIAN AND SERBIAN ECONOMY, IN THE SENSE THAT BOTH OF THEM RECORDED GROWTH, BUT ALSO FOR COOPERATION IN EXTERNAL TRADE, ABOVE ALL I think we can expect a conservative estimate for 2021. Austria's population consumption is already projected to fall by around 3%, and this will certainly affect the overall economic activity. The trend that we have noticed and hear about from companies, primarily European ones, speaks in favour of the fact that maybe this crisis can bring new quality to our mutual economic relations. This situation has shown how important it is to have own system and supply chains close both physically and administratively. So, fewer borders, fewer obstacles, harmonized legislation and more similar regulations in such situations have made it easier to overcome the crisis in some segments. Many people will view this as a new trend in the localization of their suppliers. According to the information you have, are Austrian investors in Serbia satisfied with the measures intro-

duced by the Serbian government to cushion the blow to the economy? The Chamber of Commerce and Industry of Serbia has taken on the role of an institution that communicates with the Serbian government on behalf of businesses and our goal was to get the government to devise the measures as soon as possible; measures that are clear, easily applicable and devoid of excessive administration, as well as comprehensive enough to save jobs and above all liquidity. When we proposed measures, we looked at what the surrounding countries were doing, what the EU countries were doing and what our most important investment partners were doing, knowing that it was their companies that would receive aid and that they could compare what was happening in their respective countries and what in ours. Several foreign investors, including the Austrian ones, say that these measures are essentially broad, adopted fairly quickly, very clear and very similar to the models applied by, say, the Austrian government. Of course, the measures implemented by Serbian government to help businesses were adjusted to the Serbian budget and the GDP just like the measures in Austria corresponded to their budget and their GDP. Estimates based on the current situation show that a large number of companies have used the possibility of liquidity assistance and used measures that primarily refer to deferral of payment of loan installments, taxes, etc. What is even more important is the package of measures that refers to credit support, to the support of the guarantee scheme that should be implemented together with the Ministry of Finance, the National Bank of Serbia and commercial banks. I think that will help companies to go through this year with as few problems as possible, and that is something where we can draw a parallel between the Austrian and Serbian situation in the sense that these measures are largely comparable. What issues were at the centre of the cooperation between Austrian and Serbian chambers of commerce in the past period?

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Photo: Miodrag Mitja BogdanoviÄ&#x2021;

Honestly, out of all European chambers, the Austrian Chamber is more than a partner to us. In the last eight years, we have discussed many things and many projects together and we have had strong logistical and consulting support from the Austrian Chamber, which is one of the institutions in Austria that has the biggest authority and is deemed as very important in many processes. Following that example and cooperation with the Austrian Chamber, we, as the Chamber of Commerce, have succeeded in profiling ourselves in a slightly different way. This crisis has been a test to us all so we can assess how much we have modernized, how flexible and active we have become and how much we have been able to respond to a huge number of problems we have faced in the last few months. Most importantly, the Austrian Chamber was also one of our role models. We have been closely following their work and how they help their businesses. Following their example, we established the COVID-19 website (InfoPoint) within a few days, through which we established communication with the entire business sector, posted relevant information, gave guidelines and communicated on behalf of the government about their solutions. The result was really impressive. We have had over 560,000 visits to our

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THE AUSTRIAN CHAMBER WAS ALSO ONE OF OUR ROLE MODELS. WE HAVE BEEN CLOSELY FOLLOWING THEIR WORK AND HOW THEY HELP THEIR BUSINESSES website in the past period during the crisis. We answered tens of thousands of inquiries, opened a 24/7 call centre and monitored what was happening in other countries. The most important thing for us was to communicate with the Austrian Chamber, to have information about how the transport was being carried out, what happened to the goods transported from Austria to Serbia and vice versa or the goods that had to pass through Austria to reach Germany and other European countries because Germany is our most important market and everything had to keep moving. Another significant thing for us was that, in the past period, we did two exceptionally important strategic projects with the Austrian Chamber of Com-

merce. The first was about dual education and the second about developing a digital transformation centre. Regarding the former, we made a huge step forward and this project now bears the seal of state-wide importance. As far as digital transformation is concerned, we have been training digital transformation advisors for small and medium-sized enterprises according to the Austrian model for the third consecutive year now. Today, Austrian advisors or consultants come to our country so our trainees can take tests in front of them, and thus our advisors can, in a way, be verified by the Austrian Chamber of Commerce that that knowledge they possess and the support they can give to companies are essential. In the previous two months, companies that have recognized the need to digitally transform their business as soon as possible, at least to the extent that they can do so, have found it easier and simpler to cope with a situation like working from home or communicating differently. For us, this was just proof that, together with the Austrian Chamber of Commerce, we have chosen the right topics to cover and that we have managed to raise the level of knowledge on that topic, to adopt certain experiences and to apply them to our local characteristics. Cooperation with the Austrian Chamber of Commerce will continue primarily on the development of existing projects, but what is even more interesting is that we are trying to do certain things at the regional level. Our chamber is very active in the chamber investment forum, which includes six countries of the Western Balkans. Austrian assistance is very important to us as a link that connects us all. We want the models that work successfully in Serbia to be applied in the region to create a common market. Companies in Bosnia and Herzegovina, Macedonia, Montenegro, Albania, can expect the support of their chambers too and in some way, get the same service, regardless of their location, be it Serbia or the region. We remain connected to the Austrian Chamber of Commerce at every level. Through the Eurochamber, we lobby together and talk about the businesses at the European level. Presi-

dent of the Chamber of Commerce and Industry of Serbia is also a board member and helms the digitalization board, which is recognition of the results we achieved in the previous period. The link between the Austrian and Serbian chambers of commerce has never been stronger.

MAYBE THIS WHOLE SITUATION HAS PUSHED CERTAIN INNOVATIVE COMPANIES FORWARD, WHICH HAVE DECIDED TO PROVIDE SERVICES ONLINE Will the digitalization of the Serbian economy accelerate after the COVID-19 pandemic, and what kind of help do you expect from your Austrian colleagues? I am one of the people who have been participating in that project for three or four years. I am going to be optimistic and say that I expect that this crisis will not have a second tide and that we will all learn a lot from this situation. If I need to pick one positive thing and a lesson that we have all learned in our jobs, but also globally as an economy, it is the fact that many things can be done differently, cheaper and faster. I prefer all of us being in the same room and communicating in person at con-

ference. There is also a non-verbal communication, something that makes us human, and that personal contact is simply inevitable. However, in business terms and in terms of efficiency, many tools that seemed superfluous or complicated to us have now become a part of our everyday life even for those generations who have not used digital tools in their lives and their business so far. My impression is that we worked much more from home compared to when we were all together, because we were constantly available to everybody. Each of us is a member of at least ten different WhatsApp or Viber groups, and was constantly online. What is even more important is that maybe this whole situation has pushed

certain innovative companies forward, which have decided to provide services online. Delivery services have also perfected themselves. It will no longer be strange for us not to go to the store but rather order things online. This will create many new jobs. I'm sure we'll find plenty of reasons to say that this situation has expedited digitization, the understanding of the digitization process and the growth of companies that offered digitization solutions, and even forced more conservative companies and those that may have moved a little slower to start engaging in digitalization. We, as in ordinary people, are the beneficiaries of all this and our lives could become a little simpler and we will probably do certain things more practically.

DIGITAL

WE HAVE BEEN TRAINING DIGITAL TRANSFORMATION ADVISORS FOR SMALL AND MEDIUM-SIZED ENTERPRISES ACCORDING TO THE AUSTRIAN MODEL 11 AUSTRIA 2020

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INTERVIEW

WE NEED TO BE INNOVATIVE

ERIKA TEOMAN BRENNER

Austrian Commercial Counsellor

rade volume between Serbia and Austria has been steadily growing regularly reaching 1.1 bln euro. We asked Erika Teoman Brener, ekonomska savetnicu austrijske ambasade what is next? What should be our ambition in economic cooperation? Her response is nuanced as the cooperation between two countries has many facets and promising avenues. Service

