“We are shaping the Development Agency of Serbia (DAS) into a modern organisation that offers a wide range of services, including the promotion of direct investments and export, as well as implementation of projects with the goal of boosting competitiveness, Serbia’s regional development and reputation.”
The formation of the Development Agency of Serbia was a natural consequence of the core changes made in the legislative framework regulating the economy, and it promotes equal support to both domestic and foreign investors and innovative SMEs. The Agency is considered an influential factor in regional development – says Željko Sertić, Director of the Development Agency of Serbia. As a former economy minister, Sertić has participated directly in instigating these changes. Here we discuss the future of investments in Serbia and DAS’s further plans with him.
DAS was founded a year ago, and you – as a former economy minister – were able to monitor its work. How would you rate the work done by DAS to date, and what are the Agency’s main advantages in terms of providing focal support to the Serbian economy?
The establishment of the Development Agency of Serbia was a stipulation in the Law on Investment, which we used to complete the legislative framework that regulates Serbia’s economic environment. I would like to remind you that the first step was to make the necessary amendments to the laws on privatisation, bankruptcy, spatial planning and construction, as well as labour. All of these amendments were harmonised with European legislation and contain recommendations from investors themselves, while applying the best global practices in the given area.
This is how DAS came about. What we are trying to do is to shape the Agency into a modern organisation that offers a wide range of services, including the promotion of direct investments and export, and the implementation of projects aimed at boosting competitiveness, Serbia’s regional development and reputation.
DAS provides a project advisor to every investor free of charge and their task is to facilitate solutions to problems that investors could encounter in their operations. This is done at the highest professional level. Moreover, the DAS advisors are engaged in the entire life cycle of an investment – from providing initial support with information, through the operational implementation of a project, to the opening of a factory and the launch of production. In modern parlance, this is called project aftercare.
On the other hand, our project management and economic development sectors have created a wide range of support instruments for businesses by paying close attention to the real needs of businesses.
To what extent has the goal of providing equal treatment for both domestic and foreign companies, in terms of investment subsidies, been reached – given that this is also something you have been advocating for – and what further steps are needed when it comes to strengthening the domestic economy?
I think that the balance between domestic and foreign investors has been absolutely reached, both in the legislative sense (through the Law on Investments), and in the operational sense, through the work done by everybody involved in allocating incentives for investors. In terms of the number of projects, domestic investors account for almost 50% of all of supported investments. The difference is noticeable in regard to the absolute investment amounts, because foreigners are currently able to implement bigger projects than their domestic counterparts. They can also invest more money and create more jobs. That’s why we are implementing the “Year of Entrepreneurship” project – to help our small and medium-sized enterprises and small business owners to achieve higher competitiveness, increase their capacities and become more capable of competing for bigger projects.
The Serbian Government has been very vocal about attracting so-called third generation investments, with a pronounced component of technology transfer and hiring highly skilled local workers. How can DAS participate in this proactively?
Throughout this entire time, our analysts have been closely monitoring and anticipating market trends. As a country that is still battling high unemployment, we need to continue securing job-intensive investments, while taking into account balanced regional development. Furthermore, we have successfully created a market niche of service investments where, on the one side, we have the so-called shared service sector, with companies like U.S. corporation NCR successfully operating in Serbia, while, on the other, there are investments in development centres which have sparked the interest of quite a few companies. Such companies have been increasingly employing highly educated workers with good knowledge of foreign languages and diverse skills, whose salaries are way above the national average.
For many countries, including Serbia, export is the main driving force behind economic development. What can DAS do to further promote export?
This year, in cooperation with the Serbian Chamber of Commerce, DAS organised five appearances of national companies at international fairs. All in all, 62 companies presented themselves at Serbia’s national stands. One should bear in mind that these companies would not have been able to afford this individually. We will also continue with this practice in the years ahead.
We have additionally provided domestic companies with a financial instrument aimed at internationalising companies, small business owners and clusters, and which is used to co-fund new products or product packaging design, to develop new technological processes and new products for foreign markets, product testing, foreign markets research and participation in international fairs abroad. This year’s budget for the aforementioned activities is set at 90 million dinars, and we have so far supported a total of 99 projects.
The Year of Entrepreneurship is nearly over. Could you give us your impressions about the results achieved?
We are currently processing the results and I can tell you that the initial ones look very encouraging. Out of a total of 33 programmes, 11 have been culminated, 17 are ongoing and five should be launched. Interest was really high. Close to 12,000 companies, start-ups, local self-governments and clusters applied to participate in one of the said programmes. A total of 7,118 of them received support, while a certain number is currently under consideration.
The Year of Entrepreneurship is not only about tangible support for our companies, but also promoting entrepreneurship as a way of life through many seminars, training courses, mentoring sessions and educational programmes.
We have heard a lot this year about successful start-ups in Serbia. How active is DAS in this field and what are the Agency’s long-term goals when it comes to supporting start-ups?
The first of the four financial instruments we provided in the Year of Entrepreneurship were intended for start-ups. We allocated 100 million Dinars for this purpose and had 156 approved applications in the first stage and 116 in the second stage. After these applicants undergo appropriate training, they appear in front of a commission and present their entrepreneurial ideas. This will definitely also remain as one of our programme’s priorities in 2017.
DAS also plays an important role in promoting regional development, which is a sore spot for many countries. How much did the current solution – of scaling job subsidies for investors to match the development level of the area in which the investment recipient is based – help to bridge the gap between the most developed and undeveloped municipalities in Serbia?
The Decree on Direct Investments stipulates five groups of municipalities that are classified according to the level of their economic development. The first group is comprised of developed areas and the last includes vulnerable and devastated areas. Depending on where an investor wants to invest, each group defines required minimum and maximum investments and the number of new jobs to be created in order for the project to be considered for incentives. Of course, incentives are the highest for those areas that are considered devastated, and for which investment requirements are the lowest in terms of the level of investment and amount of new jobs. For instance, in order for someone to qualify for incentives in Belgrade, they need to invest a minimum of €600,000 and hire at least 50 workers. On the other hand, if an investor wants to invest in Babušnica, the minimum required investment is €150,000 and they need to hire at least 20 new workers.