The European Times - Serbia by The European Times

SERBIA

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Discover why Serbia is ranked a global third in Pwc's Manufacturing Index and is among the top 10 worldwide services destinations in 2008! * Located at South East Europe’s investment hot spot, featuring impressive growth in the number of hosted FDI projects! ** They already did – Michelin, FIAT, Microsoft, Coca-Cola, STADA, Telenor, Henkel, Ball Corporation and more than 200 companies from around the globe. * PricewaterhouseCoopers Balancing Risk & Reward, June 2008 ** Ernst and Young SEE Attractiveness Survey, June 2008

Serbia Investment and Export Promotion Agency  +381 11 3398 550 office@siepa.gov.rs www.siepa.gov.rs

Content Introduction

• Avala Ada 45 • Dynamic Foreign Investors Helping to Build a Better Serbia 46 • Trade Hub for South-Eastern Europe 48

• Prime Minister Outlines Priorities • Building a Modern Nation • Serbia’s Fact File • Stabilisation and Association Agreement: Giant Step

4 6 10

toward EU Accession • Meeting the Challenges of EU Integration • Useful Addresses

12 14 15

• Fast-Growing Health Sector Scores High in Exports • Minister of Health Cites Priorities for Health Care Sector • Roche • Health Care Sector Transformed with EU and

17 18 20 21 22

• Jugoremedija

Infrastructure • Infrastructure Hub of South-Eastern Europe • National Investment Plan Ministry Works to

Generate Development • National Infrastructure Plan Details Ambitious Projects • Key Infrastructure Projects in the Works

62 63 64

Business & Investment Opportunities • Minister of Economy Discusses Serbia’s Investment Appeal • One of World’s Fastest Growing Economies • Serbia Investment and Export Promotion Agency • Outstanding Investment Incentives • Deloitte • AmCham President: Serbia Is a Safe Bet for Greenfield Investments

EAR Support

City of Belgrade • Belgrade: City of the Future • Luka Beograd

25 26

IT & Telecom

29 30 31

• Serbia Positioning Itself as ICT Hub

International Funders

• Prime Minister Discusses Effects of Global Financial Crisis 33 • Tighter Monetary Policy to Protect Financial Sector Stability • Central Bank Anticipates Even Stronger Fiscal Policy • Hypo Group Alpe Adria • Belgrade Stock Exchange Seeing Rapid Growth • Overview Key Banks

56 58

66 67 68

Urban Planning

70 72

Media & Communications • Media and Communications Sector Working toward

36 37 38 40

EU Standards

• Ekonomist Media Group

74 76

Business & Leisure • Serbia, One of the Undiscovered Gems of Eastern Europe 79 • Belgrade, the Perfect Combination of Business

Trade & Industry • Significant Attractions for Export-Oriented Companies • Minister of Trade and Services Cites Advantages for

and Pleasure

Regional Director: Lieve Luyten Project Coordinator: Desiree Brouwers Business Analyst: Rachael Donovan

Design: Martine Vandervoort Carine Thaens Walter Vranken Dirk Van Bun Johny Verstegen

51 54 55

Real Estate • Robust Real Estate Sector Set for Continued Growth • New Ministry Focuses on Environment and

Finance & Banking

Production Coordinator: Cindy Thys, Vicky Kox

• Telecom Minister Discusses Top Priorities • Outstanding Opportunities in Fast-Growing Telecom Sector

• EBRD Biggest Investor in Serbia • World Bank Playing Key Role • IFC Supporting Financial Sector and More

Investors

Health & Pharmaceuticals

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SERBIA

Introduction

Prime Minister Outlines of nations from which Serbia has been excluded for a long time due to unfortunate historical circumstances.” As the Prime Minister points out, Serbia has already made a number of substantive reforms in its regulatory environment over the past seven years to bring the country more in line with EU criteria, but more reforms still need to be made. He says, “It is necessary to introduce additional reforms over the next couple of years which will further approximate Serbia’s legal and economic systems to EU standards. One of the first moves of the new government was to submit the EU Stabilisation and Association Agreement to Parliament for ratification.” The parliament has since given its stamp of approval to the SAA.

Macroeconomic fundamentals solid While more reforms need to be made, Serbia has made great strides forward over the past seven years and, as the Prime Minister explains, the country’s macroeconomic Mirko Cvetkovic, Prime Minister

Stimulating Serbia’s economic growth, raising the standard of living and completing the major Corridor 10 road and rail project are among top priorities for Serbia’s government today, according to Prime Minister Mirko Cvetkovic. The Prime Minister also mentioned the government’s commitment to increasing social programmes, stepping up efforts to fight crime and corruption, promoting local culture, adhering to international laws, and working toward EU integration.

Preparing country for EU membership The new government is particularly focused on preparing Serbia for eventual EU membership. According to the Prime Minister, “Full-fledged EU membership is the core interest of Serbia and its citizens. Joining the EU would enable Serbia to become a full-fledged member of the European family

Former Parliament Building

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Introduction

Priorities

fundamentals are solid. He says, “We have seen a strong rise in GDP over the year, reaching more than 8% in the first quarter and above 6% in the second quarter, for an average of 7% for the year. Last year we achieved 7.5% average growth, but even with the global financial crisis and other issues this year, Serbia still has a very high growth rate for the region.” The government has also been successful in reducing inflation, but the Prime Minister explains that the global financial crisis may prevent Serbia from reaching its inflation targets as soon as the government had hoped. “Serbia had 10.1% inflation last year, and our plan for this year is to go into one digit inflation. I am sure we can reach this goal.”

Proactive measures to cope with global crisis To cope with the effects of the global economic downturn, the government recently adopted a package of short-term measures designed to “boost stock exchange activity and stimulate savings,” according to the Prime Minister, who adds that customs duties will be reduced beginning from January 2009. He says that the government’s 2009 budget includes the possibility of emergency intervention by the Central Bank if necessary. “The crisis will affect Europe and our region, and we want to make our region more secure than others,” he says.

Key projects still going forward Meanwhile, the government is pushing ahead with key projects. Financing for the road portion of the Corridor 10 project is already in place, the Prime Minister explains, and this project is sure to add to Serbia’s investment appeal. Attracting foreign investors is “of crucial importance for Serbia.” Another potential project is a pipeline between Serbia and Russia. Prime Minister Mirko Cvetkovic explains, “While the EU is our main focus concerning trade and international business ties, we are also pursuing partnerships with the Russian Federation, including a gas pipeline now under discussion. This would be a huge project, probably around €1 billion to €1.5 billion. It

Beli Dvor (White Palace)

would be a transit pipeline, and Serbia would benefit greatly in fees as well as in having a larger quantity of gas for our own use.”

Boosting international image One focus for Serbia is to improve its international image. As the Prime Minister explains, “Serbia’s image is not as good as it should be, and those who visit here are pleasantly surprised. The government wants to do more than just advertise Serbia; we want to complete major projects to demonstrate the country’s potential. I welcome foreign investors to come here and take advantage of Serbia’s many opportunities and fantastic human resources.” The Prime Minister concludes: “The new government aims to create a better quality of life in Serbia while preserving the singularity and dignity of all citizens. Implementing the government’s strategy will ensure higher earnings, higher pensions, increased social responsibility, better employment opportunities, less corruption, better basic infrastructure, and a stronger position for Serbia in defending its sovereignty.”

Building a Modern Nation Serbia is growing into an economic leader of the fast growing South Eastern European region in the 21st century. Serbia has a long history that reaches back to when it was first settled in the 6th and 7th centuries. In 1166, Stefan Nemanja, a Serbian warrior and chief, founded the first Serbian state. By the 14th century, under the rule of Stefan Dusan, Serbia was the most powerful country in the Balkans, and throughout the country monasteries were built in which Serbian and Byzantine works of art celebrated the Christian faith and demonstrated Serbiaâ&#x20AC;&#x2122;s advanced culture.

Hundreds of years of Ottoman rule followed, and many remnants from the long Turkish reign remain in Serbia today, including Turkish baths and distinctive architectural landmarks. In 1878, Serbia finally gained its independence from the Ottoman regime after Russia defeated the Ottoman Turks in the Russo-Turkish war of 1877-1878. During the Balkan wars (1912-1913), Serbia and other Balkan states took control of more former Ottoman lands on the peninsula. After World War I, Serbia became part of the Kingdom of the Serbs, Croats, and Slovenians (1918), which included the former kingdoms of Serbia and Montenegro; BosniaHerzegovina; Croatia-Slavonia, a semiautonomous region of Hungary; and Dalmatia.

Part of Ottoman Empire

Creation of Yugoslavia

In 1389 the country was defeated in the Battle of Kosovo and was absorbed into the Ottoman Empire.

The new kingdomâ&#x20AC;&#x2122;s first king was Peter I of Serbia; his son, Alexander I, succeeded him in 1921. Alexander

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Introduction

was assassinated in Marseilles in 1934 and his cousin, Prince Paul, served as regent for Alexander’s young son, Prince Peter. As World War II developed, Prince Paul supported the Axis powers and Yugoslavia signed the Axis Pact on March 25, 1941. Opponents overthrew the government two days later, but in April Nazi troops occupied the country.

of February 2003. In June 2004, Democratic Party leader Boris Tadic was elected Serbian president and announced his plan to work toward gaining EU membership for Serbia. Serbia’s committed drive to become a productive member of the EU had begun.

Socialist Federal Republic

In May 2006, Montenegro voted for independence from Yugoslavia. Serbia declared its own independence on June 5, 2006. On that date, Serbia became an independent state, under its own name, for the first time since 1918. In early 2008, Mr. Tadic won his second term as the President of Serbia, which confirmed the commitment of the majority of Serbia’s population towards EU membership.

In 1943, Tito established a provisional government, and in 1945 he won a federal election. The monarchy came to an end and the Socialist Federal Republic of Yugoslavia, with Tito as prime minister, was born. Tito broke with the Soviet regime in 1948 and Yugoslavia took its own path by combining Communist control of politics and economy with a more open approach to the arts, travel and private enterprise. Tito became president in 1953 and president for life in 1963.

Independent modern Serbia in 2006

Intensifying ethnic tensions After Tito’s death in 1980, tension between Yugoslavia’s many ethnic groups intensified; a rotating presidency was devised to calm dissent. In 1991, two years after Slobodan Milosevic became president of the Serbian republic, Croatia declared its independence in May and Slovenia and Bosnia followed in December. After a four-year-long war with great losses of life on all sides, Bosnia, Serbia, and Croatia signed the Dayton Peace Accords in November 1995.

Milosevic’s rule Two years later, Slobodan Milosevic became president of the Federal Republic of Yugoslavia (Serbia and Montenegro). More ethnic conflict began in 1998 between the Kosovo Liberation Army, which supported the Albanian Muslims who made up 90% of Kosovo’s population, and Yugoslav federal troops defending the territorial integrity of Serbia. In June 1999, a UN-approved peace agreement was signed that ended these conflicts. A year later, Vojislav Kostunica, a law professor, won the presidency of Serbia, replacing Milosevic, who was charged with war crimes. In March 2002, Yugoslavia decided to change the name of the state to Serbia and Montenegro, as

SERBIA

Introduction

ÂŠ SIEPA

Sveti Bor

President Tadic confirms goal of EU membership President Tadic has confirmed his goal of achieving EU membership for Serbia. After the resignation of Prime Minister Vojislav Kostunica in March 2008, President Tadic called for early elections in May and his coalition achieved a majority in parliament with 38.7% of the vote. In July, parliament approved Serbiaâ&#x20AC;&#x2122;s new government, which is composed of the Democratic Party, led by President Boris Tadic, the Socialist Party, G17 plus and a coalition of minority parties. The Democratic Partyâ&#x20AC;&#x2122;s Mirko Cvetkovic is prime minister and Socialist Ivica Dacic is deputy prime minister and interior minister. The new government is

making good on its promises that Serbia would reach out to other countries throughout the world, open its economy, and will work on meeting all the criteria for joining the EU.

tion, attracting foreign investment, and boosting exports. Serbia aims to carve out a role for itself as a trade and transport hub for the region, and it is rapidly developing its private sector.

6% GDP growth for 2008

Implementing EU standards

While the Kosovo issue remains a problem, Serbia has steadfastly promoted peaceful solutions and has opened its economy to the world. Under the current government, the Serbian economy achieved an impressive 7.1% GDP growth rate in 2007 and 6% growth in 2008. Building on this success story, the government is focusing on infrastructure development, social services, continued privatisa-

Making good on its promises, Serbia is implementing EU and international standards in all aspects of its economy, social programmes, health and education, and financial system. It is also continuing its extensive privatisation programme, for example in the telecom sector, while pursuing major infrastructure developments like the European Corridor 10 project. All these efforts are

SERBIA

Introduction

Petrova Crkve (St. Peter’s Church)

proof of Serbia’s commitment to becoming a productive EU member. As the Prime Minister Mirko Cvetkovic commented in a recent speech, “The new government of the Republic of Serbia will continue to pursue the policy of strict observance of international law and prompt compliance with all international obligations. This is the only way our country can become a fully fledged and respected member of the international community.” The Serbian government has also proved its ability to adapt to global challenges, and has devised new programmes to cope with the international economic downturn. As companies throughout the world search for less costly ways of doing business in high potential markets, Serbia is attracting attention for its many advantages, which include a highly skilled workforce, a business friendly government, a strategic location, and a market oriented economy. Clearly Serbia is well on the way to achieving its ambitious goals. After its long and often turbulent history, Serbia has positioned itself today as a stable country that offers significant attractions for foreign investors.

Karlovci Crkve © SIEPA

SERBIA

Introduction

Serbia’s Fact File Official name:

The Republic of Serbia. It contains two autonomous provinces: Vojvodina and KosovoMetohija. It was part of the ex Yugoslavia

Government

Type of Government:

Area:

88,361 sq km

Location:

Central Balkan peninsula in South Eastern Europe

Head of government:

Climate:

Temperate continental climate, with a gradual transition between the four seasons of the year.

Cabinet: Elections:

Terrain:

Extremely varied; to the north, rich fertile plains; to the east, limestone ranges and basins; to the southeast, ancient mountains and hills

Population:

7,498,001 (according to the latest census, taken in 2002, excluding Kosovo-Metohija)

Language:

The official language is Serbian and the script in official use is Cyrillic, while Latin script is also used. In the areas inhabited by ethnic minorities, the languages and scripts of the minorities are in official use, as stated by law.

Capital:

Belgrade (Beograd), with a population of 1.6 million, is the administrative, economic and cultural centre of Serbia.

Other large cities: Novi Sad, population 299,294; Nis, population 250,518, and Kraguijevac, population 175,802

Chief of state:

National Assembly:

Constitution: Legal system:

Suffrage:

Democratic republic. The president and the parliament are elected every four years in general elections. President Boris Tadic (since 11 July 2004) Prime Minister Mirko Cvetkovic (since 7 July 2008) Federal Ministries act as cabinet president elected by direct vote for a five-year term (eligible for a second term); election last held 3 February 2008 (next to be held in 2013); prime minister elected by the Assembly 250 seats;deputies elected by direct vote to serve four-year terms. Elections last held on 11 May 2008 (next to be held in May 2012) Adopted 8 November 2006; effective 10 November 2006 based on civil law system; has not accepted compulsory ICJ jurisdiction 18 years of age; universal

Autonomous provinces: Vojvodina and Kosovo-Metohija. Longest river:

the Danube, 588 km in Serbia out of a total 2,783 km

Religion:

The main religion in Serbia is Christian Orthodox. There are also other religious communities in Serbia: Islamic, Roman Catholic, Protestant, Jewish and others.

Currency:

Serbian dinar (RSD). 1 dinar = 100 para. Banknotes: 10, 20, 50, 100, 200, 1000 and 5000 dinars. Coins: 50 para, 1, 2, 5, 10 and 20 dinars

Time:

GMT + 1

Independence (from union of Serbia and Montenegro): June 5, 2006 National holiday: February 15 (National Day) Historic landmarks and national treasures: Djerdap National Park, with the 8,000 year-old Neolithic site of Lepenski Vir; Belgrade, Serbia’s capital, is one of the oldest European cities, dating back over six thousand years; Nis is the birthplace of Roman Emperor Constantine the Great (born in 274 AD); the Monastery of Djurdjevi Stupovi and the Monastery of Studenica were built in the twelfth century; The Miroslav Gospel, written in the twelfth century, is the oldest preserved Serbian manuscript.

Infrastructure Total length of railway network: 3,619 km Total length of roads:

42,692 km (asphalt) and 24,860 km (concrete)

Telephones main lines in use: 2.993 million (2007) Telephones mobile cellular:

8.453 million (2007) European Corridor X (road and rail, under construction) passes through Serbia

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Introduction Economy

Energy

GDP (purchasing power parity): €60.12 billion (2007 estimate)

Energy:

The Electric Utility Company of Serbia (EPS) encompasses coal mines, electric power sources (hydroelectric power plants, thermal power plants, heating plants) and grid distribution systems.

Electricity production:

33.87 billion kWh (2004)

Electricity exports:

12.05 billion kWh (2004)

Electricity imports:

11.23 billion kWh (2004)

Oil production:

14,660 bbl/day (2003)

Oil consumption:

85,000 bbl/day (2003 est.)

Oil proved reserves:

77.5 million bbl (2006 estimate)

Natural gas production:

650 million cu m (2005 estimate)

Natural gas consumption:

2.55 billion cu m (2005 estimate)

Natural gas imports:

2.1 billion cu m (2004 estimate)

GDP (official exchange rate): €32.42 billion (2007 estimate) GDP - real growth rate:

7% (2008 estimate)

GDP - per capita (PPP):

€8,090.5 (2007 estimate)

GDP by sector: agriculture: industry: services:

12.3% 24.2% 63.5% (2007 estimate)

Budget: revenues: expenditures:

€7.5 billion €7.6 billion (2007 estimate)

Public debt:

37% of GDP (2007 estimate)

Labour force:

2.961 million (2002 estimate)

Natural gas proved reserves: 46.17 billion cu m (1 January 2006)

Labour force by occupation agriculture: industry: services:

30% 46% 24% (2002)

Unemployment rate:

18.8% (2007 estimate)

Current account balance:

€-5,359.2 billion (2007 estimate)

Exports:

€6.86 billion (2007 estimate)

Exported commodities:

manufactured goods, food and live animals, machinery and transport equipment

Imports:

€14.28 billion (2007 estimate)

Leading industrial activities: mining of coal, building materials, copper; processing; production and distribution of electricity; production and distribution of petroleum products and water.

Population below poverty line: 6.5% (2007 estimate) Natural resources:

oil, gas, coal, iron ore, copper, zinc, antimony, chromite, gold, silver, magnesium, pyrite, limestone, marble, salt, arable land

Agricultural land:

5,718,599 hectares, of which 4.6 million is arable land and 1 million hectares is in pasture, with the remainder in fish ponds

Agriculture products:

wheat, maize, sugar beets, sunflower, raspberries, beef, pork, milk

Industries:

sugar, agricultural machinery, electrical and communication equipment, paper and pulp, lead, transportation equipment

Industrial production growth rate: 1.8% (2007)

Stabilisation and Association Agreement: Giant Step toward EU Accession

Belgrade Congress House

The Stabilisation and Association Agreement (SAA) that Serbia signed with the EU last spring shows that Serbia is right on track to become a member of the EU.