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Business in Serbia has been quite satisfying for Austrian companies over the past years. Nw we need to think about of innovation partnerships, cooperation of start-ups or common projects in third markets

sector evolved from financial to other services and advanced cooperation in the IT filed for example. A considerable number of our companies is looking forward to expand creating new jobs and broadening their presence in the market. “We are convinced that there is still a huge potential in our bilateral trade and we should aim at exploring all possible business opportunities, diversify

our export structures and forge even closer relations. These could be partnerships that go beyond simple trade. I am thinking of innovation partnerships, cooperation of start-ups or common projects in third markets”, says Teoman Brener. “The important thing is to realize what makes a potential business partner strong and how to unite knowledge and skills for a common goal. In order to do so, we should all

aim at supporting new networks, particularly among the young and upcoming generations.” Austrian firms have over 400 subsidiaries in Serbia. On what pace the new companies are arriving ? Are there any patterns you would like to outline? A company´s decision to invest in Serbia or any other country is a very individual one and depends on factors that vary from company to company. That´s why there is no pattern to it. Sometimes a company´s plan to expand to Serbia is linked to the need to be close to a specific customer or to have access to certain skills and knowhow available here. However, in a globalized world like ours, one should never underestimate the role of external factors. The current crisis in the automotive industry, for example, or rising trade uncertainty in general, force many companies to re-think their investment plans. To what extent is the structure of investments changing? What is the ratio between financial companies which arrived first and manufacturing which came afterwards We cannot give an accurate estimate of the ratio, but there is, indeed, a focus on service-oriented companies. They don´t operate only in the financial sector, but also in logistics and trade. There is also quite a considerable presence of Austrian companies in software development, benefitting from the excellent quality of Serbian IT-experts. We are also pleased to note that a considera-

ble share of our companies here plan to expand their investments here, both by employing more people or by increasing their capital expenditure. How Austrian companies evaluate their perspectives in Serbia in the latest survey? Which factors are affecting their expectations the most, those at the domestic market, or the slowdown of German and other large industries? Business in Serbia has been quite satisfying for Austrian companies over the past years. However, when it comes to assess the overall economic situation of

BUSINESS IN SERBIA HAS BEEN QUITE SATISFYING FOR AUSTRIAN COMPANIES OVER THE PAST YEARS the country, there has not been much of a change in the respondents’ sentiments over the past years. As in most surveys of this kind, however, the respondents assess their own business outlook more optimistic than the general economic climate. The fact that for 2020 more Austrian companies expect economic conditions to stay the same, relegating optimists to second place, might be a reflection of a perceived deterioration in the European economic climate.

The Austrian companies repeatedly say that the biggest problems they were facing in their operations in Serbia had to do with legal certainty and the fight against corruption and bureaucracy. However, do you see any changes in their attitudes as the reforms are progressing? Austrian companies have identified several areas, which continue to pose a significant challenge and in their view need to be improved or reformed. As in previous years, these issues relate for the most part to the rule of law, lack of transparency and red tape. While our companies acknowledge improvements in this area, they also point out that certain market-related issues, such as long payment terms, affect them at least as much as regulatory matters. Recently, our companies are faced more and more with difficulties in finding suitable candidates for their vacancies. We see this as one of the most pressing issues in the medium-term, both for domestic and foreign companies. In order to ease the lack of skilled workforce for them, the Austrian Federal Economic Chamber (WKO) together with the Austrian Development Agency (ADA), the Serbian Chamber of Commerce (PKS) and other international and Serbian institutions started in 2016 the project „DualVET Serbia“. More than 3.000 students are currently receiving or have already received vocational education in schools and companies across Serbia. This project opens new opportunities for young people in Serbia while at the same time benefitting Serbia as an interesting place to invest.

OPPORTUNITIES

THERE IS STILL A HUGE POTENTIAL IN OUR BILATERAL TRADE AND WE SHOULD AIM AT EXPLORING ALL POSSIBLE BUSINESS OPPORTUNITIES 13 AUSTRIA 2020

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FROM A STARTUP TO THE LARGEST GREENFIELD INVESTMENT EVER The story of Austrian investments in our country would not be complete without mentioning Vip mobile - part of the A1 Austria Telekom Group. Apart from being the largest greenfield investment in Serbia, this company also has a particularly interesting history

DEJAN TURK

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CEO of Vip mobile and A1 Slovenia

n just 13 years, Vip mobile has come a long way - from a startup to an operator with more than a billion euro worth of investment, 1,400 employees and over 2.3 million users. We are talking to Dejan Turk, CEO of Vip mobile and A1 Slovenia, about what this unique business adventure looked like and how much the support of the parent company, A1 Group and the support of the local team and employees meant to them during it.

In Serbia, Vip mobile is recognized not only as the largest greenfield investment but also as a pioneer and an innovator that pushes the envelope and instigates changes in the local market for the better for all participants. Although the youngest telco operator

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in our country, you were also the first in many ways. How significant was the support of your parent company, A1 Group, in all this?

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We were a group of enthusiasts ready to build a completely new brand in the market â&#x20AC;&#x201D; When Vip mobile arrived in Serbia in 2007, we started with one trailer. We were a group of enthusiasts ready to build a completely new brand in the market of traditional telco operators with already

distributed and stable positions. However, as a typical startup, we knew that at the end of the day, innovations separated leaders from followers, and we saw our chance in the disruption of the existing system. This was also the strategy of the entire A1 Group, which has already begun to profile itself as one of the carriers of technological development in all countries in which it operated on the threshold of the fourth industrial revolution. Even then, we perceived innovations not as a matter of choice, but of survival. That is why Vip mobile got the Group's full support to direct all its capacities on pushing the envelope, redefining standards and improving the market for everyone, not just its customers. Relying on the best examples of practice,

know-how and expertise from all seven countries in which A1 operates, but also on the experience and creativity of local employees, we were the first to bring Android to Serbia, a 4G network in which we have invested more than 120 million euro, as well as NEO tariffs and free gigabytes in roaming. This was followed by IoT technologies and VoLTE, the first steps towards the introduction of a new network and the 5G revolution, which solidified our position as market pioneers and innovators. Business results soon followed. In just 13 years, the company has come a long way - from a startup to an operator with more than a billion euro worth of investment and 1,400 employees who are providing the best user experience for over 2.3 million customers that placed their trust in us. Vip mobile has brought a lot to Serbia - new technologies, the know-how, superior user experience and above all, a healthy competition. What did our country offer to your company, that is, what would you characterize as the biggest business advantage in Serbia? — Analyses conducted by European and global institutions show that Serbia attracts almost 12 times more foreign investments than economies of its size and that the Serbian market is the absolute champion in the region in terms of the number of investments received - both quantitatively and qualitatively. The value of foreign direct investments reached 3.8 billion euro last year, and Serbia has twice been declared the world leader in foreign greenfield investments by the Financial Times magazine. So, it is clear that Serbia is, if not the best, then among the best countries for doing business in the Balkans, due to numerous factors, including geographical location, staff and lower business costs. From my personal and our company's point of view, all Vip mobile employees represent the best from Serbia. Vip is the first company in Serbia to be certified as a family-friendly company. You are the winner of the Friend of the Family award of Chamber of Commerce and Industry of Serbia, as well as recognized as the most gender-sensitive company by the Association of

Business Women in Serbia for two consecutive years. You are also recognized as one of the most desirable employers in our country. To what extent has the employee-friendly environment and culture you created contributed to the overall success of your company in the local market? — We, at Vip mobile, know that our people are behind every one of our business results, achieved goals, reports or figures. They are the crucial factor in our success, because they create products, enrich services, communicate with customers and thus ensure the survival of our company. Therefore, our belief from the very first day was that the

PEOPLE

We, at Vip mobile, know that our people are behind every one of our business results, achieved goals, reports or figures business match is won first in the labour market, and only then in product and services market. Our priority was to create a stimulating environment of equal opportunities, in which our employees can learn, progress, be curious and creative, and freely express their opinions. The recognition we have received is a great honour and proof that hard work is recognized and rewarded, but the satisfaction and positive energy in our company are the best validation that we are on the right path and guarantee success in the years to come. We have to talk about the coronavirus pandemic that has turned all life and business segments upside down. What was it like for a system like Vip to adapt to these new, quite extraordinary circumstances? What changes did you have to make so that neither your employees nor customers would feel the market turmoil? — When the pandemic started, our absolute priority was to make sure that more than 1,400 of our employees remained healthy and safe. This specifi-

cally meant that even before the introduction of the state of emergency, we created conditions for working from home for everyone who could work remotely. On the other hand, we implemented a number of preventive measures in order to protect the health and safety of colleagues who continued to work in the shops and in the field. As a result, we have completely transformed our operational organization in less than three weeks. We regrouped, devised new formations and redirected all our capacities to help users to continue to communicate and stay informed. We enabled them to use free internet add-ons, video conferencing applications, free calls to epidemiological services and access to various educational and informative sites. Apart from infrastructure and people, Vip has been investing in the local community in which it operates since its first day in Serbia. What is the focus of your socially responsible business and how do you decide which society's issues to get involved in? — Since its inception, Vip has demonstrated a strong commitment to implementing socially responsible business projects. Today, there is almost no significant issue in the community which escaped our attention and which we did not use our time and resources to resolve. For us, environmental protection is one of the most important issues. This is a segment in which, since 2012, we have been setting the standards of socially responsible action through our initiative "Vip Ecomotivation", thus sending out a clear message that the state of the environment depends only on us. In addition to the ecological, we strive to elevate the cultural awareness of the community too by digital restoration and preservation of some of the most important national film classics through the project "Vip Cinematheque“. However, children and young people are in the focus of our socially responsible business, "4G Classroom" and „Safe Kids“ are just some of the projects we have launched intending to help to create a better and more inclusive society in which all children, especially the most vulnerable ones, can reach their full potential. 

