Invest in Serbia

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Invest in Serbia
Embassy of the Republic of Serbia
November, 2007
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REASONS TO INVEST IN SERBIA

• Increasing Stability
• Strategic Position and Adequate Infrastructure
• Market Access and Market Potential
• Valuable Human Capital
• Improved Legal Framework
• Favorable Tax and Investment Regime
• FDI Track Record
• Sourcing Opportunities

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INCREASING STABILITY
Sustained growth, decreasing inflation, budget
surplus
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INCREASING STABILITY

• CEFTA agreement ratified in September 2007
• WTO accepted Serbias application working group
  established in January 2005, accession planned
  for 2008
  
• SAA negotiations with the European Commission
  finalized in September 2007 candidate status
  planned for 2008
  
• Completed extended arrangement with the IMF in
  February 2006 Growth will remain robust
  
• SP Credit rating
• BB-, Stable outlook

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STRATEGIC POSITION
Serbia Investment and Export Promotion Agency

• Crossroads of two high-priority European
  transportation corridors
  
• Corridor X Highway Salzburg-Thessalonica,
  including branches Budapest-Belgrade and
  Nis-Sofia-Istanbul
  
• Corridor VII Danube, access to the Black Sea,
  and through Rhine-Main-Danube Canal system to the
  North Sea

-- Corridor VII -- Corridor X
Source EIU
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ADEQUATE INFRASTRUCTURE
Road network of 40,845 km - 5,525 km of arteri
al roads, - 11,540 km of regional roads, -
23,780 km of local roads.6 ports on the Danube
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MARKET ACCESS

• Serbia is in the center of the SEE CEFTA Area
  duty free access to a 30 million people market
  
• SEE is one of the Europes fastest growing
  regions
  
• Autonomous Trade Measures granted by the EU in
  December 2000 provide for duty free exports to
  the EU
  
• The only country outside the CIS that has an FTA
  with the Russian Federation a market of 150
  million people
  
• Generalized System of Preferences for exports to
  USA
  

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MARKET POTENTIAL
(EUR)
(EUR)
Continuous GDP and purchasing power growth
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VALUABLE HUMAN CAPITAL

• Number of graduated students from universities in
  Serbia (1/3 of all students are from technical
  faculties)

In the past 35 years more than 110 medals in
mathematics, physics and informatics atworld
championships
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VALUABLE HUMAN CAPITAL

• Literacy in English language ( of population)

Serbia
42.3
Czech R. 22
Poland 22
Romania 16
Bulgaria 14
Hungary 14
Percentage of English literacy far above other
CEE and SEE countries

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VALUABLE HUMAN CAPITAL
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VALUABLE HUMAN CAPITAL

• Long tradition of cooperation with international
  corporations
  
• Chevrolet and Ford since 1930
• Fiat since 1954
• Boeing, Opel, Volkswagen, Renault, Citroen,
  Siemens.
  
• But also Unilever, Coca Cola, Tetra Pak, Henkel
  and other FMCG producers
  

Local technical expertise management talent
with international experience readily available
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IMPROVED LEGAL FRAMEWORK

• More than 260 laws passed since 2004
• Majority related to economic environment
• Bankruptcy (avg. 7 years - 1 year)
• Business Registration (51 day - 18 days )
• Company Law
• A package of tax laws, including VAT

Serbia is a number one business reformer in the
world.
World Bank, Doing Business in 2006
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International Recognition

• The World Bank 2005 Serbia 1st in speed of
  reform out of 155 countries!

The EBRD 2005 Serbia fastest reformer among 27
countries in transition!
US Department of Commerce awarded Serbia
Market of the Month title in January 2006!
Financial Times 2006/07 Belgrade City of the
Future in Southern Europe!
The World Bank 2006 Serbia 2nd in relative
progress out of 175 countries - climbed up the
list for 24 places!
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Favorable Investment Regime

• Lowest corporate profit tax rate 10
• 10-year tax holiday for large investments
• Tax relief for hiring new workers
• Tax credit up to 80 of investment amount for
  investing in fixed assets
  
• Accelerated depreciation
• Import of in-kind equipment is exempt from custom
  duties
  
• Liberalization of property laws
• National treatment for foreign investors
• Special financial incentives for new investments

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FAVORABLE TAX REGIME
Second lowest corporate profit tax rate in
Europe

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FAVORABLE TAX REGIME
Lowest salary tax rate in CEE
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FAVORABLE INVESTMENT REGIME
Free Zones in Serbia

• No customs and tax duties, no time limitation of
  customs control
  
• Import of equipment and building material are
  customs and tax free
  
• Taking the goods out of the free zone temporarily
  for outward processing and presentation is
  allowed
  
• The property of the user of the free zone cannot
  be nationalized or expropriated
  
• Transfer of profit and re-transfer of invested
  funds are free
  
• The rights of the user of the free zone
  guaranteed by the Law on Free Zones cannot be
  diminished by any other law or regulation

Free Zones in Serbia
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Financial incentives

• Assigning non-refundable funds for investments in
  all sectors, except agriculture, tourism,
  hospitality and trade
  

All the necessary documentation available at the
Agency website (www.siepa.sr.gov.yu) after the
invitation for application was published

