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Serbia to sell SMEs by end-2005, Minister Bubalo says

Belgrade, 7 October 2004

Serbia plans to complete the privatisation of small and medium-sized enterprises (SMEs) by the end of 2005, but the restructuring and sale of big public-sector enterprises may take years more, Serbian Minister of International Economic Relations Predrag Bubalo said in an interview for Reuters news agency.

Predrag Bubalo

Bubalo said, that “if all goes well, if we keep this pace of privatisations, we should sell the remaining 1,000 firms (out of some 5,000) in 2005”.

He said the government would not respond to appeals for protectionism but it would keep an eye on possible asset sales in which an investor “buys a market rather than the company”.

Firms slated for sale include companies that were already partially privatised by ex-president Slobodan Milosevic, whose neo-communists gave away 60 percent of firms' capital to pensioners and workers, leaving the state with the rest, Bubalo said.

Following Milosevic's ouster in 2000, the new pro-Western and reform-oriented government decided to start selling its stakes in more than 5,000 such enterprises, he said, adding that only dozens attracted interest from serious, strategic foreign investors, and the majority were sold to domestic buyers.

The Minister claims that big, attractive public firms in the telecommunications or energy sectors will not be privatised any time soon.

“Public companies are too important, and they should be handled carefully. I'd like the privatisation of non-core activities to start as soon as possible. They must restructure, and resolve the problem of redundancies,” Bubalo said.

He described the restructuring as the toughest step in Serbia's ongoing transition from a socialist economy, because any layoffs threaten to push unemployment above its current 30 percent level.

Minister Bubalo said that the state will support the one who makes the best offer. “We want strategic investors for the industries, multinationals to bring new technologies and open up new markets,” he said.

Bubalo also said the retail sector should primarily attract greenfield investment and that domestic suppliers should be allowed to continue to rely on the existing retail network.

Bubalo said Serbia offered good investment opportunities with an estimated 8 percent growth in gross domestic product (GDP) this year and free-trade agreements signed with seven states, mainly its neighbours, adding that the country borders the wider European Union and has an educated and skilled workforce.