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The Government of the Republic of Serbia

In the service of citizens

Creating investment friendly climate is Serbian government’s strategic goal

Belgrade, 22 May 2005

Serbian Prime Minister Vojislav Kostunica said on the opening of the first meeting of the EBRD Board of Governors that the most important goal of the Serbian government’s economic policy is to create a business environment that is reliable for investors, which means liberalised and politically and legally stable.

Vojislav Kostunica

Author: Tanjug

The Serbian government’s official web site brings the full text of Prime Minister Kostunica’s speech:

“Your Excellencies, Ladies and Gentlemen, welcome to Belgrade,

It is a great pleasure and honour for our country to host the EBRD Annual Meeting and more than 3,000 political and business leaders of the world. This is the largest and most important event in our country within the last three decades.

The importance of holding the EBRD Annual Meeting in Belgrade is overwhelming.

A few weeks ago, Serbia-Montenegro received a positive feasibility study, making the formal step towards the EU. EBRD’s decision to hold the annual meeting in Belgrade sends a strong and clear message from the world that it has recognized the great progress we have made, counting on our country in the further European integration processes.

For Serbia-Montenegro, this great event is of particular economic importance, because we are actually able to show that this country is safe for foreign investments, open to economic cooperation and abundant in economic potentials. We have been offered an opportunity to make foreign investors familiar with our advantages, and present the results we have achieved in creating a viable market economy and efficient entrepreneurship. We wish to show that we are building a state that would offer a better life to its citizens, a state that is politically stable, competitive, attractive and safe for investment.

The Belgrade meeting is taking place while Serbia-Montenegro is bracing for talks on stabilisation and association with the EU. We would like to seize this opportunity to demonstrate to our distinguished guests the nationwide social consensus that we have to continue the European integration process in a collaborative effort, and at a steady, faster pace.

Over 3,000 political and business leaders of the world have gathered today to discuss the progress the countries from Central Europe to Central Asia have made on their journey to democracy, market economy, and general stability in Europe and Asia.

The countries created after the breakdown of former Yugoslavia, Bosnia-Herzegovina, Croatia, Macedonia, Serbia-Montenegro and Slovenia are developing increasingly close cooperation, both politically and economically. Investments are already crossing our borders both ways. What investors have already realised is that our economies are largely compatible and very attractive, which opens a series of advantages and possibilities for business development and cooperation in the future. We believe an age of cooperation and prosperity is in store for Southeastern Europe at large.

Serbia-Montenegro is committed to an inclusive dialogue mindful of legitimate interests of all sides concerned. We believe it is the only path to growth, stable democracies and dynamic economies. Regional cooperation based on the European principles of democracy, human rights and good neighbourly relations, will constitute a strong incentive for the Western Balkans in their efforts towards a timely accession to the EU. This is also the only way to solve all disputes, and to find a durable and stable solution for Kosovo-Metohija. A solution that would be a compromise. A solution that makes no one a winner or a loser. Serbia is ready for the solution to the issue of Kosovo-Metohija based on compromise and the European and international democratic rules, which unconditionally protect the territorial integrity and sovereignty of all states.

I would like to recall that the Stability Pact for Southeastern Europe has adopted a broad framework for political and economic prosperity, which resulted in a free trade area with great potential to attract major foreign investors. Namely, Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Macedonia, Moldova, Romania and Serbia-Montenegro have created a customs-free market. The purpose of the free trade zone is to boost national economies, and help the entire region join the EU more rapidly. The development of regional energy and transportation infrastructure is of vital importance for the prosperity of the region, and our governments cooperate closely in these areas.

Creating investment friendly climate is Serbian government’s strategic goal

Serbia-Montenegro has also signed a free trade agreement with the Russian Federation, which offers a great opportunity to foreign investors. If they decide to develop production in our country, they will be given duty-free access not only to the far broader market in Southeastern Europe of 55 million consumers, but also a Russian market with more than 150 million consumers. Serbia has also introduced the lowest corporate profit tax in Europe of a mere 10 percent.

Dear Friends,

It is important to underline that in the 27 states stretching from Central Europe to Central Asia, the EBRD is the largest single investor, which apart from its own funds, has also mobilised major foreign direct investments. Obviously, the EBRD has the leading role in the positive transformation of the region at large.

When it comes to our country, the Bank has invested close to €700 million in our country, with an additional €780 million collected alongside the EBRD funding. Strategic loans to support the development of transportation and energy sectors have been granted, along with investments in local banks to support small and medium enterprises, and different investments in private companies and new ventures. All these efforts by the Bank have corresponded closely with our needs and development plans.

As this Annual Meeting is taking place in Belgrade, I will now make a brief account of the progress we have made and the Serbian government plans for the future.

The principal objective of the Serbian government is to provide political stability and a better life for all citizens. Our strategic commitments and goals, many of which we have already attained, are to join the European integration processes, promulgate a new constitution, fight corruption, preserve the macroeconomic stability, entering a new, broader phase of privatisation, which implies not only attractive companies, but also the restructuring of public companies and making the national economy competitive at home and abroad. We are striving to create conditions for new jobs and profitable business operations, to continue banking reform and develop the financial market. We are doing our best to promote and increase accountability and transparency, and to achieve full institutional stability.

The best illustration of this is a conclusion by the European Commission published last month: “Serbia-Montenegro has achieved a critical mass of reforms to make it capable of negotiating the Stabilisation and Association Agreement with the EU”. The Organisation for Economic Cooperation and Development (OECD) has also voiced its support. The OECD said in a report that in the year 2004 Serbia was the most successful state of the region in carrying out legal reform. We have maintained macroeconomic stability since 2001, and Serbia was given the first credit ratings ever in November 2004. Today, a mere seven months later, the country managed to raise it.

When it comes to the Serbian government’s economic policy, I wish to give you my personal assurances that our principal objective is to create a business environment that is familiar and reliable to you, in other words, liberal, politically and legally stable. Transition is well under way, and we are firmly committed to continuing and accelerating the process. We are passing new laws in order to carry out the root-and-branch modernisation of the legal system and consolidate the institutions able to enforce the new legislation. We have also introduced favourable taxes, customs rates and other incentives to support investment in Serbia.

Ladies and Gentlemen, dear guests:

The overriding objective of the Serbian government and the Serbian society is to modernise economy, increase the standard, make the state and its institutions stable and integrate the state union of Serbia-Montenegro into the EU together with other countries of Southeastern Europe. The generations of politicians coming from Southeastern Europe will be judged on how successful they were in bringing our societies closer together, closer to the contemporary principles of democracy and modern society.

I wish the EBRD Annual Meeting and Business Forum to be a success, and you to discover the advantages our country can offer, and feel comfortable in Belgrade.

Thank you for your attention.”