Zorana Mihajlović: This Year is a Turning Point for Infrastructure

It is particularly important to mention that investments in infrastructure, together with implemented reforms, have contributed to the fact that, in the past two years, construction has become the main driving force behind the GDP’s growth

The total value of infrastructure projects in Serbia which are either being implemented or in the preparation phase is 14.5 billion euro. Investments in this area will be an important driving force behind the country’s economic growth in the future. We talked with the Minister of Construction, Zorana Mihajlović about important infrastructure projects and the overall construction industry in Serbia.

The Serbian government is entering its second year. Could you tell us about the most important successes accomplished in your sector?

— In the past two years, more than 150km of motorways have been built. The entire road segment of the Corridor 10 from north to south has been completed and put into operation, and in August, we expect to officially open the Obrenovac-Čačak motorway segments on the Corridor 11.Concerning railway, the Žeželj Bridge in Novi Sad has been finished and close to 400km railroad has been renovated. Also, the construction of the first fast railroad between Belgrade and Budapest has begun. When it comes to air traffic, the Belgrade airport of Nikola Tesla has been put under a concession that will result in new investments. The airport in Niš serviced over 350,000 passengers in 2018, while in June 2019, Morava Airport near Kraljevo was opened for civilian transport as the third international airport in Serbia. These are some of the most important and most visible results and give an impression of the government’s overall work. It is particularly important to mention that investments in infrastructure, together with implemented reforms, have contributed to the fact that, in the past two years, construction has become the main driving force behind the GDP’s growth.This trend will continue in the next few years too, because, in 2019, a new infrastructure in-vestment cycle will be launched, which, among other things, includes projects in road, railway, air and water transport. Continued investments in infrastructure are important as it will provide Serbia with good connectivity to the region, the European Union and the rest of the world, new in-vestments and a better quality of life for its citizens, which are all impossible without a developed infrastructure.

You said that this year was crucial for the infrastructure in Serbia, adding that the construction of 400 kilometres of new roads would begin. Could you tell us why is this year such a turning point?

— This year is a turning point, primarily because we are completing the largest infrastructure project in Serbia in the last few decades – the construction of Corridor 10. The southern segment leading to North Macedonia and Greece was 7released in May, and the complete eastern segment, leading to Bulgaria, will be completed in the autumn. Also, this year we will have completed a total of 120 kilometres of motorways on the Corridor 11, from Surčin to Čačak.Along with the completion of these projects, we were preparing for new projects too, so this year and the next we are starting to build five new motorways. The works on the Preljina-Požega segment, on Corridor 11 in the direction of Montenegro, have already begun, and we expect to start in summer the works on the Sremska Rača-Kuzmin motorway segment, the Belgrade-Sarajevo motorway segment, as well as on the Moravian corridor, from Pojate to Preljina, that will connect the corridors 10 and 11 and about500,000 people in central Serbia. Besides, the works on the Ru-ma-Šabac-Loznica motorway and expressway are due to start this year too, while next year we will begin works on the first section of the Niš-Merdare motorway, from Niš to Pločnik.In short, 2019 is a turning point, because, in terms of the infrastructure in Serbia, nothing will be the same anymore. We have built about 300 kilometres of roads in the last four years and completed the projects that had not been finished. We are also starting to implement new projects, which will completely change the image of Serbia and make it a real transit hub in the region.

What do you think about these sudden infrastructure activities in Belgrade in recent months?

— The fact is that Belgrade has been waiting for a long time for certain infrastructure projects to be completed; from the construction of a railway station in Prokop and the completion of the bypass to finishing the construction works in many city streets. All of these projects are important to help Bel-grade to grow faster. The biggest project of them all – the Belgrade subway – is yet to be realized. We are getting ready to engage in this project and are currently discussing the financing format.

There are close to 500 active construction sites in Serbia and it seems that the construction industry is gaining momentum. Is it really so?

— There are over 400,000 active construction sites in entire Serbia, which also means that there are more construction sites in Bel-grade too. The main reasons for this are that issuing of building permits is now much quicker, our economy is more stable and we have more investments. By implementing the building permit reform and introducing e-permits, passing the Law on Legalization of Buildings, the cadastral reform, and adopting other laws that regulate the construction segment, we have created prerequisites for the facilitation of construction in entire Serbia, not only in Belgrade. However, this is the most visible in Belgrade because we are talking about the capital city and the largest city in Serbia. The number of active construction sites in Serbia has increased three times in the last three years, from about 13,000 in 2015 to more than 40,000, and this is the best proof that the reforms have come to fruition. The value of the executed construction works has been steadily increasing, as is the number of building permits issued, with construction being the most important driving force behind the GDP growth in 2018. We are facing new major infrastructure projects and perhaps the biggest challenge is for our construction firms to be ready to implement all those projects. One of the prerequisites for this is for them to join forces to be able to meet project requirements.

Is the entire Serbian government on the same page when it comes to the EU accession?

— Serbia’s accession to the EU is a strategic goal of the Government, and I do not see how anyone could be a government member and advocate different views on the issue.

What do you think about the negotiations between Belgrade and Priština?

— The issue of Kosovo is an issue closely related to Serbia’s future and that is why these negotiations are important to find a compromise solution that will provide a better future for the Serbian and Albanian people and the entire region. As a result of introducing a tax (on Serbian goods), the Albani-an side has stalled negotiations in recent months, but that does not change the fact that a viable solution can only be reached through dialogue and compromise, although we are not close to such a solution at the moment. In terms of real estate investments, do you expect new mar-ket stakeholders to arrive?— Serbia is a stable country politically- and economically-wise, where foreign direct investments are growing year-on-year. Regard-ing manufacturing investments, i.e. construction of new factories, the development of infrastructure contributes the most, primarily the completion of Corridor 10. The fact that the overall regulatory and economic environment in Serbia is favourable and that we have a continuous economic growth indicates that we can expect continued investments in the real estate segment too.

At what stage is the Serbian real estate market today? Is the legislative framework in the real estate segment going to change soon?

— On the legislative side, we have done everything to regulate the construction segment, to facilitate construction and to allow the legalization of the already built houses and apartments. In the last few years, a whole set of construction-related laws have been passed – from the Law on Planning and Construction and the Law on Legalization and Conversion to the Law on Cadastre Registration and the Law on Construction Products. After the e-permit reform, the cadastral reform is the most important reform for citizens, and also one of the most important reforms for improving the overall business environment. As of last year, citizens no longer have to visit five different offices to register their property, but can do so in one place, at a notary public office. The next step is for the Cadastre to provide the citizens with efficient services as they have now when it comes to issuing building permits. By the end of 2020, Serbia will have an e-cadastre.Of course, we will continue to monitor the implementation of all laws that have been enacted to see which solutions need to be improved to yield even better results in practice.

Who is responsible for Serbia’s having worse ranking on the World Bank’s Doing Business List?

— Many people forget that, when it comes to building permits, Serbia has progressed on the Doing Business List in the past few years so much that it now competes with the best countries in the world today. This is a completely different situation from the one we had 4-5 years ago, when we were among the last in the world, and when it was easier to move forward. All that was required was that someone wanted to deal with it and to have the entire government back it up, as was the case 3-4 years ago. Thanks to the reforms we have implemented, in three years, we jumped from 186th to 10th place in the world and today Serbia is an example for other countries in this segment. Now, when it comes to building permits, it is up to us to maintain that position and further improve it, as well as to make faster progress in those areas where we have more room to advance.

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