Stabilisation and Association Process The Stabilisation and Association Process (SAP) is the EU’s policy framework for the Western Balkans: Albania, Bosnia and Herzegovina, Croatia, Macedonia, Serbia and Montenegro. The main elements of this long term commitment by the EU to the region were proposed at the Zagreb Summit in 1999. The SAP supports the Western Balkan countries’ development and preparations for future EU membership by combining three main instruments: Stabilisation and Association Agreements, autonomous trade measures, and substantial financial assistance; Serbia has benefited from all three. Regional co-operation constitutes a cornerstone of the SAP. At a summit in Thessalonica in 2003, the EU strengthened SAP by forming so-called European Partnerships with Western Balkan countries. These partnerships identify

short and medium term priorities which each country needs to address on its way to the EU. The first European Partnership for the then unified Serbia and Montenegro was adopted in 2004, and in 2005 the European Commission determined that Serbia and Montenegro were sufficiently prepared to negotiate an SAA. However, the Commission called off SAA negotiations with Serbia and Montenegro the following year since they did not meet their commitments on co-operation with the International Criminal Tribunal for former Yugoslavia (ICTY). In 2006, Serbia and Montenegro split and the EU signed a revised European Partnership with Serbia later that year. In 2007, after successful parliamentary elections, the Commission resumed SAA negotiations with Serbia, and Serbia’s new government is making sure that this process continues to move forward toward EU membership.

Serbia living up to expectations Serbia has been living up to the EU’s confidence in its long term potential. Over the past seven years under

SERBIA

Introduction

for state spending on development (including infrastructure) and social programmes while also keeping inflation under control in order to achieve long term macroeconomic stability.

Challenges the government faces Serbia is also recording a high trade deficit (around €5 billion last year), even though exports are growing strongly. Better results are expected as large strategic investors in the automotive, high-tech and energy sectors enter the market. Serbia benefits from several free trade agreements – with Russia, CEFTA (Central European Free Trade Agreement) countries and the EU – and needs to take better advantage of them in order to boost exports still further. The country also needs to make rapid progress in its privatisation programme; state owned capital is officially supposed to be phased out by the end of 2008 according to Serbia’s privatisation law, but this deadline will not be reached. The government is still seeking strategic investors for several major enterprises.

Progress in privatisation drive © Black Box

democratic leadership, Serbia has maintained a buoyant economy with average GDP of around 7% and growing foreign investment; FDI for the first quarter of 2008 reached €729 million, compared to €2 billion for the entire year in 2006. In addition, Serbia’s recently re-elected government is strongly pro EU accession and is also focussing on EU approved policies to promote economic growth, infrastructure development and responsible social policies. The new government faces many challenges, including high inflation fuelled mainly by rising energy and food prices, excessive public spending, social inequalities and uneven regional development. The government must balance the need

Much progress is being made, however. Zastava Kragujevac, a local car manufacturer, recently signed a ground-breaking agreement with Fiat, and a 51% stake in state-owned oil refining company NIS has been sold to Russia’s Gaspromneft. The government is continuing to implement measures aimed at attracting foreign investment, and much is expected from the privatisation of other large state-owned companies. These include power company EPS, the biggest corporation in Serbia, which seems set for an IPO, as do Telekom Srbija (the sole provider of fixed line services and the leader in mobile telephony), and Belgrade Airport. The government has devised a plan to distribute 15% of its shares in the largest state-owned companies to the general public, which has proved a success. Other companies on the privatisation list include Galenika, a state owned pharmaceutical producer that is to be sold next year, and JAT, the Serbian national carrier, for which the tender was published in July 2008. Serbia’s top revenue earners are both in the energy sector: NIS (oil) and EPS (electricity). These two companies combined achieve the same total revenues as Serbia’s remaining eight companies on its top ten list of enterprises. Another top enterprise in the energy sector is Srbijagas (Natural Gas). The telecom sector overall is the country’s leading sector in revenues. Investors will find outstanding opportunities in Serbia in many sectors. While many challenges remain, the EU’s confidence in Serbia’s growth potential has clearly been justified.

Meeting the Challenges of EU Integration Serbia’s government and private sector are working hand in hand to achieve the country’s EU integration. In October this year, Serbian Prime Minister Mirko Cvetkovic, Deputy Prime Minister of European Integration Bozidar Djelic, National Bank of Serbia Governor Radovan Jelasic, 11 cabinet ministers and other government leaders and more than 150 local business leaders met in Belgrade to discuss Serbia’s development strategies and its progress toward EU membership.

New Serbian mission to EU At the meeting, Bozidar Djelic announced that the European Commission will unfreeze €120 million in 2010 for developing the Danube basin, a project in which Serbia should play a central role, and he added that within a few months Serbia will open a new mission at the EU which will welcome Serbian business leaders. Also in October, the Serbian Chamber of Commerce and Delta Holding, the first Serbian company to enter the EU market when it acquired a retail chain in Bulgaria last year, brought together business leaders and EU stakeholders in Brussels to discuss Serbia’s EU integration and to promote the ratification of the Stabilisation and Association Agreement (SAA) the EU and Serbia signed earlier this year. Miroslav Miletic, the President of the Serbian Chamber of Commerce, pointed out that the recent ratification of the SAA by Serbia’s parliament demonstrates to a wider public that the European agenda is by and for Serbia.

Meeting in Brussels Bozidar Djelic points out that Serbia has made significant progress toward EU membership through the SAA and through such initiatives as new European style passports that Serbia began to issue on November 3. At the Thessalonica Summit in 2003, the formal decision was made for Serbia to pursue EU membership, and Serbia is now a potential candidate country for EU accession. On September 10, 2007, the European Commission and Serbia concluded their negotiations for the EU Stabilisation and Association Agreement with Serbia, an important step on the road to Serbia’s EU integration. Ivica Dacic, First Deputy Prime Minister and Minister of the Interior, notes that Serbia is relaxing its visa regime to encourage more foreign investment and that the government has signed an agreement with Europole. He concludes, “The Ministry of the Interior is speeding up harmonising our legislation with that of the EU. We are on the road to Europe and stability, and we are keen to stay on this road.”

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Introduction

Useful Addresses Serbian Government Office of Prime Minister 11, Nemanjina St., 11000 Belgrade phone: +381 11 3617 719 fax: +381 11 3617 609 e-mail: predsednikvladesrbije@ srbija.sr.gov.yu Office of Deputy Prime Minister 11, Nemanjina St., 11000 Belgrade phone: +381 11 3617 593 fax: +381 11 3617 597 e-mail: kabinet.potpredsednika@ sr.gov.yu Ministry of Economy and Regional Development 15, Blvd. kralja Aleksandra 11000 Belgrade phone: +381 11 3347 231 fax: +381 11 3346 770 www.mpriv.sr.gov.yu Ministry of Finance 20, Kneza Milosa St., 11000 Belgrade phone: + 381 11 3614 007 fax: +381 11 3618 961 e-mail: informacije@mfin.sr.gov.yu www.mfin.sr.gov.yu Ministry of Energy and Mining 36, kralja Milana St., 11000 Belgrade phone: +381 11 3631 595 fax: +381 11 3616 603 e-mail: kabinet@mem.sr.gov.yu www.mem.sr.gov.yu Ministry of Infrastructure 22-26, Nemanjina St. 11000 Belgrade phone: +381 11 3616 431 fax: +381 11 3617 486 Ministry of Trade and Services 22-26, Nemanjina St. 11000 Belgrade phone: +381 11 3618 852 fax: +381 11 3610 285 e-mail: kabinet@mtu.sr.gov.yu www.mtu.sr.gov.yu

Ministry of Labor and Social Policy 2, Blvd. Mihajla Pupina 11070 Belgrade phone: +381 11 3112 916 fax: +381 11 3114 650 e-mail: kabinet@minrzs.sr.gov.yu www.minrzs.sr.gov.yu Ministry of Agriculture, Forestry, and Water Management 22, Nemanjina St., 11000 Belgrade phone: +381 11 3065 038 fax: +381 11 3616 272 e-mail: office@minpolj.sr.gov.yu www.minpolj.sr.gov.yu

Government Agencies Serbia Investment and Export Promotion Agency 3, Vlajkoviceva St. 5th Floor 11000 Belgrade phone: +381 11 3398550 fax: +381 11 3398814 e-mail: office@siepa.gov.rs www.siepa.gov.rs Privatization Agency 23, Terazije St., 11000 Belgrade phone: +381 11 3020 800 fax: +381 11 3020 828 e-mail: info@priv.yu www.priv.yu

Chamber of Commerce and Industry, Belgrade 12, Kneza Milosa St., 11000 Belgrade phone: +381 11 2641 355 fax: +381 11 2642 029 www.pks.komora.net

Other State Institutions National Bank of Serbia 12, kralja Petra St., 11000 Belgrade phone: +381 11 3027 100 fax: +381 11 3027 394 e-mail: kabinet@nbs.yu www.nbs.yu Belgrade Stock Exchange 1, Omladinskih brigada St. 11000 Belgrade phone: +381 11 3117 311 fax: +381 11 138 242 e-mail: info@belex.co.yu www.belex.co.yu Republic Development Bureau 4, Makedonska St., 11000 Belgrade phone: + 381 11 3345 233 fax: +381 11 3345 531 e-mail: rzr@razvoj.sr.gov.yu www.razvoj.sr.gov.yu

Statistical Office of the Republic of Serbia 5, Milana Rakica St., 11000 Belgrade phone: +381 11 2412 922 Serbian Business Registration Agency fax: +381 11 2401 284 5, Nikola Pasic Sq., 11000 Belgrade e-mail: stat@statserb.sr.gov.yu phone: +381 11 3331 400 www.statserb.sr.gov.yu fax: +381 11 3331 410 e-mail: registar@apr.sr.gov.yu Intellectual Property office www.apr.sr.gov.yu 5, Kneginje Ljubice St. 11000 Belgrade phone: +381 11 2630 499 Chambers of Commerce fax: +381 11 3112 377 Serbian Chamber of Commerce and e-mail: yupat@yupat.sv.go Industry 13-15, Resavska St. Share fund of the republic of Serbia 11000 Belgrade 15, Blvd. kralja Aleksandra phone: +381 11 3240 611 11000 Belgrade fax: +381 11 3230 949 phone: +381 11 3331 800 e-mail: pks@pks.co.yu fax: +381 11 3331 831 www.pks.co.yu www.share-fund.co.yu

• Minister of Economy Discusses Serbia’s Investment Appeal • One of the World’s Fastest Growing Economies • Outstanding Investment Incentives • AmCham President: Serbia is a Safe Bet for Greenﬁeld Investments

Business & Investment Opportunities

“Serbia offers a much more attractive tax system, lower labour costs, and subsidies to buy companies to create export driven industries and to create gas.” Mladan Dinkic, Minister of Economy and Regional Development and Deputy Prime Minister

SERBIA

Business & Investment Opportunities

Minister of Economy Discusses Serbia’s Investment Appeal sectors in particular: the automotive sector, where the government covers up to 25% of the initial investment if the automotive companies employ over 1,000 people and the investment is larger then €200,000; the ICT sector, in which we have signed an agreement with an Indian company to build an ICT park between Belgrade and Novi Sad; and the electronics sector. ET: Why should investors choose Serbia instead of another country in the region?

Mladjan Dinkic, Minister of Economy and Regional Development and Deputy Prime Minister

Mladjan Dinkic, Serbia’s Minister of Economy, discusses the government’s development strategies and Serbia’s attractions for foreign investors. ET: What are trends in foreign investment in Serbia? M. Dinkic: The biggest investment in Serbia to date is Norway’s Telenor. Overall, however, the EU is definitely the largest investor in Serbia, particularly Austria, Germany, Italy, and Greece. The EU (particularly Germany and Italy) also accounts for 60% of Serbia’s foreign trade. ET: What kind of investments are you hoping to attract today? M. Dinkic: Our goal is to try to attract industries that are producing consumer goods, particularly for export; the biggest step in this direction is the establishment of Fiat, which will export almost 100% of its production. We are providing special incentives to attract investment in three

M. Dinkic: Serbia offers a much more attractive tax system, lower labour costs, and subsidies to big companies to create export driven industries and to create jobs. Serbia also has a more strategic location for exports, and benefits from its many free trade agreements. Fiat considered a number of countries for its recent investment, but decided to come to Serbia because we offered more attractive conditions. ET: What are the government’s priorities concerning tourism development? M. Dinkic: Serbia achieved €558 million from tourism in 2007 and we anticipate over €0.8 billion in 2010. We have launched a tender process for an investment of around €200 million in a Greenfield ski project, and we have already attracted investors from Germany and Austria. My goal is to partner with my Bulgarian colleagues to make Serbia a candidate in 2022 for the winter Olympics. We also anticipate a tender for a joint venture to develop spa tourism, which has exceptional potential. Another possibility is themed tourism, for example Danube cruises or tours of Roman monuments. JAT’s privatisation will open the market to low-cost carriers and boost tourism to Serbia. ET: What are your ministry’s current key goals? M. Dinkic: We want to maintain Serbia’s strong growth rate (by far the highest in the region at 7%), to focus on infrastructure upgrades, to attract more foreign investors, and to help improve Serbia’s international image.

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Business & Investment Opportunities

One of World’s Fastest With an average GDP growth rate of 7% over the past few years, “Serbia is one of the very rare countries in the world today with a high level of economic growth,” explains Mladjan Dinkic, Minister of Economy and Regional Development and Deputy Prime Minister.

Inward and Net FDI (US$ ths) Year

Inward FDI

Net FDI

2000

52,219

50,252

2001

178,366

165,338

2002

503,791

475,454

2003

1,388,087

1,360,410

In fact, Serbia’s economy grew by around 7.5% in 2007 to achieve per capita GDP of US$5,000 (€4,000), an impressive 35% increase over the previous year, largely thanks to the soaring output of the services sector. “This year, per capita GDP should reach US$7,000 (€5,600),” Mladjan Dinkic says.

2004

987,239

695,690

2005

1,616,438

1,515,439

2006

5,425,147

4,264,380

2007

3,569,080

2,295,297

2008(1)

2,945,384

2,320,836

Working toward EU membership

Total

16,665,751

13,348,146

Thanks to significant political and economic reforms, Serbia’s economy operates according to free market principles and accords foreign investors the same rights and opportunities as domestic ones. Attractive investment incentives are guaranteed to keep FDI rolling in. Last year, Serbia’s parliament approved the Stabilisation and Association Agreement with the EU, an essential step toward the EU integration that will further stimulate the country’s economic growth. Serbia has already established close trade ties with the EU and has positioned itself as a preferred base for EU companies wishing to enter the fast growing markets with which Serbia has free trade agreements, including the CEFTA countries and Russia. In addition, late last year Serbia signed the Instrument for Pre-Accession Assistance (IPA) from the EU for €1 billion in funding for Serbia from 2007 to 2011. These funds will be used for institution building, socio-economic development, quicker European integration, and cooperation

Note: Inward FDI = Total investment of foreign companies in Serbia Net FDI = Inward FDI + Total inflow from withdrawing domestic companies’ investment abroad – Total outflow from withdrawing foreign companies’ investment in Serbia – Total investment of domestic companies abroad (1) January – July Source: National Bank of Serbia

with neighbouring countries, all of which will strengthen the foundations for Serbia’s long term strong macroeconomic performance.

Economic challenges Controlling inflation and boosting exports to achieve a trade balance are key challenges for Serbia’s economy. Last year the National Bank of Serbia hit the core inflation target of 5.4% by pursuing a tight monetary policy along with making utility and electricity price adjustments. Meanwhile, exports last year surged to US$8.83 billion (€7 billion), or 37.3% over 2006. According to projections by the Serbia Investment and Export Promotion Agency (SIEPA) for the period 2008-2010, Serbia’s economy will continue to experience strong

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Business & Investment Opportunities

Growing Economies GDP growth, moderate employment increases, further inflation curbing, and gradual reduction of the current account deficit, with an average GDP gain of 6.3% and a reduction in inflation to 4% by the end of 2010. Wages and productivity will continue to grow, and the public sector should achieve a surplus of 0.4% of GDP by 2010. High growth rates in foreign trade are also expected, with exports growing faster than imports. The current deficit should drop from nearly 15% of GDP today to around 11% by the end of 2010.

Countering global crisis The global financial crisis is certain to put a strain on Serbia’s economy and the government is developing strategies to meet this challenge. As Mladjan Dinkic points out, “We must work hard to maintain our strong growth in the midst of an international crisis; many other governments are fighting to have any kind of growth. We will focus on maintaining macro economic stability and strict economic and fiscal policies to keep the deficit to a minimum. Serbia already has high foreign currency reserves that other countries lack; in fact our reserves are triple our reserves of Serbian dinars. This is an anchor for the economy.” Attracting more FDI is essential for Serbia to keep its economic success story on track. “We plan to provide even more incentives to stimulate greenfield investment. Fiat has already chosen Serbia for a major project and we have started negotiations with Ikea. We aim to do as much as possible to attract as many companies as possible. Serbia needs to be on foreign investors’ minds when they are looking to invest their capital,” Mladjan Dinkic says.

been moving forward rapidly and over the past five years, over 2,180 companies have been acquired by foreign and domestic investors. Overall, privatisation investment inflows, including guarantees of future investments, totalled 4.1 billion in mid 2008. Serbia’s privatisation programme is nearly completed, according to Mladjan Dinkic, Deputy Prime Minister and Minister of Economy and Regional Development. He explains, “Privatisation is nearing its end. We recently passed a decree streamlining the process of payments by eliminating the necessity of banks to be involved in the process. We still have around ten tenders to offer, some of which will be tenders for strategic partnerships.”

■ GDP Growth Rate 2007*

7.5%

2006

5.8%

2005

6.2%

2004 2003

8.4% 2.5%

2002

4.2%

* Estimation Source: Statistical Office of the Republic of Serbia

■ GDP per Capita in $ 2007

5.641%

2006

4.207%

2005

Privatisation programme nearly complete

2004

Serbia’s Law on Privatisation calls for the sale of 70% of the capital in state-owned and socially-owned companies as well as the free transfer of capital to Serbian citizens. The ambitious programme has

2003 2002

3.526% 3.285% 2.720% 2.112%

Source: National Bank of Serbia

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Business & Investment Opportunities

Serbia Investment and Export Promotion Agency

Serbia’s FDI and Exports Powerhouse The quality of SIEPA’s services has been reflected in over €1 billion investment projects facilitated to date. Since the onset of economic reforms back in 2000, Serbia has grown into one of the premier emerging investment locations in Central and Eastern Europe. Over the past seven years, inward FDI in the country has exceeded €13 billion, with the EU members accounting for as much as 85% of the amount.

salary tax amounts to 12%. In addition, total labour expenses average below 50% of the level in EU members from Eastern Europe. On top of this, overhead can be further cut down by taking advantage of a variety of financial and tax incentives. They include state grants ranging between €2,000 and €10,000 for a new job post, a 10-year corporate profit tax holiday, or 2-3-year salary tax and social insurance charges exemptions. The former benefits are garnered with Serbia’s quality labour force, boasting high productivity, strong engineering skills, and excellent command of French.

Investment benefits

SIEPA’s services

Investors in Serbia can largely benefit from the country’s strong economic performance, booming market potential, low overhead costs, attractive investment incentives, and highly qualified workforce.

To be able to set up or expand your business at a low cost and in the minimum amount of time, you can rely on the services offered by the country’s central investment institution – SIEPA (Serbia Investment and Export Promotion Agency). SIEPA has had a track record in dealing with major foreign investors in the country, and facilitating the largest Greenfield projects. Their list of clients includes blue-chip companies, such as Indian Embassy Group, US Coca-Cola and Ball Corporation, Danish Grundfos, Austrian Knauf, and many others.

