Marko Čadež, President of the Serbian Chamber of Commerce and Industry: I Expect A New Wave Of Investments

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There is enough room to increase economic cooperation in almost all areas in which Serbia and Croatia cooperate. I am confident that there will be a new wave of good Croatian investments in Serbia and vice versa, as well as joint ventures that will bring new products with which we will appear jointly in the world

Serbia and Croatia have achieved substantial progress in commodity trade. However,  we have not sufficiently utilised the potential to increase overall economic cooperation, based on the vicinity of the markets and compatibility of the economies, says Marko Čadež, President of the Serbian Chamber of Commerce and Industry.

What are the main characteristics of the commodity trade between Croatia and Serbia?

− In the last ten years, total commodity trade between the two countries has been characterised by continuous growth, with the exception of 2009, when it dropped as a consequence of the global economic crisis, which reduced the export performance of the Serbian economy to the Croatian market and the Croatian economy to the Serbian market. Although Croatia has been among Serbia’s pre top ten foreign trade partners in the last ten years, and although mutual trade almost doubled from 465 million euros in 2006, to 864.3 million euros in 2015, i.e. 903.8 million euros in 2016, the possibilities for improving mutual trade have not been fully utilised. In addition to the fact that trade between Serbia and Croatia could be higher, it has been rather unbalanced for years, with a constant deficit on the Serbian side. Last year, this multiannual trend was interrupted for the first time, and since April, Serbia has been recording a surplus from month to month, which has reached 30.75 million euros, according to the Statistical Office of the Republic of Serbia. This balance is primarily the result of higher Serbian exports to Croatia for a couple of years consecutively, reaching467.3 million euros, which was last year’s export performance total.

How much has the “chokolinda” affair highlighted the fact that there are actually no recognisable brands in commodity trade?

− It is the fact that the commodity trade structure of the two countries has not undergone any bigger changes in recent years. The list of export products has been expanded, and the number of companies engaged in business cooperation has increased, there is a growing number of companies from Serbia that sell their goods on the Croatian market. Last year, the Serbian customs authorities recorded 3,049 exporters – 235 more than two years ago. However, observed by sectors, the predominant industries are still the metal industry (basic metals and metal products), the mechanical industry (motor vehicles and trailers), the agricultural – food industry (foodstuffs and beverages) and the chemicals-pharmaceuticals (chemicals and chemical products). Of course, the aim of every economy in the world is to sell as many final products as possible, with a higher degree of processing,

and to have as many successful and recognizable product and corporate brands as possible

beyond the boundaries of their local economies. If we trade more in raw materials and semi-finished goods, and less in final products, that is not only an issue of relations between our two countries, but also a problem of the production and export structures of each of our countries, and not only of Serbia and Croatia, but of all countries in the region. Therefore, it is important to increase the capacities of our industries and streamline them technologically, in order to achieve the highest possible level of processing and finishing in production, and to implement all international standards, in order to achieve higher competitiveness and record a better export performance. If we have a look at Serbian export, last year our major export to Croatia included cathodes and cathode sections, electric power, engine fuel, plastic bottles, polystyrene, mineral and chemical fertilisers, white sugar, women’s bathing costumes, paper and soft drinks. Despite all of that, we cannot say that there are no recognisable brands in our trade. On the list of the ten biggest exporters to the Croatian market, along with RTB Bor, there are the companies Dijamant and Gorenje, whose brands are very much recognisable in the region. The women’s bathing costumes from this year’s list of Serbian exports were produced at the Adriana tex factory, which operates under the auspices of the well known Calzedonia brand. The list of the top

30 exporters from Serbia to Croatia also includes Benetton, Frikom, Nestle, Adriatic and Soko Štark. Who in Croatia has not heard of “Plazma”, “Honey Hearts” (“Medeno srce”), “Choco bananas”, “Najlepše želje” and “Galeb” chocolate, “Smoki” and “Grand coffee”, all of

which are produced in Serbia? And, vice versa, who in Serbia has not heard of the Kraš “Bajadera”, “Kiki” and “Bronhi” candies, “Vegeta“, “Eva“ sardines, “Ronhill” cigarettes,“”Faks” detergent – all produced in Croatia. They are not only Serbian or Croatian brands, they are actually regional brands, no matter which factory produces them in Croatia or Serbia, and no matter whose property they are, either domestic or foreign.

