ISSN 2334-8593
NO. 2 | OCTOBER 2013.

BUSINESS JOURNAL OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT



FREE COP...
IMPRESSUM

VRŠAC

WORD FROM EDITOR

DIRECTOR
Violeta Jovanović / violeta_jovanovic@naled-serbia.org
EDITOR IN-CHIEF	
Milic...
THEME OF THIS EDITION

Zoran Perišić, Mayor of Niš and member of NALED Supervisory Board

W

e live in a country where rap...
NEWS

A front against
shadow economy
What is the cost of chocolate sold off car
hoods, who pays half or the entire salary ...
NEWS

News from NALED

The first regional network for a
business friendly environment

“Ask WHEN” is back!
Starting from f...
NEWS

News from NALED

Local Economic Development Experts Forum

45 open-air gyms for the most
active municipalities

Afte...
CONSTRUCTION WORK(S)

On the spot

The third large investment
IN ODŽACI

construction

ork(s)

Most significant investment...
SERVICE INFORMATION

Market, funds and scholarships

(DIS)COUNT ON GOOD THINGS
Use beneficial terms of purchase or nominat...
IN SYNERGY

Business Friendly Environment

The first eight Business Friendly certificates awarded to
municipalities of Sou...
IN SYNERGY
Development, Entrepreneurship and Crafts
of Federation of BH Sanjin Halimović, State
Secretary in the Ministry ...
IN SYNERGY

Marinko Ukropina, Managing Director of SGS for the region
and member of NALED Executive Board

12 criteria of ...
IN SYNERGY

Branislav Bugarski, Provincial Secretariat for Inter-Regional Cooperation and Local Government

Investments is...
IN SYNERGY

Aleksandar Nikolić, Local Economic Development Coordinator, NALED

SERBIA
opens the door to the
M
EAST

Our co...
IN SYNERGY

Dr Hans Estermann, NALED Strategic Development Advisor

How Berlin and Dortmund
regained their power
Successfu...
A TALK WITH...

Saša Radulović, Minister of Economy

Domestic companies will be the

basis of our development
A
prominent ...
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Business journal Synergy, 2nd edition
Upcoming SlideShare
Loading in …5
×

Business journal Synergy, 2nd edition

1,871 views

Published on

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.

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,871
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Business journal Synergy, 2nd edition