For years, Serbia has basked in robust GDP growth of approximately 7%, and the per capita figure has reached more than €4,414 4,414, or almost four times the amount in 2001. Further, Serbia offers tremendous sales opportunities, as a result of customs-free access to the markets of the European Union, Russia, and South-East Europe, along with a soaring local market potential. Cost-effective operating in Serbia is ensured through extremely competitive tax rates, labor and utility costs. Corporate tax rates are among the lowest in Europe – corporate profit tax rate stands at merely 10%, VAT is set at 18% or 8%, while the

On the investment side of our business, we specialise in Greenfield ventures, providing assistance throughout the project’s lifetime. We act as a one-stop information shop, where you can get highly professional services, be it economic or legal information, plant location

Vesna Peric, Director

advisory, permits obtaining assistance or investment after care. In addition, for those of you seeking high-quality Serbian products, SIEPA will be happy to introduce you to their top exporters from a variety of industries, such as food, automotive, textile, and the IT sector. You can meet them yearly at world’s leading trade fairs or obtain specific information from the SIEPA Export Department. The Agency’s expert staff is ready in assisting you and your business interests. SIEPA’s free-of-charge services are tailor-made to best match your company’s needs and requests.

3, Vlajkoviceva St. 5th Floor 11000 Belgrade, Republic of Serbia Phone: +381 11 33 98 55 0 Fax: +381 11 33 98 81 4 E-mail: office@siepa.gov.rs www.siepa.gov.rs

Outstanding Investment Incentives The Serbia Investment and Export Promotion Agency (SIEPA), the foreign investor’s one-stop shop in Serbia, helps investors take advantage of Serbia’s outstanding incentives.

Financial incentives Financial incentives include from €2,000 up to €5,000 in state grants per new job created in manufacturing; from €2,000 up to €10,000 in grants per new job created in internationally marketable services; and from €5,000 up to €10,000 in grants per new job created in research and development. These grants are offered for Greenfield and Brownfield projects in all industries, except for trade, tourism, hospitality and agriculture. Specific criteria required for investments in manufacturing include a minimum investment of between €1 million and €3 million, depending on the unemployment rate in the municipality where the investment is made, and a minimum number of 50 new jobs created. For the services sector, the minimum investment is €500,000, and at least 10 new jobs must be created. In R&D, the minimum investment is €250,000 and at least 10 new jobs must be created. Funds are awarded to prospective investors through a points system based on the investor’s references, the participation of domestic suppliers in the final product and the investment effect on local companies, the investment’s sustainability and viability, the effect on human resources, the environmental impact, the effect on development of the local community, and other factors detailed on SIEPA’s web site.

Tax Incentives Serbia’s outstanding tax incentives include a 10-year corporate profit tax holiday for investments over €7.5 million that create 100 new jobs; corporate profit tax

credits of up to 80% of the fixed assets investment; carrying forward of losses over a period up to 10 years; accelerated depreciation of fixed assets; a five-year corporate profit tax holiday for concessions; a fixed salary tax base deduction of €60 a month; salary tax exemptions for employees under 30 and over 45 years; annual income tax deductions of up to 50% of the taxable income; social insurance contributions exemptions for employees under 30 and over 45 years; and customs-free imports of equipment based on foreign investment. Non-residents are taxed only on their income generated in Serbia. Various other tax breaks are offered for investment in certain sectors, for small companies, for the creation of jobs, and for investments in certain regions. And, as of July this year, amendments to the Law on Terms and Conditions for Attracting Foreign Direct Investment provide for new state support in the form of non-refundable donations worth 25% of total investment value to projects exceeding €200 million and creating 1,000 new jobs or more. Net FDI In Cash by Countries (2000-2007) Investment Value (US$ 1,000) Austria 2,157,972 Greece 1,638,981 Norway 1,550,565 Germany 1,389,108 Netherlands 553,357 Slovenia 543,250 France 425,273 Luxembourg 369,507 Hungary 322,449 Great Britain 280,485 Country

Country Italy Switzerland Montenegro Croatia Bulgaria USA Slovakia Latvia Israel Belgium

Investment Value (US$ 1,000) 268,058 223,390 209,288 153,259 112,013 78,073 66,221 52,920 48,867 47,701

Note: The National Bank of Serbia reports FDI data by country of payment and not by country of actual investment. Source: National Bank of Serbia

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Business & Investment Opportunities

Deloitte

Investors’ Partner of Choice Deloitte has been present in Serbia

Macura says, “Our goal is to help investors succeed in this market. Through our in depth knowledge, we serve as the bridge between an investor and Serbia’s public or private sector, wherever the investor’s interest lies.”

since 1991 and has the longest track record of any international business services firm in the country. Deloitte initially focused on auditing services in Serbia and built up an extensive client base. Today, Deloitte has positioned itself as a market leader with a wide range of consulting and auditing services for local and international clients. In 2007, Deloitte’s offices from Serbia, Croatia, Slovenia, Macedonia, Montenegro and Bosnia and Herzegovina became one practice - Deloitte Adria; in mid 2008, the Hungarian office joined the group, now known as Deloitte PannonAdria. The group employs more than 900 highly trained professionals and serves multinationals, large national firms, and dynamically growing companies. Deloitte provides services with local, regional and international reach. Its client list in Serbia includes more than 300 companies. Milos Macura, Office Managing Partner for Deloitte PannonAdria, explains that Deloitte has worked with the World Bank and the local privatisation agency in completing a number of high profile privatisation deals and has earned a reputation as the local specialist in making the privatisation process transparent for investors.

Milos Macura, Office Managing Partner Deloitte PannonAdria

In Serbia, the evolution of the local business sector has resulted in even more opportunities for Deloitte. As Milos Macura explains, “The economic rebound of recent years has been led in part by an influx of Foreign Direct Investments, and in part by rebuilding the old regional business ties and strengthening of the trade relations throughout CEFTA and other free-trade agreements with the EU and Russia. Great local experience, global standards and knowledge sharing, make Deloitte an investors’ reliable business partner.”

Milos Macura is very positive about Serbia as an investment choice. He says, “Serbia is one of the most exciting and lucrative countries for foreign investors. Serbians are entrepreneurial and the system is being reformed in a very courageous way. The local market includes many healthy, competitive companies that are very interesting for foreign investors, and Deloitte has the know how to help investors succeed here.” As for the future, Milos Macura concludes, “By being the first choice for the most sought after clients and talents, we plan to grow faster than the market, staying always one step ahead. We will continue to develop our consulting services, focusing our efforts especially on the fastest growing industries, and we will remain the standard of excellence in the Serbian business community.”

Investors’ Bridge into Local Market Today, Deloitte is well known for its market expertise, and it has positioned itself as THE partner of choice for international firms investing in Serbia. As Milos

Deloitte d.o.o. Makenzijeva 24, Belgrade Tel: +381 11 3812 110 www.deloitte.com/rs

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Business & Investment Opportunities

AmCham President: Serbia Is a Safe Bet for Greenfield Investments Dejan Cvetkovic, President of the American Chamber of Commerce in Serbia, discusses Serbia’s attractions for foreign investors. Serbia needs an even larger sum of direct foreign investments every year. This statement, so often heard among business people, politicians and bankers, has become almost a proverb in Serbian, spoken countless number of times a day, in any opportunity.

Being attractive and unique, while surrounded by determined and ambitious competitors, is a tough and challenging task for any country. The formula that leads companies to invest in Greenfield developments is a fairly complex one. It is not just one or two factors that determine where this project or that will spring up. Sometimes it takes years to develop the particular market elements that are favourable to Greenfield investments and entities standing behind them. Once this is established, they tend to come in clusters. My prediction is that we can expect to see more Greenfield investments once the effects of already established changes in the economy have had time to influence international financiers. But, also, let’s not be too strict in seeing the number of Greenfield investments as an ultimate measure of a market’s attractiveness to investors. There are many opportunities that will come with developing market resources and capacities, and many of them will be linked to investment in smart technologies. Direct foreign investments facilitate Serbia’s integration into progressive world trading courses and at the same time create strong connections to local producers.

Success stories

Ball Packaging - one of the largest Greenfield investments in Serbia

There is no better investment promotion then a successful investment itself. One look at the success stories experienced by AmCham members and other investors say more than thousands of words spoken at any gathering. This

Dejan Cvetkovic, President of the American Chamber of Commerce

is what other potential investors will believe, appreciate and trust. They make the difference between vague advertisements and reality. Serbia has potential that has been proved by the variety of successful investors already operating here. We witness significant regulatory improvement and the willingness of the government to make FDI promotion a priority. Belgrade has already found its place on the World Edition Monopoly board. Let us all work hard to make Serbia a desirable destination on the global investment map, especially now when the world economy is facing challenges concerning the stability of the financial industry. The liquidity and stability of Serbia’s financial system today sets it apart from many other investment destinations. Serbia is a safe bet.

â&#x20AC;˘ Belgrade: City of the Future

City of Belgrade

Where Danube and Sawa meet

Belgrade: City of the Future Belgrade, named “Southern European City of the Future” in 2006-2007 by Financial Times magazine, is Serbia’s capital and its business and cultural hub. This ancient city dating back to at least the sixth century BC is now home to 1.68 million people (24% of Serbia’s population), which makes it the second largest urban centre on the Danube. Belgrade has the status of a separate territorial unit in Serbia, with its own autonomous city government. Belgrade’s mayor, Dragan Dilas, says that the city is currently involved in major projects to upgrade its infrastructure. Up-and-coming areas that are seeing significant new construction, including new Greenfield sites, include New Belgrade and Zemun.

Attractions for investors Belgrade is an ideal business base. In fact, the “City of the Future” award was given to Belgrade because of its investment appeal. The criteria for the award include economic potential, operating costs, human resources, transport, IT and telecommunications, and quality of life for foreign investors. One of Belgrade’s advantages is that it has a vast pool of highly skilled workers. Over 60 university level educational institutions are located in Belgrade, and around 6,000 students graduate from Belgrade University each year, around a third of them as engineers. Belgrade’s workers are known for being multilingual as well. In fact, according to Gallup International, the percentage of English speakers in Belgrade is the highest in Central and Eastern Europe.

Belgrade Chamber of Commerce Milan Jankovic, President of the Belgrade Chamber of Commerce, explains that a top priority for Belgrade is to position itself as a hub for services. He says, “Services will be the future of Serbia, and our job is to educate people in services, because the services sector accounts for 70% of the city’s revenues.” He adds that he anticipates extensive new employment opportunities from multinational companies that set up operations in Belgrade, and that Belgrade aims to make sure that local residents will be qualified to take these jobs.

Monument of the Unknown Soldier

The Chamber of Commerce offers free classes in English as well as research support for individuals and companies, and welcomes the chance to assist foreign investors looking into opportunities in Belgrade. “We can help them with how to start a business and with whom,” Milan Jankovic says, noting that Belgrade takes a broader perspective than other municipalities and always keeps regional and European markets in mind. Internationally oriented Belgrade welcomes visitors and investors.

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City of Belgrade

Luka Beograd

Visionary Transformation Belgrade now has a unique opportunity to reconnect with the Danube. Once the city’s port and related facilities are relocated, a 450 hectare site along the river – the biggest waterfront in Europe – will be developed in the Luka Beograde project, which includes a 6.5 km stretch of prime river frontage. This ambitious endeavour will forge a link between Belgrade’s historic city centre and one of Europe’s greatest rivers. It will replace industrial facilities and warehouses with residential developments, restaurants, shops, entertainment, sports facilities, educational institutions, a riverfront park, and much more. The search is underway for the ideal concept and design for the new project, which is set to transform downtown Belgrade. The Luka Group, owner of the site, has taken an innovative approach by requesting input from experts in many fields. Planning authorities, traffic consultants and architects from Belgrade; Studio Libeskind creating Master Plan from New York, Gehl Architects from Copenhagen; Aristotle University in Thessalonica; the University of Belgrade; and others have all been asked to submit their proposals for the new development. Ivana Veselinovic, Luka Group President, says, “Our aim is to ensure that the development proceeds according to international best practices.”

From industrial port to attractive riverfront Belgrade was founded as a port where the Danube and the Sawa rivers meet, and over the centuries its port operations, shipyard and related activities and infrastructure have dominated the riverfront. The Luka Group aims to change this. Ivana Veselinovic points out, “This project includes a very large area along 6.5 km of riverfront that must be planned strategically and with a vision. It also must have flexibility embedded in it, to create options that can be adapted to different economic situations and needs.” The first phase of the project for the Luka Group was to hire experts to complete analyses of environmental issues, traffic patterns and other factors related to the site. The group then contacted Gehl Architects, who are known for their expertise in innovative urban

Ivana Veselinovic, Luka Group President

planning. “Normally they work with governments and city institutions, but with us, they are working with a private company. We hope they will have an impact on other parts of the city. We believe Belgrade’s current development strategy is not visionary. It needs to be taken to another level,” Ivana Veselinovic says.

Partnering with the city The Luka Group is very aware of the importance of this project to the future of Belgrade. “We know that this is a huge opportunity not to be missed, and we want to avoid the kind of approach taken recently in Belgrade in which things are developed without any long term overall perspective. We are working very closely with the city of Belgrade to make sure this project is done correctly,” Ivana Veselinovic explains. Bearing in mind the significance of the project for the city, Studio Libeskind has, for the first time, offered three options for the Master Plan of the Belgrade Danube Waterfront, to be submitted for consideration to responsible city and expert institutions, as well as Belgrade’s and surrounding areas. The final choice will include specific features such as city’s topography, to highlight its historic landmarks, and in general to emphasise all the factors that make Belgrade unique. Ivana Veselinovic explains, “Today’s cities compete with other cities, not other countries. We will compare Belgrade with Vienna, a similar city on the Danube, or

SERBIA

City of Belgrade

of Belgrade’s Riverfront

Copenhagen, Lisbon, Barcelona, and other waterfront projects in the world.” While the guiding principle for the Luka Group in its Luka Beograd project is to focus on the Danube, the group is also looking at other European waterfront cities. “The Danube is our key, but we are also studying other urban waterfront projects of a similar size that had to go through a similar process, like Hamburg’s and Lisbon’s,” Ivana Veselinovic explains.

Public-private collaboration Public-private collaboration is essential for making the Luka Beograd project a success, according to Ivana Veselinovic. She says, “We cannot complete this project without public-private collaboration, and yet this kind of collaboration has not yet been tried in our country.” Internationally renowned New York based architect Daniel Libeskind decided to get involved in the project after visiting Belgrade many times and “falling in love with the city,” Ivana Veselinovic says. The architect, who is also involved in major projects – he is Master Planner for the World Trade Center in Manhattan and the Jewish Museum in Berlin – has already presented three concepts for Luka Beograd. “We want the world to recognise that Serbia has attracted great international talents like Daniel Libeskind,” she adds.

The Belgrade Danube Waterfront project will be divided in two phases and will take around 20 years to complete, with a budget of around €5 billion. The construction of planned 2.5 million square metres will include 98,000 people and 44,000 new jobs. This will have a major impact on the city economy, so the city budget revenues from the Port of Belgrade modernisation project will total about €906 million, or €76 million a year on average. It is estimated that the project implementation will result in an additional increase of the GDP growth both for the city and the Republic. In this visionary project, Luka Group wishes to combine knowledge, equity partners, and best practice from all over the world into a transparent process in order to add “something really new” to Belgrade, Ivana Veselinovic concludes.

Luka Beograd Zorza Klemansoa 37, 11000 Beograd www.port-bgd.co.yu

• EBRD Biggest Investor in Serbia • World Bank Playing Key Role • IFC Supporting Financial Sector and More

International Funders

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International Funders

EBRD Biggest Investor in Serbia The European Bank for Reconstruction and Development (EBRD) is the biggest investor in Serbia, having committed €2.9 billion in 79 projects in the country as of January 1, 2008. The net business volume of these projects is €1.3 billion. EBRD has a 50% share in Serbia’s private sector. Infrastructure has been EBRD’s main focus in Serbia but the bank has also supported a range of other sectors. The sector breakdown of EBRD’s investments in Serbia at the beginning of 2008 was 38% for municipal and environmental infrastructure and transport; 26% for the corporate sector (including agribusiness, manufacturing, property and tourism, and telecommunications); 19% for the financial sector (including banking, non banking, equity funds and trade financing); 13% for the energy sector; and 3% for micro and small business financing.

the regional and world economies,” the report explains. Last year alone EBRD committed €212 million to new projects in Serbia. The bank is gradually shifting its focus away from infrastructure and energy to focus more on the private sector, and its commitments to financial institutions increased to €298 million last year. EBRD is also stepping up its support for small and medium-sized enterprises through its Turnaround Management (TAM) and Business Advisory Services (BAS). According to a policy statement it released last year, EBRD’s current strategy is to continue to provide financing for privatisation and

post privatisation restructuring to both local and foreign enterprises, and to focus increasingly on large enterprises in their consolidation and future expansion plans, including further regional penetration. The new EBRD-Italy Western Balkans Local Enterprise Facility enables the bank to support smaller, fast growing companies through debt, quasi debt and equity financing, still relatively scarce in Serbia. The report states, “The biggest number of transactions is expected to be generated in agribusiness, but opportunities should arise in other sectors undergoing privatisation and restructuring, particularly in natural resources and general industry.”

Infrastructure has been EBRD’s main focus in Serbia

Helping to attract international investment According to a recent EBRD report, the bank expects to increase its private sector operations in Serbia as the privatisation process gains momentum. “New investment will help to create clearer ownership and corporate governance of companies. In addition, a large part of Serbia’s debt has been restructured through an agreement with the Paris Club. Improvements in the investment climate should contribute to greater investor confidence in the country and speed up the integration of Serbia into

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International Funders

The World Bank is playing a major role in supporting Serbia’s on going economic development and reforms. Its priorities are to help ensure Serbia’s macroeconomic stability, promote the growth of the private sector, help control corruption, reduce poverty, improve quality of life, and make Serbia more competitive. As the bank’s mission statement for Serbia explains, “The World Bank aims to help develop an economy that creates jobs, a financial system that operates efficiently, laws that make sense, and a justice system that is honest.”

Bank involved in financial sector reform, privatisation Simon Grey, Head of the World Bank office in Serbia, says, “We at the World Bank are proud to be associated with key reforms in Serbia. The World Bank has been involved, for example, in Serbia’s

World Bank Playing Key Role reforms of the financial sector and in its privatisation process. Now Serbia needs to continue to move forward to meet EU standards.” He says that Serbia needs to focus on both productivity and profitability to make sure that private investors will reinvest there. Key challenges Serbia faces, according to Simon Grey, are its currently inadequate pension system, the need for more focus on developing high quality human resources and educational opportunities, and the need to make the country more competitive, for example through privatising infrastructure and telecommunications. In addition, public expenditure needs to be reduced.

Wide range of projects Simon Grey explains that the World Bank is providing funding for a wide range of projects in Serbia that include regional development initiatives, development loans for both the public and private sectors, infrastructure, and health care. Overall, the World Bank is providing around €104 million in funding in Serbia per year, which is around 1% of its global funding. Specific funding programmes include a €14 million credit for the development of Serbia’s health care sector; improvements in 650 secondary schools and 50 primary schools; and support for the Labour Redeployment Project and other employment initiatives. The World Bank partners in Serbia with the European Agency for Reconstruction, the British Department for International Development, UNPD, EBRD, the US Agency for International Development and the governments of Canada, Japan, the Netherlands, Sweden and other bilateral donors.

