Leaders of reforms
Israel and Serbia
Sir Paul Judge
6
The Alliance Assembly elected
the new Managing Board
consisting of n...
2 Synergy
3june 2013 |
PUBLISHER
National Alliance for Local Economic
Development (NALED)
30/VII Makedonska street,
11000 Belgrade, ...
LEADERS OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
Belgrade Wholesale Market, Autoput bb, 11000 Belgrade, Ser...
5june 2013 |
No matter what we do, we all live and
work in a certain place. And we all
want that place – municipality to
p...
6 Synergy
news
New Managing Board
To future battles for better business environ-
ment and local economic development, NALE...
7june 2013 |
How we grade what the Government is doing
From now on, no Government of Serbia will be left alone to interpre...
8 Synergy
Electronic tax returns
On the working
luncheon with
NALED members,
the Director of
Tax Administra-
tion Ivan Sim...
9june 2013 |
ConStruCtion Work(S)!
Overview of most important foreign investments in 2013
According to the National Bank o...
10 Synergy
use beneficial terms to purchase quality products and services or nominate your offer for NALED
market and enjo...
11june 2013 |
www.naled-serbia.org/compendium
www.naled-serbia.org/training
Scholarships and trainings
Service information...
12 Synergy
Success and competitiveness of a local
government depend on whether a
municipality sees itself exclusively as
a...
13june 2013 |
first departments in municipal administrati-
on that replaced the old administrative role
for a development ...
14 Synergy
Implementing reforms is
focus area for
development are local economic development
and regional development. The...
15june 2013 |
a key
local development
for the purpose of the collection, development
and harmonization of EU regional stat...
16 Synergy
How much do you really know about LeD?
1. What is the definition of the term „local
economic development (LED)”...
17june 2013 |
British companies will always choose an
investment destination with maximum
return on investment and a minim...
18 Synergy
The EU’s positive decision on candidate status
is very important for the investment climate in
Serbia. Reduced ...
19june 2013 |
Sir Paul Judge, Chairman of British-Serbian Chamber of Commerce
studying and working here. In particular I n...
20 Synergy
As the General Manager of Coca-
Cola, you had the opportunity to
work in countries in the region. How
would you...
21june 2013 |
Ramon Weidinger, General Manager of Coca-Cola Hellenic Serbia
How would you rate Coca-Cola’s coopera-
tion w...
22 Synergy
What is your interpretation
of the term ‘business-friendly
environment’?
Čedomir Živković: When speaking of Vrš...
23june 2013 |
us to always be unique and one step ahead of
others. So far we’ve managed to do that, and
we achieved except...
24 Synergy
Although we walked up and down the
whole factory, the milk, in its raw
form, freshly arrived from the farms,
wa...
25june 2013 |
Present throughout the region
Imlek is a group operating through a network of affiliates throughout the
regi...
26 Synergy
All eyes in Kosjerić are turned to Titan,
with the entire local economy and
standard of citizens depending on
t...
27june 2013 |
the first ones to obtain
an integrated permit
Cement plant in Kosjerić was the first company in Serbia to rec...
The beginning of 2013 was marked
by the lack of reform results the
Government of Serbia has been
promising during the last...
implementation of the Regulation should
have started on April 30, 2013 so we will
evaluate the effects of these new measur...
30
Whether and to what extent can a
certain law be implemented in
practice often depends on the
adoption of required accom...
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT
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SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT

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Synergy is NALED’s magazine, published quarterly and involving information about the activities of NALED, its members and partners, as well as expert analyses and reports, interviews, service information (open calls for project funding, paid or subsidized trainings and seminars for professional development in the country and abroad) and specific solutions for the issues in the field of regulatory reform, investment promotion and local administration. All content is consistent with NALED values – competence, innovation, independence, fairness and integrity.

As a free copy, the magazine is distributed via direct mail to more than 1,500 decision-makers, including representatives of state and local institutions, international organizations and donors, diplomatic corps, businesses, business associations and chambers, professional associations and the media.

In accordance with its name, Synergy connects and intersects the views of all three sectors of the society and prominent domestic and foreign economic analysts. In addition to informative and educational content, Synergy pages are also open for advertising and promotion of ideas, products and services of NALED members, partners and associates, as well as other representatives of private, public and civil sector and the media supporting and encouraging the economic growth of Serbia.

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SYNERGY - QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT

  1. 1. Leaders of reforms Israel and Serbia Sir Paul Judge 6 The Alliance Assembly elected the new Managing Board consisting of nine members on 18th April Ambassador Yossef Levy: You have a lot of advantages but also a complicated bureaucracy Chairman of British-Serbian Chamber of Commerce: British investors are intere- sted more than ever page News fROm NaleD NO. 1 | JUNe 2013 IN FOCUS paRTNeRs fOR sUCCess NaleD INTeRvIew Local economic development in Serbia36 17page page QUARTERLY MAGAZINE OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT fRee COpY www.NaleD-seRbIa.ORg ISSN2334-8593 Regulatory Index of Serbia hOw we gRaDe whaT The gOveRNmeNT Is DOINg 3D Interview we all shaRe The same pROblems Municipality of Golubac CITY-fORTRess ON The DaNUbe
  2. 2. 2 Synergy
  3. 3. 3june 2013 | PUBLISHER National Alliance for Local Economic Development (NALED) 30/VII Makedonska street, 11000 Belgrade, Serbia t: +381 11 33 73 063, f: +381 11 33 73 061, e: naled@naled-serbia.org www.naled-serbia.org DIRECTOR Violeta Jovanović violeta_jovanovic@naled-serbia.org EDITOR IN-CHIEF Milica Stefanović milica_stefanovic@naled-serbia.org EXECUTIVE EDITOR Ivan Radak ivan_radak@naled-serbia.org DESIGN AND PRE-PRESS Dizajn biro Beograd CONTRIBUTORS Jelena Bojović, Tom Thorogood, Dušan Vasiljević, Aleksandra Galić, Milica Mandić, Jovana Ćirić ADVERTISING Dubravka Tomić dubravka_tomic@naled-serbia.org PRINT Cicero CIRCULATION 300 FRONT PAGE Titan cement factory Kosjerić Dear friends of NALED and local economic development. We are pleased to present the first issue of our new magazine Synergy. From now on, every three months the magazine will bring you interesting stories, expert analyses and comments, reports and service information in the field of regulatory reform, investment promotion and local administration. The topic of the first issue concerns all of us – citizens, businesses and municipalities. It is in everyone’s interest, but still it is truly comprehended and supported only by the best. When a new bridge or road surprises us, when our neighborhood, park or street shines in new light, when a factory opens up and brings new jobs, when a company we work in expands its operations, when businesses take care of their local community and local community of their businesses, when regulations are clear and the citizens are happy... All of this is life at its best. And it’s all local economic development, our topic. ImpRessUm wORD fROm The eDITOR inTRoDUCToRY 5 Vladan Atanasijević, President of NALED MB neWs 6 News from NALED 10 Service info in sYneRGY 12 Jelena Bojović, NALED: Local economic development in Serbia 14 Tom Thorogood, UNDP: Direction of local development 16 Test: How much do you really know about LED? inTeRVieW WiTH... 17 Sir Paul Judge, Chairman of British-Serbian Chamber of Commerce 20 Ramon Weidinger, General Manager of Coca-Cola Hellenic Serbia 22 3D interview: Vršac, Bambi and Group 484 BUsinesses 24 Visiting Imlek 26 Success story: Titan cement factory Kosjerić LeGisLaTion 28 Report on regulatory reform 30 Ask WHEN: Payment of wage taxes and contributions LoCaL GoVeRnmenT 32 Meet the municipality of Golubac paRTneRs FoR sUCCess 34 Presenting the country: Israel 37 Yossef Levy, Ambassador of Israel to Serbia 38 Presenting the project: Regulatory Index of Serbia 39 NALED members Milica Stefanović, Editor in chief 8 32 20 Contents The contents of this publication may be used only when quoting the source of information “SYNERGY – NALED’s Quarterly Magazine” If you wish to receive the printed edition of the SYNERGY magazine please subs- cribe at www.naled-serbia.org/magazine CIP - Каталогизација у публикацији Народна библиотека Србије, Београд 33 SYNERGY : quarterly Magazine of National Alliance for Local Economic Development / editor in chief Milica Stefanović. - 2013, no. 1 (june)- . - Belgrade (30/VII Makedonska street) : National Alliance for Local Economic Development (NALED), 2013- ([Belgrade] : Cicero). - 27 cm Tromesečno. - Ima izdanje na drugom jeziku: Sinergija = ISSN 2334-8402 ISSN 2334-8593 COBISS.SR-ID 199587084
  4. 4. LEADERS OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT Belgrade Wholesale Market, Autoput bb, 11000 Belgrade, Serbia 011 715 84 80, info@veletrznica.co.rs www.veletrznica.co.rs think BIG invest in WHOLESALE MARKET Fruit, vegetables, meat, fish, flowers – new system of trade Premium location and market – 18 ha next to highway and airport Up to 12% return on investment, 50% lower lease price be The fIRsT IN seRbIa aND The RegION!