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WE ARE HELPING TO PROMOTE AND SECURE PROSPERITY IN CEE MARKET Because Erste sees its purpose as helping to promote and secure prosperity in its market, we are closely working together with the region’s governments, central banks and other stakeholders to implement the support programs as quickly and efficiently as possible

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INGO BLEIER

Member of the Management board of Erste Group Bank AG (responsible for Corporate Banking and Markets business) and President of the Board of Directors of Erste Bank Serbia

A 16

lthough the economic downturn in CEE is likely to be more muted than that for the Eurozone and perhaps less catastrophic than many had at first feared, the recovery may well prove to be more

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wavelike and extended than the sharp “V” that many observers had hoped for – especially if the health crisis re-emerges through additional outbreaks later this year, said Ingo Bleier, Erste Group Bank AG and Erste Bank Serbia. How do you assess the overall environment created by pandemic? — Obviously, the coronavirus crisis and the reactions that countries across CEE have taken to combat it have had a sharp impact on the region’s societies and economies. The CEE states have generally been more successful in limiting the health crisis than many Western Eu-

ropean countries and the economies in our markets are now on the path of reopening – something already apparent in such indicators as mobility data, the level of capacity utilisation in automotive plants and – unwelcome – rising levels of pollution. However, there can be no doubt that the impact of the lockdowns will weigh heavily on economies, also in CEE, both in the current quarter and the ones ahead of us. Global supply chains have been disrupted and the business models of sectors like tourism and gastronomy are under massive pressure. What is different this time in comparison to the financial crisis in 2008 and following years?

LIQUIDITY

Securing liquidity was and remains a key concern for private clients, SMEs and corporates across our region

Unlike any other event in our lifetime, this crisis has managed to absolutely crush both supply and demand at the very same time. Also as a result of that, the current crisis is not only impacting a broader range of industries than the global financial crisis, it also is hitting them harder, at least in the short-term.

BACKBONE

EBS is perhaps the closest to small and medium-sized enterprises, companies that are the very backbone of Serbian economy What sort of support are you offering to the corporations? — Securing liquidity was and remains a key concern for private clients, SMEs and corporates across our region. We are helping them by providing liquidity, keeping credit lines open, and address-

ing their acute needs in this exceptional environment. In a tense economic situation like the one this crisis has triggered, banks play the role of vital utility providers. That’s why we’re fully committed to implementing the comprehensive support measures that states across the region have drawn up. Our overarching goal: ensuring that our customers can pursue their revised business objectives, ramp up their trade and business operations again, and manage their investments in these turbulent times. We also remain open to grow our business and attract new clients despite the current operational constraints. How do your initiatives differ based on the regions in which do you operate? — For Erste Group, our home region is Central and Eastern Europe, including Austria. The countries and economies in our region don’t all have the same profile in normal times, and there are also differences in the specific focus and scope of the responses that they’ve taken in the crisis. But on the whole, the CEE states are applying the same set of fiscal sup-

Photo: 2016 Erste Campus Ansicht Gartendeck Innenhöfe © Christian Wind

— The trigger is an entirely different one. The 2008 crisis had its roots in the financial sector, primarily in the United States. In this crisis, the financial sector is not the cause – the current crisis is at its heart a health crisis. Instead, this time around banks can and must play an important role in combatting the crisis by working together with other stakeholders to help safeguard the real economy. That is why it is good that banks are in a very different position these days than they were back in the financial crisis. Banks are now far better capitalized and ready to face the current crisis thanks to a decade of strict banking regulation, as well as reflection within our industry about the general role banks should play within society. Although the collapse of Lehman Brothers was without a doubt the trigger event for the financial crisis, the impact of the COVID-19 pandemic is if anything even more radical and abrupt. Within the space of just a few months, it has put the real economy out of action – and done so immediately, completely and across most countries worldwide.

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port measures: loan repayment moratoria, state-backed loan guarantees and bridge loans, short-term work schemes, and various tax incentives. Measured as a percentage of national GDP, the fiscal packages in those CEE economies where we are active are generally quite large in international comparison – with the 11% for Serbia more or less on the same level as Austria (10%). Because Erste sees its purpose as helping to promote and secure prosperity in its market, we are closely working together with the region’s governments, central banks and other stakeholders to implement the support programs as quickly and efficiently as possible. In addition to retail customers, these programs also focus heavily on small and medium-sized enterprises, which play such an important role in CEE economies, both in terms of growth and jobs. What strategy does Erste Bank Serbia follow and where do you see your role in helping to steer the bank? — Erste Bank Serbia (EBS) acts as a good corporate citizen, operating in compliance with the strict rules that apply in Serbia and seeking close cooperation and agreement with the National Bank of Serbia in its role as the regulator for the country’s financial sector. We take this approach while at the same time maintaining our growth strategy, which has seen EBS increase its assets nearly 19fold since it entered the market in 2005. Among all corporate segments, EBS stands out in renewables and specialized lending, where it has been a pioneer and serves as a market maker. The same is true for EBS’s real estate project financing, where the bank has achieved outstanding results and was a leader in the market in both 2018 and 2019. However, EBS is perhaps the closest to small

and medium-sized enterprises, companies that are the very backbone of Serbian economy. As president of EBS’s Board of Directors, I am there to help my colleagues in EBS with my own and Erste Group’s experience to continue our business growth, in line with the strategy of the Group, while fostering the financial wellbeing of clients and further developing our digital agenda.

PIONEER

Among all corporate segments, EBS stands out in renewables and specialized lending, where it has been a pioneer and serves as a market maker Are the existing banking products fit for new circumstances or you are ready to offer new ones? — Times of crisis are always times that call for innovation. But that doesn’t necessarily mean that we need to create new products and services out of thin air -- instead, it often means realizing that existing offerings can be applied for new purposes and in new ways. One thing this crisis has unquestionably made clear: flexibility, resilience and speed are absolutely essential qualities for any- and everything we in the corporate banking and markets sphere offer. That’s also why our focus on digitalisation, both on the front and back-ends, is now stronger than ever. Supply chain financing is a good example of an offering that has a new urgency as a result of the crisis and also benefits greatly from digitalisation. Be-

cause the crisis has demolished global supply chains, trade risks have spiked. That makes innovative trade offerings like we.trade, a blockchain-based platform that Erste Group has just launched in Austria, a very compelling solution as trade-focused companies seek to reboot their sales both domestically and internationally. Another example: when the crisis first took off in our region, Erste quickly worked together with payments partners in several markets to offer those small corporate customers who to date had been purely brickand-mortar with simple to use e-shop solutions that allowed them to sell and deliver goods – and generate some revenues -- even while their physical shops had to stay shut during the lockdown. It is believed that COVID-19 pushed everybody to digitalise at a fast pace. Were your clients in Serbia ready to fully embrace e-banking? — Yes, clients in Serbia are embracing electronic and mobile banking. They were already doing so even before the crisis. According to a survey Erste Group conducted last year, Serbia and Romania are actually the first markets in the CEE region in which people who use digital banking services are more likely to do so via mobile phones than desktop computers. With the social distancing being enforced during the COVID-19 pandemic, the need for and use of digital services has only grown stronger. Active users of electronic banking have further increased their activities on online channels, while passive ones have recognized the need for easier and safer banking operations from the comfort of their homes. In addition, a significant number of clients decided for the first time to perform banking activities digitally. 

THE USE OF DIGITAL SERVICES Erste Bank Serbia has intensively promoted the use of digital services during the state of emergency as a good choice for safe and simple banking operations, and it will continue to do so. Among other things, EBS has enabled its clients to contract or activate electronic banking services or receive a new payment card without having to go to a branch. EBS’s mBanking and NetBanking were both used for filing requests for cash loans. As for corporate clients, these had already handled a lot of their business -- fast and safe payments and running daily business -- through electronic banking before the crisis. This trend has continued throughout the state of emergency.