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FDI TRACK RECORD
(USD million)
OECD Serbia attracted the largest Greenfield
investment in South East Europe in 2003, 2004,
and 2005
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FDI TRACK RECORD
Biggest investments in Serbia 2001-2006

• Biggest Privatization EUR 1,513 mn
• Telenor, Norway, Telecommunications, 2006
• Biggest Greenfield (completed) EUR 80 mn
• Ball Corporation, USA, Packaging, 2004
• Biggest Acquisition EUR 475 mn
• Stada, Germany, Pharmaceuticals, 2006

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FDI TRACK RECORD
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REMARKABLE PRESENCE OF US CAPITAL

• Investments of more than 1 billion in
  2000-2006
  
• Philip Morris, U.S. Steel, Galaxy Tire,
  Coca-Cola, Ball Packaging, City Bank, Microsoft,
  Fox, Van Drunen Farms etc
  

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FDI SUCCESS STORIES IN SERBIA

• Ball Corporation USA
• Regional center production facility for
  aluminum cans
  
• Broke ground in May 2004, production started in
  May 2005
  
• Biggest Greenfield investment in SEE Region in
  2003
  
• Dragisa Antic, Vice-president, Ball Packaging
  Europe
  
• Since we started considering our options, we
  cooperated with three Prime-ministers and their
  Governments, and they have all been most
  supportive and willing to help us realize our
  investment project.

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FDI SUCCESS STORIES IN SERBIA

• Microsoft Corporation USA
• Opened in Belgrade one of only 4 international
  Research Centers
  
• Cambridge, UK, 1997
• Beijing, China, 1998
• Bangalore, India, 2005
• Belgrade, Serbia, 2005
• Development of PC tablet handwriting recognition
  software
  
• Dejan Cvetkovic, Director, Microsoft Serbia
• The corporation recognized the outstanding
  talent that exists in Serbia.
  

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FDI SUCCESS STORIES IN SERBIA

• US Steel - USA
• Sept 2003 - Acquisition of a bankrupt company -
  the biggest Steel Mill in Serbia
  
• Major turnaround in operations in 2004
• Steel production increased by more than 35
  percent in 2005 over the record levels achieved
  the year before
  
• Biggest exporter from Serbia in 2006
• Mr. Thomas Kelly, General Director The people
  a well educated group of workers -- have
  responded very effectively to our training in
  continuous improvement of such areas as workplace
  safety, product quality, customer service,
  environmental improvement and cost reduction.

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Key Investment Opportunities
Methods
Privatization
Energy NIS (Oil Industry of Serbia) Insuranc
e DDOR Novi Sad Dunav osigu
ranje Transportation JAT Airways
JV Cargo hub with
Belgrade Airport
Hotels ex Intercontinental, Slavija, Kopaonik
Remaining industrial companies i
n state ownership
Greenfield Brownfield Concessions Privat
ization
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Numerous opportunities in the strategically
important fields of economy

• Energy
• Privatization of the Oil Industry of Serbia
  (NIS)
  
• Construction of electrical power plant Kolubara B
  (2x350 MW) and TENT (700 MW)
  
• Reconstruction of the heating system in Novi Sad
• Gasification (Blue Stream 2)

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Numerous opportunities in the strategically
important fields of economy

• Transport
• Highway Horgos-Pozega concession signed in 2007
  financial arangement expected to be closed in
  early 2008
  
• Belgrade by-pass, 47 km in length (EUR 530 mil
  investment)
  
• Corridor X (E75), 94 km, (EUR 470 mil.
  Investment)
  
• Highway Nis-Bulgarian border, 100 km (EUR 450
  mil. Investment)
  
• Privatization of Lasta, the leading commercial
  transport company in the Balkans
  

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Numerous opportunities in the strategically
important fields of economy

• Railway
• The European Investment Bank financial arangement
  amounting EUR 80 mil. signed, ratification in the
  Parliament expected
  
• Goal reconstruction and modernization of Coridor
  X sections (Subotica-Dimitrovgrad)
  
• Tender procedure is expected to commence in
  October / November 2007
  

• The European Bank for Reconstruction and
  Development financial arangement amounting EUR 60
  mil. signed, ratification in the Parliament
  expected
• Goal purchasing of couches
• Tender procedure is expected to commence in
  November 2007
  
• Technical assistance for railroad reconstruction
• French investment

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Numerous opportunities in the strategically
important fields of economy

• Air transport
• Privatisation of JAT Airways
• Tender procedure is expected to commence in the
  end of 2007
  
• Privatisation of JAT Tehnika
• Tender procedure is expected to commence in 2008
• Cargo center construction
• Public Private Partnership envisaged for 2008

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Numerous opportunities in the strategically
important fields of economy

• Agriculture
• Privatization of farms and agricultural
  enterprises
  
• Investments in irrigation system

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Numerous opportunities in the strategically
important fields of economy

• Continuation of Privatization Process
• Zastava, car factory
• RK Belgrade, department stores
• DDOR, insurance
• Genex, tourism and real estate
• JPPEU Resavica, mining industry
• Mostogradnja, Belgrade, construction
• Industrija Kablova, Jagodina, cables

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WE LOOK FORWARD TO SEEING YOU IN SERBIA!
Serbia Investment and Export Promotion Agency
Thank you for your attention!