Radoš Gazdić, Acting Director of Development Agency of Serbia (RAS)

What makes Serbia an attractive destination for foreign investors?

For several years now, Serbia has been enjoying the status of one of the most attractive investment destinations in the world, and the inflow of foreign direct investments best testifies to the investors’ interest in investing in our country. 2019 FDI amounted to whooping 3.8 billion euros, while the year behind us, though rather difficult when it comes to business, records as much as 3.014 billion euros of FDIs. From the investors’ point of view, interest in Serbia is not waning; in fact, recent global events, disruptions or slowing of supply chains mainly from Asia to European HQs of companies, showed that dependence on distant production locations must be reconsidered and changed in the future. With its geographical position, favoring primarily logistics, Serbia has great chances in that constellation to attract numerous investors who want to bring their activities closer to Europe and do so in the most efficient and high-quality way. If we keep in mind that according to research by the specialized fDi Markets service the Covid-19 crisis has led to a rise in investments in telecommunications, infrastructure, equipment production and digital repair services by as much as 30 percent compared to 2019, and that some of the most attractive sectors for investment include electronics, food, chemical and biotechnology industries, it is realistic to expect that we will attract such investments. As a country, we are expected to attract the most significant projects in the electronics industry, IT industry, automotive, machinery and equipment industries, which are all complementary. And certainly, interest in investing in industries like the food or chemical industry is not diminishing, but is becoming all the more attractive to investors. There is a certain constant in our country’s attractiveness for investors around the world, so the 2020 IBM report "Global Location Trends" points out Serbia has been showing good results for the fourth year in a row, as one of the investors’ favorite location in Europe, and is a world leader in the number of jobs created through FDI projects in 2019, seen by population number.

What makes us favorites in the eyes of investors are always the general things, such as an optimal business climate and political and economic stability, a priori. Then, each investor’s calculation includes those more specific factors, such as optimal geographical position, highly qualified staff, competitive operating costs, good connection and developed infrastructure, and even subsidies, and the state's commitment to project development and implementation. One of the great advantages of Serbia as an investment location over many other countries in the region is that thanks to free trade agreements, duty-free export to the markets of CEFTA, EFTA, Russia and the Eurasian Union, as well as Turkey, is possible. When this is added to the preferential terms of trade with the European Union, the United States, Japan and Australia, Serbia's export potential is a market of 1.3 billion consumers. By the same logic, the idea of creating a Mini Schengen will be tempting and significant for all companies operating in Serbia, as it will eliminate or simplify administrative and other barriers to efficient business in the entire region, and even expand the space of potential consumers.

Speaking about investment trends, emphasis is currently placed on research and development activities all over the world, and for us as for the Government of the Republic of Serbia one of the priorities is investment in development and research activities and connecting education and scientific institutions with the economy. We want investors in Serbia not only to produce, but also to innovate and design new products here. That is where the future lies, so we encourage companies in Serbia to turn to this sphere of investment as much as possible, and to create partnerships with faculties and colleges to educate future engineers, experts, innovators while keeping up with technology trends.

Apart from incentives, for such investor activities we have good predispositions when it comes to education and staff created every year by our world-renowned technical universities. Numerous investors point to commitment, innovative spirit and knowledge as something that characterizes our people in their daily work. Still, further work on education, meaning keeping up with the times and technological needs of the market, is an absolute priority so that we could make a step towards final products and smart products dominance, as opposed to what we have now, which is relatively dominant production of semi-finished products. By improving our workforce knowledge level, primarily of engineering staff, but also technicians (I am talking about secondary education), we increase the chances for "smart" investments. This is not just about foreign investments, but the more important goal is to advance domestic companies, and for them to develop their own "smart" and final products. Another important aspect in this transition to "smart" products is developing local suppliers of raw materials and semi-finished products that would be incorporated into final products. This is something DAS pays special attention to through, for example, specific support programs it offers to the economy. We support domestic companies to strengthen business and production capacities in order to fulfill the conditions to be large value chain suppliers, and at the same time we create a rounded system comprising "big" players who make final products in our country, but also suppliers from Serbia.

Low unemployment rates also encourage investors willing to invest in "smart" investments, and that is now our advantage. With the single-digit unemployment rate (7.3%) we have reached, we are no longer the target of those seeking to employ a large number of workers mostly of lower education levels. This leads to even greater emphasis on education and its connection with the economy, as the idea is to offer knowledge and expertise necessary for "smart investments" and sophisticated jobs. If the goal so far has been to reduce long-term and huge unemployment rates, from now on we must rely more on reducing "brain drain", and we can achieve that by opening new business opportunities for highly qualified people, our experts, and by working on educating new ones.

And last but not least, further improvement in all other segments of business will only accelerate the journey to that "smart" future and investments - there is always room for improvement of administration, infrastructure, legal security, work on tax and customs system, further development of industrial zones. Working on improving the investment atmosphere is a permanent task, which is done even by the most developed countries in the world. And with all that, we must not forget that countries put a lot of emphasis on investment incentive programs, either through targeted activities or subsidies, but for investors, it is always an additional green light showing the seriousness and commitment of a country to economic development. In this way, countries show they have long-term plans and strategies for economic growth and development; they take control of their future, and do not passively wait for what tomorrow will bring.