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YOUR GOOD HABIT
The idea behind creating Diplomacy&Commerce was to promote a new and dynamic approach to covering topics and providing quality content in the world of national press in the English language. In the last year, D&C has given its readership an abundance of news from politics, business and culture, reported on the opinions of relevant stakeholders both from Serbia and abroad covering all segments of life, and opened up topics that were not written or talked about enough. We have tried to inform, educate, and entertain our readership, and to show them the potential that Serbia has in regard to cooperating with numerous countries in the world. Judging by the number of our readers, we are on a good trajectory.
With its latest issue, Diplomacy&Commerce is celebrating its first anniversary in Serbia. We are very proud of the fact that, in one year and 12 issues, we have managed to interview the leaders of the Serbian political, business and diplomatic world, as well as the renowned public figures in our country. Not only that... In these past 12 issues, we have also published special supplements dedicated to bilateral, economic, cultural and overall relations between Serbia, Europe and the rest of the world. We have presented investment groups assembled in chambers of commerce, business associations and organizations, reported about important events in economy, talked to the leaders of national and international companies, promoted national IT startups, written about the main trends in marketing and advertising and much more.
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We have also tried to report in detail about the important global and domestic trends, to show our readership the multicultural heritage of Serbia and its vibrant cultural life, as well as to present the head chefs of Serbian restaurants, the best wines from all over the country, and interesting parts of the country, all in the shape of an attractively designed magazine.
We have asked the people we have intereviewed so far to give us their prognosis on whether Serbia will stagnate or progress in 2017 compared to 2016, and to tell us what changes in the business environment would be crucial for that happening. We have also asked them to tell us how much do magazines like Diplomacy&Commerce can contribute to exchange of opinions, points of view and facts about Serbia, and to providing better information about our country and its potential to interested parties.
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Do you think Serbia will stagnate or progress in 2017, relative to last year, and what changes to the business environment could play a crucial role in that?
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How much do magazines like Diplomacy & Commerce contribute to the exchange of opinions, stances and facts about Serbia, as well as informing all interested parties about our country and its potential?
Professor
ZORANA MIHAJLOVIC, PhD Serbian Deputy Prime Minister and Minister of Construction, Transportation and Infrastructure CONTINUE TO IMPROVING
01 I am sure of one thing – this year, Serbia will continue improving its ranking on the World Bank’s Doing Business List which assesses business conditions. This is unstoppable. Our plan is to make it to the top 20 countries in the world in the next two years. The land registry reform is something that we have been working hard on with the goal of reducing the time required for registration of property or an asset, and other services provided within the scope of the land registry. The activities and the communication between businesses and the state are now being carried out electronically for the most part. The traditional stamp is no longer, and we are abolishing certain business fees too. I would like to remind that electronic issuance of build permits has given us the biggest impetus in implementing changes. The time of stagnation is behind us, and it is our goal to secure the best possible conditions for businesses while continuously moving forward.
02 No country can be called successful without having successful economy and successful trade with the entire world. Also, no country can be called successful if its diplomacy is not focusing on economic development. The very name of your magazine – Diplomacy & Commerce – which is celebrating its first birthday, is the best possible fusion of these two important factors as it underlines the importance and the connection between diplomacy and commerce. Information is the most valuable commodity today, and more people find out about Serbia’s potential, more success there will be for all of us.
IVICA DAČIĆ First Deputy Prime Minister and Minister of Foreign Affairs HEALTHY ECONOMY
01 Serbia has a big and important job to do this year. European Serbia has always been our goal which implies a healthy economy, good jobs and salaries, efficient healthcare and education system, border safety and safety of our citizens in the streets.
In regard to economy and doing business, Serbia is aware that it is necessary to have an appealing business environment in order to attract new investors, to the benefit of all citizens. This also ensures a better future which is why Serbia has invested a lot of effort in creating economic and political stability by improving the quality of its laws and making public administration more efficient.
The aim of this government is to have economic growth of at least 4% in 2017 which will be another proof that Serbia is becoming a successful country. If we do our best and achieve the 4% growth, this will translate into higher pensions and salaries, both in the public and in private sector. And that is of crucial importance for our country.
On the other hand, small countries like Serbia and its neighbours can expand their
Prof. DUŠAN VUJOVIĆ, Ph.D. Minister of Finance in the Government of Serbia FASTER SUSTAINABLE GROWTH
01 I expect that Serbia will continue to make progress and again exceed projected GDP growth and general government deficit. Conservatively set economic growth rate of 3 percent has an upside potential of 0.5 or even 1.0 percent which can easily materialize and in the absence of new external shocks. We already have grounds based on actual performance to revise fiscal deficit from 1.7 to 1.4 percent. Similar improvements can be expected in the current account balance and in the public debt. More importantly, these results are accompanied with (permanent) structural improvements in the fiscal deficcit of up to 4.4 percent of GDP. Serbia has exceeded the three year 4 percent adjustment target in only two years. These results are only means to securing a stronger basis for faster sustainable and inclusive medium run growth. I see three main channels through which better fiscal position will positively impact growth. markets through regional trade arrangements which stipulate trading in goods of preferential origin or custom-free import of goods which is yet another thing that can help with drawing foreign investors in. Despite the challenges that marked last year, and unfortunately the beginning of this one, Serbia will continue to play its role of a political anchor to regional stability while being aware of the fact that we are a stable and prosperous region that can be attractive for investors.
In conclusion, Serbia still has to perform many tasks, but we are determined to continue implementing structural reforms. I know that the goals that we, the government, believe in are quite ambitious, but, as a government, we are obligated and simply have to think about how is this country going to look like in two to three years or even decades; whether it is going to be competitive compared to regional, European or global market. Of course, I have to thank our citizens for their patience and the support for the government reforms which haven’t been easy. I believe that this is a proof that our society is aware that the Serbian government cannot change our country or society singlehandedly, without the full support of our citizens. And it is because of this support that I firmly believe in Serbia’s progress.
02 I have always believed in the value of exchanging ideas and opinions. All of us that run the country, or are actively participating in its political life, have to listen intently to the voice of our citizens, the people
First, it will provide space to lower the tax burden on the economy, including the cost of labor to provide incentives for the creation of new jobs in existing and new companies. Second, it will allow additional public investment with strong crowding in effect on private investment. These include business relevant infrastructure as well as investment who are important for our country’s economic life, and the representatives of foreign countries because Serbia does not stand alone as a country but can only exist in interaction of regional, European and global politics and economy. Hence, I support and value this kind of exchange of opinions and visions, and I do hope that this practice will continue into the future too.
in knowledge and innovation as the main sources of productivity and income growth. Third, the fiscal consolidation and reform program introduced a new economic growth model. High GDP growth recorded during 2001-2008 period was based on domestic aggregate demand financed from external sources. With weak domestic supply response and politically induced increases in pensions and public sector wages, this model led to unsustainable domestic (fiscal) and foreign (current account) imbalances. This trend was turned around. During the first two years of the program, investment and exports became the main source of economic growth, with simultaneous reduction in both deficits. Starting in 2017 private consumption will become an increasingly more important source of growth, this time based on a sustainable domestic incomes.