  5. 5. 5june 2013 | No matter what we do, we all live and work in a certain place. And we all want that place – municipality to provide us with adequate conditions for doing business and high quality of life. Unfortu- nately, not all municipalities have favorable geographic location, natural resources, nor they were lucky enough to serve as admini- strative center of certain regions in Serbia, and have revenues from fees and taxes filling-up the local budget on their own... But for this reason, all local governments should be aware of and find answers to the following questions: What are the specific characteristics and comparative advantages of our municipality? What can we do to improve the quality of life and doing business in our community? How can we establish a local eco- nomic development plan and program? How can we reach new investments and jobs? One of NALED roles is to use the certificati- on process in assisting local governments to understand better their position and the ways for improving it, recognize their uniqueness and build their future upon this foundation, improve their business environment in the best interest of their citizens and businesses. This role is not always pleasant and sometimes faces lack of understanding, both on the natio- nal and the local level. The latest example was the NALED analysis on para-fiscal charges, whose sole purpose was to ease the businesses from unnecessary fees in order for them to grow and develop, bringing new jobs and tax revenues to local governments. In this and all other cases, NALED does not take the stand for individual interests of one group or ano- ther. NALED is on the side of local economic development in Serbia, which can be stimu- lated only if businesses, municipalities and citizens work together and respect each other in order to reach compromise and sustainable solutions, leading to long-term prosperity. Our goal is to understand the real situation when it comes to doing business in Serbia, and offer solutions for improving it. We are trying to make things better not just to look good. This is the only way forward. INTRODUCTORY Vladan Atanasijević, President of NALED MB
  6. 6. 6 Synergy news New Managing Board To future battles for better business environ- ment and local economic development, NALED will go armed with new forces. On April 18 in the Ministry of Finance and Economy, the Alliance held its Assembly electing the new Managing Board, which will as of this year involve nine members – 5 from companies, 3 from local governments and one from the NGO sector. In the following two years, NALED will be led by Vladan Atanasijević, Director of Asseco SEE, as the President of MB, Ramon Weidinger, General Manager of Coca-Cola Hellenic, Bratislav Gašić, Mayor of Kruševac and Ana Brnabić, Executive Director of Pexim foundation, as Vice-Presidents. The other mem- bers will be: Mihailo Janković, CEO of Knjaz Miloš, Miroslav Miletić, General Manager of Bambi, Ernst Bode, General Manager of Messer Tehnogas, Nemanja Delić, Mayor of Sombor, Vladan Vasić, Mayor of Pirot. The ceremony of announcing the new members of MB gathered around prominent guests - Minister of Finance and Economy Mlađan Dinkić, Head of EU Delegation to Serbia Vincent Degert, USAID Mission Director in Serbia Susan Fritz and Secretary for Economic Cooperation of the Embassy of Germany, Christophe Eichen. The Assembly also appointed the new Supervisory Board, with members from the previous term - Dragan Đuričin, President of Deloitte, Borislav Miljanović, CEO of Represent Communications and Vladimir Milovanović, General Manager of Energoprojekt holding, and new members - Svetlana Tolmacheva, President of Executive Board of ProCredit bank and Mayor of Niš Zoran Perišić. NALED Executive Director Violeta Jovanović awarded plaques of gratitude to members of previous MB for their contribution to Alliance development over the previous years – Vladimir Čupić, Toplica Spasojević and Vladan Maksić. The same recognitions were earned by Ivana Veselinović and Neven Marinović. Two proposals to amend the Labor Law One of the biggest reforms we can certainly expect in 2013 is the amendments to the Labor Law. Since the current regulation has not brought about the expected effects but, on the contrary, it even contributed to reduction of employment in Serbia, NALED became actively engaged in proposing the necessary reforms. Our association is a member of a working group considering the changes that need to be made. In this sense, NALED prepared two expert analyses with proposals for changing the severance pay system and definite-period employment. Regarding the severance pay, we propose to limit the payments only to the period of time spent with the current company that declared an employee redundant, and not for all the years of service. The second proposal is to limit the definite-period emplo- yment to a maximum of 36 months and to change the tax policy in a way that additionally destimulates definite-period employment. The obstacles set by the current Labor Law have caused several problems: employers are constantly extending the definite-period emplo- yment contract, without even considering hiring experienced workers from the National Employment Service records, fearing that they would have to pay high severance pays if these workers become redundant. Thus, a large number of citizens are either in a challen-ging and uncertain employment position or they cannot even find a job, so they find themselves in the grey zone, with little rights. Nova Varoš, Kula and Odžaci pass for a Certificate In the first quarter of 2013, another three local governments obtained the business-friendly status – Nova Varoš, Odžaci and Kula. This way the number of certified municipalities went up to 27, and some of them have already become candidates for recertification – such as Loznica or Kragujevac, which were the first ones to successfully pass this repeated test! Nova Varoš achieved a very high result in fulfilling the required criteria – 92.1%. In Kula, this result was 83.9%, and 84.6% in Odžaci. The success of these three local governments which are not located on an important corridor or in the proximity of large cities, should serve as a best practice example for other similar municipalities, showing they should work on improving the business environment and administrative procedures regardless of their geographic location. The results in attracting investments so far show that the location of a municipality is not crucial for the decision. It’s the commitment and hard work of municipal management, the efficiency of local administration and the proactive search for investors that make a difference.
  7. 7. 7june 2013 | How we grade what the Government is doing From now on, no Government of Serbia will be left alone to interpret its performance in developing a better business environment; there is a new eye watching on them – the Regulatory Index of Serbia (RIS), a new tool for impartial assessment of the Government’s work, developed by NALED and USAID Business Enabling Project. It was presented in January at a press co- nference in Danas Conference Center. According to RIS, the work of both governments in 2012 earned only 31.7 points out of 100. In order to re-confirm the validity of RIS „on the ground”, NALED in cooperation with Ipsos Strategic Marketing performs a quarterly survey among the businesses throughout Serbia regarding their views on regulatory environment. The correlation between business opinions and RIS results is very high (85%), showing we have achieved one of the organization’s most important tasks – that is to ensure the efficient control of what the executive authorities are doing. According to the survey, businesses think that the Government is not improving in the first quarter of this year since most of the ministers received lower grades or kept the same level. Deputy Prime Minister Aleksandar Vučić (average grade 4.3) and Minister Mlađan Dinkić (average grade 3) were the only ones to receive better ratings for responsibility in their work. PPP as the key of sustainable development In the previous two decades, the European Union invested more than EUR 250 billion into infrastructure and development of utility services through public- private partnerships, proving this is the right and proper way to raise the co- mpetitiveness and employment on the local level and ensure adequate living and working conditions for the citizens and businesses. Serbia finally received a mo- dern Law on PPP in 2011 providing the right framework for developing projects in this field. However, the interest among local governments is still modest. For this reason, in cooperation with USAID Sustainable Local Development Project, NALED initiated the project „Public-private partnerships – key of sustainable development” involving 32 local governments. The project aims to motivate local administration in identifying the projects they could realize through PPP and participate at the competition for the best PPP idea. The best eight municipali- ties will receive technical assistance from NALED to establish local teams for realization of PPPs and develop action plans for project implementation. In No- vember, NALED and USAID will organize an investors’ conference providing the opportunity for local governments to connect with interested private partners. News from NALED The study on para-fiscal charges prepared last year by NALED made a significant impact reducing the burden to businesses seen in numerous fees and charges. Apart from accepting our recommendations and eliminating 138 para-fiscal charges and fees shortly upon its establishment, the Government of Serbia obliged at the same time to regulate the issue of fees through a single law. In the first quarter, the Draft Law on Fees for Use of Public Goods was published. As a follow up, in cooperation with the Ministry of Finance and Economy and USAID Business Enabling Project, NALED organized the first round table within the public discussion on this Draft Law in Belgrade Hyatt Hotel. Representa- tives of companies, municipalities and NGOs from NALED membership had the opportunity to engage in an open dialogue with Milica Bisić, Advisor at the Ministry of Finance and Economy, in order to identify the challenging aspects of the Draft Law and to offer alternative solutions. After the discussion, all co- mments and suggestions were submitted to the Ministry in writing. NALED will continue to monitor the process of fur- ther content development of the Law and influence the adoption of proposals that will benefit local economic development. All fees in one place
