doing business in serbia 2014
TRANSCRIPT
Tel: +381 11 3398 550Fax: +381 11 3398 814
officeŠsiepa.gov.rswww.siepa.gov.rs
www.doingbusinessinserbia.com
DOINGBUSINESS IN
SERBIA 2014
01 F O R E W O R D
02 B U S I N E S S E N V I R O N M E N T
S t a b l e a n d P r e d i c t a b l e
03 W H Y I N V E S T ?
Tr a d e U n l i m i t e d H u m a n R e s o u r c e s Fa v o r a b l e G e o g r a p h i c P o s i t i o n
L o w O p e r a t i n g C o s t sF i n a n c i a l I n c e n t i v e s
S I E P A - A D e c a d e o f M i n d i n g Yo u r B u s i n e s s
04 W H E R E T O I N V E S T ?
A u t o m o t i v e I n d u s t r y A g r i c u l t u r e a n d Fo o d P r o d u c t i o n I C T S e c t o r
S I E P A - S u p p l i e r s D a t a b a s e ™ E l e c t r o n i c s I n d u s t r y
S h a r e d S e r v i c e s a n d B P OR e a l E s t a t e
W o o d a n d Fu r n i t u r e I n d u s t r y Te x t i l e a n d A p p a r e l P r o d u c t i o n
05 S T E P S T O T A K E
G e t t i n g To a n d W o r k i n g i n S e r b i a O f f i c e a n d R e s i d e n t i a l S p a c e M a r k e t
C o n s t r u c t i o n P r o c e d u r e S I E P A - I n v e s t m e n t L o c a t i o n s D a t a b a s e ™ U s e f u l C o n t a c t s
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00 I N D E X O F C O N T E N T
Airport City Belgrade, the first multi-use commercial facility in Serbia that mergesthe latest in building technology, together with a tenant-focused approach.
Poland
-180
Czech R.
- 191Slovakia
-104
Hungary
-289Romania
-301Serbia
+120 Bulgaria
-139
06 07
Source: EY *
Based on the comparison between the number of FDI projects secured over 2004-2008 and 2009-2013 periods, Serbia is the only country in CEE that has raised i ts FDI attractiverness
* EY European Attractiveness Survey 2014
FDI Projects by Countries
According to EY*, Serbia was one of Europe’s favorite investment locations in CEE in 2012. The success continued in 2013 as the number of new jobs was up by 18%, placing Serbiaon the 5th position in Europe, while 63 new projects made Serbia the second most attractive location in CEE, second only to Poland. 01 F O R E W O R D
Poland
802
622
Slovakia
305
201
Bulgaria
287
148
Hungary
597
308
Czech Rep.
512
321
2004-2008
2009-2013
Romania
612
311
Serbia
164
284Nikola Jankovic
Acting Director, SIEPA
08 09
www.srbija.gov.rs www.seio.gov.rs
Foreign investors are accorded national treatmentand provided with full legal security and protection in respectto the rights acquired by the virtue of investment. 02 B U S I N E S S
E N V I R O N M E N T
Over the past several years, the Serbian economy has experienced growth due to strong foreign investment and continuous improvement of its business environment. Major steps to improve the business climate and reduce the state’s footprint in the economy have been implemented with the aim to provide momentum for investments, economic diversification, and sustainable private sector growth in order to create jobs.
Serbia has set an ambitious plan regarding its top priorities - EU accession, fiscal consolidation, finalization of the privatization process, improvements of the Labor Law and pension system and reforms in the functioning of the public enterprises.
The European Council granted the status of candidate country to Serbia in March 2012 and decided to open accession negotiations in June 2013. Accession negotiations were formally launched in January 2014. The Stabilization and Association Agreement between Serbia and the EU entered into force in September 2013. Serbia has continued to build a satisfactory track record in implementing the obligations of the SAA as noted in the EC latest report from October 2014. The analytical examination of the EU Acquis (screening process) started in September 2013 and so far 5 chapters have been fully screened and screening of 9 more chapters have started. Overall, the screening exercise is expected to be completed in 2015.
Serbia’s external position is more balanced than before the 2008–09 crises. This was reflected by a lower current account deficit, a more competitive exchange rate and a comfortable level of international reserves. The banking system is liquid and well-capitalized, a result of cautious economic policies pursued before and during the crisis.
The government’s fiscal consolidation plans outlined in the draft medium-term strategy identify a set of measures that aim to put public finances on a sustainable footing. The 2013 general government deficit of 5.0% of GDP exceeded the initial target, although it came in below the 2012 deficit. The 2014 budget envisaged an increase in the deficit to 5.5% of GDP to finance mainly higher investment and interest payments.
A new Privatization Law was enacted in August, setting the end of 2015 as a deadline for completing the privatization process and outlining the possible models of privatization: strategic partnership, transfer of capital without compensation, sale of capital and sale of assets.
The new Labor Law was adopted granting more flexibility to employers and providing options for work previously not available. Amendments to the Pension and Disability Insurance Law were adopted in July. In August, amendments to the Bankruptcy Law were adopted, regulating more in detail the role of the bankruptcy administrator and creditor rights.
Serbia wants to secure a three-year loan agreement with the International Monetary Fund this year end to help reach debt and deficit goals.
“Serbia has great potential in the IT industry- that is why the world’s biggest software companydecided to open a development centre in Belgrade”.Mr. Christopher Brennan,Central Eastern Europe General Manager,Microsoft
10 11
GDP Growth Rates Serbia vs Eurozone Inflation RSD Exchange Rate EUR/RSD, USD/RSD
Serbias trade balance in million EUR
Sou
rce:
NBS
, Eur
osta
t
Sou
rce:
NBS
, Eur
osta
t
2009 2010 2011 2012 2013 2014*
16,000
18,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
5,9617,393
8,441 8,73810,996
5,514
15,469
7,500
14,71614,25012,622
11,505
Eurozone GDP Serbia GDP * January - July * January - July
2011 2012 2013 2014* 2011 2012 2013 2014* 2011 2012 2013 2014*
4
3
2
1
0
-1
-2
-3
10
11
1213
14
9
87
6
54
3
2
1
0
-1-2
-0.6 -0.4
1.6
-1.5
-0.580.8
86.183.1
87.1
2.5
113.7 114.6 116.7
0.9
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55
50
1.4
12.2
2.1
7.0
2.2
104.6
USD EUR
Import Export
After the screening process in 2014Serbia will officialy start the EU negotiation process in 2015
Tax rates in Serbiaare still one of the mostfavorable in Europe.
B U S I N E S SE N V I R O N M E N T
Following an export led recovery last year, the economy contracted in the first half of 2014. Hence H1 2014 GDP dropped by app. 0.5% yoy (+0.1% in Q1 and -1.1% in Q2). Exports of goods and services in euro terms kept growing by double digit rates, while imports remained restrained due to weak domestic demand. Net foreign direct investment rose slightly on the previous year, but is still far below its pre-crisis levels.
Heavy floods in the spring have hit agriculture and damaged transport and, in particular, energy infrastructure, further undermining short term growth. The floods will most
likely have a negative contribution on continuation of trade gap narrowing, bearing in mind the stronger needs for energy imports, and, possibly, lower potential of agricultural exports.
In the conditions of weak domestic demand, the effects of good last year’s agricultural season, decrease in global commodity prices and relative dinar stability in most of 2013 and 2014, inflationary pressures have decreased in the last and this year. The annual inflation slowed down to 2.1% in July 2014 which is below the lower targeted band of the NBS (of 4±1.5%).