02 Although “Diplomacy & Commerce” targets primarily diplomats, foreign business and expat community it also influences domestic analysts and opinion makers. Collaboration with “The Economist” adds to the quality and credibility of its substantive contributions to the professional media space in Serbia. It provides minimum glare with maximum substance on carefully selected diplomatic, commercial economic, political and government developments.
MAJA GOJKOVIĆ Speaker of the Republic of Serbia's National Assembly BETTER INVESTMENT ENVIRONMENT
01 In the last three years, Serbia has recorded significant results in recovery and stabilization of public finances, reduction of deficit, and curbing the public debt which are all a good starting point for further development. Following the many measures and laws devised by the government and adopted in the Serbian parliament, as well as the construction of infrastructure and development of industrial zones, we have tried to create a good investment environment. I am confident that today Serbia is the best investment destination in this part of Europe which is also confirmed by our country improving its ranking on the World Bank’s Doing Business List. On one hand, our goal is for the economic growth to be at least 4% in 2017 which will be the best validation of Serbia’s success, while on the other, we want to continue reducing the deficit and public debt. I am confident that this year will be the year of development and progress for Serbia.
02 First of all, I would like to congratulate you on your first successful year. Diplomacy&Commerce has managed to occupy an important position in Serbia thanks to its unique approach to important topics. Considering the political, economic, business, cultural and other topics that you have chosen to cover, you are definitely contributing to better presentation of Serbia and the opportunities for doing business in our country which is especially important considering that your targeted readership is in diplomacy and business. I would like to wish you even more success in your future!
MARKO ČADEŽ President of the Serbian Chamber of Commerce PRESERVE THE POLITICAL AND MACROECONOMIC STABILITY
01 SThere is no reason for this year not to be better for businesses than 2016. Last year, we have managed to surpass our growth level from 2008, and created a good basis for acceleration of healthy economic growth based on investments, bigger export and innovation. The most important thing now is to preserve both the political and macroeconomic stability, and to continue with fiscal consolidation and structural reforms. It is vital to expedite the reforms in public and state-owned companies, to finish privatization and restructuring, and by doing so, create more space for bigger support to the private sector. It is especially important for dual education to become an integral part of the regular schooling system as of autumn which will contribute to the current education system adapting to the real needs of businesses and labour market. The reformed Serbian Chamber of Commerce and the unified chamber system, which we started implementing at the beginning of this year, will provide companies and small business owners with even more useful
01 In 2017, I expect the EU integration process to be expedited, as I expect the overall reforms in the society to do too, because these two processes are inseparable. The changes in the business environment are yet to come as we continue with the EU accession talks. We have opened eight and temporarily closed two negotiation chapters. We are going to continue preparing for opening of as many negotiation chapters this year as possible. We expect everything that we have recognized as important in the negotation process to translate into the everyday lives of the citizens and businesses. Every investor wants to work in predictable conditions and in a safe environment. Hence, Chapters 23 and 24, that cover the and efficient services, and will more vigorously protect their interests.
02 From the corporate point of view, magazines like Diplomacy&Commerce give important support to promotion of Serbia as a business destination, and of both investment and export potential of our companies. Such magazines also contribute to the internationalization of our companies. At the same time, diplomatic circles and representatives of the international business community can find everything about Serbia in one place in the magazine. Diplomacy&Commerce has several advantages - variety of content, modern design, and the quality guaranteed by the licence from the renowned The Economist magazine, in addition to the availability of information, both in print and online.
TANJA MIŠČEVIĆ Ph.D. Head of the Negotiating Team for the Accession of Serbia to EU EU INTEGRATION PROCESS TO BE EXPEDITED
rule of law, are extremely important to us. In late February, we opened Chapter 20 – Enterprise and Industrial Policy – which is of key importance for the Serbian economy and SME, which we see as the driving force behind development. In conclusion, I would like to say that we are given a chance to make big changes.
02 You have taken on an important task of presenting Serbia and its development opportunties to diplomatic and business community. It is always good to question social and economic processes, and for busines community and decision makers to exchange opinions because we can all learn from that, and see the same situation from an entirely different angle. Apart from providing information, I would like to encourage you to invest some of your energy into promoting CSR because that is yet another European value that should be practiced in Serbia.
SINIŠA MALI
Mayor of Belgrade
THE IMPETUS TO DEVELOPMENT OF SERBIA
01 Serbia should never allow itself to stagnate again, and I believe it won't. I think that the instigated reforms and the expedited economic growth can only continue moving forward. The city of Belgrade's share in the Serbian GDP stands at 40% which drives us even more to became the impetus to development of Serbia. The Belgrade Waterfront project will certainly contribute to this since it has moved the entire economy and construction industry from a standstill. Belgrade no longer has this decrepit location. Today, everywhere you turn you can see hoists and cranes and hardworking people. I think that we have created a good business environment. There has never been more active businesses in the city than now. For the first time in many years, there are less than 100,000 unemployed people in the city as we are providing many employment incentives.
02 I think that it is very important to have a platform where all stakehodlers can get information, exchange opinions and see what novelties are there in certain fields. Both Belgrade and Serbia have a lot of potential, and a good investment environment, and it is important for all relevant stakeholders to be objectively informed.
Mayor of Novi Sad BIG ECONOMIC SUCCESSES
01 I am confident that Serbian citizens will decide in favour of our country continuing with the reforms and economic recovery as set out by the Serbian government and PM Aleksandar Vucic. I am also confident that, by the year end, we are going to record big economic successes. The basis for all of this is political stability and continuity. Serbian government has managed to achieve fiscal balance in order to continue reforms, and stimulate economic growth. The implementation of the faster and more efficient electronic issuance of building permits, reforming the land registry, many incentives for businesses and star-ups, and construction of utility infrastructure are the foundation of our policy for further development and progress of the city of Novi Sad. Considering that we have been given the title of the European Capital of Culture 2021, and the Youth Capital of Europe 2019, we are especially going to focus on the city’s tourism potential. Our goal is for anyone having a good idea and the will to work or advance the existing business to be given an opportunity to do just that, as well as for them to plan expanding their business in Novi Sad because we offer the best conditions. As the mayor of the town that is also an important
01 The serious transitional changes started in Serbia in 2014, and today, we can be proud of what has been accomplished in the last two years. There are many positive results like the GDP growth, decline in unemployment, lower inflation and growing export that corroborate the expected progress in 2017. Owing to reformative legislation that has been harmonized with the European one, and many tax and other financial incentives, Serbia has managed to devise an incredibly appealing package for investors. Last year, the SDA worked together with potential investors on 94 projects. A total of 22 agreements were signed which will result in 236.8 million EUR worth of investments in Serbia and creation of 16,496 jobs in the next university centre where generations of young, talented and diligent people have been growing up, I think that the comprehensive reform of our education system, and especially implementation of dual education, is both our biggest challenge and our biggest chance for better future.
