SERBIA

REPUBLIC OF SERBIA
Ministry of Foreign and Internal Trade
and Telecommunications
SERBIA
an attractive
investment destination
SERBIA
AN ATTRACTIVE INVESTMENT DESTINATION
content:
01
Strategic position
of Serbia
02
Serbian economy
in the past decade
03
Alluring
tax rates
04
Rising exports and
export/import coverage
05
Unique
export potential
06
Foreign
direct investments
07
Supportive
investment regime
08
Valuable assets
- human resources
09
Investing in
Free Zones
01
STRATEGICALLY
POSITIONED
WITH GOOD
NETWORK OF
TRANSPORTATION
INFRASTRUCTURE
Official Name:
Republic of Serbia
Location:
South Eastern Europe
Area:
88.361 km2
Population:
7.6 million
Official Language:
Serbian
EU Countries
Non EU Countries
CEFTA
Free Trade Agreements
10th Pan-European Corridor
7th Pan-European Corridor
Serbia covers the area of 88.361 km2
At the crossroads of the two Pan European Corridors: X (running
between Salzburg and Thessaloniki) and VII (the main inland
waterway transport Corridor linking Western and Eastern Europe
through the Rhine, the Main, the Rhine-Main-Danube canal and
the Danube connecting the North with the Black Sea)
Transit country of commodities and passengers between Central
Europe and Asia
Due to favorable geographical position any shipment can reach
delivery location Europe-wide within 24 hours
Serbia features a modern, reliable infrastructure network: highways,
railways and rivers providing easy access to all parts of the country
Serbia – major logistic hub in SEE
Domestic roads: 40.845 km (5.525 km of arterial roads, 11.540
km of regional roads, 23.780 km of local roads)
Railway network 3.809 km long; national railway company carrying 5,5 million passengers and cca 12,6 million tons of commodities annually
Government:
Parliamentary Democracy
Inland waterway of total length of cca 1600 km, two international and
one interstate navigable rivers (the Danube 588 km, the Sava 207 km,
the Tisa 164 km and the Danube-Tisa-Danube canal 604 km)
Capital:
Belgrade (1.6 million)
Ten international ports (nine located on the Danube and one on
the Tisa river while two national ports are on the Sava river)
National Currency:
Serbian Dinar (RSD)
Two international airports – Belgrade and Nis; 1,1 million passengers and 2500 tons of cargo annually
3
02
SERBIAN
ECONOMY
IN THE
PAST
DECADE
During the period from
2001 to 2011
GDP per capita and real GDP growth rate
*Projection WB, January 2013
5000
• Average GDP growth rate was 3,5%
• The services sector key generator
of the growth: trade, transportation,
warehousing and communications
• To a certain extent agriculture and
processing industry contributed to
the economic growth
• Economic growth having positive
impact on standard of living of population – GDP per capita increased 2,5 times
10.00%
9.30%
4500
8.00%
4000
3500
5.30%
4.30%
3000
5.40%
6.00%
5.40%
3.60%
4.00%
3.80%
2.50%
2500
2%*
1%
2000
1.60%
2.00%
0.00%
1500
-2%
1000
-3.50%
500
0
-2.00%
-4.00%
-6.00%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
in EUR
GDP per capita
Real GDP growth rate
Economic prospects for 2013
In 2013, GDP growth is expected to be between 2.0% and 2.5% driven mainly by net exports resulting from expansion in export-oriented
industries
• Export oriented model of growth in medium-term based on attracting the FDI in industrial and agricultural sector
• The automobile industry continues to expand