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COOPERATION

EXTERNAL TRADE AND INVESTMENTS

Austrian companies operating in the Serbian market are announcing new investments. It is expected that Austrian family-owned companies, which are traditionally careful when making business-related moves, will start relocating to Serbia. A lack of engineers and qualified workers is a concern ustria is one of the largest investors in the Serbian economy. Currently, there are over 900 business entities in Serbia whose majority owners are Austrian nationals, that is, legal entities registered in Austria that employ over 20,000 workers which made total investments in excess of $ 2 billion. Austrian medium-sized, so-called family-owned, firms that have been relocating their production units in search

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of more competitive prices and more qualified workforce, have also been showing a growing interest in investing in Serbia. A business trust survey, which is regularly conducted by the Austrian Embassy and which results were officially presented earlier this year, shows that 41% of the surveyed Austrian companies said that they felt that the economic situation in Serbia had changed for the better in 2019, while 46% said that

the business opportunities remained unchanged. At the same time, 49% of respondents believe that business opportunities will remain unchanged in 2020, while 37% expect better opportunities. Such somewhat restrained projections are, among other things, a reflection of the marked deterioration in Europe due to the Brexit crisis and the economic situation in Germany. However, in 2020, more than half of businesspeople from Austrian companies

in Serbia said they expected an increase in total turnover, number of purchase orders and capacity utilization, and the same percentage expects capital costs and staffing to remain at the same level as last year. Austrian companies believe that it is necessary to increase legal safety, step up the fight against corruption and reduce red tape to improve the business climate. Also, Austrian businesspeople advocate improving the transport infrastructure, increasing awareness about quality and boosting the population's purchasing power. Austrian companies say that a shortage of labour, both engineers and skilled workers, is one of the biggest problems. However, 89% of them still think they would invest in Serbia again, and 40% expect to increase their investments in Serbia this year. For example, the Austrian company Thermowool, which has its plant in Sremska Mitrovica, will build another factory in the town of Ĺ id in 2020. In the last three years, Serbia has made its way into the group of 30 countries that Austria has been trading with the most. According to the data covering the first three quarters of last year, Serbia, with the external trade value of EUR 1.1 billion, is Austria's largest trading partner in the region. In the first 10 months of last year, Austrian exports to Serbia increased by 16%, while exports from Serbia to Austria increased by 30%. This exceeded the record set in 2018 when the total external trade amounted to just over one billion euro, an increase of 5.44% compared to 2017. Serbia's exports increased by as much as 9.85%. Austria ac-

TRADING

AUSTRIAN COMPANIES BELIEVE THAT IT IS NECESSARY TO INCREASE LEGAL SAFETY, STEP UP THE FIGHT AGAINST CORRUPTION AND REDUCE RED TAPE TO IMPROVE THE BUSINESS CLIMATE counts for 2.7% of total exports among the countries to which Serbia exports. The export to import ratio in 2018 was 72.3%. According to the data collated by the Ministry of Finance of the Republic of Serbia (i.e. the Customs Administration), 4,274 companies are doing busi-

ness with Austria. 904 active business entities in Serbia are majority-owned by Austrian nationals or legal entities registered in Austria. The two countries have been mostly trading in the products from the metal-processing sectors like vehicles and construction equipment with the growing trade in hi-tech services too. Increasingly, our companies have been producing software for Austrian companies, as well as maintaining their information systems, not only in Austria, but also in the subsidiaries in other EU countries. As for other areas of interest and products that could be marketed in Austria, the food processing and machine-building industries also have great potential. Additionally, Serbian construction companies are very interested in the Austrian market, but the issue of obtaining work permits faster remains an obstacle.

IN THE LAST THREE YEARS, SERBIA HAS MADE ITS WAY INTO THE GROUP OF 30 COUNTRIES THAT AUSTRIA HAS BEEN TRADING WITH THE MOST 21 AUSTRIA 2020

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WE ARE A COMPETENT AND RELIABLE BUSINESS PARTNER IB Interbilanz is here for clients to help them in all areas related to finance, accounting, taxes and financial consulting

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FILIP BORŠIK

Director of IB Interbilanz Consulting & Audit d.o.o.

ur goal is, in cooperation with the management of the companies we represent, to mitigate the initial reduction of their business activities, to stabilize cash flow with measures in the field of finance and taxes and to prepare for the next steps in business optimization.

Given that in the present situation the Serbian Government introduced a number of legislative situations, tell us please in which area you may support clients in adapting to the new framework? — IB Interbilanz as a business partner and consultant supports companies in strategic planning and implementation of all measures adopted by Serbian Government. Together with clients, we have established critical points in their business. Our goal is, in cooperation with the management of the companies we represent, to mitigate the initial reduction of their business activities, to stabilize cash flow with measures in the field of finance and taxes and to prepare for the next steps in business optimization.

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After the implementation of the first crisis measures, we are working with clients on medium- and long-term plans for business stabilization. Bearing in mind that not all sectors are equally affected by criris, and therefore not all our clients face the same business scenario and the need for Government`s support. The HORECA Sector, and to some extent the entire Real Estate Sector, have suffered the most damage and in my opinion, given the importance of these sectors for the development of the Serbian company, the Government`s measures had to be more concrete in order for them to recover from the crisis as soon as possible. It is positive that we can hear announcements of additional support packages lately, and I use this opportunity to encourage decision makers to make that move.

SUPPORT

Our support to clients is always aimed at the best possible anticipation of their business, and in times of crisis, the dynamics of circumstances only intensified this cooperation What would be your suggestion when it comes to implementation of current measures or introduction of new measures? — Recommendations we give to clients are reflected in the most rational application of financial support received from the Government of RS, buisness opti-

mization and creation of medium-term and long-term exit plans from the crisis through tax optimization and financial restructuring. These plans are important not only for overcoming the consequences of the current one, but also as a preparation for the next crisis that inevitably occur in cycles, regardless of the source. The global economy will face a slowdown and that is invevitable, and for that, clients must be ready and react in time. IB Interbilanz is working with its clients to redefine and implement internal measures, budgets and plans for this and next year. In which areas foreign clients operating in Serbia need your support the most? — When we talk about foreign clients doing business in Serbia, what makes up over 90% of our portfolio, the most important thing for them is that their business is in the line with Serbian legislation. How is your company dealing with the current situation, and specifically when it comes to retention of the staff? — IB Interbilanz has gone through, and is still going through, a very dynamic period with its clients. Our support to clients is always aimed at the best possible anticipation of their business, and in times of crisis, the dynamics of circumstances only intensified this cooperation. IB Interbilanz thinks of its employees and it was important for us to understand their individual situations, in order to organize them well for working from home. Our company did not reduce salaries, because there was no reason for that, and, as an incentive to employees for all their efforts and dedicated work, our plan is to reward them for that. 

INTERNATIONAL CONSULTING AND CLIENT SERVICE BEYOND EXPECTATIONS

IB Interbilanz Consulting & Audit d.o.o. Beograd is a subsidiary of IBD Group GmbH, Vienna. The IBD Group has its roots in Austria and provides consulting and auditing services since 1991 also in other countries. At the moment we are active in 8 countries - besides Serbia, in Slovenia, Croatia, Hungary, Slovakia, Ukraine and Czech Republic – on totally 12 locations. We are present on the Serbian market more than 15 years and provide services in German and English. Our Belgrade office offers a wide range of services: - Accounting – Outsourcing - Payroll -Outsourcing - Tax advisory & transfer pricing studies - Audit & Assurance (Statutory & IFRS) - Business advisory (business planning, CFO services etc.) - Corporate finance (M&A, due diligence, valuation services etc.) - Translations and courier services

Audit | Tax | Advisory Milentija Popovića 5V kula S2 11070 Novi Beograd T: +381 11 655 70 55 • +381 11 655 70 43 E: office@interbilanz.rs · W: www.interbilanz.rs member of IBD

ECONOMY

STRONG AND INNOVATIVE ECONOMY

The Austrian economy is deemed as one of the most stable in Europe strong industry and service sector. In 2019 Austria recorded growth of 1,6 % (IMF estimation) and is expected to remain stable in the coming years

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ustria has a population of 8.8 million population of which 4.4 million people belong to labour force, of whom many are highly educated and skilled. The country has a low percentage of unemployment compared to

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other countries in the eurozone and the EU, I low single digits. In 2019, unemployment rate grew slightly to 5.1% but it is expected to remain stable to 5% in 2020 and 2021 (IMF estimates). By the same token, there is a labour shortage which could limit economic growth.