The risk premium, as measured by JP Morgan's EMBI index, in the region have had a decreasing trend since February 2014 and has declined further during the second quarter. In addition to global factors, the fall in Serbia’s risk premium was aided by the announced fiscal consolidation measures. Despite the flooding, Serbia’s risk premium was on a decline throughout May and the first half of June, when it fell to the level of 220 bp last recorded in early November 2007.
In the second quarter of 2014, the year-on-year inflation moved below the lower bound of the target tolerance band. In fact, it plunged to 1.3% in June, its lowest level in the past 50 years. Persistently low inflationary pressures over the past 18 months reflect the absence of major cost-push pressures, low aggregate demand, lower inflation expectations and relative stability of the exchange rate.
As of Q3 2014, the Serbian banking sector consisted of 29 banks, most of which in majority foreign ownership. As assessed by the National Bank of Serbia in March 2014, the banking system is stable and highly liquid. Capital adequacy ratio is more than 20%, almost two times higher than the regulatory minimum in Serbia and two and a half times higher than in the EU. Judging by all criteria, banking sector liquidity is running exceptionally high. At the end of 2013, liquid assets covered 38.5% of total assets and 62.2% of short-term liabilities. In terms of their share in total banking sector assets, the most significant foreign banks are from Italy and Austria, followed by banks from Greece, France and other countries.
STABLE AND PREDICTABLE www.nbs.rs
12 13
-Duty-free access to a 1 billion people market;-State grants for new jobs created;-One of Europe’s lowest CIT rates - 15%;-Major European corridors’ intersection point;-Access to a competitive and qualified talent pool.
03 W H YI N V E S T ?
LOW OPERATINGCOSTS
FINANCIALINCENTIVES
TRADEUNLIMITED
HUMANRESOURCES
FAVORABLEGEOGRAPHICPOSITION
FDI Rankingby value
FDI Rankingby No. of Projects
8.7%GREECE
8.6%NORWAY
6.5%GERMANY
5.3%RUSSIA
4.9%SLOVENIA
4.8%BELGIUM
4.3%FRANCE
5.2%FRANCE
10.2%SLOVENIA
5.0%GREECE
14.1%ITALY
12.0%AUSTRIA
12.0%US
13.0%GERMANY
16.9%ITALY
11.6%AUSTRIA
5.0%US
4.4%ISRAEL
2.5%CROATIA
2.5%SWITZER.
Source: SIEPA database of investment projects 2001-2014*
14 15
Owing to the free trade agreements with these countries, Serbia is an ideal place for setting up a manufacturing/distribution hub to serve the markets of the Russian Federation,South East Europe, the EU and EFTA countries, Belarus, Kazakhstan, and Turkey.
CEFTA
In addition to duty-free trade between member countries, the agreement specifies accumulation of product origin, meaning that products exported from Serbia are considered of Serbian origin if integrated materials originate from any other CEFTA country, the European Union, Iceland, Norway, Switzerland (including Liechtenstein) or Turkey, provided that such products have undergone sufficient processing, i.e. if at least 51% of the value added in the product is sourced in Serbia (if value added there is greater than the value of the materials used in Serbia).
EFTA
Industrial products exported from Serbia to EFTA member states (Switzerland, Norway, Iceland, and Liechtenstein) are exempted from paying customs duties, except for a very limited number of goods, including fish and other marine products. Custom duties for imports of industrial products originating in EFTA states will gradually be abolished by 2014. Trade in agricultural products is regulated by separate agreements with each of the EFTA members, providing for mutual concessions for specified products.
W H YI N V E S T ?
Russian Federation
The agreement stipulates that goods produced in Serbia, i.e. which have at least 51% value added in the country, are considered of Serbian origin and exported to Russia customs free. The list of products excluded from the Free Trade Agreement is revised annually. As of March 2012, the list of excluded products includes: poultry and edible waste, some sorts of cheese, sugar, sparkling wine, ethyl-alcohol, tobacco, cotton yarn and fabric, some types of compressors, tractors, and new and used passenger cars. There is also a list of products originating from Russia which are excluded from the agreement.
TRADE UNLIMITED
Serbia is the only country outside of the Commonwealth of Independent Statesthat has an a Free Trade Agreement with Russia.Increase your competitiveness by benefiting from a Customs-Free Access to a Billion Person Market.
Turkey
Companies from Serbia can export to Turkey without paying customs duties. Imports of industrial products from Turkey are generally customs-free, but for a large number of goods customs duties will be progres-sively abolished over a six-year period, ending in 2015. Customs duties remain in effect for agricultural products.
EU
Some export limitations are imposed only on exports of baby beef, sugar and wine in the form of annual export quotas. Import from the EU is customs-free for most of the products.
Kazakhstan
The Agreement is in effect as of 2011. The list of free trade exemptions includes meat, cheese, wine, motor vehicles and several other product groups.
Belarus
There are only a few exceptions to the Agreement, including sugar, alcohol, cigarettes, as well as used cars, buses, and tires.
www.mtt.gov.rs
16 17
Source: National Employment Service of Serbia
Source: National Employment Service of Serbia HUMAN RESOURCES
According to elance.com Serbia is among the top 5 countries in Europe based on freelancers’ earnings, while the number of freelancers rises by 70% annually.University of Belgrade has confirmed its world class ranking on the Shanghai List of top 500 universities globally.
W H YI N V E S T ?
Educated
Serbia's labor force offers a unique combination of high quality, wide availability and cost effectiveness. It is one of the key factors enabling strong business performance.
For decades, Serbia fostered extensive relationships with leading western economies. A list of blue-chip companies maintaining strong ties with local partners is topped by Siemens, Alcatel-Lucent, Fiat, IKEA and many others. Throughout years of cooperation, Serbian workers received specific know-how and adopted advanced technological applications and intense quality control standards. Having vast experience in manufacturing and management, local staff requires minimum training to adopt to cutting-edge technologies and assembly processes.
Universities and colleges in Serbia produce around 47,500 graduates annually. One third of them are produced by business and administration universities, while another third comes from technical universities. Leading institutions in this field such as the School of Electrical Engineering or the School of Mechanical Engineering in Belgrade or the Technical University in Novi Sad are recognized internationally for their expertise. University of Belgrade has confirmed its ranking from 301-400 place on the 2014 Academic Ranking of World Universities (ARWU), also known as the Shanghai List of top 500 universities globally. Although the list is considered informal, it is a prestigious ranking comprising only two percent of all universities globally.
High-quality technical education is largely based on elementary and high schools offering a more advanced curriculum in technical sciences than in most other CEE countries. Top-quality
management education in Serbia is provided through joint graduate and post-graduate courses organized by local universities and renowned western business schools such as the French HEC, British Sheffield University and Heriot Watt University. In addition, there is an increasing number of international elementary and high schools in Serbia. At the moment, they offer curricula in English, German, French, and Russian, including internationally recognized examinations.
Available
Recruitment of young graduates and undergraduates is simple given the high unemployment rate, especially among those under 30 years of age (almost 50%). Many are keen to work for international companies. Serbian workers have a strong work ethic and demographics are favorable for foreign companies: a wealth of ambitious and educated people coupled with a high unemployment rate keep wage expecta-tions at competitive levels.
The rate of unemployment is as high as 22%, while the percentage of those with college and university level education seeking jobs stands at around 15%. The number of engineers and managers is sufficient to meet the growing demand of international companies in the country. Freelancing is also an increasingly popular concept among young educated people in Serbia, especially in creative industries, software develop-ment etc. According to elance.com Serbia is among the top 5 countries in Europe based on freelancers’ earnings, while the number of freelancers rises by 70% annually.
