Business journal Synergy, 2nd edition

ISSN 2334-8593
NO. 2 | OCTOBER 2013.

BUSINESS JOURNAL OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT

FREE COPY

IN SYNERGY

Together for
investment

The first eight certificates awarded
to business friendly municipalities
in South East Europe

page

16

A TALK WITH SAŠA RADULOVIĆ

The Minister's
Priorities

Regulatory reform, resolving
the public debt, burden, cutting
income tax and creating better
conditions for SMEs - these are
the strategic priorities

page

28

PARTNERS FOR SUCCESS

Europe's
Locomotive

Germany is the world’s fourth
economic power after the USA,
China and Japan. What is the
secret of its success?

IN FOCUS

Business

Friendly Environment

page

70

WWW.NALED-SERBIA.ORG

IMPRESSUM

VRŠAC

WORD FROM EDITOR

DIRECTOR
Violeta Jovanović / violeta_jovanovic@naled-serbia.org
EDITOR IN-CHIEF
Milica Stefanović / milica_stefanovic@naled-serbia.org
EXECUTIVE EDITOR
Ivan Radak / ivan_radak@naled-serbia.org
DESIGN AND PRE-PRESS
Zoran Zarković / zoran_zarkovic@naled-serbia.org
CONTRIBUTORS Jelena Bojović, Milica Mandić, Jovana Ćirić, Daniela
Dodig, Aleksandar Nikolić, Marko Marić, Slobodan Krstović, Hans
Estermann, Miloš Damjanović
ADVERTISING
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SYNERGY : business journal of the
National Alliance for Local Economic
Development / editor in chief Milica
Stefanović. - 2013, no. 1 (june)- . Belgrade (30/VII Makedonska street) : Expose,
2013- ([Belgrade] : Birograf ). - 27 cm
Tromesečno. - Ima izdanje na drugom jeziku:
Sinergija = ISSN 2334-8402
ISSN 2334-8593 = Synergy (Belgrade)
COBISS.SR-ID 199587084

E
Milica Stefanović
Editor-In-Chief

very year we ask ourselves and our politicians the same question – when and
how will things get better? We have great
expectations of others, but others are so difficult
to change. Only one thing is definitely under
our control to influence – ourselves. So if we are
among the lucky ones who work in the private
sector we should give our best at work (not just a
minimum effort), so that our company can grow
and develop, so it can pay regular salaries and
taxes to the state to finance our roads, schools,
streets, hospitals.
If we are lucky enough (or unlucky for that
matter) to struggle in the market as entrepreneurs
– we should all do business fairly and treat our
employees and the state correctly, as only then
can we expect fairness in return. And finally, if we
are among the minority that has the opportunity
and duty to change the business environment
for the better, we must set ourselves the highest
expectations – to put the common interest above
the individual and undertake reforms that may
be hard in the beginning but lead to long-term
prosperity. With political power comes great
responsibility. And a better business environment
heralds a better age for all.

THEME OF THIS EDITION

Zoran Perišić, Mayor of Niš and member of NALED Supervisory Board

W

e live in a country where rapid economic growth is one of the strategic
goals of both state and local government. To reach this goal, we rely on Serbia’s
advantages such as its unique geographic position, rich industrial history and well-developed
industrial practice, and on its immense potentials
in energy, agriculture and tourism. However,
the proof of Serbia as a country with a good
investment climate needs to come from us – its
local governments. We need to ensure businessfriendly environment for existing businesses and
potential investors, which means a well thoughtout, coordinated model of cooperation among
all socio-economic stakeholders in the local
community. For all of us, the essential task and
duty is to reduce Serbia’s unemployment which
has reached almost a million people, and to raise
the quality of life. We have at our disposal the
models of EU countries that are assisting us in
our efforts, and their experience that can be used
as a foundation for our steps forward.
We are aware that there are numerous challenges
on the path towards healing the economy in
cities and municipalities, and that increasing
efficiency in the use of available resources is
not so simple. For these reasons, we in NALED
designed the Business Friendly Certification

Contents

programme. This provides clear guidelines for
local governments on the steps they must take to
improve their investment climate, and shows the
environments best suited to starting a business
and expanding it by bringing in investors. Local
governments are responsible for making this
process as efficient and fast as possible.
Economic development mechanisms are springing up: new industrial zones and technology
parks, public-private partnerships, business
incubators and large public investments. But if
they are to enhance growth and employment at
the local level we must act fast, be well organized
and, most importantly, share our experience and
best practice examples so we can develop in a
balanced manner. Our great potential is also seen
in the under-used linkages between academia and
business, the cooperation of all sectors of society,
their joint involvement in realising strategic priorities and establishing new mechanisms of intersector coordination and cooperation. In this task
I see an important role for NALED as the only
private-public association connecting businesses,
local governments and the civil sector.
All of us have ample prospects depending on our
local resources, but we have no time for missed
opportunities and lack of vision. We must be
active in all arenas that affect local economic

In Synergy

development. I strongly believe that we will manage, with great effort and through well-planned
actions and by learning from our mistakes. In
a not too distant future we will be waking up
each day in our own communities to see newly
acquired European features embedded in our
local identities. And naturally, we will all be
economically empowered to achieve new goals
and launch new development efforts.

22.
Businesses

6. from
News

NALED

Legislative
framework

38.

62.

Local government

46.
58.

NEWS

A front against
shadow economy
What is the cost of chocolate sold off car
hoods, who pays half or the entire salary in
cash and how has shredded tobacco moved
from the counter to being hidden below it?
What is the harm of such and similar forms
of grey and shadow economy? It is 24% of
GDP or approximately EUR 7.5 billion of
annual turnover outside the law, leaving
citizens and businesses deprived of funds
for improving the infrastructure and services, encouraging economic development,
investing in education and health care.
Even more significant consequences entail
possible harm to citizens’ health, as well as
the loss of a large number of jobs. Bearing
in mind that dealing with shadow economy
in a long-term crisis should be one of the
most urgent items on the agenda of Serbian
Government, NALED decided to engage
the companies that are most affected by
illegal trade of products. Through a media
campaign, proposing and advocating for
concrete solutions, the newly-established
front aims to encourage the Ministers in the
Government to adopt systemic measures to
suppress the ones that have no intentions
of working by the law and to stimulate with
incentives the ones that wish to return to
legal flows. The interest for joining the
campaign was shown so far by Phillip
Morris Operations, Japan Tobacco International, Coca-Cola HBC Srbija, NIS, Konsing, Gomex, Stefkom, Bambi, Mondelez...

News from NALED

NALED Government's indispensable partner
NALED needs to become an indispensable and key partner for all future Government cabinets in the implementation of regulatory reform, application of laws and development of local
economic development policies. In addition to the issue of organization's sustainability, this
has been identified as the key priority by the Alliance management at the annual Board retreat
held on 21st August in Belgrade. On this occasion, the management agreed on the recommendations to the new Government for the most important reforms that should be conducted in
the period to come. Among other things, NALED’s recommendations include the necessity
for Labor Law amendments, improvements to construction permit issuance system, tax administration reform, combating shadow economy, reform of inspections, adoption of Law on
Investments and Paperwork Reduction Act. The retreat gathered the members of NALED
Managing Board – Vladan Atanasijević, MB President and the Director of Asseco SEE,
Ramon Weidinger, MB Vice President and General Manager of Coca-Cola HBC Serbia, Ana
Brnabić, MB vice President and Executive Director of Pexim foundation, Bratislav Gašić, MB
Vice President and Mayor of Kruševac, Mihailo Janković, General Manager of Knjaz Miloš,
Nemanja Delić, Mayor of Sombor, as well as NALED Executive Office management - Violeta
Jovanović, Executive Director, Jelena Bojović, Policy Director, Milica Stefanović, Marketing
Director, Marko Stanojević, Finance and Administration Director. After the retreat, NALED
management hosted a dinner for long-term partners at the restaurant Klub književnika.

Illegal charges by institutions
The first half of the year did not bring better business conditions as there
were no significant effects of actions taken and some of the announced
measures were not even adopted. On the other hand, a new problem has
emerged, which was first identified by NALED. It is the illegal behavior
of institutions, including the Republic Geodetic Authority, Veterinary Directorate and the Commission for Protection of Competition. As
determined by NALED, for months these state institutions have been charging fees in their jurisdiction in the amounts that were not approved by the Ministry of Finance. Additionally, the RGA is still illegally charging two fees for a single service, and poor procedure has also been
noticed in the Tax Administration, whose branch offices refuse to give the lump tax status to new taxpayers that meet the conditions, and with
such practice, the state is imposing an illegal cost for their bookkeeping. NALED presented these findings in public in July, causing severe
public reaction to such practice of state institutions, and the Ministry of Finance announced to impose penalties to irresponsible institutions
by freezing the payment of their salaries in case they do not acquire appropriate approvals.
6

SYNERGY

NET(WORKING)

60 students from Diaspora completed
summer internships in Serbia

For years, our country has been among the top five in the world by the
“brain drain”. The return of young people studying abroad, to apply their
knowledge obtained in encouraging local economic development, was
the main motive why NALED initiated the project “Meet the State of
Serbia”. In July this year, with the support of the Embassy of Switzerland
and Telenor foundation, NALED organized the third cycle of summer
internship for 23 students from Diaspora who spent three weeks in local
governments and companies in 10 cities. with this group, the number
of students NALED engaged as summer interns in the previous three
years, to familiarize them with the functioning of public and business
sector in Serbia, went up to 60. This summer, the closing ceremony was
held at the Residence of Embassy of Switzerland, and the hosts were the
Ambassador Jean-Daniel Ruch and the President of NALED Managing Board Vladan Atanasijević. In front of numerous representatives
of diplomatic corps, mayors and business people, Ambassador Ruch
stressed that the students studying abroad are representing Serbia in
the countries they live in and can make a significant contribution to the
improvement of business and investment climate in Serbia.

