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The Government of the Republic of Serbia

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Increase export to reduce trade deficit, Parivodic says

Belgrade, 30 April 2005

Serbian Minister of International Economic Relations Milan Parivodic said in an interview for Blic daily that the solution to the foreign trade deficit is an increased domestic export and new investors coming to Serbia rather than additional cuts in public spending. He also notes that among economic priorities include speeding up privatisation and active work on stimulating foreign investments. The official website of the Serbian government brings excerpts from the interview:

Milan Parivodic

End of negotiations with IMF representatives:

No definite agreement with the IMF in Washington was achieved, but I expect that by May 13, when the IMF delegation will end their visit to Belgrade, an agreement will be achieved. The biggest obstacle is IMF’s demand to cut public spending, and thus imports. Reduction of imports means reduced foreign trade deficit, which is currently too large. Still, we have a positive trend, as export was reduced in comparison with the same period last year, so I am hoping for a positive outcome.

Measures to be taken to solve ownership disputes and abolish bureaucratic obstacles that are the biggest burden to foreign investments:

It is true that investors here are facing problems, particularly with getting land and building licences. We are losing a great number of foreign investors because they cannot get ownership licences for city building land, only getting licences for its use. After getting a construction licence, they are to provide some 20 more licences, which is a true nightmare for them. That must be changed so that one construction licence incorporates those 20 additional ones.

Meetings with investors in Israel, Great Britain and Slovakia:

Israelis are very interested in investing in our infrastructure, state-of-the-art technology and agriculture. In Britain, we had talks with British Petroleum and Shell, who are interested in cooperation with Serbian oil company NIS whereas OMV showed interest in the takeover of NIS, so we expect that NIS will become a modern profit-making company this year. Vodafone is interested in our mobile telecommunications market as they are already present in the region. For the time being, Vodafone is interested in the takeover of Telekom or they wish to get a third licence, rather than to take over Mobtel because of the unresolved ownership problems. Their common practice is to buy the second strongest mobile operator and to upgrade it to become the leader on the market.

You recently signed a textile agreement with EU representatives. Do you have estimates about the value of Serbian textile goods that might be exported to the EU?

The parliament should ratify the textile agreement in early May, and it should become effective on July 1. Serbia’s textile products will then be exported on the EU market without customs tariffs and duties. That will open up the doors for foreign investment in the Serbian textile industry as the textile goods will be exported not only to the EU, but to countries in the region and Russia. To foreign investors, that is a market of 650 million consumers. To us, it means starting the textile industry and more work for around 100,000 of Serbia’s textile workers.

What is the EU’s stand on the announced change of customs rates for a number of products?

The EU Directorate-General for Trade Policy has sent a positive response in principle. We suggested changing customs tariffs for 168 products, including milk, meat, and meat products. On the other side, we asked for reduction of taxes for 151 items imported from the EU. The European Commission said we should re-examine the tariff rates of 31 products. In principle, our suggestion is acceptable to them and I expect it will be carried out soon.