Flexible
The new labor regulations (Labor Law, in effect as of July 2014) are in favor of employer, bolster new employment and labor flexibility. Employees are entitled for an increased compensation for working at night and overtime (26%), but not for working in shifts. A contract for a definite period of time may now last for up to two years, while severance pays are paid only for the time with the current employer. Standard work week for full-time work consists of 40 working hours, but may be reduced to not less than 36 hours. In general, a work week is comprised of 5 days but in case there is a need for work in shifts and overnight hours, an employer is entitled to determine the exact days and working hours, pursuant to the needs of a working process. Also, if a work process allows it, there is a possibility of flexible hours i.e. flexible start time, but fixed duration. In a given calendar year, an employee has the right to at least 20 working days of annual paid leave (holiday) as determined by general act or contract of employment. This right is acquired after only a month of continuous work with the current employer. Working after 10pm is considered work at night.
Cost Competitive
Average salaries in Serbia are low enough to ensure cost-effective operations. While slightly higher than in neighboring countries such as Bulgaria, total costs for employers stand at merely 60% of the level in CEE countries.Social insurance charges and salary tax nominally amount to roughly 62% of the net salary, but the tax burden for employers can be largely reduced through a variety of financial and tax incentives for new employment.
The average gross salary with out employer’s contributions across economic sectors for the first eight months of 2014 was around €540 as noted by the Vienna Institute, but the labor costs vary among individual industries, cities, and education levels. The ratio of average salaries among economic sectors may differ as much as 5:1, while the salary range for the same position in different regions may also be significant. Overall salary levels in euro equivalent are rather stable and vary only by a couple of percentage points annually.
The minimum salary has to be at the statutory minimum wage determined by the mutual consent of the Serbian Government, labor unions, and the association of employers. It is currently slightly higher than €1 per hour, i.e. close to €240 on the monthly level (as of 2015).
The structure ofunemployed by level of education (August 2014)
www.bg.ac.rswww.uns.ac.rswww.ni.ac.rs
Number of registered unemployed people,by age (August 2014) 165,512174,802187,056177,976757,243
AGE
TOTALAGE
20-29AGE
30-39AGE
40-49AGE
50-59
53.53%
HIGHSCHOOL
UNIVERSITYAND COLLEGE
ELEMENTARYSCHOOL
405,379
14.61%
110,680
31.85%
241,184
413 490 537777 824 870 965 1.048
Average grossmonthly salary (EUR)
Source: Vienna Institute for International Economic Studies, 2014
BULGARIA ROMANIA SERBIA HUNGARY SLOVAKIA POLAND CZECH REP. CROATIA
This table does not represent total cost of employees. It is used as an international benchmarking standard. Average wages encompass net salary and contributions and tax paid by employees only. Adding contributions paid by the employer on behalf of the employee will result in total cost.
18 19
FAVORABLE GEOGRAPHIC POSITION
Serbia bridges the East and the West.Its treasured position in the heart of South East Europemakes it an outstanding investment location.
Owing to its position on the geographic borderline between the East and West, Serbia is often referred to as a gateway of Europe. Two important European corridors, VII – the River Danube and X – the international highway and railroad, intersect on the Serbian territory, providing excellent connections with Western Europe and the Middle East. Serbia is thus a perfect place for a company to locate its operations if it wants to closely and most efficiently serve its EU, SEE or Middle Eastern customers. Bordering the EU, Serbia still offers a possibility of enjoying all benefits of working outside the EU while being able to provide services and transport goods in projected and flexible time frames.
The most efficient way to reach Serbia is by air, using one of the two available international airports in Serbia - Belgrade Airport and Nis Airport. The ease of traveling from Belgrade to almost every destination in the world, either directly or with a layover is provided by almost all major international airlines. The daily flight schedule to major transportation hubs such as Frankfurt, Rome, and Moscow includes more than four flights. Once in Belgrade, airport Nikola Tesla is located only 18 km away from downtown and, by taking a highway, it takes no longer than 20 minutes to reach the heart of the city. The road network connects the airport with major international roads E-75 and E-70 which link the capital to Zagreb, Nis, Novi Sad, Subotica, and other cities in Serbia and the region.
Air traffic to Nis is less frequent, yet it provides a good international connection to the city.
BucharestIstanbul
LjubljanaRome
ViennaZurich
Sarajevo
BerlinDüsseldorf
FrankfurtKiev
MilanMunich
ParisPrague
LondonMoscow
StockholmAmsterdam
BejingDubai
New YorkToronto
UP TO
1hrUP TO
2hrsUP TO
3hrsMORE THAN
3hrsDuration of flights
Amsterdam1722km Hamburg1547km Berlin1255km Frankfurt1282km Zurich1175km Munich930km
Milano1009km Rome1289km Prague907km Warsaw1067km Kiev1302km Bucharest641km
BELGRADE
Budapest384km
Bratislava578km
Moscow2235kmMinsk1532km
Vienna612kmStuttgart1451km
London2042km
Salzburg989km
Ljubljana510km Zagreb442km
Sofia756km
Skopje889km Thessaloniki1020km
Igoumenitsa1051km
Istanbul1356km
Konstanza702km
Graz699km
10th Pan European Corridor
7th Pan European Corridor
W H YI N V E S T ?
LOW OPERATING COSTS
To avoid unnecessary tax burdens, Serbia has double taxation treaties with 55 countries (as of September 2014).
New employment entitles employers to a sizable relief of personal income tax and
contributions of up to 75%.
W H YI N V E S T ?
20 21
BULGARIA
10%
SERBIA
15%
ROMANIA
16%
CZECH REPUBLIC
19%
POLAND
19%
HUNGARY
19%
CROATIA
20%
SLOVAKIA
23%
SERBIA
10%
BULGARIA
10%
CZECH REPUBLIC
15%
ROMANIA
16%
HUNGARY
16%
SLOVAKIA
19-25%
POLAND
18-32%
CROATIA
12-40%
SERBIA
20%
BULGARIA
20%
SLOVAKIA
20%
CZECH REPUBLIC
21%
POLAND
23%
ROMANIA
25%
CROATIA
25%
HUNGARY
27%
CorporateProfit tax
SalaryTax rate
VAT
www.mfin.gov.rs
Source: National IPAs
Free zones in SerbiaSubotica
Zrenjanin
Novi Sad
Smederevo
Pirot
Vranje
Krusevac
Sabac
Uzice
“South” - Nis
Apatin
SvilajnacFAS Free zone -Kragujevac
FINANCIAL INCENTIVES
SIEPA - one-stop-shopfor financial support
W H YI N V E S T ?
22
Decree Statistics as of October 2014
www.siepa.gov.rs
www.privreda.gov.rs
TOTAL NUMBER OFSUBSIDIZED PROJECTS 200
TOTAL VALUEOF THE PROJECTS
NEW JOBSCREATED 42,405
TOTAL AMOUNTOF SUBSIDIES PLEDGED
A DECADE OF MINDING YOUR BUSINESS
SIEPA was established more than a decade ago and entrusted with the mission to support foreign companies seeking to set up or expand their presence in Serbia and Serbian companies doing business abroad. Today, a staff of nearly 50 multilingual employees handles projects from and to all over the world.
We provide professional services to companies interested in setting up business operations in Serbia, focusing on all relevant issues in their decision making process. Our staff is ready to offer information on the general investment environment as well as targeted legal and industry-specific advisory services. Our network of contacts provides links to all levels of government as well as private service providers.
