IGOR MIROVIĆ, The President of the Government of Vojvodina: FASTER ECONOMIC AND GENERAL DEVELOPMENT OF THE PROVINCE AS PRIORITY

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Thanks to substantial funds available this year, and even bigger funds available in 2018, we can further boost the growth of many economic actvities, while the FDIs have spurred competitiveness and developed awareness about the need for the faster economic development of the province

Attracting new FDIs, promoting capacities for foreign investments, implementing important infrastructure projects, constructing roads, further decrease of unemployment, development of local communities, SMEs and workforce, and raising the overall quality of life in the province have been and still are the priorities of the Vojvodinian government. We are talking to the President of the Government of Vojvodina, Igor Mirović, about the results achieved so far, and about future projects.

What are the provincial government’s strategic aims in attracting FDIs?

he provincial government implements activities on attracting FDIs in full coor-dination with the Serbian government, the ministries and the Serbian Development Agency (RAS). To that end, we have also formed the Vojvodina Development Agency (RAV) which will provide additional institutional support to direct investors and that will cover those segments that RAS doesn’t. The direct financial support for RAV depends primarily on the available funds for direct subsidies, but the idea is for the Agency to direct investors to the lesser developed areas in Vojvodina through promoting foreign investment capacities, and, by doing so, together with the provincial government, work towards closing the development gap between regions. The second important goal is to improve the business infrastructure which we are doing in coordination with local self-governments. We are developing new industrial zones in Šid, Srbobran, and Titel, we are improving the existing ones, and, in cooperation with local authorities, we are working hard on developing the existing business environment.

To what extent is infrastructural development keeping up with development plans?

The provincial government prepares and implements the most important infrastructure projects through four groups. The first group covers national infrastructure projects that are funded from the Serbian state budget and are important for Vojvodina. These are projects like the construction of the Belgrade-Subotica railroad and preparatory work on the large-scale transport and water infrastructure corridors with the aim of enabling a faster transport, an easier access to industrial centres, and having more agricultural land covered by irrigation. We have picked up pace on implementing these major infrastructural segments, and we are using all available financing resources like European, national, provincial and local funds which are completely directed towards developing infrastructure. Some projects have regional character and some local. However, it is the provincial government that provides most funds via its Capital Investments Directorate.

The construction of the Novi Sad-Ruma motorway, that includes a tunnel through Fruška Gora, is one of those big infrastructure projects. How is this project going to add to Vojvodina’s faster development?

The said project will contribute to faster development of Novi Sad, Irig and Ruma, in the initial stage, and Šabac, in the second stage. In Novi Sad, we are going to open several industrial zones that will lie on the future Petrovaradin bypass, as well as two brand new industrial zones in Irig and Ruma. At the same time, the project will alleviate traffic on Fruška Gora, promote environmental protection of the area, and boost the development of tourist potential of Fruška Gora, as well as contribute to faster development of all municipalities that gravitate towards this corridor. The corridor plays an important strategic role in connecting Vojvodina, Mačva and the Republic of Srpska. This is a route with the heaviest traffic in the entire Republic of Serbia with 12,000 vehicles using it daily, out of which between 700 and 800 are trucks. In that respect, investing in this corridor is completely economically viable.

What about construction of the Novi Sad-Zrenjanin-Timisoara motorway that is still mentioned from time to time?

The line ministry is in charge of largescale projects in transport infrastructure, and we help with pointing out relevant priorities. Having fast roads through Banat County, i.e. from Novi Sad to Zrenjanin and from Belgrade to Zrenjanin, are certainly our priority because these roads will pass through almost a dozen municipalities that are considered lesser developed according to the national classification of regional development and development level of local self-governments. Because of this fact, construction of fast roads through Banat is very important for us, and this is something that we have been working on together with the Ministry of Construction, Transport and Infrastructure.

Last year, you announced special incentives for investors in Vojvodina. Could you elaborate please?

We are currently drafting the Decree on Incentives for Investors that will be finished by the end of August. In September, we are going to launch a public all for grants, primarily for SMEs, in the amount of 350 million dinars that will be available to investors. The subsidies will be allocated according to the number of new jobs created, first in domicile and then in foreign companies, and the allocation criteria will be precisely defined and completely transparent. RAV will be in charge of conducting relevant procedures along with the Secretariat for Regional Development, Inter-Regional Cooperation and Local Self-Government, under the full supervi-sion of the provinicial government which will be reporting to the Autonomous Province of Vojvodina Assembly. The idea behind this is to use subsantial funds available this year, and even more substantial ones in 2018, to boost a number of economic activities, and spur on primarily existing companies. RAS will be in charge of allocating big investment incentives, while we, in line with our capacities, will to participate in providing incentives to investors, in a way that will complement RAS, and primarily to existing companies which are planning to expand their technological capacities and hire new workers.

What kind of support and incentives does the provincial government give to local self-governments towards creating a more attractive investment environment?

We are working with almost all local self-governments in Vojvodina on promoting investment environment with the view of swaying investors towards investing in a certain municipality. A number of municipalities already have ready, fully built industrial zones, as well as those under construction or under expansion. We have joint plans with towns and municipalities which we are coordinating on a monthly basis. We are also funding utility infrastructure in industrial zones, and local road networks with the view of boosting local development. Furthermore, we are funding certain activities that are increasing the appeal of local communities, and are positively contributing to investors’ deciding to invest in a particular local community.

