A country perfect to do business in Europe for many reasons, Serbia has a specific development pattern, influenced by the situation back in the nineties. As communist Yugoslavia fell apart, which was followed by a civil war, the country was thrown back in its development for a decade. The economy staggered and a large number of citizens fled political turmoil, social insecurity and unemployment.
Today the country is making a remarkable comeback on the international scene as we are witnessing growing inward investment and rapidly improving quality of life. It is estimated that Serbia has attracted a total of €25 billion investment since 2000, the leading investors being Italy, the US and Austria. In 2015, foreign investment in Serbia reached a record €1.75 billion level. Serbia is now an aspiring economy recognized by major international companies, such as Fiat, Bosch and Ikea. Quite interestingly, the one-decade-long economic decline has provided for some unique business opportunities as there are many gaps on the market awaiting eager investors to fill them in.
Also worth attention is the fact that these days a reverse migration trend is taking place as more and more successful Serbian citizens who had built their careers abroad opt for repatriation bringing their knowledge and their international experience to the country. Although there are so far no statistics available on the number of highly educated citizens choosing to return to the country, there is a vibrant repatriate community and its members are a significant driving force for startups and business initiatives creating value for the economy.
In the recent years Serbia has also made a name as a tourist destination with quality options for leisure, entertainment, and conference tourism. In addition to the tourism awards and titles won in 2015 the National Tourism Organization of Serbia (NTOS) reports a 24% increase in the number of foreign tourists to have visited Belgrade in January 2016, Turkey and China being some of the new markets currently exploring tourism options in Serbia. With a new campaign launched by the NTOS at the Chinese market in February 2016 Serbia is looking forward to welcoming increasing numbers of tourists from China.
Let us have a closer look at some facts and data indicating the trends which make Serbia a perfect country to invest in right now.
SERBIA TO JOIN THE EU BY 2020
Outline of the accession and current progress
Serbia officially became a candidate for EU membership in 2012. After some political issues were ultimately resolved in 2011, there are no obstacles whatsoever for Serbia to join the EU family. The first International Serbia – EU Conference took place in 2014, and in December 2015 Serbia opened the negotiation chapters with the EU, which confirms the progress of this country made and once again gives the positive signal for the Serbian economy and the rule of law.
In the recent years Serbia has made a number of major steps to bring its national regulations and practices in line with those of the EU and to fulfill the criteria for EU membership:
- Action plans aimed at establishing the rule of law successfully finalized
- Public administration, justice and anti-corruption reforms conducted, praised by the EU
- Fiscal consolidation conducted aimed at reducing the national debt
- The Parliament has adopted positive media laws to set ground for media freedom
Following these reforms, the European Parliament has recently adopted a generally very positive resolution on Serbia. The next negotiation chapters to be open in June 2016, cover a wide variety of aspects of justice, domestic security, fundamental rights and the fight against corruption and organized crime. Serbia has also received an invitation to open chapters dealing with transport and trans-European networks. This means the introduction of European standards to ensure that Serbia has roads, railways and water transport precisely like other EU countries.
The majority of the citizens feels positive about the perspective of EU membership, as confirmed by the poll conducted in 2015, which has shown a 59 percent support. The President has scheduled an early parliamentary election in April 2014 in order to re-confirm the support of the citizens before taking the reforms to the next level.
OTHER MAJOR IMPROVEMENTS AND BUSINESS TRENDS
Serbia has also made some important improvements providing for a more economically stable and business-friendly environment. The government has managed to reduce the fiscal deficit from 6.6 percent GDP in 2014 to 3.5 percent GDP in 2015 resulting in Fitch Ratings revising Serbia’s outlook to positive from stable and affirmed its Long-term foreign and local currency Issuer Default Ratings (IDR) at 'B+'. Moody’s Investors Service has changed the outlook on the Government of Serbia’s rating to positive from stable and affirmed the B1 long-term issuer and senior unsecured debt ratings.
Also, the World Bank Doing Business Report 2016 has placed Serbia 59th out of 189 economies, a jump of as much as 32 positions compared to last year’s list. This outstanding progress is due to time-and-cost-saving improvements introducing electronic procedures in the field of construction permits and tax payment. Another rating to have highlighted Serbia’s potentials is the fDi European Cities and Regions of the Future 2016/17 rankings, which has brought a number of regions within the country into the spotlight based on their cost effectiveness and business friendliness.
Striving to promote business and private initiative, the government has declared the year 2016 the Year of Entrepreneurship, pointing out the country’s commitment to enhancing entrepreneurial spirit and social consensus on encouraging these values and long-term policies.
A recent questionnaire answered by the general managers of leading companies and banks on the market has shown that Serbia grabs some global trends such as digitization, modern agriculture and energy efficiency, further enhancing the business environment and acclaiming itself as a regional leader. Another survey, conducted by PricewaterhouseCoopers among 1,409 CEOs from 83 countries shows that business leaders in Serbia are more optimistic than their colleagues around the world. 86 percent of them believe that they will achieve growth over the next year and as many as 95 percent expect higher corporate revenues over the next three years. This optimism generally reflects the overall stable and positive atmosphere on the market with an outlook for further improvement.
BELGRADE: A FASTLY GROWING METROPOLIS, A BOOMING INVESTMENT HUB
The capital of Serbia, Belgrade is also the national and the regional economic center and a business innovation hub. One of the Global Cities of the Future according to Knight Frank 2015 selection, it has recently become a scene of major development projects drawing increased investment and setting new standards of life in this metropolis.
It has recently become scene of the largest single asset deal in South Eastern Europe for five years, as the two Delta City shopping centers, in Belgrade and Podgorica, Montenegro were sold to joint venture between South African Hyprop, the country’s largest listed specialized shopping center REIT, and Homestead Funds for a total of €202.7 million. JLL, the exclusive advisor to this transaction has pointed out that Serbia had started to become attractive to international investors after years of being overlooked compared to its South Eastern Europe counterparts.
The city authorities have announced their major development plans regarding the area on the left bank of the Sava across the currently biggest construction project Belgrade Waterfront, a €3.5 billion UAE investment. The new residential and business area, which is subject of an urban and architectural design competition, is to occupy 46.8 ha, providing homes for some 12,000 residents.
These development projects are part of the unified strategy aimed at improving the urban planning processes, beautifying the cityscape, and creating a more distinctive and attractive identity in terms of economy and tourism. The urban planning projects scheduled for 2015-2019 will introduce serious improvements and revamp a number of key areas within the city:
- developing Belgrade GIS, a unified spatial information base for a more reliable decision-making process, priority-setting and facilitated procurement of site permits and site-related information
- developing areas of historic and cultural significance, including major restoration and extension of the pedestrian area
- improving the quality of open public spaces by landscaping them and making them more user-friendly
- establishing a new, environmentally acceptable hierarchy of traffic participants, aimed at smarter traffic planning, including drawing a significant part of the traffic out of the downtown area
- improving the existing and building new infrastructure
- increasing the use of smart technologies
The next major steps to be taken are the 2040 Vision and the 2020 Strategy of Development to be adopted soon in order to set long-term planning framework and priorities.