  8. 8. 8 Synergy Electronic tax returns On the working luncheon with NALED members, the Director of Tax Administra- tion Ivan Simič announced that starting from July 1st 2014 all taxpayers will be obliged to submit tax reports in electronic form. In his words, since the beginning of this year, there have been around 110,000 tax returns, out of which only 2.7% were submitted electroni- cally – all the rest was done via the counter. Introduction of the digital certificate would significantly simplify tax reporting procedure, so Simič appealed to all businesses to start using this type of signatures, if they hadn’t already started – especially since the law does not require the use of stamps anymore. Simič stressed that transition from counters to electronic tax reporting would not lead to less jobs in Tax Administration offices across Serbia. Finally, he announced about NALED Grey Book recommendation to be adopted early next year – to have wage taxes and con- tributions paid to one account, which would bring much relief to the business community. Next investment destination: Serbia For the third year in a row, Belgrade Airport has been promoting the best from Serbia – business friendly cities and munici- palities. This unique investment promotion campaign was initiated by NALED and Nikola Tesla Airport back in 2010 and so far, 23 local governments received the opportunity to present their business po- tentials in this spot, in front of more than 6 million passengers! In February 2013, the third campaign cycle was launched, under the title „Next investment destinati- on: Serbia“. For a one-year period, seven certified cities and municipalities – Paraćin, Užice, Kruševac, Vršac, Zrenjanin, Novi Sad and Sombor – will promote food, chemical, metal-processing, construction and phar- maceutical industries, with the support of seven large companies operating with great success on the local level – Holcim, Copper Mill Sevojno (East Point), Henkel, Fresenius Medical Care, Dijamant, United Brewe- ries of Serbia (Heineken) and Somboled (Lactalis). At the launching of the campai- gn, Minister of Regional Development and Local Government Verica Kalanović and the Provincial Secretary for Interregional Cooperation Branislav Bugarski signed Me- morandums of Understanding with NALED on further promotion of business-friendly municipalities. Even though our country has attracted a significant amount of investments since the democratic changes in 2000, no comprehensive record of investments has been made so far by the state institutions. The methodology of keeping investment records often varies from one institution to another. We decided to do the pioneer work – after collecting and classifying extensive data rece- ived from various sources, the first database of foreign investments was created and published on NALED website. For the start, the database contains information about the 200 most important international companies that invested almost EUR 16 billion into our country over the previous 13 years. The largest part of investments was seen in automotive industry (21), food industry (19), banking and insurance (15) and construction industry (14). Among the top 10 cities and municipalities by the number of investments, there are seven holders of NALED business friendly certificate (Inđija, Novi Sad, Subotica, Stara Pazova, Niš, Zrenjanin and Pirot). Since it was published in February, the database has attracted much public attention and NALED updates it regularly with new information on foreign investments. The first database of foreign investments news News from NALED
  9. 9. 9june 2013 | ConStruCtion Work(S)! Overview of most important foreign investments in 2013 According to the National Bank of Serbia, during the 1st quarter of 2013 net flow of foreign direct investments (FDI) in our country rea- ched EUR 155.3 mil. Most investments arrived in the field of financial services – 29.5%, wholesale – 27.1%, beverage production – 14.6% and construction – 12.9%. Holcim Serbia opened a concrete factory in Dobanovci. Investment value: EUR 2 mil Danish Grundfos opened a factory in Inđija. Investment value: EUR 50 mil Sloboda launched a new production facility for artillery ammunition in Čačak. Investment value: EUR 5.5 mil Company Continental Wind Partners CWP obtained the permit for constructing the first wind farm in the municipality of Kovin. Investment value: EUR 300 mil Fresenius Medical Care launched its third production line of medical equipment in Vršac, providing new jobs for 112 people Thanks to company U.A. Aribolt which opened a new women’s stockings production facility in Kruševac, new jobs were created for 100 workers. Investment value: more than EUR 5 mil Slovenian company Gorenje opened a new air-conditioning systems factory in Valjevo. Investment value: more than EUR 21 mil Gorenje and Panasonic are jointly opening a company for producing cooling devices in Zaječar. Investment value: EUR 70 mil New factory of confectionery company Benlian foods in Niš brought jobs for 100 workers Italian company for synthetic fiber production - Fulgar invested EUR 2 mil into construction of a new production hall to increase the existing capacities by 40% and employ 100 workers Construction material producer Domino opened its sales center in Kikinda. Investment value: EUR 800.000 Expected investments in 2013 Company Messer Tehnogas will invest more than EUR 20 mil into its new factory of oxygen in Bor In the next three years, Siemens will invest EUR 10 mil in its factory in Subotica, providing jobs for 230 workers In June 2013, Swarovski starts constructing a factory to bring new jobs for 550 workers Company Gucci invests EUR 6 mil into its leather garments producti- on facility in Ruma, to employ 120 workers Petroleum Industry of Serbia (Naftna industrija Srbije - NIS) starts constructing a thermo power plant / gas power plant in Pančevo. Investment value: EUR 182 mil By the end of 2013, new production facilities of Golden Lady in Lozni- ca will employ 200 new workers Around 1,100 jobs to be created in Stara Pazova, in five companies starting their business operations in this municipality - Milšped, EyeMaxx, Streit Group, Sika, Quattro houses By 2016, Turkish company Teknotes will invest USD 700 mil into the construction of a thermo power plant in Despotovac By September 2013, Elixir Group will invest EUR 30 mil into fertilizers factory in Šabac Panonka from Sombor is investing EUR 1.5 mil into its new food-pro- cessing facility With the launching of production of Chipsy Way in Čačak, new jobs will be created for 130 people German company MC Bauchemie will invest several millions of EUR in Sremska Mitrovica, into the construction of concrete-additives factory
  10. 10. 10 Synergy use beneficial terms to purchase quality products and services or nominate your offer for NALED market and enjoy the promotion in Serbian professional community www.naled-serbia.org/berza naleD market – (dis)count on good things Event organization in Hyatt Regency DISCOUNT: 10% SUPER DISCOUNT FOR THE FIRST 5 NALED MEMBERS: 15% Valid through 31st December 2013 Hyatt Regency Belgrade, the finest ***** star hotel in Belgrade, located only five minutes by car from the Belgrade city center. In addition to luxury rooms and suites and lavish content it also provides services of organizing business meetings and conferences, as well as personalized catering services. Event management packages come in three categories: express, half-day and full-day package. The express package involves meeting set-up, two-hour coffee break, standard AV equipment and cable internet by the price of EUR 25 per person (minimum 15 partici- pants/2 hours). The half-day package of EUR 35 per person (minimum 15 participants) includes meeting set up, one morning or afternoon coffee break, lunch, standard AV equipment and cable internet. The third, daily package involves a price of EUR 45 per person (minimum 15 participants), including meeting set up, morning and afternoon coffee break, lunch, standard AV equipment and cable internet. Advertising and PR space DISCOUNT: 10% Valid through 31st July 2013 Daily newspaper Danas, corporate member of South East Europe Media Organization (SEEMO) and Association of newspapers Project Syndicate, offers a discount for all NALED members and partners for advertising and PR space. Danas, daily newspaper with national coverage, is one of the rare newspapers not using tabloid methods to increase its circulation. It is famous for providing strong support to Serbian non-government organizations, promoting EU accession and the rights of minorities. Trainings and education in the field of human resources DISCOUNT: 10% SUPER DISCOUNT FOR THE FIRST 5 NALED MEMBERS: 20% Valid through 31st December 2013 Within its Training and Development sector, Gi Group, now OD&M Consulting, offers to all NALED members and partners a discount for trainings in the field of personal and team development, HR management, as well as sales and negotiations, project and change ma- nagement. Gi Group was founded in Serbia in April 2002 with the mission to support clients in accomplishing their business strategies, offering broad knowledge of the local market, vast experience of consultants and tested international practice of their partners. Services offered by Gi Group include: employee training and development, HR consulting, search and selection, staffing solutions – outsourcing services. Leader in the region, one of the most successful companies in the field of labor market, Gi Group can offer comprehensive solutions in all areas of human resources. News marketing@danas.rs www.danas.rs T: +381 11 344-11-86 F: +381 11 344-11-86 Daily newspaper Danas 19 Alekse Nenadovića Street, Belgrade T: +381 11 308 73 27, +381 62 80 33 479 F: +381 11 308 73 71 tijana.raicevic@odmconsulting.com www.odmconsulting.rs OD&M Consulting 52 Prote Mateje Street, Belgrade T: +381 11 301 1139 F: / belgrade.regency@hyatt.com www.belgrade.regency.hyatt.com Hotel Hyatt Regency Belgrade 5 Milentija Popovića Street, 11070 Belgrade, Serbia
  11. 11. 11june 2013 | www.naled-serbia.org/compendium www.naled-serbia.org/training Scholarships and trainings Service information SUPPORT TO CSO PROJECTS Deadline for applications: N/A Donor: Royal Norwegian Embassy Beneficiaries: NGO Purpose: strengthening the rule of law, good governance and anticorruption, defense and security sector reform, strengthening human rights, economic development and entrepreneurship, environment protection Maximum amount of funds: EUR 100,000.00 EXCHANGE 4 – SUPPORT TO MUNICIPALITIES Deadline for applications: 4th July 2013 Donor: EU Delegation to Serbia Beneficiaries: local governments Purpose: municipal projects in the fields of environment protection, local economic development, social protection on the local level Maximum amount of funds: EUR 200,000.00 INCENTIVES FOR NEW JOBS CREATED Deadline for applications: N/A Donor: National Employment Service Beneficiaries: businesses, local governments Purpose: Supporting employment in local government units and companies Maximum amount of funds: RSD 400,000.00 SUPPORT TO EU INTEGRATION Deadline for applications: 31st December 2013 Donor: Fund for an Open Society Beneficiaries: state and provincial institutions, municipalities, NGO, associations Purpose: actualization of the education reform issue and its placing on the political agenda, acceleration of Serbia’s EU accession process, judicial reform and establishing full guarantees for its independence, harmonization of regional development of Serbia and strengthening of cross-border cooperation etc. Maximum amount of funds: N/A Database of funds – Compendium Training for SMEs: improving the investment readiness Deadline for applications: 28th June 2013 Organizer: National Agency for Regional Development NARR, Ministry of Finance and Economy, Ministry of Education, Science and Techno- logical Development Participants: Small and medium enterprises Venue and date: Belgrade, Novi Sad, Niš, Kragujevac (Serbia), July 2013 This type of program was developed aiming to assist companies, in particular innovative enterprises with large growth potential, to attract investment capital and understand the needs and requests of the inves- tors. The Program for improving the investment readiness will involve training, advisory support, mentoring and technical assistance, to support enterprises in Serbia in improving those segments of work and influencing their investment readiness. Practice in German Parliament (International Parliamentary Scholarships) Deadline for applications: 30st June 2013 Organizer: German Bundestag, Free University, Humbolt University and Technical University in Berlin Participants: Youth under 30, with knowledge of German language, interested in public administration work Venue and date: Berlin (German), July 2013 German Parliament offers young people an opportunity to learn about the German parliamentary system and political decision-making pro- cesses and to obtain practical experience in the work of the Parliament. The program is intended for young people interested and wishing to have an active role in the democratic shaping of their countries. The partici- pants receive a EUR 450 scholarship, paid accommodation, insurance, as well as covered travel expenses. Money prizes for special achievements in investigative journalism Deadline for applications: 20th July 2013 Organizer: Central European Initiative (CEI), South East Europe Media Organization (SEEMO), Konrad Adenauer Stiftung (KAS) Participants: Journalists from Serbia (press, TV, online, agencies) Venue and date: / For the category Professional journalists, candidates who had success in in- vestigative journalism and are still actively involved in journalism may apply. For the category Young journalists, candidates who are active in the field of investigative journalism and who published an investigative article meeting the professional standards may apply. Potential candidates may be nominated by individuals, organizations, media companies. Self-nominations are not allowed.
