Cheaper labor, lower operating costs, lower taxes, and the possibility of obtaining state subsidies on several bases, but also the size of the market and good trade agreements with many countries in the world, are just some of the possible reasons why one company would leave Croatia and do the rest of the business in Serbia.
The decision of the company Meggle to shut down production in Osijek with a total of 160 employees and to practically freeze the investment that began in Croatia in 1996, was not made overnight. As they pointed out in the factory itself, the withdrawal from the neighboring market has been postponed several times during the last few years, with the hope that business conditions and circumstances will improve. As they were absent, and they explored all other options in parallel, a decision was made to withdraw.
In Meggle, they stated that they are not moving production to Serbia, but that they are simply shutting it down in Croatia. The question that arose at the same time is, however, what does Serbia have from the point of view of investors, without Croatia either not, or at least not to a sufficient extent. Because Meggle has been operating in Kragujevac since 2011, when they bought the Kragujevac dairy Mladost in Serbia.
In Serbia, the average salary is around 500 euros, and in Croatia around 900 euros, so a cheaper and quality labor force is more accessible to investors in our country. In Serbia, business costs are lower, foreign investors often receive subsidies, and the state and local governments are ready to encourage them in terms of providing space for work, the necessary infrastructure, etc.
“Serbia’s main asset is the right to access cheaper labor, support for foreign investors, but also in general in easier business. We have much cheaper electricity than Croatia, but also from many other countries in the region and the EU,” says Milan Kovacevic, a consultant for foreign investment in an interview for Blic Business.
A very important fact is that the Serbian market is larger than the Croatian one. Through the free trade agreement with the EU and CEFTA members, as well as with Turkey and the Eurasian Economic Union, in which Russia is the leading member, companies registered in Serbia practically open a larger market than the one opened to companies registered in Croatia.
Speaking specifically about the dairy industry, Kovacevic says that there is a lot of competition in the European Union and a lot of livestock farms, so it is clear from that side if Meggle, for example, leaves Croatia because it has become part of the European Union.
The Council of Foreign Investors has repeatedly pointed out that Serbia is positioned relatively well in relation to its neighbors, thanks to its geostrategic position and well-developed framework of the Free Trade Agreement.
“The government has managed to implement fiscal consolidation and enable good economic parameters, such as GDP growth and exports, and to introduce significant improvements in various parts of the business climate, primarily in the field of real estate and construction,” the Council said.
In its report, the US State Department also positively assessed the country’s strategic position, but also a well-educated and profitable workforce, investment incentives and free trade agreements with key markets, primarily with the European Union, Kamatica reports.