Fiat shall start with full capacity production in 2013, while the first batch
of produced cars has already been delivered in September 2012- the
main contribution to GDP growth in 2013 (2.0 pp contribution of net
export to GDP growth)
• A positive contribution may also come from exports of petroleum products
Financial links - the
fastest transmitter of Euro
zone troubles
Heavy presence of
European-owned banks
However, Capital adequacy
of Serbian banking sector
is satisfactory
The banking sector remains
adequately capitalized
5
03
ALLURING TAX RATES
Personal income tax
Corporate profit tax
Croatia
15 – 45%
Slovenia
19%
Czech Republic
36%
Hungary
19%
Slovakia
12 – 24%
Bulgaria
19%
Hungary
41%
Slovakia
19%
40%
20%
0%
Serbia
15%
Serbia
12%
60%
Romania
16%
Romania
16%
80%
Croatia
20%
Bulgaria
10%
25%
20%
15%
10%
5%
0%
Attractive tax regime as competitive advantage vis à
vis neighboring countries
Standard VAT rate
Hungary
27%
Croatia
25%
Romania
24%
40%
30%
20%
Czech Republic
20%
Bulgaria
20%
Serbia
20%
10%
0%
7
04
RISING EXPORTS
AND
EXPORT/IMPORT
COVERAGE
Targeting export growth and elimination
of trade deficit
18
16.47
16
70.00%
14.78
60.00%
14
59.80%
12
10
32.80%
8
6
4
2
8.84
7.43
50.00%
40.00%
30.00%
4.76
20.00%
1.92
10.00%
0.00%
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Export, bn EUR
Import, bn EUR
Export/Import coverage %
Serbian exports reached record high of 8.84 bn EUR in 2012
Export/Import coverage stood at 59.8%
Rising exports and export/import coverage
Key trading partners in 2012
During the period from 2001 to 2012
In 2012, exports amounted to 8.84 bn EUR
Annual growth of 4.7% largely due to expansion of automotive sector and oil industry
Exports to EU surged by 5.4%
•Total Serbian foreign trade increased 3.5 times
•Export value increased 4.6 times – from 1.9 billion to 8.8 billion EUR
•Import value increased 3 times – from 4.8 billion to 14.8 billion EUR
•Export – import coverage ratio increased from 40% to almost 60%
Overall trade
15.80%
58.10%
14.50%
11.60%
Exports
8.30%
58.10%
20.10%
58.20%
Top export destinations 2008 - 2012
100
200
300
400
500
600
700
800
900
1000
Germany
1100
25.20%
1023.8
Italy
933.2
Bosnia
Herzegovina
8.40%
842.6
Montenegro
Imports
Romania
Russia
FYROM
Slovenia
8.10%
Croatia
Austria
13.60%
France
2008
2009
2010
2011
2012
Germany, Italy and Bosnia and Herzegovina top three export destinations
Last year exports to Germany exceeded 1 bn EUR
EU
Customs Union of Russian
Federation, Belarus and Kazakhstan
CEFTA
Other
9
05
UNIQUE
EXPORT
POTENTIAL
Broad Market Access due to Free Trade Agreements
EU – Interim Trade Agreement entered into force on February 1st, 2010
CEFTA – signed in 2006, in force since 2007, for Serbia as of October
2007
Russian Federation – implemented since 2000, further trade liberalization in 2009 and 2011
Belarus – signed and implemented since March 2009
Kazakhstan – signed in October 2010, entered into force
in December 2011
Turkey – signed in 2009, in force since 2010
EFTA – signed in 2009. With Switzerland and Lichtenstein entered into
force in 2010, with Norway and Iceland in 2011
EU
CEFTA
EFTA
Russia
Turkey
Belarus
Kazakhstan
USA
preferential trade
11
06
FOREIGN
DIRECT
INVESTMENTS
FDI inflow to Serbia
2002 - 2011
FDI origin by sector
3,500
16
in mn EUR
3,000
2,500
14
Food, beverage and agriculture
16.40%
12
Financial services
14.30%
Telecom.