02 When meeting up with foreign delegations, I personally saw that your magazine is a very popular read, and that they consider you a relevant source of information about our country. Thank you for your support and an opportunity that you have given to Novi Sad by reporting about it, and about its plans and successes. I wish you to continue being so professional, and to become even better together.
ŽELJKO SERTIĆ Director of the Serbian Development Agency (SDA) SERIOUS TRANSITIONAL CHANGES
few years. This is a record-breaking result in the last 10 years which is how long the FDI incentives programme has been implemented in our country. On the other hand, one of the priority tasks of the Serbian economic policy is supporting and developing the SME sector which, again, was the basis for creation of the 2015-2020 Strategy for Development of SME, Entrepreneurship and Competitiveness. As a part of this Strategy, the state declared the year 2016 as ‘The Year of Entrepreneurship’. This year, we are embarking on an even bigger project – ‘The Decade of Entrepreneurship’. Numerous support initiatives for SME sector, large companies, organizations and investors will be implemented through the programmes devised by the SDA. .
02 Magazines like Diplomacy&Commerce contribute to objective reporting and provide quality information about important economic and business trends in the country. Apart from the general public, the magazine also speaks to professionals and potential investors while reporting on all relevant and current activities in Serbia/.
KRUŠIK RESEARCH AND DEVELOPMENT CENTRE D.O.O. VALJEVO is a research and development company founded in 2007 as a successor of the Research and Development Unit that was established in 1996 when HK Krušik a.d. made a decision to extend its business activity and set a research and development unit that would engage in electrical engineering, electronics, communication technology, mechanical engineering, technology and similar activities.
How competitive is the Serbian arms industry compared to other arms companies in the global market? — In 2016, Serbian arms industry recorded important results and exported close to 484 million US dollars worth of products. Compared to 2015, the export grew by 63%, and has even grown threefold since 2012. The fact that the products of the Serbian arms industry are exported to a substantial number of countries, and that our export has been constantly growing since 2012 just show that the competitiveness of our arms industry in the global market has had a satisfactory level of growth.
What has Krušik been doing towards increasing its export? — Krušik is an export-orientated company. In the past period, we have been working hard on modernizing and expanding our production programme, implementing new technologies, and boosting our production capacity. The said activities resulted in us getting a substantial number of new contracts. At the moment, the value of the export agreements that Krušik has concluded is 273 million US dollars. In 2016, 90% of our production was exported, which exceeded our export plans by 28%. Our products can be found in over 70 countries and are synonymous with quality and reliability. Our employees are absolutely committed to preserving our company’s standing in the global market, while, thanks to continuous improvement of our production process, growing labour productivity and advancement all the performances have resulted in higher competitiveness of our products. We are also working towards our products having an even bigger share in the global market. Bearing in mind that both your production and export have been growing, have you managed to keep up with them billion dinars which is a 77% hike compared to 2015. Our productivity plans for 2016 were exceeded by 28%, while we managed to generate the profit amounting to over half a billion dinars. The average annual productivity growth in the last three years stood at 68%. In the period from 2014 to 2016, we hired 1,234 new workers.
In order for this trend to continue in the years to come, Krušik has been educating its employees and improving the age structure of its engineers and craftsmen.
Considering that, in the last 20 years, no students at the vocational technical school in Valjevo expressed interest in becoming milling-machine operators and
WE CONSTANTLY NEED YOUNG ELECTRICAL AND
staffing-wise? — Krušik’s turnover in 2016 was 5.7 turners, these professions became very scarce. In order to overcome this problem, we have concluded a contract with the school stipulating business and technical cooperation which specifies the ways in which the students can learn in practice what machinists do. The contract also stipulates scholarships for these students and getting a job at HK Krušik a.d. Valjevo once they finish their education. The practical part of their studies will be executed at the premises and in the production facility of HK Krušik starting with the students from grade two, and will last in line with their curriculum for the particular worker profile. Also, the teachers from the vocational technical school in Valjevo and experts from Krušik, as demonstrators and student mentors, will take place in the practical education. We constantly need young electrical and mechanical engineers, and have been even considering providing scholarships for a certain number of students.
Where do you see Krušik in five years? — We expect 2017 to be a record-breaking year in our 78-yearlong history, both in terms of revenue and production volume. In the first half of this year, we are going to open a new cap production facility for which we laid the foundation in 2016. Also, we are going to start implementing several new investments, and continue with expanding and modernizing our capacities. We are especially going to focus on development of new and modernization of existing products. In five years, I see Krušik as one of the most development factories in the region which production capacity and staff structure will enable production of high technology products.
What resources does Krušik need in order for this vision to come true? — In order to realize this vision, we need to implement investment projects in line with the priorities set out in our business plans. Considering to volume of contracted business, our business results and the know-how that we possess, we believe that we are going to succeed in that.
H.E. AXEL DITTMANN
Ambassador of Germany to Serbia
VERY SUCCESSFUL GERMAN-SERBIAN COOPERATION
01 Last year was, in the prism of German-Serbian cooperation, a very successful year, and I am confident that we can deepen and broaden this close relationship even further. Germany supports Serbia’s steps on its path towards EU membership. In 2016 Serbia and the EU managed to open crucial chapters in the EU accession process, namely those covering the rule of law. Together with the EU, Serbia has developed very detailed action plans in these areas. They are a real blueprint for reform and consist of legal amendments that need to be changed e.g. in order to ensure the independence, impartiality and efficiency of the Judiciary, and to prosecute cases of corruption more effectively. We hope that these changes will be implemented in 2017 and thereby substantially enhance living standards in Serbia. At the beginning of 2017, Serbia already opened two further Chapters, which shows that both Serbia and the EU wish to maintain the successful momentum of reforms and rapprochement.
02 Diplomacy&Commerce magazine is an important news provider for all expats in Serbia, but also for Serbian decision-makers. With its intriguing stories, interesting interviews and elaborate reports, it is a substantial information tool, particularly to all of those who haven’t yet mastered the Serbian language. It brings Serbian culture closer to us diplomats and brings us closer to our Serbian friends. I am happy to cooperate with D&C and wish it a long lasting and further successful work.
H.E. GIUSEPPE MANZO Ambassador of Italy to Serbia FURTHER CONSOLIDATION AND REFORMS
01 Growth is a priority, in Serbia like everywhere else in Europe. According to recent economic forecasts, Serbia should be looking towards the coming months with optimism: the EU Commission predicts that the country will grow at a rate of 3% in 2017 and 3.3% in 2018. There should also be a significant improvement in the unemployment rate, reflecting the impact of the economic reforms so far adopted. Further consolidation of a functioning market economy is fundamental – not only to pursuing the EU integration process, but – first and foremost – to raising the living standards of Serbian citizens. As the main economic partner of Serbia, with 600 of its companies having invested here, Italy has shown its concrete support and contribution. Now, in order to keep the number of Italian entrepreneurs in Serbia growing, it is crucial to continue on this path and improve the business environment by facilitating market entry procedures, continuing the privatisation of state-owned enterprises and implementing tax administration reform.
