THE REPUBLIC OF SERBIA - YOUR TRADE PARTNER

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1 THE REPUBLIC OF SERBIA - YOUR TRADE PARTNER Slobodan Milosavljević, PhD Minister of Trade and Services Republic of Serbia Vicenza, May 2010

GEOSTRATEGIC POSITION Location: : South-East Europe, central part of the Balkan Peninsula Intersection of pan-european corridors X and VII Corridor X: Highway Salzburg-Thessalonica,

2 GEOSTRATEGIC POSITION Location: : South-East Europe, central part of the Balkan Peninsula Intersection of pan-european corridors X and VII Corridor X: Highway Salzburg-Thessalonica, including sections Budapest-Belgrade Belgrade and Niš-Sofia Sofia-Istanbul Corridor VII: The Danube, access to the Black Sea and the Northern Sea through the waterway Rhine-Main Main-Danube

3 THE GOVERNMENT S S PRIORITIES Macroeconomic and political stability The EU integration Attracting foreign investments Modernisation of infrastructure Ensuring energy stability Improving foreign trade balance Increasing standard of living

4 MACROECONOMIC INDICATORS GDP (in mill euros) Average annual growth rate of GDP in the period was 5.6% 35,000 30,000 25,000 20,000 15,000 10,000 5, Growth of GDP in 2008 was 5.4% In 2008 GDP per capita was 6,874 USD In 2009 GDP marked a decrease of 2.8% in comparison to previous year. A decrease in economic activity mostly affected construction, industry, exports, imports, transport and internal trade Industrial production had a tendency of growth in 2007 of 3.7%, and in %. In 2009 it decreased by 12.6% In 2008 the inflation rate was 6.8%, and in 2009 it was 6.6% in comparison to December 2008 (source:nbs)

5 FOREIGN TRADE EXCHANGE 25, % 20, , % 16% EU CIS CEFTA Other countries in mill USD 10, , , export import deficit 16% -10, , years

6 GDP data comparison EU-Serbia (changes in percentages compared to the previous year) % GDP 2 Serbia EU years

7 STRUCTURE OF IMPORT AND EXPORT IN % IMPORT 26% 59% 10% EXPORT products for reproduction consumer goods equipment 31% 59% products for reproduction consumer goods equipment

8 MAJOR FOREIGN TRADE PARTNERS IN 2009 IMPORT Russian Federation Germany 1, ,963.1 (in mill USD) Italy 1,549.8 China 1,135.3 Hungary ,000 1,500 2,000 2,500 EXPORT Bosnia and Herzegovina Germany Republic of Montenegro Italy 1, Romania ,000 1,200

9 THE WORLD TRADE ORGANISATION (WTO) The Republic of Serbia began the process of joining the WTO in 2005 In the process of accession Serbia has undertaken a number of measures, of which we point out the activities on: Harmonisation of national legislation with the EU law and the WTO standards, Harmonisation of foreign trade regime with the WTO rules and standards, Simplifying procedure for issuing import permits, Eliminating technical barriers in trade, Harmonisation in the field of implementation of sanitary and phytosanitary measures in compliance with the EU standards.

10 THE EU AND SERBIA Serbia became a potential candidate for the membership in the European Union in 2003 Since the end of 2000 Serbia has enjoyed a preferential status for the export of goods to the EU The Agreement on trade in textile products between Serbia and the EU came into force on 1 July 2005 The SAA signed in Brussels in April 2008 provides a clear perspective for Serbia s membership in the EU Crucial element of the SAA is the establishment of a free trade zone between the EU and Serbia in a six-year transition period The Interim Agreement on trade and trade-related matters between the EU and Serbia was supposed to enter into force in July 2008, but it was postponed and officially entered into force on 1 February 2010 On 19 December 2009 liberalisation of visa regime for Serbian citizens came into force On 22 December 2009 Serbia submitted EU membership application

11 FREE TRADE AGREEMENTS The CEFTA is a free trade agreement concluded among the countries of South Eastern Europe (Serbia, Bosnia and Herzegovina, Croatia, Montenegro, Albania, Macedonia, UNMIK/Kosovo in compliance with the Resolution of the SC no. 1244, and Moldova). The CEFTA covers the market of about 30 million people The Free Trade Agreement with the Russian Federation The Free Trade Agreement with Belarus The Free Trade Agreement with Turkey The Free Trade Agreement with EFTA members (Norway, Switzerland, Iceland, and Liechtenstein) Expert negotiations regarding the conclusion of the Free Trade Agreements with Iran, Ukraine and Kazakhstan are in progress

12 Booming Market Potential MARKET TRADE REGIME NUMBER OF PEOPLE EU Preferential Trade Regime 494,070,000 US Generalized System of Preferences 302,558,000 Russia Free Trade Agreement * 142,754,000 SEE CEFTA 29,330,542 Belarus Free Trade Agreement 9,689,800 Turkey Free Trade Agreement 76,805,524 EFTA Free Trade Agreement 12,660,623 Total 1,067,868,489 * Serbia is the only country, apart from the Commonwealth of Independent States members, with such an agreement