13.50%
10
2,000
8
1,500
6
1,000
4
500
0
2
2002
2003
2004
2005
2006
2009
2010
2011
FDI inflow
500
1,194
774
1,250 3,323 1,821 1,824 1,373
860
1,827
FDI as % GDP
3.1%
6.9%
4.1%
4.1% 14.1% 6.2%
2.9%
5.9%
Strong presence of investors from EU
- more than 4/5 of all FDIs of EU origin
2007
2008
5.3%
4.4%
FDI by sectors 2001-2011
0
Oil and gas
8.90%
Automotive
8.70%
Retail
5.80%
Real estate
5.30%
Tobacco
5.30%
Pharmaceutical
4.60%
Construction
4.40%
Others
12.80%
Source: SIEPA
Serbia tops region list in FDI inflow –
strong FDI performance in 2011
In 2011 with FDI inflow reaching 2,7 bn USD Serbia leader in
the region (comprising EU 27 Romania, Bulgaria and Slovenia)
– 41% of all FDIs to SEE destined to Serbia
Serbia attracted more FDIs than Croatia & Slovenia altogether,
or four neighbouring countries Montenegro, FYROM, Bosnia
Herzegovina and Albania
Serbia attracted one half of all greenfield FDIs in SEE
Better distribution across sectors, attracting investors with higher
value projects
However in 2012 sharp decline of FDI (80%) due to a severe
contraction in investment outflows from high-income European
economies and in addition, reinvested earnings were limited
due to weak profitability
Still positive trend occurring - foreign investors from middleincome countries such as Turkey, Russia, China and Azerbaijan
and high-income UAE are increasing their presence – a trend
which may spur a “second wave” of privatization
Leading Foreign Investors
Value
(mil. EUR)
Company
Value
(mil. EUR)
Company
1
Telenor
1.830
6
Agrokor
800
2
Gazprom Neft
NIS
1.400
7
Mobilkom
VIP Mobile
748
3
Fiat Automobili
Serbia
1.200
8
Philip Morris
DIN
671
4
Delhaize
1.010
9
Stada
Hemofarm
650
5
Banca Intesa
Delta Banka
893
10
Eurobank EFG
500
Investments until December 31st 2012
Source: Ministry of Foreign and Internal Trade and Telecommunications
13
Serbia offering a wide range of attractive
financial incentives for stimulating
foreign investors
For standard-scale Greenfield and Brownfield projects in the
manufacturing, export-related services sector and tourism, nonrefundable state funds are offered in the range between EUR
4,000 and EUR 10,000 per new job created within three years
of the day of signing the contract on awarding funds
•EUR 4.000 – 10.000 per job created
•Refunding up to 17% of total investment for projects of special
significance, with minimum investment of EUR 200 million
creating at least 1000 new jobs
•Refunding up to 20% of total investment for capital projects
worth minimum EUR 50 million creating at least 300 new jobs
•Refunding up to 10% of total investment for projects of medium
importance worth minimum EUR 50 million creating at least 150
new jobs
SUPPORTIVE
INVESTMENT
REGIME
07
•National treatment of foreign companies
•Free transfer of financial and other assets,
including profits and dividends
•No industry restrictions on
foreign investment
•Business legislation reforms in line with
the EU legal framework
National treatment for foreign investors
•In case of concession investment, the concession undertaking
company is exempt from corporate profit during the 5 years from
the day of the contracted completion of the entire concession
investment
Republic of Serbia, in the period of five years, subsidies and
tax benefits for creating new jobs
•Import of equipment based on the investment by the foreign
subject is exempt from customs duties, while for a number of
raw materials the lower tariffs are applied
•Corporate profit tax holiday for large investments in the period
of 10 years (investments exceeding 800 million RSD, i.e. app.
7million EUR and more than 100 new jobs created)
•The Republic of Serbia has signed Double Taxation Treaties
with 50 countries
•The state and particularly local municipalities indirectly stimulate
foreign investors by offering free of charge or subsidized fee
for land and related infrastructure
•Corporate profit tax holiday, proportionately to investment value, for investments into the regions of special interest for the
Financial incentives
Direct investments
Manufacturing sector
Eligible
investment
projects
Internationallymarketable services
Strategic projects
in the field of tourism
Investments in the
4th group of local
administration and
devastated regions
Investments in the
1st, 2nd and
3rd groups of local
administration
The entire territory of the
Republic of Serbia
The entire territory of the
Republic of Serbia
Amount
of funding (EUR)
4.000 - 10.000 for
each new job created
4.000 - 10.000 for
each new job created
4.000 - 10.000 for
each new job created
4.000 - 10.000 for
each new job created
Minimum
investment
amount (EUR)
500.000
1.000.000
500.000
5 million
Minimum number
of new, full-time
jobs created
50
50
10
50
15
08
VALUABLE
ASSETS HUMAN
RESOURCES
Labour force structure
•University and college education 16.24%
•Secondary school education 48.93%
•Elementary school education and no
education 34.44%
Earnings
Over the period from 2001 to 2011 annual
net income registered average growth
rate of 10% and real net wages increased
3,6 times
Labour force structure in 2011, by sector
20.70%
“This initiative demonstrates
our confidence and trust in
Serbia, its industry, management competence, and the
skill of its workers.”