Worldbank is providing funding for a lot of projects in Serbia that include regional development initiatives

Through supporting Serbia’s economic development the World Bank is creating opportunities for investors. As Simon Grey explains, “The government must follow a set of procurement procedures to select companies to be involved in projects, and bids above a certain threshold must be tendered internationally.”

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International Funders

IFC Supporting Financial Sector and More The International Finance Corporate (IFC), part of the World Bank, has been instrumental in helping Serbia establish a viable economy. As of June 2008, the IFC’s committed portfolio in Serbia totalled 286.1 million in 10 projects, the majority of which are in the financial sector. In addition, IFC has financed three regional funds which include Serbia.

Focus on SMEs Giovanni Daniele, Chief of Mission at IFC, explains that IFC is mandated to invest only in the private sector, and that it has invested in a wide range of activities in addition to financial services, including residential real estate development, construction, agribusiness and retailing. “One key focus for IFC is definitely small and medium sized enterprises (SMEs),” he explains. He adds, “We would now like to move away from banks and support non-banking financial services enterprises, including leasing and insurance companies.” IFC’s projects in Serbia include assistance in privatising the banking sector; supporting the entry of foreign investors (including Raiffeisen, Banka Intesa and NLB), which resulted in more mortgage, consumer and SME financing; supporting microfinance institutions;

and introducing new products, including credit lines to support energy efficiency investments through IFC’s investment in ProCredit Serbia. In the corporate sector, IFC’s many projects include providing loan and equity investment and advisory services for Tigar Rubber Company, a leading regional producer of automobile tyres, and assistance to Mercator, Slovenia’s biggest food retailer, in establishing hypermarkets in Serbia.

Giovanni Daniele is positive about Serbia’s investment potential and prospects for continued growth. He cites Serbia’s ability to serve as a gateway to Russia and adds, “At the end of the day, you have to factor in productivity, and I think that on this front the Serbian workforce performs very well compared to other countries in the region.”

Advisory services IFC’s investment in regional private equity funds has benefited Serbia’s small and medium sized enterprises, and IFC has provided advisory services in many areas, for example concerning infrastructure development. It has also supported an alternative dispute resolution (ADR) programme and the creation of eight mediation centres in Serbia. To help Serbia become more competitive internationally and to attract more international investment, IFC is working with the World Bank to assist the government in upgrading the country’s regulatory environment and quality standards. It is also working with four municipalities and has devised a corporate governance programme aimed at CEOs and managers. IFC also advised the National Bank of Serbia on the new securitisation law.

Projects in Serbia include assistance in privatising the banking sector and supporting entry of foreign investors

• Prime Minister Discusses Effects on Serbia of Global Financial Crisis • Tighter Monetary Policy to Protect Financial Sector Stability • Central Bank Anticipates Even Stronger Fiscal Policy • Belgrade Stock Exchange Seeing Rapid Growth

Finance & Banking

“The financial sector has made great progress since 2000.” Radovan Jelasic, Governor of the National Bank

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Prime Minister Discusses Effects of Global Financial Crisis Prime Minister Mirko Cvetkovic, Serbia’s former Minister of Finance, discusses recent developments in Serbia’s financial sector.

ET: What are some of Serbia’s top performing foreign banks? M. Cvetkovic: This is a very competitive market, as I pointed out, and generally speaking, all the banks now operating in Serbia are having a very positive impact on the economy.

ET: Foreign banks have a strong presence in Serbia. What is their impact on Serbia’s banking sector?

ET: What are the prospects for 2009? M. Cvetkovic: Our banking system is very competitive and banks from all over Europe are present here, including banks from France, Austria, Greece and Italy. The competition these foreign banks provide is great for consumers. The second positive thing is that overnight we have destroyed all non performing banks and we have created a banking system that is solid and making a profit. ET: Have foreign banks helped to boost Serbia’s economic development? M. Cvetkovic: A very important role foreign banks are playing is through providing loans and other support from their mother banks. Foreign banks are also bringing foreign currency into the country via their international networks, which is helping us strengthen our foreign currency reserves.

Mirko Cvetkovic, Prime Minister

ET: What are other benefits of having foreign banks in Serbia? M. Cvetkovic: In addition to providing financial support for individuals and companies, foreign banks are employing Serbian workers. We have a large pool of high skilled financial sector professionals here in Serbia, and foreign banks are taking advantage. These banks are employing big; who cares whether they are foreign or not?

M. Cvetkovic: Due to effects of the global financial crisis, we can expect Serbia’s rate of the economic growth to be around 4% next year, compared to 7% to 7.5% this year. The government will have to implement a more restrictive fiscal policy and control consumption. Financing for investments in Serbia’s economy will be more limited and more expensive next year. On a positive note, we expect that our budget deficit should be below 2%. The budget for 2009 will include financing for urgent interventions for the banking system if necessary. Serbia is not an isolated island. The international crisis is affecting us along with all other countries.

ET: Are their any negative effects about having such a strong presence from foreign banks? M. Cvetkovic: The only negative effect may be that demand for loans is increasing since these banks have issued loans. Generally, however, foreign banks have a very positive effect on Serbia’s economy.

The National Bank building

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Tighter Monetary Policy to Protect Serbia’s financial sector is one of the country’s success stories. The National Bank of Serbia (NBS), the country’s central bank, has developed a stringent regulatory environment to keep Serbia’s financial sector on track.

Strong growth in deposits and foreign reserves The NBS’s foreign reserves rose from €1.3 billion in 2001 to €9.6 billion this year, while savings deposits by Serbians rose from €329 million to €5.8 billion over the same period. Meanwhile, Serbia’s dinar reserves grew from RSD41.4 billion (€0.5 billion) to RSD161.7 billion (€1.92 billion) and foreign investments from €184 million to €1.58 billion. Nevertheless, major challenges remain for Serbia’s financial sector, including inflation and a growing current account deficit that has increased from €976 million in 2001 to €1.4 billion this year. While the NBS and the government have shown their willingness to tighten monetary policy further to cope with these problems, the global financial crisis has created a major new hurdle.

pattern, then at least to think and work faster and more efficiently.” Key issues facing the global financial sector, according to Radovan Jelasic, include markets’ reduced tolerance of mistakes in macroeconomic policy. “We are still paying for the mistakes made in earlier years,” he says, noting that the implications of the current crisis for Serbia are far ranging. “The spreads are changing now, even the exchange rate, and we are receiving bills for all that we have not done.”

Policy change necessary The Governor believes that Serbia has two choices: not to change anything of consequence or to go for a complete turnaround in its economic policy, freeze consumption and allow only for an increase in capital investment. He favours change. He adds, “I am convinced, however, that we not only want, but also can change the economic policy

Coping with global crisis In a speech he gave at the Serbian Economic Summit in Belgrade on November 4 this year, Radovan Jelasic, NBS Governor, explained, “The challenge we are currently facing comes from abroad and forces upon us a new set of rules, puts things into a different context, and requires a different perspective, if not to adopt a completely new

Privredna banka Beograd AD

in our favour. This shall not be popular, but shall certainly be useful for us.” The NBS has proved to be productive in its response to recent events, and the banking sector overall has also performed well, according to the Governor. He says, “Banks have managed to withstand the pressure without resorting to either tax payers’ money or decreasing the volume of insured deposits.” A number of banks from throughout Europe have established a presence in Serbia, boosting competition and bringing in foreign reserves.

PBB plans share issue Privredna banka Beograd AD (PBB), a successful Serbian bank, was restructured after its 2006 IPO into a universal commercial bank by a dynamic new management team. Building on the strong support it has received from the EBRD, PBB provides a range of lending products

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Financial Sector Stability © SIEPA

at RSD86.7145 for €1 on the day of the NBS’s intervention. The NBS will continue to cope with the current challenges by reinforcing its regulations and controls. The governor says, “Recent events confirm that it pays off to be restrictive if you are a financial sector supervisor like the NBS is. Our banking sector has proved in practice that it is solvent and liquid and can withstand the pressure. Moreover, when push came to shove, foreign majority investors were ready to support their institutions in Serbia.”

Zepter Building

and offers outstanding investment opportunities. Cedo Petrovic, PBB’s Chairman of the Board, explains, “We aim to expand our activities and boost our deposits and number of clients. We can expand our level of lending, but we need additional capital; we are planning to issue preferential shares. PBB is a small bank with huge potential. Investors can benefit from our wellestablished network and in-depth local knowledge.” He adds that PBB is looking into cross-border financing.

“Only hard work counts now” To maintain Serbia’s financial sector success in this difficult period, the Governor calls for “additional measures to strengthen macroeconomic stability, but not necessarily

additional funds. There can be no more muddling through; only hard work counts now.” Serbia’s entry into a Stabilisation and Association Agreement (SAA) with the EU as a step toward EU accession will give the country’s economy a boost but will not protect it from external shocks, Radovan Jelasic points out. He says, “The SAA does not mean that we will be able to relax. The agreement represents only a chance for a better life, not a guarantee.” Putting this proactive approach into practice, the NBS recently intervened in the Interbank forex market by selling €20 million to prevent high daily oscillations in the exchange rate. As a result, the indicative exchange rate levelled off

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Central Bank Anticipates Even Stronger Fiscal Policy Serbia’s financial sector has made tremendous progress since 2000 and has received praise from international ratings agencies concerning its regulatory environment and performance. The National Bank of Serbia, the country’s central bank, has been instrumental in bringing the financial sector up to international standards.

Today, as countries all over the world are working to combat current global financial uncertainties, the National Bank is taking a proactive approach and focusing on implementing more stringent controls. Radovan Jelasic, Governor, explains, “Conditions in the international financial sector are bad and no one can see the light at the end of the tunnel. Capital markets are turbulent, in spite of interventions. The global banking sector is facing major challenges, including capital adequacy, and yet banks must continue to provide loans if development is to continue. To survive such uncertainty, it is very important for a country’s financial sector to have political support, as we do in the Baltic states. The devil is at our door, and we cannot afford higher pensions and higher salaries.”

Combating inflation and public sector deficit The Serbian dinar has decreased in value by 5.8% because of the crisis, and inflation remains a threat. Providing cheap credit will be impossible for Serbian banks in 2009, and the National Bank notes that the anticipated fall in the value-added tax will have a negative impact on the state budget. Next year, Radovan Jelasic says, “We will have to continue to deal with the two main challenges the financial sector faces, which are inflation and the current deficit. Basically, structural changes are not a quick fix. The main tool that we need to employ now is a strong fiscal policy.” As for the coming five years, the National Bank governor calls for “on-going structural changes and continuing privatisation” in order to ensure that

Serbia can continue to achieve its development goals. In spite of the problems to be overcome, Radovan Jelasic is very positive about Serbia’s future, particularly because of the country’s strong performance over the past eight years. He says, “We need to be realistic. We do not expect to see the effects of our current strategies for another two to three years. Nevertheless, this is not the first time that Serbia has faced such major challenges. We have achieved excellent results under very difficult conditions in the past, and can do so again.”

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Hypo Group Alpe Adria

Outstanding Track Record of Service for Leading Bank The Hypo Group Alpe Adria was an early investor in Serbia where it has developed a leading position in the financial services sector. Hypo Alpe-Adria-Bank a.d. Beograd has a 15% share of the housing loans market and around a 14% share in both lending to small and medium size companies and agricultural financing; its focus is on corporate banking. The bank anticipates profits of around €30 million for 2008 and around €40-45 million next year. Hypo Alpe-Adria-Bank entered the Serbian market in 2002 and has benefited from the advantage of being one of the first to invest in an emerging market. The bank maintains its competitive edge thanks to its strong track record of performance and service. As Chairman of the Executive Board Vladimir Cupic explains, “What matters most to customers is quality of service, defined by standards of operations and the quality of the people that a company employs. We are known for the quality of our service and for finding creative, flexible solutions for our clients.” Hypo Alpe-Adria-Bank in Serbia has an excellent track record in structuring mergers and acquisitions, real estate projects and targeted financing. A recent project for the bank is Block 67, the

biggest real estate project currently underway in Serbia. Block 67 is a residential development that has been chosen to accommodate the participants of the Universiade 2009 sports games, and around 80% of the apartments in the project have already been sold. Hypo Alpe-AdriaBank structured and financed the project, working in partnership with the Delta Group.

Serving foreign investors The bank provides a wide range of services to local and foreign investors, and a sister company is the biggest leasing operation in Serbia. “With our leasing capacity, banking operations and cross border portfolio combined, Hypo Group Alpe Adria is the second largest financial services institution in Serbia,” Vladimir Cupic says. He adds, “In a market like Serbia, foreign investors need a stable partner they can rely on. That is where we come in.” He urges foreign investors to visit Serbia and see for themselves what the market can offer. Vladimir Cupic foresees more partnerships, mergers and acquisitions, increased financing of investment projects and other services as growth areas for the bank in the future. He concludes, “Customers come to us for our flexibility and reliability. At the end of the day, clients want to do business with a firm that can close the deal, and that firm is Hypo Group Alpe Adria. We offer the right kind of service and the right solutions.”

Vladimir Cupic, Chairman of the Executive Board

Hypo Group Alpe - Adria Bank Bulevar Mihajla Pupina 6 11070 Belgrade Serbia Tel: +381 11 222 6713 www.hypo-alpe-adria.rs

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Belgrade Stock Exchange Seeing Rapid Growth The Belgrade Stock Exchange, founded in 1894, has achieved a number of milestones since it began trading foreign exchange savings bonds in 2001. The exchange is now a full member of the Federation of Euro-Asian Stock Exchanges and an associate member of the Federation of European Stock Exchanges, and it has signed a partnership agreement with several regional exchanges.

High quality products Since 2000, the exchange has introduced several products to promote efficient trading and import of orders and to boost market surveillance. The most important of these products is the BELEX system, which allows for brokers to trade from remote locations and enables trading in almost all trading materials and methods allowed on the exchange. The new main board allows brokers to more easily monitor securities and to customise the appearance of the board and columns. Brokers can also monitor the exchange’s indices, follow their orders, and receive data on orders and executed transactions, which they can use in back office applications to process the trading day. The exchange offers continuous trading and monitoring through RSS online and through SMS and

Gordana Dostanic, Director of the Belgrade Stock Exchange

WAP services, and launched its new version of BELEX, the BELEXFIX information system, earlier this year. It is also helping to upgrade Serbia’s capital markets by organising various training and educational programmes to assist professionals in achieving best practices.

Planned privatisations to further stimulate market Gordana Dostanic, Director of the Belgrade Stock Exchange, says, “Serbia’s capital markets activity has been growing rapidly and we see great potential for further development, especially because of the planned privatisations of several major companies whose combined capital will be around €6.5 billion. We anticipate significant opportunities in telecom, energy and pharmaceuticals privatisations.”

Serbia has both regulated and unregulated markets, and foreign investors make up around half the total investors on the combined markets. Gordana Dostanic explains, “Around 30 to 40 companies fit the criteria to be on the regulated market, and around 1,700 on the unregulated market. There are a certain number of companies on the unregulated market which, although they do not meet the requirements to be listed on the regulated market, are interesting for investors and have a high level of liquidity, for example for banks. We hope to attract more Serbian companies to the regulated market, which will in turn attract more foreign investors.”

New IPO legislation awaiting approval by parliament New legislation is needed to allow for IPOs, Gordana Dostanic says, for example of Telekom Serbia, whose IPO has long been awaited, and for ComTrade, which has announced a plan to achieve an IPO in the near future. She says that this legislation has already been prepared and is now awaiting parliament’s approval. The securities market is being stimulated by new measures. New government securities are being issued in dinars to promote the local currency, and the creation of new pension funds in addition to the national pension fund (currently valued at €38 million) could stimulate securities investments on the regulated market, Gordana Dostanic explains. She notes that the

national pension fund needs to be strengthened and reorganised. Concerning the possibility of new pension funds, Gordana Dostanic says, “We estimate that there is a chance to open new pension funds and also to increase participation and investment in these funds. There are some limitations as far as securities are concerned as these funds can only invest in securities on the regulated market. If investors decide to invest in securities on the unregulated market, then the central bank requires a certain level of reserves.”

Brokerage firms providing world-class services To assist investors looking to take advantage of opportunities in Serbia, the country now has a number of brokerage firms, including M&V Investment, KBC Securities, Citadel, and Sinteza Invest. M&V Investments, 1995, was one of the the market. “The process created huge

founded in first to enter privatisation potential for

us,” Dragijana Radonjic Petrovic, Director, explains. She adds, “There is a lot of equity trading, and both foreign and local investors are looking for companies with liquidity and strong management. We mainly deal with institutional investors. With IPO activity, we will attract more investors. We are advising one company that is planning an IPO next year. As Serbia’s leading brokerage company with the longest tradition, we can offer the best quality of services. No one else can do it better.” Dragijana Radonjic Petrovic is bullish on the Serbian market. She says, “Because of increasing IPO activity here, Serbia will be a market investors can get involved in. We will attract that hedge fund or mutual fund that wants to accept risk and has experience in this region. Our market will go higher much faster than more mature markets will.” All the experts agree that once it changes its legal framework to make it more investor friendly, Serbia’s capital markets will continue to develop rapidly.

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Overview Key Banks

HYPO ALPE - ADRIA - BANK AD BEOGRAD Address: Bulevar Mihajla Pupina 6, 11070 Novi Beograd Phone: +381-11-222-6000, 080-0303303 Fax: +381-11-222-6799 Web site: www.hypo-alpe-adria.co.yu

KOMERCIJALNA BANKA AD BEOGRAD Address: Svetog Save 14, 11000 Beograd Phone: +381-11-308-0100,308-0150 Fax: +381-11-344-1335,344-0033 Web site: www.kombank.com

SOCIETE GENERALE Address: Bulevar Zorana Dindica 50a i 50b, 11070 Novi Beograd Phone: +381-11-301-1400, 301-1555 Fax: +381-11-328-2230 Web site: www.societegenerale.co.yu

MARFIN BANK AD BEOGRAD Address: Dalmatinska 22, 11000 Beograd Phone: + 381-11-330-6300 Fax: + 381-11-324-1448 Web site: www.marfinbank.rs

ERSTE BANK AD NOVI SAD Address: Bulevar osobodjnja 5, 21000 Novi Sad Phone: +381-21-480-9402 Fax: +381-21-489-0651 Web site: www.erstebank.co.yu

PRIVREDNA BANKA BEOGRAD AD BEOGRAD Address: Bulevar kralja Aleksandra 70, 11000 Beograd Phone: +381-11-381-6555 Fax: +381-11-381-6700 Web site: www.pbb-banka.com

BANCA INTESA AD BEOGRAD Address: Milentija Popovica 7 b, 11070 Novi Beograd Phone: +381-11-201-1441, 201-1200 Fax: +381-11-201-1207 Web site: www.bancaintesabeograd.com EUROBANK EFG Ĺ TEDIONICA AD BEOGRAD Address: Kolarceva 3, 11000 Beograd Phone: +381-11-332-365, 333-2311 Fax: +381-11-302-7536 Web site: www.eurobankefg.co.yu FINDOMESTIC BANKA AD BEOGRAD Address: Kosovska 10, 11000 Beograd Phone: +381-11-333-1717, 322-8886, 333-1711 Fax: +381-11-322-1526 Web site: www.findomestic.co.yu

RAFFEISEN BANKA Address: Bulevar Zorana Dindica 64a, 11000 Beograd Phone: +381-11-3202100 +381-113202777 Fax: +381-11-2207019 Web site: www.raiffeisenbank.co.yu

METALS BANKA Address: 2 Strazilovska Stret, 21000 Novi Sad, Serbia Phone: +381-21-488-4400 Web site: www.metals-banka.co.yu

• Signiﬁcant Attractions for Export-Oriented Companies • Minister of Trade and Services Cites Advantages for Investors • Dynamic Foreign Investors Helping to Build a Better Serbia

Trade & Industry

“The current government is committed to ensuring a stable, investor-friendly business environment.’ Slobodan Milosavljevic, Minister of Trade and Services

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Significant Attractions for ExportSouth Eastern Europe has the highest growth rate in

Top earning exports

Europe and is one of the fastest growing regions in the

Top earning exports last year were iron and steel (€0.78 billion, 12.4% of total exports), non ferrous metals (€539.1 million, 7.9% of total exports), fruits and vegetables (€362.9 million, 5.3% of total exports), garments (€345.9 million, 5% of total export), other metal products (€331.6 million, 4.8% of total exports), other miscellaneous manufactured articles (€297.4 million, 4.3% of total exports), cereals and cereal products (€266.4 million, 3.9% of total exports), electrical machinery, units and appliances (€250.6 million, 3.6% of total exports), rubber products (€222.7 million, 3.2% of total exports) and organic chemicals (€203.8 million, 3% of total exports).

world. Serbia, in the heart of the region, is positioning itself as a key hub for trade and services. Serbia benefits from its participation in the Central European Free Trade Agreement (CEFTA), which allows companies to reach markets with a total 30 million people, customs free. Furthermore, Serbia is the only country outside the CIS that has a free trade agreement with Russia, providing access to another market of 150 million people. Serbia also has preferential trade status with the EU and the US, providing an additional incentive for investors. In addition to its free trade agreements and preferential trade deals, Serbia, as a transitional economy, has an added advantage in that it offers skilled low cost labour, a fast growing domestic market, a strong GDP growth rate of around 7%, and a government committed to achieving EU membership.

