This is a promising period in the economic relations between the USA and Serbia. Serbia is taking steps to expand economic co-operation with its neighbors in the Western Balkans and the EU. Serbia’s “Little Schengen” initiative and the EU-promoted common regional market offer new opportunities to facilitate trade and economic co-operation in the Balkans. If the region can move towards functioning as a single economic space – with fewer barriers to the movement of goods, services and people – American and other investors will be more attractive to set up their local hubs here. Serbia, as the economic center of the Western Balkans, would have disproportionately more benefits from that integration, Beron Lobstein, head of the economic department at the US Embassy in Belgrade, told Nova ekonomija.
How do you see the development of economic relations between Serbia and the United States, especially having in mind the agreement on the normalization of economic relations signed in 2020 in Washington, which mentions several important projects?
Serbia’s public financial management and planning also provided opportunities for cooperation with the United States. Prior to the coronavirus pandemic, the Serbian government had four consecutive years with a budget surplus and managed to reduce the burden of public debt to a tolerable level. At the same time, the government has set a strong agenda for investing in infrastructure projects in the areas of transport, waste management and renewable energy. Not only can the government afford these projects because of fiscal responsibility, but these projects are critical to sustainable and sustainable economic growth in the future. These projects offer more than enough opportunities for American companies to participate in the expansion of Serbian infrastructure.
What will be the role of the newly opened DFC office in Belgrade?
In the last 20 years, the United States has provided about a billion dollars in economic aid to Serbia in various areas, from agriculture to aid to small and medium enterprises. Serbia has become a richer country in the last two decades and now it is appropriate to expand our cooperation to help investments in the private sector.
That’s where DFC comes into play. DFC brings a number of tools to economic cooperation between Serbia and the United States, including risk insurance, loan guarantees, and even direct loans and other forms of financing.
The DFC will be able to use them in Serbia thanks to a new Investment Promotion Agreement, signed by US Ambassador and Finance Minister Sinisa Mali in January. We hope that DFC will encourage more American companies to invest in Serbia, but also that it will help create conditions for Serbian companies to grow and develop.
Where do you see the most room for improving trade and investment between the Serbian economy and the US economy?
The business climate in Serbia has greatly improved in recent years. Economic and fiscal stability have helped and the government has privatized many former state-owned companies. That work needs to continue. Most importantly, investors should be able to rely on an environment where the rule of law is respected at all times, where contracts are enforced, and where courts resolve disputes fairly and efficiently. The European Commission pointed out this in its reports on the process of Serbia’s accession to the EU, and we also hear that from American companies. The government could further improve the business environment by implementing reforms in the Foreign Exchange Payment Act, which continues to place technical and bureaucratic burdens on cross-border transactions of international companies operating here.
Have any American companies shown interest in investing in Serbia? In which sectors?
Many US companies already operate here, employing over 20,000 people in a variety of sectors, including food and beverage (Coca-Cola and PepsiCo), packaging and logistics (Ball Packaging), digital services (NCR, Oracle and Microsoft), and the automotive industry, development of infrastructure projects (Bechtel), mining and many others. We think there is room for growth, and so do other American companies. We spoke with almost several companies about investments in the energy sector, including the potential supply of natural gas through new gas pipelines, as well as in renewable energy sources.
In previous years, American technology companies bought several Serbian startups. Do you see room for this cooperation to continue at a strategic level, such as the establishment of research and development centers here?
I see. One of the biggest advantages of Serbia is its young and highly educated workforce. Many of these young people are interested in working in the technology sector. In order for these people to stay in Serbia, the country must provide them with career opportunities. This begins with creating an environment that encourages and embraces technology startups. It is also important to provide sources of funding so that these companies can grow. We have been working with partners in Serbia for many years on programs that address these priorities, and Serbia has made important progress there.
Serbia and the United States are improving economic relations, but the United States is still not among Serbia’s largest trading partners. Do you see the possibility that the products and services of Serbian companies have a greater presence on the US market?
Although Serbia is not one of the main trade partners of the USA in terms of direct trade, do not forget that many Serbian products can be found on the American market through supply chains of trade partners from the EU, primarily Italy and Germany – as suppliers of automobile parts, for example. But as Serbia further develops key areas of its economy – I mean digital services and food production – there are promising opportunities to expand direct cooperation with American customers.
The United States has invested heavily in projects related to the rule of law and media freedom over the past 20 years. Do you see progress in that area?
Improvements in the rule of law and media freedoms are the two most important areas that the European Commission has identified as essential for accelerating Serbia’s accession to the Union. We agree. These areas are critical to any liberal democracy, essential for ensuring sustainable long-term economic growth. They help the authorities to be accountable for their policies and actions. They are therefore the natural focus of our support programs. We have seen important progress. There are investigative journalists in Serbia who do a good job. We have also seen great openness to our work on the rule of law. Various legal reforms have brought about an improvement in the business climate. But of course, there is still a lot of work to be done.
What do you think about the business environment in Serbia? What are the benefits of doing business here?
Serbia has made great progress in improving the business climate. The government is obviously taking care of that. It has made significant positive changes in the legal framework for business and investment. It offered directly to foreign companies generous incentives to invest in Serbia. These moves have created new jobs in the country and Serbia is now ranked 44th in the world in terms of ease of doing business, according to an annual World Bank Doing Business survey, Nova Ekonomija reports.
