The announcement that „Mirabank“, a member of the „Royal Group“ from the UAE, is to invest USD 5 billion in Serbia in the next three years is definitely good news, especially if one considers the fact that the level of investments has been very low in the past period. For years, economists have been pointing out that without a larger investment inflow there can be no considerable economic growth rates and that the business setting improvement is the most important factor for the arrival of investors.
The arrival of „Mirabank“ from the UAE in the Serbian market should contribute to the development of the financial sector, especially if investments of several billion dollars are realized in full. The majority of the sum is intended for crediting economy. In the past two years, the investment inflow in Serbia has dropped drastically and does not exceed one billion euros annually.
According to economists, there are several reasons for that, such as the drop in the global investment level due to the economic crisis, or the slow application of measures for business setting improvement. Although the government keeps mentioning almost every day that the investment climate improvement is a priority, little has been done in that sphere. The adoption of the laws on labour, privatization and bankruptcy is a good step forward, but is not enough. If one looks at the recommendations of business associations, one can see that the measures they expect the government to take include the simplification of the administrative procedure and legal safety, as top priorities. Increasing state administration efficacy and reducing regulations is a necessary condition for the creation of a better business setting, but the process is going on slowly. Thus it takes several months to obtain a permit, licence or certificate and one needs many of such documents, which represents a waste of precious time for companies wishing to make investments.
As for legal security, two events surprised both the analysts and foreign investors recently. Calling in question the economic justifiability of the strategic agreements signed by the past Serbian government and world renowned companies is not a good message for new investors, the more so as the aforesaid companies have been operating successfully in the Serbian market for years, employing a large number of people, realizing profit and making big exports. When coming to Serbia, planning to invest their own capital and to contribute to the development of local economy, big companies do not want to be the site of political conflicts between the leadership and the opposition. Another incident as well has had a negative echo in foreign investors’ circles.
A high governmetn official blamed a foreign company for the poor business results of a state enterprise operating in the same sphere. One should bear in mind the fact that the world’s most distinguished companies have gained their reputation in the strong battle and competition in the international market and thus they do not go to Serbia in order to destroy local companies, which, without the state’s financial support, cannot survive even in the local market. Economic analysts warn that such cases do not contribute to the establishment of a stimulating investment climate, but, on the contrary, they are sending a message that foreign investors are not welcome and that their investments are not safe.
Should the government want to increase the investment level, without which there can be no economic growth, concrete measures and moves to make the business setting truly favourable are required. Meanwhile, it is important that UAE investments, both those in the banking sector and those that have been announced before and have not been realized so far, such as those in a chip factory, an airplane parts factory or a food plant, should arrive in Serbia.
Source Radio Serbia