  1. 1. ISSN 2334-8593 NO. 2 | OCTOBER 2013. BUSINESS JOURNAL OF THE NATIONAL ALLIANCE FOR LOCAL ECONOMIC DEVELOPMENT FREE COPY IN SYNERGY Together for investment The first eight certificates awarded to business friendly municipalities in South East Europe page 16 A TALK WITH SAŠA RADULOVIĆ The Minister's Priorities Regulatory reform, resolving the public debt, burden, cutting income tax and creating better conditions for SMEs - these are the strategic priorities page 28 PARTNERS FOR SUCCESS Europe's Locomotive Germany is the world’s fourth economic power after the USA, China and Japan. What is the secret of its success? IN FOCUS Business Friendly Environment page 70 WWW.NALED-SERBIA.ORG
  2. 2. IMPRESSUM VRŠAC WORD FROM EDITOR 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 Zoran Zarković / zoran_zarkovic@naled-serbia.org CONTRIBUTORS Jelena Bojović, Milica Mandić, Jovana Ćirić, Daniela Dodig, Aleksandar Nikolić, Marko Marić, Slobodan Krstović, Hans Estermann, Miloš Damjanović ADVERTISING Milica Mandić / milica_mandic@naled-serbia.org PRINT BiroGRAF The contents of this publication may be used only when quoting the source of information “SYNERGY – NALED’s Business Journal” If you wish to receive the printed edition of SYNERGY, please subscribe at www.naled-serbia.org/journal PUBLISHER CIP - Каталогизација у публикацији Народна библиотека Србије, Београд 33 Expose by 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 SYNERGY : business journal of the National Alliance for Local Economic Development / editor in chief Milica Stefanović. - 2013, no. 1 (june)- . Belgrade (30/VII Makedonska street) : Expose, 2013- ([Belgrade] : Birograf ). - 27 cm Tromesečno. - Ima izdanje na drugom jeziku: Sinergija = ISSN 2334-8402 ISSN 2334-8593 = Synergy (Belgrade) COBISS.SR-ID 199587084 E Milica Stefanović Editor-In-Chief very year we ask ourselves and our politicians the same question – when and how will things get better? We have great expectations of others, but others are so difficult to change. Only one thing is definitely under our control to influence – ourselves. So if we are among the lucky ones who work in the private sector we should give our best at work (not just a minimum effort), so that our company can grow and develop, so it can pay regular salaries and taxes to the state to finance our roads, schools, streets, hospitals. If we are lucky enough (or unlucky for that matter) to struggle in the market as entrepreneurs – we should all do business fairly and treat our employees and the state correctly, as only then can we expect fairness in return. And finally, if we are among the minority that has the opportunity and duty to change the business environment for the better, we must set ourselves the highest expectations – to put the common interest above the individual and undertake reforms that may be hard in the beginning but lead to long-term prosperity. With political power comes great responsibility. And a better business environment heralds a better age for all.
  3. 3. THEME OF THIS EDITION Zoran Perišić, Mayor of Niš and member of NALED Supervisory Board W e live in a country where rapid economic growth is one of the strategic goals of both state and local government. To reach this goal, we rely on Serbia’s advantages such as its unique geographic position, rich industrial history and well-developed industrial practice, and on its immense potentials in energy, agriculture and tourism. However, the proof of Serbia as a country with a good investment climate needs to come from us – its local governments. We need to ensure businessfriendly environment for existing businesses and potential investors, which means a well thoughtout, coordinated model of cooperation among all socio-economic stakeholders in the local community. For all of us, the essential task and duty is to reduce Serbia’s unemployment which has reached almost a million people, and to raise the quality of life. We have at our disposal the models of EU countries that are assisting us in our efforts, and their experience that can be used as a foundation for our steps forward. We are aware that there are numerous challenges on the path towards healing the economy in cities and municipalities, and that increasing efficiency in the use of available resources is not so simple. For these reasons, we in NALED designed the Business Friendly Certification Contents programme. This provides clear guidelines for local governments on the steps they must take to improve their investment climate, and shows the environments best suited to starting a business and expanding it by bringing in investors. Local governments are responsible for making this process as efficient and fast as possible. Economic development mechanisms are springing up: new industrial zones and technology parks, public-private partnerships, business incubators and large public investments. But if they are to enhance growth and employment at the local level we must act fast, be well organized and, most importantly, share our experience and best practice examples so we can develop in a balanced manner. Our great potential is also seen in the under-used linkages between academia and business, the cooperation of all sectors of society, their joint involvement in realising strategic priorities and establishing new mechanisms of intersector coordination and cooperation. In this task I see an important role for NALED as the only private-public association connecting businesses, local governments and the civil sector. All of us have ample prospects depending on our local resources, but we have no time for missed opportunities and lack of vision. We must be active in all arenas that affect local economic In Synergy development. I strongly believe that we will manage, with great effort and through well-planned actions and by learning from our mistakes. In a not too distant future we will be waking up each day in our own communities to see newly acquired European features embedded in our local identities. And naturally, we will all be economically empowered to achieve new goals and launch new development efforts. 22. Businesses 6. from News NALED Legislative framework 38. 62. Local government 46. 58.
  4. 4. NEWS A front against shadow economy What is the cost of chocolate sold off car hoods, who pays half or the entire salary in cash and how has shredded tobacco moved from the counter to being hidden below it? What is the harm of such and similar forms of grey and shadow economy? It is 24% of GDP or approximately EUR 7.5 billion of annual turnover outside the law, leaving citizens and businesses deprived of funds for improving the infrastructure and services, encouraging economic development, investing in education and health care. Even more significant consequences entail possible harm to citizens’ health, as well as the loss of a large number of jobs. Bearing in mind that dealing with shadow economy in a long-term crisis should be one of the most urgent items on the agenda of Serbian Government, NALED decided to engage the companies that are most affected by illegal trade of products. Through a media campaign, proposing and advocating for concrete solutions, the newly-established front aims to encourage the Ministers in the Government to adopt systemic measures to suppress the ones that have no intentions of working by the law and to stimulate with incentives the ones that wish to return to legal flows. The interest for joining the campaign was shown so far by Phillip Morris Operations, Japan Tobacco International, Coca-Cola HBC Srbija, NIS, Konsing, Gomex, Stefkom, Bambi, Mondelez... News from NALED NALED Government's indispensable partner NALED needs to become an indispensable and key partner for all future Government cabinets in the implementation of regulatory reform, application of laws and development of local economic development policies. In addition to the issue of organization's sustainability, this has been identified as the key priority by the Alliance management at the annual Board retreat held on 21st August in Belgrade. On this occasion, the management agreed on the recommendations to the new Government for the most important reforms that should be conducted in the period to come. Among other things, NALED’s recommendations include the necessity for Labor Law amendments, improvements to construction permit issuance system, tax administration reform, combating shadow economy, reform of inspections, adoption of Law on Investments and Paperwork Reduction Act. The retreat gathered the members of NALED Managing Board – Vladan Atanasijević, MB President and the Director of Asseco SEE, Ramon Weidinger, MB Vice President and General Manager of Coca-Cola HBC Serbia, Ana Brnabić, MB vice President and Executive Director of Pexim foundation, Bratislav Gašić, MB Vice President and Mayor of Kruševac, Mihailo Janković, General Manager of Knjaz Miloš, Nemanja Delić, Mayor of Sombor, as well as NALED Executive Office management - Violeta Jovanović, Executive Director, Jelena Bojović, Policy Director, Milica Stefanović, Marketing Director, Marko Stanojević, Finance and Administration Director. After the retreat, NALED management hosted a dinner for long-term partners at the restaurant Klub književnika. Illegal charges by institutions The first half of the year did not bring better business conditions as there were no significant effects of actions taken and some of the announced measures were not even adopted. On the other hand, a new problem has emerged, which was first identified by NALED. It is the illegal behavior of institutions, including the Republic Geodetic Authority, Veterinary Directorate and the Commission for Protection of Competition. As determined by NALED, for months these state institutions have been charging fees in their jurisdiction in the amounts that were not approved by the Ministry of Finance. Additionally, the RGA is still illegally charging two fees for a single service, and poor procedure has also been noticed in the Tax Administration, whose branch offices refuse to give the lump tax status to new taxpayers that meet the conditions, and with such practice, the state is imposing an illegal cost for their bookkeeping. NALED presented these findings in public in July, causing severe public reaction to such practice of state institutions, and the Ministry of Finance announced to impose penalties to irresponsible institutions by freezing the payment of their salaries in case they do not acquire appropriate approvals. 6 SYNERGY NET(WORKING) 60 students from Diaspora completed summer internships in Serbia For years, our country has been among the top five in the world by the “brain drain”. The return of young people studying abroad, to apply their knowledge obtained in encouraging local economic development, was the main motive why NALED initiated the project “Meet the State of Serbia”. In July this year, with the support of the Embassy of Switzerland and Telenor foundation, NALED organized the third cycle of summer internship for 23 students from Diaspora who spent three weeks in local governments and companies in 10 cities. with this group, the number of students NALED engaged as summer interns in the previous three years, to familiarize them with the functioning of public and business sector in Serbia, went up to 60. This summer, the closing ceremony was held at the Residence of Embassy of Switzerland, and the hosts were the Ambassador Jean-Daniel Ruch and the President of NALED Managing Board Vladan Atanasijević. In front of numerous representatives of diplomatic corps, mayors and business people, Ambassador Ruch stressed that the students studying abroad are representing Serbia in the countries they live in and can make a significant contribution to the improvement of business and investment climate in Serbia. Sir Paul Judge visits NALED A renowned British businessman and the Chairman of British Serbian Chamber of Commerce Sir Paul Judge visited Serbia in September. On this occasion he met with the Prime Minister Ivica Dačić and they discussed cooperation between the two countries and the improvement of economic relations. During his short stay, his agenda also involved a visit to NALED. The delegation of British Serbian Chamber of Commerce met the Alliance management and the representatives of municipalities Odžaci and Kula. These two municipalities participate in the project Cross Border Cooperation for Investment Promotion (CBC IP), implemented by NALED in cooperation with partner organizations and municipalities from Croatia, and financed by the European Union. The guests from Great Britain were presented with key investment potentials of the two municipalities from West Bačka District, after which Sir Paul Judge expressed his willingness to provide his advice and contacts and assist Kula and Odžaci in defining their offer and approach towards potential investors. october 2013 | 7
