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The Government of the Republic of Serbia

In the service of citizens

Creating and protecting Serbian brand

Belgrade, 16 June 2004

In an interview with the latest edition of the "E-magazin" monthly, Serbian Minister of International Economic Relations Predrag Bubalo speaks about measures and legislation for improving production environment, about foreign market, Serbian brand, exports, business cooperation with foreign partners and the importance of the Diaspora for Serbia's return to foreign markets. The official web site of the Serbian government brings excerpts from the interview.

Predrag Bubalo

Tasks of the Ministry:

The Serbian Ministry of International Economic Relations is responsible for improving international economic relations; foreign trade policy; foreign investment; coordinating activities in the field of planning, securing and using donations and other forms of foreign assistance; monitoring activities of domestic economic entities abroad; improving and monitoring economic bilateral and regional cooperation; securing and monitoring cooperation of republic bodies with international economic organisations and UN agencies.

The Ministry is divided into sectors: for foreign investment; for concessions; for donations and development assistance; for bilateral economic cooperation; for multilateral and regional trade development; for foreign trade regime and policy.

On what the new ministry inherited:

Upon taking the office of the minister, I inherited a very well organised Ministry, with a number of very good executives. I must say that employees were highly motivated and with strong work ethics, although they receive very low salaries, like all employees in the state administration. The new ministry inherited problems with Germany (Bor and Sartid), Italy (Zastava and Sartid), Russia (gas debt), China (oil and loan arrangements), the EU (sugar affairs), and several more. The major task is how to return foreign investors' confidence in Serbia. I think that the inventiveness of our people could largely contribute to Serbia's quicker return to world economic flows, but only if they change their way of thinking. They must accept that we must work more and get rid of the habits from the past.

On steps to reduce foreign trade deficit:

The state will propose system measures, define development policies (agro, industrial and trade), establish standardisation, quality control and certification, and launch an initiative for boosting producer awareness, i.e. restructuring national production through structural measures. How can we make that changes? Through the inflow of foreign direct investment (FDI), which, apart from the fresh capital, brings new jobs, new technologies, return to international markets, and finally, a new Serbian product made for the foreign market.

On legislation that could boost Serbia's exports:

We could boost exports through a set of laws, which would improve business environment and facilitate the opening of new companies, which are preconditions for quicker inflow of FDI. The most important laws adopted are the laws on concessions; on security rights on registered non-fixed assets; on leasing; on registration of economic entities; on labour; on securities market; on public procurement; on telecommunications. The laws to be adopted are laws on bankruptcy; on energy; on railway; on international trade arbitration; on entrepreneurs; on foreign trade. The boosting of exports is conditioned by a suitable legal framework for reviving production. Harmonisation and implementation of standards and technical regulations with that of the EU and the World Trade Organisation are prerequisites for export of our products. Loan policy regulations should boost development and export oriented production.

On possibilities to apply "Hungarian model" in Serbia:

The Hungarian model implies that 60 percent of products that are exported should be produced in factories that were built through FDI. The successful implementation of such a model in Serbia depends on political stability and more favourable conditions for quicker inflow of FDI, which should be created by the state and the Serbian government. The most recent concrete step is the Action plan for eliminating administrative obstacles to the opening of new firms.

Markets on which Serbia should focus:

Serbia should focus on the markets of neighbouring countries with which it has signed free-trade agreements that can benefit the local production. Also on Russia, with which we have also signed a free-trade pact, as well as China. Then the EU market, and finally the markets of the US and Canada.

On industries that should push the country’s exports:

Agriculture, the food, meat, confectionery, and milk industries, the pharmaceuticals, wood, metals and engineering industries, and tourism in the short-term. In the long-run, it could be the value-added production, IT and services.

On export-oriented products that could be referred to as Serbian brand:

We have to create and protect a domestic brand with full observance of all quality standards and short-term export deals. In the long-run, we need to have brand new products and production activities.

On Serbia’s production capacity, labour force that can be engaged in export-oriented production:

The past 15 years saw no major investment in new technologies, equipment, or labour. Still, we have a certain number of successful companies whose products have found their way to western markets.

On crucial elements for establishing cooperation with foreign partners:

In order to present itself successfully abroad, a company must have extensive knowledge of its production potential and the very products it wants to sell, as well as the situation in a specific country. Personal talents of company representatives, their abilities to establish contacts, efficiency and commitment are also of extreme importance.

On how the Diaspora can help Serbia return to foreign markets:

The Diaspora can be of priceless importance for Serbia’s further economic growth, it should be a major link in cooperation with other countries. The Serbian Diaspora is estimated to have between $50 billion and $60 billion in capital, only ten percent of which would be enough to revive the country’s economy. However, the Diaspora wants to see Serbia create an investment-friendly environment, just as foreign investors do.

On Serbia’s image abroad:

Our current image abroad is not good enough. It sends a signal that the country is located in an unstable region and that its political life is not stable enough. At the same time, the quality of our products is not always stable and reliable. In order to change this, we must take a series of system and institutional measures. Unfortunately, we must be aware of the fact that our image abroad will slowly change despite numerous measures. That should motivate us to make more efforts to take any measure that will help change our image abroad.

On what results the Ministry would like to achieve after four years in office:

I would be satisfied if the country could complete the process of privatisation over the next four years, including the sale of large enterprises that are currently restructuring. That would bring in more foreign capital, new production technologies, modern management, and new markets. The country’s integration into European institutions would be certain and we would not have a negative image abroad. It is not an easy thing to do, but it can be achieved over a four-year period.