01 We expect Serbia to make further progress in 2017. The economic reform programme is showing results. Since the programme’s inception, the Serbian Government has been successful in reducing the fiscal deficit and stimulating growth. Reform is underpinned by an IMF Stand-by Arrangement. We support the idea of the extension of the IMF programme after Serbia graduates from the current one. Due to progress in improving the business environment, Serbia has seen its ranking in the World Bank’s Ease of Doing Business list increase. It was ranked 47th in 2016, as opposed to 91st in 2015. Despite the 02 For a diplomat in Belgrade who is representing the country which is Serbia’s largest trade partner, “Diplomacy&Commerce” are two inseparable words. Your magazine plays an important role in informing domestic public opinion, as well as expats, about opportunities and relevant news about Serbia. Your valuable insights on politics and the business community are very useful for a deeper and better understanding of Serbia, and they provide effective tools to comprehend its trends and developments. Srećan Rođendan and wish you great success for your future!
H.E. DENIS KEEFE Ambassador of the United Kingdom to Serbia REFORM PROGRAMME IS SHOWING RESULTS
progress, there’s still considerable work to be done. Structural reforms are delayed, and public debt is still around 75%, so there is no room for back sliding. A lot remains to be done to reform the public administration and streamline state-owned enterprises. Progress on the rule of law is also central to business, in order to give legal certainty. We’re very glad that HMG is in a position to provide the Serbian Government with tangible support. We are using our Good Governance Fund to work in several key areas, such as supporting the Rule of Law, Public Administration Reform and the business environment and economy (such as the Doing Business working group).
02 Anything that supports an informed debate about how best to help Serbia make progress is welcome. In particular, an exchange of opinions backed up by facts is crucial in helping decision makers take the right calls about Serbia’s future.
H.E. PERTTI IKONEN
Ambassador of Finland to Serbia TRANSPARENCY IN TENDERING PROCESSES
01 According to the European Commission’s latest forecast, expected Serbian GDP growth will be around 3%, which is more than it was in 2016. At the same time, the unemployment rate in Serbia is expected to drop to 14.3%, from 16.1% in 2016. These expectations already provide a good signal of the further revival of the Serbian economy in 2017. My only concern is that this process might slow down following elections and bring some delays in making important decisions for Serbia. I would like to emphasise the importance to the EU accession process of Chapter 5, which relates to public procurement. Significant efforts are needed to further improve competition, transparency and efficiency in tendering processes. I am confident that improvements in this field would play a crucial role in having a better business environment in Serbia. At the same time, it would send a positive signal and encourage foreign companies that are considering doing business in Serbia.
02 Since its first edition in March last year, monthly magazine Diplomacy&Commerce has been highly devoted to the diplomatic and business community by covering topics related to the economy, trade, business, diplomacy, politics and culture. In that way, this magazine not only contributes significantly to the exchange of opinions and facts about Serbia, but also keeps potential foreign investors informed about Serbia’s economic and political landscapes, as well as its potential.
FOSTERING DYNAMIC DEVELOPMENT
01 The country’s stability and its openness towards creation of new mechanisms for development of active relations with all countries that favour cooperation are the main ingredients for stronger economic growth, which is already obvious, in Serbia in 2017. From my point of view, I would say that it is important for Serbia to continue fostering dynamic development of relations with the regions which are today the centre of global development, namely with the regions that are recording economic growth.
02 As you well know, knowledge is power. Every piece of information is useful. It is important for this information to focus on relations between Serbia and both East and West. Information needs to be important and unbiased, it has to closely follow Serbian interests and
01 In my opinion, Serbia will definitely move forward. Serbia enjoys a favourable location which has resulted in the concluding of many free trade agreements, which stimulate export and reduce the foreign trade deficit. The country made progress on the Doing Business list and especially under the Infrastructure criteria, in which the e-permitting system contributed to a dramatic jump in ranking. A reduced fiscal deficit with high fiscal discipline, inflation below the target band and a confirmed B+ credit rating are some of the positive outcomes of ongoing reforms. I’m in the process of discovering the wide spectrum of Serbia's economy, but what I’ve seen so far is the huge potential of human resources in the tech area, which is to be developed and transformed into the leading revenue generator. In this regard, the Serbian government announced a Decade of Entrepreneurship, with many activities to be implemented. As the second largest start-up ecosystem in opportunities, as well as talk about advantages for investors. It is this kind of approach to modern surroundings that is the stamp of quality for the media. Issuing a magazine in the Serbian language and in the language spoken by the main partner of a magazine would attract even more readers. These are the languages spoken by the main trade and economic partners of Serbia, including Russian, German and Italian.
H.E. ALONA FISHER KAMM Ambassador of Israel to Serbia POSITIVE OUTCOMES OF ONGOING REFORMS
the world and a country that has based its economy on exporting knowhow, our Embassy already takes an active part in the Serbian start-up and tech community and will happily continue to support such initiatives. In addition, Israeli investors find Serbia very appealing: as a friendly country with a similar mentality and temperament and just three hours away, with good airline connections, among other advantages. Of course, not only to Israeli investors but to all of them, the issues of cutting red tape, creating and maintaining a stable legal and macroeconomic environment, with an efficient judiciary, rank highly as issues when it comes to considering investments in Serbia, or elsewhere.
02 Our Embassy has very good cooperation with the magazine and publisher Color Press Group. We participate actively in various conferences and events that share our agenda. Also, we did a special “In focus Israel” supplement, with the support of Israeli companies in Serbia, which presented our economy, bilateral trade relations and tourism, and provided good insight into the potentials that we should work on in the future. So, the magazine and its special editions definitely provide useful information on bilateral relations, investments, trade and tourism, as well as opening a window of opportunities to be explored.
H.E. ARNE SANNES BJØRNSTAD
Ambassador of Norway to Serbia
GOOD CONDITIONS FOR FURTHER PROGRESS
01 I have great faith in Serbia and believe the conditions are good for further progress. The reforms undertaken and planned, as well as the prospects of EU membership, make Serbia more attractive to investors. Continued financial responsibility and further harmonisation of Serbian policy, legislation and procedures with the best achievers of the EU will boost progress. There are difficult choices that have to be made to consolidate the advances of the last few years, and despite the resistance to change you will find in Serbia, as everywhere else, I am convinced the right choices will be made.