  5. 5. NEWS News from NALED The first regional network for a business friendly environment “Ask WHEN” is back! Starting from fourth quarter, the videos humorously presenting some of the biggest administrative problems in Serbia will once again “spin” on the channels of Serbian Broadcasting Corporation (RTS), after NALED and the public broadcaster signed a new Memorandum of Understanding. The agreement means continuation of the joint campaign “Ask WHEN” initiated in June last year, allowing the citizens and businesses to indicate poor bureaucratic procedures hampering their day-to-day life and work, and NALED will tend to resolve them in cooperation with line institutions. Over the previous year, the campaign “Ask WHEN” assisted in resolving a range of problems, most important certainly being the elimination of 138 para-fiscal charges and reduction by 2/3 of paperwork for exercising the right to maternity leave. The Agreement was expanded to broadcasting TV stories on best practice examples in local governments coming from the ranks of NALED members. Additionally, it was agreed that the Alliance and RTS would launch another campaign titled Counter-Meter, to announce the worst counter of the month, based on reports by citizens and businesses. NALED intends to resolve the problem of long lines before counters and unnecessary paperwork requested by the line institutions. Savings from changes to income tax - zero The guillotine of regulations and recommendations from NALED’s Grey Book did not find their way to the Government’s agenda in the second quarter. None of the proposed solutions have been adopted, and no para-fiscal charges were eliminated. On the other hand, the second quarter was marked by amendments to tax laws, the most significant being the new solutions in the law on Individual Income Tax. The tax rate was reduced from 12% to 10% and at the same time, the contributions for social insurance were increased from 22 to 24%. The calculation, which was thoroughly analyzed only by NALED, showed that even though this measure was presented as means of savings for businesses, it practically saves a 8 SYNERGY monthly amount of – zero dinars. These are only some of the key findings of the Report on Regulatory Reform Status in the second quarter, presented by NALED in July. On that occasion, NALED also presented the results of the third cycle of Business opinion survey. It showed that the Government’s anti-crisis package did not receive a passing grade, because 30% of businesses considered it poor, 12% find it good and 35% of companies are not familiar with it. In the second quarter, the businesses were more pessimistic than in the first three months. The share of businesses that expect a reduction in their revenues was increased by 10% (from 34% to 44%). There were more businesses expecting lower investments – a 5% increase (33%), and a 2% increase among companies finding there will be a decline in employment (25%). The quickest way to a building permit In Serbia, obtaining a construction permit takes up 269 days on average. Public enterprises and the sector laws they work by, are one of the main obstacles to increasing the efficiency in the process of issuing construction permits. This, as well as other problems, resulted in Serbia being ranked 179 within World Bank's Doing Business Report in terms of dealing with construction permits, out of a total of 185 countries. One of the most commonly stated solutions is to deny the decision-making power to public enterprises so that they are not able to slow down or stop the process. They should, however, still be in charge of providing construction paperwork that falls under their jurisdiction. Regarding this matter, NALED, in cooperation with USAID Business Enabling Project, organized round tables with representatives of local electricity supply operators and utility companies for water management and sewerage. The two well-attended meetings discussed the Concept of reform of construction permitting procedure, recommending introduction of one-stop shops in municipalities, for investors to complete all steps towards a construction permit. Additionally, there is a need for introducing a comprehensive IT system for monitoring the flow of each individual request, resolving land property-legal issues, simplifying the process of planning documents adoption. As usual, we have the answer to the question HOW. What remains is the famous WHEN? Until we receive the answer and a solution from the line institutions, we will keep watching the reality show Building a factory, on Serbian Broadcasting Service (RTS) and observing it in everyday life. Action plans for the eight best PPP ideas as soon as next year, through public-private partnerships, eight local governments could attract EUR 19 million worth of investments. The projects submitted by Niš, Zrenjanin, Nova Varoš, Doljevac, Raška, Kanjiža, Tutin and Prijepolje have been selected as the best within the competition “PPP as development potential” implemented by NALED with the support of USAID Sustainable Local Development Project. These local governments have already been visited by consulting teams involving lawyers, economists and bankers who will be assisting in turning these ideas into specific action plans. In November, NALED will organize an investors' conference, where the top eight projects will be presented to investors. The municipalities have proposed a large variety of ideas. Nova Varoš wishes to develop a cogeneration biomass plant through PPP, Kanjiža and Doljevac intend to construct large logistical-distribution centers for trade in agriculture products, while Zrenjanin strives to enrich its touristic offer by finding a partner to invest in the development of Rusanda Spa. The municipality of Prijepolje plans to build a regional freezer storage for local produce, Tutin develops a project for collection and processing of forest fruits and medicinal herbs, Niš wishes to invest into a manufacturing-educational wine-fruit facility, and the municipality of Raška wants a recycling yard. A total of 29 project ideas were submitted at the competition ran by NALED and USAID and 32 local governments were entitled to participate. In late September, at the II international municipal fair in Rijeka (NEXPO 2013), the institutions from Croatia, Serbia, Macedonia and Bosnia and Herzegovina (BH) signed a Memorandum of Understanding on establishing the Regional Network for Business Friendly Environment in South East Europe – the first regional institution to be in charge of improving and harmonizing the business conditions and investment promotion in these four countries. The regional network was formed by partner organizations participating in the project Business Friendly Certification South East Europe (BFC SEE) – NALED, Center for local economic development of the Faculty of Economics in Rijeka, Local Economic Development Network of the Federation of BH, headed by the Federal Ministry of Development, Entrepreneurship and Crafts, Local Economic Development Network of the Republic of Srpska, headed by Ministry of Economic Relations and Regional Cooperation, as well as the Association of the Units of Local Governments (ZELS) and Macedonian Chambers of Commerce (MCC). Hereby, the President of NALED Managing Board Vladan Atanasijević expressed satisfaction for having NALED’s certification program, as a best practice example from Serbia, acknowledged in the region as well. The mayors of certified municipalities are satisfied as well. “Since 2010 when we first obtained the certificate, the municipality of Ruma has attracted three times more investments than in the previous period, when we were not certified”, said the Mayor of Ruma Goran Vuković. The establishment of Regional network and joint fair appearance of the first certified municipalities from South East Europe was supported by the German Government via GIZ Open Regional Fund for Modernization for Municipal Services. october 2013 | 9
  6. 6. NEWS News from NALED Local Economic Development Experts Forum 45 open-air gyms for the most active municipalities After two and a half years of successful work, NALED’s Local Economic Development Offices Network transitioned into the Local Economic Development Experts Forum. “It is a mechanism for efficient networking of professionals working in local administration in the fields of business support, investment promotion and project preparation. It is important that we learn from each other, to replicate successful solutions from one municipality in another, to improve our communication with businesses, national institutions and donors” said Olivera Subotić, Head of LED Department in the City Administration of Pančevo and the first President of LED Experts Forum. Milan Ranđelović, Forum Vice President and the Head of LED Office of the City of Niš added: “If doctors, accountants and lawyers have their bars and their professional associations provide results in the affirmation of profession, can LED Forum assist in the acknowledgement of the role and significance of LED Offices and primarily the recognition of professionals dealing with LED in local governments? I truly believe that it can and I invite all involved in LED to take active engagement in the work of NALED’s LED Experts Forum”. According to him, one of the main challenges facing the Forum is for it to establish itself as a partner and interlocutor to various institutions creating the business environment and influencing the local economic development, such as the Ministry of Economy, Ministry of Finance, Ministry of Regional Development and Local Government, national institutions (SIEPA, NARD), donors and many others. On the occasion of marking 45 years since the production of the first bottle of popular sparkling beverage in Serbia, the company Coca-Cola Hellenic, in cooperation with NALED, the Ministry of Regional Development and Local Government and the Ministry of Youth and Sport, organized a competition for the construction of 45 active zones – open-air gyms in cities and municipalities all across Serbia. During two months of competition, Coca Cola received approximately 1.7 million votes of citizens who wished to support their municipality! Particularly large interest and rivalry was seen among small municipalities, where Bela Palanka and Babušnica fought until the very end for the first place. On 1st August, the organizers calculated the votes and declared 45 municipalities to receive an open-air gym. Already in September, the Minister of Youth and Sport Vanja Udovičić, the Mayor of Pančevo Pavle Radanov, Operations Manager of Coca-Cola system Dimitar Andonov and the Director of SGS and member of NALED Executive Board Marinko Ukropina, cut the ribbon at the opening ceremony for the first active zone in Pančevo. By the end of the year, another 9 open-air gyms will be opened, and the remaining 35 by May 2014. No great decrease in local revenues At the working luncheon with NALED members, the Minister of Regional Development and Local Government Igor Mirović presented the programs and measures of the reformed Government to encourage economic development on local and regional levels. In his words, the municipalities should not fear the announced tax reform because the reduction of wage tax will not cause significant reduction of local revenues. The Ministry is currently working on drafting the National Strategy of Regional Development and on creating the conditions for the use of IPA funds. The Minister announced the initiative for listing the major infrastructural and regional projects to be implemented with a long-term plan and that will not depend on the change of government. The Minister 10 SYNERGY stated the priority projects were the cleaning of Great Bačka Canal, highway Pojate-Preljina, highway Novi Sad-Ruma. He announced an open call for infrastructure development in industrial zones, to be conducted next year. The Vice President of NALED Managing Board and the Mayor of Kruševac, Bratislav Gašić, appealed to the Ministry to support the Business Friendly Certification program and certified municipalities, that should be given an advantage in open calls for economic development incentives, bearing in mind their proven capacities and potentials. “Certified municipalities serve as a success model and a best practice example to other local governments. Certification is a good process and it should be supported” the Minister concluded. Eight municipalities received the national Business Friendly Certificate The third quarter of this year started with good news that the business friendly territory in Serbia was expanding. Another eight local governments obtained NALED's Certificate. A particular success was the fact that Loznica and Kragujevac were the first cities to successfully pass the recertification process, proving that they strongly believe in the advantages of going through the process of obtaining the Certificate. At the ceremony held at the National Assembly of Serbia, the officials of Kovačica, Kula, Nova Varoš, Odžaci, Sombor and Vršac received this recognition for the first time. The Certificates, proving that local governments have efficient and transparent administration, partner relations with the existing businesses and all preconditions for the arrival of new investors, were awarded by then-Deputy Prime Minister for European integration Suzana Grubješić. The ceremony was opened by the President of NALED MB Vladan Atanasijević, and the participants in the panel dedicated to solutions for improving the business conditions in Serbia were Dragovan Milićević, State Secretary in the Ministry of Foreign and Internal Trade and Telecommunication, Michael Hasenau, Deputy Ambassador of Germany to Serbia, Howard Ockman, Director of USAID Sustainable Local Development Project, Alexis Lope-Bello, General Manager of Comtrade, Slobodan Petrović, General Manager of Imlek, Alexandros Daniilidis, General Manager of Heineken Serbia and Toplica Spasojević, Vice-President of NALED Advisory Board. october 2013 | 11