  12. 12. 12 Synergy Success and competitiveness of a local government depend on whether a municipality sees itself exclusively as a service for citizens and relies on assistance from the state when it comes to investments, or it is ready to take local economic develo- p-ment into its own hands. Even though the role of the state is crucial for the creation of overall business environment and attracting large-scale investors such as FIAT, cities and municipalities can do a lot in terms of developing local economy and attracting investments of smaller (but not negligible) scale. This is exactly the essence of local economic development (LED), as a process where municipalities and businesses work together on improving the overall economic strength of the local community. In these efforts, some municipali- ties have more success than others. The less successful will say that the others had better legacy, more help from the state, better geographic location... However, the most common factor that contributed to having one municipality stand out from the others was a shared idea and persistence of several people to make the idea come to life. Pioneers of local economic development, like Inđija or Zrenjanin, appeared at the beginning of the previous decade, and these were the first municipalities that under- stood and took over this new assignment to themselves, primarily thanks to strong leadership. At that time, the biggest obstacle was the “lack” of construction land that in Synergy could be given to a potential investor for use or ownership. Not only were cities and municipalities unable to sell or rent their resources (land, buildings, office space), but they could not obtain any property without the consent of republic organs either. The extent to which this hindered local economic development is needless to stress – particu- larly threatened were business incubators, industrial parks, brownfields and similar projects, since they involved management and disposal of real estate. A large number of municipalities lamented over their faith for years, but some of them used old coo- perative land, adapted its purpose, developed infrastructure and ga- ined advantage over the others. Other municipalities attracted foreign investors by partnering with private land owners. Some acquired ownership of the land or facilities by purchase and conversion of military property. When municipalities partially resolved the problem of land, there was a new challenge – infrastructure. The cost of infrastructure and connections for one industrial location of around 30 ha is approximately EUR 4 million. Bearing in mind that total budget of a mid-developed municipality with 50,000 inhabitants was approximately EUR 5 million in 2005, it is easy to conclude the money for infrastructure was lacking. They dealt with this problem in various manners, using vari- ous funding sources, loans, donations, state aid and often private equity (partnership Inđija and Zrenjanin are the first municipalities that understood the importance of having a consolidated vision for development and more importantly, they had the persistence and determination to go about its implementation with the private sector). At the same time, the appetites had to be reduced, so the first industrial locations that were equipped were not bigger than 5 ha. This way the industrial zones started emerging and the municipa- lities could offer locations to new investors for construction of factories, shopping malls or office space. This new „Serbian land“, that appeared at investment and real estate fairs, had the task to distinguish itself from compe- tition and earn trust of investors. The most efficient manner of gaining credibility before new investors was based on upgrading the cooperation with existing businesses, which turned out to be the best promoters of a municipality provided they are satisfied with local business conditions. On the other hand, the rate of employment at the local level, living standard and munici- pal budget depend primarily on the existing businesses, so more progressive munici- palities soon recognized that cooperation with local companies is the key to successful economic development. This meant not only the introduction of new services for businesses, but also a change in the approach and manner of completing day-to-day administration with the busine- sses. The first reforms in this field involved establishment of municipal service centers and utility centers, as well as one-stop-shops for registration of businesses and issuing of permits. Maybe the most significant reform of this type was the forming of municipal Local Economic Development offices, starting from 2006 onwards. These were the key to municipal development Good leaders are the USAID research indicated that 63% of foreign investors chose Serbia thanks to previously established business contacts
  13. 13. 13june 2013 | first departments in municipal administrati- on that replaced the old administrative role for a development function. Their form and manner of establishment can vary (servi- ce, department, agency, team within the Mayor’s office), but regardless of their posi- tion within municipal structures, they deal with strategic planning, investment promo- tion, identification of problems faced by the businesses, preparation and implementation of economic development projects, etc. The office role is to serve as a mediator between the businesses and the state (public sector) and ease and accelerate communication of businesses and public service providers. Finally, along with bringing institutional framework, in 2007 the new Law on Local Government also established the lacking legal framework for dealing with LED, due to which investment promotion and development of existing businesses were officially placed under the authority of cities and municipalities. The same year, NALED Local economic development in Serbia initiated the Business-Friendly Certification program in order to assist the local govern- ments in jumping into this role in the most efficient manner. Today, almost one third of all municipalities in Serbia recognize the importance of local economic development and are improving their business enviro- nment through NALED certification pro- gram. The most successful ones found their way to the list of Top investment destinati- ons in South East Europe 2012/13, prepared by the renowned Financial Times. Finally, it should be noted that local econo- mic development does not provide answers to all the questions. There are many things that are still decided upon by the state. The state determines taxes and regulates the financing of local governments so it has the main mechanism of control, as well as sti- mulation of development, in its own hands. The state decides on the construction of in- ternational road network and inter-munici- pal infrastructure, investments into railroad and air traffic. Hence, investing into traffic infrastructure on local level can be futile for those municipalities that are located on the main road intersections. However, the local government and local policies influence the supply of water, sewerage, gas, degree of land development. Local governments also create the processes and procedures the businesses need to go through within the local administration, availability of work force or public transport, price of utility services and amounts of utility fees. The results of actions taken by local officials (or lack thereof) make the key difference among municipalities located at similar geographic positions, with the same legacy. In successful municipalities, a team of people took the responsibility and initiative to identify problems, develop solutions and work persistently and efficiently on their implementation. These people make all the difference between more and less successful municipalities in Serbia. Jelena Bojović, NALED Policy DirectorJelena Bojović, NALED Policy Director In successful municipalities, a team of local officials took the responsibility and initiative to identify problems, develop solutions and work consistently and efficiently on their implementation. These people make all the difference between successful and less effective municipalities in Serbia
  14. 14. 14 Synergy Implementing reforms is focus area for development are local economic development and regional development. These are not mu- tually exclusive and in fact the final activities are similar if not the same; however for the sake of clarity a brief explanation of each will now be provided. Local economic development seeks to build up the economic capacity of an area to improve its economic future and to improve the quality of life for all. It is a process by which public, business and the non-government sectors work collectively to create better conditions for economic growth. The process is invariably led by the Local Governments who seek to build up the economic capacity of a local area and to improve its economic future and the quality of life for all. For those wanting a more compre- hensive review on LED regarding the theory, background and practical guidance on how it should be implemented, please refer to the excellent World Bank publication Local Eco- nomic Development Quick Reference Guide. Regional development is encapsulated by the EU regional policy that aims to reduce the significant economic, social and territorial disparities that exist between Europe’s regions. The objectives of this policy are convergence solidarity among regions, regional com- petitiveness and employment and European territorial cooperation. European regions are standardized according to the NUTS clas- sification which is a hierarchical system for dividing up the economic territory of the EU in Synergy Cutting the red tape is a key focus area for local development. It is the municipal leadership who are best placed to implement such actions Tom Thorogood, local and regional development initiatives expert In the course of the last 10 years Serbia has experienced a difficult transition process as it seeks to implement democratic reforms, enter the EU and restructure its economy. This transition coupled with the global economic crisis has had a marked impact on the country and its economy. The problems faced include high unemployment, poor infrastructure, an aging population and migration from the poorer regions to the main centers leading to a self-perpetuating spiral of underdevelopment in certain parts of the country. The two approaches widely adopted for local
  15. 15. 15june 2013 | a key local development for the purpose of the collection, development and harmonization of EU regional statistics and socio-economic analyses of the regions. NUTS 1 are major socio-economic regions, NUTS 2 are basic regions for the applications of regional policies, and NUTS 3 are small regions for specific diagnoses. This article focuses on the NUTs 3 level that in Serbia translates approximately into two Districts. In practice, all the different actors are aiming to do very similar things that can best be described as influencing the factors that affect the economy of a geographical area, whether it is a region or a municipality or both, such as the quality of the public sector management; policies affecting the availability or commu- nal infrastructure; and factors affecting labor productivity in the local economy including housing, health, education services, skills avail- ability, training opportunities and transport. All these hard and soft infrastructure factors are key determinants of an area’s comparative advantage and form the backbone for a successful local economy. In terms of the specific activities and results that these various interventions have achieved, they can roughly be consolidated under certain specific themes. Strategy Development: There is now a plethora of strategies developed at the local level with the majority of municipalities having at least one strategy and many having several address- ing specific issues. Despite the coordination between the donors there is still a tendency for individual projects to insist upon new strate- gies that will be developed according to their guidelines and that will address the needs of that specific project. While the aim has always been to coordinate this strategic planning with one third of municipalities believe naleD’s solution The evidence would suggest that municipal leaders are realizing the need for action on this issue and are taking concrete steps. Examples of this include the fact that more than 60 local governments in Serbia embraced NALED’s certification program as a mechanism for improving capacity of local administration and creating an environment favorable to economic development and investments. Local development direction the municipal budgeting process, this has rarely actually occurred. Therefore, in the majority of cases the strategies have little or no connection with the municipal investment planning, which thus reduces their real value. Infrastructure Investment: This has generally taken the form of a grant with some match- ing funding that addresses key issues such as water, sewage, educational infrastructure and economic infrastructure. In many cases different donors have combined their funding to support one intervention. The majority of these projects are the product of a strategic planning process and in recent years there has been a move to support larger projects relying on a number of funding sources including borrowing. Administrative Reform: A number of different approaches have been adopted here includ- ing activities such as capacity development of municipal staff, the establishment of Citizen Assistance Centers and lobbying and advocacy around specific issues at the local and central level such as “building permits” and “register- ing a business”. Evaluating all these different interventions and the impact they have had is well beyond the re- mit of this article. However, what is clear is that Serbia has significant regional disparities with certain parts of the country being significantly less developed than others. Furthermore it is clear that the majority of bilateral donors are gradually phasing out their support to Serbia. So the question is what the focus should be for municipal development in the future. The answer is: clear administrative reform. This can mean a number of things as highlighted earlier; however in this article it refers to creat- ing an enabling environment and eradicating the red tape and bureaucracy which businesses face at every level. Through publications such as The World Bank’s Doing Business Report it is clear Serbia has fundamental problems in this respect, many of which can only be ad- dressed at the central level. However, anecdotal evidence such as the success of Inđija Munici- pality, suggest there is much that can be done at the local level with the key ingredients being strong leadership and political will. The evidence would suggest that municipal leaders are realizing the need for action on this issue and taking concrete steps. Examples of this include the fact that eight municipalities have now been certified as investor friendly by NALED, having passed through a process that in the majority of cases involves the implemen- tation of reforms to the manner in which they provide services. To conclude, implementing reforms that make doing business easier is a key focus area for local development. It is the municipal leadership who are best placed to implement such actions and it would appear that this message is now being taken up and acted upon. That being said there is still much to be done in this sector if Serbian municipalities hope to compete with other loca- tions for foreign and domestic investment.