National debt has been reduced since 2015 to an estimated 70.7% of GDP in 2019 (IMF) and the government plans to bring down it to 67.7% of GDP in 2020 and to 65.1% in 2021, reaching the Maastricht criterion of 60% in a few years. The National Bank of Austria ex-

pected public deficit to reach 0.0% in 2019 thanks to the economic recovery in the Euro zone and the strengthening of trade relations with eastern European countries. With average inflation rate of 1.8% since the introduction of the euro, Austria has successfully maintained price stability in line with Eurosystem's definition (1.5% in 2019 and an estimated 1.9% for 2020 and 2021, according to IMF). Austria is one of the 10 member states that contribute more to the EU budget than they receive (0.85% of GDP versus 0.51%, European Commission data). Austria is characterized as a free market economy with a strong social focus on weaker members of society as well on as its commitment to economic and social partnership, which traditionally plays a strong and reconciliatory role in wage and price policies. Austrian industry covers every branch of manufacturing, from basic goods to the labor-intensive production of highly processed products. The most important industries are food and luxury commodities, mechanical engineering and steel construction, chemicals, and vehicle manufacturing. The construction of plants and systems (encompassing the planning, delivery, and assembly of turn-key production facilities, including the required know-how and operational expertise) is making up an increasingly important share. Over the past fifteen years, Austria has successfully implemented policies for the economic specialization of each region (Lander): Upper Austria (iron, steel, chemical and mechanical

engineering), Salzburg (electrics, wood and paper), Vorarlberg (textile, clothing), Carinthia (wood, pulp and paper industry), Styria (automobiles, manufacturing) and Vienna (financial services). The industrial sector is comprised of SMEs and is strongly connected to the Central European markets. It accounts for 25.4% of the GDP and employs 24.4% of the active population.

AUSTRIA IS INCREASINGLY BECOMING AN INTERNATIONAL MEETING POINT, WHICH IS ILLUSTRATED BY THE LARGE NUMBER OF SUMMITS AND CONFERENCES HELD IN AUSTRIA Apart from strong network of export-focused SMEs, the country relays on excellent academic standards and significant spending for research and development which contribute to innovation and business diversification in green and digital economy. The agricultural sector employs 3.8% of the active population and represents 1.1% of GDP (World Bank data). However, combined with the food and drink industry, it represents about 12% of the GDP. There is strong trend in organic farming with overall share of 22% which

gives Austria a leading position among the EU Member States. Austria benefits from significant subsidies from the European Union provided by the Common Agricultural Policy. Consequently, agricultural exports are continuously increasing. Austria is rich in resources among which are iron ore, non-ferrous metals, important minerals and earths. Austria has its own resources of petroleum and natural gas. The generation of hydroelectric power is constantly being expanded, which makes Austria the leader in the field of hydroelectric power in the European Union. The renewable energies sector, especially hydroelectric power, is booming and its performance has exceeded those of the tourism and construction sectors. By 2020, Austrian energy companies are expected to invest almost EUR 10 billion into the distribution, efficiency and upgrade of the energy sector. Austria is world-famous for its arts and crafts, most notably fine hand-crafted items, costumized jewellery, ceramics, and glassware. The services sector dominates the economy, contributing 62.7% of the GDP and employing 71.6% of the country's active population. Every sixth job is provided by tourism, which has a major impact in the countryâ&#x20AC;&#x2122;s economy. According to the last available information of Statistical Office, Austria registered 46.1 million arrivals in the year 2019 (with more than 31.8 million international tourists), a new record with a growth of 3%. Most of the visitors came from Germany (37%), Netherlands (7%), Switzerland (3.6%), and United Kingdom (2.6%).

INDUSTRY

AUSTRIAN INDUSTRY COVERS EVERY BRANCH OF MANUFACTURING, FROM BASIC GOODS TO THE LABOR-INTENSIVE PRODUCTION OF HIGHLY PROCESSED PRODUCTS 25 AUSTRIA 2020

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DIGITALIZATION AND DIGITAL INFRASTRUCTURE DEVELOPMENT We have so far developed a number of solutions in this area, such as digital load measurement or the use of artificial intelligence in transport planning

regularly briefed our clients regarding current events in the markets where we operate.

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JELENA ŽIVANOVIĆ

Sales Manager, Gebrüder Weiss Serbia

he latest product that we will soon offer is ETA (Estimated Time of Arrival), a unique service on the market that provides the user with real-time information on the status of the shipment.

How did Gebrüder Weiss respond to the challenges that Covid-19 imposed on the Serbian economy performance? — For the transport and logistics industry, the pandemic brought increased demand for certain services, which required us to react quickly and to adapt. From the very beginning, we have taken all necessary measures following the recommendations of the competent authorities to create a safe working environment. Thanks to the stable business infrastructure and commitment of our employees, we have continued to provide high-quality services. We have ensured an uninterrupted flow of supply and remained firm support to our customers, offering them solutions that have enabled them to maintain their business even under the altered circumstances. We have also established a central Situation Centre thanks to which we have

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What are the capacities of your Home Delivery service? What are your target users? — Last year, the home delivery service was one of the drivers of successful business results, recording a growth of 24%, which makes it one of the key services in our portfolio. The concept brings together a team of 500 employees and a fleet of 270 vehicles. During 2019, we delivered about 1.1 million products to end-users in Austria and Eastern European countries. The global trend is also noticeable in the domestic market, where the annual growth rate of the number of shipments is 8%, while in the first quarter of 2020 this percentage was 11.25%

TOOL

ETA is a self-service software tool that provides customers with up to date status of the expected arrival of the shipment This development is related to the online commerce growth trend. Logistics efficiency is one of the critical factors of its success, where our service, in addition to the delivery of goods to the home address, often includes logistics activities that follow or precede the delivery process. How does this service stand out from the competition, and how do you in-

tend to develop it? — Home Delivery service is specifically created within our company and is applied according to the same standards in each country. We presented it to the Serbian market in 2015, and since then, we have been continuously working on its development, focused on providing our clients with a high-quality service. We expect that the positive trend recorded by this service will continue, and we are ready to adjust our capacities accordingly. What new services you have offered or intend to offer online to your partners and customers? — We are currently focused on digitalization and digital infrastructure development. We have so far developed a number of solutions in this area, such as digital load measurement or the use of artificial intelligence in transport planning. The latest product that we will soon offer is ETA (Estimated Time of Arrival), a unique service on the market that provides the user with real-time information on the status of the shipment. Unlike previously available solutions that involved personal contact, ETA is a self-service software tool that provides customers with up to date status of the expected arrival of the shipment. The calculation of the scheduled time is based on the shipment identification code and GPS parameters, taking into account the type of vehicle, infrastructure, traffic jams, stops or changes in the order of delivery. By developing such software solutions, we provide a transparent delivery process to our customers and create added value to the service rendered, which affirms our position as an innovative pioneer in logistics. 

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by Žikica Milošević

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ECONOMY

SOCIAL CONSENSUS Healthy house on a healthy foundation ustria is a wealthy country, but what else can we expect from a country that knows how to dance and save money, as well as a country that, despite being landlocked, created the longest-lasting European empire and the first "European Union" before the European Union. There must be something in the Austrians that gives us the right to study their economy and copy what we can from them.

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IN ADDITION TO A HIGHLY DEVELOPED INDUSTRY, INTERNATIONAL TOURISM IS THE MOST IMPORTANT PART OF THE NATIONAL ECONOMY

SOCIAL CONSENSUS IS GOOD FOR THE ECONOMY During the post-war period, Austria was in the buffer zone between east and west, while being capitalist and neutral at the same time, thus successfully using certain elements of neutrality in the economy as well. By the 1980s, many of the largest Austrian industrial companies had been nationalized. After 1992, the fall of the Berlin Wall and the rise of the neoliberal thought, the

country took a different direction. In recent years, privatization has reduced state shares to a level comparable to other European economies, which initially had a "more capitalist" mantra. Austria has profited a lot from the social consensus between workers and employers, which gave the country the opportunity to build the economy on a sound footing, and to make investors feel good, as well as attract foreign and domestic workforce to work under these conditions. Labour movements are particularly strong in Austria and have a major impact on labour policy. No-one is dissatisfied and workers are more loyal to companies and vice versa.