  7. 7. CONSTRUCTION WORK(S) On the spot The third large investment IN ODŽACI construction ork(s) Most significant investments in the 3rd quarter of 2013 Source: eKapija, Bizlife The factory currently employs 314 workers and by the end of next year there will be a total of 450 employees A fter Greiner Packaging and Standardgas, the municipality of Odžaci is richer by another new investment – on 2nd October, Magna Seating officially opened its factory of car upholstery and other car seats components, which was enough to shift this until-recently asleep municipality from the category of under-developed to the ranks of developed local governments. Magna moved its facility to Odžaci from Czech Republic, and the entire production is intended for international market. As much as 4 million vehicles of well-known global manufacturers such as Smart, Renault and Ford are equipped with this company’s seats. So far, they have invested EUR 5.5 million into the production facility of 4,300 m² in Odžaci industrial zone, and the planned investment is ten times bigger. The municipality gave 2.5 ha of construction land without compensation, entirely equipped industrial zone with all infrastructure lines and ensured fast issuance of all necessary permits. The factory currently employs 314 people and by the end of 2014 it will have a total of 450 workers. All employees in Magna attended special training in order to ensure maximum flexibility and efficiency of the production process. This training is an additional investment by Magna, to assist in the development of local labor force and adaptation to the needs of automotive industry. According to the Plant Manager Zoran Sokolović, Magna was looking for a favorable location to expand its business in South East Europe and they found it in Odžaci: “We worked together with the Government of Serbia, Government of AP Vojvodina, municipality of Odžaci and Canadian Ambassador in order to create the required conditions for this investment. For example, the municipality provided many benefits in the recently established industrial zone and they assisted with Magna seats are used by Smart, Renault and Ford 12 SINERGIJA » Magna Seating opened a plant in Odžaci for manufacturing Zoran Sokolović, Director and Plant Manager of Magna the development of infrastructure, such as the access road. The availability of site for constructing the factory, the qualified labor force at low price, developed infrastructure, geographic location – these were the reasons we opted for Serbia and Odžaci.” Magna Seating is part of Magna International that has factories in 29 countries in the world and hires 123,000 people. upholstery for car seats. The total expected amount of investment is EUR 5.5 million, and the number of new jobs will be 750. » Petroleum Industry of Serbia (NIS) initiated the construction of the first wind farm in Serbia in Plandište. Investment value: EUR 160 million. » Johnson Electric starts the construction of factory in Niš. Inves tment value: approximately EUR 20 mil. Jobs for 1,000 workers. » German company Fresenius Medical Care started building a new factory in Vršac. Investment value is EUR 16 million will result in 429 new jobs. » The U.S. Cooper Standard invests EUR 6 million into new production facilities in Sremska Mitrovica. The first phase will bring jobs for 580 people and another 300 jobs will be created in the second. » Dutch company Royal Agrifirm group bought 35% of domestic company Sto posto. The investment value in the following three years will be EUR 30 million. » Cablex opened a new factory in Platičevo near Ruma. Investment value: EUR 2 million. » Cico Collection opened a new factory for jeans manufacturing in Zrenjanin. Investment value: EUR 3 million. By 2017 there will be 1,500 new jobs. » BIM-tex invested EUR 1.4 million in Leskovac, for a new cotton yarn production facility. » Construction of waste water processing facility initiated in Leskovac. Investment value: EUR 22 million. » German company Leoni started building a second factory in Serbia, in Doljevac, to employ 1,500 people. Expected investments in 2013/14 » Michelin to build a facility in Pirot. Investment value is EUR 170 million, jobs for 700 workers. » Swarovski starts its construction in Subotica by the end of the year. The investment value in the first phase will be EUR 15 million, 100 new jobs. » MK Group starts sugar production in Pećinci, in January 2014. The value of new facility will be EUR 20 million. » Falkensteiner Michaeler Tourism Group invests EUR 30 million in Stara Planina mountain. » Šid to receive a cargo center on 120 ha. Investment value: EUR 120 million. Jobs for 100 workers. » Construction of new facilities of Italian Lames Group, German Bauchemie and Lebanese VVT soon to be initiated in Sremska Mitrovica. » Company Gorenje plans new investments through a joint venture with the Government of Serbia in factories in Zaječar, Valjevo and Stara Pazova. Jobs for 700 people in the next 3 years. » Turkish textile company Jeanci Serbia will hire approximately 500 new workers in Leskovac by the end of the year. » German Grammer opens a new factory in Aleksinac. 520 new jobs by the end of 2014. » Geox acquired land in Vranje to construct a 20,000 m2 factory. Jobs for 1,250 workers. » Takata arrives to Serbia – the airbag production company will hire 1,000 people. october 2013 | 13
  8. 8. SERVICE INFORMATION Market, funds and scholarships (DIS)COUNT ON GOOD THINGS Use beneficial terms of purchase or nominate your offer for NALED market and enjoy the promotion - www.naled-serbia.org/berza Modern scarves with traditional motifs 20 % Ethno Network is the largest national professional association gathering organized groups of artisans (more than 400 producers) from all around Serbia, for commercial production of well-designed and top-quality handicrafts. Ethno Network is a synonym for handicrafts that are a refined blend of traditional techniques and modern design and can be an exclusive corporate gift. The scarf with the elements of Byzantine architecture and motifs from the courts of Serbian for first 5 members kings is a combination of modern and traditional in an attractive piece of clothing. The exclusive scarves of Ethno Network are made of cotton and silk. The purchase of this product shows comDiscount:10% mitment to social responsibility, as it creates income for women from all around Serbia producing Valid through: 01/12/2013 handicrafts and contributes to the preservation of cultural heritage. Etno Mreža, 10 Brankova street, 11000 Belgrade, +381 11 337 3068, +381 60 7030 855, iva.radic@etnomreza.rs, www.etnomreza.rs SUPER DISCOUNT Advertising on eKapija Discount:10% Valid through: 01/01/2014 eKapija.com, the leading business portal in Serbia and Bosnia and Herzegovina offers all members and partners of NALED a 10% discount for advertising via banners on the portal until the year end. eKapija offers its users and readers up-to-date economic analyses stock market reports, announcements of upcoming investments, overview of the latest tenders as well as a comprehensive catalogue of companies that currently involves more than 130,000 business and legal entities. More than 18,000 system users and daily rate of more than 60,000 articles and documents read make eKapija the most influential business portal in the region. 15% SUPER NT DISCOUbers 5 mem for first eKapija.com, 10A Bulevar Mihajla Pupina street, +381 11 715 22 57, +381 11 715 22 41, iva.brncic@ekapija.com, www.ekapija.com Events in Hyatt Regency Hotel 15% Hyatt Regency Belgrade is 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 service 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, ongoing coffee break, standard AV equipment for first 5 members and cable internet by the price of EUR 25 per person (minimum 15 participants / 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 Discount:10% daily package involves a price of EUR 45 per person (minimum 15 participants) including meeting Valid through: 31/12/2013 set up, one morning and afternoon coffee break, lunch, standard AV equipment and cable internet. Hyatt Regency Belgrade, 5 Milentija Popovića, 11070 Belgrade, Serbia, +381 11 301 11 39, belgrade.regency@hyatt.com, www.belgrade.regency.hyatt.com SUPER DISCOUNT Advertising in Danas Discount:10% Valid through: 31/11/2013 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 for advertising and PR space. Danas, daily newspaper with national coverage, is one of the rare newspapers in Serbia 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. Daily newspaper DANAS, 19 Alekse Nenadovića street, Belgrade, +381 11 344 11 86, +381 11 344 11 86, marketing@danas.rs, www.danas.rs 14 SYNERGY Database of funds MOVE FOR BUSINESS Deadline for application: 31st December 2013 Donor: Philip Morris Beneficiaries: Entrepreneurs and newly-established SMEs Purpose: Support for business start-up or expansion Maximum amount of funds: RSD 200,000.00 SUPPORT TO SME DEVELOPMENT Deadline for application: N/A Donor: European Bank for Reconstruction and Development Beneficiaries: Businesses Purpose: Support for businesses to improve their performance and competitiveness Maximum amount of funds: EUR 10,000.00 Comprehensive information on sources of funding www.naled-serbia.org/compendium INCENTIVES FOR RECYCLING Deadline for application: 31st January 2014 Donor: Ministry of Energy, Development and Environment Protection Beneficiaries: Businesses Purpose: Reuse of waste as secondary material or for generation of energy and plastic bags production Maximum amount of funds: N/A SUPPORT TO EU INTEGRATION SUPPORT TO CSO PROJECTS Deadline for application: 31st December 2013 Donor: Fund for an Open Society Beneficiaries: state and provincial institutions, municipalities, NGOs, 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 Scholarships info Professional development in the country and abroad www.naled-serbia.org/training Deadline for application: N/A Donor: Royal Norwegian Embassy Beneficiaries: NGO Purpose: strengthening the rule of law and anti-corruption, defense and security sector reform, strengthening human rights, economic development and entrepreneurship, environment protection Maximum amount of funds: EUR 100,000.00 Open call for employers: Youth staff training in workplace Deadline for applications: 17th November 2013 Organizer: USAID Sustainable Local Development Project (SLDP) Participants: Companies with minimum 5 employees with seat offices in one of the 32 cities and municipalities involved in USAID SLD project Within this program, the employers will be able to quickly and efficiently find and train employees who suit their needs, thus saving time and money. The program involves free selection of staff with the required qualifications, their employment and administration of their engagement. During the two-month practice, the candidates will receive a fee of 60% of minimum gross salary, provided by USAID SLDP based on the Training agreement. The training is intended for youth aged under 30, for jobs in production and service sectors. Seminar: Democracy, civil society and youth participation Deadline for applications: 31st December 2013 Organizer: Latvian national agency for Youth in Action program Participants: Young leaders, project managers Venue and date: 8th – 20th December 2013, Cairo, Egypt Latvian national agency for Youth in Action program organizes a conference Democracy, civil society and youth participation, aiming to facilitate exchange of experience and discussions to the topic of youth in community and politics. The conference target group involves representatives of public sector, embassies, international community. Training: Policy, strategy and systemic support to the development of rural environments Deadline for applications: 1st November 2013 Organizer: Israel agency for international development cooperation (MASHAV) and Center for Development Studies Participants: State institutions, local governments, NGOs, businesses Venue and date: Israel, 13th January – 5th February 2014 The training is organized by Israel agency for international development cooperation and Center for Development Studies, with the support of Israel Ministry of Foreign Affairs. During the 3-week study tour to Israel, the participants will have the opportunity to better understand the importance of integration of business activities, national policies and local interests, in order to achieve local rural development and the use of local resources. Additionally, the participants will learn about how the national and regional policies can serve as support to rural development, what is the role of agriculture and what financial and organizational mechanisms there are for revitalization and development of rural environments. october 2013 | 15
  9. 9. IN SYNERGY Business Friendly Environment The first eight Business Friendly certificates awarded to municipalities of South East Europe Attracting investment is a joint regional task I vanec, Bjelovar, Sanski Most, Prijedor, Ruma, Pirot, Strumica and Veles are the first local governments in South East Europe that improved the municipal administration and business environment in accordance with a unique international BFC SEE standard, thus obtaining the right to hold the regional Business Friendly Certificate. The standard, involving 12 criteria and more than 80 sub-criteria required for the development of partner relations between local administration and businesses, was developed by NALED and with the support of GIZ Open Regional Fund for Modernization of Municipal Services (GIZ ORF MMS), expanded outside of Serbian borders – to Croatia, Macedonia and Bosnia and Herzegovina. The realization is supported by partner organizations – Faculty of Economy in Rijeka, Ministry of Economic Relations and Regional Cooperation of the Republic of Srpska, Ministry of Development, Entrepreneurship and Crafts of the Federation of BH, and Association of Local Self-Governments and Macedonian Chambers of Commerce from Macedonia. The first certificates were awarded at the II Regional congress on business friendly environment in SEE, the ceremony held on 12th June in Zagreb Westin hotel, attended by numerous high Government officials, representatives of local governments, diplomatic corps and businesses. In front of more than 120 guests, the congress was opened by Croatian Minister of Entrepreneurship and Crafts Gordan Maras, President of NALED Executive Board and the Director of Contango, Darko Vukobratović, the Dean of Faculty of Economy in Rijeka Heri Bezić and German Ambassador to Croatia Hans Peter Annen. 