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The Government of the Republic of Serbia

In the service of citizens

Domestic, foreign investors welcome to invest in Serbia

Belgrade, 3 January 2008

Serbian Minister of Trade and Services Predrag Bubalo gave an interview for today’s edition of the Glas daily and said it is beneficial for Serbia if both domestic and foreign investors invest in it and that every investor who earned their capital by honest means is welcome.

The Serbian government’s official web site gives excerpts of the interview.

Is the Serbian market in better order than before?

It doesn’t necessarily have to be more ordered, but it is certainly a lot easier if you go to a large shopping centre where on relatively small surface you have a huge offer of products. Reforms and transition in the market economy begin and end with changes in the trade sector. They are the most significant. On the other hand, our market is still insufficiently developed. Here I have in mind the purchasing power of citizens. If there were more money, we would certainly have more foreign retail chains, though a few are here already. We expect that a higher GDP growth will increase the interest of retail chains to come to Serbia.

Is import too much larger than export?

I don’t think the import is too high, I believe that the export is too low. It is not a problem if your import is limited. A country must be able to strengthen the export. Around 40% of imported goods are energy sources, which tells us that we are dependant on the import energy-wise, but that is something we cannot control. Particularly not since the price of energy sources increased again in 2007. Around 30% of our import is the procurement of machines and equipment, as well as intermediate goods. I support this kind of import, especially in this moment when we have two decades of insufficient investment behind us and a huge problem with obsolete technology, equipment and machines. I am always in favour of importing intermediate goods, which is better than becoming simply a source of raw material.

On privatisation of the Serbian Oil Industry and Electric Power Industry:

These two companies do not have to be privatised in 2008, though many claim it is so. The state will be involved with public companies such as the oil and electric power industry for a number of years. When it comes to the public sector, however, we are closer to the European model, in which the state-owned portion is dominant, and not to the model which is in force in the US and one part of England. This means that the state will still have some influence on public companies. Foreign capital will most certainly not be fully present in these companies, and citizens will get free shares. Once they take them to the securities market, at least 15% of every public company will go to the hands of private companies.

On Russian capital in Serbia:

Everyone is welcome. No one has ever said that Russian capital is not welcome. We should bear in mind that other sectors were privatised and that the time is now right for the arrival of Russian capital because the next on the list are investments in the energy sector. Russia is the world leader when it comes to energy.

On Serbia’s trade cooperation with Russia:

It is getting better every day. In the past four years our export to the Russian market increased by 40% on average, and the import by 23%. The problem is that we lost our position in the Russian market in comparison with the 1980s and 1990s. We used to have a surplus in trade with Russia, and today our largest deficit is exactly there. This is primarily because we import a lot of energy sources. Our deficit stands at over $1.5 billion. It is good that we have the free trade agreement with Russia as it enables us to export our goods customs-free.

What are trade relations between Belgrade and Pristina like?

I am convinced they exist. I am aware of certain goods for which we have not given consent. Here I mean primarily food products, that is, wheat and flour. I see that the exchange of goods is particularly alive and that a lot of Serbian products can be found in the province. Serbia is one with Kosovo-Metohija and we do not calculate the volume of exchange since Serbia and Kosovo are not two foreign states.

How much of Serbia’s capital is there in Kosovo-Metohija?

The estimates vary, but it is certain that Serbia invested $19 billion in Kosovo-Metohija. If we look at the property belonging to the Serbian Orthodox Church, physical persons, citizens of Serbian nationality, it most definitely amounts to a lot. It is hard to make estimates.