By administering the financial incentives program offered by the government, we have supported opening of more than 40 thousand new jobs since the launch of the program in 2006. At the same time, we have technically and financially supported thousands of Serbian companies in increasing their competiveness at global markets.
SIEPA’s work is widely recognized, with World Bank’s MIGA ranking SIEPA among the top five IPAs of developing and countries in transition topping the list of our international acknowledgements. The list of our clients includes FIAT, Benetton, Panasonic, Bosch and many other global and regional industry leaders.
We invite you to contact our expert staff which is ready to assist you in developing your business in Serbia. Working with us is simple, easy, and still costs nothing.
www.siepa.gov.rs
Source: SIEPA - October 2014
24 25
„I have been nothing but impressed by Serbia - a hidden gem to the business world.I will be sure I share my very positive experience with many inside and outside of NCR“
Mr. Jeff McCroskey, VP Services, Europe04 W H E R E T OI N V E S T ?
AUTOMOTIVEINDUSTRY
AGRICULTUREAND FOOD
ICTSECTOR
SHAREDSERVICESAND BPO
ELECTRONICSINDUSTRY
TEXTILEINDUSTRY
WOOD ANDFURNITUREINDUSTRY
REALESTATE
In previous chapters we saw the main reasons why companies selected Serbia as the host for their projects and also saw detailed information of the FDI source countries. In order to get the full picture and to understand the potential and attractiveness of Serbian economy we will take a look at the specific sectors which attracted the largest portion of investments.
Apart from what we could mark as expected FDI results such as financial sector (vast majority of banks operating in Serbia
are now foreign owned), telecom, retail and real estate, Serbia recorded large investments in the automotive sector, both in value and project numbers. FIAT nicely rounded our efforts to revitalize the automotive industry but in no terms is a sole player as the next pages will show.
Where Serbia truly stands out is the fact that combined agro-food investments take a very high place in the overall analysis, being second in terms of number of projects and third in value terms. There are a few reasons behind this, firstly the booming local market which was very interesting for privatizations in the first round of the tranzition, between 2001 – 2005 followed by major acquisitions such as Pepsico or Heineken which occurred later, after 2007. Secondly the
regional CEFTA market proved to be one of the major drivers of the FDI in this sector. Pharmaceutical sector was also quite interesting to investors and here the network of FTA’s, especially with Russia (where our pharmaceutical products are exported in significant scale) played an important role. Investments into construction material production were also quite important both in value terms and project numbers. If we deepen the sector analysis and look at the number of projects realized we are able to get a better picture of the attractiveness of specific sectors in Serbia.
The importance of the automotive industry grows compared to the value analysis pushing it to the number one position. This proves that FIAT investment although strategically important wasn’t the main contributor and that the sector has much more to offer as many German and French investors will testify. Looking at project numbers, the combined manufacturing sector plays a much more important role than in value terms. Combined automotive, electrical and electronics, machinery and equipment, textile and clothing and metallurgy and metal work projects account for a large stake of the pie. This tends to confirm our strategic orientation as we declared investments into automotive, electronics and ICT the ones of strategic importance. It also confirms that the key messages sent in the previous chapter are correctly perceived by the investment community.
FDI per sectorby value
TELECOM.
16.6%
FOODBEVERAGE &AGRICULTURE
12.4%
RETAIL
8.8%
AUTOMOTIVE
7.8%
OIL & GAS
6.9%
REAL ESTATE
5.3%
TOBACCO
4.8%
CONSTRUCTION
3.9%
PHARMACEUT.
3.5%
WOOD& &FURNITURE
1.5%
FINANCIAL
17.9%
FDI per sectorby No. ofprojects
FOODBEVERAGE &AGRICULTURE
10.5%
CONSTRUCTION
7.7%
TEXTILE
7.5%
MACHINERY &EQUIPMENT
6.4%
ELECTRICAL &ELECTRONICS
5.5%
REAL ESTATE
5.0%
FINANCIAL
4.4%
RETAIL
3.9%
METALLURGY
3.6%
WOOD& &FURNITURE
2.8%
AUTOMOTIVE
16.0%Source: SIEPA database of investment projects 2001-2014
26 27
“Our operations here will provide Fiat Group with the means to widen itscustomer base and to support its expansion and volume aspirations from a strategic region,
while, at the same time, contributing to Serbia’s industrial and technological development.For over half a century, FIAT and Zastava have played
an important role in developing the Serbian automotive industry.”Mr. Sergio Marchionne,
President, FIAT Group
AUTOMOTIVE INDUSTRY
- Wide availability of highly-qualified staff; top technical education at both the secondary and tertiary levels.- Perfect geographic location for efficiently serving EU, SEE and Middle Eastern customers. - Sufficient capacity for even larger volumes of production.
W H E R ET O I N V E S T ?
The Serbian automotive industry has a tradition of more than 70 years, dating back to 1939 in the city of Kragujevac, where the Serbian producer of motor vehicles, Zastava, produced automobiles under the license of FIAT. Zastava’s suppliers manufactured under strict FIAT quality standards and acquired high-quality production standards that enabled them to work with other western car manufacturers such as Mercedes, Ford, PSA and Opel. At the same time Opel cars were assembled in the town of Kikinda and Serbian producers of trucks and buses worked hand in hand with major OEMs such as Mercedes, Man and others.
Today, it is one of the most prominent sectors in Serbia, accounting for almost 8% of the entire FDI stock in Serbia since 2000. More than 60 international investors have invested almost €1.7 billion, creating more than 27,000 jobs. The Serbian automotive industry supplies almost all major European and some Asian car manufacturers.
The largest and the most important investment in the sector is the FIAT project, not only because of the investment amount, but also because it has helped to attract a number of other car parts producers. It is also the largest one of the most important investment projects in the past 20 years and a future engine of growth of the Serbian economy. FIAT produced 117,000 vehicles in 2013 generating over €1.5 billion of turnover, majority of which was exported. Hence FIAT took over the first place in the race for the biggest exporter from Serbia.
Manufacturing of vehicle chassis system parts, especially tires and suspension parts is most prominent in the industry. Electrical system components are another dominant product group with car batteries and wiring installations as the most important products. Also, production of engine components, mostly casted, is very significant, along with forged and machined parts like camshafts, brake discs, valves and flywheels.
Sector Overview
Major Players:
www.acserbia.org.rs
28 29
- Serbia is a global leader in the export of frozen raspberries with $232 million exported in 2013.- Serbia is the largest provider of frozen fruit to the French and German market, and the second largest to the Belgium market in 2013.
- Highly-attractive sector accounting for 12.4%of FDI stock since 2001.
- One of the few industry sectors recording a surplus; made-in-Serbia food is present around the globe.
AGRICULTURE ANDFOOD PRODUCTION
W H E R ET O I N V E S T ?
Serbia boasts ideal natural conditions for growing crops, fruit and vegetables. The soil is still one of the cleanest in Europe, while most of the fruit is grown in perfect conditions; it is hand-picked, carefully stored, and packaged in order to attain the highest possible quality and a unique flavor. Serbia’s diverse climate and ample land resources also create unique opportunities for the development of primary vegetable production.
An excellent raw material base, network of FTAs, and a long tradition of high-quality food production and strong regional brands are key reasons world class companies have come to Serbia. As noted above analysis, the agro-food sector accounts for a massive proportion of foreign direct investments, whether in terms of value or of the number of projects.
In addition to excellent raw materials and conditions for producing high-quality, healthy food in Serbia, investors can also enjoy strong support from Serbia’s widely recognized
fruit-research institutes. Research mainly focuses on technologically-advanced production that leads to high-quality, environmentally-friendly seeds and vegetable crop production. Moreover, Serbian law prohibits the production and import of any genetically modified (GMO) foods and seeds.