In your opinion, in which areas, do the two countries insufficiently take advantage of their potential for better economic exchange?

 − There is enough room to increase in economic cooperation in almost all areas in which we cooperate the most, as well as in those in which we have only scratched the surface. Although we will need a lot of time and efforts to increase our capacities and mutual trade in order to one day achieve five billion USD, the trade in goods between the two republics in the former joint state which was the value of trade in goods between the two republics in the former joint state. It is now possible to record further growth in agriculture, particularly in the food industry, energy, metalworking, construction, but also in transport, tourism, information technology, the environment, and other sectors. For instance, demand on the Croatian market indicates export opportunities for producers of fresh fruit and vegetables, wine and alcoholic beverages, building material, metal wiring and grids, products of ferrous and non-ferrous metallurgy, the metal and machinery industries, the automotive and pharmaceuticals industries, and not only in trade, but also in terms of trade other forms of business operations. It is true that every single euro generated from exports means a lot to all of us in the region, that our neighbouring countries are our natural export destinations, that it is important to boost our bilateral trade, to increase our trade in goods and eliminate all possible barriers to the free flow of goods and capital. However, the essential issue of small national economies on the territory of the former Yugoslavia, whether they are in the European Union, like Croatia and Slovenia, or in the CEFTA region, like Serbia and other countries, is not how to sell more commodities to each other, or who will record a surplus or deficit of a few dozen million euros, but how to develop higher forms of our cooperation, to network our companies, their references and free capital, to produce jointly and appear on third markets and to strengthen the export performance of every country individually, and the region as a whole. It is of utmost importance to implement our joint infrastructure projects, to improve the business climate, to strengthen our own capacities, to boost our exports and attract more investors.

What are the areas with the greatest number of Croatian investors and what trends do you expect in the upcoming period?

− Today, in Serbia, there are about two hundred companies founded or bought by Croatian capital, which established their representative offices, participated in the process of privatising of Serbian companies and invested in new factories and plants. The structure of Croatian investments in Serbia, in terms of activities, indicates that the largest investments have been recorded in agriculture and the production of food and beverages, then the industry of non-metal and mineral products, retail and wholesale trade, the manufacturing of machinery and appliances, electrical machines and apparatus, insurance and pension funds. However, the largest individual investments have been made in the foodstuffs industry and construction, then in the fields of the pharmaceuticals, textiles and automotive industries, transport and the machinery industry. It is certain that further investments can be expected to continue in these sectors. Our companies have an interest in cooperation and, honestly, I am confident that there will be a new wave of good Croatian investments in Serbia and vice versa, as well as joint ventures that will bring new products with which we will appear jointly in the world.

To what extent can close cooperation between the two Chambers contribute to creating a better business climate in both countries and to the creation of new opportunities for cooperation?

−After the occurrences of the 1990s, the Chamber of Commerce and Industry of Serbia and the Croatian Chamber of Economy were the first institutions to restore their ties and thus take a significant step towards the normalisation of relations between the two countries. Today, we have excellent bilateral and everyday communication at all levels. A special quality to the inter-chamber cooperation, including partnership in the Danube and Adriatic-Ionian Transnational Programme, has been added the last two years by our joint work and initiatives within the Chamber Investment Forum, which consists of eight National Chambers of Commerce and Industry of the region – six chambers of commerce and industry of the Western Balkan countries – members of the Berlin Process-and the Chambers of Economy of Croatia and Slovenia, with a total of 350,000 companies. The Croatian Chamber of Economy holds the Presidency of the Chamber Investment Forum (CIF) this year, which is an efficient chamber economic platform. It has grown into the strongest cohesion factor in the region, through the connection of economies, the elimination of barriers for the purpose of more successful business operations, the implementation of projects which are aimed at supporting strengthening of the capacities of our economies and their networking. The focus of our activities will be on the topics envisaged by Croatia’s Presidency Agenda such as the promotion of dual education, the development of entrepreneurship and entrepreneurial learning (in which the Southeast European Centre for Entrepreneurial Learning –SEECEL, with its seat in Zagreb, plays a significant role), and strengthening the region’s SME sector.

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