The pandemic has postponed many business projects for some better days. Foreign investment in the world fell by up to 40 percent last year
In 2020, Serbia had 2.9 billion euros in net from foreign direct investments, which is half the decline. According to the inquiries they receive, the Development Agency of Serbia is convinced that we may return to the level of inflows from abroad from before the pandemic this or next year. Some experts warn that we are still three to four years away from that.
According to the balance of payments data for last year, the net inflow of FDI of 2.9 billion euros was more than enough to cover the current balance of payments deficit. It was 46 percent higher than the deficit.
– In Serbia, despite the pandemic, the inflow of foreign direct investments has remained strong – they point out in the National Bank of Serbia. – The inflow in 2019 of 3.8 billion euros was a record. The constant growth of interest of foreign investors in investing in export-oriented companies in Serbia, even during the pandemic, is primarily the result of the achieved and preserved full macroeconomic, financial and fiscal stability. Most foreign direct investments in Serbia during 2020 came from the Netherlands – 705.5 million euros, Slovenia – 483.3 million and China – 478.9 million euros. The inflow from Slovenia also includes funds from the privatization of Komercijalna Banka.
And for the majority package of the once largest state bank, 395 million euros were paid into the budget. We cannot count on such an injection this year.
– 2.9 billion euros of foreign direct investments arrived in Serbia last year, which is 19 percent less than the year before – explains Milojko Arsic, professor at the Faculty of Economics. – This amount was influenced by the privatization of Komercijalna Banka. We won’t have that this year. Investments take three to four years to return to the previous level. The company’s position has deteriorated. Our advantage is that China is less attractive, because salaries there are now higher, and geopolitical relations are somewhat longer. Maybe we could attract part of what would have been invested in China earlier. China is also becoming an exporter of capital. We can profit from that as well.
The Development Agency of Serbia points out that the interest of foreign investors is not waning. They see this by the number of inquiries that arrive every day and by the projects that are already being realized.
– Recently, the Japanese NIDEC officially announced that at least half of the 1.5 billion euros, which they plan to invest in Europe in total, will be placed in a new plant and research and development center in Serbia – they point out in RAS. – Our assessment is that this year, and next year, we will return to the level of foreign investments before the pandemic, and probably surpass them. We also benefit from the fact that many companies want to bring their production capacities and business closer to Europe. The investments we expect in this and next year will bring projects to Serbia that are not labor-intensive, because more and more investors who are engaged in high and sophisticated technology are also planning development and research activities here.
The money comes through the Netherlands
The first on the list of countries where investments come from is the Netherlands. The NBS explains that this is because some foreign investors, due to tax relief, as well as one of the most liberal financial and banking systems, realize their investments from branches in the Netherlands. But when it comes to parent companies, the picture looks somewhat different.
– According to the records of the Development Agency of Serbia, according to the number of projects, most investments are from Germany (14.9 percent), Italy (14.6), Austria (8.2), Slovenia (6.2), USA (5.4), France (five) and Turkey (3,4) – they say in RAS. – In terms of investment value, Italy is in first place (10.7), followed by the USA (10.3), France (9.7), Germany (9.7), Austria (9.3), China (8.9) and the Czech Republic with 6.8 percent, Kamatica reports.