Sir Paul Judge visits NALED

A renowned British businessman and the Chairman of British Serbian
Chamber of Commerce Sir Paul Judge visited Serbia in September.
On this occasion he met with the Prime Minister Ivica Dačić and they
discussed cooperation between the two countries and the improvement of economic relations. During his short stay, his agenda also
involved a visit to NALED. The delegation of British Serbian Chamber
of Commerce met the Alliance management and the representatives of
municipalities Odžaci and Kula. These two municipalities participate
in the project Cross Border Cooperation for Investment Promotion
(CBC IP), implemented by NALED in cooperation with partner
organizations and municipalities from Croatia, and financed by the
European Union. The guests from Great Britain were presented with
key investment potentials of the two municipalities from West Bačka
District, after which Sir Paul Judge expressed his willingness to provide his advice and contacts and assist Kula and Odžaci in defining their
offer and approach towards potential investors.
october 2013 |

7

NEWS

News from NALED

The first regional network for a
business friendly environment

“Ask WHEN” is back!
Starting from fourth quarter, the videos
humorously presenting some of the biggest administrative
problems in Serbia will once again “spin” on the channels
of Serbian Broadcasting Corporation (RTS), after NALED
and the public broadcaster signed a new Memorandum
of Understanding. The agreement means continuation of
the joint campaign “Ask WHEN” initiated in June last year,
allowing the citizens and businesses to indicate poor bureaucratic procedures hampering their day-to-day life and work,
and NALED will tend to resolve them in cooperation with
line institutions. Over the previous year, the campaign “Ask
WHEN” assisted in resolving a range of problems, most important certainly being the
elimination of 138 para-fiscal charges and reduction by 2/3 of paperwork for exercising
the right to maternity leave. The Agreement was expanded to broadcasting TV stories
on best practice examples in local governments coming from the ranks of NALED
members. Additionally, it was agreed that the Alliance and RTS would launch another
campaign titled Counter-Meter, to announce the worst counter of the month, based on
reports by citizens and businesses. NALED intends to resolve the problem of long lines
before counters and unnecessary paperwork requested by the line institutions.

Savings from changes to
income tax - zero

The guillotine of regulations and recommendations from NALED’s Grey Book
did not find their way to the Government’s
agenda in the second quarter. None of the
proposed solutions have been adopted, and
no para-fiscal charges were eliminated. On
the other hand, the second quarter was marked by amendments to tax laws, the most
significant being the new solutions in the
law on Individual Income Tax. The tax rate
was reduced from 12% to 10% and at the
same time, the contributions for social insurance were increased from 22 to 24%. The
calculation, which was thoroughly analyzed
only by NALED, showed that even though
this measure was presented as means of
savings for businesses, it practically saves a
8

SYNERGY

monthly amount of – zero dinars. These are
only some of the key findings of the Report
on Regulatory Reform Status in the second
quarter, presented by NALED in July. On
that occasion, NALED also presented the
results of the third cycle of Business opinion
survey. It showed that the Government’s
anti-crisis package did not receive a passing
grade, because 30% of businesses considered it poor, 12% find it good and 35% of
companies are not familiar with it. In the
second quarter, the businesses were more
pessimistic than in the first three months.
The share of businesses that expect a reduction in their revenues was increased by 10%
(from 34% to 44%). There were more businesses expecting lower investments – a 5%
increase (33%), and a 2% increase among
companies finding there will be a decline in
employment (25%).

The quickest way to
a building permit

In Serbia, obtaining a construction permit
takes up 269 days on average. Public enterprises and the sector laws they work by, are
one of the main obstacles to increasing the
efficiency in the process of issuing construction permits. This, as well as other problems,
resulted in Serbia being ranked 179 within
World Bank's Doing Business Report in terms
of dealing with construction permits, out
of a total of 185 countries. One of the most
commonly stated solutions is to deny the
decision-making power to public enterprises
so that they are not able to slow down or stop
the process. They should, however, still be in
charge of providing construction paperwork
that falls under their jurisdiction. Regarding
this matter, NALED, in cooperation with
USAID Business Enabling Project, organized
round tables with representatives of local electricity supply operators and utility companies
for water management and sewerage. The
two well-attended meetings discussed the
Concept of reform of construction permitting
procedure, recommending introduction of
one-stop shops in municipalities, for investors
to complete all steps towards a construction permit. Additionally, there is a need
for introducing a comprehensive IT system
for monitoring the flow of each individual
request, resolving land property-legal issues,
simplifying the process of planning documents adoption. As usual, we have the answer
to the question HOW. What remains is the
famous WHEN? Until we receive the answer
and a solution from the line institutions, we
will keep watching the reality show Building
a factory, on Serbian Broadcasting Service
(RTS) and observing it in everyday life.

Action plans for the eight best PPP ideas
as soon as next year, through public-private partnerships, eight local governments could
attract EUR 19 million worth of investments. The projects submitted by Niš, Zrenjanin,
Nova Varoš, Doljevac, Raška, Kanjiža, Tutin and Prijepolje have been selected as the best
within the competition “PPP as development potential” implemented by NALED with the
support of USAID Sustainable Local Development Project. These local governments have
already been visited by consulting teams involving lawyers, economists and bankers who
will be assisting in turning these ideas into specific action plans. In November, NALED will
organize an investors' conference, where the top eight projects will be presented to investors.
The municipalities have proposed a large variety of ideas. Nova Varoš wishes to develop a
cogeneration biomass plant through PPP, Kanjiža and Doljevac intend to construct large
logistical-distribution centers for trade in agriculture products, while Zrenjanin strives to enrich its touristic offer by finding a partner to invest in the development of Rusanda Spa. The
municipality of Prijepolje plans to build a regional freezer storage for local produce, Tutin develops a project for collection and processing of forest fruits and medicinal herbs, Niš wishes
to invest into a manufacturing-educational wine-fruit facility, and the municipality of Raška
wants a recycling yard. A total of 29 project ideas were submitted at the competition ran by
NALED and USAID and 32 local governments were entitled to participate.

In late September, at the II international
municipal fair in Rijeka (NEXPO 2013), the
institutions from Croatia, Serbia, Macedonia
and Bosnia and Herzegovina (BH) signed a
Memorandum of Understanding on establishing the Regional Network for Business
Friendly Environment in South East Europe
– the first regional institution to be in charge
of improving and harmonizing the business
conditions and investment promotion in these
four countries. The regional network was
formed by partner organizations participating
in the project Business Friendly Certification
South East Europe (BFC SEE) – NALED,
Center for local economic development of the
Faculty of Economics in Rijeka, Local Economic Development Network of the Federation
of BH, headed by the Federal Ministry of
Development, Entrepreneurship and Crafts,
Local Economic Development Network of
the Republic of Srpska, headed by Ministry of
Economic Relations and Regional Cooperation, as well as the Association of the Units of
Local Governments (ZELS) and Macedonian
Chambers of Commerce (MCC). Hereby, the
President of NALED Managing Board Vladan
Atanasijević expressed satisfaction for having
NALED’s certification program, as a best
practice example from Serbia, acknowledged
in the region as well. The mayors of certified
municipalities are satisfied as well. “Since 2010
when we first obtained the certificate, the municipality of Ruma has attracted three times
more investments than in the previous period,
when we were not certified”, said the Mayor
of Ruma Goran Vuković. The establishment
of Regional network and joint fair appearance
of the first certified municipalities from South
East Europe was supported by the German
Government via GIZ Open Regional Fund for
Modernization for Municipal Services.
october 2013 |

9

NEWS

News from NALED

Local Economic Development Experts Forum

45 open-air gyms for the most
active municipalities

After two and a half years of successful work, NALED’s Local Economic Development Offices Network transitioned into the Local Economic Development
Experts Forum. “It is a mechanism for efficient networking of professionals working
in local administration in the fields of business support, investment promotion
and project preparation. It is important that we learn from each other, to replicate
successful solutions from one municipality in another, to improve our communication with businesses, national institutions and donors” said Olivera Subotić, Head
of LED Department in the City Administration of Pančevo and the first President
of LED Experts Forum. Milan Ranđelović, Forum Vice President and the Head of
LED Office of the City of Niš added: “If doctors, accountants and lawyers have their bars and their professional associations provide results in the affirmation of profession, can LED Forum assist in the acknowledgement of the role and significance
of LED Offices and primarily the recognition of professionals dealing with LED in
local governments? I truly believe that it can and I invite all involved in LED to take active engagement in the work of NALED’s LED Experts
Forum”. According to him, one of the main challenges facing the Forum is for it to establish itself as a partner and interlocutor to various
institutions creating the business environment and influencing the local economic development, such as the Ministry of Economy, Ministry
of Finance, Ministry of Regional Development and Local Government, national institutions (SIEPA, NARD), donors and many others.

On the occasion of marking 45 years since the production of the first bottle of popular sparkling beverage in Serbia, the company Coca-Cola Hellenic, in cooperation with NALED, the Ministry of Regional
Development and Local Government and the Ministry of Youth and Sport, organized a competition for
the construction of 45 active zones – open-air gyms in cities and municipalities all across Serbia. During
two months of competition, Coca Cola received approximately 1.7 million votes of citizens who wished
to support their municipality! Particularly large interest and rivalry was seen among small municipalities,
where Bela Palanka and Babušnica fought until the very end for the first place. On 1st August, the organizers calculated the votes and declared 45 municipalities to receive an open-air gym. Already in September,
the Minister of Youth and Sport Vanja Udovičić, the Mayor of Pančevo Pavle Radanov, Operations Manager of Coca-Cola system Dimitar Andonov and the Director of SGS and member of NALED Executive
Board Marinko Ukropina, cut the ribbon at the opening ceremony for the first active zone in Pančevo. By
the end of the year, another 9 open-air gyms will be opened, and the remaining 35 by May 2014.