Sergio Marchionne, CEO
18.50%
5.40%
55.40%
Services
Industry
Agriculture
Construction
Valuable assets - human resources
•27,000 university and 2-year college graduates, and 75,000
high school graduates annually
•Top quality technical education at both high school and university level
•A wide availability of highly qualified staff
•Strong command of the English language
Top Quality Technical Education
Zrenjanin
Novi Sad
BEOGRAD
^a~ak
Kragujevac
Kraljevo
Ni{
Faculty of Mechanical Engineering
Faculty of Technical Sciences
Faculty of Electrical Engineering
Faculty of Traffic and Transport Engineering
Faculty of Technology and Metallurgy
•11 technical faculties for white collar workers
•71 technical schools for blue collar workers
17
09
INVESTING
IN FREE
ZONES
fDi magazine’s second global ranking
of economic zones
• Among top 50 free zones of the future Free zone Pirot ranked 41st and
Free zone Southeast - E~ka (Zrenjanin) ranked 48th
• More than 600 free zones across 120 countries were invited by fDi
Magazine to complete a survey requesting both qualitative and quantitative data regarding their free zones
• The information collected was set under five categories: incentives,
facilities, cost effectiveness, transportation and best FDI promotion
•Fiscal benefits (exemptions from any tax burden for FDI, VAT,
company profit tax, property tax, income tax, etc.)
•Free of customs duties for goods, equipment, raw and construction material
•Efficient administration, (one stop shop)
•Simple and fast customs procedures
•Local subsides for using the infrastructure, providing a set of
services to users under preferential terms
Investing in Free Zones
Subotica
Novi Sad
Zrenjanin
[abac
BEOGRAD
Smederevo
Svilajnac
• Direct benefits
(FAS) Kragujevac
Užice
No customs and other duties shall be paid for import of goods intended for production activity and construction of facilities in a free zone, except when such goods are placed on
local market
Kru{evac
South (Ni{)
• Indirect Benefits – purchase of land below market value
Pirot
No VAT shall be paid for import of commodities into a free
zone and provision of transport and other services within a
free zone
In eight free zones – Subotica, Pirot, Zrenjanin, Novi Sad,
(FAS) Kragujevac, [abac, Smederevo and U`ice – all businesses are allowed with exception of retail trade
Existing
Underway
10th Pan-European Corridor
7th Pan-European Corridor
Three new free zones are underway: South (Ni{), Kru{evac and
Svilajnac*
*Directorate for free Zones of Republic of Serbia
19
Published by:
Ministry of Foreign and Internal Trade
and Telecommunications
22-26, Nemanjina St.
11000 Belgrade, Serbia
Phone: +381 11 314 96 86
Fax: +381 11 311 46 50
[email protected]
www.mtt.gov.rs
Other Relevant Institutiones:
Serbian Investment
and Export Promotion Agency
www.siepa.rs
National Bank of Serbia
www.nbs.rs
Chamber of Commerce
and Industry of Serbia
www.pks.rs
Ministry of Finance and Economy
www.mfp.gov.rs
Designed by:
Jadranka & Bojan Rasic
Photos by:
NIS, FIAT, Chamber of Commerce
and Industry of Serbia
Printed by:
DMD Printing House
REPUBLIC OF SERBIA
Ministry of Foreign and Internal Trade
and Telecommunications
www.mtt.gov.rs