TOURISM AS A BLESSING AND A CURSE In addition to a highly developed industry, international tourism is the most important part of the national economy. At least it was, which puts Austria in the position of losing a lot of tourism revenue due to the pandemic, as well as be able to recover quickly which is something that Austria

desperately wants. But the facts and figures before the pandemic are impressive. Tourism in Austria forms an important part of the country's economy, accounting for almost 9% of the Austrian gross domestic product. Austria has one guest bed for every six inhabitants and boasts the highest per

THERE WILL STILL BE TURBULENCE AND STRANGE TWISTS, BUT AUSTRIA REMAINS A SILENT GIANT OF THE EUROPEAN AND WORLD ECONOMY capita income from tourism in the Organisation for Economic Co-operation and Development. As of 2007, the total number of tourist overnight stays is roughly the same for summer and winter season, with peaks in Febru-

ary and July/August. It is not easy to be a tourist destination all year round, which many countries can only dream about. Vienna is Austria’s main attraction – a tourist attraction so big that Salzburg, which is the second most visited city in Austria, is happy if it attracts 20% of tourists going to Vienna. City tours are still popular in winter, but nature takes precedent, mainly to skiers. In the winter season, a number of winter sports resorts in western Austria - Sölden, Saalbach-Hinterglemm, Ischgl, Sankt Anton am Arlberg and Obertauer - exceed Salzburg in the number of overnight stays. Most of the tourists here are German, followed by the Dutch, Swiss, Italian and British. The per capita income from tourism in Austria was over 2,000 euro in 2017.

GERMAN GIANT Historically speaking, Germany has been Austria's main trading partner, making it vulnerable to rapid changes in the German economy. This is not surprising given that for many years, Austria was "the last remaining coun-

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try on the defensive line of capitalism" in Europe, and that Germany, Italy and Switzerland were Austria's three links with the West, while it was clear looking at its other neighbours - Hungary, Czechoslovakia and Yugoslavia – that Austria belongs to an entirely different economic world than they did. However, since Austria became a member of the European Union, it has solidified its ties with other European Union economies, reducing its economic dependence on Germany. In addition, the EU membership has spurred an influx of foreign investors attracted by Austria's accession to the European single market and the proximity of the economies that the European Union wants. GDP growth has accel-

PERCENTS

TOURISM IN AUSTRIA FORMS AN IMPORTANT PART OF THE COUNTRY'S ECONOMY, ACCOUNTING FOR ALMOST 9% OF THE AUSTRIAN GROSS DOMESTIC PRODUCT 30

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AUSTRIA 2020

erated in recent years, reaching 3.3% in 2006, and Austria has once again stepped into the world of highly developed economies. Even Germany is

HISTORICALLY SPEAKING, GERMANY HAS BEEN AUSTRIA'S MAIN TRADING PARTNER, MAKING IT VULNERABLE TO RAPID CHANGES IN THE GERMAN ECONOMY

now listening very carefully to what Austria has to say and show and discreetly copying everything worth copying from Austria. In 2004, Austria was the fourth richest country in the European Union, having a GDP (PPP) per capita of approximately € 27,666, with Luxembourg, Ireland, and the Netherlands leading the list. The services sector accounts for 68% of total economic production, the industrial sector 30%, and agriculture and forestry 2%. All in all, this is a healthy, rich, and reasonable economy. When tourism, Austria's golden goose, the country will be at the top again. There will still be turbulence and strange twists, but Austria remains a silent giant of the European and world economy.

CORPORATE

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MORE THAN 4 MILLION DINARS DONATED BY GRAWE SERBIA DURING CORONA CRISIS ince the very onset of the state of emergency caused by the outbreak and spread of the virus COVID-19 GRAWE Insurance Company in Serbia has provided more than 4 million dinars to procure required medical and other equipment as well as to assist those most at risk under current circumstances. Responding to an appeal of the Serbian Government, GRAWE donated RSD 2.5 million for the purchase of respirators and other medical equipment required in

the fight against the coronavirus. In cooperation with the Embassy of the Republic of Austria, GRAWE donated protective masks for the healthcare workers who are most at risk in these extraordinary circumstances. Furthermore, in cooperation with the Austrian

Embassy and the Serbian Chamber of Commerce, GRAWE donated 230 antibacterial waterproof mattresses distributed to the alternative Belgrade hospitals. GRAWE continues to donate assets to procure medical and accompanying equipment necessary to

provide relevant care to and preserve the lives of citizens of Serbia who are most at risk during this COVID-19 epidemic. Several million dinars have been provided for these purposes. Together with other members of the Association of Serbian Insurers, GRAWE participated in donating the assets used for the procurement of respirators, coronal virus tests, reagents, medical and other equipment required during this epidemic which required hiring three airplanes to deliver these materials to our country.

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CUSTOMS

NEUTRALITY AND FEDERALISM The Two Pillars of Success

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ustria is a small country, but it has been incredibly influential in the world since the end of World War II; in fact, since the end of the occupation of Austria in 1955 and the adoption of the Constitution. As always, it's all about having a good foundation and good infrastructure. Since the country was established as a federation, the possibility of the capital city, which was too huge for the country, 'swallowing up' the rest of Austria was drastically decreased. Because Vienna is a neutral country, it did not have to spend too much on the army (and unlike Yugoslavia, which feared that everyone would attack it, Austria was convinced that no-one would attack them). Instead, the country be-

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haved like Finland and Sweden and was focused on cooperating with everyone. Austria was the closest to the Eastern bloc and served as a junction between East and West, both economically and politically. Summits were frequently

held here and Austrian companies, as we have mentioned many times, were the first to arrive in the Eastern European markets, while the superpowers hesitated to invest farther. Austria got the best of both worlds, thanks to the good foundations of its â&#x20AC;&#x153;houseâ&#x20AC;?.

AUSTRIA WAS THE CLOSEST TO THE EASTERN BLOC AND SERVED AS A JUNCTION BETWEEN EAST AND WEST, BOTH ECONOMICALLY AND POLITICALLY

NEUTRALITY AS AN ASSET Austrian neutrality has been a fundamental element of Austrian foreign policy since it was passed on October 26, 1955 - the day on which, for the first time, there were no occupying troops in the country after the war. Since October 26, October 26th has been Austria's national holiday. Austria's neutrality was de facto restricted by the EU accession on January 1, 1995, and by other new constitutional provisions that have

been passed since then. This helped the country to insure itself against the division experienced by Germany, and to allow itself the privileged position that Finland also won for itself. The Soviets gave up expanding to Austria, and so did the Westerners. Capitalism had a human face, workers' rights were respected, and the army was not in the service of attack, but only defence. An ideal position for any country!

FEDERALISM AS A SECOND ASSET The federalization of a small country? Aren't we afraid that someone will break away? Of course not, providing things go well. It was because other Austrians realized that Vienna could not govern the rest of Austria centrally (they called Vienna "Wasserkopf" or "Huge Head") and they were aware that the country would fall into an ungovernable state. Minorities like Slovenians and Croats in Carinthia and Burgenland did not sound good after another war that did not go well, while the plebiscite in Carinthia went well after the First World War there were fears that Carinthia could disappear into the "Slovenian corridor", that stretched from Slovenia to the Czech Republic, and that the country could be separated from Hungary. That is why Croats and Slovenes are guaranteed every possible right in those two provinces, and why the country is decentralized. But in which way? The Republic of Austria consists of nine states (German: Bundesländer): Vienna, Burgenland, Carinthia, Upper Austria, Lower Austria, Vorarlberg, Tyrol, Salzburg and Styria. Even in German-speaking provinces, there was

FEDERATION

CAPITALISM HAD A HUMAN FACE, WORKERS' RIGHTS WERE RESPECTED, AND THE ARMY WAS NOT IN THE SERVICE OF ATTACK, BUT ONLY DEFENCE danger of breakaway. For instance, Vorarlberg, the only province that does not speak the Austro-Bavarian dialect but the Swiss-Alemannic, had the referendum after the Great War in which it wanted to join Switzerland. Although, the majority voted „yes“, Vorarlberg never became a part of the Swiss Con-

federation. With all that in mind, Austria has managed to tailor a federation on a rather small territory that worked out great. But not everyone thinks so. Some complain that Austria is the case of "centralized decentralization" or "federation without federalism", but like any system, it is worth preserving and needs to be repaired. Many NATO supporters complain that neutrality is bad. Many proponents of centralization complain that administration is too expensive. The price of not having regionalization and neutrality can be quite steep, and it was the balance that has made the voice of a small country like Austria heard and upheld and which regionalization system is copied all over the world. This is why Vienna is still the centre of Europe, as it was many years ago.

AUSTRIA HAS MANAGED TO TAILOR A FEDERATION ON A RATHER SMALL TERRITORY THAT WORKED OUT GREAT 33 AUSTRIA 2020

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by Žikica Milošević

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CULTURE

VIENNA SECESSION The last great European Style ay people, that is ordinary citizens, and experts alike, say that secession may be the last major European style. After that, styles weren't grandiose or European, or neither of these two, quite often. Of all the secession styles, we, in Serbia, are familiar with the Hungarian and Viennese the best.