Infrastructure investment Signiﬁcant investment in infrastructure, particularly the key trans European Corridor 10 route that passes through Serbia, is increasing Serbia’s appeal as a trade and services hub. Under the current government, Serbia is countering its negative international image by implementing rigorous EU and international standards, establishing regulatory bodies for key sectors, enhancing health care and education, focusing on social services, and combating corruption. Serbia is also stepping up its trade activities. According to the Serbia Investment and Promotion Agency (SIEPA), Serbia’s overall foreign trade in 2007 reached €21.1 million, a 38.6% rise over the previous year, and the total value of exports in 2007 was €6.8 million, a 37.3% increase over 2006.

Imports grew as well last year, reaching €14.24 million, a 39.3% increase over 2006, for a deﬁcit of €7.39 million, or 41.2% above the deﬁcit in 2006. Serbia’s main imports last year were petroleum and petroleum products, vehicles, iron and steel, industrial machines, electrical machinery and appliances, natural and manufactured gas, non ferrous metals, specialised industrial machinery, telecom equipment, and metal products.

Key goals for Ministry of Trade Obviously, the government is focusing on reducing the trade imbalance. Minister of Trade and Services Slobodan Milosavljevic recently commented that a priority of his new ministry will be to stimulate domestic trade so that Serbia can increase its presence abroad and place more Serbian goods in neighbouring markets. The second goal for the ministry is investment in the trade and services sector, which will create new jobs, improve competition and give a new impulse to the development of the Serbian economy. The trade sector has signiﬁcant investment appeal, as its track record shows. In the period 2001 to 2007, Serbia’s trade grew 2.5 times faster than that of the overall economy, according to the minister, who pointed out that in 2007, Serbia’s trade GDP reached €3.3 billion and accounted for 10.8% of Serbia’s GDP. To help attract more investment in trade oriented activities, Slobodan Milosavljevic says that the

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Oriented Companies government will focus on maintaining macroeconomic stability, combating excess red tape, and creating even more incentives for foreign investors. Promoting trade oriented small and medium sized enterprises is a key goal for the government; Serbia now has some 105,000 registered SMEs.

New Belgrade Interchange © SIEPA

The minister adds that the government’s increased focus on ending monopolies (for example in the telecom and information technology sector) and on promoting free market principles in general is crucial in attracting international investors.

Enhancing competition and consumer protection The Minister of Trade adds that Serbia has significant EU funding to call on to upgrade its trade and services environment, for example through ensuring more competition and better protection for consumers. “We have instituted a new law against monopolies, and we will fight the grey market by stepping up our system of imposing taxation responsibilities. We also aim to harmonise our laws on value added tax and fiscal tax registers to meet EU standards,” Slobodan Milosavljevic says. The Minister of Trade says he expects many new players to enter the trade sector in the near future and that he aims for Serbia to work to expand its wholesale and retail trade networks to enhance opportunities for trade oriented businesses.

Foreign Trade in Goods (US$ million)

Source: Statistical Office of the Republic of Serbia

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Minister of Trade and Services Cites Advantages for Investors Slobodan Milosavljevic, Serbia’s Minister of Trade and Services, has held a number of important public and private sector posts before assuming his current ministerial role, including serving as Serbia’s Minister of Trade, Tourism and Services from 2001 to 2004, and as Minister of Agriculture, Forestry and Water Management from 2007 to July 2008. He discusses Serbia’s trade policies and investment attractions. ET: What is Serbia doing to attract foreign investors? S. Milosavljevic: Necessary legislation concerning some industries has been prepared and is awaiting the assembly’s approval. This government is very focused on attracting foreign investment, so we expect the process to move forward quickly.

ET: What are your priorities as minister? S. Milosavljevic: One of my goals is to help foster positive relationships with both domestic and international companies, to reduce inefﬁciencies, and to bring more large international retail chains to Serbia to increase competition. This government will work with all countries to boost Serbia’s foreign trade. ET: How will Serbia’s drive to gain EU candidate status affect trade and investment? S. Milosavljevic: We aim to maintain the SME sector in the trade business, now with 105,000 registered companies; strengthen competition; and practice economic diplomacy to enter other markets. We have new laws, for example on e-commerce, which can create new jobs, and a law against monopolies to ensure competition. We also aim to use EU funds for consumer protection measures. We will ﬁght the grey market by ensuring that companies pay their taxes, and we will harmonise our laws on VAT and on tax registries. We anticipate new players in our trade sector, and we aim to expand our wholesale and retail network. ET: What has hindered investment in Serbia up to now? S. Milosavljevic: One of the most harmful obstacles Serbia faces is its negative image. Many if not all investors that come to Serbia are shocked when they see just how

Slobodan Milosavljevic, Minister of Trade and Services

developed the country is, and how efficient and productive our business sector is. The current government is committed to ensuring a stable, investor friendly business environment. ET: How will the global economic slowdown affect Serbia? S. Milosavljevic: This may benefit Serbia. Now more then ever, companies need to be more prudent in their costs and operate where they can re-invest the maximum amount of profits as credit becomes scarce. Serbia has one of the most attractive corporate tax structures in the region, and this government is prepared to offer companies very attractive incentives for bringing business and jobs to Serbia.

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Avala Ada

Reliable Partner in Packaging Industry Avala Ada has over 60 years of history, having been founded in 1946. The firm was privatised in 2003, and became a member of the KappaStar Group. Currently, the Avala Ada facility covers around 37,000m2, including the manufacturing plant, stores and management offices - all under the same roof, on the plot of ground that covers 115,000 m2. Avala Ada supplies the largest food manufacturers in Serbia, but it is also a highly valued partner of other industries such as tobacco, pharmaceuticals, chemicals, confectionery, alcoholic and non-alcoholic beverages, cosmetic industry, and household equipment production. Avala Ada’s strategy is based around the delivery of a complete service to our customers. Its clients are major Serbian ﬁrms and big multinationals located in Serbia, such as Philip Morris, British American Tobbaco, Interbrew, Henkel, Japan Tobacco, Michelin, Efes Pilsen, Rauch. Avala Ada has two separate production lines: commercial folding boxes (capacity 100 million m2) and corrugated board boxes (capacity 9,000 tonnes). Avala Ada can offer in-house CTP plate making as well as in-house CAD facilities that allow the company to create carton spreads to meet customers’ individual requirements. An in-house ELCEDE machine is used to produce test samples. One of the company’s biggest competitive advantages lies in the fact that Avala Ada has every key process in-house, which allows it to react quickly if a client needs an urgent change on their packaging. In recent years, Avala Ada has made signiﬁcant investments in new manufacturing equipment. One of the biggest investments was in May 2007, when Avala introduced a new DRO 1628NT rotary die-cutter for the processing of corrugated board. This machine features four printing units and can achieve a mechanical speed of 11,000 sheets per hour. In 2008, the investments reached 25 million. Following the world market trends, Avala Ada’s management intends to continue investing in the most modern technical equipment.

Avala Ada was one of the first companies in the region that received the ISO 9000 certificate in 1996, and all operations and procedures are conducted in line with defined quality management procedures. Today, the company has in place Total Quality Management, which includes certificates ISO 9001, ISO 14000 (ecology standards), HACCP (food safety) and OHSAS 18001 (safety at work). This makes Avala Ada the only company in Serbia which follows all four quality standards, and the only safe option for food packaging. Avala Ada is increasingly active on the international stage, particularly in neighbouring countries. In the last few years, Avala Ada has opened up new markets starting supplies to Croatia, Slovenia and Bosnia and other markets in the region. Due to the high quality standards of their products and competitive prices Avala Ada is a good supplier to the most demanding West-European customers.

Prilazni put Adi Huji 9, 11000 Belgrade telephone: +381 11 2075 404 mail@avalaada.rs - www.avalaada.rs

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Dynamic Foreign Investors Helping to Build a Better Serbia Serbia’s proactive private sector is a key attraction for foreign investors, and the Foreign Investors Council (FIC) is helping to make Serbia’s advantages better known worldwide. The FIC was founded in 2002 by 14 major foreign investors in Serbia, with the support of the OECD. Its main goal is to help improve Serbia’s investment climate.

Members account for more than 75% of FDI The FIC is now widely known as a powerful, constructive and respected reference concerning doing business in Serbia. It has more than 120 members from more than 20 countries representing a wide range of economic sectors. In fact, FIC members account for more than 75% of all foreign investment in Serbia. These companies have also become major employers of the local workforce. As Serbia’s economy takes off, the FIC continues to grow. As it has from the beginning, the FIC works in close partnership with relevant government authorities, international organisations and institutions, with the overall aim of sharing positive international business practices with local authorities and supporting their reform activities.

Focus on establishing a dialogue The FIC emphasises maintaining a dialogue, both formal and informal, with all who are involved in Serbia’s economic development. In the past year alone, the FIC has participated in several round table discussions, panels and conferences; participated in and supported many non FIC events; provided ongoing services for its members; and prepared the FIC White Book, an essential source of information on Serbia’s economy and on doing business in Serbia. The FIC worked with the Serbian Chamber of Commerce on this project, and it has also formed links with other foreign investor oriented organisations, including the American Chamber of Commerce in Serbia. Through its web site, the FIC brings its in-depth knowledge of the Serbian market to a global readership.

Platform for exchanges on wide range of issues The FIC has specialised committees on legal issues, human resources, insurance, and the key sector of detergents and cosmetics, as well as three committees reactivated over the past year to focus on corporate social responsibility, exploration and mining, and taxation. All these issues are regularly discussed in meetings involving FIC members. Overall, the FIC provides a good platform for the exchange of experiences and opinions among its membership. Beiersdorf, the well-known German beauty care brand, illustrates the potential of the Serbian market for foreign investors. Peter Koys, General Manager, explains that the company signed an agreement with Delta to handle the distribution, imports and marketing of its products in Serbia, coordinating with Beiersdorf’s central ofﬁce and logistics hub for South-Eastern Europe in Vienna. Beiersdorf established a full operation in Serbia in 2002. It is also active in neighbouring Croatia and in Russia, but its market share in Serbia is greater than its share in Croatia. In fact, “Beiersdorf Serbia has, along with Austria and Switzerland, the highest market share in the Beiersdorf group,” Peter Koys says. He adds that Beiersdorf’s strategy has been to optimise its supply chain in Serbia, which it views as an excellent investment target. He explains, “Serbia deﬁnitely has the potential to be a hub for investment.”

Long-term commitment to Serbia Beiersdorf has made a long-term commitment to the Serbian market. Peter Koys explains, “We are very present in Serbia, unlike some other companies. We did not have to think too long about whether to enter this market. We came in with people who had had experience in other similar markets. We believe that the Serbian market has great potential.” Beiersdorf is also a strong supporter of community service projects in Serbia, particularly concerning education about health and family related matters. It takes its corporate social responsibility very seriously and aims to be a major force for economic and social

development in Serbia. “Corporate social responsibility is very important for us and we want to be even more active in this ﬁeld in Serbia,” Peter Koys says.

FIC Corporate Social Responsibility Manifesto Beiersdorf thus adheres to a guiding principle of the FIC, which is to provide support for projects that beneﬁt the local community. As the FIC Corporate Social Responsibility Manifesto explains, “By promoting and

implementing the concept of corporate social responsibility, we are trying to build trust among citizens and demonstrate our ability and willingness to contribute to the society with our insight and expertise and, most of all, with our commitment to the local community.” Companies like Beiersdorf reﬂect the potential of the Serbian market for foreign investors, and the FIC is ready to assist potential investors explore opportunities in this fast growing market, which is well placed to serve as the trade hub of South-Eastern Europe.

Leading Foreign Investors (2002-2008) Company

Country

Industry

Investment Type

Investment Amount ( million)

Telenor

Norway

Telecommunications

Privatisation

1,602

Fiat

Italy

Automotive

Joint Venture

700

Philip Morris

USA

Tobacco

Privatisation

611

Mobilkom

Austria

Telecommunications

Greenfield

570

Banca Intesa

Italy

Banking

Acquisition

508

Plaza Centers

Israel

Real Estate

Greenfield

500

Stada

Germany

Pharmaceutical

Acquisition

475

Embassy Group

India

Real Estate

Greenfield

428

InBev

Belgium&Brazil

Food

Acquisition

427

National Bank of Greece

Greece

Banking

Privatisation

425

U.S. Steel

USA

Metal

Privatisation

250

Mercator

Slovenia

Retail

Greenfield

240

Fondiaria SAI

Italy

Insurance

Privatisation

220

Lukoil

Russia

Energy

Privatisation

210

Airport City Belgrade

Israel

Real Estate

Greenfield

200

Block 67 Associates

Austria&Serbia

Real Estate

Greenfield

180

Holcim

Switzerland

Construction

Privatisation

170

OTP Bank

Hungary

Banking

Privatisation

166

Engel Group

Israel

Real Estate

Greenfield

160

Source: SIEPA

SERBIA

Trade & Industry

Trade Hub for South-Eastern Europe Serbia has undertaken an aggressive reform program with the intent to establish itself as a regional and international trade hub and crossroads. To achieve this goal, the current government is creating new incentives for investors and is actively pursing policies that would enhance free trade between Serbia and all nations. The government is also committed to making Serbia an EU candidate country, and this drive is reassuring investors.

Customs free access to key markets Serbia offers tremendous opportunities for trade oriented companies as a result of its customs free access to the markets of the EU, Russia, and South East Europe, along with a soaring local market potential; with a population of eight million, Serbia has the biggest domestic market in the region. Serbia has also been actively pursuing membership in the World Trade Organisation since 2005.

CEFTA opens doors to fast growing new markets Serbia is a member of the Central European Free Trade Agreement (CEFTA), which includes Albania, Bosnia and Herzegovina, Croatia, Macedonia, Moldova, Montenegro, and Kosovo as well as Serbia. The agreement stipulates that no import duties can be increased nor can new ones be imposed other than those prescribed by the existing bilateral free trade agreements between parties of the agreement. CEFTA also stipulates that products exported from Serbia are considered of Serbian origin even if integrated materials originate from any other CEFTA country, the EU, Iceland, Norway, Switzerland (including Liechtenstein) or Turkey, provided that such products have undergone sufďŹ cient processing in Serbia; the value added in Serbia must be greater than the value of the materials used.

Gateway to Russian market Serbia also signed a free trade agreement with Russia in August 2000 that makes the country particularly attractive to foreign investors and manufacturers looking to enter the Russian market. The agreement stipulates that the importing country regulates the rules of origin, in accordance with World Trade Organisation regulations. Therefore, goods produced in Serbia with prevailing value added in Serbia are considered of Serbian origin, thus free of customs when entering the Russian market. The list of products not covered by the duty free agreement is updated annually, and currently includes poultry, sugar, chocolate, alcoholic beverages, soap, cotton, carpets, wooden furniture, household appliances, and motor vehicles. The free trade accord with Serbia is the ďŹ rst such agreement Russia has signed with any country outside the Commonwealth of Independent States.

Free trade with EU, US Serbiaâ&#x20AC;&#x2122;s free trade agreement with the EU is derived from the EU Stabilisation and Accession Process, which allows duty free exports (except for wine and veal) from Serbia to any EU country. The agreement also abolished customs duties and quantitative limitations on imports

Victor’s Column, Belgrade

into the EU of Serbian textile products, and it includes a guarantee that the current policy will be maintained in the future. Serbia, in turn, has gradually liberalised its duties on imports of EU textiles products. Serbia also has a beneﬁcial trade agreement with the US through the Generalized System of Preferences (GSP). The GSP programme currently provides preferential duty free entry to the US of around 5,000 products, including most manufactured and intermediate goods and selected agricultural and primary industrial products. Certain sensitive goods are not eligible for duty free entry under GSP, which generally includes most textile products, leather goods and footwear. The list of eligible goods is reviewed and adjusted twice per year with input from US industries.

International companies betting on Serbia Extremely competitive tax rates, as well as low labour and utility cost and corporate tax rates that are among the lowest in Europe, add to Serbia’s investment appeal as a trade hub. International companies have been quick to take advantage of Serbia’s growing hub status. In the past year alone, DuPont, Intel, and Xerox have all established regional sales ofﬁces in Belgrade.

Regional energy hub Serbia has been carving out a niche for itself as a hub in many sectors, particularly energy. In January this year, Russian and Serbian officials announced a multibillion dollar deal that would make Serbia a key centre for Russian energy supplies. The agreement, which Serbian officials have estimated as worth at least 1.7 billion, would include building a branch of the prospective South Stream natural gas pipeline in Serbia. South Stream would run under the Black Sea from Russia to Bulgaria, and then branch off. The section through Serbia would carry at least 10 billion cubic meters a year. A major gas storage facility in Serbia is also planned. “This agreement has a huge strategic importance for Serbia,” says Serbia’s President, Boris Tadic. He adds, “It will strengthen Serbia’s strategic positions in South-Eastern Europe, since Serbia will serve as a transit point for gas supplies to the EU’s southern flank.” The gas project is one example of Serbia’s growing status as a regional and international hub.

• Fast-Growing Health Sector Scores High in Exports • Minister of Health Cites Priorities for Health Care Sector • Health Care Sector Transformed with EU and EAR Support

Health & Pharmaceuticals

“We aim to improve the health care system in every way.” Tomica Milosavljevic, Minister of Health

SERBIA

Health & Pharmaceuticals

Fast-Growing Health Sector Scores High in Exports

Jugoremedija

Thanks to Serbia’s large domestic market and its free trade agreements with other CEFTA countries, Russia and the EU, Serbia’s health sector, including pharmaceuticals, offers outstanding growth potential for EU investors. The government is in the process of upgrading health care facilities and services for the Serbian people -focusing on preventive health care, health care infrastructure, institutional reforms, and public health education and training -- while also supporting the continued growth of the country’s health care enterprises.