No great decrease in local revenues
At the working luncheon with NALED members, the Minister of
Regional Development and Local Government Igor Mirović presented the programs and measures of the reformed Government
to encourage economic development on local and regional levels.
In his words, the municipalities should not fear the announced tax
reform because the reduction of wage tax will not cause significant
reduction of local revenues. The Ministry is currently working
on drafting the National Strategy of Regional Development and
on creating the conditions for the use of IPA funds. The Minister
announced the initiative for listing the major infrastructural and
regional projects to be implemented with a long-term plan and
that will not depend on the change of government. The Minister

10 SYNERGY

stated the priority projects were the cleaning of Great Bačka Canal,
highway Pojate-Preljina, highway Novi Sad-Ruma. He announced
an open call for infrastructure development in industrial zones, to
be conducted next year. The Vice President of NALED Managing
Board and the Mayor of Kruševac, Bratislav Gašić, appealed to the
Ministry to support the Business Friendly Certification program
and certified municipalities, that should be given an advantage in
open calls for economic development incentives, bearing in mind
their proven capacities and potentials. “Certified municipalities
serve as a success model and a best practice example to other local
governments. Certification is a good process and it should be
supported” the Minister concluded.

Eight municipalities received the national Business Friendly Certificate
The third quarter of this year started with good news that the business
friendly territory in Serbia was expanding. Another eight local governments obtained NALED's Certificate. A particular success was the fact
that Loznica and Kragujevac were the first cities to successfully pass
the recertification process, proving that they strongly believe in the
advantages of going through the process of obtaining the Certificate.
At the ceremony held at the National Assembly of Serbia, the officials
of Kovačica, Kula, Nova Varoš, Odžaci, Sombor and Vršac received
this recognition for the first time. The Certificates, proving that local
governments have efficient and transparent administration, partner relations with the existing businesses and all preconditions for the arrival

of new investors, were awarded by then-Deputy Prime Minister for European integration Suzana Grubješić. The ceremony was opened by the
President of NALED MB Vladan Atanasijević, and the participants in
the panel dedicated to solutions for improving the business conditions
in Serbia were Dragovan Milićević, State Secretary in the Ministry of
Foreign and Internal Trade and Telecommunication, Michael Hasenau,
Deputy Ambassador of Germany to Serbia, Howard Ockman, Director
of USAID Sustainable Local Development Project, Alexis Lope-Bello,
General Manager of Comtrade, Slobodan Petrović, General Manager of
Imlek, Alexandros Daniilidis, General Manager of Heineken Serbia and
Toplica Spasojević, Vice-President of NALED Advisory Board.
october 2013 | 11

CONSTRUCTION WORK(S)

On the spot

The third large investment
IN ODŽACI

construction

ork(s)

Most significant investments
in the 3rd quarter of 2013
Source: eKapija, Bizlife

The factory currently employs 314 workers and by the
end of next year there will be a total of 450 employees

A

fter Greiner Packaging and Standardgas, the municipality of Odžaci is
richer by another new investment
– on 2nd October, Magna Seating officially
opened its factory of car upholstery and other
car seats components, which was enough to
shift this until-recently asleep municipality
from the category of under-developed to
the ranks of developed local
governments. Magna moved
its facility to Odžaci from
Czech Republic, and the entire production is intended for
international market. As much
as 4 million vehicles of well-known global manufacturers such as Smart, Renault and Ford
are equipped with this company’s seats. So
far, they have invested EUR 5.5 million into
the production facility of 4,300 m² in Odžaci
industrial zone, and the planned investment
is ten times bigger. The municipality gave
2.5 ha of construction land without
compensation, entirely equipped
industrial zone with all
infrastructure lines
and ensured fast

issuance of all necessary permits. The factory
currently employs 314 people and by the end
of 2014 it will have a total of 450 workers. All
employees in Magna attended special training
in order to ensure maximum flexibility and
efficiency of the production process. This training is an additional investment by Magna, to
assist in the development of local labor force
and adaptation to the needs
of automotive industry.
According to the Plant
Manager Zoran Sokolović,
Magna was looking for a
favorable location to expand
its business in South East Europe and they
found it in Odžaci: “We worked together with
the Government of Serbia, Government of
AP Vojvodina, municipality of Odžaci and
Canadian Ambassador in order to create the
required conditions for this investment. For
example, the municipality provided many
benefits in the recently established industrial zone and they assisted with

Magna seats are
used by Smart,
Renault and Ford

12 SINERGIJA

» Magna Seating opened a plant in Odžaci for manufacturing

Zoran Sokolović,
Director and Plant
Manager of Magna

the development of infrastructure, such as
the access road. The availability of site for
constructing the factory, the qualified labor
force at low price, developed infrastructure,
geographic location – these were the reasons
we opted for Serbia and Odžaci.”
Magna Seating is part of Magna International
that has factories in 29 countries in the world
and hires 123,000 people.

upholstery for car seats. The total expected amount of investment
is EUR 5.5 million, and the number of new jobs will be 750.
» Petroleum Industry of Serbia (NIS) initiated the construction of
the first wind farm in Serbia in Plandište. Investment value: EUR
160 million.
» Johnson Electric starts the construction of factory in Niš. Inves
tment value: approximately EUR 20 mil. Jobs for 1,000 workers.
» German company Fresenius Medical Care started building a new
factory in Vršac. Investment value is EUR 16 million will result in
429 new jobs.
» The U.S. Cooper Standard invests EUR 6 million into new production

facilities in Sremska Mitrovica. The first phase will bring jobs for 580
people and another 300 jobs will be created in the second.
» Dutch company Royal Agrifirm group bought 35% of domestic
company Sto posto. The investment value in the following three
years will be EUR 30 million.
» Cablex opened a new factory in Platičevo near Ruma. Investment
value: EUR 2 million.
» Cico Collection opened a new factory for jeans manufacturing in
Zrenjanin. Investment value: EUR 3 million. By 2017 there will
be 1,500 new jobs.
» BIM-tex invested EUR 1.4 million in Leskovac, for a new cotton
yarn production facility.
» Construction of waste water processing facility initiated in
Leskovac. Investment value: EUR 22 million.
» German company Leoni started building a second factory in
Serbia, in Doljevac, to employ 1,500 people.

Expected investments in 2013/14
» Michelin to build a facility in Pirot. Investment value is EUR
170 million, jobs for 700 workers.

» Swarovski starts its construction in Subotica by the end of the

year. The investment value in the first phase will be EUR 15
million, 100 new jobs.
» MK Group starts sugar production in Pećinci, in January 2014.
The value of new facility will be EUR 20 million.
» Falkensteiner Michaeler Tourism Group invests EUR 30 million
in Stara Planina mountain.
» Šid to receive a cargo center on 120 ha. Investment value: EUR
120 million. Jobs for 100 workers.
» Construction of new facilities of Italian Lames Group, German
Bauchemie and Lebanese VVT soon to be initiated in Sremska
Mitrovica.
» Company Gorenje plans new investments through a joint

venture with the Government of Serbia in factories in Zaječar,
Valjevo and Stara Pazova. Jobs for 700 people in the next 3
years.
» Turkish textile company Jeanci Serbia will hire approximately
500 new workers in Leskovac by the end of the year.
» German Grammer opens a new factory in Aleksinac. 520 new
jobs by the end of 2014.
» Geox acquired land in Vranje to construct a 20,000 m2 factory.
Jobs for 1,250 workers.
» Takata arrives to Serbia – the airbag production company will
hire 1,000 people.

october 2013 | 13

SERVICE INFORMATION

Market, funds and scholarships

(DIS)COUNT ON GOOD THINGS
Use beneficial terms of purchase or nominate your offer for NALED
market and enjoy the promotion - www.naled-serbia.org/berza

Modern scarves with traditional motifs

20

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for first 5 members
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mitment to social responsibility, as it creates income for women from all around Serbia producing
Valid through:
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handicrafts and contributes to the preservation of cultural heritage.
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SUPER
DISCOUNT

Advertising on eKapija

Discount:10%
Valid through:
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eKapija.com, the leading business portal in Serbia and Bosnia and Herzegovina offers all members and partners of NALED a 10% discount for advertising via banners on the portal until
the year end. eKapija offers its users and readers up-to-date economic analyses stock market
reports, announcements of upcoming investments, overview of the latest tenders as well as a
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Events in Hyatt Regency Hotel

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Advertising in Danas
Discount:10%
Valid through:
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Daily newspaper Danas, corporate member of South East Europe Media Organization (SEEMO) and Association of newspapers Project Syndicate, offers a discount for all NALED members for advertising and PR space. Danas, daily newspaper with
national coverage, is one of the rare newspapers in Serbia not using tabloid methods to increase its circulation. It is famous for
providing strong support to Serbian non-government organizations, promoting EU accession and the rights of minorities.

