There are more and more investments that are taking place at a higher technical level and that is what propels a country to the next level, GDP-wise. Serbia also needs to ensure that there is enough available workforce with the right skills and that they are trained and educated for the future so we can elevate FDIs in the region.
For the jubilee issue of InFocus Germany, we spoke with Director of the German-Serbian Chamber of Commerce (AHK Serbia) Frank Aletter, who has over ten years of experience in the system of German chambers of trade and industry.
“The German Chamber network worldwide, with 130 offices in 92 countries, promotes trade and investments between Germany and the relevant countries, including Serbia. So, my expectations are that the good foundation and good relations between Germany and Serbia will grow in the next years, while I am in Serbia”, concluded Mr. Aletter.
German investors employ more than 67,000 people and German companies have an exceptional influence on the business spirit in Serbia. How important is the cooperation between our two countries in each segment?
There is a variety of things to be mentioned here. Maybe we can first talk about the topic of FDI. During recent years, we have seen quite a strong involvement of German companies in investing in Serbia, which also brought knowledge transfer and created jobs. The reason for that is that there are competent and skilled people here, and of course, because of the relationship between Serbia and the EU. That is certainly one area we are specifically focusing on, and if you look at the SEE region, Serbia is quite a strong player. Then, we have Serbian companies, operating also for quite a long time, which have certain goods or products that fit into the German supply chain. Since the coronavirus pandemic has started, we have had discussions on the topic of so-called “nearshoring”.
We can foster cooperation in science and research, and of course, in business areas that both countries would benefit from
In simple terms, nearshoring means diversifying the supply chain for German companies, who are closer looking into finding more suppliers in this area. The third one is the general trade – namely, import and export of products, including primary goods since Serbia is quite well positioned when it comes to the agricultural sector. Then there are, of course, German companies in the semi-finished product sector for which Serbia is an interesting market. Also, Serbia’s GDP growth is beneficial for both business sides.
What will happen with the Western Balkans Purchasing Initiative in 2021, and is the aim?
The Western Balkan Purchasing Initiative was launched six or seven years ago. We have been working on it continuously together with our colleagues from German chambers in the area but also with the German Association for Procurement and Supply. The idea is, as I mentioned, to tap into this topic, where German companies are looking into diversifying their supply chain and matching purchasers and suppliers. The overall aim is to strengthen the business relationship and support the development in different areas and countries. The initiative contributes to job creation and stabilization of whole areas, including rural areas that are going through change. In Germany, we also have complete areas changing and we need to identify or define their new role. This is what we are tapping into and we want to promote that idea with this initiative. So, as you said, we are not only focusing on Serbia, but also on the Western Balkan region, since we believe that the WB countries offer quite a good range of very interesting solutions, which is what we have seen over the past six or seven years.
What can Serbian government do to make the business environment more attractive and in which sectors do you see an opportunity to improve cooperation?
Off the top of my head, I can think of several areas that can be improved but let’s talk about two points. If you look at the development of Serbia or the Western Balkan region, German investors regard it as a positive thing. The investments, were you need a full spectrum of workforce, are not so common any more. There are more and more investments that are taking place at a higher technical level and that is what propels a country to the next level, GDP-wise. We see that with the German investments and that is going to continue. Serbia also needs to ensure that there is enough available workforce with the right skills and that they are trained and educated for the future so we can elevate FDIs in the region. That’s one part. The other part, which also doesn’t apply only to Serbia, is something that many countries need to look into – sustainable economic development. Topics like the environment, the efficient use of water, fostering a clean energy approach and reducing CO2 emissions will become increasingly important.
The Western Balkan Purchasing Initiative contributes to job creation and stabilization of whole areas
Through its Green Deal approach, the EU vouched to become carbon-neutral by 2050. Since the EU is one of the dominant trading partners of Serbia, this is something Serbia also needs to look into. That’s where we can use the good relationship between our countries and we can foster cooperation in science and research, and of course, in business areas that both countries would benefit from. Plus, of course, we have 350 member companies, both German and Serbian.