Pharmaceuticals sector thriving Serbia’s pharmaceuticals sector is seeing signiﬁcant growth. The country’s advantages as a base for pharmaceuticals production include its highly skilled, low cost workforce in pharmaceuticals and related industries. The average gross salary in Serbia’s pharmaceuticals sector in March 2008 was €788 (€567 net), much lower than the EU average, yet Serbian pharmaceuticals workers are highly trained and specialised institutions continue to train the qualiﬁed pharmaceuticals workers of tomorrow. The local pharmaceuticals market has been growing particularly rapidly, spurred on by a more stable political

environment and a reduction in value added tax on pharmaceuticals products (from 18% to 8%). In fact, Serbia’s pharmaceuticals market is expected to grow at an average rate of 8% per year until 2012.

to boost revenues and accelerate development. Serbia’s pharmaceuticals sector already achieves attractive proﬁts. In 2006, revenues grew 18% compared to 2005 and reached €400 million.

As of mid 2009, all Serbian producers, including producers of pharmaceuticals, will be obliged to introduce GMP standards, which will further strengthen the industry and will increase the number of Serbian companies able to compete for the share of European markets. The pricing controls the government formerly set on pharmaceuticals products are being phased out, giving pharmaceuticals ﬁrms the possibility

Top ﬁve Serbian pharmaceuticals ﬁrms

The leading Serbian pharmaceuticals ﬁrm is Hemofarm Group, which achieved consolidated revenues of €221 million in 2006, a 13% rise over the previous year. Hemofarm is also Serbia’s sixth biggest exporter, exporting some €60 million of pharmaceuticals products in 2006. Hemofarm has been introducing

GMP standards after being acquired by the Stada Group (Germany) with EBRD funding. Hemofarm is also investing in expanding its production capacity in Russia. Galenika is number two on the list of leading Serbian pharmaceuticals firms. The company, set for privatisation, achieved a 25% growth in revenues in 2006 and a 30% rise in profits. Galenika is ranked among the top 50 exporters in Serbia. Zdravlje, based in Leskovac and owned by Actavis (Iceland) since 2002, is Serbia’s third largest pharmaceuticals firm. It has been steadily upgrading its facilities, distribu-

growing sales in the domestic market. Serbia’s pharmaceuticals market was worth €688.81 million last year and has been growing at an annual rate of almost 50% since 2004. Top sellers on the domestic market are medicines used in the treatment of cardio-vascular diseases, followed by medicines used to treat infectious diseases or problems in the nervous system. The top export markets for Serbian pharmaceuticals (in descending order) are Russia, Montenegro, Macedonia, Ukraine, Romania, Algeria, Libya, Iraq and Albania.

Signiﬁcant opportunities for EU ﬁrms

tion centres and laboratories, investing €8 million in upgrades in 2006. Between 2001 and 2006, it has invested more than €30 million in all its operations and began producing pharmaceuticals that meet GMP standards last year. The company achieved a 14% growth in revenues in 2006. The remaining two industry leaders are Jugoremedija and Habitfarm. Jugoremedija achieved €24 million in revenues in 2006, for a very impressive 33% growth over 2005. The company also achieved a 57% EBITDA margin that year, making it the most proﬁtable Serbian company. Habitfarm also had a great year in 2006, boosting its revenues by 36%, and both Habitfarm and Jugoremedija were ranked among Serbia’s top exporters that year. Serbia’s top pharmaceuticals ﬁrms export around 20% of their combined production per year and are seeing

The Serbian market represents signiﬁcant potential for EU pharmaceuticals ﬁrms, whether they export to Serbia or get involved in production there. The top sources of pharmaceuticals imports to Serbia in 2007 were Slovenia (€71.1 million), followed by Switzerland (€54.4 million), Germany (€51.8 million), Hungary (€25.9 million), Belgium (€21.2 million), Bulgaria (€18.5 million), Denmark (16.7 million), Austria (€16.6 million), Macedonia (€12.4 million), and France (€11.3 million). EU granted trade preferential agreements allow for Serbian pharmaceuticals to be imported to the EU if they comply with EU standards. Serbian pharmaceuticals can be exported duty free to Russia except for medicines in the HS 30.04 range.

Excellent choice for chemical trials Other opportunities for foreign ﬁrms in Serbia’s health sector include conducting chemical trials in Serbia. Serbia has implemented the EU Chemical Trials Directive, making it particularly competitive, and also offers highly qualiﬁed medical professionals and a local population willing to try new and improved medicines. As Serbia brings its health care sector up to EU standards, opportunities for investors abound.

SERBIA

Health & Pharmaceuticals

Minister of Health Cites Priorities for Health Care Sector Tomica

Milosavljevic,

Serbia’s

Other priorities include improving primary health care throughout the country, creating a regulatory body speciﬁcally for the health care sector, and focusing on preventive care through a new action plan the ministry has developed for the period 2008 to 2015. The plan includes anti smoking campaigns as well as new regulations to ensure that Serbian pharmaceuticals meet EU standards.

Minister of Health, recognises the challenges the country is facing in upgrading its health care facilities and services, but points out that Serbia has already made significant progress. He says, “We are doing our best, and we have achieved some

Signiﬁcant progress in pharmaceuticals

successes. We aim to improve the health care system in every way, and to focus on implementing EU standards in all aspects of the system.”

Tomica Milosavljevic, Minister of Health

Serbia’s health care sector offers signiﬁcant investment potential, for example in pharmaceuticals. As Tomica Milosavljevic points out, “Serbia could play a key role in the regional and international pharmaceuticals industry.” He adds that another investment opportunity is Serbia’s rehabilitation hospital, currently with 8,000 beds, part of this will be privatised and other medical facilities to be privatised. Serbia has also positioned itself as an excellent choice for chemical trials. Top priorities for the Ministry of Health include strengthening the national Health Insurance Fund, which had declined significantly but rose in 2007 to €260 per capita. The ministry has completed the first data base of everyone covered in the fund, and has balanced the fund’s budget after selling off around €100 million of the fund’s debts.

Privatisation in the health care sector continues. Recent privatisations in the pharmaceuticals sector include Hemofarm (acquired by Stada of Germany) and Zdravlje (acquired by Actavis), with Galenika to be next on the list. “We have improved environmental standards and accountability in the pharmaceuticals sector, and have created 28 new regulations for the sector in the past three years alone,” Tomica Milosavljevic explains. Serbia is upgrading its health care sector with the support of the World Bank, the European Investment Bank, and the EU. Overall, international institutions have provided around €100 million for health care projects in Serbia since 2001. Concerning opportunities for private investors, both local and foreign, in Serbia’s health care sector, Tomica Milosavljevic says, “We have opened the door for private institutions that meet our standards. I expect that we will see increasing involvement by the private sector, including private insurance companies, as Serbia’s GDP rises.”

SERBIA

Health & Pharmaceuticals

Roche

International Pharmaceuticals Leaders Helping to Build Better Health System Global pharmaceuticals leader Roche was one of the first foreign investors in Serbia, establishing the first licence agreement in 1968 and its representative office in 1991. Roche remained in Serbia throughout the war years, and became an independent affiliate in 2005 within the Roche group by both surpassing financial targets set by the Roche group, as well as demonstrating leadership in the Serbian pharmaceutical market. Today, Roche Serbia distributes a wide range of products manufactured by the Roche group. “Roche’s operation in Serbia is a kind of Greenﬁeld investment. We came here and built up the business,” says General Director Vojislav Petrovic, who has been with the company since the early 1990s.

Signiﬁcant turnover growth Roche achieved an impressive turnover of 36 million last year, largely thanks to increasing promotion and distribution of its oncology treatments, which, according to Vojislav Petrovic, are the main drivers of Roche’s growth in Serbia and other markets as well. “Roche Serbia focuses on quality and turnover,” he adds. Roche’s main market in Serbia is the state healthcare plan. One of the aims is to help Serbia reestablish the health services, that are available in

the former Yugoslavia and that were largely diminished during the war. “We would like to see the establishment of a national health plan like an oncology plan. We would also like to improve a strategic dialogue between pharmaceuticals companies and the Ministry of Health,” Vojislav Petrovic explains. Roche welcomes changes in Serbia brought about by EU integration. “When a strong and clear regulatory environment is in place here as in the EU, it will be much easier for us to do business. It will also have a very positive impact on the pharmaceuticals sector overall. Some local ﬁrms are lagging behind meeting the deadline to maintain European standards, but Roche is ready today,” Vojislav Petrovic says proudly. He adds, “The only way to make long-term changes in Serbia’s health-care sector, however, is for the economy to grow, and for the portion of the budget devoted to health care to be increased.”

Exemplary corporate citizenship The global Roche group is known for its corporate citizenship, and in Serbia Roche has instituted free testing for hepatitis C as well as free use of Copegus, a drug used in combination with Roche’s Pegasys hepatitis treatment. Roche is also supporting public information campaigns to promote good health (for hepatitis – Am I number 12?, reumathoid artritis, lymphoma – Rebuilding Lives and can you spot lymphoma?, breast cancer – Breast Friends...) and has

Roche Serbia Management Team

provided free kits for the determination of the type of breast cancer which is neccessary for setting the optimal treatment. As Vojislav Petrovic puts it, “We are not just here to sell. We are also here to educate and support the community in all relevant aspects.” As for the future, Roche Serbia will continue to focus on its oncology and virology treatments as well as rheumatology and other innovative products in which it has gained a strong competitive edge, and it will continue to work to improve the local health-care system. Vojislav Petrovic concludes, “Roche played a critical role in maintaining Serbia’s pharmaceutical industry during the war. Roche was not only able to survive this period but to come out of it as a success. Based on the teamwork Roche Serbia is a true example of the sustainability and perseverance of the Serbian market!”

Roche d.o.o. Milutina Milankovica 11a 11070 Belgrade - Serbia www.RocheSerbia.rs

SERBIA

Health & Pharmaceuticals

Health Care Sector Transformed with EU and EAR Support When Serbia’s democratic government came into power in 2000, the country’s health sector was in disarray after years of mismanagement and war. The EU, working through programmes managed by the European Agency for Reconstruction (EAR), has played a major role in helping the Serbian health sector to move forward. The EU’s financial support for the restructuring and modernisation of Serbia’s health care sector totals around €100 million to date.

top priorities: rebuilding the country’s health care infrastructure; making institutional reforms, for example in the National Health Insurance Fund; promoting preventative health care; and developing public health education.

Boost to local pharmaceuticals sector

New health centres and modernisation of existing facilities

One of the ﬁrst problems addressed in 2000 was a critical shortage in key medicines and medical supplies, for which the EU provided €20 million in funding support. This initiative supplied medicines and supplies to pharmacies and hospitals throughout the country and provided a major boost to the local pharmaceuticals sector, which produced most of the medicines. Today, the pharmaceuticals industry is one of Serbia’s export leaders. Next, the government, the EU and the EAR developed programmes designed to bring Serbia’s health care sector up to EU standards. This effort focuses on four

Among the accomplishments to date, Serbia has established a National Medicines and Medical Devices Agency, a national blood transfusion service, a Health Information System, and a new School of Public Health to train the health care professionals of tomorrow.

Serbia has also created 25 preventive health centres, and has launched projects to renovate 20 regional hospitals and four university clinical centres in cooperation with the European Investment Bank (EIB), which provided a loan of €50 million for this initiative. In 2006, the EAR provided an additional €200 million to upgrade the university hospitals in Belgrade, Nis, Novi Sad and Kragujevac. The EAR is providing guidance and technical support for these projects. Crucially, the EAR has also assisted Serbia’s Ministry of Health in developing short- and medium-term strategies for the health care sector. This effort has involved studies of disease patterns, deﬁciencies in current services, and recommendations for cost effective improvements. The studies showed, for example, that unhealthy lifestyle patterns were the cause of around 70% of health problems requiring treatment in Serbia, and campaigns to inform the public about the dangers of smoking, alcohol abuse and other issues have been developed.

Focus on preventive health care

The EAR has also supported the ministry in focusing on preventive health care strategies that matched the best European standards and practices concerning the prevention, diagnosis and treatment of such diseases as

SERBIA

Sector

diabetes, hypertension and the most common forms of cancer. The Ministry of Health’s “One smoker, many victims” campaign was awarded the World Health Organisation’s prize for the best health campaign in Europe last year.

allows for better management of data and costs. It also helps the Ministry of Health devise better strategies for health care development. In addition, the EAR helped Serbia develop a new payment system for primary care physicians based on the number of patients treated.

Upgrading the country’s blood supply and transfusion services was a top priority in 2000. Thanks to €5 million in EU funds, the EAR managed projects to reorganise Serbia’s blood supplies, create new transfusion centres, purchase new equipment, pass a new law on blood transfusions, institute quality assurance procedures, train staff, and launch a national blood donation campaign.

The EU also provided €5 million in technical assistance and management to create public health laboratories for speciﬁc diseases, based on standard practices throughout the EU, and to upgrade existing laboratories to ensure that they are operating according to EU and WHO criteria.

Tertiary health care strategy

Education and training

The EU, through the EAR, is also helping Serbia develop a tertiary health care strategy aimed at decreasing hospital beds by more than 1,000, controlling costs, and ensuring sustainability. A particular challenge is the refurbishment and reorganisation of the Clinical Centre of Serbia in Belgrade, whose 3,700 beds make it one of the largest hospitals in the world. EIB funding is supporting these efforts.

Concerning education and training, the EAR has funded the new international standard School of Public Health within the Belgrade University School of Medicine. A new EU-funded project will train some 2,000 health managers in business practices and standards to help them run health facilities efﬁciently, using modern management techniques. It will also set the foundation for a School of Health Management to educate competent and accountable managers in the future.

Restructuring the health care sector involved reforming health care ﬁnancing, and the EAR created a modern electronic health record based on EU models that

Overall, Serbia’s health care sector has made impressive progress since 2000, and the support of the EU and the EAR has been crucial in making these advances.

SERBIA

Health & Pharmaceuticals

Jugoremedija

Outstanding Performance by Worker-Run Factory Jugoremedija – a pharmaceutical giant in Zrenjanin which provides pharmaceutical products to the local market and to Bosnia and Herzegovina, Montenegro, Russia, Ukraine, Belorussia, Moldova, Armenia, Georgia, Kazakhstan and Azerbaijan -- exemplifies Serbian entrepreneurship and a determination to create a functional free-market economy that is beneficial to all citizens. During the company’s privatisation past and present workers were given the majority of shares in the Jugoremedija factory; many of these workers later sold their shares to the government or private sector, but around 4,200 remaining workershareholders, who controlled a total 58% share in the company, decided to retain their shares and to handle the company’s operations themselves. In March 2007, this dream became a reality, and the company has been achieving outstanding performance ever since.

Exemplary performance by worker-shareholders Zdravko Deuric, Chairman of the Board since March 2007 and today General Manager, proudly points out that the worker-managers have already managed to improve working conditions in the factory. In March 2007 the factory had debts totalling 2.8 million, including 1.2 million to Aventis, causing Aventis to cancel its contract with the company.

Furthermore, employees had not been paid. Since the workers have regained control of the factory there has been a complete turnaround, “We managed to pay all the factory’s debts and sign a new contract with Aventis,” Zdravko Deuric says. The company’s new management has also been able to reinstate contracts and licensing agreements in the Russian market which had been cancelled under the factory’s previous management, and to export 3,5 million to the Russian market this year. “We have made great strides forward in only one year, and most importantly we have managed to regain people’s trust,” Zdravko Deuric says. At present Jugoremedija continues to ﬁght off domestic businessmen’s attempts to take control of the company out of current management’s hands, speciﬁcally through full privatisation. If this were to be the case before the factory meets all international Good Manufacturing Practice (GMP) standards, the shares could be acquired more cheaply and the full privatisation could be completed more rapidly. However, this would not be positive for the workers and families who depend on Jugoremedija. “After all the problems we have faced and overcome, we very much want to continue to work toward introducing GMP standards by August 2009,” Zdravko Deuric points out.

Strategic partners can beneﬁt from company’s regional network To reach this goal, Jugoremedija is currently looking for a strategic partner to help the factory meet GMP standards. Such a move will require government approval. “If we achieve this and ﬁnd a strategic partner, the company will have a very bright future. We will be able to expand our export activities, including in the EU,” Zdravko Deuric says. A key advantage of investing in Jugoremedija is that the company already has a well-established distribution network throughout the region and in Russia, and any partner working with Jugoremedija can use this network to distribute its own products by incorporating them into Jugoremedija’s current contracts. Partners can also count on dynamic, committed workers and management. Zdravko Deuric explains, “We invite investors from Western Europe to invest in Jugoremedija and help us to continue to build up the company. We have already earned the trust of Aventis, and trust is very important in this business.”

• Infrastructure Hub of South-Eastern Europe • National Investment Plan Ministry Works to Generate Development • National Infrastructure Plan Details Ambitious Projects • Key Infrastructure Projects in the Works

Infrastructure

SERBIA

Infrastructure

Infrastructure Hub of SouthSerbian President Tadic’s decision in July this year to create a National Council for Infrastructure reflects the government’s awareness that infrastructure development is crucial if Serbia is to achieve its economic goals. The new council will coordinate and manage infrastructure projects in a move to speed up Serbia’s economic and overall development. In addition to President Tadic, members of the council are some of Serbia’s top leaders, including Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic; Minister of Infrastructure Milutin Mrkonjic; Minister of Energy and Mining Petar Skundric; Minister of Finance Diana Dragutinovic; Minister of Telecommunications and Information Society Jasna Matic; Minister of Environment and Spatial Planning Oliver Dulic; Minister for the National Investment Plan Verica Kalanovic; Minister of Agriculture, Forestry and Water Management Sasa Dragin; Serbian Deputy Prime Minister for European Integration and Minister of Science and Technological Development Bozidar Djelic; Chairman of the Vojvodina Executive Board Bojan Pajtic; and Dragan Dilas the Mayor of Belgrade.

Corridor 10 a top priority High priority infrastructure projects that the new council is currently overseeing include completing the 800 km Serbian portion of the European Corridor 10 motorway, beginning construction of a new motorway from Belgrade south to

SERBIA

Infrastructure

Eastern Europe the Adriatic region, and modernising Serbia’s railway network. Corridor 10 runs from Salzburg to Thessaloniki (2,350 km). Around €2 billion is needed to complete the Serbian portion, part of which will be a high speed motorway. President Tadic has requested all Serbian ministries to single out infrastructure projects they feel are the most crucial for the economic activities they oversee, and these recommendations will be used in forming a four year infrastructure development plan. The council has budgeted around �5 million for building European standard roads in Serbia, and will also promote rail, air and river trafﬁc through speciﬁc projects in these areas. A key role for the new council will be to develop a strategy for investments in Serbia’s energy and telecommunications infrastructures as well.