Daily newspaper DANAS, 19 Alekse Nenadovića street, Belgrade, +381 11 344 11 86, +381 11 344 11 86, marketing@danas.rs, www.danas.rs
14 SYNERGY

Database of funds
MOVE FOR BUSINESS

Deadline for application: 31st December 2013
Donor: Philip Morris
Beneficiaries: Entrepreneurs and newly-established SMEs
Purpose: Support for business start-up or expansion
Maximum amount of funds: RSD 200,000.00

SUPPORT TO SME DEVELOPMENT

Deadline for application: N/A
Donor: European Bank for Reconstruction and Development
Beneficiaries: Businesses
Purpose: Support for businesses to improve their performance and
competitiveness
Maximum amount of funds: EUR 10,000.00

Comprehensive information on sources of funding
www.naled-serbia.org/compendium
INCENTIVES FOR RECYCLING

Deadline for application: 31st January 2014
Donor: Ministry of Energy, Development and Environment
Protection
Beneficiaries: Businesses
Purpose: Reuse of waste as secondary material or for generation of
energy and plastic bags production
Maximum amount of funds: N/A

SUPPORT TO EU INTEGRATION

SUPPORT TO CSO PROJECTS

Deadline for application: 31st December 2013
Donor: Fund for an Open Society
Beneficiaries: state and provincial institutions, municipalities,
NGOs, associations
Purpose: actualization of the education reform issue and its placing
on the political agenda, acceleration of Serbia's EU accession process,
judicial reform and establishing full guarantees for its independence,
harmonization of regional development of Serbia and strengthening
of cross-border cooperation etc.
Maximum amount of funds: N/A

Scholarships info

Professional development in the country and abroad
www.naled-serbia.org/training

Deadline for application: N/A
Donor: Royal Norwegian Embassy
Beneficiaries: NGO
Purpose: strengthening the rule of law and anti-corruption, defense
and security sector reform, strengthening human rights, economic
development and entrepreneurship, environment protection
Maximum amount of funds: EUR 100,000.00

Open call for employers: Youth staff training in workplace

Deadline for applications: 17th November 2013
Organizer: USAID Sustainable Local Development Project (SLDP)
Participants: Companies with minimum 5 employees with seat offices in one of the 32 cities and municipalities involved in USAID SLD project
Within this program, the employers will be able to quickly and efficiently find and train employees who suit their needs, thus saving time and
money. The program involves free selection of staff with the required qualifications, their employment and administration of their engagement.
During the two-month practice, the candidates will receive a fee of 60% of minimum gross salary, provided by USAID SLDP based on the Training agreement. The training is intended for youth aged under 30, for jobs in production and service sectors.

Seminar: Democracy, civil society and youth participation

Deadline for applications: 31st December 2013
Organizer: Latvian national agency for Youth in Action program
Participants: Young leaders, project managers
Venue and date: 8th – 20th December 2013, Cairo, Egypt
Latvian national agency for Youth in Action program organizes a conference Democracy, civil society and youth participation, aiming to facilitate exchange of experience and discussions to the topic of youth in community and politics. The conference target group involves representatives
of public sector, embassies, international community.

Training: Policy, strategy and systemic support to the development of rural environments

Deadline for applications: 1st November 2013
Organizer: Israel agency for international development cooperation (MASHAV) and Center for Development Studies
Participants: State institutions, local governments, NGOs, businesses
Venue and date: Israel, 13th January – 5th February 2014
The training is organized by Israel agency for international development cooperation and Center for Development Studies, with the support of
Israel Ministry of Foreign Affairs. During the 3-week study tour to Israel, the participants will have the opportunity to better understand the importance of integration of business activities, national policies and local interests, in order to achieve local rural development and the use of local
resources. Additionally, the participants will learn about how the national and regional policies can serve as support to rural development, what
is the role of agriculture and what financial and organizational mechanisms there are for revitalization and development of rural environments.
october 2013 | 15

IN SYNERGY

Business Friendly Environment

The first eight Business Friendly certificates awarded to
municipalities of South East Europe

Attracting investment
is a joint regional task
I
vanec, Bjelovar, Sanski Most, Prijedor,
Ruma, Pirot, Strumica and Veles are
the first local governments in South
East Europe that improved the municipal
administration and business environment in
accordance with a unique international BFC
SEE standard, thus obtaining the right to hold
the regional Business Friendly Certificate.
The standard, involving 12 criteria and more
than 80 sub-criteria required for the development of partner relations between local
administration and businesses, was developed
by NALED and with the support of GIZ
Open Regional Fund for Modernization of
Municipal Services (GIZ ORF MMS), expanded outside of Serbian borders – to Croatia,
Macedonia and Bosnia and Herzegovina. The
realization is supported by partner organizations – Faculty of Economy in Rijeka, Ministry
of Economic Relations and Regional Cooperation of the Republic of Srpska, Ministry of
Development, Entrepreneurship and Crafts
of the Federation of BH, and Association of
Local Self-Governments and Macedonian
Chambers of Commerce from Macedonia.
The first certificates were awarded at the
II Regional congress on business friendly
environment in SEE, the ceremony held on
12th June in Zagreb Westin hotel, attended by
numerous high Government officials, representatives of local governments, diplomatic
corps and businesses. In front of more than 120
guests, the congress was opened by Croatian Minister of Entrepreneurship and Crafts
Gordan Maras, President of NALED Executive
Board and the Director of Contango, Darko
Vukobratović, the Dean of Faculty of Economy
in Rijeka Heri Bezić and German Ambassador
to Croatia Hans Peter Annen.
16 SYNERGY

Our economies rely on neighbouring markets and for this reason I
fully support economic cooperation ideas such as certification” said
the Croatian Minister of Entrepreneurship, Development and Crafts
Gordan Maras at the opening of the II Regional Congress on
a business friendly environment in South East Europe on June the
12th in Zagreb, involving a declaration of the first municipalities from
four countries that fulfilled the regional standard of efficient and
transparent local administration, BFC SEE
SUPPORT FOR THE REGIONAL
CERTIFICATION
Minister Maras stressed that Croatia finds regional cooperation to be highly important, which
is why he fully supports this project of Business
Friendly Certification in South East Europe. In
his words, in further developing of economic
relations, cooperation on both national and
municipal level is extremely important. In the
previous several years, Croatia has done much
to make itself approachable for investors. An
incentive policy was introduced, but there is
also a need for structural reforms. Currently
ongoing is the procedure for adoption of law on
strategic investments, to refer to all investments
higher than EUR 20 million. It will involve drastically shorter deadlines for issuing all required
permits. He added that up till now, there was a
problem of local governments not treating big
investors in the right way, and this is one of the
areas where certification can help a lot. Finally,
Minister Maras noted that even though Croatia
is leaving CEFTA agreement, this does not mean that they will not cooperate with countries in
the region and that they do not find this market
important. We gladly use Serbian products such
as Eurokrem and Jaffa, the same as people in
Serbia are extensively using Vegeta – said Maras.

The President of NALED Executive Board
Darko Vukobratović reminded that NALED has
been implementing the certification program
in Serbia since 2007. One third of all local governments in Serbia are improving their business environment through NALED’s certification

program, and 27 of them managed to fulfill the
conditions for acquiring the national Business
Friendly certificate. In the previous five years,
these municipalities attracted investments of
several billion EUR, proving that they are true
local economic development leaders. When
Financial Times ranked 5 certified municipalities among top 10 investment destinations in
Europe for 2012/13, it was yet another valid
confirmation of the program quality. We are
confident that we will achieve such effects on
the regional level as well. The countries of South
East Europe can make use of the crisis period
and, through certification program, ensure
better starting position than the competition
and be ready for a new investment cycle. The
chances of attracting foreign capital are far
better if we share common standards and act
together towards the investors, as a region –
Vukobratović said.
Dean Bezić said that the investors are looking
for recognizable cities and municipalities, and
they can stand out through certification, which
is the path towards standardization of services.
“The investors do not have time to go into the
specifics of each municipality and make their
decisions based on standards. This is the reason
we supported this project and I would like to

Cities and municipalities in certification process

In addition to Ivanec, Bjelovar, Sanski Most, Prijedor, Ruma, Pirot, Veles and Strumica, the
Business Friendly Certification South East Europe project involves another 10 participating
local governments. Among Serbian municipalities, the ones that are closest to receiving the
Certificate are Bujanovac and Stara Pazova, and it is expected that Inđija will also win this
recognition. As for Croatia, Macedonia and BH, it can be noted that the certificate is equally attractive to big cities and small municipalities. In Croatia these include Rijeka, Osijek
and Crikvenica, in BH Banjaluka and Ljubuški, and in Macedonia – Štip and Struga.

thank NALED and GIZ for including us”, said
Bezić, adding a message to municipalities that
they should hire professionals if they do not
have sufficient internal capacities to work on
improving the municipal administration and
investment promotion.
At the end of introductory session Ambassador
Annen added that the region needs direct foreign investments, and they require a business
favorable environment, as well as transparency
and accountability of administration. He said
that reforms were required in all countries
in the region, since all of them received bad
marks from the European Commission. “The
investments in the region are modest because
investing encounters great risk and numerous
obstacles. This is a situation where Mayors
can make a difference. They can work on
planning and infrastructure and reduce costs
and deadlines for issuing permits. Neighbors

are also important. For Germany, Belgium
and Netherlands are much more important
than some bigger countries”, Annen stressed
and congratulated NALED and partners on
realization successful project.

