Risks to the investment climate include an inefficient judiciary, proven corruption at all levels, as well as remaining elements of the informal economy. The legislation has passed many laws aimed at improving areas such as building permits, labor law, public procurement and inspection procedures, said Jan Lundin, Ambassador of the Kingdom of Sweden to Serbia, for the latest edition of the New Economy “Investments in Serbia 2000-2020”.
In 2019, Serbia had an inflow of foreign direct investments of over three billion euros. How does Serbia act as an investment destination?
The investment climate in Serbia has seen moderate improvements in recent years, primarily driven by recent macroeconomic reforms, increased financial stability, better fiscal discipline, and Serbia’s commitment to joining the European Union (EU), providing a wide range of incentives for legal changes that lead to the improvement of the business climate.
However, there are challenges in Serbia that investors from Sweden and other countries should be aware of. Most importantly, progress is needed in the area of rule of law and the fight against corruption. Also worrying are cases of the possibility of exerting political influence on the decisions of various regulatory agencies. Serbia should also step up efforts to restructure state-owned companies, in order to introduce better governance and the services these companies provide.
Sweden and other countries, as well as international financial institutions, are ready to help Serbia in this process.
What advantages of investing in Serbia do you point out to potential investors from Sweden, and what do you warn them about?
The recent flow of numerous foreign direct investments serves as a clear proof that the Government of Serbia gives an important priority to attracting investors.
Judging by our contact with Swedish investors who have either already invested in Serbia or just want to do so, most of them have a generally positive attitude towards Serbia, emphasizing its strategic location, highly educated and affordable (cheap) workforce, good language skills, as well as and a wide range of investment incentives and free trade arrangements with many markets in the region and in Europe.
As mentioned in the previous question, risks to the investment climate include an inefficient judiciary, proven corruption at all levels, as well as remaining elements of the informal economy.
Legislation has enacted many laws aimed at improving areas such as building permits, labor law, public procurement, and inspection procedures. We are also aware that implementing these important reforms that help improve the business environment takes time. It is often a slow process, but Sweden is determined to help Serbia along the way.
How do you assess the cooperation between the Serbian and Swedish economies in the previous period and is there room for progress and increased investments?
This is the 103rd year of our uninterrupted diplomatic relations with a constant contribution to stable relations and respect between our two countries.
It also affected the constant growth of mutual trade and economic ties. Today, we have almost 200 companies operating in Serbia, which have Swedish-Serbian capital and employ several thousand workers.
Many of them are considering expanding their business by reinvesting in Serbia. Others are considering establishing their business presence in Serbia.
If the Serbian government continues on its reform path during the EU accession process, investment and business opportunities may continue to grow in the coming period. Sectors that could be most attractive to Swedish companies include environmental protection (especially waste, wastewater, energy efficiency, renewable energy sources, etc.), mining technology, information and communication technologies (ICT) including digital services, healthcare and production processes.
The system of attracting foreign investment through job subsidies gives results, but it is mostly investors who use labor-intensive technologies. Is it the right system to attract investment during the digital revolution?
In recent years, the Serbian government has committed itself to economic growth by creating new jobs, and in many cases job subsidies are being offered as one of the measures to address long-standing issues related to the country’s slow transition to a market-oriented economy.
The second effort is focused on the use of digital services for certain functions (eg electronic issuance of building permits, e-signatures and many other e-services). Although digitalization has not yet brought a significant improvement in business processes, in the long run it will lead to an improvement in the investment climate as a whole.
One such example is a project started in 2019, funded by Sida to help the Republic Geodetic Administration in Serbia develop a digital national register of investment locations, so that investors can access all the necessary information in one place on the Internet. Investors should also continue to closely monitor the implementation of Serbian government reforms and be well informed about current available government investment and incentive programs.
Sweden is known for its large share of renewable energies (RES) in electricity production. How did Sweden achieve such a high level of RES participation and how did it affect the Swedish economy?
Long-term and committed political reform, harmonized with investments and economic instruments, has successfully increased the use of green technologies and the work of Swedish clean technology has been very active (successful) in this field. All this together has enabled Sweden to become the first country in Europe to meet the renewable energy targets set by the EU. Almost 50% of energy production in Sweden now comes from renewable sources and much is happening in the field of wider use of biofuels, especially for the production of electricity and heating, as well as in the forestry industry.
In recent years, we have also seen an increase in the number of uses of heat pumps. The most important domestic renewable energy sources are biofuels, although organic waste from households and industry is also an important part. These two sources are also the main fuels used in the district heating sector, which supplies heating to 93% of all residential buildings and 83% of all commercial buildings.
What experiences in the field of environmental protection in Sweden can be applied in Serbia, especially in terms of greenhouse gas emissions, given that about three quarters of electricity is generated from coal here?
There is a wide range of Swedish clean technology expertise on biowaste, energy efficiency, heat pumps and biofuels – see: https://swedishcleantech.com/about-us/
The Swedish Embassy in Serbia, together with the Ministry of Environmental Protection and UNDP, is now implementing a plan for biological and green waste that plays an important role in reducing greenhouse gas emissions.
In Serbia, there are challenges that investors from Sweden and other countries should be aware of. Most importantly, progress is needed in the area of rule of law and the fight against corruption, Nova Ekonomija reports.