13 INCENTIVES FOR FOREIGN INVESTORS National treatment for foreign investors Tax holiday on profit for big investments in the period of 10 years Tax holiday on profit for investments in an area of special interest for the Republic of Serbia in the period of 5 years Tax cuts for the employment of new workers Tax credits up to 80% of the value of investments in fixed assets Import of equipment is exempted from customs duties Special financial incentives for investments directed to production Favorable tax regime: - Salary tax rate 12% - Corporate profit tax rate 10% - Value added tax rate 8%, i.e. 18%

14 INVESTING IN SERBIA FOREIGN DIRECT INVESTMENTS (in 000 USD) FOREIGN DIRECT INVESTMENTS IN CASH NET, BY COUNTRY (in 000 USD) 3,500,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 3,000,000 2,000,000 2,500,000 2,000,000 1,500,000 1,000,000 1,500,000 1,000, , , Austria Greece Norway Germany Netherlands Italy Slovenia France Luksembourg Hungary In the period after 2000, four fifths of all FDI in cash have been from the EU countries. Italy is the sixth largest investor in Serbia

15 1, MAJOR FOREIGN INVESTMENTS IN SERBIA (in mill. Euros) ,000 1,200 1,400 1,600 1,800

16 MAJOR ITALIAN INVESTMENTS IN SERBIA in mill euros FIAT* Bank "Banca Intesa" Insurance Co. "Fondiaria SAI" Bank "San Paolo IMI" Insurance Co."Generali Group" Bank "Findomestic Banca" 30 22,

17 Besides mentioned, in Serbia are also present:

18 BILATERAL COOPERATION BETWEEN SERBIA AND ITALY Italy is one of the most important Serbian trade partners After 2004, there has been a significant increase in total trade between Serbia and Italy In 2009 the trade of goods between Serbia and Italy amounted to 2,355 million USD - Export of 821 million USD (clothes,iron and steel, foot-wear,coloured metals and plastic materials) - Import of 1,534 million USD (industrial machines, motor vehicles, spin yarn, cloth and textile materials)

19 INDUSTRIAL,, FINANCIAL IAL AND BANKING COOPERATION The industrial cooperation is concentrated on a small number of sectors (vehicles, agricultural machinery, household appliances, pharmaceutical industry - packaging for drugs, wood processing sector, clothing and footwear production) There are 200 Italian companies in Serbia as well as 4 Italian banks (Intesa, Unicredit, Findomestic, Sanpaolo) Italian Government granted two loans (in 2005 and 2008) of approximately 67 million for SME for the purchase of Italian equipment and the realization of infrastructural, environmental and public utilities projects Serbian Government and Italian company Fiat signed Joint investment agreement in the factory Zastava Kragujevac. Zastava produced 15,000 cars (mainly Punto model) in 2009 In addition to the cooperation within the car industry, there are opportunities for more intensive cooperation between the two countries in the domain of chemical industry, energy and construction sector, as well as tourism, food and agriculture sectors

20 CAR INDUSTRY COOPERATION

21 Production of facade stone ONGOING PROJECTS Construction material industry Wood processing industry Production of chipboards in Ivanjica and blockboards in Leskovac Furniture factory in free zone Backa Palanka Textile industry Production of luxury ready-to-wear clothes in Vrbas ENERGY Mini power station in Priboj municipality

TOP FIVE MANUFACTURING DESTINATIONS Source: The PricewaterhouseCoopers EM20 Index, July 2008 IN THE WORLD Time for Registering a Company 5 Days and cost of Registering a Company 90 Euros The research

22 TOP FIVE MANUFACTURING DESTINATIONS Source: The PricewaterhouseCoopers EM20 Index, July 2008 IN THE WORLD Time for Registering a Company 5 Days and cost of Registering a Company 90 Euros The research of the Standard & Poors Agency in December 2009 shows that the credit rating of Serbia increased from BB negative to BB stable. Serbia s better credit rating will have a positive effect on more favourable credit borrowing and the improvement of general investment climate in Serbia.

23 Sources Sources of Useful Information Serbian Government Ministry of Trade and Services Ministry of Economy and Regional Development Serbia Investment and Export Promotion Agency Serbian Chamber of Commerce

24 THANK YOU FOR YOUR ATTENTION! Ministry of Trade and Services Nemanjina, Belgrade

INVESTING IN SERBIA 2012

INVESTING IN SERBIA 2012 Bozidar Laganin Director PRESENTATION OUTLINE About Serbia Economic Indicators and Trends Foreign Investments In Serbia Technical Education and Workforce Logistic and Trade Tax