COOPERATION AT THE
HIGHEST LEVEL
As presented at the event, the certification
project is a unique initiative in this region,
directed towards improvement and harmonization of business conditions, strengthening
the image of SEE as investment destination,
raising competitiveness, increasing economic
cooperation and capital flow. In this regard,
the topic of the first panel discussed the
means of support for economic growth. Along
with Minister Maras, the panel involved the
Minister of Economic Relations and Regional
Cooperation of RS Igor Vidović, Minister of

october 2013 | 17

IN SYNERGY
Development, Entrepreneurship and Crafts
of Federation of BH Sanjin Halimović, State
Secretary in the Ministry of Foreign and Internal Trade and Telecommunications of Serbia
Stevan Nikčević, General Manager of company
Coca-Cola HBC Serbia Ramon Weidinger and
Executive Director of Macedonian Chambers
of Commerce Mitko Aleksov.
In addition to law on investments, Minister
Maras once again stated the significance of CEFTA
region market for Croatia, reminding that starting
from 1st July, foreign trade cooperation would be
performed based on the agreement South East
Europe countries have with the European Union,
which would negatively influence the competitiveness of Croatian exporters due to unfavorable tax
treatment. On the other hand, we found that the
region will have much benefit from Croatia’s EU

Business Friendly Environment
accession, primarily in terms of road and railroad
infrastructure investments.
Minister Vidović gave positive impressions
about the reforms conducted in countries in the
region so far, and he particularly emphasized
the improvements of business environment
in BH with the introduction of a new system
for company registration that will significantly
reduce the costs and time for business start-up.
Federal Minister Halimović stressed the complexity of administrative organization and political system of BH, finding that it makes local
governments the driving power of development
and improvement of legislative framework.
They are the parts of a locomotive that should
pull us forward – towards new investments. “We
have not utilized all the resources we have. We
had highly unfavorable investment conditions

Gordan Maras, Minister
of Entrepreneurship and
Crafts of Croatia

Congress recommendations

9 principles of effective
investment promotion
1) Regional approach
2) Predictable business environment
3) Standardization of services
4) Transparency and responsibility
5) Decentralization of authority
6) Political stability
7) Targeting investors
8) Quality staff
9) Communication with businesses

10 to 15 years ago and it was hard to expect quality investors”, said Halimović.
State secretary Nikčević agreed that investment
promotion was a joint task of the region. He
stressed that the manners and incentives for
investment promotion were mostly similar and
most frequently involved land allotment and
subsidies for new jobs. Additionally, the countries in the region have recognized the sectors
they hope to show the best results in terms of
18 SYNERGY

attracting new capital, and most commonly
these sectors are agriculture and infrastructure.
Nikčević believes that economic cooperation
in the region was spurred by CEFTA, which
significantly improved the economic exchange.
On the other hand, the problem is that there
are still too few investments among countries
in the region.
The views of businesses were represented by the
General Manager of Coca-Cola HBC and VicePresident of NALED MB Ramon Weidinger,
who had spent a year and a half managing this
company in Croatia. Weidinger reminded that
Coca-Cola system has seven factories in six municipalities in the region, and distribution centers in another 20 locations. Among the region's
advantages he primarily emphasized the same
language. On the other hand, the main problems
are Governments' decisions affecting the
competitiveness of businesses. “We measured
the production costs and we noticed that our
facilities in SEE are partly not competitive. We
compared Zagreb to Austria and we found that
our production in Croatia was more expensive
than if we manufactured in Austria and exported
to Croatia. Production in Serbia is also more
expensive than in Bulgaria.” Weidinger pointed
out several specific problems he encounters as
an investor. “We have not been able to acquire
ownership rights over certain land parcel for 6. 7
years, causing us much cost. We also have large
expenses for water fees” he said.
The first panel was closed by the Executive Director of Macedonian Chambers of Commerce
Mitko Aleksov, who emphasized that the certification program represented a plan for municipalities wishing to improve their business climate
and attract new investments, and a seal of quality
for companies considering to invest in South
East Europe. “If the local business environment
is not improved, the companies will have
problems such as Coca Cola. The certification
stimulates competition among mayors, leading
to the creation of better conditions for doing
business in the region” Aleksov concluded.

RECOMMENDED BY MAYORS
The ministers’ panel was followed by a discussion on the topic of how to promote investments
on the local level. The seats on the stand were

taken by the representatives of cities and municipalities that were the first to successfully pass
the certification program.
Milorad Batinić, Mayor of Ivanec and Vice President of Croatian Parliament, emphasized that
the first task of all municipalities is to establish
efficient administration. “The certification program has certainly assisted us in this endeavor.
Our primary goal is not to receive a stamp for
having a good environment, but become better
than we currently are and learn more than we
know at the time being” Batinić said.
The first man of Bjelovar, Antun Korušec,
spoke about the problem of slow issuing of
construction permits and reminded that his
city was among the leaders in Croatia by the
speed of issuing these permits, as well as the
number of resolved requests. In his words, this
is a consequence of longtime work and investments into human resources. “The people now
realize that they cannot keep permit requests in
drawers. Overly bureaucratic countries and the
collision of many laws are additional problems.
We have too many administrative barriers
before we get to clean documentation. We
will need to reduce the number of regulations.
Additionally, if we descend jurisdictions to a
lower level, we will all be much more efficient”,
Korušec emphasized.
When it comes to promotion, the Mayor of
Ruma Goran Vuković said that there can never
be too much promotion and that all opportunities should be used, such as the investment promotion campaign at Belgrade airport, organized
by NALED. “Everything we did in this field has
contributed to the attraction of 12-13 investments over the past few years, whereas from
2003 to 2008 there were only three. However,
promotion should not be just advertising for its
own sake, but to be honest so that the investors
are not let down” Vuković said.
The political environment is also crucial for
attracting investments, said the Mayor of
Prijedor Marko Pavić. He said that this was the
first item in his plan. “We created favorable international and inter-religion relations. Then we
created a good relation between the city assembly and local administration. Seven out of eight
parties are ruling and all decisions are made
by a two/thirds majority. This brings certainty

Success story: Gucci in Ruma

Since 2010, when they entered the certification process, the municipality of Ruma has managed to
attract three times more investments than in the previous years, when they had not been certified
as business friendly. The greatest interest of investors was seen in the fields of machine and metalprocessing industry (one of the greenfield investments in 2012 was made by British manufacturer
of engines and turbines, Albon Engineering Manufacturing) as well as the leather and footwear
industry Ruma was famous for in former Yugoslavia. Thanks to 80 years of tradition in leatherprocessing and production of footwear, top-quality of raw materials (neat leather from Ruma is
one of the finest in Europe – soft but durable, with no defects), qualified labor force, adequate
greenfield and brownfield locations, good marketing and most of all – proactive and committed
local administration, Ruma has managed to attract global footwear manufacturers and bring back
the old glory and new glamour to this until-recently asleep industry. The results followed up not
long after the award of Business Friendly Certificate and after investment promotion campaign
at Belgrade airport in 2011, involving posters with red leather shoes and the slogan “Ruma - Fit
for Profit”. At that time, the company Insert, producing women’s footwear Antonela Rossi and
working for world’s famous brands such as Prada, Christian Dior, Louis Vuitton and Valentino,
initiated one of the most significant greenfield investments in Ruma – the construction of a 5,000
m2 facility in working zone “West”. A year later, in 2012, the global leader in the field of clothes
and fashion accessories, company Kerring Group, bought the Leather factory Ruma to launch
the production of leather products of luxury, sports and lifestyle brands for the global market. It
is sufficient to say that Ruma currently produces footwear for brands like Gucci, Saint Laurent,
Alexander McQueen, Puma and further on. Kerring Group is present in more than 120 countries,
now including Serbia, it employs 33,000 people across the world and achieves annual revenues
of nearly EUR 10 billion. Ruma truly is “fit for profit”, so there is no wonder that it is among the
first 8 municipalities in the region certified in 2013 as business friendly according to international,
improved standard of Business Friendly Certification in South East Europe (BFC SEE).

for investors since they know how the local government functions. Now we have investments
going on because Prijedor was recognized as
a secure destination. The seal of quality in the
form of Business Friendly Certificate will only
verify this”, Pavić added.
Targeted investment promotion is also necessary. Mustafa Avdagić, Mayor of Sanski Most,
stressed that this local government is focused
on its Diaspora. “The first group that left Sanski
Most did not make large investments, since
these were mostly people with high school
education, but now their children are investing
in Sanski Most. The certificate will help us a lot,
since these young people acquired education
abroad and they monitor the way municipalities
treat businesses”, stressed Avdagić.
Vladan Vasić, Mayor of Pirot and a member
of NALED Managing Board, emphasized
the importance of human resources in local
governments. “The human factor is the first and
most important, and for this reason we do not
hesitate to look for outside assistance. However,
there are people in Pirot who can deal with great
investments and I believe that certification can
help us position ourselves as a good destination
on the investment map of South East Europe”,
said Vasić, adding that there is an urgent need

to resolve the issue of institutions that act as
states within the state. “They need to change or
become decentralized”, Vasić pointed out.
At the end of panel, Goran Jović, Deputy Mayor
of Veles, added that investment promotion is
also affected by the positive relation of local
administration towards the existing businesses.
This is why he particularly stressed the obligation of forming a Business Council as one of
the most important certification criteria. “Veles
council involves representatives of businesses,
local governments and unions who directly
communicate and resolve both big and small
problems on a high level”, Jović stressed.
The mayors of certified municipalities urged
the Government to introduce higher level of
decentralization in the region, to facilitate investment promotion. They believe that there is no
fear this would lead to misuse at the local level
because they would perform some functions
better than the national Government. They also
find that the local government should not be
discouraged if the investments do not flow in
shortly after the implemented reforms because
the investors will most certainly come once all
“horizontal and vertical line” obstacles have
been removed. The panel was followed by the
official ceremony of regional certificates award.
october 2013 | 19

IN SYNERGY

Marinko Ukropina, Managing Director of SGS for the region
and member of NALED Executive Board

12 criteria of business
friendly environment
1. Strategic approach to local economic development
2. Administrative capacity to support businesses (LED Office)
3. artner relationships with the private sector
P
(Business Council)
4. Efficient system for issuing construction permits
5. Database management of business related information
6. Proactive approach in investment promotion and marketing
7. Credit solvency and financial stability
8. romotion of job creation and human resource
P
development
9. Promotion of public private partnerships
10. Adequate infrastructure and reliable utility services
11. Transparent and stimulating tax policy
12. Use of information technologies

NALED's Certificate gives investors
proof of good municipal services

O

ne of the main motives for SGS
Belgrade, as the largest certification institution in the region, to
become involved in Business Friendly Certification (BFC) by BFC standards, stemmed
from the very definition of verification
process. “Verification is a systematic and
independent process, determining the
degree to which the verification criteria have
been fulfilled”. The Certificate confirming
the degree of fulfilling the criteria of business
friendly environment should act as a valid
proof for all stakeholders (particularly investors) that the certified local governments will
provide administrative and logistical services
for business start-up and expansion, in an
efficient and effective manner.
In case an investor plans to have multiple
business facilities operating in various
municipalities, the certification ensures
consistent approach in the work of local
administration. It also allows the networking
20 SYNERGY

and exchange of experiences among local
governments in Serbia and the region. By
fulfilling 12 comprehensive certification
criteria, the municipalities are certain to become equal partners with successful foreign
and domestic organizations and to stand out
among other municipalities. This way, the
program contributes to the improvement of
business environment in Serbia and investment promotion.
Among other things, the Business Friendly
Certificate testifies to the responsibility
and tendency of local administration to
act in accordance with ethical principles
and it represents a good starting point for

the development in accordance with other
international standards such as Quality
Management System - ISO 9001, Environmental Management System – ISO 14001,
Information Security Management System
– ISO 27001.
Through implementation of Business
Friendly Certification and other international standards, SGS Belgrade, as the leading control organization and certification
authority in the region, will certainly strive
to make a contribution in improving the
overall business environment in the Republic of Serbia and the region, in an increasingly demanding market competition.