16 SYNERGY Our economies rely on neighbouring markets and for this reason I fully support economic cooperation ideas such as certification” said the Croatian Minister of Entrepreneurship, Development and Crafts Gordan Maras at the opening of the II Regional Congress on a business friendly environment in South East Europe on June the 12th in Zagreb, involving a declaration of the first municipalities from four countries that fulfilled the regional standard of efficient and transparent local administration, BFC SEE SUPPORT FOR THE REGIONAL CERTIFICATION Minister Maras stressed that Croatia finds regional cooperation to be highly important, which is why he fully supports this project of Business Friendly Certification in South East Europe. In his words, in further developing of economic relations, cooperation on both national and municipal level is extremely important. In the previous several years, Croatia has done much to make itself approachable for investors. An incentive policy was introduced, but there is also a need for structural reforms. Currently ongoing is the procedure for adoption of law on strategic investments, to refer to all investments higher than EUR 20 million. It will involve drastically shorter deadlines for issuing all required permits. He added that up till now, there was a problem of local governments not treating big investors in the right way, and this is one of the areas where certification can help a lot. Finally, Minister Maras noted that even though Croatia is leaving CEFTA agreement, this does not mean that they will not cooperate with countries in the region and that they do not find this market important. We gladly use Serbian products such as Eurokrem and Jaffa, the same as people in Serbia are extensively using Vegeta – said Maras. The President of NALED Executive Board Darko Vukobratović reminded that NALED has been implementing the certification program in Serbia since 2007. One third of all local governments in Serbia are improving their business environment through NALED’s certification program, and 27 of them managed to fulfill the conditions for acquiring the national Business Friendly certificate. In the previous five years, these municipalities attracted investments of several billion EUR, proving that they are true local economic development leaders. When Financial Times ranked 5 certified municipalities among top 10 investment destinations in Europe for 2012/13, it was yet another valid confirmation of the program quality. We are confident that we will achieve such effects on the regional level as well. The countries of South East Europe can make use of the crisis period and, through certification program, ensure better starting position than the competition and be ready for a new investment cycle. The chances of attracting foreign capital are far better if we share common standards and act together towards the investors, as a region – Vukobratović said. Dean Bezić said that the investors are looking for recognizable cities and municipalities, and they can stand out through certification, which is the path towards standardization of services. “The investors do not have time to go into the specifics of each municipality and make their decisions based on standards. This is the reason we supported this project and I would like to Cities and municipalities in certification process In addition to Ivanec, Bjelovar, Sanski Most, Prijedor, Ruma, Pirot, Veles and Strumica, the Business Friendly Certification South East Europe project involves another 10 participating local governments. Among Serbian municipalities, the ones that are closest to receiving the Certificate are Bujanovac and Stara Pazova, and it is expected that Inđija will also win this recognition. As for Croatia, Macedonia and BH, it can be noted that the certificate is equally attractive to big cities and small municipalities. In Croatia these include Rijeka, Osijek and Crikvenica, in BH Banjaluka and Ljubuški, and in Macedonia – Štip and Struga. thank NALED and GIZ for including us”, said Bezić, adding a message to municipalities that they should hire professionals if they do not have sufficient internal capacities to work on improving the municipal administration and investment promotion. At the end of introductory session Ambassador Annen added that the region needs direct foreign investments, and they require a business favorable environment, as well as transparency and accountability of administration. He said that reforms were required in all countries in the region, since all of them received bad marks from the European Commission. “The investments in the region are modest because investing encounters great risk and numerous obstacles. This is a situation where Mayors can make a difference. They can work on planning and infrastructure and reduce costs and deadlines for issuing permits. Neighbors are also important. For Germany, Belgium and Netherlands are much more important than some bigger countries”, Annen stressed and congratulated NALED and partners on realization successful project. COOPERATION AT THE HIGHEST LEVEL As presented at the event, the certification project is a unique initiative in this region, directed towards improvement and harmonization of business conditions, strengthening the image of SEE as investment destination, raising competitiveness, increasing economic cooperation and capital flow. In this regard, the topic of the first panel discussed the means of support for economic growth. Along with Minister Maras, the panel involved the Minister of Economic Relations and Regional Cooperation of RS Igor Vidović, Minister of october 2013 | 17
  10. 10. IN SYNERGY Development, Entrepreneurship and Crafts of Federation of BH Sanjin Halimović, State Secretary in the Ministry of Foreign and Internal Trade and Telecommunications of Serbia Stevan Nikčević, General Manager of company Coca-Cola HBC Serbia Ramon Weidinger and Executive Director of Macedonian Chambers of Commerce Mitko Aleksov. In addition to law on investments, Minister Maras once again stated the significance of CEFTA region market for Croatia, reminding that starting from 1st July, foreign trade cooperation would be performed based on the agreement South East Europe countries have with the European Union, which would negatively influence the competitiveness of Croatian exporters due to unfavorable tax treatment. On the other hand, we found that the region will have much benefit from Croatia’s EU Business Friendly Environment accession, primarily in terms of road and railroad infrastructure investments. Minister Vidović gave positive impressions about the reforms conducted in countries in the region so far, and he particularly emphasized the improvements of business environment in BH with the introduction of a new system for company registration that will significantly reduce the costs and time for business start-up. Federal Minister Halimović stressed the complexity of administrative organization and political system of BH, finding that it makes local governments the driving power of development and improvement of legislative framework. They are the parts of a locomotive that should pull us forward – towards new investments. “We have not utilized all the resources we have. We had highly unfavorable investment conditions Gordan Maras, Minister of Entrepreneurship and Crafts of Croatia Congress recommendations 9 principles of effective investment promotion 1) Regional approach 2) Predictable business environment 3) Standardization of services 4) Transparency and responsibility 5) Decentralization of authority 6) Political stability 7) Targeting investors 8) Quality staff 9) Communication with businesses 10 to 15 years ago and it was hard to expect quality investors”, said Halimović. State secretary Nikčević agreed that investment promotion was a joint task of the region. He stressed that the manners and incentives for investment promotion were mostly similar and most frequently involved land allotment and subsidies for new jobs. Additionally, the countries in the region have recognized the sectors they hope to show the best results in terms of 18 SYNERGY attracting new capital, and most commonly these sectors are agriculture and infrastructure. Nikčević believes that economic cooperation in the region was spurred by CEFTA, which significantly improved the economic exchange. On the other hand, the problem is that there are still too few investments among countries in the region. The views of businesses were represented by the General Manager of Coca-Cola HBC and VicePresident of NALED MB Ramon Weidinger, who had spent a year and a half managing this company in Croatia. Weidinger reminded that Coca-Cola system has seven factories in six municipalities in the region, and distribution centers in another 20 locations. Among the region's advantages he primarily emphasized the same language. On the other hand, the main problems are Governments' decisions affecting the competitiveness of businesses. “We measured the production costs and we noticed that our facilities in SEE are partly not competitive. We compared Zagreb to Austria and we found that our production in Croatia was more expensive than if we manufactured in Austria and exported to Croatia. Production in Serbia is also more expensive than in Bulgaria.” Weidinger pointed out several specific problems he encounters as an investor. “We have not been able to acquire ownership rights over certain land parcel for 6. 7 years, causing us much cost. We also have large expenses for water fees” he said. The first panel was closed by the Executive Director of Macedonian Chambers of Commerce Mitko Aleksov, who emphasized that the certification program represented a plan for municipalities wishing to improve their business climate and attract new investments, and a seal of quality for companies considering to invest in South East Europe. “If the local business environment is not improved, the companies will have problems such as Coca Cola. The certification stimulates competition among mayors, leading to the creation of better conditions for doing business in the region” Aleksov concluded. RECOMMENDED BY MAYORS The ministers’ panel was followed by a discussion on the topic of how to promote investments on the local level. The seats on the stand were taken by the representatives of cities and municipalities that were the first to successfully pass the certification program. Milorad Batinić, Mayor of Ivanec and Vice President of Croatian Parliament, emphasized that the first task of all municipalities is to establish efficient administration. “The certification program has certainly assisted us in this endeavor. Our primary goal is not to receive a stamp for having a good environment, but become better than we currently are and learn more than we know at the time being” Batinić said. The first man of Bjelovar, Antun Korušec, spoke about the problem of slow issuing of construction permits and reminded that his city was among the leaders in Croatia by the speed of issuing these permits, as well as the number of resolved requests. In his words, this is a consequence of longtime work and investments into human resources. “The people now realize that they cannot keep permit requests in drawers. Overly bureaucratic countries and the collision of many laws are additional problems. We have too many administrative barriers before we get to clean documentation. We will need to reduce the number of regulations. Additionally, if we descend jurisdictions to a lower level, we will all be much more efficient”, Korušec emphasized. When it comes to promotion, the Mayor of Ruma Goran Vuković said that there can never be too much promotion and that all opportunities should be used, such as the investment promotion campaign at Belgrade airport, organized by NALED. “Everything we did in this field has contributed to the attraction of 12-13 investments over the past few years, whereas from 2003 to 2008 there were only three. However, promotion should not be just advertising for its own sake, but to be honest so that the investors are not let down” Vuković said. The political environment is also crucial for attracting investments, said the Mayor of Prijedor Marko Pavić. He said that this was the first item in his plan. “We created favorable international and inter-religion relations. Then we created a good relation between the city assembly and local administration. Seven out of eight parties are ruling and all decisions are made by a two/thirds majority. This brings certainty Success story: Gucci in Ruma Since 2010, when they entered the certification process, the municipality of Ruma has managed to attract three times more investments than in the previous years, when they had not been certified as business friendly. The greatest interest of investors was seen in the fields of machine and metalprocessing industry (one of the greenfield investments in 2012 was made by British manufacturer of engines and turbines, Albon Engineering Manufacturing) as well as the leather and footwear industry Ruma was famous for in former Yugoslavia. Thanks to 80 years of tradition in leatherprocessing and production of footwear, top-quality of raw materials (neat leather from Ruma is one of the finest in Europe – soft but durable, with no defects), qualified labor force, adequate greenfield and brownfield locations, good marketing and most of all – proactive and committed local administration, Ruma has managed to attract global footwear manufacturers and bring back the old glory and new glamour to this until-recently asleep industry. The results followed up not long after the award of Business Friendly Certificate and after investment promotion campaign at Belgrade airport in 2011, involving posters with red leather shoes and the slogan “Ruma - Fit for Profit”. At that time, the company Insert, producing women’s footwear Antonela Rossi and working for world’s famous brands such as Prada, Christian Dior, Louis Vuitton and Valentino, initiated one of the most significant greenfield investments in Ruma – the construction of a 5,000 m2 facility in working zone “West”. A year later, in 2012, the global leader in the field of clothes and fashion accessories, company Kerring Group, bought the Leather factory Ruma to launch the production of leather products of luxury, sports and lifestyle brands for the global market. It is sufficient to say that Ruma currently produces footwear for brands like Gucci, Saint Laurent, Alexander McQueen, Puma and further on. Kerring Group is present in more than 120 countries, now including Serbia, it employs 33,000 people across the world and achieves annual revenues of nearly EUR 10 billion. Ruma truly is “fit for profit”, so there is no