Made-in-Serbia food is present around the globe, from Japan to the US, and is sold under Serbian brands and through world’s largest supermarket chains such as Tesco, Lidl, Asda, Spar, Carrefour, Metro, Idea, Leader price, X5 Retail group, Magnit, Auchan Group and Dixie Group, Kopeika, and Rewe. In the first seven months of 2014, Serbia exported €1,232 million of agriculture produce, which is for 16.1% higher than in the same period last year, making it one of the few industry sectors recording a trade surplus (€537.3 million). International customers keep increasing orders for Serbian truffles, raspberries, apples, corn, juices, concentrates, purees, jams, frozen and dried fruit and other first-class produce.
www.serbiaorganica.info
www.spos.info www.serbiaorganica.info
www.srpskemlekare.org
Sector Overview
Major Players:
30 31
SIEPA SUPPLIERS DATABASE™
If you know what you’re looking for,we know where to find it.
Upgrade your business by buying products and services from Serbia. In order to assist you in doing just that, we have developed a comprehensive tool that enables on-line browsing of our SIEPA Suppliers Database™ and find the suitable product or component for your business. This ever-expanding database currently has around 2,500 suppliers and is searchable by various criteria such as product, sector, technology, region, and others. We come in once you find the product and shortlist companies. By using our vast experience with the Serbian industry, we will help you select the right company and put you in contact with the key people to make sure you establish mutually-beneficial business cooperation.
serbia-suppliers.rs
- Serbia - home to 1,600 innovative IT Companies employing more than 14,000 people.- Microsoft’s 4th development center in the world opened in Serbia, evolving over time into an innovation center. - Expertise in custom, high-end IT development services including software development, hardware, and solutions.
ICT SECTOR
W H E R ET O I N V E S T ?
As the world market for ICT continues to evolve towards outsourced software engineering, offshore systems design and integration, Serbia is well-placed both geographically and structurally to provide a cost-effective, reliable alternative to more established markets. An outstanding pool of intellectual capital, attractive labor costs, excellent skills, good communications networks and a high fluency in English are just some of the key competitive advantages that persuade international companies to expand their businesses to Serbia.
Engineering education in Serbia is particularly strong, with approximately 33% of university graduates coming from technical schools. ICT is taught at 35 high-education institutions, 16 of which state-owned, 6 private and 13 state-owned Vocational Higher Schools. These institutions are located in 18 cities, which greatly helps recruiting a wide base of ICT students for two studying programs (Tertiary-type A and type B) and six studying sub-programs. Given today’s growing demand for ICT products and services, Serbian educational institutions are facing challenges, both accommodating booming interest among high-school graduates and supplying more experts to the market. Total number of new ICT enrollees in school year 2011/2012 was 5,523, of which 3,042 students
begun their ICT education with Tertiary type A studying program (OAS) and the remaining 2,481 with tertiary type B (OSS). Serbian ICT sector absorbs a vast majority of ICT graduates, although “brain drain” is still an issue.
The cost-competitiveness of engineers is another advantage of doing business with Serbia. Compared to salaries in the country, IT specialists earn more than average, but compared to their European colleagues, the situation is quite different. Net salaries range from €600 to €1,200 per month for highly-qualified and experienced, university-educated talents, while gross salaries range from €1,000 to €2,000 per month.
Shoulder to shoulder with food, production and automotive sector, ICT is becoming one of the pillars of the Serbian economy. A large number of Serbian ICT companies offer very strong technical skills that have attracted partnerships with international firms and won them a place in high-value market niches. Serbia ranks 40th on the list of biggest software exporters globally. In 2013 Serbia exported around €230 million in software services, which is a 30% increase compared to the year before and as much as 165% against 2008. Local market is worth additional €400 million.
Sector Overview
Major Players:
www.vojvodinaictcluster.org
www.ni-cat.org
www.ict-net.com
32 33
W H E R ET O I N V E S T ?
- Significant investment track record Siemens, Panasonic, Gorenje, Elrad, ATB, Gruner, Eaton.
- Manufacturing tradition and skillset in place.
- Fifth most exported oriented sector in 2013.
ELECTRONICS INDUSTRY
Serbia is home to a rich tradition in the electronics industry that dates back to the days of Nikola Tesla, one of the greatest pioneers and inventors in the field of electricity. This industry had its peak back in 1980s, when Yugoslavia’s electronics industry was a $1 billion sector that employed around 100,000 people. Although the sector today is still only a fraction of what it was back then, recent foreign direct investment into the industry and various state-driven initiatives suggest that this sector has strong potential for future growth.
From 2001 onwards, this industry has witnessed a steady revival primarily driven by a continual inflow of foreign direct investment - roughly €200 million. This, coupled with the upcoming opening of several ICT-electronics parks, illustrates that the best is yet to come for companies in Serbia’s electronics sector. Some of the key investments are those of Austrian giant ATB Gruppe, Slovenian home appliance company Gorenje that has invested a total of €44 million in three separate locations, Siemens with €16 million in Subotica and Panasonic with €13 million facility in central Serbia.
Serbian electronics industry is a thriving, export-oriented sector that grows with influx of foreign direct investment.
Exports from the industry were growing by 24% annually on average over the past four years (2010-2013). Between 15 and 20 electronics companies each export more than €1 million per year, while the entire sector exported €743 million in 2013 which made it the fifth most exported oriented sector.
The Government of Serbia was actively promoting the growth of this sector: along with automotive and ICT industry, the electronics sector was designated as one of the priority sectors in Serbia’s National Development Strategy and allowed investors in this sector to receive more favorable investment incentive packages. Companies in this industry have taken advantage of this fact: investments in the electronics industry are fourth when it comes to the number of projects which have been approved for funding and third in terms of created jobs.
Furthermore, numerous initiatives, including the promotion of IT and Research and Development parks throughout the country and the founding of an electronic systems cluster, will propel the sector even further.
Embedded World, Nuremberg, Germany
Sector Overview
Embedded World, Nuremberg, Germany
MEET US AT:
Major Players:
34 39
W H E R ET O I N V E S T ?
Sector Overview
- Low market saturation.- Available labor with low attrition rates which is proficient in foreign languages.- The right time zone to service European customers.
SHARED SERVICES AND BPO
Serbia holds a whole range of aces up its sleeve to emerge as a new hot spot for hosting BPO centers. Although new small-to-medium sized service providers are emerging on monthly basis, with an increasing number of big players, the market is still unsaturated compared to “usual” BPO locations in CEE. However, all of the pre-requisites for growth are in place and considerable growth potential especially given the size and availability of the labor pool. Many global players, mostly US companies, have already recognized and used Serbia’s potential as a BPO destination. The list of companies serviced from Serbia is much longer and includes companies across a wide spectrum of industries. They are serviced on as many as 17 languages.
The workforce is reliable, with a good skills base and business culture stemming from strong cultural and business ties with the West. The country has a level of multilingualism, especially as concerns the English language, almost without parallel in many other parts of Central and Eastern Europe. In 2012, Serbia was ranked fourth out of 76 reviewed countries in Business English proficiency by the Business English Index (BEI). The average attrition rate for large BPO centers is around 5 percent.
Although there are international BPO centers outside of the Serbian capital, companies with more diversified talent needs usually opt for Belgrade. It is one of the largest cities in CEE and
one of the biggest and the best university centers in Balkans. The total number of studying in Belgrade at all levels and across all faculties stands at around 118,000, more than half of the 230,000 students on the country level. Business-related studies are the most popular, while one third of all students belong to technical faculties. Out of just over 53,000 students enrolled in higher education in Serbia in 2012, nearly 27,000 of them have started studying in Belgrade.