What is your forecast regarding overcoming the consequences of the coronavirus pandemic on the German economy but also on German companies in Serbia?
I think it’s a quite difficult to answer that question and if I knew the answer, I probably wouldn’t be here. Let me address two points. If you look, in particular, into the German-Serbian trade relations, we only had a trade decrease of 2% in 2020, i.e. from 5.2 billion euro in 2019 to 5 billion last year. So, our trade proved to be quite stable. The trade deficit has been quite limited or smaller. All in all, this is actually a quite healthy trade relationship. Our partners in Germany, so-called Industrie und Handelskammer, have been conducting surveys and research on future developments. Last year, the GDP declined by 5%, which is still a better result for Germany compared to the 2008 financial crisis. Our only hope is, and we have discussed this idea with our partners, that, when it comes to measures, we should base them on free trade and movement of goods. We also hope that global development will revert to the pre-pandemic level. If you read the German newspapers, you’ll see that everybody is stunned about the Serbian approach regarding vaccination. I would like to congratulate the Serbian government for carrying out the vaccination process smoothly. In my opinion, vaccination is the key to overcoming the pandemic at the end.
You mentioned the 2008 financial crisis. Did we gain some kind of know-how that we can use today and what have we learned?
Compared to 2008, Germany has now been allocating funds with the view of strengthening certain economic sectors and has more flexible labour regulations. All of this seems to have worked in 2008 and last year. If we look at Serbia and worldwide, the situation is a bit different now, as is the foundation. Germany’s approach is somewhat more challenging. So, balancing the health interests of each and every person together with economic interests, which, in the end, also relates to nature, forms a future perspective. All of this wasn’t needed in 2008. It was a different scenario back then. The route that Serbia has taken is hopefully also a good one. However, it’s always tricky for the persons who are in charge to balance out these interests.
The former Delegation of the German businesses today known as AHK Serbia, is celebrating 20 years of operations in Serbia this year and AHK five years since its founding. How important is a stable business environment?
As we know, it’s always quite important for investors to have a stable framework that they can rely on. That starts with issues like, for instance, property law, i.e. investing somewhere that you can get your return on investment out of the country too. These are the basics that are more or less covered here in Serbia. Furthermore, it’s also quite important that you have a standardized system or a standardized framework, as well as technical certificates and testing centres and that you have carried out standardization of certain products. When you want to compete and compare to others, you have to compare apples with apples and not apples with oranges. Another important thing is for a country to have a more or less reliable industrial or economic policy that doesn’t change frequently.
I would like to congratulate the Serbian government for carrying out the vaccination process smoothly
These are the factors that are very, very important for investors. Also, there is something we touched on quickly at the beginning which is the right kind of workforce, who is skilled and trained. There are German companies which offer dual vocational training and have a system in place for developing certain work skills. Because of a more general approach, you can grow the workforce. But, as I said earlier, the basics have to be put in place. This is something that German companies are looking for. There has always been a chase for talent and all partners need to participate in developing that talent.
Which organizations and institutions does the Chamber cooperate with the most in Serbia and which projects are planned for the next period?
We cooperate, as you mentioned, with the Serbian Chamber of Commerce quite closely on a wide variety of topics. The Chamber is a natural partner to us. On several occasions, we have also talked with organizations from certain sectors depending on having organized meetings between specific companies from a certain sector – for example, in the energy field or energy efficiency, in particular, or the circular economy, meaning wastewater and waste treatment. These companies are open, can provide the right infrastructure and we have a continuous working relationship with them. Sometimes we establish new contacts if there’s a new sector of specific interest.
Impressions of Belgrade
What are your impressions of Belgrade and Serbia?
I’ve been here for four weeks and I’m really enjoying it. Belgrade is an old city with lots of history but it is also quite open compared to other countries that are still in lockdown which makes a huge difference. Belgrade is also a beautiful city and I must say the weather, with the blue sky, is very nice. The city’s location, on the Danube and Sava, is just fantastic. So, I do enjoy being here.