This crisis will pass. It is important to show that we are human, to take care of each other, to save businesses, small and medium-sized enterprises, and to keep everyone calm and level-headed.
In his interview for the January issue of ‘France in Focus’, Dragoljub Damljanovic, President of the French-Serbian Chamber of Commerce (CCIFS), points out that in the second half of the year, there was a noticeable growth of business activities in most sectors, and the economy began to gradually recover. In terms of next year, he says that the recovery of the Serbian economy will depend on the recovery of the economy in the European Union and foreign demand, which cannot be influenced by own economic policy instruments.
What results have your members achieved in the business year 2020?
Our members have faced a very difficult situation. As in many sectors, business activity was reduced to a minimum and it was difficult to maintain the business at all and not lay off employees. Fortunately, in the second half of the year, there was a noticeable growth of business activities in most sectors, and the economy began to gradually recover. On the other hand, some companies will need more time to make up for a lost time, because they could not start activities in the second half of this year, and it is questionable whether they will be able to do so before summer 2021, especially in the sectors of like culture, industry, catering, hotel, etc.
So far, the situation was such that companies with localized production have had a better chance than those with a globalized supply chain, but the vast majority of businesses have recorded significant changes in demand and business models themselves will continue to change more or less, with very few companies being in the no-change zone. However, and this something that we, in the Chamber, are constantly highlighting, the most important thing is that the business community makes an effort to help small and medium-sized enterprises, that large systems meet their payment deadlines, and banks offer more flexible terms and help with cash flow. This crisis will pass. It is important to show that we are human, to take care of each other, to save businesses, small and medium-sized enterprises, and to keep everyone calm and level-headed.
How would you assess the current measures devised by the Serbian government to help the economy? What is their general reach, and how have they affected your members?
I think that the measures to support the economy are satisfactory, but that their technical implementation and documents on how they should be applied were lacking. What is also lacking is greater flexibility in the Labour Law which should allow employees to work part-time or to be temporarily unemployed for a longer period without fear of being fired, thus increasing the percentage of job retention. Serbia faces both economic challenges and unresolved health problems, and it will take time for all of them to be regulated. However, we must take into account that the recovery of the Serbian economy will depend on the recovery of the economy in the European Union and foreign demand, which cannot be influenced by own economic policy instruments.
The bright spot of the year 2020 is that the current large-scale projects have been barely affected by the crisis.
How did COVID affect the current and planned large-scale French investments in Serbia?
The bright spot of the year 2020 is that the current large-scale projects have been barely affected by the crisis. The project to rehabilitate the landfill in Vinča and the construction of a new storage centre and incineration unit that will generate power and heat, which the Suez-Itochu consortium is working on as part of a public-private partnership, are running smoothly, while Belgrade Airport has started investing and infrastructure works. The decline in air traffic is drastic and will certainly affect the business of Vinci Airports, which is difficult to quantify for now. Financing of the smart grid project with EPS, which will enable significant savings in the power grid in Serbia, has been secured and it is expected to be launched. There is also the launch of the Belgrade subway project. France might finance the system part of the project, because the agreement between the two governments that stipulates funding from French sources for both projects was signed on November 26th this year.
What are the next important steps that the government could take? As a chamber of commerce, are you involved in consultations on these new measures?
With the help of the above-mentioned particularly vulnerable sectors, we believe that the Government should also consider special incentives for export-oriented domestic producers, especially small and medium-sized domestic companies that have export potential and still do not export. They need assistance in finding clients, first in the region and then beyond, through subsidies for market research or employment of persons who would carry out that in companies that do not have an export sector yet. Now is the time to help small and medium-sized enterprises.
Also, the EU has prepared a serious programme of incentives to support economic growth, mostly focused on the environment, green economy and digitalization. The Serbian government should devise a plan on how to attract as much of that money as possible to jump-start these parts of the economy.
Bilateral chambers were not included in the consultations and we are sorry about that. At the very beginning of the pandemic, following the initiative of the French-Serbian Chamber of Commerce, twelve bilateral chambers sent a letter to Minister Mali with proposals for aid measures for small and medium-sized enterprises. We are glad to see that most of those measures were implemented. We believe that bilateral chambers, along with a vision from their home countries, have unique expertise that could be of great use for establishing a dialogue with all economic actors and applying best practices.
It is believed that COVID-19, in addition to causing a big shock in the economy, will bring about a big jump in innovation. How ready is the Serbian economy for the post-COVID period?
This situation certainly opens the way for various research and development programmes primarily in the field of digitalization, but also in other sectors. Serbia has all the necessary conditions, experts, good universities and places for research. I believe that the number of such places will only increase. This is evidenced by the opening of science and technology parks and implementing digital education. All this leads to Serbia becoming a country recognized for creating new technologies. Some of the government’s measures that are applicable to the said sectors include reducing the rate of profit tax generated from the income coming from intellectual property that is developed or mostly developed in Serbia from 15 to 3 per cent. This measure is certainly one of the reasons why development companies are moving their development centres to Serbia.
The year 2021 will start with a series of online events which we will try to make as interesting as possible because we are aware of how everyone is sick and tired of staring at screens.
Is it fair to say that the interest of French investors in Serbia has been renewed and to what extent?
The interest has grown in the last two years, but 2020 saw a pause in that sense too. We started receiving inquiries again only late this year, primarily owing to the incentive measures of the French government for export companies whose market research is co-financed by the French state. Also, inquiries regarding production in Serbia have been arriving gradually. Some of these inquiries give us the necessary dose of optimism with which we will start in 2021 because there is a possibility that we will welcome new, large-scale French investments.
What will be the Chamber’s key activities in 2021?
The year 2021 will start with a series of online events which we will try to make as interesting as possible because we are aware of how everyone is sick and tired of staring at screens. It is still difficult to plan some of our “standard” activities, but we are optimistic and believe that in 2021, we will manage to organize our 10 gala evenings, the French Week and Beaujolais Nouveau, our Event Booster fairs, Bonjour France, etc.
A regional conference on public-private partnerships, a visit to the MEDEF (the Movement of the Enterprises of France), as well as, for the first time, a large food event, which will surely be the talk of the town next year, have already been included in our programme. Also, we are ready to answer to all inquiries of new French companies, which, we hope, will grow.