The latest statistics show that the number of unemployed workers in Belgrade stands at around 107,000. Moreover, there are over 100,000 unemployed in Serbia holding a higher-education degree (college or university degree+), which is 14.6% of the total number of the unemployed. Due to a strong migration trend towards Belgrade the percentage of college/university among the unemployed in Belgrade is much higher. Unemployment level in the under 30 population is especially high, with around 300,000 unemployed workers in this tier.
The quality of life is exactly what one could expect from a capital of 2 million people, with international schools, quality medical services, and infrastructure to host a large expat community. In 2007, the Financial Times’ fDi magazine picked Belgrade as the City of the Future. It is also described by Lonely Planet as the No. 1 nightlife destination in the world.
www.siepa.gov.rs
Major Players:
36 37
W H E R ET O I N V E S T ?
REAL ESTATE
The market is witnessing an increasing number of international companies who have chosen Serbia instead of, for instance, the Czech Republic, Slovakia, or Bulgaria, which is quite encourag-ing. Consequently, the office space market now faces a lack of new supply with only small-scale projects either under construc-tion or being in shall and core condition, waiting for the future tenants to finalize construction. The list of announced projects is long, proving that the office segment remains attractive segment for the investors, but the vacancy rates will remain insufficient to accommodate the projected growth of services industry.
Based on CB Richard Ellis’ report, in Q2 2014, the vacancy rate further dropped below 10% (as compared to the total stock). Due to the lack of new supply, the market becomes undersup-plied of quality office spaces as at the moment only a few office buildings may accommodate requests of over 500 sq.m as a compound unit. When analyzing the distribution of lease activities by sector in the first two quarters of 2014, the two fast growing industries, ICT industry with 53% and SS & BPO with 16% are still the most dominant.
However, the segment with the most promising investment potential is the retail market. According to global CBRE annual research on the presence of leading international brand retailers (“How Global is the Business of Retail”), in 2014 Serbia’s positioned at 46th place on the global list, with 19% of share. For comparison, Croatia is ranked at 39th place with 25% of share. Belgrade itself holds 114th place, among 188 cities which participated in the research across the world.
The total retail stock in Belgrade remained unchanged at the end of Q2 2014, standing at app. 230,000 sq m of GLA, which includes all types of retail schemes: western-style shopping centers, neighborhood malls, department stores and secondary SC schemes. At the moment, Belgrade retail stock comprises only three modern western-style shopping centers (in total app. 105,000 sq.m GLA).
In terms of the new developments, one of the biggest RE projects in the region – Belgrade Waterfront is underway. This multi-use complex developed by UAE’s Eagle Hill will include the construction of 5,700 residential units, 2,200 hotel rooms, 12,700 sq.m of office space on the total of 1.8 million sq.m. Also, the opening of two retail parks in Belgrade is planned for 2015 and 2016, developed by Israeli IBC and Aviv Arlon, as well as Poseidon Group’s 20,000sq.m Capitol Park. Poseidon already built such retail park totaling 9,700 sq.m with 17 stores in Sabac in April 2014, accommodating brands such as Tempo, C&A, NewYorker, JYSK, Deichmann, Takko Fashion etc.
The construction works on Vivo shopping park Jagodina are underway. The project will comprise 10,000 sq.m with app. 30 stores, while the opening is expected in late 2014. Slovenian company Toming targets Cacak to open its first retail scheme of 7,000 sq.m. Austrian Immofinanz Group is also looking for locations for retail park development. At the moment, their scheme Stop.Shopof 11,000 sq.m is planned for development in Subotica. Subotica should also witness the development of 10,000 sq.m large retail park, planned by MPC.
WOOD AND FURNITURE INDUSTRY
Furniture industry is one of the few sectors recording trade surplus of over €100 million. FTAs with CEFTA, the EU and Russian Federation underpin vast customs-free export oppor-tunities for the Serbian furniture. Made-in-Serbia furniture has a good reputation at the Russian market and numerous Serbian construction companies are engaged in projects in Russia, further increasing the demand. Export of furniture to Russia is growing at the pace of 50% annually.
The foundation of the industry lies in good raw base and the skillset of the workers. Forests cover some 2.252.400 hectares (29.1%) of the territory of Serbia. Broad leaves constitute 90% of Serbian forests, while the remaining portion is made up of various conifers. The main tree groups of Serbian natural forests are beech (40%), oak (30%) and other broadleaves. State owned forests (1,194,123 hectares) has been certified by FSC standard.
There are 22 high schools in Serbia that specialize in wood processing, while the Forest Sciences Faculty at the Belgrade University produces around 1,000 graduates annually. Serbian companies also have long-standing traditions of supplying international buyers and the skill-set for the wood processing industry is constantly improving.
One of the sub-sectors of the industry with the brightest future is the production of massive furniture. This area offers
comparative advantages such as: high-quality local raw materi-als, a low-priced labor force, low energy prices compared to other European countries, and a strategic geographic position that allows for fast shipment. All of these benefits represent advantages compared to Asian competitors. Majority producers of solid wood furniture from Serbia are successful, as they focus on exporting to Russia, France, Germany, Italy and the neighboring countries. Upholstery production is also a strong point for Serbia. Simpo and Forma Ideale are the biggest furniture producers in Serbia and the region, they are followed by the exporters such as Matis, Gir, Atlas, Tra-Duga and Extraform, which are widely recognized for their style and quality. Serbian companies dominate the region, especially in Macedonia, Bosnia and Herzegovina, Montenegro, Croatia and Albania. To support the local and regional demand for chipboard furniture, there have been significant investments into automated lines for production of chipboards, especially by Austrian company Kronospan, the largest multinational company in this domain, and Fantoni from Italy. Interior design is also a sub-sector in which Serbian companies are achieving especially on the markets of Montenegro, Greece and Russia.
The last but certainly not the least important significant component of furniture industry, offering enormous potential and competitive advantage, is business relationships between Serbian designers and local furniture producers, in order to create a sustainable cooperation and business ventures.
www.belgradewaterfront.com
www.klasternekretnine.gov.rs www.klasterdp.rs
- Among the highest office yields in Central and Eastern Europe.- Strong demand for residential space across the country.- Shopping center stock well below the CEE average.
- Strong local demand and duty-free export accessto Russian, EU and SEE market.
- Large opportunities in sawn wood, engineered wood products, furniture, and paper production.- Top-quality raw base materials.
Sector Overview Sector Overview
Major Projects: Airport City Belgrade, Belgrade; Block 67, Belgrade; Big Center, Novi Sad Major Players:
38 39
COMPROM Plus
TEXTILE INDUSTRY
W H E R ET O I N V E S T ?
Textile and garment production has a long history and admirable tradition of fruitful collaboration with foreign partners. Before the disintegration of Yugoslavia, textiles were one of the leading exports, with annual industry export revenues of around $1 billion. Over 70% of the export revenues originated from the western European market. The majority of these textile companies were located on the territory of Serbia. During the eighties of the last century, the production was mostly conducted on a cut-make-trim (CMT) basis; where the materials are imported and only labor is added before re-export. Over the last 10 years, the Serbian fashion industry has evolved from a manufacturing-based industry into a design-oriented sector operating in the global marketplace. Over 1,500 companies employing 30,000 personnel operate in the Serbian textile industry which includes garment, textile and leather production. This is nearly 2% of the total number of companies and 2.9% of the total number of employees in
Serbia, or 8.7% of employees in the manufacturing sector. The companies in the textile and garment production generate around 0.7% of Serbia’s turnover.