02 When Diplomacy&Commerce was launched a year ago, my first thought was — why are they starting a new magazine in the already crowded publishing sky of Serbia? But then every new issue of D&C would prove me wrong. With its thorough analysis and coverage of political, economic and business affairs in Serbia, it is a ‘mustread’ for all foreign residents and decision-makers in the country. Given its readership, D&C is also a good platform for "spreading the good word" about Norway, for which we are grateful. Personally, I have to admit that I am very fond of the In Focus supplements, which always make a good weekend read
H.E. HENK VAN DEN DOOL Ambassador of The Netherlands to Serbia IMROVING BUSINESS CLIMATE
01 The Government continued with the important reform agenda in 2016 and results should be more visible as of this year. I believe that the improved business climate will provide additional room for economic growth and attract additional investors, including those from The Netherlands. I commend the authorities for their hard work, especially the Ministry of Construction, Transport and Infrastructure and the Ministry for Public Administration and Local Self-Government. The results achieved by these two ministries are both the most tangible and the most beneficial for businesses. Still, in order to provide a full-scale business-friendly framework, more needs to be done in strengthening the rule of law and transparency in public procurement.
02 Magazines like Diplomacy&Commerce play an important role in the exchange of information among stakeholders and they
01 Since the macroeconomic results for 2016 are really good, and the forecasts of economic analysts and the IMF mission for 2017 are also encouraging, we can expect this year to be very good economy-wise. Of course, we can only presume that there won’t be any major or unexpected turbulence on the global markets that could greatly affect national economies. Also, it is very important for Serbia to continue with its reforms, particularly with the further fiscal consolidation, GDP growth, new foreign investments, and privatization of public enterprises, as well as with the continuation of reforms in various fields pertaining to the accession negotiations between Serbia and contribute to the overall quality of what we can call public diplomacy. One’s work and results nowadays need to be promptly and constantly communicated in a relevant network, and in that respect this magazine is a helpful tool and an important channel.
H.E. GORDAN MARKOTIĆ Croatian Ambassador to Serbia IMPLEMENTING AS MANY REFORMS AS POSSIBLE
the EU, including the progress in the EU accession talks. Hence, it is very important to implement as many reforms as possible, harmonize the legislative system with EU’s Acquis, implement European standards and values and continue the dialogue with Pristina.
02 Magazines like Diplomacy&Commerce are mainly intended to foreigners who live, work and do business in Serbia including diplomatic and consular staff and representatives of business associations and companies. The magazine is an excellent vehicle for providing as much information as possible about the host country, and about business activities of the foreign countries which representatives live here with the view of further developing economic and other kinds of relations between their respective countries and Serbia. Good business cooperation, extensive trade, opening of new companies and creation of new jobs are important for any country, and it is magazines like this one that can contribute to the development of these relations by being informative and useful with its articles, analyses and interviews.
H.E. LEO D’AES
Belgian Ambassador to Serbia EFFORTS TO PROMOTE MACRO-ECONOMIC STABILITY
01 Whether Serbia will stagnate or progress will depend on Serbia itself, and on the wider macro-economic environment. Regarding Serbia, there is a very clear Economic Reform Programme (ERP) agreed with the European Commission, the main points of which broadly correspond with the recommendations of the IMF and the World Bank. In addition to that, I think Serbia should step up its efforts to encourage the many SMEs interested in Serbia to come and prospect, and above all reassure them in a credible way about the legal stability of the business environment, which is at least as important as other factors, like permits or credit conditions. Regarding the macro-economic environment, since around 70% of Serbia’s trade relations are with the EU, the economic health and dynamism of the EU is, of course, of key importance to the furthering of economic progress in Serbia. If you follow the EU decision-making in this field, you will have noticed considerable common efforts to promote macro-economic stability and thus the creation of employment.
02 Magazines like Diplomacy&Commerce, through their regularity and attractive presentation and content, certainly contribute to helping focus on the essential contribution of private initiative to lasting economic prosperity. Interviews with dynamic businessmen and women, and with officials implementing economic policy, in close coordination with the EU and other international partner institutions, usefully enlighten us on how the way forward is perceived and/or implemented, building on Serbia’s potential.
H.E. NARINDER CHAUHAN Ambassador of India to Serbia GREAT COOPERATION BETWEEN OUR COUNTRIES
01 Serbia is emerging as a premier investment location in CEE. In the World Bank’s Ease of Doing Business report, Serbia has climbed to 47th position and the economy showed robust growth in 2016, at 2.8%, and is expected to grow at an average rate of 3.7% over the next few years.
India-Serbia economic cooperation received a significant boost at the beginning of 2017, when PM Vučić visited India to participate in the Vibrant Gujarat Economic Summit and discussed cooperation with India’s Prime Minister in the fields of agriculture, pharmaceuticals, defence, health, films, tourism and IT. PM Vučić invited more Indian investment to Serbia. The visit is expected to provide real momentum to the overall bilateral relationship, to the mutual advantage of our two peoples
01 I want and I do believe that Serbia will accomplish a significant economic growth in 2017 because that is also important for the entire region, and especially for neighbouring countries. The World Bank’s forecast for Serbia in 2017 show a GDP growth that will be much higher than the one in Eurozone. Additionally, there is the expected macroeconomic stability, low budget deficit, and controlled inflation and foreign currency rate. Foreign investments will definitely be one of the main priorities of the Serbian government, and in order to attract these investments, it is necessary to have continuity in reforms like implementing e-governance with emphasis on issuance of building permits. Economic and social development is process that requires permanent dedication, implementation of higher standards, facilitation of innovation, removal of barriers and incentives for starting a business. At the same 02 Diplomacy&Commerce has been kind to Indian’s efforts to raise awareness of the growing business opportunities with the friendly people and government of Serbia. Diplomacy & Commerce’s unbiased and incisive perspective plays a major role in shaping public opinion.
H.E. VERA JOVANOVSKA-TIPKO Ambassador of the Republic of Macedonia in Belgrade FOREIGN INVESTMENTS- THE MAIN PRIORITIES
time, I think that the dynamic of implementation of the key recommendations from the European Commission will play an important part in further transformation of economic environment. I am confident that Serbia is fully capable of walking down the path of economic development..
02 The role of the media has always been crucial for development of democracy in a society. Today this is truer than ever because we are living in the time of hyperproduction of information where unfortunately we come across information that is completely or partially untrue, as well as various speculations and spun news. Because of this, consumers have to be more critical, analytical and selective in order to get to the real truth. There are only a handful of media that still endorse the principle of proven truth; the media that facilitate exchange of opinions, incite to deep thinking and evoke readers’ trust. Diplomacy&Commerce magazine is one of them. The magazine’s role in the Serbian information space is important particularly in regard to relaying quality information about your country’s potential. I have no doubt that you will continue doing that in the future too.
H.E. TOMASZ NIEGODZISZ
Ambassador of Poland to Serbia
FURTHER DYNAMIC DEVELOPMENT
01 I believe in Serbia’s further economic progress and I wish for your country to have further dynamic development. The agenda of Prime Minister Aleksandar Vučić, as well as the commitment of the entire government, along with the goodwill of the international community, provide a good forecast for the current year. The Polish engagement, and the good relations we have with the Serbian authorities, gives hope for further growth of the trade exchange between our countries. The best indication of that is the fact that the trade exchange has been growing constantly for a number of years now.