THE BEGINNING The Viennese secession has nothing to do with a certain part of the country wanting to secede. On the contrary, it is an art movement, closely associated with Art Nouveau, launched in 1897 by a group of Austrian painters, graphic artists, sculptors and architects, including Josef Hoffman, Koloman Moser, Otto Wagner and Gustav Klimt. They resigned from the Austrian Association of Fine Artists in protest against the Association’s support for more traditional artistic styles. A secessionist building de-

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signed by Joseph Maria Olbrich, which was the site of the group's exhibitions, was their most influential architectural work. Hermann Bahr wrote about an important secession principle: "We want art that is not a slave to foreign influences, but at the same time, neither

KLIMT MAY NOT BE AS SHOCKING TO US TODAY AS HE WAS AT THE TIME frightened nor hated by them." Another important quote illustrating their ideas and ideals is written at the entrance to a secessionist building: "To every age its art, to art its freedom." (DER ZEIT IHRE KUNST, DER KUNST IHRE FREIHEIT.) The Viennese Secession was named after the Munich Secession. Its offi-

cial magazine was called ‘Var Sacrum’ in which one could find very stylized and influential graphic art. Their mission was "total art", and the unification of all art forms – the so-called Gesamtkunstwerk. They hated the historicism of the Vienna Academy (Künstlerhaus Wien). In 1905, the group split when some of its most prominent members, including Klimt, Wagner and Hoffmann, resigned in the priority dispute, but it continued to function and operate today from its seat in a secession building. It was an act of secession from secession.

THE KISS OF KLIMT Klimt loved the female body and his works are imbued with eroticism. Klimt may not be as shocking to us today as he was at the time, but it is still difficult to refrain from reacting even today when we see his monumentally erotic painting “The Kiss”. It is almost

impossible to count how many reproductions this image has had, and how many notebooks and calendars depict it. Klimt’s artwork radiates yellow and gold, while the figures are usually placed in an erotic pose. This can be seen in the paintings such as “Judith and the Head of Holofernes” (1901), as well as in “The Kiss” (1907-1908), and especially in “Danae” (1907). Klimt drew inspiration from ancient artists, all the way to Albrecht Dürer. It goes without saying that the Nazis could not stand him. The SS destroyed three paintings that were commissioned as decoration for the ceiling of the grand hall of the University of Vienna. His three paintings, “Philosophy”, “Medicine” and “Jurisprudence”, were severely criticized and classified as "perverted" and "pornographic". And, of course, that meant

THE LEGACY OF SECESSION ARTISTS IS BREATHTAKING. DESIGN, APPLIED ARTS, ARCHITECTURE, PAINTING. GESAMTKUNSTWERK… the end of them. “The Portrait of Adele Bloch-Bauer I” is perhaps his most famous painting and was considered the "Austrian Mona Lisa". It was commissioned by Ferdinand Bloch-Bauer, a Jewish industrialist from Vienna, who amassed his wealth by producing sugar. He was a great patron of the artist and his wife is the only person whom

Gustav Klimt painted twice. Klimt spent three years doing the first painting. He did the second painting, called “The Portrait of Adele Bloch-Bauer II” in 1912. Adele Bloch-Bauer was also targeted by the Nazis who, in 1941, renamed the painting "The Woman in Gold" in order to avoid mentioning her Jewish origin. The painting was exhibited at Belvedere until 2006 and was subsequently sold in the United States, at the request of the woman how inherited it. To this day, this painting remains a symbol of Vienna's secession and the town’s golden age. The legacy of secession artists is breathtaking. Design, applied arts, architecture, painting. Gesamtkunstwerk… Subsequently, Art Deco took over, but perhaps art reached its peak just before the Great War, in Vienna.

SECESSION

THE VIENNESE SECESSION WAS NAMED AFTER THE MUNICH SECESSION. ITS OFFICIAL MAGAZINE WAS CALLED ‘VAR SACRUM’ IN WHICH ONE COULD FIND VERY STYLIZED AND INFLUENTIAL GRAPHIC ART 35 AUSTRIA 2020

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SPIRIT

by Žikica Milošević

THE MOST LIVEABLE CITY The Legacy of the Rotes Wien

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or many years now, Vienna has been ranked high on the list of "most liveable cities in the world", and it is very often ranked first. Vienna is not so far from us geographically, but it is light years ahead regarding the living standard. No wonder it is a magnet for the former Yugoslavs.

THE MOST LIVEABLE IN THE WORLD, TWICE IN A ROW In 2019, Vienna was voted the best city to live in for the second consecutive time by scoring the highest in all categories of the new liveability index collected by The Economist Intelligence Unit (EIU). Vienna got 99.1 points out of 100, the same result the city achieved a year before. Three years before that, Vienna ranked second, right after Melbourne. It is interesting to note that there are eight cities from Europe in

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HE ACHIEVEMENTS OF THE VIENNA SOCIALISTS WERE THE MOST EXHILARATING SOCIAL MOVEMENT OF THE POST-WAR PERIOD IN ANY EUROPEAN COUNTRY the Top 20, and three Australian and Canadian and two Japanese cities in the Top 10. Surprisingly, London ranks 48th, followed by New York (in the 58th place), while Paris is perhaps the bestranked among European megacities, occupying the 25th place. So, how did this come about? Wasn't the capital of the Austro-Hungarian Empire a noisy

and crazy city in 1918 that was in disarray despite having the infrastructure of the empire?

ROTES WIEN Yes, it was, but then the Empire disintegrated and the moment came to bring things in order amidst the chaos caused by the lost war. In the next 16 years, the city will be nicknamed „The Red Vienna“ („Rotes Wien“), not because it went through a revolution, as St Petersburg did, but for entirely different reasons. Namely, the Red Vienna was the nickname of the capital of Austria between 1918 and 1934, when the Social Democrats had the majority and the city was democratically governed for the first time in its history. After 1918, ties with the regions that provided food for Vienna were severed, people starved, and refugees filled up the city. In other parts of German Aus-

tria, which establishment was declared (Deutschรถsterreich), people gossiped about Vienna as being a too big of a capital city for such a small country, similar to what happened to the cities in the former Yugoslav republics and the USSR. A Spanish flu pandemic, syphilis and tuberculosis broke out, and the apartments became overcrowded. It was time for a big, red-black coalition, without which a civil war would have broken out. John Gunther characterised the overall setting of Vienna between the wars as following: "The disequilibrium between Marxist Vienna and the clerical countryside was the dominating Motiv of Austrian politics until the rise of Hitler. Vienna was socialist, anti-clerical, and, as a municipality, fairly rich. The hinterland was poor, backward, conservative, Roman Catholic, and jealous of Vienna's higher standard of living." A 5-day working week and an 8-hour working day were immediately introduced. The coalition broke up in 1920, but the Reds continued to lead Vienna until 1934. After 1934, Gunther commented: "In Vienna the socialists produced a remarkable administration, making it probably the most successful municipality in the world. The achievements of the Vienna socialists were the most exhilarating social movement of the post-war period in any European country. "

THE PRINCIPLES OF THE BEST CITY The first thing that was passed was the Tenant Protection Act (in German: Mieterschutzgesetz). Apartment rents reverted to the ones from 1917, which effectively killed private housing and en-

abled state housing. General-purpose buildings and blocks were built inside parks and had modern infrastructure. 60,000 new apartments were available in Gemeindebau ("community construction") buildings, such as those in Karl-Marx-Hof and George-Washington-Hof. Rent was low so renting an apartment in one of these buildings was equivalent to 4% of a worker's salary, while in private buildings, the rent was 30% of a salary. If someone report-

IN VIENNA THE SOCIALISTS PRODUCED A REMARKABLE ADMINISTRATION, MAKING IT PROBABLY THE MOST SUCCESSFUL MUNICIPALITY IN THE WORLD

ed that they lost their job, they did not pay the rent until they were employed again. Parents received packages with clothes for their children, because "no newborn in Vienna will be wrapped in a newspaper anymore." Nurseries and after-school care facilities were built. Health care was free and numerous sports grounds were built too. The money for all these endeavours came from the funds that the state saved by having fewer young people in prison, fewer teenage pregnancies and fewer people that were ill. Once everything was put in place, Vienna did not forget its true identity. In 1978, a subway was added to the very efficient public transport network that consisted of trams and buses. Tickets are purchased on a daily, monthly, weekly basis and are quite affordable. No station is too far and it takes 15 to 30 minutes to travel from one end of the city to the other. This is how you build a city that people actually want to live in; a city that has been built with its residents in mind. Austria should be viewed as a role model for all other countries.

MODEL

AUSTRIA SHOULD BE VIEWED AS A ROLE MODEL FOR ALL OTHER COUNTRIES 37 AUSTRIA 2020

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DID YOU KNOW

THE NEW YEAR'S CONCERT he Vienna Philharmonic presents annually at the New Year a program consisting of the lively and yet nostalgic music from the vast repertoire of the Strauss family and its contemporaries. This concert is now broadcast to over 90 countries around the world.

