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German companies are staying in our country – nearly 90% of businessmen would invest in Serbia again

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Serbia is an attractive investment destination and the majority of German companies that have entered this market would invest in it again although the Government of Serbia have not taken sufficient measures to create better business climate – this is the conclusion of the fifth traditional poll of the German Business Association in Belgrade (DWB) for year 2010, which was conducted between February 16 and March 4.

Being present at the presentation of results, German Ambassador Wolfram Mas confirmed that Serbia was interesting to his country and assessed it was important that that market be entered by German mid-size companies, the preconditions for which were: political stability, equality before the Law and less bureaucracy.

He reminded that German investments in Serbia had grown from 282m EUR in 2004 to 1.5bn EUR, while 40m EUR had been invested in 2009.

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Ernst Bode, a representative of the German Business Association that gathers 150 members and employs 13,000 people in Serbia, said that the poll showed that German businessmen were of the opinion that Serbia’s economic position was not fantastic, but that the companies were satisfied with their business results and that their current positions were better than in 2009.

Current Vs Future Situation in Serbian Market

Thirty per cent of German companies that operate in our country assessed their business situation as good, while 62% thought it was satisfying. In addition, 42% of them expect their performance to improve this year, while 50% expect the same situation as in 2009. Last year, the turnovers of 34.5% of German companies in Serbia dropped. This year, 48% of them expect growth, 45% do not expect any change, while only 7% believe that their turnovers will drop. Similarly, 39% of companies expect growth of investments, while 48% are of the opinion that the level of investments will remain at the last year’s level. Higher profit is foreseen by 42% of the polled, the same percentage think that their profits will not be changed this year, while 16% of them expect smaller profits.

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Ernst Bode also said that “paying moral” was very important for investors and that collection of payments in Serbia was not good because the economy’s liquidity was at low level. According to him, the foreign-trade exchange between Serbia and Germany in 2000 amounted to 2.8bn EUR, while its value now equals only third of that amount.

What did Serbian Government (not) do?

Michael Schmidt, the Delegate of the Delegate Office of German Industry and Commerce for Serbia and Montenegro, estimated that Serbia was very important country in central and east Europe, the region that received 9% of all German investments abroad, including the investments in China. However, he warned that two thirds of all polled companies had found the Serbian Government’s measures against the crisis either average or unsatisfying. He also underlined the need for resolving structural bureaucratic problems.

Based on the members’ opinions, Germans find legal security the most important, followed by public administration (transparency of public tenders), access to the state subventions and quality of infrastructure. He said that the Government of Serbia should be more efficient in the improvement of those areas, as well as in the fight against corruption and crime. According to him, the education system also needs to be improved because lack of quality staff is obvious.

Staying in Serbia After All

Regardless of the insufficient measures that our Government have taken to create better business climate for attracting foreign investors, 87% of the polled said it would not change Serbia as the investment destination, which can not be said for all countries where the poll was conducted. Therefore, certain progress is made when compared to the poll’s results in 2009. German companies assessed their performance in Serbia as positive and they are optimistic when it comes to the results in 2010, but the representatives of German businessmen found the poll’s results “subjective”. On the other hand, Ambassador Mas points out that the businessmen in Serbia, once they get familiar with the country, put it at almost the same level as Czech Republic and Germany.

The German Business Association in Belgrade was formed in late 2003 at the initiative of the Delegate Office of German Industry and Commerce and numerous German companies in Serbia. This association, which currently has about 150 members, closely cooperates with Delegate Office of German Industry and Commerce in the global network of German chambers of commerce.

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