FOREIGN DIRECT INVESTMENTS IN SERBIA

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FOREIGN DIRECT INVESTMENTS IN SERBIA

• Balance of payments data collection system

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BACKGROUND

• Serbia has a nearly 40 year long experience with
  foreign investments.
• During 1967-1988 period foreign investments were
  were allowed in the form of joint ventures only.
  
• The 1989 reform gave FD investors the right of
  ownership and management.
• After 1991 FDI decreased due to the dissolution
  of the former Yugoslavia, war and sanctions.
• In 2002 the current Law on FI not only gave
  foreign investors the national treatment, but
  also introduced a number of incentives such as
  free imports of capital goods, tax incentives,
  protection from expropriation and nationalization
  etc..

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BACKGROUND (contd.)

• Total FDI in the period 2000 -2005 amounted to
  about 4.531 million or 755 million annually
  (in the first quarter 2006 it amounted 215
  million).
• The expected annual inflow of FDI is estimated to
  rise from 1.515 million in 2005 to 2.117
  million in 2011.

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LEGAL FRAMEWORK

• Law on Foreign Investments (for inward FDI)
• Law on Foreign Trade (for outward FDI)
• Decision on Conditions and Manner of Arranging
  Payments Made, Payments Received and Transfers
  Under Current and Capital Transactions in Foreign
  Currency and Dinars

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LEGAL FRAMEWORK (contd.)

• Guidelines for Implementation of the (above)
  Decision
• Decision on Reporting Requirements in
  International Operations
• Guidelines for Implementation of the (above)
  Decision
• Forms

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DATA SOURCES

• BASIC
• ITRS
• Statistics Office of Serbia
• Direct Reporting

• SUPPLEMENTARY
• Ministry for Foreign Economic Relations
• Privatization Agency
• Serbian Investment and Export Promotion Agency
  (SIEPA)
• Official Gazette
• Media

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ITRS

• Reports on transactions in cash only
• Uses specific codes for transactions made through
  banks accounts specifying amounts, currencies,
  FD investors and countries
• Identifies the country from which the payment is
  made rather than the investors country of origin

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STATISTICS OFFICE OF SERBIA

• Reports on FDI in kind only
• Specifies amounts, economic uses of FDI
• Can supply information on individual companies
  engaged

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DIRECT REPORTING (since October 2002)

• Based on the obligation of all direct investment
  entities whether existing or created by FDI.
• The only comprehensive source of FDI information
  including the stock of FDI related to
  International Investment Position.
• The response rate is low.
• The current survey form will be improved in
  accordance with the recommendations of the IMFs
  technical assistance mission on BOP statistics.

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THE CURRENT SURVEY FORM (for inward FDI) SPECIFIES

• Resident entity receiving FDI, each investment
  and each FD investor through reports once a year
  before March 31 for the preceding year and before
  the 10th of the month for the preceding quarter.
• Whether the investment is in an existing company
  or a bank or a new company or a bank or a
  subsidiary or institute or foundation.
• Foreign investor, his county of origin, his
  shareholding percentage, total amount of
  investment and monetary and non-monetary portion
  of investment.

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THE CURRENT SURVEY FORM (contd.)

• Tabular breakdown of FDI including opening
  balance, increases of investment through payments
  made in the form of reinvested profits,
  securities, tangible assets (fixed assets and
  goods), intellectual property rights and other
  payments in foreign currency, as well as
  withdrawals, profit/loss, reporting period
  closing balance and the amount transferred to
  foreign entity accounts.

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THE RECOMMENDED SURVAY FORM SPECIFIES

• Increases and decreases in investments,
  investments in cash and in kind, withdrawals of
  investments, net profit/loss, reinvested
  earnings, disbursements of profit, exchange rate
  changes, price changes and net worth of equity by
  the end of the year.
• Positions of assets and liabilities with
  affiliated companies in respect of loans (short
  term, long term), trade credits (short term, long
  term), including the value of assets/liabilities
  at the end of the year.

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SUPPLEMENTRY DATA SOURCES

• Ministry for Foreign Economic Relations,
  Privatization Agency supply data which is used
  for crosschecking records on registered FI
  entities, value of signed contracts and amount of
  equity sold in the process of privatization.
• All companies are obliged by law to register with
  the Agency for economic registers. The Agency is
  obliged to report to the National Bank of Serbia
  on all companies involved in foreign direct
  investments.

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SUPPLEMENTARY DATA SOURCES (contd.)

• Privatization Agency registers FDI regardless of
  the actual transfer of money and only for the
  companies in the process of privatization which
  have state ownership, but supplies comprehensive
  data on foreign investors country of origin,
  kind of economic activity, other investors,
  social program and the amount of compensation for
  the state budget and other shareholders.
• Official Gazette and media are used to identify
  new entrants into economy.

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Dissemination practice

• Data on FDI transactions are disseminated within
  BOP data on the NBSs website and in its
  Statistical Bulletin.
• Also available are data on FDI by economic
  activity starting with the year 2005 and by
  countries of payments starting with the year
  2000, but with some limitations regarding quality
  of data.