  16. 16. 16 Synergy How much do you really know about LeD? 1. What is the definition of the term „local economic development (LED)”? a. Local economic development is a process managed by the state in order to encourage balanced regional development of the whole country. b. Local economic development is a process managed by cities and municipalities, in co- operation with partners from private, public and civil sector, with the goal of strengthe- ning the existing businesses, promotion of new investments and increased employment in local communities. c. Local economic development is a process managed by businesses in order to raise their productivity and profitability at the local level. 2. Which of the following LED tools generates potentially the largest number of new jobs? a. Business incubator. b. Business Improvement District - BID. c. Industrial zone / park. 3. What is the difference between the greenfield and brownfield investments? a. Greenfield investments refer to investing into construction of new production facili- ties, and brownfields involve purchase and adaptation of existing ones. b. Greenfield investments mean investing in- to clean technologies and brownfields mean dirty technologies. c. There is no difference. 4. What is the difference between an industrial zone and industrial park? a. There is no difference; these are different terms defining the same concept. b. Industrial zone is a location of up to 100 ha, and an industrial park covers a larger area. c. Industrial park is a broader term than the industrial zone, since in addition to construction land it also involves relevant infrastructure and professional management of the park. 5. Which tax generates most revenues for budgets of local governments in Serbia? a. Income tax. b. Property tax. c. Local taxes and fees. 6. Which institutions fall under the jurisdiction of local governments? a. Cadaster. b. Public utility companies. c. National Employment Agency offices at the local level. 7. How can municipalities improve the competitiveness of local labor force? a. By introducing new educational profiles in high schools and faculties. b. By partnering with businesses to orga- nize trainings and internship programs for students and unemployed. c. By reforming the educational system. 8. Employment rates and revenues in local governments primarily depend on…? a. Local businesses. b. New foreign investments. c. State subsidies. 9. What are public-private partnerships (PPP)? a. Providing tax incentives to the private sector. b. Cooperation between businesses and municipalities in the field of corporate social responsibility. c. Cooperation and joint effort of public and private sector in producing public goods or providing public services. aNsweRs: (1–b,2–c,3–a,4–c,5–a,6–b,7–b,8–a,9–c) TEST
  17. 17. 17june 2013 | British companies will always choose an investment destination with maximum return on investment and a minimum risk. Serbia has a lot of characteristics promo- ting itself: an excellent location, a large number of talented workers and EU perspective, which will encourage the Government to further economic reforms. However, companies will not invest if they are not confident in the rule of law and lack of corruption – says Sir Paul Judge, Chairman of British-Serbian Chamber of Commerce. Do you have any special strategy to improve foreign investment to Serbia and are British investors expressing more interest to invest in our country recently? The Chamber wants to enhance networks and communication between the two economies. Serbia remains very much on the radar of UK business. Trade missions over the past six months have significantly increased with recent visits to Serbia by delegations from the British security, railway and business training industries. During the year, UK Trade and Industry, the Commercial Section of the British Embassy in Belgrade, has had its busiest-ever year in terms of enquiries, trade missions and other initiatives. British companies will choose, from a global mar- ketplace, an investment destination where returns are maximized and risks are minimized. Serbia has a lot of characteristics to recommend it: british investors are interested in Serbia more than ever Reduced bureaucracy and lower administration costs place your country in a high position compared to the surrounding markets, and there are also other competitive advantages, such as the benefits of trade treaties and investment potential in key industries, such as agriculture INTeRvIew Sir Paul Judge, Chairman of British-Serbian Chamber of Commerce In order to attract capital from London, Serbia needs to offer large-scale projects –investments of at least EUR 20 million a great geographic location, a talented pool of wo- rkers, and an EU perspective which will encourage government’s drive for further economic reform. The Chamber and its leading members like the international audit firm KPMG want to help UK companies become assured that Serbia is firmly committed to an ambitious path of labor, capital and market reforms, sound fiscal management, and improvements in the investment environment. If it can do this – along the lines of those proposed by foreign investors’ bodies in Serbia and by respected global comparisons such as the Doing Business Guide and Global Competitiveness Report – Serbia will find itself especially well-placed to take advantage of resurging British investment. Recently you said “Serbia has significant and growing investment potential“. How can Serbia enhance its potential for economic development? I believe that following its very difficult recent history, Serbia can now hope to enjoy a much improved economy.
  18. 18. 18 Synergy The EU’s positive decision on candidate status is very important for the investment climate in Serbia. Reduced bureaucracy and lower admi- nistration costs place the country in a strong position when compared with its surrounding markets. In addition, Serbia can further impro- ve its opportunities by enhancing business and investment-friendly policies and by building on its strengths with its strategic position in South East Europe, attractive benefits coming out of tax and other treaties and its potential in impor- tant industries such as agriculture. Investments from other countries, such as the Fiat car plant in Kragujevac and the potential of the South Stream gas pipeline, will generate interest from British investors in allied industry sectors. As liquidity returns to the financial markets the- re will be much competition for debt and equity capital which means that Serbian businesses must work hard to improve the attractiveness of their enterprises. Undertaking the necessary financial and operational restructuring cannot be avoided if Serbian companies are to secure inward investment and strategic partnerships successfully. The Chamber will work hard to support Serbian companies seeking financial investors, strategic partners and new markets in the United Kingdom while leveraging the benefits of EU candidacy, as well as the EU Stabilization and Accession Agreement which remains to be ratified only by Lithuania. Why do we have such a poor record of British investment to Serbia up to now? During last year, Serbia exported about € 110 million to the UK and imported € 130 million from the UK so there is already a reasonable flow of trade. In terms of investment however the official British record is perhaps misleading. London remains Europe’s primary equity and debt capital market and a lot of investment and restructuring for Serbia and Serbian companies is done through London. Many British-funded investment vehicles operate outside the UK for tax reasons through holdings in, for example, Switzerland, the Netherlands or Cyprus and their investments are recorded in Serbia as being from those countries even though the money has come from the UK. Serbian businesses seeking Western capital must recognize that they must meet the requi- rements for enhanced financial disclosure and compliance which are commonplace in interna- tional markets like London. Also, investments must normally be of a significant size to attract London capital, for example a minimum of EUR 20 million. Investors need to have as much certainty and confidence as possible when deploying capital into Serbia and a lot more can be done by Serbian business leaders to restructure their enterprises and make themselves investor-ready interview Legal and financial systems need reform Resistance to transparent presentation of data may be an obstacle for British investors in networking with Serbian businesses, in particular since many local financial institutions have not conducted an in-depth financial analysis of the organizations they support. This points out a necessity for changes and improvements of current legal and financial systems in Serbia, so that the investors can get a fair insight into the business performance and management. and fit-for-purpose in order to secure internati- onal investment. As a part of the celebrations for Serbian Month in Great Britain 2012, you hosted the evening business reception at your home in Central London. What did you speak about, and what are your impressions of Serbian people? I firstly emphasized the close historical relation- ships between the UK and Serbia. This year is the 175th Anniversary of diplomatic relations between the two countries. In addition, in 2013 the world is celebrating the 1700th Anniversary of the decision by the Emperor Constantine in 313 to legalize Christianity in the Roman Empire, one of the most important proclamati- ons in history. This brings together Serbia and Britain as Constantine was born in Nis in Serbia and became Emperor while he was in the city of York in Britain. I also talked about the potential for building upon the progress that Serbia has made in the last decade, culminating in its becoming an EU candidate country. It is clear that many other countries which had a long period of communist rule and then a difficult period of
  19. 19. 19june 2013 | Sir Paul Judge, Chairman of British-Serbian Chamber of Commerce studying and working here. In particular I noted the excellent connection which has grown up between the University of Cambridge and Serbia with the Pexim Foundation generously providing scholarships for Serbian students to study at Cambridge, including three ladies who are currently doing their MBA at the Judge Business School. The biggest British investment made in Serbia thus far has been the acquisition of the Vranje Tobacco Industry by British American Tobacco in 2003. Recently, it was announced in our media that our spas (‘wellness centers’) are very interesting for investors. I do know of forthcoming investments from the UK in the renewable energy, mining and healthcare sectors although I cannot comment on their behalf. Interest from British strategic partners will grow given the favorable EU candidacy status Serbia now enjoys and the Chamber will support Serbian companies in efforts to access the City of London investment community. We must remember though that decisions to invest are not taken overnight and in many cases can take many months to develop. I would expect to see a greater level of British strategic partnerships with Serbian enterprises and financial investments. This is especially so as Serbian companies and institutions understand the benefits of the new EU-compliant legislation now enacted in Serbia, for example the Laws on Companies, Capital Markets and Public Private Partners- hips. However the experiences of British and other investors in recent years have been mixed, not least the disappointment of the mooted UK investment at Vrnjačka Banja. You are the chairman of Greenhouse Capital, with an office in Belgrade. How much have you invested so far in Serbia? Greenhouse secured € 22.5 million three years ago to consolidate the SE Europe telecoms sector which was deployed in the creation of Orion Telekom. Orion is the consolidation of SezamPro, Mediaworks and Novi Sad