02 For the Polish Embassy, Diplomacy&Commerce is a source of information on a number of issues, including on the economic life of Serbia. We also share the information you provide with Polish recipients. We always point to you as our source of information, so that they themselves can access the online version of your magazine while in Poland.
On the occasion of the first anniversary I would like to wish the editors, journalists and readers further accurate analysis, a further increase in circulation and many more anniversaries to come.
H.E. JAN LUNDIN Ambassador of Sweden to Serbia THE INFLOW OF FOREIGN INVESTMENT
01 Serbia will progress in 2017 thanks to the inflow of foreign investment, for instance, from a Swedish point of view, the opening of Ikea in August, which will have positive long-term implications for the Serbian furniture industry.
02 Such magazines are truly a valuable source of information, especially for diplomats. Diplomacy&Commerce succeeds in presenting up-to-date, relevant and interesting information about current developments in Serbian society, which is very useful in our everyday work.
Our first year is behind us We would like to celebrate it with you
On the Occasion of the 1st Anniversary of the Diplomacy&Commerce magazine, we will present the “Diplomacy & Commerce Awards” to individuals, organisations and companies.
On 16th March we will all celebrate this anniversary together, along with the awarding of the
to those who have contributed the most to ensuring all of these themes have come to life, and left a trail.
MARTIN KNAPP
THE PHENOMENON OF PARLIAMENTARY ELECTIONS
01 I hope that this year there will be no parliamentary elections. Every time there are elections, the state's life almost comes to a halt, which in turn impacts on the economy. In Germany we also know the phenomenon that parliamentary elections are always going to happen in one of the 16 federal states and that less popular decisions are being postponed because of these elections, even at the level of the federation. In Serbia we have a similar effect caused by repeated parliamentary elections.
02 The international press reports little about Serbia and if that does happen then it is mainly about problems. This is not because of malice, but because of the fact that news about problems is always regarded as more important than other messages, however interesting they may be. To this extent, magazines like Diplomacy&Commerce fill a gap. If they are also entertaining and critical, that’s even better.
ZORAN PETROVIĆ Chairman of Managing Board of American Chamber of Commerce IMPROVING THE CONSTRUCTIVE DIALOGUE
01 I expect that positive changes in economic environment and Serbia's further economic progress will hinge on successful implementation of both the ongoing and announced reforms. A survey which the American Chamber of Commerce (AmCham) conducts in Serbia every year among its members, which shows the level of satisfaction with the business climate while identifying priority tasks for the next period, showed that increasing predictability of the tax system and non-tax levies, reforming the Tax Administration, further countering of shadow economy, wider implementation of e-governance and reforming the health sector are vital steps towards improving business climate in Serbia. Considering that AmCham's members are the most successful American, Serbian and other international companies which operate on the most developed global markets, modernization of legislation to reflect the one in the EU is also high on their agenda. We
01 The World Bank and IMF's forecast for 2017 looks encouraging particularly in regard to Serbia's GDP which is projected to grow by 3%. We are very closely tied to the European economy which has been successfully dealing with many challenges. I think that Serbia has been quite successful in responding to the demands and trends on the European market, and is increasingly positioning itself as the regional market leader. True, an average citizen might not yet feel the effects of this, but business community is very aware of positive trends in the Serbian economy which is stable. Additionally, think that it is vital to continue progressing and improving the constructive dialogue between businesses and the government in order to better plan further reforms and more consistently monitor the results of the ongoing ones.
02 Business magazines like Diplomacy & Commerce are an important platform for providing information about the events and news from various business areas. More importantly, they are a platform for exchanging ideas and opinions of all those business stakeholders whose joint effort is crucial for further economic development, boosting entrepreneurship and advancing business environment in Serbia.
DRAGOLJUB DAMLJANOVIĆ President of the French-Serbian Chamber of Commerce CONTINUATION OF STRUCTURAL REFORMS
FDIs are growing, private consumption is expected to grow too, and there are many important infrastructure projects that are going to be implemented. A positive business environment has been created which is something that is very important to foreign companies. Political stability and continuation of structural reforms, especially the reforms in public enterprises, will play a crucial role. Furthermore, opening and development of small and medium enterprises which are the driving force behind every successful economy should be encouraged more.
02 I think that, in a very short period of time, you have managed to become a very serious medium for the Serbian business community. Business publications like Diplomacy & Commerce have a great impact on promoting best business practices in Serbia and internationally. I am sure that many serious and successful managers are subscribed to your magazine, and I do hope that, in the future, there will be more such business publications in Serbia
Dr GIORGIO MARCHEGIANI
01 Sustainable economic growth and progress are expected, if we take into account that even the National Bank of Serbia predicts economic growth of 3% this year. The Government of the Republic of Serbia has to maintain the continuity of the high standards that it sets itself. The most important thing is for structural reforms to be completed quickly, because they have an impact on accelerating economic growth and increasing competitiveness on the market, and they are a very important sign for those already doing business in Serbia, especially for foreign investors, as well as better enforcement of laws and their compliance with bylaws. I would highlight the importance of improvements in the field of taxation, primarily the reform of the tax administration, as well as ensuring equal conditions for all participants in the business market. For everything that provides progress, foreign investors have placed their knowledge at the disposal to the state of Serbia, for the benefit of everyone.
02 2.Promoting successful business, pointing out potentials in the field of market economy in Serbia, as well as highlighting examples of foreign markets that you are thematically orientated towards – those are things that are, when it comes to the media, very important for all business players. Your contribution is important because this kind of promotion is necessary, especially in the circles that your readers occupy.
YANA MIKHAILOVA President of Swiss-Serbian Chamber of Commerce and Regional Director of Nestlé Adriatic IMPROVING THE BUSINESS CLIMATE
01 2016 was a successful year for Serbia in terms of improving the business climate. Even though business conditions in Serbia are improving and the country is slowly emerging from recession, challenges are still present, as they are on every market. The growth of consumption is still weak in most market segments, while the inconsistent implementation of regulations is a challenge that makes the business environment more difficult. The Government has adopted a number of important legislative changes and thus enabled companies to adapt their business to economic circumstances. Nestlé, as well as other companies, needs to adapt to changes on the market and needs time for this process. Furthermore, the advantage of Serbia is reflected in its excellent geostrategic position and well developed frame of free trade agreements. However, in order to increase the number of new investors, Serbia needs to improve its investment climate and reduce unnecessary bureaucracy, as well as becoming more attractive for small and medium-sized businesses. Moreover, improvements need to be continued in areas like fighting unemployment and the shadow economy, agriculture, education, health and public sectors, considering that these
01 Serbia doesn't have a lot of choices. If the country wants to survive, it has advance. Its economic fabric is a part of the global organism, and as such, is sensitive to the changes that surround it. External influences are strong and they dictate trends on much stronger economies than Serbian. Serbian leadership and business community have to step up their activities that would result in the Serbian economic fabric becoming stronger, more immune and stable in crisis situations. The main and the most important activity in this respect is fighting corruption and shadow economy. The uprooting of both of are priority topics for the country and further progress on its EU accession path.