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39 AUSTRIA 2020

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by Žikica Milošević

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CULTURE

MUSIC AS A BRAND

The country famous for its notes

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ustria has always been a country of good music from Mozart, Schubert and Strauss' waltzes to Falco and Conchita Wurst and the underground bands. Simply put, Austrian people know how to make a hit. Soft power has always been expressed through music, and Austria certainly never lacked musical talent. If neighbouring Germany is considered experimental and has encouraged experimental performers to go beyond borders (David Bowie, Depeche Mode, Nick Cave, The Beatles and of course, the indigenous Kraftwerk), Austria has always known to elevate everything to a more melodic and a more commercial level, whilst relying on the traditions of classical music. This was aptly described by Miloš Forman in his cult classic „Amadeus“, in which he demon-

strates how every person had heard of the „A Little Night Music" and only rare individuals liked Salieri's pieces.

PEARL NECKLACE Vienna has been an important centre of musical innovation. 18th- and 19th-century composers were drawn to the city due to the patronage of the Habsburgs, and made Vienna the European capital of classical music. Joseph Haydn, Wolfgang Amadeus Mozart, Ludwig van Beethoven, Franz Schubert and Johann Strauss II, among others, were associated with the city, with Schubert being born in Vienna. During the Baroque period, Slavic and Hungarian folk forms influenced Austrian music, especially Haydn. However, Mozart died poor, because his fame eventually faded which could not be said for the "Strauss Dynasty",

as the British series depicting lives of Johann Senior, Johann Junior and Joseph Strauss, called it. They were simply so popular that entire Europe and the world danced the waltz and eagerly waited for a "new smash hit" from “the hit-making industry” called the Strauss family. Even today, the New Year Day's concert in Vienna is vastly popular around the world. After partying the night earlier and getting up around noon, people sit in front of their TVs to watch the Viennese elite applaud to the New Year’s rendition of “Radetzky March”.

CONTEMPORARY POP Everything goes back to Mozart, no? Just look at the good old Falco who, in 1985, rode on the coattails of the success of Forman's film and composed a song called „Rock Me Amadeus“ which had numerous remakes and is instantly recognizable even today. Falco liked to mix German and English, like in his hits "Vienna Calling" and "Jeanny". Several bands continued to follow him through the gate that he opened, including Opus with their hit "Life Is Life". Then Slovenia's Laibach followed suit, remaking this song in both English and German, thus paving their road to becoming a legendary band. After that came a rather comedic period during which, in 1989, members of the band called Edelweiss mixed famous songs in Austrian style with an electropop/disco undertones. With the dawn of new musical constellations, Austria kind of faded away until the electronic music master. who goes by the name of Parov Stelar, emerged, bringing back the spotlight to Austria and Linz.

NEW YEAR

We should also mention the infamous Conchita Wurst. Her (or his, as Conchita is actually called Thomas Neuwirth and uses masculine pronouns when referring to himself but feminine pronouns to describe Conchita) victo-

SOFT POWER HAS ALWAYS BEEN EXPRESSED THROUGH MUSIC, AND AUSTRIA CERTAINLY NEVER LACKED MUSICAL TALENT

ry at the 2014 Eurovision Song Contest with the song „Rise Like a Phoenix“ marked both the Austrian and global music scene. „The woman with the beard" as she is often described a bit derogatory, as a circus attraction, even managed to remove Turkey from the Eurovision Song Contest, but also to inspire great performers like Božo Vrećo. Today, we have great newcomers like Cari Cari and Dives, two shoegaze bands slowly but surely conquering the alternative music scene. Although these are underground bands, their songs are quite melodic and ideal for festivals. Our recommendation for a summer song is "Summer Sun" by Cari Cari. Have a listen!

EVEN TODAY, THE NEW YEAR DAY'S CONCERT IN VIENNA IS VASTLY POPULAR AROUND THE WORLD 41 AUSTRIA 2020

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TOURISM

SALZKAMMERGUT & HALLSTATT The most visited, the best of nature

THE ORIGINAL HALLSTATT It is really bizarre to think that someone is copying entire cities, in

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he Salzkammergut is something like the Lake District in Britain, or simply, „the Caribbean“ in the mountains; a place where Austrians go on vacation to rest from the hustle and bustle of Vienna, even though Vienna is like a walk in a park compared to New York. At its centre sits the biggest gem in its crown, Hallstatt.

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the way one's copies brands of shoes, clothes or watches, but it does happen, only to the best though, like Hallstatt. In China, someone was so fascinated with Hallstatt that they made a replica of the entire city just to enjoy its beauty without bothering to pay for expensive tickets to Austria, and to avoid being pushed around with a horde of tourists from all over the world, since Hallstatt is one of the places affected by the so-called "overtourism". Or rather it was affected and probably will be.

THE ROOT OF THE WORD “SALZKAMMERGUT” IS OBVIOUSLY “SALZ” (“SALT” IN GERMAN), AND WHEN TRANSLATED INTO ENGLISH, IT MEANS "SALT DEMESNE"

SALT DEMESNE The root of the word “Salzkammergut” is obviously “salz” (“salt” in German), and when translated into English, it means "Salt Demesne". The word Kammergut is a German word for the territories ruled by the princes and princesses of the Habsburg Empire. The Kammergut we are writing about has been linked to salt since the Celtic era. Namely, Hallstatt is a Germanic-Celtic combination of words, literally meaning "salt city", because "hall" in the Celtic language means salt.

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It is fun to note that, in East Germany, we come across the same word game - the city of Halle on the Saale River means the Salt City (in Celtic) on the salt river. That Hallstatt was inscribed on the UNESCO World Heritage List in 1997, and the size of the place will definitely deceive you. Hallstatt has a population of only 1,000 but is visited by 600,000 tourists a year, which means that literally, every person living here meets 600 tourists a year whom they have never seen before. It is no wonder that the city has been struggling with excessive tourism for years, and that it

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WHEN IN ROME, DO AS THE ROMANS DO, AND WHEN IN HALLSTATT, DO AS THE HALLSTATTIANS DO literally lives off visitors. The coronavirus pandemic did bring a hiatus in tourist activity here but soon enough, the people of Hallstatt would want to see big crowds again. Or maybe not. Weâ&#x20AC;&#x2122;ll

see. It is safe to say that tourists already miss Hallstatt, and since it is the most photographed place in Austria, it is quite clear how much they miss it. In May, all the traffic in Hallstatt stops and the whole city becomes a pedestrian zone until October, making it one-ofa-kind in the world.

WARUM HALLSTATT? Yes, why did this place, small and charming like many others, become so overcrowded by people who are trying to escape overcrowdedness of cities? Well, there are several reasons. Some

are historical. Halstatt was the site of the first salt mine in Europe, which was exploited by people who came here before the Celts. Although lonely and inhospitable, this area is considered one of the first to be inhabited by humans. The reason is the rich deposits of natural salt, which have been mined for thousands of years. Some of the oldest finds, such as the stone axe, date back to around 5,000 BC. In 1846, Johann Georg Ramsauer discovered a large prehistoric cemetery near the present location of Hallstatt, where one of the first blacksmith's sites was discovered. The developed commerce and the wealth that it brought facilitated the development of a culture, which, after the finding at Salzburghohtal, was called the Hallstatt Culture and lasted from about 800 to 400 BC. Of course, since salt was terribly precious and

food without it was bland, the people from this area amassed a tremendous amount of wealth, so the high technology and great art here do not come as a surprise. If you want, you can also get to the mine by cable car, enjoy the beautiful view from the vista overlooking the town that it looks as if it was made with Lego bricks, and take a perfect picture for your Instagram profile. While you are there, you can have the Aus-

THERE IS NO GOOD TIME TO VISIT HALLSTATT, A JEWEL IN THE BOSOM OF AUSTRIA. ANY TIME IS A GOOD TIME

trian sausage in the restaurant, drink Hallstatter Bier, and top it all off with apple strudel, vanilla cream and cinnamon. When in Rome, do as the Romans do, and when in Hallstatt, do as the Hallstattians do.

WAITING FOR THE NEW BEGINNING As we await tourism to resume and hopefully, this time around we are going to be more considerate and smarter towards nature and each other, let us remind ourselves that this is the place where Lake Hallstatt, the Protestant Church Pfarrkirche and the Catholic Church Christuskirche melt into a uniquely beautiful sight that looks like a fairytale in winter, is soothing in autumn, and full of magical colours in spring and summer. There is no good time to visit Hallstatt, a jewel in the bosom of Austria. Any time is a good time.

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