internet services provider Neobee, and is now Serbia’s leading fixed line operator after Telekom Serbia. That transaction took 18 months to develop meaning that Greenhouse has been present in Serbia since 2007. The European Bank for Re- construction and Development and the Royal Bank of Scotland were also key investors. Late last year, Greenhouse developed and introduced an Alternative Fixed Income Strategies (AFIS) product to enable various Western financial institutions with emerging market capital to have an alternative source of investment in SE Europe. AFIS is aimed at the countries of the former Yugoslavia, Albania, Bulgaria, Moldova, Romania and Ukraine whe- re individual corporate bond-like transactions are not of a sufficient scale or transparency to enable direct investments. Initially AFIS will support Serbian, Croatian and Montenegrin markets as part of a regional strategy aimed at deploying over EUR 1.5 billion of hybrid capital with Belgrade as the headquarters of Greenhouse’s SE Europe operations. Our goal therefore is to create a positive climate for further investment alongside developing a strong locally-based international corporate finance advisory team. There are also several new transactions in the pipeline and we hope to make announcements very soon. There is a huge demand for agricultural products throughout the world. Serbia has great potential within agricultural produce. Why are potential investors not investing in producing food in Serbia and then exporting abroad? It is true that food security is of global interest with Serbia’s strengths in producing agricultural commodities especially organic products, fruit and meat processing potentially in very high demand. However, the smallholder structure of many Serbian farms means it can be difficult to attract investors which would seek larger scale production. Serbia’s own companies, for exam- ple Victoria Group and MK Group, are leading their field across the SE European region, and have access to markets and capital in Serbia which means that they may not necessarily need external investment at this stage. However, as they seek to expand and modernize producti- on possibly outside of Serbia, for example via funding investments and possibly acquisitions, they may well seek to utilize London’s capital market. It is in this area where I believe the future cooperation lies which the Chamber, and indeed Greenhouse, would support. About Sir Paul Judge Sir Paul Judge is an English business and political figure. He was educated at school in London and then at Trinity College, Cambridge, and at the Wharton School of the University of Pennsylvania as a Thouron Fellow. His early career was with Cadbury Schweppes where he undertook a number of international postings and projects and whe- re he led the buyout of their food compani- es. In the 1990s he was Chairman of Food from Britain, Director General of Britain’s Conservative Party and a Ministerial Adviser at the United Kingdom Cabinet Office. In the 2000s he was Chairman of the Royal Society of Arts and President of the Charte- red Management Institute. As well as being Chairman of the British-Serbian Chamber of Commerce and of Greenhouse Capital Group which operates in Belgrade, his ap- pointments currently include: UK chairman of the British-North American Committee, a special adviser to the Royal Institute of In- ternational Affairs, a member of the Russian Presidential Academy of National Economy and Public Administration. He is married to Lady Barbara Judge, Chairman of the United Kingdom Pension Protection Fund, former Chairman of the UK Atomic Energy Autho- rity, current Business Ambassador for UK Trade and Industry; and has two sons. adjustment have now become places of stability and transparency. Serbia deserves to achieve the same transformation which should allow it to achieve growth rates well above those of We- stern Europe as Adam Smith’s “invisible hand” of market forces takes investment to a place where many businesses can be competitive. I also commented on the strong Serbian presence in London with many of its people
  20. 20. 20 Synergy As the General Manager of Coca- Cola, you had the opportunity to work in countries in the region. How would you rate the business environment in Serbia compared to other countries? I may say that all countries in the region, and beyond, are facing the same challenges. These are certainly influencing the business envi- ronment, but they are all the more reason for us to be more creative and innovative in our work and always go one step further. Serbian market is no exception, and for this reason we find particular satisfaction in the fact that it is one of the fastest developing markets in Eu- rope for our company. We’ve invested much effort, time and funds here in order to deve- lop a large business system contributing to the country’s economy and society, not only with business operations, but also continuous years of success in Serbia investments in the local community. You were recently appointed as Vice-Presi- dent of NALED Managing Board. In your opi- nion, which steps should be taken by the state and which by the local governments in order to accelerate local economic development? Multi-sector cooperation is crucial and necessary. It is highly important that we work together with partners from public, private and civil sectors on improving the business envi- ronment. Our experience on various projects indicates that such cooperation and combina- tion of different expertise produce best results. It is therefore essential that we listen to each other’s needs in order to identify important topics and improve our efficiency. We need to advise each other, learn from each other and be true partners in the business process. INTeRvIew This year, one of the largest business systems and leaders of social responsibility in Serbia is celebrating 45 years since they produced the first bottle of favorite beverage in our country. General Manager of Coca-Cola Hellenic Serbia, Ramon Weidinger, speaks for Synergy about the celebration of this anniversary and the perspective of foreign investors regarding local business conditions
  21. 21. 21june 2013 | Ramon Weidinger, General Manager of Coca-Cola Hellenic Serbia How would you rate Coca-Cola’s coopera- tion with the local governments? For each market we operate, we find it significant to invest into local community, be the initiators, and in cooperation with partners stimulate activism that would bring about some changes. Improving the lives of citizens is a priority for us, as we believe that a business system is as sustainable as the local community in which it operates. We find this to be our task – to make a contribution. In this regard, we are very dedicated to creating real partnership with the local governments, in order to define the most important issues to address and jointly work for changes. Which advantages of Serbia would you stress the most when presenting our country to a potential investor? The importance of this market is seen in the fact that this year we are celebrating an important anniversary – 45 years of doing business. The fact that we have been present in Serbia for four and a half decades, the period in which we’ve grown into one of the largest business systems in the country, is sufficient recommendation. Having achieved significant success here, we are committed to celebrating many more anniversaries in Serbia. Your company is one of the first five hol- ders of Corporate Social Responsibility Certificate awarded by NALED. What are the manners of Coca-Cola’s contribution to the local community? We are very pleased to be among the first five companies that received this re- nowned certificate. For us, social res- ponsibility is a priority, and the prin- ciple of sustainability is embedded in our entire business process. The Contribution of Coca-Cola system to the economy and society Coca-Cola has been present in Serbia since 1967, when the first bottle of this bevera- ge was produced in local facilities. Over the previous decade only, the company inve- sted EUR 200 million in this market, and Coca-Cola has grown into one of the most significant business systems in the country. This was also shown in last year’s study on socio-economic impact of Coca-Cola in Serbia, developed by consulting company Steward Redqueen, which is the first research of such type in our country. The results showed that Coca-Cola system in Serbia pays EUR 3 million in taxes into the budget, and supports additional EUR 107 million of tax revenues for the state. Adding up the profit of suppliers and retailers who work with the company, as well as taxes and con- tributions they pay, total value added to Serbian economy by Coca-Cola system reaches EUR 345 million or 1.18% of GDP. Similarly, 1,300 of Coca-Cola’s direct employees support approximately 18,500 additional jobs, or 0.62% of entire work force of Serbian economy, which is a 1:13 ratio. Basically, each direct employee in Coca-Cola assists in creation of additional 13 jobs in Serbian economy. key areas for us are environment protection, support to vulnerable groups, investing in youth and talented people and promotion of active and healthy lifestyle. This certi- ficate is another confirmation that we are on the right track and we will certainly be looking to continue the traditional support projects, but also new initiatives, such as the construction of 45 open-air gyms across the country. Celebrating 45 years of production in Serbia, in cooperation with NALED and Ministry of Regional Development and Local Government, Coca-Cola is awarding 45 open-air gyms to cities and municipali- ties across Serbia. Why did you choose to celebrate the anniversary in this manner? Celebrating 45 years since the first produ- ced Coca-Cola in Serbia is more than just a corporate anniversary for us. This is why we decided to launch something big that will raise the quality of life in municipalities all over Serbia. Promotion of active and health lifestyle is one of the pillars of our corporate social responsibility. Through the platform “Active healthy living” we implement numerous projects, trying to inspire and activate people to adopt good habits, find a sport that suits them and do it either professionally or as recreation. In addition to pointing out the importance of active life and recreation, we also wish to raise aware- ness on the importance of balanced nutrition and healthy habits. Corporate anniversary celebration Celebrating 45 years from the beginning of production in Serbia, in cooperation with National Alliance for Local Economic De- velopment (NALED) and with the support of Ministry of Regional Development and Local Government, Coca-Cola system has initiated a project to provide the citizens with 45 open-air gyms. The citizens will vote to determine where these Coca-Cola active zones would be built. The project involves all municipalities, divided into three cate- gories based on their population – small, medium-sized and large. By the end of July, via website www.45godinausrbiji.rs you may vote for your preferred municipality; 15 municipa- lities with the highest number of votes in each category will be awarded. The first open-air gym is scheduled to be ope- ned in September, another nine by the end of this year and the remaining 35 by May 2014. The project for constructing 45 open-air gyms is only one step further in this direction. We are certain that Coca-Cola active zones will be the place where many citizens will spend their time in a more quality way, exercising in open air and doing something good for their health. What is life and doing business like in Serbia, what is it that you find the most appealing? I am very glad to have the opportunity to work in Serbia, because along with the very dynamic work I perform in this important regional market, my leisure time is also very pleasant. The people are open and friendly and this is certainly an important factor for feeling at home.