02 Magazines like Diplomacy & Commerce play an important role in providing fresh and accurate information about the Serbian economy and in promoting the existing business potential on the local market. I would particularly emphasise the importance of country-focused special editions, as they help highlight trends in economic relations between Serbian and its foreign trade partners. As these special editions contain interviews with representatives of both the public and private sectors, they contribute significantly to creating better understanding of the opportunities and challenges related to Serbia's cooperation with its foreign partners. Ultimately, this could help bring about new solutions to existing challenges, or even initiate new business partnerships
DANIJELA FIŠAKOV President of the Slovenian Business Club (SBC) FIGHTING CORRUPTION AND SHADOW ECONOMY
these occurrences is not easy or simple. A truthful and principled attitude towards this fight always yields positive results, and even if the results are not visible this year, they will definitely have a long-term impact thanks to this approach.
02 Both the global and Serbian media space are bursting with opportunties for public expression of views and opinions, facts and information. The possibilities offered by the contemporary media are both fast and current. On the other hand, the traditional written word is more permanent and irrevocable. Diplomacy & Commerce magazine has succeeded in fusing all these possibilities. Their articles are up-to-date, interesting and diverse. In the magazine, readers can find interviews with all foreign ambassadors in the country, important foreign and domestic business people and representatives of Serbian state authorities while getting to know their opinions and views about important economic, business and other issues.
ERIKA TEOMAN-BRENNER
Austrian Commercial Counsellor
SME SECTOR FOR SUSTAINABLE GROWTH
01 I am definitely sure that Serbia’s economy will continue to grow in 2017. We saw some substantial reforms in the business environment in recent years, which were welcomed by the business community. But there is still room for improvement, especially when it comes to the rule of law and, more specifically, the transparency and length of administrative and regulatory procedures. For example, we hear regularly from our business community that tax administration often lacks a uniform and consistent application of regulations, which in turn creates uncertainty on the part of the companies. However, in more general terms, Serbia needs competitive and diversified local SMEs for sustainable growth. Only a strong SME sector provides for employment and growth through investments and consumption.
02 Your magazine has been able to build up an impressive readership in its first year. This is not least due to the fact that it manages to cover a very wide range of topics, while at the same time being very focused on what makes Serbia special. For many readers from the diplomatic and business community, a magazine like yours offers unique insights into leading Serbian corporations and institutions.
GEORGIOS PAPANASTASIOU President of the Hellenic Business Association (HBA) STRENGTHENING ECONOMIC TIES
01 According to the World Bank's forecast, Serbian economy is expected to grow by 3.5% compared in 2017 compared to last year's 2.5%. This will be accomplished thanks to investments, while domestic consumption will have a bigger impact only in years to come. I would also like to underline that these are realistic expectations considering that the three important economic reforms have been implemented that pertain to issuing building permits, property registration, and simplification of starting a business. Still, it is necessary to continue with the implementation of other structural reforms, without delay. In terms of business environment, Serbia has been working on improving the conditions for local business communities, and the country should continue along this course, particularly in terms of improving its legislative framework, reforming the judiciary, complying with the EU regualtion and increasing the efficiency of state agencies. This, in turn, will make business environment more predictable for companies that wish to include Serbia in their operations, and lead to instigation of large-scale infrastructure projects, as well as further economic development and progress in Serbia. The Hellenic Business Association will certainly continue to give its contribution along this path through active lobbying on behalf of Serbia as an ideal destination for new Greek investments, and through strengthening economic ties between the two countries.
01 The Croatian Business Club is advocating international business cooperation, and I do hope that 2017 will be the year for expansion of international cooperation particularly with the countries in the region, and primarily between Serbia and Croatia. The purpose of our Club, which assembles business people from Serbia and Croatia, is to boost the cooperation first at the political, and then on 02 For a whole year now, Diplomacy & Commerce magazine has been informing us of new investments and other activities in the world of diplomacy, economy, business, culture, arts and sports through various reports, interviews, economic analyses and specialized publications. By doing so, the magazine is helping us to get to know Serbian social and business environment better, in addition to presenting and strengthening the ties between Serbian government, the diplomatic corps, foreign and local chambers of commerce, business associations, international and local institutions, organizations and business people from Serbia, the region and the world. By exchanging experiences and good practice cases among each other, all of these stakeholders should be credited for creating a picture about Serbia as a country that has a great potential and which has been constantly working on improving living and working conditions, as well as fostering social and economic development. I would like to use this opportunity to congratulate your magazine on its first birthday and wish you to continue with your enthusiasm and contribution to nurturing the links between all interested parties while presenting Serbia as a country that offers numerous possibilities.
MARIJA RADULOVIĆ President of the Croatian Business Club EXPANSION OF INTERNATIONAL COOPERATION
economic level because there are huge economic opportunties on both sides.
02 Magazines like Diplomacy & Commerce are important for dissemination of good ideas because they have a big readership and credibility especially when we consider their dedication to presenting a country, its economy and opportunities in a special light. Apart from reporting about companies, the quality interviews in the magazine speak volumes about it. We do hope that you are going to continue with this good practice in the future too which will positively contribute to better cooperation and mutual relations.
Asia’s Exports Rebound
Trade figures augur well for the global economy
It is easy to be downcast about the state of global trade. It has faced stiff headwinds in recent years: in 2016, for the first time in 15 years, it grew more slowly than the world economy. Regional and global trade deals are going nowhere, slowly. And America’s new president has promised to protect his country from trade-inflicted “carnage”.
Amid all this gloom, optimism seems foolhardy. But in Asia’s export dynamos, trade is picking up steam. In January, Chinese exports rose year-on-year for the first time in ten months; South Korean shipments have increased for three months in a row. Surveys reveal strong export pipelines in Japan, Singapore and Taiwan. Healthy order books for Asia’s manufacturers normally bode well for global trade and indeed the global economy. It is too soon to declare a definitive upturn in global trade, but it looks like more than a blip (see chart).
The simplest explanation for the rebound is that global demand is itself on solid ground. Global growth is still slower than before the financial crisis of 2008, but is heading in the right direction. Both the IMF and the World Bank think it will speed up a bit this year. Investors have turned more bullish: the MSCI all-world index, which covers 46 different markets, hit a record high this week. The rebound in Asian exports is more reason for bullishness.
