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The Government of the Republic of Serbia

In the service of citizens

Foreign investment in 2006 over $4 bln

Belgrade, 27 December 2006

Serbian Minister of International Economic Relations Milan Parivodic said today that the amount of foreign investment in Serbia in 2006 will exceed $4 billion, which is 2.5 times more than the previous year.

Parivodic told a press conference presenting results of Ministry’s work in 2006 that for the past two years Serbia has had record high inflow of foreign investment and recalled that 2004 saw foreign investment of $966 million whereas they increased 63% in 2005.

He added that nearly $2.5 billion for 2007 has been agreed on already now.

At the proposal of the Ministry, the government adopted a Foreign Investment Incentive Strategy, which placed Serbia among few countries that have such strategic documents.

Parivodic said that implementation of this document, wide legislative activity, promoting Serbia as a good place to invest as well as additional assistance to foreign investors in the last three years considerably improved the investment climate in Serbia.

Serbia got numerous positive marks from respectable international economic institutions, Parivodic stressed recalling that Financial Times proclaimed Belgrade as the City of the Future in Southeast Europe for 2006/07 and that World Bank ranked Serbia as second by relative economic development.

According to Parivodic, Serbia improved its advancement by 24 places in the World Bank's rank order whereas the European Bank for Reconstruction and Development (EBRD) stated that Serbia is leader in economic growth in 2006 in Southeast Europe, with GDP growth of 6%.

Parivodic noted that the Ministry has done essential reforms which should improve business climate and liberalise foreign trade.

The Minister recalled that the Law on foreign currency transactions has been amended whereas the Law on arbitrage and the Law on mortgage have been adopted whereas the Bill on foreign investments has been drafted too.

The Minister announced that early next year the government will discuss the general law on restitution, which will also incorporate regulations referring to denationalisation of city construction land.

Parivodic also said that in the first ten months exports reached $5.1 billion which is an increase of 42.3% against the same period last year, whereas imports stood at $10.5 billion.

He assessed the results as positive, but added however that despite the ratio between export and import being 50% the foreign trade deficit is still large which is why a speedy restructuring of the Serbian economy must be carried out.

Speaking about concessions for the Horgos-Pozega motorway, the Minister stressed that the contract is about to be signed, adding that the concession is worth $800 million.

According to Parivodic, a total of $460 million in donations has been realised while $300 million worth of contracts have been signed and remain to be realised.

He stressed that in cooperation with other ministries, the Ministry of International Economic Relations drafted a document titled "Serbia's Needs for International Assistance in 2007-2009" in which Serbia's requirements regarding foreign investments are stated.

The Minister also said that with the aim of increasing the state's capacities for an influx of donations, a process is under way to set up a decentralised system for managing assistance arriving from the EU.

A shortened report of the World Trade Organisation (WTO) says that Serbia is ready to enter the next negotiating stage for gaining access to WTO, said Parivodic and voiced expectations that Serbia will join WTO in the course of 2008.

The Minister recalled that Serbia has recently signed Central European Free Trade Agreement (CEFTA) and announced that the document will be ratified in May or July next year.

Parivodic added that in 2007 the Ministry will work on the implementation of a project to create Serbia's brand name in the foreign investment sector, export, tourism and diplomatic (cultural and political) image.