Extending the BFC standard in the region

NALED has taken the far-reaching initiative to expand BFC certification to the region of South
East Europe (Croatia, BH, Macedonia), creating BFC SEE standards. Extending certification
to a wider region allows a comparative analysis of the BFC criteria and impact of the process,
providing a basis for re-evaluation and improvement in the work of local governments

Branislav Nedimović, Mayor of Sremska Mitrovica and member of NALED Executive Board

Only half the municipalities in Serbia
have any greenfield investment

I

will try to make a brief overview of investment-related issues and events, primarily
greenfield investments, in the period since
2004 when this issue became topical in our
country. There are many factors that determine
whether or not a greenfield investment will
be realized in a certain location, but the most
important include the country’s legal certainty,
stability (political, above all), regulated property-legal issues, developed planning documents,
system of incentives and many others. The shy
steps that used to be taken in the beginning,
most frequently by the local governments with
high level of awareness, have finally led to a
point where all local governments dream or
plan to have at least one such investor (so far,
approximately 80 local governments succeeded at least once in their efforts). However,
with a big H, there is a key question of local
government performance in terms of previously
stated factors that condition the realization of
such investments. In terms of first two factors –
legal certainty and stability, the decisive role is
in the hands of the Serbian Government, while
the other factors require full initiative of the
local governments. It is certain that NALED
with its municipal certification program had a
great role in raising awareness on the need for
foreign investments and the concept of market
competition in investment
promotion and overall importance of business friendly
environment.
In terms of conditions local
governments provide to
investors, there are a lot of
varieties in Serbia. From this
aspect, I would classify all
local communities into three
groups: The first one involves
municipalities that have still
not defined the urbanistic areas for potential
investments in their planning documents. The
second group involves the ones that defined the

The Law on Investments
should define the following:

• Who are the investors
• hat is considered an investment of state significance
W
• ypes of investments supported by the state
T
• he measures for stimulating investments (subsidies,
T
co-financing of industrial zone development, potential
tax benefits etc.)
• he activities of various stakeholders involved in
T
investment realization process
• Obligatory treatment by institutions, companies and or
ganizations in the investment realization procedures and
deadlines and penalties for not complying with the rules

zones and completed urbanistic regulation, but
for lack of funding have not yet shaped it with
infrastructure. The third group has completed
all of the above and are on the go for a strong
marketing campaign for investment promotion.
But the first requirement that needs to be met
to allow the municipalities and the state to deal
with local economic development and investment promotion is the existence of appropriate
regulatory framework. And it’s here that we
encounter two problems. The first was partially
removed in 2007 with the adoption of new Law
on Local Government placing local economic
development under municipal jurisdiction. The
second is the lack of legal solutions providing
a definition of investment from the aspect
of state interests and the
game rules that need to be
respected by the state, local
government, all institutions
and the investors themselves. In addition to defining
the concept of investments
that should be supported
and encouraged by the
state, I believe that we also
need a developed system
of measures for stimulating
investments significant for the state or local
community. In drafting the Law on Investments,
the Government should include the most

In drafting the Law
on Investment, the
Government should
include the main
business associations
such as NALED and
use the vast experience
of SIEPA.

significant business associations and think-tank
organizations such as NALED, and they should
certainly make use of extremely vast experience
of Serbian Investment and Export Promotion
Agency SIEPA, which was the main agent in
attracting greenfield investments to Serbia. The
path is well paved but what’s missing is to make
the incentive procedures more transparent, so
as not to compromise the entire process.
There is no doubt that, in the forthcoming
period, the topics of greenfield investments and
job creation will be more and more significant
because the Serbian economy simply craves for
new employment, and this is the path to economic recovery. To achieve this great, but accessible goal, the first thing we need is political will,
which is now definitely here, as well as adoption
of regulations in the form of law that would
govern the area of investments and bring legal
certainty to investors. There is a need to make a
political decision on developing a system of measures to achieve these goals, bearing in mind
that our competitors in the race for investors,
primarily the countries in the region – Croatia,
BH, Macedonia, Albania, Bulgaria, Romania
are most certainly not sitting idle with their
arms crossed. For this reason, the investment
challenges should be declared the No.1 issue of
the entire political elite, as it leads the path of
recovery and growth which is saved only for the
politically stable and predictable systems.
october 2013 | 21

IN SYNERGY

Branislav Bugarski, Provincial Secretariat for Inter-Regional Cooperation and Local Government

Investments is hindered by our
failure to implement the law
Politicians and
bureaucrats need to drop
the practice of taking shortcuts

S

ince the year of 2000, foreign investments have served as a topic used by all
politicians, in both positive and negative
context. From the announcements that foreign
investments would ensure better conditions of
life and a stronger economy, to warnings that
we would be used as cheap labor force and for
application of “dirty” Western technologies,
without gaining anything for ourselves. I belong
to the group that looks at these investments
from a positive aspect (limiting my statements
to production-service character investments).
After all, it is a fact that foreign investments are
important for developing countries, as they
allow you to achieve economic growth without
direct borrowing, create new jobs, gain new
technologies and ultimately, increase your
exports (and imports, certainly, but with a positive balance in final calculation). In Serbia, all
three levels of authority have paid attention to
this issue: the republic, the province and cities
and municipalities. Even though we had a very
difficult starting point, being burdened with
war conflict (giving us a very bad image) and
just made the initial steps towards normal and
organized democratic society (representing an
additional risk in the eyes of the investors, as we
were treated as unstable business environment)
we have made great efforts and managed to
achieve a decent result in spite of the fact that
our country’s Prime Minister was assassinated.
Today, there are more than 230 foreign companies operating in AP Vojvodina, with 66,000
employees and EUR 6.6 billion invested. Could
it be better – it certainly could. In general, even
though it was not strategically documented and
assigned, the role of public sector in this effort
was recognizable. The Republic was in charge
22 SYNERGY

A huge problem is disorganization at the national
level in the promotion of Serbia. Not enough
money is spent on marketing.
of developing the legal framework, while the
Province and cities and municipalities created
conditions in the field, by completing the
planning documentation and utility connections in potential locations. All levels got actively
engaged to have as many foreign investors come
and visit Serbia, Vojvodina or individual cities
or municipalities. In my humble opinion, the
Province and municipalities significantly contributed to improving the image of Serbia. Still,
I cannot ignore the fact that these foreign investments were often the subject of political abuse
and irrational decisions – there were cases of
some investments being negatively presented in
the media and of individuals boasting of success
for projects they did not take part in.

MISSED OPPORTUNITIES AND
WHAT CAN BE DONE NOW
In addition to regional conflicts and internal
political turbulences, another big problem that
has not been resolved to this day is the poor
organization on the national level in terms of
promotion of Serbia. It is just sad how the good
ideas fell through and how little funds were
invested in Serbia’s marketing. We cannot
expect potential partners to see us in the positive light if we do not present ourselves that way.
To achieve this, we need to communicate more
and use every opportunity to present ourselves.
Topic that is endlessly debated are the subsidies
per job created. My experience as the Director
of Vojvodina Investment Promotion Fund

is very clear: without incentives, we are not
competitive in global and European investment
markets. Furthermore, another important
issue is the education of local political officials,
who should learn to always look at the broader
picture. In particular cases, we have encountered situations of public servants giving promises
they knew were not in accordance with the
law, making such municipalities automatically
disqualified in the eyes of investors or causing
future harsh accusations by the investors regarding the public sector efficiency (which were
certainly justified in some cases). Finally, telling
the truth proved right in all cases, no matter
how bad it is. It is clear that there will always be
problems, it is only a matter of how reliable you
are as a partner to resolve the issues by working
together. It may sound trivial, but apart from
relevant technical details, the investors’ subjective impression will be influenced by toilette
cleanliness (which is not our strong point if
we are being honest), use of foreign languages,
behavior in meetings. One thing we need to
understand: being poor is not something to be
ashamed of, but lacking the effort for beating
poverty, thus acting smart about it, is.