Structural changes may also be at play in Asia. A much-cited factor behind the slowdown in global trade in recent years has been China’s tightening grip on complex supply chains. As more production takes place inside a single country, fewer cross-border transactions are needed to produce final goods. Yet this consolidation within China is starting to meet more friction. China is still aiming for a bigger share of high-
GLOBAL GROWTH IS STILL
HARNESSED TO CHINA Goods exports, % change on a year earlier
China 60
40
Asia excluding China
2007 09 11 13 15 17 20
0
20
40 tech industries, but less-developed countries in Asia are scooping up more of its low-end manufacturing, and wealthier markets are also fighting back. Over the last nine months of 2016, China’s export performance trailed the rest of Asia.
Nevertheless, there are good reasons to restrain the optimism. The rebound in exports from Asia’s commodity producers such as Indonesia and Malaysia is mainly the result of higher prices for oil and metals. Growth in their trade volumes has been much slower. For Asia’s hightech economies, the rebound’s durability hinges on the fickle tastes of consumers. Both Samsung and Apple are expected to launch shiny new gadgets this year. Semiconductor makers around the region have gone into overdrive in anticipation. If demand falls short of expectations, exports of electronics will quickly dive again.
And looming large over all these trends is Donald Trump. Fears that he might declare China a currency manipulator in his first few days in office came to naught. But his threats during the election campaign to slap heavy tariffs on Chinese products still linger in the background. A trade war would be unwelcome at any time. If it came just when the world was breaking free from a long slump in global trade, the irony would be all the more cruel.
From The Economist, published under licence. The original article, in English, can be found on www.economist.com
DIGITALIZATION IS THE FUTURE OF BUSINESS
Macroeconomic stability was good last year. The inflation was low and the dinar was stable which positively contributed to the functioning of entire economy, including the insurance segment – says President of Executive Board of Generali Osiguranje (Generali Insurance) a.d., Dragan Filipović
Are you satisfied with the results achieved in 2016 and what are your expectations this year? — We are satisfied with the results achieved in 2016. The official data collated by the National Bank of Serbia shows only the results for the third quarter, but our data shows that we have solidified our position as the number two in overall premiums, we are still the leader in life insurance, and we are the most profitable company in Serbia. We expect that overall market growth in 2016 will be between 6 and 8 percent overall. The biggest growth was recorded in life and health insurance segment, while vehicle insurance remains at the same level as in previous years. Which factors contributed the most to the obvious growth of the entire insurance industry last year? — Macroeconomic stability was good last year. The inflation was low and the dinar was stable
INCOMPREHENSIBLE
which positively contributed to the functioning of entire economy, including the insurance segment. Up until a couple of years ago, we had to take into consideration fluctuations in the foreign currency exchange rate and the inflation because premiums usually cannot be settled immediately so we opt for deferred payment in order to make our clients more relaxed. The stable economy made our job easier in terms of prices being more stable too, and more employers buying health insurance for their employees, which, in turn, was very beneficial for the labour market. At the same time, life insurance was a form of compensation for lower bank interest rates. Now, clients who want a more long-term investments often buy life insurance policies firstly to protect their families should something happen to them, secondly for long-term savings. The return on government securities, in which 95% of entire industry has been investing, is still higher than in Western countries so we are now in position to transfer
WE HAVE SIMPLIFIED THE TERMS AND
some of that return onto our clients which makes life insurance policies even more appealing.
When you were appointed President of Executive Board of Generali Osiguranje you said that the one of the tasks for you and your team was to make your products more understandable for everyone. How much did you succeed in doing this? — We have simplified the terms and conditions for our clients for over 10 of our products. We have reduced the paperwork so that the client now has to read only five pages compared to 26 pages before, most of which were pretty incomprehensible. We have expedited the processes in the company in order to issue our policies faster. We are going to continue along this path because our industry is still a big unknown to people - there is very little awareness about the need to be insured and people are still hesitant to buy insurance.
We have received positive feedback from our clients who are satisfied with our improved services. We don't want our policies to have small print that is puzzling to our clients.
In partnership with Banca Intesa and the German Development Bank (KfW), you have develped Agroprotect Loan for farmers. How important is this considering that agriculture is thought of as the future leading industrial sector, and which of the agricultural segments showed the biggest interest for the loan? — We are satifsfied with how Agroprotect Loan has been developing in Serbia. The idea was to incorporate agriculture insurance policy into a loan that the bank gives to farmers for development of crop farming or livestock breeding. Both the insurance company and the bank have agreed to waive a part of their profit in order for farmers to be insured. Every year, we widen the eligibility criteria by 20% so
I think this year we are going to accomplish the best results so far. Only between 8 and 10 percent of arable land in Serbia is insured, which is very low. After the flooding, the situation has improved somewhat but still not enough.
Generali is the first company in Serbia to link investing with life insurance. How popular is this product and how much did it raise awareness about this form of investing? — This is the so-called unit-linked insurance plan which is popular in the West and has a 30% share in the overall volume of issued life insurance policies. By purchasing this product, clients decide themselves where to further invest the money spent on buying a policy. This functions flawlessly in the West because there are many companies that have unit-linked insurance advisors. You can choose a conservative approach, with smaller but safer return, or the riskier one where you invest in stock that can substantially grow.
However, legislation in Serbia is not adapted to this kind of product in terms of making it more appealing than the products we usually offer. Hence, there are certain obstacles and limits to what funds clients can invest in, namely they can invest only in the funds located in Serbia. The next limit is that clients can invest up to 20% of their insurance policy value in one fund only, so, in order to invest all of your money, you have to pick five different funds. The problem is that these funds operate on the same market as insurance companies so the return on investing in them is equal to the return that insurance companies offer to their clients. All of this makes it very difficult for us to explain to the client the difference between the two. The idea is to have laws that would allow investing in foreign funds with the client receiving the same kind of treatment as their counterparts in the West. In this way, clients will have an opportunity to invest
EVERY YEAR, WE WIDEN THE ELIGIBILITY
CRITERIA BY 20% SO I THINK THIS YEAR WE ARE GOING TO ACCOMPLISH THE BEST RESULTS SO FAR. ONLY BETWEEN 8 AND 10 PERCENT OF ARABLE LAND IN SERBIA IS INSURED, WHICH IS VERY BAD
wherever they want – in Microsoft or Coca-Cola or any other successful company.
How important is development of technology and online services for you considering that you closely follow in the latest trends and develop your services accordingly? To what extent is Generali going to continue following the development of IT in that respect? — We, in Generali, think that digitalization is the future of business. There are certain limitations if we are talking about insurance segment. Some insurance products need the so-called preventive client examination or rather a check-up of their health situation which carries certain risks. This is the reason why such policies cannot be bought quickly, whether online or by phone. We have developed certain products in Serbia that are popular in the world at the moment so, as of March this year, clients can buy our travel insurance via their mobile phones. It is only five clicks away, and quite easy to purchase with the help of a very simple navigator. You can do this from the comfort of your home, a bar, a restaurant, on road. We are also going to continue selling our home insurance along the same principle. We will be more available to clients for information who can to buy this policy rather quickly. We want our clients in Serbia to feel like citizens of any European or other country in the world.