  22. 22. 22 Synergy What is your interpretation of the term ‘business-friendly environment’? Čedomir Živković: When speaking of Vršac, as one of the most developed local governme- nts in Serbia, for me the term business friendly environment involves the supportive climate for the existing businesses, both international and domestic, we have been cooperating in the previous years. For years Vršac has been successful in maintaining and improving the business-friendly approach, enabling the investor to work with more ease in Vršac and to feel better than anywhere else. This is also confirmed by NALED’s Business-Friendly Certificate we acquired in 2012. The Muni- cipality of Vršac, primarily thanks to its LED Office, has managed to position itself and improve its image of a reliable partner in the eyes of private sector. We’ve also achieved the unique, fourth level of e-government in Serbia, showing we are a transparent local gover- nment, working for the benefit of its citizens. Miroslav Miletić: Business-friendly envi- ronment in macroeconomic sense is probably the dream of most managers in Serbia, bearing in mind that in the last 20 years we haven’t had a single year with stable business conditions. These certainly include: - Clearly defined and enforceable strategies 3D interview as the backbone of a country’s main econo- mic policies (development, export) - Business environment with low inflation rate, affordable loans, stable consumption and stable foreign exchange rate, - Liberal, European-standards market in terms of protection of competition, consu- mers and national brands, - Depoliticized and efficient management wi- th developed tax system and other fiscal rules, - State consensus on economic priorities. At the local level, this is certainly different than in the times when I was the Secretary of Municipal Assembly in Požarevac, but under stable business environment I mean efficient performance of all tasks under the jurisdiction of local governments, as well as the functions that the central government performs throughout the country, prima- rily through its regions. Many of the above stated elements could also be applied to the local government level, as can be seen in some municipalities that adhere to these standards in their day-to-day operations. Gordan Velev: Civil society in Serbia works in very difficult circumstances. It is mostly financed by international donors, while the support from public funds and private sector is not satisfying. On the other hand, one should understand the fact that Serbian economy is in deep crisis and without new investments the overall economic stability may be questioned. Hence the cooperation of all stakeholders is the answer, and tax subsidies and incentives to businesses supporting civil society is the way to go. Viable solutions come as a result of dia- logue among key actors from all three sectors. I believe that in Serbia we still lack broader dialogue on the need of balance among the three pillars of every modern society (public, private and civil). What would be your message to foreign investors – whether and why they should invest in Serbia? Čedomir Živković: My message to foreign investors is that they shouldn’t have any dilemmas - we will be able to answer any qu- estion regarding investment conditions and incentives at any time, at least a few minutes faster than our competitors, other cities and municipalities in Serbia. Vršac introduced corporate approach to resolving problems and provision of public services, motivating Čedomir Živković, Mayor of Vršac There is no success without cooperation of all three sectors of the society Miroslav Miletić, Bambi Banat CEO / member of NALED MB We all share the same local problems From the perspective of private, public and civil sector
  23. 23. 23june 2013 | us to always be unique and one step ahead of others. So far we’ve managed to do that, and we achieved exceptional success in pharma- ceutical industry. Miroslav Miletić: I would most certainly advise foreign investors to invest in my co- untry, not only for patriotic reasons, but also because of firm and tested belief that Serbia has significant competitive advantages in relation to the region. This primarily refers to the environment, potentials and people, and also the proverbial vitality of our people, especially in the times of difficulties and crisis, that can be witnessed nowadays or in the nineties, when many other economies and communities would not endure what we went through. Gordan Velev: I believe that in Serbia they can find hard-working and educated people, ready to respond to the most-demanding requirements of employers and investors. The Government is even ready to offer incentives to new investors who decide to locate in Serbia. I firmly believe in the European perspective of Serbia, which also means stability, sought by every investor. At the same time, my message to all investors would be to develop a socially responsible program, since people would respect and appreciate such a business more than those solely marching towards profit. In what manner could mu- nicipalities, businesses and CSOs improve their coopera- tion in order to encourage the growth of local economy? Čedomir Živković: I believe the answer is in thinking in a completely different and new manner, seeing each other as local partners, understanding that success comes only if we work together. The three sectors should per- ceive that they are the pillars of sustainable development that can significantly contribute to overall development of local community in the long run. New times in the global market require a shift in thinking and completely new approach to resolving problems. Miroslav Miletić: Improving cooperation among municipalities, businesses and CSOs is reflected primarily in strengthening the awareness in local environments that they all belong to the same community, sharing the same local, primarily utility problems and issues. Their belonging to one of the three sectors should come as secondary important. Raising awareness leads to more efficient execution of specific goals in each area. And better execution of plans and goals strengthens the trust and satisfaction with personal and business environment. Gordan Velev: My answer here leans onto the previous question. Economic and overall social progress is not possible without the dialogue and agreement of all three sectors in our society. Civil society in Serbia can offer its expertise and experience in resol- ving many issues seen in local communities throughout the country. For example, the new Law on Social Protection gives an opportunity for civil society organizations to be involved in the process of social service provision, which cannot be provided by the existing state institutions in an efficient manner. Public-private partnerships and involvement of civil society organizations would bring efficient services to citizens, which is much cheaper than having the state start its own service or department, and civil society organization would be much closer to the sustainable financing model... On the other hand, CSOs often collect funds and use them for grants to assist starting of busi- ness for the poorest citizens or to encourage them to establish clusters and associations. This is an area where private sector can also recognize a window of opportunity. In partnership with the civil society, businesses can multiply the effects of awarded grants, and get reliable partners. At the same time, CSOs are a hub of innovative ideas in the field of public administration reform and multi-sector partnerships. These ideas can help the state become more efficient, but al- so motivate private sector to develop socially responsible perspective in its operations. What is your message to other triangle interviewees (representatives of private and civil sector)? Čedomir Živković: As stated before, partner- ship is definitely the key to success. It is important to make the first step, and we must be ready and willing to listen to the other side and understand their needs. In Vršac we are developing the image of a proactive local government, which is comple- tely opposite to how citizens of Serbia have seen the local officials and administration employees so far. I would also state that they would find a long-term and reliable partner in Vršac. Our slogan – now widely accepted even though it was initially conceived as the promotional slogan of the first Industrial Technological Park in Serbia: Innovation, Teamwork, Partnership – only con- firms this attitude. Miroslav Miletić: All other participants should follow the stated triangle selflessly, free of egoism and vanity. Vanity is a noto- rious trait of Serbian character and a major constraint of our development. It is no wonder our people often say that the hardest growing seed in Serbia is SUCCESS! Gordan Velev: I wish them all the success in their work. Gordan Velev, GRoup 484 We should help each other more Čedomir Živković, Miroslav Miletić and Gordan Velev
  24. 24. 24 Synergy Although we walked up and down the whole factory, the milk, in its raw form, freshly arrived from the farms, was nowhere to be seen. When you are visiting the largest factory of milk and dairy products in Serbia, you would expect to see it all around. „But where is the milk?” was the first question we asked the employees in Imlek production facilities. „In order to get adequate product quality, it is crucial that during the entire production process, starting from primary production of raw milk, through transport from the farms and until it gets to the final consumer, the so-called “cold chain” never gets interrupted. This is why one cannot see the raw milk. Once it is milked out of cows, until it gets into the final packaging, the milk practically never leaves the machines. This way we ensure premium quality of the final product” explained Srđan Popović, Marketing Director in Imlek. For this reason, Imlek provides retail facilities with cooling cabinets where their products are stored and displayed. Since the cows are milked on farms in the morning and evening, the milk factory also performs morning and evening receipt of milk. Raw milk is transported from the farms in special thermo stable tanks and immediately analyzed. Some of the analyses performed refer to the temperature, pre- venting further development of microorga- nisms in milk, presence of antibiotics as an important factor of production process, milk fat content, acidity of milk and finally total number of bacteria. Each round of delivered Dairy plant where no milk can be seen After it is milked out of cows, until it gets into final packaging, the milk does not leave the machines. This ensures premium quality of the final product. businesses Visiting Imlek
  25. 25. 25june 2013 | Present throughout the region Imlek is a group operating through a network of affiliates throughout the region, including AD Imlek Beograd, Imlek Boka in Montenegro, AD IMB dairy in Bitola, Macedonia, and Mljekoprodukt operating in Kozarska Dubica in Bosnia and Herzegovina. In line with their regional expansion policy, the company is proud of its highly-educated workforce, investing its knowledge and modern technology into continuous improvement of the production pro- cess, thus setting new standards and challenges for their competitors. Favorite domestic brand Imlek’s brand “Moja kravica” (“My little cow”) has received a number of prestigious awards, the most important certainly being – “Favorite domestic brand”. The title, awarded by the consumers within the competition entitled “Moj izbor” (“My choice”) organized by association “Moja Srbija” (“My Serbia”), went to Imlek brand in 2010 and 2012. Moreover, for three years in a row, Imlek was top ranking in the category “milk and dairy products”. milk comes with a quality certificate, guara- nteeing that all products are safe. The majority of company employees work in production. The company operates in three shifts, 24 hours a day, 365 days a year. In one shift, we saw nearly 70 workers. They worked quickly and skillfully. It was obvious at a glance that they are a well-trained team. In more than one decade, the many of them have been working for the company, they learnt the job, gained routine and now they can easily “shoot out” several thousand product items in only one shift. Still, all of this could not be possible without Imlek’s farmers. They are one of the most important links in the chain, keeping this company on top in the area of milk producti- on and processing. Imlek invested more than EUR 50 million into farm development and improvement of raw milk quality and capacity. Investments into production facilities, tran- sport and logistics also reached tens of millions EUR. Imlek also continuously imports heifers for farmers.
  26. 26. 26 Synergy All eyes in Kosjerić are turned to Titan, with the entire local economy and standard of citizens depending on their operations. Fortunately, this company has never ceased developing and investing into local community, ever since it was founded in 1976. Kosjerić cement factory was among the first in Serbia to successfully pass the privatization process and since 2002 it has been operating within Titan Group, interna- tional cement producer. So far, Titan Group invested more than EUR 50 million into envi- ronmental protection, occupational health and safety, production technology and local community. Current production capacities of 750,000 tons of cement a year are sufficient to supply a significant part of Serbian and Montenegrin market. In spite of lower sales of cement due to the crisis, Kosjerić plant still invests significant funds in improving the production process and into its employees, since, as they like to say in Titan, employees are their most important resource. Occupational health and safety has been set as a priority and preco- ndition of employment. Socially responsible approach has earned Titan the OHSAS 18001 certificate. Commitment to the community and business success was recognized in the professional circles – in 2009, they were awarded the Business Leader of the Year prize by Ekonom:east media group. In 2011, the plant invested more than EUR 615,000 in the local community, 85% of this amount going to the municipal budget, and the rest to local clubs, schools, cultural institu- tions and for other activities contributing to higher living standard. Also, in 2011 Titan decided to transfer to the local government one of its properties – the sports-recreational According to the Statistical Office of the Republic of Serbia, over the previous years Kosjerić has been among the top five municipalities with highest average salaries. This high- ranking position is certainly thanks to the local giant – Titan cement plant, absorbing almost a quarter of available work force in this little town in West Serbia Driving power of kosjerić bUsINesses E 75 E 75 E 75 E 70