How many FDIs is Vojvodina going to have this year, and what is their structure like?

In 2016, a total of 140.97-million-EUR worth of investments were made in Vojvodina which resulted in creation of 3,922 new jobs. Since the beginning of 2017, a total of 47.5-million-EUR worth of FDIs were made in Vojvodina which is 33.7% of all the FDIs implemented here in 2016. In 2017, FDIs led to creation of 2,303 new jobs which is 58,7% of the new jobs in 2016. Relative to the amount of FDIs made in 2017, we have a higher number of new jobs created this year compared to last. It is important to mention that, in the observed period in 2017, there was no decline in the number of employed persons. In terms of the country of origin of the 2017 FDIs, German companies dominate since they made 51,6% of the total number of FDIs in Vojvodina. Italy follows with 21,1%, and Canadian-Austrian companieswith 12,6%. Considering that most FDIs in 2017 were made in production (with the exception of the Logistics Centre in Šimanovci), which resulted in hiring over 2,000 new workers, we can expect the existing production volume to grow, new production facilities to be opened and products made in them to be exported. As a result, the volume of Vojvodina’s exports will grow, and the export to import ratio will improve.

Which local communities stand out as centres of certain industries?

There are local communities in Vojvodina which have far exceeded the average development level in Serbia and which are already lacking workforce needed for opening of new companies. Subotica and Zrenjanin stand out as the centres of automotive industry, while Bečej is the centre of agricultural investments. Some of the smaller municipalities have recorded growth in terms of investing in SMEs, while in some municipalities, like Stara Pazova, the unemployment level is almost ideal, i.e. less than 7% or 8%. Unfortunately, 19 municipalities are still below average development-wise and, in these municipalities, we need to pick up pace, so to speak, in order to catch up to the most developed and the most attractive ones that we have mentioned earlier.

How much do FDIs contribute to development of the province’s industry and its export potential?

In the last two years, industry’s contribution to creating gross added value has gone up again compared to the service sector. This indicates that industry is recovering, spurred on by diversified influx of investments and the improved business and investment environment. Positive tendencies in industrial production have also expedited the growth of external trade where export is growing much faster than import. Sustainability of industrial growth and net export are the two most important components for the dynamic growth of the overall economic activity. In the first half of 2017, industrial production in Vojvodina grew by 5.9% relative to the same period last year. Processing industry recorded the biggest growth as a result of new investments, both domicile and foreign. From January to June 2017, Vojvodina recorded a 22.3% annual export growth, while the import grew by 15.8%. The export to import ratio stood at 95%. In the same period, Vojvodina’s external trade deficit was almost halved (a 42% drop).

How did the arrival of foreign investors affect development of domicile companies?

Arrival of foreign investors has prompted many economic branches and sectors to become more specialized, raise their technological standards, acquire certificates and work on complying with the standards of foreign investors with the view of connecting domicile and foreign companies in production that can be appealing to both sides. We have a few very powerful clusters that have been growing in their respective sectors year-on-year. The Vojvodina Metal Cluster is one of a more successful ones and it is known for substantially relying on foreign investors while maintaining its own programmes. The companies that make this cluster have been recording a higher export year-on-year. SMEs cannot develop without big companies, and, in that respect, the arrival of big investors in Vojvodina also translates into growth for domicile SMEs because companies connect very quickly and they implement the necessary standards in line with the requirements of foreign investors. This significantly contributes to the growing technological level in domicile companies, which is probably the biggest benefit of them all.

In which economic segments can Vojvodina provide a well-qualified workforce?

There is almost no economic segment in which Vojvodina cannot provide a well-qualified workforce for because we have a plethora of vocational high schools and good faculties under the Novi Sad University that produce young, educated professionals in all educational areas which will become an even more important asset in the future. The cost of the workforce will grow with time and following the drop in unemployment in Vojvodina and we are going to be even more competitive compared to our neighbours. The cost of the qualified and highly educated workforce will also grow which we can already see happening in several companies. One of those companies in Continental which is building a development centre in Novi Sad and hiring highly educated workers who can be trained by the faculties of the Novi Sad University.

In that respect, how beneficial is the new Science and Technology Park going to be?

The construction of the Science and Technology Park is going as planned. This will be the centre for additional, specialist education primarily for IT professionals, and later for professionals from other economic branches that are developing in Serbia and Vojvodina. The relevant secretariats in the provincial government will determine the purpose of certain premises in the park in terms of innovative segments, startups and connecting the companies willing to work together on hiring graduate students from the University of Novi Sad, primarily the Faculty of Technical Sciences.

How much did FDIs improve the overall quality of life in the province?

First and foremost, FDIs have boosted the technological development of the entire province. They have also significantly contributed to reducing unemployment and have done a lot on developing local communities. Furthermore, they have encouraged local and provincial administration to invest more in business infrastructure, as well as in local utility infrastructure in those areas that received the most foreign investments. Many investors are also participating in funding local projects through a social component that is present in every company. Also, they have provided substantial funds towards humanitarian, health and educational projects in local communities. To sum up, FDIs have significantly improved the overall quality of life in the province, have increased competition and competitiveness among domestic investors, and have developed awareness about the need for the province to have a faster economic development.

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