wonder that it is among the first 8 municipalities in the region certified in 2013 as business friendly according to international, improved standard of Business Friendly Certification in South East Europe (BFC SEE). for investors since they know how the local government functions. Now we have investments going on because Prijedor was recognized as a secure destination. The seal of quality in the form of Business Friendly Certificate will only verify this”, Pavić added. Targeted investment promotion is also necessary. Mustafa Avdagić, Mayor of Sanski Most, stressed that this local government is focused on its Diaspora. “The first group that left Sanski Most did not make large investments, since these were mostly people with high school education, but now their children are investing in Sanski Most. The certificate will help us a lot, since these young people acquired education abroad and they monitor the way municipalities treat businesses”, stressed Avdagić. Vladan Vasić, Mayor of Pirot and a member of NALED Managing Board, emphasized the importance of human resources in local governments. “The human factor is the first and most important, and for this reason we do not hesitate to look for outside assistance. However, there are people in Pirot who can deal with great investments and I believe that certification can help us position ourselves as a good destination on the investment map of South East Europe”, said Vasić, adding that there is an urgent need to resolve the issue of institutions that act as states within the state. “They need to change or become decentralized”, Vasić pointed out. At the end of panel, Goran Jović, Deputy Mayor of Veles, added that investment promotion is also affected by the positive relation of local administration towards the existing businesses. This is why he particularly stressed the obligation of forming a Business Council as one of the most important certification criteria. “Veles council involves representatives of businesses, local governments and unions who directly communicate and resolve both big and small problems on a high level”, Jović stressed. The mayors of certified municipalities urged the Government to introduce higher level of decentralization in the region, to facilitate investment promotion. They believe that there is no fear this would lead to misuse at the local level because they would perform some functions better than the national Government. They also find that the local government should not be discouraged if the investments do not flow in shortly after the implemented reforms because the investors will most certainly come once all “horizontal and vertical line” obstacles have been removed. The panel was followed by the official ceremony of regional certificates award. october 2013 | 19
  11. 11. IN SYNERGY Marinko Ukropina, Managing Director of SGS for the region and member of NALED Executive Board 12 criteria of business friendly environment 1. Strategic approach to local economic development 2. Administrative capacity to support businesses (LED Office) 3. artner relationships with the private sector P (Business Council) 4. Efficient system for issuing construction permits 5. Database management of business related information 6. Proactive approach in investment promotion and marketing 7. Credit solvency and financial stability 8. romotion of job creation and human resource P development 9. Promotion of public private partnerships 10. Adequate infrastructure and reliable utility services 11. Transparent and stimulating tax policy 12. Use of information technologies NALED's Certificate gives investors proof of good municipal services O ne of the main motives for SGS Belgrade, as the largest certification institution in the region, to become involved in Business Friendly Certification (BFC) by BFC standards, stemmed from the very definition of verification process. “Verification is a systematic and independent process, determining the degree to which the verification criteria have been fulfilled”. The Certificate confirming the degree of fulfilling the criteria of business friendly environment should act as a valid proof for all stakeholders (particularly investors) that the certified local governments will provide administrative and logistical services for business start-up and expansion, in an efficient and effective manner. In case an investor plans to have multiple business facilities operating in various municipalities, the certification ensures consistent approach in the work of local administration. It also allows the networking 20 SYNERGY and exchange of experiences among local governments in Serbia and the region. By fulfilling 12 comprehensive certification criteria, the municipalities are certain to become equal partners with successful foreign and domestic organizations and to stand out among other municipalities. This way, the program contributes to the improvement of business environment in Serbia and investment promotion. Among other things, the Business Friendly Certificate testifies to the responsibility and tendency of local administration to act in accordance with ethical principles and it represents a good starting point for the development in accordance with other international standards such as Quality Management System - ISO 9001, Environmental Management System – ISO 14001, Information Security Management System – ISO 27001. Through implementation of Business Friendly Certification and other international standards, SGS Belgrade, as the leading control organization and certification authority in the region, will certainly strive to make a contribution in improving the overall business environment in the Republic of Serbia and the region, in an increasingly demanding market competition. Extending the BFC standard in the region NALED has taken the far-reaching initiative to expand BFC certification to the region of South East Europe (Croatia, BH, Macedonia), creating BFC SEE standards. Extending certification to a wider region allows a comparative analysis of the BFC criteria and impact of the process, providing a basis for re-evaluation and improvement in the work of local governments Branislav Nedimović, Mayor of Sremska Mitrovica and member of NALED Executive Board Only half the municipalities in Serbia have any greenfield investment I will try to make a brief overview of investment-related issues and events, primarily greenfield investments, in the period since 2004 when this issue became topical in our country. There are many factors that determine whether or not a greenfield investment will be realized in a certain location, but the most important include the country’s legal certainty, stability (political, above all), regulated property-legal issues, developed planning documents, system of incentives and many others. The shy steps that used to be taken in the beginning, most frequently by the local governments with high level of awareness, have finally led to a point where all local governments dream or plan to have at least one such investor (so far, approximately 80 local governments succeeded at least once in their efforts). However, with a big H, there is a key question of local government performance in terms of previously stated factors that condition the realization of such investments. In terms of first two factors – legal certainty and stability, the decisive role is in the hands of the Serbian Government, while the other factors require full initiative of the local governments. It is certain that NALED with its municipal certification program had a great role in raising awareness on the need for foreign investments and the concept of market competition in investment promotion and overall importance of business friendly environment. In terms of conditions local governments provide to investors, there are a lot of varieties in Serbia. From this aspect, I would classify all local communities into three groups: The first one involves municipalities that have still not defined the urbanistic areas for potential investments in their planning documents. The second group involves the ones that defined the The Law on Investments should define the following: • Who are the investors • hat is considered an investment of state significance W • ypes of investments supported by the state T • he measures for stimulating investments (subsidies, T co-financing of industrial zone development, potential tax benefits etc.) • he activities of various stakeholders involved in T investment realization process • Obligatory treatment by institutions, companies and or ganizations in the investment realization procedures and deadlines and penalties for not complying with the rules zones and completed urbanistic regulation, but for lack of funding have not yet shaped it with infrastructure. The third group has completed all of the above and are on the go for a strong marketing campaign for investment promotion. But the first requirement that needs to be met to allow the municipalities and the state to deal with local economic development and investment promotion is the existence of appropriate regulatory framework. And it’s here that we encounter two problems. The first was partially removed in 2007 with the adoption of new Law on Local Government placing local economic development under municipal jurisdiction. The second is the lack of legal solutions providing a definition of investment from the aspect of state interests and the game rules that need to be respected by the state, local government, all institutions and the investors themselves. In addition to defining the concept of investments that should be supported and encouraged by the state, I believe that we also need a developed system of measures for stimulating investments significant for the state or local community. In drafting the Law on Investments, the Government should include the most In drafting the Law on Investment, the Government should include the main business associations such as NALED and use the vast experience of SIEPA. significant business associations and think-tank organizations such as NALED, and they should certainly make use of extremely vast experience of Serbian Investment and Export Promotion Agency SIEPA, which was the main agent in attracting greenfield investments to Serbia. The path is well paved but what’s missing is to make the incentive procedures more transparent, so as not to compromise the entire process. There is no doubt that, in the forthcoming period, the topics of greenfield investments and job creation will be more and more significant because the Serbian economy simply craves for new employment, and this is the path to economic recovery. To achieve this great, but accessible goal, the first thing we need is political will, which is now definitely here, as well as adoption of regulations in the form of law that would govern the area of investments and bring legal certainty to investors. There is a need to make a political decision on developing a system of measures to achieve these goals, bearing in mind that our competitors in the race for investors, primarily the countries in the region – Croatia, BH, Macedonia, Albania, Bulgaria, Romania are most certainly not sitting idle with their arms crossed. For this reason, the investment challenges should be declared the No.1 issue of the entire political elite, as it leads the path of recovery and growth which is saved only for the politically stable and predictable systems. october 2013 | 21
  12. 12. IN SYNERGY Branislav Bugarski, Provincial Secretariat for Inter-Regional Cooperation and Local Government Investments is hindered by our failure to implement the law Politicians and bureaucrats need to drop the practice of taking shortcuts S ince the year of 2000, foreign investments have served as a topic used by all politicians, in both positive and negative context. From the announcements that foreign investments would ensure better conditions of life and a stronger economy, to warnings that we would be used as cheap labor force and for application of “dirty” Western technologies, without gaining anything for ourselves. I belong to the group that looks at these investments from a positive aspect (limiting my statements to production-service character investments). After all, it is a fact that foreign investments are important for developing countries, as they allow you to achieve economic growth without direct borrowing, create new jobs, gain new technologies and ultimately, increase your exports (and imports, certainly, but with a positive balance in final calculation). In Serbia, all three levels of authority have paid attention to this issue: the republic, the province and cities and municipalities. Even though we had a very difficult starting point, being burdened with war conflict (giving us a very bad image) and just made the initial steps towards normal and organized democratic society (representing an additional risk in the eyes of the investors, as we were treated as unstable business environment) we have made great efforts and managed to achieve a decent result in spite of the fact that our country’s Prime Minister was assassinated. Today, there are more than 230 foreign companies operating in AP Vojvodina, with 66,000 employees and EUR 6.6 billion invested. Could it be better – it certainly could. In general, even though it was not strategically documented and assigned, the role of public sector in this effort was recognizable. The Republic was in charge 22 SYNERGY A huge problem is disorganization at the national level in the promotion of Serbia. Not enough money is spent on marketing. of developing the legal framework, while the Province and cities and municipalities created conditions in the field, by completing the planning documentation and utility connections in potential locations. All levels got actively engaged to have as many foreign investors come and visit Serbia, Vojvodina or individual cities or municipalities. In my humble opinion, the Province and municipalities significantly contributed to improving the image of Serbia. Still, I cannot