  27. 27. 27june 2013 | the first ones to obtain an integrated permit Cement plant in Kosjerić was the first company in Serbia to receive the integrated permit (IPPC), proving that they use the best technology and that their products are made by the highest ecology standards applying both to Serbia and the European Union. The permit re- gulates the work conditions in the plant and prescribes maximum levels of harmful ma- terial they can reach in the production process without endangering the environment. The main principles of integrated pollution prevention and control are stopping or reducing the emission at the very source of pollution, cutting the use of non-renewable natural resources and energy, reducing the waste and minimizing the risk to health, envi- ronment and material goods. The certificate means additional investments into reconstructi- on of existing facilities, and since 2002, Titan has allocated EUR 15 million for this purpose. In Serbia, there are 177 companies in total that need to obtain the integrated permit. center involving two soccer fields, indoor sports hall and olympic pool. And what do citizens think about all of this? Thanks to Titan, Kosjerić is among the econo- mically most developed municipalities of We- stern Serbia. Unfortunately, the benefits of high salaries are only enjoyed by those who are fortunate enough to be hired by Titan. Undeveloped SME sector and other industries le- ave three quarters (75%) of working population with no alternative for employment. Local government is there- fore expected to find new ways to encourage local economic growth, through well planned socially responsible work in cooperation with Titan. This area is famous for its domestic rakija (brandy) with denominati- on of origin, as well as plums and raspberries representing the primary or additional source of income for all unemployed or low income families. Likewise, there is a lot of potential for rural development, country tourism, handi- crafts and healthy food. It is exactly Titan that locals perceive as a strong pillar of further development that can and in their mind, should, support all that is good, unique and authentically branded by Kosjerić. Locals will also tell it could be little Norway down there, although they suspect it would take a lot of hard work, just like some of them already do in the cement plant. Titan cement plant: responsible to local community the first ones to obtain an integrated permit Cement plant in Kosjerić was the first company in Serbia to receive the integrated permit (IPPC), proving that they use the best technology and that their products are made by the highest ecology standards applying both to Serbia and the European Union. The permit re- gulates the work conditions in the plant and prescribes maximum levels of harmful ma- terial they can reach in the production process without endangering the environment. The main principles of integrated pollution prevention and control are stopping or reducing the emission at the very source of pollution, cutting the use of non-renewable natural resources and energy, reducing the waste and minimizing the risk to health, envi- ronment and material goods. The certificate means additional investments into reconstructi- on of existing facilities, and since 2002, Titan has allocated EUR 15 million for this purpose. In Serbia, there are 177 companies in total that need to obtain the integrated permit. stern Serbia. Unfortunately, the benefits of high salaries are only enjoyed by those who are fortunate enough to be hired by Titan. Undeveloped SME sector and other industries le- ave three quarters (75%) of working population with no alternative for employment. Local government is there- fore expected to find new ways to encourage local economic growth, through well planned socially responsible work in E 75 E 75 E 70 E 75 E 75 E 70 kOsJeRIĆ 750 thousand tons of cement a year supplies a significant part of markets in Serbia and Montenegro
  28. 28. The beginning of 2013 was marked by the lack of reform results the Government of Serbia has been promising during the last two quarters of the previous year. These reforms were supposed to simplify the procedures, lower the cost of doing business and increase the legal certainty, so businesses and citizens are eager to see them come to life. While some of the adopted laws are waiting to come into force, and others are in the draft phase, most important reforms de- pend on regulations which are still in the initial phase of preparation. We hope that the Serbian Government will realize at least a part of the promises in the following quarter of this year. The Government slowed down the activities on elimination of para-fiscal charges, as well as the work on implementing recommenda- tions from the Grey Book and CRR. „De- agencification” stopped upon dissolution of several widely-known authorities that even had some relevant work to do. This reform was supposed to be comprehensive. For start, a list of all companies founded directly or indirectly by the State should have been prepared and presented to the public. We are certain that the Government itself would spot on the list a lot of companies who could be closed down, bringing major effects on the budget without the risks of legal gaps. In short, regulatory activity in the first quarter included the following: Starting from April 1st the new Law on Public Procurement has come into force. The Law should increase the efficiency of the public procurement procedures, and ensure transpa- rency of public procurements through efficient use of public procurement portal. The amount of fees needs to be proporti- onal to the costs of public service provision – in February 2013 a new Regulation on methodology and manner of determining expenses of public service provision was adopted, aiming to reduce the amount of fees to the real cost of service provided. Full No results of promised reforms The Government has slowed down the activities on elimi- nation of para-fiscal charges, as well as the work on imple- menting the initiatives from the Grey Book and CRR (Comprehensive Regulatory Reform) recommendations. „De-agencification” stopped upon dissolution of several widely-known authorities legislative framework Report on the status of reforms Grey Book As for the Grey Book recommendations for cutting the red tape, since the year beginning, the most active was the Ministry of Energy and Environment Protection that adopted or proposed to the Government a larger number of by-laws. Some of the adopted by-laws concern the conditions and procedures for acquiring the status of privileged electricity producer, and regulate the incentives for production of elec- tricity from renewable energy sources, as well as the amount of special incentive for 2013. By amending the Law on Corporate Income Tax, the Ministry of Finance and Economy eliminated the obligation of submitting annual financial report to several different places. By amending the Regulation on the form and content of registration form for VAT taxpayers, this Ministry also partially resolved the pro- blem of inconsistent practice of submitting the VAT form. Ministries and other responsible institutions haven’t made any pro- gress regarding 56 initiatives for improving the regulations. Respon- sible ministries did not even consider two very important, systemic initiatives from the Grey Book V – to eliminate employment record books and health insurance cards. The Ministry of Health has not taken any steps to resolve the huge problem of complicated proce- dure for verification of health insurance card. Additionally, no steps were made to ease the procedure of registration and deregistration of entrepreneurs to RHIF in case they move the head office to a different municipality. A commendable fact is that in this quarter a short, but important amendment to the Trade Law was adopted. Erasing Article 45 of the Law eliminated unnecessary administrative obstacle for new large retail chains to enter our market, thus enabling improvement of the market competition. 28 Synergy
  29. 29. implementation of the Regulation should have started on April 30, 2013 so we will evaluate the effects of these new measures in the future. Some simple recommendations of the busi- nesses are still waiting to be adopted: • Ministry of Finance has not abolished the ad- ministrative fees in procedures with Republic Geodetic Authority (GDA), so the parties are still paying two fees for the same procedure (fee to RGA and republic administrative fee). • Ministry of Health has not taken any steps to resolve the huge problem of complicated pro- cedure for verification of health insurance card, that makes 50% of businesses fail to verify health insurance cards for their employees on the first attempt. • Tax Administration did not react to the initia- tive to harmonize their working hours with the needs of clients. Draft Law on Fees for Use of Public Resources has sparked strong reactions among businesses and local governments, so the Ministry of Finance will have to carefully review the basis, rates and distribution of these fees. In spite of numerous objections and initiatives businesses have made to amend the Labor Law, it has remained unchanged since 2005 – for full eight years. For this reason, employers avoid hiring workers who “bear the burden of severance pay” – older unemployed workers. After the termination of the Law on Environ- mental Protection Fund in September 2012, the manner of awarding incentives for environ- ment protection and jurisdiction over this matter was left unregulated, so the regulatory oversight fell at the burden of businesses. Whether the Law on Deadlines for Settling Financial Obligations in Commercial Transa- ctions will have positive effects on the liquidity of Serbian businesses, remains to be deter- mined in the following period, bearing in mind that this regulation has come into force recently (in April). We have no doubt that the Government of RS is conducting reforms with the best intention to ease the operations of businesses and to attract new investments into Serbia. What Serbia certainly needs is acceleration of esse- ntial reforms and synchronization of their implementation. However, the pace of these reforms must not negatively affect their qua- lity. The implementation of reforms should take into account previously accepted RIA methodology which involves public debates and considers the reasonable suggestions made by the businesses, in order to reduce unpleasant reform surprises to a minimum. Additionally, practicing changed regulation is of crucial importance for the reform success. Shorter procedures are not always easier to implement. Unless the reform is implemented Helped the pregnant women, no assistance for new mothers NALED initiative to simplify the procedure for exercising the right to pregnancy reimbur- sement fee resulted in simplification of this procedure in practice (the number of requi- red documents was cut down by 2/3) so the Ministry of Health can take pride in acting upon this initiative. However, the Ministry of Labor, Employment and Social Policy has not taken any steps to ease the procedure for the same pregnant woman when she delivers the baby, to exercise her right for reimbursement during maternity leave. Key recommendations are still out of Government’s focus Resolving some of the key problems hinde- ring business is still out of Government’s focus, probably due to their estimated effects on the republic budget (e.g. redu- ction of contributions for compulsory social security). Simplifying the procedures with republic authorities such as Republic Health Insurance Fund (RHIF) and Republic Geode- tic Authority (RGA) has still not contributed to acceleration of individual procedures... 29june 2013 | by some new authority, the changed proce- dures are conducted by the same people, so the expected reform effects are often not there due to its bad implementation.
  30. 30. 30 Whether and to what extent can a certain law be implemented in practice often depends on the adoption of required accompanying regula- tions (decrees, decisions or rulebooks). In order to stimulate the responsible institu- tions to action and make their work more transparent, NALED developed the By-Law Barometer – the first online system for mo- nitoring the dynamics of adopting by-laws relevant for economic development. The Barometer monitors the progress that the Government of Serbia, ministries and independent regulatory authorities make in adopting 362 by-laws related to 27 systemic laws which regulate business environment in Serbia and directly influence the compe- titiveness of domestic businesses. Unlike the data on execution of Government’s Legislation Program, which is mostly classified, the Barometer is available to the broader public via the Internet at the address barometar.naled-serbia.org. According to the Barometer, average delay in adopting by-laws compared to the de- adline given by the Law reaches 615 days. This means that on average, regulations or rulebooks in Serbia are one year and eight months late! DYNamICs Of bY-law aDOpTION NUmbeR Of DaYs Average delay for non-adopted 615 The greatest delay 1,120 Fastest adopted 10 (after the adoption of Law) Slowest adopted 861 (after deadline) Average delay for adopted 175 barometar.naled-serbia.org legIslaTIve fRamewORk Why some prosaic activity such as paying income tax and contri- butions is worth full attention of both local governments and businesses? Income tax is paid at a 10% rate while the first RSD 11,000 is tax-exempted. Cities and municipalities are entitled to 80% of collected funds and the remaining 20% goes to the state budget. Tax revenues are not filling the budget of the local government where the compa- ny operates, but where the employees have residence. The obligation of distributing wage taxes to the accounts of individual municipa- lities where the employees reside falls at the burden of the employer. The bigger a compa- ny, the more chance is that the employees are residents of a larger number of municipalities. To make it even more complicated, the health insurance contributions are paid to the regio- nal health centers, and pension contributions according to the seat office of the company. Payment of wage taxes and contributions is a nightmare for businesses, repeating itself month by month, even when they have the funds for payment. According to the analysis of Foundation for the Advancement of Econo- mics (FREN) which used the Standard Cost Model, the distribution of taxes and contri- butions to separate accounts costs more than RSD 440 million per year. The research also showed that businesses would save more than RSD 570 million a year if there was a possibi- lity of submitting a joint form for wage taxes and contributions via the Internet. Either way of delayed regulations days615 30 the data on execution of Government’s In the next issue: find out who is most efficient in adopting by-laws and who hits the bottom of the list among the ministries, as well as what by-laws are recorders in delay and who is in charge for that. missing regulations cost us millions of euros The Cinema Law, which was adopted in January 2012, prescribed adoption of four by-laws, including the Regulation on the film industry incentives. In early 2013, these regulations were running late for more than 170 days. The implications of this delay are shown in the analysis of the Serbian Film Commission – the delay in adopting the regulation on encouraging foreign cinematographic works in Serbia led to a situation where our country lost EUR 100 million of direct investments in the past three years! Synergy

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