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The Government of the Republic of Serbia

In the service of citizens

Government to give incentives for car industry development

Kragujevac, 27 December 2007

Serbian Minister of Economy and Regional Development Mladjan Dinkic said today that early next year the government will bring incentives for car industry development, with special focus on potential investors.

During the visit to the plant and new production hall of the Zastava Tapacirnica upholstery, Dinkic voiced hope that at least two international companies will apply at the tender for the sale of Zastava car factory, announced today.

He said that the real market competition is expected to take place in April and May 2008 and promised that the one who loses at the tender will be enabled to open a car factory in Serbia.

Serbia has quality workforce and tradition and it is high time that a change was made in Serbia's car industry, Dinkic said and added that there is a great interest on the world market for production of automotive parts in Serbia.

At a press conference held following the meeting with representatives of major trade unions of Zastava Automobiles, the Minister informed that the tender for privatisation of the Zastava Automobiles factory will be announced on December 31 in the Financial Times, and the government will allocate RSD 1.2 million for preparations for the strategic partner.

According to the Minister, the government will also provide funds for the assembly line for Opel Astra Classic in Kragujevac, and production should begin in the last quarter of next year.

Dinkic recalled that during the past seven years the government allocated more than €300 million for the factory in the form of various subsidies, and the basic aim in privatising the factory is to reduce the import of cars, which are the most imported item in Serbia following oil.

He said that by the end of January 2008 a tender will be announced for the factory Zastava Trucks, in which the state will be owner of 66% of the capital, and the company Iveco from Italy will own 34%.