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The Government of the Republic of Serbia

In the service of citizens

Serbia represents big business opportunity to investors

Belgrade, 10 May 2005

Addressing the 5th International Summit of Serbia-Montenegro, Serbian Prime Minister Vojislav Kostunica called on foreign investors to join forces with Serbian businesspeople as Serbia is a big business opportunity and may well be their next business success.

Serbian Prime Minister Vojislav Kostunica

Kostunica said that Serbia has huge potentials for the development of transportation, energy and communication infrastructure on Corridor 10, infrastructure opportunities for the Danube River on Corridor 7, concession arrangements as well as for the development of science parks.

The Prime Minister recalled that the political, economic and judicial framework for foreign investment is becoming increasingly safer in Serbia.

Serbia’s GDP grew 8.3 percent last year, Kostunica said noting that it was the largest GDP growth over the past 25 years. He added that foreign deficit increased and that the local economy recorded accelerated growth thanks to macroeconomic stability.

In the first quarter of this year, Serbia’s exports grew 52 percent, with imports decreasing 11 percent, Kostunica said, noting that this resulted from the positive effects of privatisation and from corporate restructuring.

He also said that the current free trade system in Southeastern Europe should be improved into a universal regional agreement serving a market of over 65 million consumers, following in the example of the CEFTA agreement.

Serbia’s corporate profit tax is the lowest in Europe, at just 10 percent, Kostunica noted and added that it is a good signal for foreign investors.

According to him, estimates for new investment this year amount to around $600 million. There are over 1,000 foreign companies working in Serbia, Kostunica pointed out, noting that the private sector covers nearly 50 percent of Serbia’s GDP.

Privatisation is changing the picture of Serbia for the better, Kostunica said, having brought in 16 billion dinars in the first quarter of the year, a sum four times more than last year.

Kostunica also said that the parliament has enacted over 100 laws proposed by the government and that they have been aligned with European judiciary.

The Prime Minister said that a positive feasibility study is the turning point in the country’s EU integration process.

Kostunica said that Serbia is again becoming a reliable and important partner in building peace, democracy and sustainable stability. Everyone in the region should adhere to European principles and values, which includes keeping international borders intact, Kostunica noted.

Speaking on Kosovo-Metohija, Kostunica said that Serbia is opting for a compromise solution for the province, in which the interests of both Serbs and ethnic Albanians would be respected. “We need to search for a specific solution that will offer an enlarged scope of autonomy for the province”, he said.

Kostunica stressed that Serbia fully respects and implements the policy of integrations that leads to the EU, and said he believes that Serbia and Montenegro together have a historic chance to join Europe and with greater speed. The Prime Minister said that now, when all of Europe is uniting, it is not the time to waste energy on internal conflicts and that forces should be joined in the spirit of European integrations in order to get the state union into Europe as soon as possible.

On behalf of the government, Kostunica said that a consensus on European values and objectives in Serbia is needed, as the time is ripe for creating a European future for Serbia.

Serbian Minister of International Economic Relations Milan Parivodic

Serbian Minister of International Economic Relations Milan Parivodic said that Serbia is stable for foreign investment and added that the economic environment has been improved in the past few years.

He said that certain problems still persist, such as those of Kosovo-Metohija and Montenegro, but the resolution of these problems will not harm investors.

Among other things, it is good to invest in Serbia because it has a good geographic position, Corridors 10 and 7 cross its territory, and it is situated in the middle of the new free trade zone, Parivodic stressed.

The Minister reiterated that inflation has been reduced from 112 percent in 2000 to 13.7 percent now, that GDP is on the increase, the banking market has been improved, labour costs are the lowest in the region as well as the low corporate income tax of 10 percent.

Serbian Minister of Economy Predrag Bubalo pointed out that Serbia adopted a series of economic laws which have been harmonised with EU regulations and which largely contributed to the improvement of the economic environment in the country.

Bubalo said that the privatisation process is developing rapidly and that the number of socially-owned companies that are being restructured is increasing. He concluded that stable macroeconomic policy, transparency of work of state institutions, a single tax policy and customs reliefs are just some of the reasons why foreign investors should invest in Serbia.