Traditionally, Serbian companies provide quality CM and CMT services for brands like Pompea, Dolce & Gabbana, Patricia Pepe, Schiesser, Schoffel, Glitz, Lisca, etc. Also, to a lesser extent, they provide Original Equipment Manufacturer (OEM) services to global brands such as Concordia, Bikkembergs, Decathlon, Benetton, Armani, HIS, Atair and alike.
Serbian indigenous brands are perceived as brands of good quality available at competitive prices. They traditionally have a strong presence on the regional markets, while leaders in this sector having a stronger international presence including the EU, USA, post-Soviet states, Turkey and other markets.
- One of the most price-competitive industries in Europe with a respectable tradition and vast availability of skilled workforce.- Existing FTAs all encompass textile products, enabling efficient access to various markets.
- Numerous business opportunities, primarily in yarn, fabric and ready-made garment production;
more than 25 investors have already taken advantageof this opportunity.
Sector Overview
Major Players:
www.serbianapparel.com
40 41
The business registration procedure in Serbiatypically takes around 5 business days.
“The registration of the company went on simple and fast.We think that the procedure is very rational and that the competent institutions in the state administration perform their work very professionally”.Mr. Milutin Ivanovic,Former General Manager,Knauf Beograd, Germany
05 S T E P ST O T A K E
C O N S T R U C T I O N
P R O C E D U R E
GETTING TO
AND WORKING
IN SERBIA
O F F I C E A N D
R E S I D E N T I A L
S P A C E
M A R K E T
Serbian Company Law is in accordance with the European Union’s directives and the latest trends in harmonization with the EU legislation. Therefore, company types in Serbia are similar to those in other countries.
Usually, international investors pursue business activities in Serbia by setting up a Limited Liability Company, for which the minimum capital required is as low as €1. Other usual forms of incorporation include Joint Stock Companies, Limited and General Partnerships. Minimum capital required for opening a Joint Stock Company is around €25,000, while the minimum capital requirements for setting up an insurance company range from €2-4 million for companies providing life insurance to €1-4.5 million for those offering other forms of insurance. In this case, an operating license issued by the National Bank of Serbia is also required.
A company can also set-up a representative office in Serbia which would not have the status of a legal entity and could also have one or more branches in Serbia. The parent company assumes responsibility for all obligations that may occur as a result of the representative office’s operations in Serbia. Also, opening one or several branch offices is also an option. Branches do not have legal personality either and
they conduct business activities in the name and on the behalf of their parent companies.
Finally, business association is a legal entity founded by one or more companies or entrepreneurs to achieve common goals, but cannot conduct any business for profit, only for the mutual interest of its members. The name of business association must specifically include words "business association“, abbreviated “b.a.” or “p.u.” in Serbian. Association is not permitted to convert its legal form into a company of any type.
All business forms must be registered with the Serbian Business Registers Agency. The procedure is swift and easy – for a Limited Liability Company the Agency will issue a decision on the registration of a company, along with the registration and tax identification number (PIB), certificate on the registration with the Fund for Pension and Disability Insurance, and certificate and registration number with Republic Health Insurance Fund within the statutory timeframe of 5 days. Agency’s headquarter is in Belgrade, but it also has 13 branch offices throughout Serbia (the list of cities can be found at www.apr.gov.rs). The Agency also accepts applications over the Internet.
www.apr.gov.rs
Starting a Business in Serbia
42 43
Citizens of the EU member countries may travel and stay in Serbia for up to 90 days without a visa. The same regime applies to EU membership candidate countries and a number of other countries such as Argentina, Australia, Brazil, Canada, Israel, Japan, Mexico, New Zealand, Russian Federation, The Republic of Korea, Switzerland, Turkey, UAE, Ukraine, the United Kingdom and US (for a complete list of countries please refer to www.mfa.gov.rs). Residents of other countries traveling to Serbia for business purposes or permanent employment may obtain a business visa which is valid for up to one year from a Serbian embassy abroad.
Visas can be requested by submitting an application to the Consular Section of the responsible Embassy or Consulate General. There are three types of visas that are available: Short stay visas (type C visa), Transit visas (type B visa) and Temporary residence visas (type D visa). Short stay visas are mainly issued for tourism, business and other travel needs and may be valid for single, double or multiple entries into the Republic of Serbia. The duration of an uninterrupted stay and/or the total duration of successive visits of a foreigner with a short stay visa shall not exceed 90 days within a period of six months, starting on the day of the first entry. Short stay visas with multiple entries option are valid for up to one year, for a maximum stay of 180 days.
To start employment in Serbia, a foreigner must be granted the approval for temporary residence as well as the approval for employment. Temporary residence may be approved for a period of up to one year and may be extended multiple times for the same duration. Business Permits are issued to company founders, directors of companies with foreign shareholders, directors of representative offices, directors of banks, bank representative offices, insurance companies, and their representative offices; Work Permits are issued to all non-Serbian citizens looking to establish employment. The prerequisite for this is the proposed employment contract and letter written on company letterhead that explains the company’s need for the expatriate’s skills. A work permit is issued for a period of at least 3 months, but not more than 12 months. It always has the same validity period as the temporary residence permit. It can be renewed without any obstacles.
Temporary residence can also be obtained on the basis of ownership over residential or business structure, professional specialization, training, engagement at NGOs, private visits, as well as to accredited journalists, officers of international institutions and university professors.
“Life is very cosmopolitan, it is very easy to integrate,and I have a great quality of life. It’s relatively easy for meto get back to the UK at weekends, as my children do not live here with me.But when they come over to visit, my kids love it.”Mr. Anthony Burnett,Former Plant Manager, Ball Packaging
“I have lived in Belgrade for 4 years and I must say,personally, I believe that Belgrade is the most attractive
and most interesting city in Europe.There is no doubt”.
Mrs. Doerte Weidig,Former President of ProCredit Bank, Serbia
GETTING TO AND WORKING IN SERBIA
Investors can either buy or rent an office space in all major cities in Serbia. Naturally, availability of high quality offices is much greater in larger cities, especially in the capital. According to CB Richard Ellis’ report, speculative office stock in Belgrade amounted to a million square meters of GLA in Q1 2014. Belgrade’s contemporary supply exceeds 734,000 square meters of GLA, out of which 70% is speculative (513,000 sq.m) and 28% owner-occupied space (221,000) sq.m.
The second quarter of 2014 recorded a slower activity with the total take-up of 9,356 square meters, while the overall number of transactions was 16 and the average deal size was 585 sq.m. As of the beginning of 2014, the total take-up amounted to around 25,000 square meters.
Class A office buildings recorded asking rents ranging between €14-16/sq.m/month, while average asking rents of
Class B stock vary between €11-12/sq.m/month. Prime yields range between 9-9.5%.
In 2013, the number of completed units in Belgrade amounted to 7,596. Currently, New Belgrade municipality marks the strongest construction activity. According to the official statistics, the number of finished apartments preserved a stable trend in Belgrade in the previous few years, after a certain standstill in construction activities that characterized the period 2009-2010 thanks to the joint efforts of the government and the private investors. On the other hand, when analyzing Serbia as a whole, the construction sector witnessed the further drop of 12% in the number of finished apartments, as compared to the 2012-results.