EXISTING RESISTANCE FACTORS
AND HOW TO REMOVE THEM
I have already spoken about some of the prerequisites to attract foreign investors. However,
a more important question is whether we can
do something to be more competitive and what
can that be?! If we start from an assumption that
the main three conditions are favorable legal
framework, infrastructure and labor force, we
can easily recognize and perform a self-analysis
of whether and what we achieved. The lack of
comprehensive and mature approach among
politicians, lack of courage and cheap populist
moves have significantly slowed down this process. The best example for this attitude towards
creating a better business environment is the
case of Law on Planning and Construction from
2008. The idea of the Law to set up a system has
unfortunately lost the battle to populism and
lack of patience. After long and hard work on its
development, this Law was supposed to allow
all investors to have public and transparent
insight into the opportunities and plans of a

certain local government. Where and what they
can build, and which size the facility can be.
Unfortunately, once again we faileded to follow
the law in full scope, as the legalization was not
performed. These are difficult topics, but they
will have to change in the decades to come,
most of all through a change in our approach
and mentality.
As for the legal framework, the liberalization
of Labor Law is another very important aspect
for investment promotion. We cannot expect to
protect the slackers together with good workers.
The investors have also often demanded the improvement of courts. The inefficiency of judicial
system has been a problem since the 90s and we

In order to resolve this problem, the first
thing to do is to change the awareness in
public administration, in two directions –
by communicating that there is a need for
systemic approach to work and that there can
be no shortcuts. This needs to be understood
by politicians and administration. The second
important step is to change awareness among
administration to understand that they are
exclusively a service for citizens, and that they
receive their salaries to act as such. This was
exactly the reason why the Government of
Vojvodina, the Secretariat for Inter-Regional
Cooperation and Local Government, decided
to start the process of harmonizing the work

Amateurism and superficial approach
The idea of economic representatives fell through the day (in my opinion, in the very beginning)
when these professionals were not supported with allocated budget and clearly defined goals.
One cannot expect to make a good deal without the funds to organize a presentation or reception, lunch or dinner, or travel from Berlin to Hamburg or from Paris to Lyon. Such amateurism and superficial approach is the worst enemy and the greatest obstacle to better results.

still have not managed to resolve it. Regarding
infrastructure, much progress was made in this
field. We still have not made the best use of the
existing capacities, but this comes as a result of
complicated legal grounds on one hand, and the
inefficient courts on the other. Nevertheless, in
terms of workforce, our opportunities are great.
For example, Vojvodina established an education center allowing people to obtain knowledge
and use it in the labor market. Additionally, we
have another mechanism to partner with investors in teaching people the skills in accordance
with the employers’ needs.

STANDARDIZATION OF WORK
THROUGH CERTIFICATION
By not implementing the law, we actually slow
down the entire investment process. Had you
started developing planning documents in
2010, by 2012 you would have completed the
work and in 2013 you would know what can be
offered to investors and under what conditions.
It is certain that this job is neither easy, nor
simple and it lasts for quite a long time. On
the other hand, the development of the state
and the system has still not been completed
by anyone and it is certainly a demanding and
large-scale effort.

of local administration in entire Vojvodina.
We called it “Vojvodina standard”, partially
overlapping with NALED’s Business Friendly
Certification. This means that each local
government needs to have three elements
– development strategy, Local economic
development office to implement the strategy
and the system of 48 hours for responding to
citizens enquiries. The work done by NALED,
certification and standardization of municipalities, is extremely important because it
prepares them for investment promotion. Still,
the obtained certificate does not mean that the
job is done, as it is a permanent process the
municipality needs to perform continuously.
They need to constantly plan, implement,
control and make corrections for future plans,
thus constantly improving themselves.
Finally, I find it important to say that the level
of development and existing capacities can be
limited, but there are certainly great potentials
in the country, that can be of assistance in
building these capacities. Expecting solidarity
and assistance is one thing, but more important, the cities and municipalities in Serbia
need to take responsibility for their future and
economic growth, of course, with the support
of everyone involved in this work in Serbia.
october 2013 | 23

IN SYNERGY

Aleksandar Nikolić, Local Economic Development Coordinator, NALED

SERBIA
opens the door to the
M
EAST

Our country’s strong points are its
location, good labour force and free
trade agreements; the downside is
bureaucracy and a complicated tax system

ost foreign investors that have
serious interest in expanding their
business in the region of South
East Europe see Serbia as an interesting location in terms of being favorable for investments.
Certainly, one of Serbia’s greatest advantages
is its geographic position – the location on
the crossroad of two international corridors
(road Corridor 10 and Danube Corridor 7)
connecting the West and Central Europe
with Turkey and Middle East and facilitate
access to Black Sea region. This is particularly
important for European companies in the stage
of expansion, the ones that see Serbia as an
important hub for further placement of their
products towards the East. On the other hand,
the European companies wishing to reduce
their production costs find benefit in the fact
that Serbia is neighboring four EU countries,
ensuring excellent logistical connections and
easier access to this market.
Another very important advantage of Serbia
is high level of education and qualifications of
the available work force, which is an obligatory
demand of almost every investor. Our workers
are often described as hard-working and educated people, with strong business spirit, easily
adaptable and open to changes, with additional positive remark that a large share of the
workforce speaks foreign languages,

24 SYNERGY

allowing easier communication and contributing to faster acceptance of new business
requirements and principles.
Working as an economic diplomat abroad,
I have had the opportunity to see for myself
that foreign investors particularly appreciate
the multitude of trade agreements Serbia has
with other countries, such as the arrangements
with Turkey, Russia, Belarus, Kazakhstan, EU
countries and EFTA. Particular importance for
easier business of domestic companies comes
with the regional agreement CEFTA, while it
is also certainly inevitable to note the existence
of preferential arrangement with the USA,
allowing duty-free export of certain types of
industrial products to this most developed
market in the world. All of these agreements
together provide domicile-status companies
with free access to a market of more than
billion potential consumers. What spurs much
attention among investors, representing a huge
competitive advantage of Serbia compared to
other countries, is the existence of free trade

The author Aleksandar Nikolić has many years
of experience in investment promotion activities
within USAID and as an economic diplomat in
Macedonia and Slovenia.
agreement with Russia. Except for former
Soviet republics, no other countries in the
world have such agreements and incentives.
In terms of tax burden level, with corporate
income tax of 15%, VAT of 20%, and individual income tax of 10%, Serbia is somewhere
in the middle of the list compared to its
neighbors. While the tax burden here is much
lower than in Croatia and Slovenia, on average
they are higher when compared to Bulgaria,
Montenegro, Bosnia and Herzegovina, Albania
and Macedonia. On the other hand, when the
calculation also includes tax incentives and

Famous brands testify to
maturity for large investments

subsidies provided to foreign investors, there is
a conclusion that Serbia is more attractive than
its neighboring countries. It is one of the three
countries in the region allowing the so-called
tax holiday (for investments of more than EUR
9 million and 100 new jobs), and the only
one where this offer involves all industries.
Additionally, tax holiday can be used for up to
10 years – which is the longest period for such
opportunity in the region.
In addition to a variety of tax exemptions, the
Government of Serbia also ensures significant
incentives for foreign and domestic investors.
Together with the unique trade agreement
with Russia, I would say that the financial
incentives tip our sales pitch in promotional
activities for attracting investors to Serbia.
Since 2006, our Government has been providing subsidies for foreign direct investments
through a special program of financial support
awarding grants of EUR 4,000-10,000 per new
job created, depending on the location, for
investments of at least EUR 1 million (or EUR
500,000 in the so-called devastated areas),
that is, 50 new jobs. This measure has rather
far-reaching impact when compared to similar
initiatives in other countries in the region.
It is also important to stress the importance
of large investment projects, and the arrival
of globally recognized brands, such as Fiat,
Bosch, Siemens, Panasonic. These projects
indicate that Serbia has large absorption
potential and can take up large investments. In
practice, the arrival of large companies often

It is also important to stress the importance of
large investment projects, and the arrival of globally
recognized brands, such as Fiat, Bosch, Siemens,
Panasonic. These projects indicate that Serbia has
large absorption potential and can take up large
investments. In practice, the arrival of large
companies often acts as a magnet for other
companies to come, especially the ones from
the same or related industry.

acts as a magnet for other companies
to come, especially the ones from the
same or related industry.
Much to the dismay of all dealing with investment promotion of our country, whether local
or national initiatives, Serbia is also characterized by numerous disadvantages that prevent or
negatively affect further inflow of foreign direct
investments to Serbia. My personal impression
is that for these companies, the greatest problem
in making a positive investment decision is
the slow and inefficient state administration.
Most remarks are made in regards to excessive
bureaucracy, complicated administration, nontransparent and burdensome procedures for
obtaining the necessary permits, slow judicial
system and high level of corruption. I have had
the opportunity to experience how hard it is to
explain a foreign company owner that the issue
of construction permit may take up more than
8 months of their time. Why foreigners find
it hard to understand – it becomes clear after
looking at the World Bank’s Doing Business
report for 2013, ranking Serbia as 179th out of
185 analyzed countries with regards to this indicator. At the same time, many countries from
our surroundings are rated much better, for this
and for other indicators. I will only mention Macedonia, ranked 65th based on the time needed
for issuing permits, and 23rd in terms of overall
business conditions (Serbia is ranked 86th).
In addition to the mentioned problems, a
number of foreign investors have also been
complaining about the complicated taxation

system. This is an additional challenge, because
along with the national tax system, there are
a plenty of local fees that vary locally. Even
though the corporate income tax is relatively
low, this effect often gets annulled through a
multitude of fees charged by local authorities.
What is common for all investors, no matter
what country they come from, is that they
demand transparency, political and economic
stability, maximum possible predictability and
fast and efficient administration and courts.
In the time to come, the overall development of
our country will largely depend on the amount
of realized foreign direct investments, especially
having in mind that the conditions of low liquidity among businesses, limited loan opportunities, insufficient exports and lack of modern
technologies would pose a significant obstacle
to continued economic development in Serbia.
The effects of foreign investments have deep impact and do not come down solely to an inflow
of certain amount of money and employment
of domestic labor force. They also contribute to
the development of domestic industry, creation
of a more competitive market, arrival of modern
technologies, increased productivity, higher
exports and country’s better payment and
foreign trade balance. There is no doubt that the
FDI are a necessary requirement for a successful
transition of Serbian economy and its integration into the global market.
october 2013 | 25