Minister of Infrastructure cites priorities Serbian Minister of Infrastructure Milutin Mrkonjic says that his ministry’s priorities are renovation, revitalisation and construction of transport infrastructure in Serbia over the coming three years. He singled out the Corridor 10 project, modernisation of rural infrastructure, modernisation of the BelgradeBar rail line, and Corridor 7 as particularly important projects. The minister added that Corridor 10 may be completed within two years, while the rail link would be completed in four to ﬁve years. Around €500 has been invested in the Belgrade rail line to date, and

an additional €100 million to €200 million is needed to complete the project. “We have secured the funding for these projects, and Serbia has both the workforce and the enterprises capable of carrying out projects of this magnitude,” the minister says. He adds that Corridor 10 is signiﬁcant not only for Serbia but for the EU as a whole, since it connects Greece and Macedonia with other parts of Europe. One section of Corridor 10 in Serbia is a ring road around Belgrade, and the ﬁrst section of this new ring road was inaugurated on October 1 this year. Completing Corridor 10 by 2011 will require allocating €1.3 billion for the sections to the Macedonian and Bulgarian borders, between €150 million and €200 million for the motorway from Subotica to Novi Sad, and the rest to complete the Belgrade ring road, according to Serbian Prime Minister Mirko Cvetkovic. Negotiations with the European Investment Bank are underway for a �120 million loan to complete the ring road. As the Prime Minister points out, “Improved road infrastructure is necessary if Serbia is going to attract more foreign investment.”

Significant support from EBRD The European Bank for Reconstruction and Development (EBRD) has announced it will invest €250 million to €280 million annually on infrastructure projects in Serbia, a reflection of the bank’s confidence in Serbia’s long term growth potential.

Completing the Serbian section of Corridor 10 will be a priority for the EBRD, but railway infrastructure will also receive financing (€100 million is under discussion) to purchase new rolling stock and to modernise railways. The bank is ready to approve a €150 million loan next year for financing the Nis-Dimitrovgrad motorway, and plans to invest in the Belgrade-South Adriatic motorway as well. Expressing his own vote of confidence in Serbia, Thomas Mirow, EBRD President, commented recently, “Serbia has a central role in the Balkan region and the Serbian government is working to improve its co-operation with the EU. This is why I chose to visit Serbia first after my appointment as EBRD president.” As Serbian president Boris Tadic points out, “Upon the completion of Corridor 10, from Hungary to the Macedonian and Bulgarian borders, Serbia will become the infrastructure hub of South-Eastern Europe.” Continued development of the country’s infrastructure will strengthen its role as a regional crossroads.

SERBIA

Infrastructure

National Investment Plan Ministry Works to Generate Development Serbia’s National Investment Plan (NIP) is the generator of Serbia’s economic development and the cornerstone of its growth, according to Verica Kalanovic, Minister of the NIP. The government’s decision to devote a ministry to the NIP reflects the plan’s significance for Serbia. The ministry’s budget for 2009 is around RSD47 billion; this year, the ministry launched projects with a total budget of RSD30 billion.

The Ministry of the NIP’s objectives are to boost Serbia’s GDP, exports, foreign direct investment, and standard of living while reducing unemployment. It also aims to increase Serbia’s competitiveness and support regional development. “For 2009 alone, roughly 3,896 projects amounting to over €3.7 billion have applied for ﬁnancing from the NIP. It is important to note that the Ministry for the NIP is a coordinator of the efforts by other ministries, cities and municipalities which jointly implement NIP projects,” Verica Kalanovic explains.

Close monitoring of new investments The minister singles out transport and energy infrastructure, health care, education, and social programmes as key sectors for investment in Serbia today. She adds, “A priority for the ministry is to establish a quality system for the selection of development programmes from all parts of Serbia, as well as a more efficient implementation and monitoring of effects. Such a system will ensure that NIP projects financed from taxpayers will truly secure a better and more prospective life for every individual.” The ministry will closely monitor all new investments to determine the cost-to-benefit ratio of each one.

Government Building

The Ministry of the NIP receives funding for its projects from international funding organisations, European institutions, and EU preassociation funds as well as from the Serbian state. Current projects for

Verica Kalanovic, Minister of the NIP

the ministry include the completion of the Serbian part of the pan-European Corridor 10 route, about which Serbia’s Minister of Infrastructure, Milutin Mrkonjic, recently commented “It is a pleasure and honour to be involved in this big project.” In addition to the Corridor 10 project, the Ministry of the NIP will also be involved in the modernisation of railway and river transport, construction of seven or eight industrial zones, and investment in tourism activities. The ministry will handle regional and local projects as well as national ones. Verica Kalanovic concludes, “In this demanding labour that the ministry takes on daily, we need the strong support of other ministries, municipalities, the private sector, and also all the citizens of Serbia.”

National Infrastructure Plan Details Ambitious Projects

Serbia’s National Plan for Infrastructure details a series of ambitious projects concerning road and rail infrastructure to be undertaken between 2008 and 2012. The projects are designed to help stimulate Serbia’s economy, strengthen its role as a regional hub for trade and transport, and attract more foreign investment, not only in infrastructure projects but in enterprises that depend on high quality infrastructure. These projects represent outstanding opportunities for foreign investors and suppliers. Priority projects in the plan include Serbia’s portion of the European Corridor X road and rail system, with the road portion to be completed by 2011 at a cost of €1.58 billion; Serbia’s portion of the Belgrade to South Adriatic highway, at a cost of €600 million; and construction and improvements in regional road routes. The total cost of all road improvements outlined in the plan is €2.9 billion. The plan states that if ﬁnancing is not found for all of these projects, then lower priority initiatives mentioned in the plan (including improvements to local roads) will not be undertaken. Overall, the plan anticipates the need for around €1.39 billion in loans, €100 million in donations, and €1.41 billion from public sector ﬁnancing to reach the total €2.9 billion.

International agencies funding upgrades Financing for the most important project in the plan, the Corridor X road, is to come from the World Bank (a €400 million loan), the EIP (a €540 million loan), the EBRD (a €150 million loan), the Hellenic Plan (a €100 million donation), and from public funds (€395 million, including from privatisation proceeds). Concerning the Corridor X rail project, the plan calls for modernisation and reconstruction to increase speeds substantionally, including upgrading signalling and installing double gauge tracks in some sections; this project is estimated at €1.7 billion. Serbia will partner with Deutsche Bahn (the German national railway) in this initiative. EBRD and EU preaccession funds will be used to finance the project. Funding is still being sought for other projects in the plan, including the Belgrade to South Adriatic highway. The infrastructure plan calls for significant revenues for infrastructure projects to come from the many privatisation projects currently underway, including of NIS and Galenika as well as the IPOs of Nikola Tesla Airport, Telekom Srbija, Commercial Bank, and the electricity sector. Municipalities are also expected to contribute their share, particularly Vojvodina, Belgrade and Novi Sad.

SERBIA

Infrastructure

Key Infrastructure Projects in the Works

Serbia is in the process of completing a number of key infrastructure projects with the support of international donors, the public sector, and local and international companies. The priority project for Serbia is to complete the Serbian portion of the European Corridor 10 transport corridor, set for completion in 2011. When Serbian president Boris Tadic and Minister of Infrastructure Milutin Mrkonjic visited work in progress on Corridor 10 in July, Boris Tadic commented that when the Serbian portion of Corridor 10 is completed, Serbia will become the hub for South-Eastern Europe. Aligned with the Corridor 10 road project is a Corridor 10 rail project, which is set to begin next year.

Signiﬁcant road upgrades Additional projects involve upgrading and improving the Belgrade to South Adriatic road connection (at a cost of €600 million and scheduled for 2009 to 2015; funding is still being sought), and the Serbian portion of key regional road routes, including the Kragujevac to Batocina highway (€65 million, from 2008 to 2010), the Kikinda-Ada-Novi Sad-Sremska Mitrovica-Sabac-Loznica highway (€280 million, from 2009 to 2012), the Pozarevac-Kucevo-Majdanpek-Negotin highway, the M25 (€175 million, from 2009 to 2012) and the Pancevo-Vrsac highway (€200 million, also from 2009 to 2012). Serbia has already completed a wide range of infrastructure projects, many of them undertaken by local firms. Serbian firm Energoproject recently announced it would team with Austria’s Immorent and Germany’s Eureal in a bid to become co-investors in a €236 million tourist complex in Stara Planina, a mountain area. Energoproject is also involved in the upgrading of the Soroki-Dokolo-Lira road and other key projects. Energoproject reflects the potential of Serbian firms to help in the effort to build a better Serbia.

• Telecom Minister Discusses Top Priorities • Outstanding Opportunities in Fast-Growing Telecom Sector • Serbia Positioning Itself as ICT Hub

IT & Telecom

“We hope that e-government will help upgrade and streamline Serbia’s government processes, which will benefit foreign investors.” Jasna Matic, Minister of Telecommunications and Information Society

SERBIA

IT & Telecom

Telecom Minister Discusses Top Priorities Jasna Matic, Serbia’s Minister of Telecommunications and Information Society, discusses her ministry’s key goals. ET: What are your priorities for Serbia’s telecom and IT sectors? J. Matic: We aim to improve telecommunications services in general and promote information technology on several levels, including e-government and education initiatives. We also aim to help local ICT companies strengthen their market position and grow regionally and internationally. We also anticipate additional liberalisation of telecom and IT as well as more competition, in line with EU and World Trade Organisation standards. ET: When do you expect Telekom Serbija’s IPO to occur? J. Matic: We want to complete the process within two years but the timeline will depend on the development related to the international ﬁnancial crisis. Our aim is to ﬁnd an optimal moment which will maximise the proceeds, enhance the international image of Serbian telecommunications, and provide the best boost for the Serbian telecom market. As for Serbia’s image, we believe that the worst is behind us and hopefully international media will now focus on the good things that are happening here.

Jasna Matic, Minister of Telecommunications and Information Society

“We hope that e-government will help upgrade and streamline Serbia’s government processes, which will benefit foreign investors.”

ET: What are your priorities concerning e-government? J. Matic: We hope that e-government will help upgrade and streamline Serbia’s government processes, which will beneﬁt foreign investors. We have made some advances on an ad hoc basis, but we need harmonisation among government institutions. We are working on upgrading our telecom and IT infrastructure.

international bidders. Our e-society initiatives represent a signiﬁcant opportunity, as do various EU programmes with ICT components. The new IT park in Indjija should attract international software companies and back ofﬁce service providers.

ET: What are the opportunities for investors in Serbia’s telecom and IT sectors?

ET: Do you expect Serbia to be a telecom and IT hub for the region?

J. Matic: We anticipate strong growth, so a number of investors are looking into the possibilities here and of course are most welcome. Since Serbia is a latecomer to the transition process, there are a number of opportunities available here that have already disappeared in other places. We will be opening tendering procedures for various telecom services and we expect to attract

J. Matic: Yes, we do, and we certainly hope to attract talent from all over the region. The ministry will offer support for this. We already have strong skills in software development. We are being told that software developed here in Serbia can be easily understood and modiﬁed by other people, which is not always the case. Many Serbian software engineers are working abroad and we hope to attract them back to Serbia.

SERBIA

IT & Telecom

Outstanding Opportunities in Fast-Growing Telecom Sector When Serbia passed its new telecommunications law in 2003, it began to liberalise the sector and create an environment that would encourage further development and an open market.

announced it expected a 42% rise in proﬁts to reach €289 million for 2008. The company is the majority owner of the second-largest telecom company in neighbouring Bosnia and of MTel, the newest mobile operator in Montenegro.

Another major step forward was the creation of the Republic Telecommunication Agency (RATEL) in 2005. Jovan Radunovic, President of RATEL’s board, explains, “RATEL created opportunities for new mobile operators, which has meant better service and lower prices. We were especially proud of licensing VIP Mobile, a pure greenﬁeld investment.” Serbia’s mobile operators are Telenor (Norway), MTS (a division of Telekom Srbija), Mobilkom (Austria), and VIP Mobile.

RATEL is also preparing tenders to introduce new technologies to Serbia’s telecom sector, including WIMAX and CDMA to bring better quality Internet connections throughout the country. To date, the majority of investments in Serbia’s telecom sector have been in increasingly digitalised ﬁxed line services and in Internet services, including broadband. Investment in Serbia’s ﬁxed line infrastructure rose from €62 million in 2006 to €166 million last year. Mobile telephony, which has attracted €100-200 million in investments since 2006, achieves the highest rate of return, with an increase in revenues from €580 million in 2006 to €840 million last year.

RATEL hopes to issue tenders to license two more fixed line operators to end Telekom Srbija’s current monopoly on fixed line services. “The privatisation and liberalisation of fixed line services has to be done carefully and reasonably,” Jovan Radunovic points out. Telekom Srbija, in addition to providing all Serbia’s fixed line services, has a 70% share of the mobile services market. It recently

Thanks to market liberalisation, Serbia now has 159 Internet service providers, only two of which are public, with SBB, a private company, leading the market and ranked

Number of users Penetration (%) in Number of users (thousand) in 2005. (thousand) in 2005. 2006.

Jovan Radunovic, President of RATEL

number one in cable distribution. “RATEL’s role is to provide equal opportunities for all players in the market, and to promote competence, transparency, impartiality, and adherence to laws and regulations,” Jovan Radunovic says. The privatisation of Telekom Srbija is clearly not the only outstanding opportunity for investors in Serbia’s telecom sector. As Jovan Radunovic concludes, “The telecom market in Serbia is open and regulated, and investments are quickly proﬁtable. I believe there is a great potential for further investment here.”

Penetration (%) in 2006.

Proportional Absolute increase increase in the in the number of number of users users (thousand) (%)

Fixed

2,527.3

33.7

2,719.4

36.3

7.6

192.1

Mobile

5,510.7

73.5

6,643.7

88.6

20.6

1,133

Internet

756.7

1,005

13.4

32.8

248.3

Cable

530.5

541.9

7.2

2.15

11.4

SERBIA

IT & Telecom

Serbia Positioning Itself as ICT Hub Serbia is an ideal choice for ICT investment. The country already has around 3,000 highly trained IT engineers and is stepping up its efforts to ensure high quality ICT human resources; labour costs are considerably lower than the European average.

Serbia’s ICT sector already achieves annual revenues of around 79 million and is growing by 18.3% per year; its projected five year growth rate is 16.8%. Several multinationals are already present in Serbia, along with a number of smaller European firms, and ICT research and development efforts have attracted strong international participation. Serbia’s 10% corporate profit tax adds to the benefits for investors.

Successful ICT investors in Serbia include Microsoft, with its thriving Belgrade Microsoft Development Centre; US based Euronet, a global leader in processing secure electronic ﬁnancial and payment transactions; ComTrade Group, a Serbia based ICT leader; IMP-Telecommunications Ltd, a Belgrade enterprise specialising in digital signal processing and more; Serbia based PSTech, known for the latest automated identiﬁcation and data capturing (AutoID) technologies; and BIS Gowigroup, a Serbian software developer.

Major IT business park: Indjija Serbia will soon become the home of Europe’s biggest information technology park, Ingea, in Indjija on the outskirts of Belgrade. Indjija is being developed by Bangladore based Embassy Group, an international leader in the development of business parks. Indjija is budgeted at a minimum of 473 million and is expected to create around 25,000 new jobs for skilled professionals over the coming ﬁve years. Its exports are expected to reach around 1.6 billion per year. Business parks developed by Indian Embassy Group have already attracted leading international names in the IT sector, including IBM, Microsoft, HP, Fidelity, Covansys, LG Soft, Yahoo, Google, Lenovo, AlcatelLucent, NVIDIA, and many more. Ingea is expected to provide a major new incentive for international investors in Serbia. Construction on Indjija has already begun and the park is expected to open in mid 2009, with everything completed by 2013. The mayor of Indjija, Goran Jesic, explains that the municipality has provided 50 hectares free of charge for the Ingea project. The Serbian government will provide infrastructure, according to Telecommunications and Information Society Minister Jasna Matic. This major endeavour for Serbia is expected to pay off handsomely in the long run; estimates suggest that Ingea could some day produce up to half of Serbia’s overall exports. For investors in ICT, Serbia is deﬁnitely a top choice.

• Robust Real Estate Sector Set for Continued Growth • New Ministry Focuses on Environment and Urban Planning

Real Estate

SERBIA

Real Estate

Serbia’s real estate sector, which accounts for over 7% of the country’s GDP, offers significant advantages for investors as the economy continues to develop. With GDP growth averaging around 7% and per capita GDP rising to over 43,153, Serbia’s economy is one of the fastest growing in Europe. Foreign direct investment in Serbia is also rising rapidly and totalled 7 billion between 2001 and 2006. Last year, the country attracted a record 3.4 billion in FDI. Significantly, the state’s budget surplus is providing unprecedented funding for infrastructure development.

Demand growing for office, residential and retail space All these trends mean growing demand for office, residential and retail property in Serbia’s key urban centres. Demand for quality office space is expected to continue to grow strongly thanks to increasing FDI and an expanding private sector, while the residential market is benefiting from increasing disposable income and the wide availability of mortgage loans and decreasing rates of interest. Retail space is also in demand as the economy grows. Yields in Serbia’s real estate sector tend to be higher than in other countries in Central and Eastern Europe, amounting to 9% in the office market, 4% to 7% in the residential market, and 5% to 6% in the retail market.

SERBIA

Section is composed with help of

Real Estate

Set for Continued Growth Amount of ofﬁce space rises 40% in Belgrade

In the office market, according to a study by Colliers International in 2006, the total supply of speculative office space in Belgrade had increased by 40% since the end of the previous year, bringing total speculative office inventory of Class A and Class B office space in Belgrade to nearly 270,000 sq m. Compared to the Class B market segment, the growth in Class A inventory was significantly higher, and totalled around 145,000 sq m at the end of 2006. Most new office property development in Belgrade has been in the New Belgrade district, which has accounted for almost 90% of new Class A and 80% of Class B property. Vacancy rates for Class A office space in New Belgrade were around 9% in 2006, while the city’s overall Class A and B vacancy rate was 11.7%. Available Class A and B office space for rent in Belgrade at the end of the year totalled slightly over 20,000 sq m. Demand for high quality office space in Belgrade is being driven mainly by financial and legal services, telecommunication and IT companies, and the expansion and market positioning of existing banks. Demand for small and medium size premises remains robust as well.

Genex Business Apartments in New Belgrade

is for smaller apartments. Many new buyers prefer newer buildings, since there is little price difference between apartments in new and old buildings, and newer structures usually offer higher quality ﬁnishing and facilities.

Demand for high quality ofﬁce space growing

New Belgrade seeing strongest demand

In 2007, the supply of office space in Belgrade remained adequate but demand continued to increase, and more and more office projects are being announced for the future. Average rental rates for Class A office space in Belgrade reached €22 per sq m per month in the prime central district of New Belgrade. Class B buildings in the same area commanded rents of €11 and €17/sqm/ month, while converted space averaged €10/sqm/month. Office yield in Belgrade in 2006 was roughly 9%, higher than in other countries in the region.

The supply of rental housing in Belgrade has been growing, primarily in the New Belgrade, Dedinje, Vracar, and downtown districts. Most new properties are two- and three-bedroom apartments. The average prime rent for residential property in Belgrade was €11/sqm/ month as of the end of 2006. New Belgrade has seen the strongest demand and also the strongest increase in supply of new residential space, keeping rental rates steady. Yields for mid-range apartments vary between 4% and 5%, whereas for high-end apartments the level is between 6% and 7%.

Residential construction growing by 50% per year since 2003 Serbia’s residential market began to recover with the country’s new political and economic stability in 2000. Between 2000 and 2005, signiﬁcant new residential development occurred in Belgrade, Novi Sad and Nis. In fact, construction of multi-family homes has increased by roughly 50% every year since 2003, underpinned by strong market demand. Two bedroom apartments account for 30% of total residential property in Belgrade, and the highest demand

Concerning retail property, numerous shopping malls are under construction or in the planning phase. The city of Belgrade continues to be the main investment destination, followed by Novi Sad, Serbia’s second largest city. As these developments show, Serbia’s property market is set to continue to be robust as the economy develops. Companies setting up operations in the country currently have a choice of high quality properties, and investors seeking high potential opportunities will ﬁnd much to attract them in Serbia’s real estate sector.

