The Law on Investments preserves the liberties of foreign investments while safeguarding standard investment guarantees. There is nothing new here compared to the repealed Law on Foreign Investment. The Law also lists out those well-known investment incentives: state aid, taxes, customs fees, and compulsory social insurance payments. However, if a bilateral or multilateral agreement grants wider guarantees to investors than the law on Investments, it shall apply.
The Law does bring some very good news: all state authorities (except the Competition authority) are obliged to resolve all administrative procedures in “realization and maintenance of investments in the shortest possible time.” Investors can jump the cues!
Some new state bodies to support investments are established by the new law: the Council for Economic Development, the Development Agency of Serbia (DAS), Vojvodina Investment Promotion (not new), municipal and city “units for local economic development and support.”
The Council for Economic Development is composed of ministers of economy, finance, labour, the president of the Serbian Chamber of Commerce and the director of the DAS. This body should guarantee steering through all the cumbersome red tape.
The DAS, which replaces SIEPA, “cooperates with all bodies of state to promote economic development and investments,” and it “assists in the realization of investments.” The autonomous province continues to use Vojvodina Investment Promotion (VIP).
Municipalities and cities are to establish “units for local economic development and support of investments” that provide “expert assistance and support to investors, if requested by the investor.” Municipal and city one-stop-shops are part of the new law: an investor may file documents and collect permits at the unit for local economic development.
Another new concept: The Republic, autonomous province, municipality or city may, upon request of investor, establish “project teams,” tailor-made to “provide expert assistance by the rendering of information and data and ensuring efficient granting of permits, needed for efficient and timely realization of investments.” At project team meetings, an investor describes his project and the officials explain what permits are needed and what needs to be submitted to get them. They agree on a timeline. These communications are confidential.
Large investments are hard to attract, and Serbian law is often not conducive to large private investments, resulting in complicated and sometimes circuitous procedures
Another novelty are “Investment Programs,” drafted and signed by the investor and the municipality and/or Autonomous province, which specify which documents need to be submitted to that level of government, which permits, and when they will be issued. The supervision of local and Provinces Investment programs is carried out by the DAS.
The DAS establishes and manages project teams for supporting “investments of special significance.” I would recommend that the DAS project teams be composed of relevant officials from all three levels of government, thereby facilitating investments of special importance.
The Investment Law does not specify that investment programs be signed between the DAS and investors of special importance, but there is no prohibition to do so, and the statutory duties of the DAS support the case that investment programs should be signed. Large investments are hard to attract, and Serbian law is often not conducive to large private investments, resulting in complicated and sometimes circuitous procedures. These complications are best resolved by a single all-level project team and then signing an Investment program. This approach should be applied not only for projects in which the state is an equity partner, but also for all “investments of special importance”.
The Law on Investments, regrettably, does not define the rules for entering nor the typical content of investment agreements between the state and investors, although this would enhance transparency and equal rights. Such agreements have been signed before by the Government, because major investors of who make long-term investments need special guarantees and incentives from the state acting in its public capacity. Investment agreements should not be reserved only for equity partners of the state.
I praise the introduction of the new concepts into the Law on Investments, such as expedited administrative procedures for investors, customized state project teams, investment programs, one-stopshops. I made two draft laws on investments in 2013 and 2015, and it is a pleasure that these ideas (in a diluted form) were introduced into the new Law on Investments. I hope that the suggestions put forward here shall be useful as well. I would conclude that the Law on Investments is an important step towards strengthening rule of law and predictability of investments in Serbia.
The author is a lawyer and former Minister of International Economic Relations