ignore the fact that these foreign investments were often the subject of political abuse and irrational decisions – there were cases of some investments being negatively presented in the media and of individuals boasting of success for projects they did not take part in. MISSED OPPORTUNITIES AND WHAT CAN BE DONE NOW In addition to regional conflicts and internal political turbulences, another big problem that has not been resolved to this day is the poor organization on the national level in terms of promotion of Serbia. It is just sad how the good ideas fell through and how little funds were invested in Serbia’s marketing. We cannot expect potential partners to see us in the positive light if we do not present ourselves that way. To achieve this, we need to communicate more and use every opportunity to present ourselves. Topic that is endlessly debated are the subsidies per job created. My experience as the Director of Vojvodina Investment Promotion Fund is very clear: without incentives, we are not competitive in global and European investment markets. Furthermore, another important issue is the education of local political officials, who should learn to always look at the broader picture. In particular cases, we have encountered situations of public servants giving promises they knew were not in accordance with the law, making such municipalities automatically disqualified in the eyes of investors or causing future harsh accusations by the investors regarding the public sector efficiency (which were certainly justified in some cases). Finally, telling the truth proved right in all cases, no matter how bad it is. It is clear that there will always be problems, it is only a matter of how reliable you are as a partner to resolve the issues by working together. It may sound trivial, but apart from relevant technical details, the investors’ subjective impression will be influenced by toilette cleanliness (which is not our strong point if we are being honest), use of foreign languages, behavior in meetings. One thing we need to understand: being poor is not something to be ashamed of, but lacking the effort for beating poverty, thus acting smart about it, is. EXISTING RESISTANCE FACTORS AND HOW TO REMOVE THEM I have already spoken about some of the prerequisites to attract foreign investors. However, a more important question is whether we can do something to be more competitive and what can that be?! If we start from an assumption that the main three conditions are favorable legal framework, infrastructure and labor force, we can easily recognize and perform a self-analysis of whether and what we achieved. The lack of comprehensive and mature approach among politicians, lack of courage and cheap populist moves have significantly slowed down this process. The best example for this attitude towards creating a better business environment is the case of Law on Planning and Construction from 2008. The idea of the Law to set up a system has unfortunately lost the battle to populism and lack of patience. After long and hard work on its development, this Law was supposed to allow all investors to have public and transparent insight into the opportunities and plans of a certain local government. Where and what they can build, and which size the facility can be. Unfortunately, once again we faileded to follow the law in full scope, as the legalization was not performed. These are difficult topics, but they will have to change in the decades to come, most of all through a change in our approach and mentality. As for the legal framework, the liberalization of Labor Law is another very important aspect for investment promotion. We cannot expect to protect the slackers together with good workers. The investors have also often demanded the improvement of courts. The inefficiency of judicial system has been a problem since the 90s and we In order to resolve this problem, the first thing to do is to change the awareness in public administration, in two directions – by communicating that there is a need for systemic approach to work and that there can be no shortcuts. This needs to be understood by politicians and administration. The second important step is to change awareness among administration to understand that they are exclusively a service for citizens, and that they receive their salaries to act as such. This was exactly the reason why the Government of Vojvodina, the Secretariat for Inter-Regional Cooperation and Local Government, decided to start the process of harmonizing the work Amateurism and superficial approach The idea of economic representatives fell through the day (in my opinion, in the very beginning) when these professionals were not supported with allocated budget and clearly defined goals. One cannot expect to make a good deal without the funds to organize a presentation or reception, lunch or dinner, or travel from Berlin to Hamburg or from Paris to Lyon. Such amateurism and superficial approach is the worst enemy and the greatest obstacle to better results. still have not managed to resolve it. Regarding infrastructure, much progress was made in this field. We still have not made the best use of the existing capacities, but this comes as a result of complicated legal grounds on one hand, and the inefficient courts on the other. Nevertheless, in terms of workforce, our opportunities are great. For example, Vojvodina established an education center allowing people to obtain knowledge and use it in the labor market. Additionally, we have another mechanism to partner with investors in teaching people the skills in accordance with the employers’ needs. STANDARDIZATION OF WORK THROUGH CERTIFICATION By not implementing the law, we actually slow down the entire investment process. Had you started developing planning documents in 2010, by 2012 you would have completed the work and in 2013 you would know what can be offered to investors and under what conditions. It is certain that this job is neither easy, nor simple and it lasts for quite a long time. On the other hand, the development of the state and the system has still not been completed by anyone and it is certainly a demanding and large-scale effort. of local administration in entire Vojvodina. We called it “Vojvodina standard”, partially overlapping with NALED’s Business Friendly Certification. This means that each local government needs to have three elements – development strategy, Local economic development office to implement the strategy and the system of 48 hours for responding to citizens enquiries. The work done by NALED, certification and standardization of municipalities, is extremely important because it prepares them for investment promotion. Still, the obtained certificate does not mean that the job is done, as it is a permanent process the municipality needs to perform continuously. They need to constantly plan, implement, control and make corrections for future plans, thus constantly improving themselves. Finally, I find it important to say that the level of development and existing capacities can be limited, but there are certainly great potentials in the country, that can be of assistance in building these capacities. Expecting solidarity and assistance is one thing, but more important, the cities and municipalities in Serbia need to take responsibility for their future and economic growth, of course, with the support of everyone involved in this work in Serbia. october 2013 | 23
  13. 13. IN SYNERGY Aleksandar Nikolić, Local Economic Development Coordinator, NALED SERBIA opens the door to the M EAST Our country’s strong points are its location, good labour force and free trade agreements; the downside is bureaucracy and a complicated tax system ost foreign investors that have serious interest in expanding their business in the region of South East Europe see Serbia as an interesting location in terms of being favorable for investments. Certainly, one of Serbia’s greatest advantages is its geographic position – the location on the crossroad of two international corridors (road Corridor 10 and Danube Corridor 7) connecting the West and Central Europe with Turkey and Middle East and facilitate access to Black Sea region. This is particularly important for European companies in the stage of expansion, the ones that see Serbia as an important hub for further placement of their products towards the East. On the other hand, the European companies wishing to reduce their production costs find benefit in the fact that Serbia is neighboring four EU countries, ensuring excellent logistical connections and easier access to this market. Another very important advantage of Serbia is high level of education and qualifications of the available work force, which is an obligatory demand of almost every investor. Our workers are often described as hard-working and educated people, with strong business spirit, easily adaptable and open to changes, with additional positive remark that a large share of the workforce speaks foreign languages, 24 SYNERGY allowing easier communication and contributing to faster acceptance of new business requirements and principles. Working as an economic diplomat abroad, I have had the opportunity to see for myself that foreign investors particularly appreciate the multitude of trade agreements Serbia has with other countries, such as the arrangements with Turkey, Russia, Belarus, Kazakhstan, EU countries and EFTA. Particular importance for easier business of domestic companies comes with the regional agreement CEFTA, while it is also certainly inevitable to note the existence of preferential arrangement with the USA, allowing duty-free export of certain types of industrial products to this most developed market in the world. All of these agreements together provide domicile-status companies with free access to a market of more than billion potential consumers. What spurs much attention among investors, representing a huge competitive advantage of Serbia compared to other countries, is the existence of free trade The author Aleksandar Nikolić has many years of experience in investment promotion activities within USAID and as an economic diplomat in Macedonia and Slovenia. agreement with Russia. Except for former Soviet republics, no other countries in the world have such agreements and incentives. In terms of tax burden level, with corporate income tax of 15%, VAT of 20%, and individual income tax of 10%, Serbia is somewhere in the middle of the list compared to its neighbors. While the tax burden here is much lower than in Croatia and Slovenia, on average they are higher when compared to Bulgaria, Montenegro, Bosnia and Herzegovina, Albania and Macedonia. On the other hand, when the calculation also includes tax incentives and Famous brands testify to maturity for large investments subsidies provided to foreign investors, there is a conclusion that Serbia is more attractive than its neighboring countries. It is one of the three countries in the region allowing the so-called tax holiday (for investments of more than EUR 9 million and 100 new jobs), and the only one where this offer involves all industries. Additionally, tax holiday can be used for up to 10 years – which is the longest period for such opportunity in the region. In addition to a variety of tax exemptions, the Government of Serbia also ensures significant incentives for foreign and domestic investors. Together with the unique trade agreement with Russia, I would say that the financial incentives tip our sales pitch in promotional activities for attracting investors to Serbia. Since 2006, our Government has been providing subsidies for foreign direct investments through a special program of financial support awarding grants of EUR 4,000-10,000 per new job created, depending on the location, for investments of at least EUR 1 million (or EUR 500,000 in the so-called devastated areas), that is, 50 new jobs. This measure has rather far-reaching impact when compared to similar initiatives in other countries in the region. It is also important to stress the importance of large investment projects, and the arrival of globally recognized brands, such as Fiat, Bosch, Siemens, Panasonic. These projects indicate that Serbia has large absorption potential and can take up large investments. In practice, the arrival of large companies often It is also important to stress the importance of large investment projects, and the arrival of globally recognized brands, such as Fiat, Bosch, Siemens, Panasonic. These projects indicate that Serbia has large absorption potential and can take up large investments. In practice, the arrival of large companies often acts as a magnet for other companies to come, especially the ones from the same or related industry. acts as a magnet for other companies to come, especially the ones from the same or related industry. Much to the dismay of all dealing with investment promotion of our country, whether local or national initiatives, Serbia is also characterized by numerous disadvantages that prevent or negatively affect further inflow of foreign direct investments to Serbia. My personal impression is that for these companies, the greatest problem in making a positive investment decision is the slow and inefficient state administration. Most remarks are made in regards to excessive bureaucracy, complicated administration, nontransparent and burdensome procedures for obtaining the necessary permits, slow judicial system and high level of corruption. I have had the opportunity to experience how hard it is to explain a foreign company owner that the issue of construction permit may take up more than 8 months of their time. Why foreigners find it hard to understand – it becomes clear after looking at the World Bank’s Doing Business report for 2013, ranking Serbia as 179th out of 185 analyzed countries with regards to this indicator. At the same time, many countries from our surroundings are rated much better, for this and for other indicators. I will only mention Macedonia, ranked 65th based on the time needed for issuing permits, and 23rd in terms of overall business conditions (Serbia is ranked 86th). In addition to the mentioned problems, a number of foreign investors have also been complaining about the complicated taxation system. This is an additional challenge, because along with the national tax system, there are a plenty of local fees that vary locally. Even though the corporate income tax is relatively low, this effect often gets annulled through a multitude of fees charged by local authorities. What is common for all investors, no matter what country they come from, is that they demand transparency, political and economic stability, maximum possible predictability and fast and efficient administration and courts. In the time to come, the overall development of our country will largely depend on the amount of realized foreign direct investments, especially having in mind that the conditions of low liquidity among businesses, limited loan opportunities, insufficient exports and lack of modern technologies would pose a significant obstacle to continued economic development in Serbia. The effects of foreign investments have deep impact and do not come down solely to an inflow of certain amount of money and employment of domestic labor force. They also contribute to the development of domestic industry, creation of a more competitive market, arrival of modern technologies, increased productivity, higher exports and country’s better payment and foreign trade balance. There is no doubt that the FDI are a necessary requirement for a successful transition of Serbian economy and its integration into the global market. october 2013 | 25