SERBIA

Real Estate

New Ministry Focuses on Environment and Urban Planning Oliver Dulic, Minister of Environment and Spatial Planning, discusses his ministry’s key goals and projects. ET: What is your ministry’s mission? O. Dulic: The ministry ﬁnally brings together environment, construction and spatial planning under one roof, which enables us to develop these activities according to European standards and plan a sustainable future for Serbia. Our mission is to develop a cleaner, healthier, richer and more suitable environment for foreign investments in Serbia. The ministry is already working on new legislation that meets EU criteria concerning the environment and urban planning. The ministry’s goal is to reduce the number of plans and ensure greater coordination of projects as well as stringent controls and punishment for abuses. All companies must guarantee that they meet EU environmental standards by 2015. The ministry will soon institute new procedures that will shorten the time it takes to get permits, and will also inspect new urban planning projects to make sure they meet international standards. ET: What are some of the ministry’s current projects? O. Dulic: Supported by EU pre-admission funds, the ministry is working on new environmental legislation, improved systems for managing air quality, and a network of preserved natural areas. Projects for the near future include ways to manage toxic waste and chemicals, and more environmental projects. © SIEPA

Oliver Dulic, Minister of Environment and Spatial Planning

ET: What about meeting EU environmental standards? O. Dulic: For us, environmental standards are not an obstacle for joining the EU, but rather one of the main reasons Serbia should gain EU membership. The ministry is charged with evaluating the environmental impact of proposed projects, and new procedures will allow us to provide these evaluations in under 70 days, compared to the current 250 days. In addition, the ministry’s new environmental legislation has been drafted and is awaiting the approval of the parliament. ET: What is the ministry doing to encourage more foreign investment? O. Dulic: We will ensure that public land used for development can be privately owned, as stated in Serbia’s new constitution. According to the superﬁcio solo cedit principle, the owner of a property will own what is built on that property. Overall, this ministry will work to reduce red tape and yet upgrade controls over new construction, to speed up the process yet also make sure that new construction meets EU standards, for example concerning energy efﬁciency. ET: What is your personal message? O. Dulic: I invite investors to visit Serbia, talk to companies that have been successful here, and count on the Ministry of Environment and Spatial Planning as their partner.

â&#x20AC;˘ Media and Communications Sector Working Toward EU Standards

Media & Communications

SERBIA

Media & Communications

Media and Communications Sector Serbia’s media and communications activities have evolved rapidly since 2000, and are set for further significant changes as Serbia aims to meet the criteria of the EU Audiovisual Media Services (AVMS) Directive.

Signiﬁcant progress since 2000 In Serbia, the information and communication technologies (ICT) sector, the media market overall, and media legislation and implementation are still far behind the European average, and Serbia has many challenges in store as it positions itself for EU membership. Nevertheless, signiﬁcant progress has been made in Serbia’s media and communications sector over the past eight years. The Broadcasting Act (adopted in 2002), the Public Information Act (adopted in 2003), the Telecommunications Act (adopted in 2003), and the Advertising Act (2005) have all helped to create a stronger regulatory environment that has reassured foreign investors. In addition to this new legislation, the Ministry of Culture is drafting a law on “Preventing Media Ownership Concentration” with the assistance of domestic and international media experts.

New ministry focuses on telecom In a signiﬁcant step forward, the new Ministry for Telecommunication and Information Society was created in May 2007 to oversee

and regulate media and telecommunications in Serbia. The new ministry is mandated to help Serbia meet the criteria of the Convention on Transfrontier Television of the Council of Europe (TWF-CoE) and a number of CoE recommendations for the media sphere. Serbia has already developed a dynamic media scene. In one recent development, President Zeljko Mitrovic launched a state-of-the-art ﬁlm studio to help position Serbia as the hub for movie production in Eastern Europe.

Belgrade Serbia’s media hub Belgrade is Serbia’s media hub. The city is home to the main headquarters of the public service broadcaster Radio Television Serbia (RTS), as

well as the RTS record label PGP RTS and the country’s most popular commercial broadcaster, RTV Pink, a Serbian media multinational known for its popular entertainment programmes. B92, the most popular alternative commercial broadcaster, is also based in Belgrade; it operates a television station and a radio station and has its own music and book publishing activities as well as Serbia’s most popular web site. High circulation daily newspapers published in Belgrade include Politika, Blic, Vecernje novosti, Glas javnosti, Press and Sportski žurnal. Other dailies include Danas and Kurir. Novi Plamen is a very well known leftist magazine, while a new free daily, 24 sata, was founded in 2006.

SERBIA

Media & Communications

Working toward EU Standards EU standards New legislation is helping to bring Serbia’s media sector up to EU standards. The Broadcasting Act introduced European models and values to Serbian broadcasting and established an independent regulatory body (the Republican Broadcasting Agency); the Public Information Act outlines general provisions on media freedom and journalistic independence and regulates the means of establishing and distributing media outlets; and the Telecommunication Act established the Republic Telecommunication Agency (RATEL) and sets down various regulations to ensure free market conditions and EU standards.

Challenges to be faced A number of challenges remain in Serbia’s media and communications sector. These include the need to respond to the growing convergence of traditional media (radio and television) and new media (mobile telephones and the Internet); the need for the public sector to enhance Serbia’s participation in the global information network; and the need to step up the pace of acceptance of new media technologies in the Serbian market. In 2007, less than half of Serbia’s population (41%) owned a computer, and only 30% used the Internet on a regular basis. On the other hand, around 75% of the population owned mobile telephones. Of the Internet users last year, 74% still accessed Internet services through dial-up connections. WAP and GPRS services were used by 16% of the population last year, while 15% of Internet users employed ADSL connections. Analogue television broadcasting, in contrast, was accessed by 98% of the population last year. Digital terrestrial television (DTT) has not yet been launched, although the public service broadcaster, Radio Television of Serbia, is transmitting DTT trial signals. Serbia Broadband, a cable and Internet company, was the first commercial operator to introduce satellite digital broadcasting in Serbia (in 2006) and it now serves around 50,000 subscribers. VoIP, WiMax, DTT, CDMA and triple-play are being introduced to the market this year, and 3G mobile phone services

were being used by around 30,000 subscribers at the beginning of 2007. The liberalisation and development of Serbia’s telecommunication sector is a top priority for the country, as is the implementation of regulations concerning Internet services and digitalisation. The Ministry of Culture and the Ministry of Telecommunication and Information Society, along with independent agencies RBA and RATEL, have formed an inter-sectoral working group to develop strategies for a digital switchover. Serbia still has to adopt new laws regulating e-government, e-commerce, and the protection of personal data, but the progress it has made so far makes observers hopeful of the future.

SERBIA

Media & Communications

Ekonomist Media Group

Uncompromising Professionalism Ekonomist Media Group (EMG) is the leading business media group in Serbia and one of the leading ones in the region. Since they launched the initial Ekonomist magazine eight years ago, they have managed to expand their activities and as a result of this growth EMG today has three different magazines under its roof (Ekonomist, weekly; Banker, monthly; Enterprise, monthly) and is coproducing a business TV show (Wallet, half hour show on economy and business running on TV B92 with national coverage).

Ekonomist magazine – the EMG ﬂagship Ekonomist magazine has built a reputation of a magazine that is a benchmark for business success and competence. Its loyal readership includes the entire business community of Serbia and the region, corporate managers, government representatives, economists and socially involved individuals. In the past eight years, Ekonomist has published interviews with numerous relevant individuals, economic experts and key people in the government and political organisations in Serbia and in the region, as well as leaders of renowned world institutions. During the turbulent years that shook the entire region both politically and economically, Ekonomist has managed to keep the highest standards of professional ethics as well as its characteristic analytical abilities, thus positioning itself as one of the most respectable and relevant sources of information and evaluation.

Ekon:ference – conferences that inﬂuence the corporate world Ekon:ference is an EMG section in charge of organising high-proﬁle business conferences whose content and topics, as well as attendees and participants, meet the needs of regional business community. The objective of Ekon:ference is to raise the level of business cooperation in the region to a higher level, and to gather under one roof the top managers of leading

domestic, regional and global companies. Speakers and participants of our events are competent experts with remarkable backgrounds in various ﬁelds of economy. With their presence and direct participation in our events they contribute signiﬁcantly to the quality, seriousness and relevance of the views presented.

EMportal – competent source of business information EMportal is the web-portal of the EMG. Its mission is to inform, educate, communicate and explain economic, business and ﬁnancial trends on the local, regional and global levels. EMportal has several mutually supplementing sections that provide the visitors with a comprehensive and reliable view of the economic landscape in Serbia, the region and the world. EMportal features the following sections: News, Stock Market, Ekon:ference and Business Calendar, EMG Publications, EM Plus, and EMG Central – an online corporate ID card of Ekonomist Media Group and its entire portfolio of products and services. The address is emportal.co.yu

LCS – event management at the highest level Logistics Consulting & Services is a team of top quality experts specialised for each stage of an event management project. Long-term experience, know-how and a strategic approach distinguishes LCS team members as the elite in the profession, guaranteeing that every event under

the auspices of LCS will bear the quality of uniqueness, visibility and excellence. LCS provides a complete service from the initial planning stages, through direct consulting for all event-related issues, up to logistic and technical implementation. LCS makes it happen. The specter of events that LCS can organise for their clients is comprehensive: press conferences and brieďŹ ngs for the media and business community, business breakfasts, cocktails, seminars, training courses, forums, conferences and congress events, as well as roundtables and business summits at all levels.

Corporate communications â&#x20AC;&#x201C; a link with a world of high business performance Department for corporate communications Ekonomist Media Group

is a result of one logical sequence of activities of the company, aiming to establish better and more successful communication among businessmen and having the following groups as target ones: the public, established institutions, the media, those who create public opinion,... Ekonomist Media Group can create and carry out media campaign tuned to your needs, it can organise meetings with target groups you want to meet and it can also help you to present yourself successfully. Within this department there are experts who seriously work on media consulting for companiesclients, and who also work on exclusive trainings and education. Next year EMG plans to organise trainings on the following issues: public relations, media presentation, crisis management, market

analysis, corporate management, internal and external communications, corporate social responsibility, approach to investors, placement on the market, e-governance, etc. Their goal is to improve business communication both in their country and in the region, and by doing so they plan to raise standards for the creation of a more professional and favorable business environment.

Ekonomist Media Group Address: Kosovska 1/ IV Belgrade 11000, Serbia Tel.: +381 11 333 3002 Fax: +381 11 337 4050 ofďŹ ce@ekonomist.co.yu www.emportal.co.yu

â&#x20AC;˘ Serbia, One of the Undiscovered Gems of Eastern Europe â&#x20AC;˘ Belgrade, the Perfect Combination of Business and Pleasure

Business & Leisure

Serbia, One of the Undiscovered Gems of Eastern Europe Serbia, in the heart of the Balkans region, is set to become

Belgrade: lively modern city with long history

one of Europe’s next top tourism destinations. Serbia has

Most visitors to Serbia arrive in Belgrade, a dynamic modern city with a long history. Conquered and rebuilt by Celts, Romans, Slavs, Turks, and Austro-Hungarians, the Kalemegdan Fortress anchors the city to its strategically important position at the conﬂuence of the Danube and Sava rivers. From the fortress’s walls visitors have great views of New Belgrade – the city’s up-and-coming business and commercial centre – rising across the river. Belgrade is ﬁlled with lively cafés, eclectic architecture, and a rich cultural scene. It has many luxury hotels, and often hosts international exhibitions and conferences.

something for everyone. It offers lively cities, picturesque villages, a range of possibilities for an active holiday, natural spas, five national parks, a rich architectural heritage, and, for the business traveller, world class conference and meeting facilities as well as luxury hotels that offer special services for travelling executives.

National Theatre and Statue of Prince Mihailo III on Republic Square

SERBIA

Business & Leisure Beyond Belgrade

Rural heartland

Beyond Belgrade, the multi-ethnic city of Novi Sad, Serbia’s second largest urban centre, has a growing economy and a lively cultural life, although is considered more laid back than Belgrade. It is known for its art (and artists), music, food and fun, and hosts Exit, the very popular international music festival, every year in July. It enjoys a picturesque riverside location on the Danube beneath the imposing 600 year old Petrovaradin Fortress. Novi Sad is the home of the Fine Arts and Music Academy and Vojvodina Museum, which houses regional exhibits from the Paleolithic to late 19th century, with an emphasis on relics from WWI and WWII. Novi Sad’s cuisine, a unique mixture of Serbian, Hungarian, Romanian and Slovakian spices and traditions, can be enjoyed in the city’s many restaurants. Often diners are entertained by a tamburitza orchestra.

Visitors in search of Serbia’s rural heartland can visit many picturesque villages scattered around hills and valleys, including Kosjeric, with its rich farmland and picturesque architecture; Lucani, another agricultural centre with luxuriant forests all around; and Mionic, with its mountain streams, fruit orchards and cattle farms.

Nis, Serbia’s third largest city, lives up to Serbia’s reputation for a rich cultural life. Built on both sides of the Nisava River, Nis hosts an annual international ﬁlm festival in August and a three day music festival, Nisomnia. Legend says that Roman emperor Constantine the Great was born in Nis, and the remains of a 4th century villa he ordered built can still be visited. Constantine is celebrated every year in June with a popular festival. The city also has a lively shopping district, an archeological museum, and a well-preserved amphitheatre.

Serbia also has several “ethno villages” that celebrate traditional Serbian life and are an excellent choice for travellers who want to learn more about Serbian culture. Sirogojno is the home of the Museum of National Architecture, and contains a recreation of a traditional Serbian mountain village. Near the village of Mokra Gora is Drvengrad, the creation of world-famous Serbian ﬁlm director Emir Kusturica. While shooting one of his movies in the area, Kusturica noticed that even when it was raining almost everywhere else, one place was almost always sunny, so he built a village there that recreates a Serbian village of the 19th century. It has several cottages as well as a cinema, library, art gallery and shops.

UNESCO World Heritage Sites Serbia is also known for its many monasteries, some of which have been named UNESCO World Heritage

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Business & Leisure Sites. Decani Monastery, 17 km from the town of Pec, is the biggest medieval building in Serbia and is one of the country’s World Heritage Sites. It contains a fabulously rich collection of Byzantine paintings that depict the history of Christianity in more than 1,000 individual figures and scenes created between 1335 and 1350. Decani’s frescoes are described by UNESCO as “one of the most valued examples of the so-called Palaeologan renaissance in Byzantine painting, a valuable record of life in the 14th century.” Gracanica Monastery, completed in 1321, is another World Heritage Site and is considered one of the finest examples of Serbian medieval art in the first half of the 14th century. Gracanica’s well-preserved frescoes were painted by Greek painters from Thessalonica. Studenica Monastery is a well-preserved 13th century monastery set on the wooded slopes of Mount Radocelo and is one of the most popular monasteries in the country.

Five national parks Nature loving travellers can explore Serbia’s ﬁve national parks, including Djerdap National Park, which stretches along the Danube and offers unforgettable vistas of the great river; Tara National Park, set in mountainous western Serbia and an excellent choice for summertime hiking; Kopaonik National Park, home of Serbia’s tallest mountain and a growing

ski centre; Fruska Gora National Park with its lush forests, 16 orthodox monasteries, archaeological sites, and many vineyards where travellers can sample the wines; and mountainous, virtually undeveloped Sara National Park in the Serbian province of KosovoMetohija; it is the home of lynx, bear and chamois. For sports lovers, Serbia has something to offer all year. In winter, Kopaonik has more than 44 km of ski trails and 17 km of ski lifts. The Panonian Basin is a paradise for bird-watchers, while the Drina river is a popular choice for river rafting excursions. And these are just a few of the possibilities in sports friendly Serbia. Visitors can shop for traditional handicrafts throughout the country, relax in one of Serbia’s many spas, or just enjoy the luxurious facilities at one of the country’s best hotels. Getting to Serbia has never been easier. The country has three international airports (Belgrade Nikola Tesla, code name BEG; Niš Constantine the Great Airport (INI) in Niš; and Priština International Airport (PRN) located in Kosovo Metohija province. Serbia’s national carrier is JAT Airways, which operates a ﬂeet of 30 aircraft and offers connections to most European destinations. Serbia’s tourism industry deﬁnitely has growth potential.

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Business & Leisure

Belgrade, the Perfect Combination of Business and Pleasure One of the oldest cities of Europe and capital of former Yugoslavia, Belgrade breeds a quality of life that has inspired many expatriates to never leave again. Its openhearted spirit in combination with a myriad of attractions and vibrant social life make Belgrade the most dynamic city in South Eastern Europe.

The city’s historic sites include the National Museum and the adjacent National Theatre, Nikola Pašic Square, Students’ Square, the Kalemegdan Fortress on a hill above the city, Knez Mihailova Street, the Parliament building, the Temple of Saint Sava, Tito’s mausoleum, Beli Dvor (the White Palace, ﬁlled with priceless works of art), and the Old Palace. Museums, parks and nature preserves, Dorian Gray

Dorian Gray

and the hilltop Avala Monument are other must-sees.

Belgrade is all about wining and dining. Five recommended venues:

Sports loving visitors gravitate to Ada Ciganlija on the Sava River, Belgrade’s biggest sports and recreational complex. It offers seven km of beaches and facilities for sports of all kinds, from golf and tennis to bungee jumping and wake boarding. In the peak summer months, visitors can enjoy live music and overnight beach parties.

Dorian Gray Outstanding restaurant offering great selection of wine, with a large outdoor terrace facing Strahinjica Bana Kralja Petra 87-89, Tel. +381 11 263 4151

Belgrade, dubbed “the capital of cool” by the British Times, has a lively social scene year round. In summertime river clubs or so-called ‘splavovi’ provide entertainment along the banks of the Sava and Danube rivers. Spread throughout the city there is a fashionable bar scene, with one of the most popular strips on Strahinjica Bana in Dorcol. For a taste of Serbian tradition, visitors can explore the ancient Skadarlija neighbourhood, known for its concerts of starogradska (traditional music) and its kafanas (some of the city’s best and oldest traditional restaurants). Zemun, within splitting distance from Central Belgrade, offers a convenient getaway from the busy city with a great variety of (ﬁsh) restaurants along the Danube. Dorian Gray

Madera Renowned Belgrade restaurant with a beautiful garden located on the periphery of Tašmajdan Park Bulevar Kralja Aleksandra 43 Tel. +381 11 323 1332 ¿Que Pasa? Award-winning restaurant with international cuisine, part of Aleksandar Palace Hotel Kralja Petra 13-15 Tel. +381 11 328 4764 Restaurant Zaplet Stylish restaurant with very diverse menu, located in one of Belgrade’s arty suburbs Kajmakcalanska 2 Tel. +381 11 240 4142; Restaurant Reka Offers a truly Serbian dining experience including live music, situated along the banks of river Danube in Zemun Kej Oslobodjenja 73b Tel: +381 63 864 8215 /611 625

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Deloitte d.o.o. Makenzijeva 24 11000 Belgrade Serbia Tel: +381 11 3812 100 Fax: +381 11 3812 101 www.deloitte.com/rs