IN SYNERGY

Dr Hans Estermann, NALED Strategic Development Advisor

How Berlin and Dortmund
regained their power
Successful German local governments follow a simple recipe:
they analyze their background and have a clear vision of
where they are going

T

he German economy is probably
one of the most stabile ones in
Europe. Nevertheless it is subject
to constant changes. It has to face tough
international competition and is fighting
for technological leadership as well as for its
share in international markets. Economic
policy is setting the framework for dealing
with structural changes and competition,
national infrastructure has to be kept on a
high level and programs for qualification
and bringing new technologies to markets
are developed.
All this is useful and helps meeting the
requirements of a competitive environment. Germany is a federal republic
with 16 states, all of them with their own
responsibilities, i.e. in economic actions,
education and infrastructure. But all
business is local and thus the local authorities and stakeholders in local economic
development have to play an important role in taking chances and overcoming risks.
About 8.000 towns and municipalities are
the backbone of economic development.
They are setting the conditions for projects,
for investment and employment.

success is inclusion of local business and
NGOs in formulation and implementation
of local strategies and measures. There is not
the one and only way to deal with change.
Major threads for the local economy where
met by local policy in different ways.
Germany is well known for its industrial
basis. It is automobile, machinery, chemicals
that dominate the image of the industry. But
most of it declined in the 70s, 80s and 90s of
the 20th century. Dortmund in the German
industrial heartland Ruhr for 100 years was
the synonym for coal and steel, seconded
by its fame for beer. Not much of it was left
after the decline of mining, concentration
of steel industry and internationalization
of the brewing industry. After 1960 some
80,000 jobs got lost in industry, only coal
mining jobs came down from 40,000 to
zero. All actions and protests could not stop
the decline. Even Billions of subsidies for
the old branches could not save the region.
Local economic development department
of Dortmund city administration took the
chance that came along with a new university founded in the late sixties. It started
with about one thousand students, today

Whenever an interesting investment
appeared, Berlin had an offer ready
Towns, municipalities and regions are active
in local economic development. They are
free to do it as part of their administration
or with businesslike organizations. But
finally it is not the form of organization,
people making the difference. Part of the
26 SYNERGY

there are more than 25.000 being educated
in Dortmund. But that is not enough to
develop the economy in a city of 600.000.
The focal point for the turnaround in the
economic structure was to combine the scientific background with business. The city

The author works as Strategic Development
Advisor in NALED, with the support of
German Government and CIM center. During
his decades-long experience, among other
things, he held the managing positions in state
administration for economic and local development in Berlin, Cologne and Dortmund
should be attractive for service industries,
new technologies and creativity. It worked
with the foundation of a technology park
next to the growing university as a cornerstone of modernization policy. Electronics,
Software, Biotech, Logistics were the
centers of new development. The image of
the city of Dortmund changed completely:
it is no longer traditional industries but high
tech and service industries. And of course
football, but that is another story.
Berlin started from a different situation.
After having been divided into an eastern
sector and the western part for 50 years,
reunification was the turning point for the
old structures. Although under different
political systems, on both sides industries

had enjoyed subsidies and closed markets,
the public sector was blown up highly above
the needs. Competition became the new
philosophy after 1990 and it lead to dramatic changes. 350.000 jobs were lost in old
industries that moved to low cost countries.
Although the federal government came
into town, it did not solve the problem.
Federal institutions in Germany are highly
decentralized and so only about 35.000 new
jobs accompanied the move of the federal
government.
Berlin local economic development was
completely reorganized in the early 1990s.
No longer subsidies where the trigger,
but concentration on future industries.
Attractive locations could be found in
abandoned industrial buildings, fitting
the expectations of creative minds, as well
as in city centers and in newly developed
industrial parks. A network of technology
centers and attractive assistance for new
businesses completed the offers and LED
managed to attract investment and relocation from branches, which were defined as
the future of the local economy. They had
a local basis as well as first class markets
worldwide with their new technologies
and high quality production and services:
Transportation technologies and automotive, Medical and Biotech, Energy, Service
industries, and last but not least the Media
and Creative Industries. Special teams in
local economic development agency and
city administration put together tailor
made offers to the companies fitting into
the new strategy. Specialists started travelling in Germany and around the world
to meet the decision makers. Whenever
an interesting investment was on the
agenda, an offer from Berlin was on the
table. The strategy was seconded with a
bundle of measures to make the city of
Berlin more attractive. Three universities
and more than 100 scientific institutions
were playing a pivotal role in the process. Substance, international reputation
and concentration on the growth sectors
changed the image of an interesting, but
traditional location. Berlin is now seen as

Adlershof Technology
park Berlin © Wista

Euref Campus Berlin
© Berlin Partner

the place for innovation, creativity, talents
and networks. Founders and established
companies find the right location, the
right people, attractive networks and easy
access to markets. Thanks to assistance
from the EU and federal government they
can rely on a most modern infrastructure,
qualified workforce, access to technologies
and enjoy an environment which more
than 10 million tourists are visiting every
year for culture, lifestyle, shopping and
pleasure. Local economic development
has its share in this success of a 3,5 million
capital city by concentrating on the unique
selling points of an economy in transition

and offering tailor made solutions for all
interested parties.
Each municipality can tell its story how to deal with challenges. The successful ones follow
a simple recipe: they analyze where they come from and have a clear vision where to go.
Politics and administration are focusing on
growth factors and streamline their organization. If it should be successful LED has to be
integrated part of local policy. Qualification,
environment, quality of life, social benefits
and culture make the location attractive and
are brackets of prosperity. Investors are looking to figures, but also like to enjoy benefits
of an outstanding environment.
october 2013 | 27

A TALK WITH...

Saša Radulović, Minister of Economy

Domestic companies will be the

basis of our development
A
prominent proponent of regulatory reform known in public as an
economic analyst and author of
articles harshly criticizing the authorities,
he describes himself in one of his blog posts
on the B92 website as an electrical engineer
who left Serbia for Germany in the 80s and
started his career in Siemens. He has lived
and worked in countries all over the world.
He developed and managed companies
from their beginning in a garage to the point
when they had more than 150 employees.
He has been CEO, member of the management team and board of directors in several
companies. He returned to Serbia in 2005
and stayed because he liked it: “hard but
beautiful, most difficult for the children, for
their education and the future”. In Serbia, he
was a licensed bankruptcy manager, expert
associate to the Council of Europe, OSCE,
U.S. Embassy, GIZ, NALED, advisor to
the Association of SMEs. Today, he is the
Serbian Minister of Economy.
On taking office, his first time in the role of
Minister, Saša Radulović spoke about the
plans and programmes of the reshuffled government to improve the business environment
and encourage economic growth, at a working
luncheon with NALED members and partners
on 23 September 2013.
“One of the key issues we brought up, something
first Deputy Prime Minister Aleksandar Vučić
insists on, is to achieve a healthy and sustainable
state and economy based on private ownership,
profit, new jobs, production, exports. The strategic guidelines that will serve as a framework
for developing state policy are classified in four
main categories: regulatory reform, professionalization of the public sector, resolving the issue of
excessive debts among businesses, reducing the
burden on labour and creating better business
28 SYNERGY

Regulatory reform, professionalization of the public sector, resolving
the issue of excessive debts among businesses, reducing the burden
on labour and creating better business conditions for SME are the
country’s strategic priorities
conditions for small and medium enterprises”
– said the Minister of Economy Saša Radulović
opening the discussion.
What are the Government’s priorities in
the field of regulatory reform?
Labour Law, the Law on Planning and
Construction and the Law on Privatization
supported by good regulations will be the
first priority. This will be followed eliminating
unnecessary regulations that cause substantial
problems for businesses. There should be
fewer fees, but they could be higher and easy
to administer. I was against the company sign
fee and we have made progress in this area to-

gether with NALED. I would go even further,
but there is the issue of our country’s economic situation. We also have a problem with
implementing the law. The Budget System Law
introduced a provision that the level of fees
cannot be determined arbitrarily but has to reflect the cost of service provision. This has not
yet been implemented. We will ask all agencies
to adjust their fees to reflect the cost of their
service, nothing more and nothing less. A fee is
neither a revenue nor a tax. Taxes are applied
to consumption, income, profit, property.
Can we expect the introduction of Think
Small First principle, which is practiced

If I’d thought it was hopeless I
wouldn’t have joined the government.
I think there is a will for change. I like
to win, what about you?
in the EU, meaning that in the course of
adopting regulations, the first thing to
evaluate is its impact on the SME sector?
This could be the Ministry’s slogan, because we
really act that way. We think small first, big after.
What amendments to the Labour Law can
be expected and when?
These are severance pay and easier dismissal
of employees. It is unreasonable for severance pay to be calculated on the years of
employment record. An immediate result is
that people aged over 40-50 can never find
employment, as no one is ready to take on
the risk of such a long employment record.
Because if your company falls on bad times
and has smaller revenues, you will be forced to
dismiss people and so pay unrealistic sums in
severance pay to these people. So the Law that
should protect the workers has a completely
perverse effect. I think the expenses of hiring
someone and providing training for them are
enormous, so allowing easier dismissal is in
fact a measure for stimulating employment.
What I do not agree with is for fixed-term
employment to be extended beyond one year.
What are the effects of the current tax
system in Serbia?
The effect is two aspects of the grey economy
– illegal employment and tax evasion in
terms of VAT from customs and excises. One
leads to the other. We need to release the
burden on labour. This will directly benefit
production and export because these provide
employment. If you compare the balance
sheets of an exporter and a producer selling
the same product, the difference is seen
in labour. When you take a look at the tax
october 2013 | 29

Business journal Synergy, 2nd edition

Business journal Synergy, 2nd edition

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