  14. 14. IN SYNERGY Dr Hans Estermann, NALED Strategic Development Advisor How Berlin and Dortmund regained their power Successful German local governments follow a simple recipe: they analyze their background and have a clear vision of where they are going T he German economy is probably one of the most stabile ones in Europe. Nevertheless it is subject to constant changes. It has to face tough international competition and is fighting for technological leadership as well as for its share in international markets. Economic policy is setting the framework for dealing with structural changes and competition, national infrastructure has to be kept on a high level and programs for qualification and bringing new technologies to markets are developed. All this is useful and helps meeting the requirements of a competitive environment. Germany is a federal republic with 16 states, all of them with their own responsibilities, i.e. in economic actions, education and infrastructure. But all business is local and thus the local authorities and stakeholders in local economic development have to play an important role in taking chances and overcoming risks. About 8.000 towns and municipalities are the backbone of economic development. They are setting the conditions for projects, for investment and employment. success is inclusion of local business and NGOs in formulation and implementation of local strategies and measures. There is not the one and only way to deal with change. Major threads for the local economy where met by local policy in different ways. Germany is well known for its industrial basis. It is automobile, machinery, chemicals that dominate the image of the industry. But most of it declined in the 70s, 80s and 90s of the 20th century. Dortmund in the German industrial heartland Ruhr for 100 years was the synonym for coal and steel, seconded by its fame for beer. Not much of it was left after the decline of mining, concentration of steel industry and internationalization of the brewing industry. After 1960 some 80,000 jobs got lost in industry, only coal mining jobs came down from 40,000 to zero. All actions and protests could not stop the decline. Even Billions of subsidies for the old branches could not save the region. Local economic development department of Dortmund city administration took the chance that came along with a new university founded in the late sixties. It started with about one thousand students, today Whenever an interesting investment appeared, Berlin had an offer ready Towns, municipalities and regions are active in local economic development. They are free to do it as part of their administration or with businesslike organizations. But finally it is not the form of organization, people making the difference. Part of the 26 SYNERGY there are more than 25.000 being educated in Dortmund. But that is not enough to develop the economy in a city of 600.000. The focal point for the turnaround in the economic structure was to combine the scientific background with business. The city The author works as Strategic Development Advisor in NALED, with the support of German Government and CIM center. During his decades-long experience, among other things, he held the managing positions in state administration for economic and local development in Berlin, Cologne and Dortmund should be attractive for service industries, new technologies and creativity. It worked with the foundation of a technology park next to the growing university as a cornerstone of modernization policy. Electronics, Software, Biotech, Logistics were the centers of new development. The image of the city of Dortmund changed completely: it is no longer traditional industries but high tech and service industries. And of course football, but that is another story. Berlin started from a different situation. After having been divided into an eastern sector and the western part for 50 years, reunification was the turning point for the old structures. Although under different political systems, on both sides industries had enjoyed subsidies and closed markets, the public sector was blown up highly above the needs. Competition became the new philosophy after 1990 and it lead to dramatic changes. 350.000 jobs were lost in old industries that moved to low cost countries. Although the federal government came into town, it did not solve the problem. Federal institutions in Germany are highly decentralized and so only about 35.000 new jobs accompanied the move of the federal government. Berlin local economic development was completely reorganized in the early 1990s. No longer subsidies where the trigger, but concentration on future industries. Attractive locations could be found in abandoned industrial buildings, fitting the expectations of creative minds, as well as in city centers and in newly developed industrial parks. A network of technology centers and attractive assistance for new businesses completed the offers and LED managed to attract investment and relocation from branches, which were defined as the future of the local economy. They had a local basis as well as first class markets worldwide with their new technologies and high quality production and services: Transportation technologies and automotive, Medical and Biotech, Energy, Service industries, and last but not least the Media and Creative Industries. Special teams in local economic development agency and city administration put together tailor made offers to the companies fitting into the new strategy. Specialists started travelling in Germany and around the world to meet the decision makers. Whenever an interesting investment was on the agenda, an offer from Berlin was on the table. The strategy was seconded with a bundle of measures to make the city of Berlin more attractive. Three universities and more than 100 scientific institutions were playing a pivotal role in the process. Substance, international reputation and concentration on the growth sectors changed the image of an interesting, but traditional location. Berlin is now seen as Adlershof Technology park Berlin © Wista Euref Campus Berlin © Berlin Partner the place for innovation, creativity, talents and networks. Founders and established companies find the right location, the right people, attractive networks and easy access to markets. Thanks to assistance from the EU and federal government they can rely on a most modern infrastructure, qualified workforce, access to technologies and enjoy an environment which more than 10 million tourists are visiting every year for culture, lifestyle, shopping and pleasure. Local economic development has its share in this success of a 3,5 million capital city by concentrating on the unique selling points of an economy in transition and offering tailor made solutions for all interested parties. Each municipality can tell its story how to deal with challenges. The successful ones follow a simple recipe: they analyze where they come from and have a clear vision where to go. Politics and administration are focusing on growth factors and streamline their organization. If it should be successful LED has to be integrated part of local policy. Qualification, environment, quality of life, social benefits and culture make the location attractive and are brackets of prosperity. Investors are looking to figures, but also like to enjoy benefits of an outstanding environment. october 2013 | 27
  15. 15. A TALK WITH... Saša Radulović, Minister of Economy Domestic companies will be the basis of our development A prominent proponent of regulatory reform known in public as an economic analyst and author of articles harshly criticizing the authorities, he describes himself in one of his blog posts on the B92 website as an electrical engineer who left Serbia for Germany in the 80s and started his career in Siemens. He has lived and worked in countries all over the world. He developed and managed companies from their beginning in a garage to the point when they had more than 150 employees. He has been CEO, member of the management team and board of directors in several companies. He returned to Serbia in 2005 and stayed because he liked it: “hard but beautiful, most difficult for the children, for their education and the future”. In Serbia, he was a licensed bankruptcy manager, expert associate to the Council of Europe, OSCE, U.S. Embassy, GIZ, NALED, advisor to the Association of SMEs. Today, he is the Serbian Minister of Economy. On taking office, his first time in the role of Minister, Saša Radulović spoke about the plans and programmes of the reshuffled government to improve the business environment and encourage economic growth, at a working luncheon with NALED members and partners on 23 September 2013. “One of the key issues we brought up, something first Deputy Prime Minister Aleksandar Vučić insists on, is to achieve a healthy and sustainable state and economy based on private ownership, profit, new jobs, production, exports. The strategic guidelines that will serve as a framework for developing state policy are classified in four main categories: regulatory reform, professionalization of the public sector, resolving the issue of excessive debts among businesses, reducing the burden on labour and creating better business 28 SYNERGY Regulatory reform, professionalization of the public sector, resolving the issue of excessive debts among businesses, reducing the burden on labour and creating better business conditions for SME are the country’s strategic priorities conditions for small and medium enterprises” – said the Minister of Economy Saša Radulović opening the discussion. What are the Government’s priorities in the field of regulatory reform? Labour Law, the Law on Planning and Construction and the Law on Privatization supported by good regulations will be the first priority. This will be followed eliminating unnecessary regulations that cause substantial problems for businesses. There should be fewer fees, but they could be higher and easy to administer. I was against the company sign fee and we have made progress in this area to- gether with NALED. I would go even further, but there is the issue of our country’s economic situation. We also have a problem with implementing the law. The Budget System Law introduced a provision that the level of fees cannot be determined arbitrarily but has to reflect the cost of service provision. This has not yet been implemented. We will ask all agencies to adjust their fees to reflect the cost of their service, nothing more and nothing less. A fee is neither a revenue nor a tax. Taxes are applied to consumption, income, profit, property. Can we expect the introduction of Think Small First principle, which is practiced If I’d thought it was hopeless I wouldn’t have joined the government. I think there is a will for change. I like to win, what about you? in the EU, meaning that in the course of adopting regulations, the first thing to evaluate is its impact on the SME sector? This could be the Ministry’s slogan, because we really act that way. We think small first, big after. What amendments to the Labour Law can be expected and when? These are severance pay and easier dismissal of employees. It is unreasonable for severance pay to be calculated on the years of employment record. An immediate result is that people aged over 40-50 can never find employment, as no one is ready to take on the risk of such a long employment record. Because if your company falls on bad times and has smaller revenues, you will be forced to dismiss people and so pay unrealistic sums in severance pay to these people. So the Law that should protect the workers has a completely perverse effect. I think the expenses of hiring someone and providing training for them are enormous, so allowing easier dismissal is in fact a measure for stimulating employment. What I do not agree with is for fixed-term employment to be extended beyond one year. What are the effects of the current tax system in Serbia? The effect is two aspects of the grey economy – illegal employment and tax evasion in terms of VAT from customs and excises. One leads to the other. We need to release the burden on labour. This will directly benefit production and export because these provide employment. If you compare the balance sheets of an exporter and a producer selling the same product, the difference is seen in labour. When you take a look at the tax october 2013 | 29

×