The sales prices of residential units remained mostly stable, due to the more balanced demand-supply ratio. In central Belgrade municipalities, the asking prices of high-quality projects start at €2,200 (VAT included), with most mid-end projects varying between €1,700-2,200. Steady demand in the leasing segment continued in the first months of 2014. In general, typical rental levels range between €8-10/sq m for renovated properties and from €10-13/sq m for newly built properties, while some of the units generate asking rents of even €15/sq m, depending on the location and the quality of properties.
OFFICE AND RESIDENTIAL SPACE MARKET
S T E P ST O T A K E
Source: CB Richard Ellis
www.mup.gov.rs
Belgrade Office Space Stock
Residential Market Developments
0
100.000
200.000
300.000
400.000
500.000
Class A Stock Class B Stock
Owner-Ocuppied Stock Total Completions
2005 2006 2007 2008 2009 2010 2011 2012 2013
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SIEPA INVESTMENT LOCATIONS DATABASE™
Greenfield and Brownfield Sites That Match the Color of Your Business
A SIEPA database of more than 500 available Greenfield and Brownfield sites throughout Serbia will ease your quest for locations that suit the needs of your business. The database is easy to browse: you just need to choose the size, rough geographic location and few other details, and you will instantly get a list of matching locations. Couple that with municipality-specific data also, and you will be able to screen the list of potential locations and come up with a shortlist.
Let us take it from there and advise you on the final selection and further steps to be taken.
serbia-locations.rs
www.mgsi.gov.rs
The Law on Planning and Construction provides for private ownership over any type of construction land and enables further transfer of ownership rights. The provisions are aimed at replacing the right of use which was commonly used during previous periods when city construction land was state owned and when owners of buildings were entitled to the right of use over the land beneath them.
The Law introduces different categories of construction land, namely:
- City (Urban) Construction Land and - Construction Land outside the City Construction Land
Urban construction land may be purchased from an owner of such land or leased from a municipality through either public bidding or public tender where the land is sold or leased to the highest bidder. However, municipal authorities have, and often exercise, the power to lease the land at a fee lower than the market value or free-of-charge with the prior consent of the government. Additionally, a plot of agricultural land may be converted into construction land with approval of the competent bodies and payment of the land conversion fee.
A building is lawfully constructed if a building permit has been issued by the competent authority. The permit is issued on the basis of a location permit and technical documentation main design. One of the main features of the Construction Law is the possibility of a building permit transfer together with a transfer of property rights
over building/land. Municipalities are authorised to issue building permits. The competent Ministry is in charge of issuing building permits for the construction of nuclear plants, oil and gas production/processing industry objects, hydro power stations, airports, traffic infrastructure and similar.
Once a Location Permit is obtained from a municipal authority, an investor applies for the Construction Permit, which is issued within 8 days from the date of submission ofthe application. A structured technical inspection is done upon the completion of construction. It may sometimes be carried out simultaneously with the construction process, upon which the Occupation Permit is issued. The final stage in the construction process is the registration of an initiated structure in the Real Estate Cadaster or in the Land Book Registry kept by a Municipal Court.
The Construction Law provides for automatic conversion of the right of use on State owned developed construction land into ownership at no fee, subject to numerous exceptions. The main exception is related to the right of use on state owned developed construction land currently or formerly held by companies that were subject to privatization, bankruptcy or enforcement laws which can be converted into ownership subject to the payment of a fee equal to the difference between the market value of the land at the conversion date and the amount paid for the acquisition of the right of use on such land.
“Mace would invite major investors to joinMicrosoft, Lukoil, Intesa Sanpaolo, Coca Cola, Telenor, and Mace itself.The Serbian economy is on the move, has the right attitude forfuture growth and a stable political and financial platform to move forward”Mr. Mark Richards,Business Development Director International,Mace International.
CONSTRUCTION PROCEDURE
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USEFUL CONTACTS
Office of the Prime Minister
www.srbija.gov.rs predsednikvladeŠgov.rs
Ministry of Foreign Affairs www.mfa.gov.rs mspŠmfa.rs
Ministry of Economy
www.privreda.gov.rs kabinetŠprivreda.gov.rs
Ministry of Finance
www.mfin.gov.rs kabinetŠmfin.gov.rsMinistry of Trade,
Tourism and Telecommunications
www.mtt.gov.rs kabinetŠmtt.gov.rs
Ministry of Agriculture and Environmental Protection
www.mpt.gov.rs officeŠminpolj.gov.rs
Ministry of Construction, Transport and Infrastructure
www.mgsi.gov.rs kabinetŠmgsi.gov.rs
Ministry of Mining and Energy
www.mre.gov.rs pr.kabinetŠmre.gov.rs
Ministry of Public Administration andLocal-Self Government
www.mduls.gov.rs jparezanovicŠgov.rs
Ministry of Education, Science and Technological Development
www.mpn.gov.rs kabinetŠmpn.gov.rs
Ministry of Labour, Employment, Veteran and Social Affairs
www.minrzs.gov.rs pressŠminrzs.gov.rs
National Bank of Serbia
www.nbs.rs kabinetŠnbs.rs
Serbian Business Registers Agency
www.apr.gov.rs registerŠapr.gov.rs
Privatization Agency
www.priv.rs indoŠpriv.rs
Customs Administrations
www.upravacarina.rs kabinetŠcarina.rs
Statistical Office of the Republic of Serbia
www.stat.gov.rs statŠstat.gov.rs
National Employment Service
www.nsz.gov.rs pressŠnsz.gov.rs
National Tourism Organization of Serbia
www.serbia.travel officeŠserbia.travel
University of Belgrade
www.bg.ac.rs officebuŠrect.bg.ac.rs
National Agency for Regional Development
www.narr.gov.rs officeŠnarr.gov.rs
Vojvodina Investment Promotion – VIP
www.vip.org.rs officeŠvip.org.rs
Agency for Investment Promotion andBusiness Support in Central Serbia
www.invest-in-central-serbia.org officeŠinvest-in-central-serbia.org
Regional Development AgencyEastern Serbia (RARIS)
www.raris.org officeŠraris.org
National Alliance for LocalEconomic Development (NALED)
www.naled-serbia.org naledŠnaled-serbia.org
Chamber of Commerce and Industry of Serbia
www.pks.rs kabinetŠpks.rs
Foreign Investors Council
www.fic.org.rs officeŠfic.org.rs
American Chamber of Commerce in Serbia
www.amcham.rs infoŠamcham.rs
Delegation of the German Economy in Serbia/ German –Serbian Business Association
www.serbien.ahk.de dswŠahk.rs
Italian Trade Agency
www.ice.gov.it belgradoŠice.it
Ministries
Other Relevant Institutions
Other Useful Contacts:
“Europe’s New Capital of Cool“, Sunday Times
” Belgrade one of the ten “hotspots” of Europe” , Lonely Planet Guide
“Les folles nuits de Belgrade”, Le Monde
“City of Future”, Financial Times
“For the real beguiling Balkan spirit, it has to be Belgrade. It is a city wherehospitality crackles in the air and where looking good is a birthright. Simply irresistible”, CNN Traveler
“Serbia… a natural combination of Oriental passion and European finesse”, Time Out
“The real Belgrade is in the people – they are generous, warm and extraordinarily friendly-they will go to any lengths to help and make you welcome” , Spaces Magazine
“After taking my traditional Sunday stroll down Knez Mihajlova, I feel enlivened”, Herald Tribune
“No 1 to Party the Night Away” , Times Magazine
Tel: +381 11 3398 550Fax: +381 11 3398 814
officeŠsiepa.gov.rswww.siepa.gov.rs
www.doingbusinessinserbia.com
DOINGBUSINESS IN
SERBIA 2014