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Claims of discrimination against domestic investors in Serbia

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The allegation of discriminatory practices against domestic small investors in Serbia, although officially denied, has sparked a debate over the country’s business environment. Pavle Medić from the Center for Advanced Economic Studies (CEVES) suggests that despite official assurances, direct subsidies and tax laws seem to disproportionately benefit large corporations.

At the Kopaonik Business Forum, former finance minister Dušan Vujović added fuel to the debate by stating that corruption has less impact on foreign direct investments, contributing to the perception of a dual business environment. This environment appears favorable to foreign investors, while domestic companies face challenges related to the rule of law and corruption.

National Bank of Serbia (NBS) Governor Jorgovanka Tabaković refuted claims of state discrimination against domestic investors, emphasizing that Serbia has provided an environment conducive to record-breaking foreign direct investments. Tabaković challenged critics to provide evidence supporting the assertion that the state hinders domestic investments.

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Minister of Economy Slobodan Cvetković echoed Tabaković’s sentiments, stating that there is no discrimination against domestic investments in Serbia. He argued that foreign investors, being more powerful and bringing new technologies, contribute positively to the market.

However, Ilija Dević, former owner of ATP “Vojvodina,” responded to Tabaković’s call for evidence by sharing his own example. Dević highlighted the challenges faced by domestic companies, citing the case of ATP “Vojvodina,” which led to bankruptcy due to contractual issues with the City of Novi Sad.

Medić argued that the Development Agency of Serbia (RAS) primarily supports foreign companies, with a substantial majority of funds allocated to large foreign investors. This skewed distribution, where 70% of subsidies go to foreign investors and 30% to domestic investors, raises concerns about the fairness of state support.

He also pointed out that tax exemptions for investments primarily benefit large companies, creating an environment where smaller enterprises struggle to meet the criteria for tax relief. Medić highlighted the absence of support for small and medium-sized enterprises, calling for a dedicated agency to address their specific needs.

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Comparing Serbia to Ireland, Medić emphasized the importance of having an agency focused on supporting small and medium-sized enterprises. The debate continues, raising questions about the inclusivity of Serbia’s investment policies and their impact on the domestic business landscape.

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