It has been announced that several more major German investors will confirm their decisions to invest in Serbia by the end of this year. This provides a reason to believe that the growing trend of cooperation between the two economies will continue and will deepen

Serbia’s trade exchange with Germany continued to grow again this year. After an increase of 12.5% in 2018, when it reached a record total of 4.88 billion euros, that exchange has now exceeded three billion euros, according to the latest data published for the seven months of 2019, which represents 7.2% more than during the same period of last year. “Provided this trend continues, we will end this year with more than 5.2 billion euros in mutual trade,” says Marko Čadež, president of the Chamber of Commerce & Industry of Serbia (CCIS).

It is particularly important for the Serbian economy that exports to the German market, which are now 2.5 times higher than a decade ago, are growing continuously, notes Čadež. “It is certain that we will exceed two billion euros this year.”

An important contribution to Serbia’s growing export performance and the improving structure of our exports is provided by German companies that have invested here and are among the largest exporters – not only to Germany but to the markets of the world. In seven months, our exports reached 1.28 billion euros, which is an increase of 11.3% compared to the same period last year, and they are growing faster than imports.

“In this way, Germany – in addition to being the top foreign trade partner and the country from which we import the most goods – has again, after a break of a few years, become the top export market worldwide for Serbian goods. This has also contributed to increasing the coverage of imports by exports, which have risen from last year’s level of 66 per cent to 72.9 per cent,” says the CCIS president.

“Germany is also our top foreign trade partner in the trade of services, but unlike the deficit that we have in the trade exchange, in this field, we are also recording a positive balance in 2019. In the first half of the year, we recorded revenues of 334 million euros from exports of services, which is actually twice as much as imports (162 million euros) and represents a surplus of 172 million euros.”

What kind of impact on the trade exchange and level of investment of German companies do you expect in the period ahead, considering the slowdown in the German economy?

– There is no hint of a reduction in the operations of German companies in Serbia for now. On the contrary, in the latest poll conducted by the German-Serbian Chamber of Commerce – which was published in May, when the potential risk of a slowdown in both the global and German economies was already known – 88 per cent of the members of this association said that they would again invest their capital in Serbia, while 51 per cent announced that they will hire new workers this year and 43 per cent said that they will also invest in 2019.

Of course, any slowdown in global growth always carries great risks for small and externally dependent economies like ours: there is a danger that reduced economic activity, especially in major partner countries, will lead to reduced demand for our products and services, delays in previously planned investments and restrictions on the investment operations of their companies that already operate here.

When it comes specifically to Germany, Europe’s strongest economy, I’m convinced that with its strength it will, as always, find the right response to the latest global challenges and that, thanks to a stable financial base it will – if necessary to resist the recession – take the announced measures of injecting billions of euros into its economy.

A solid start to the third quarter, as measured by July’s rise in German exports, is encouraging, as is the fact that, following the European Central Bank’s announced monetary stimulus and the German government’s fiscal stimulus, the sentiment of German investors had improved more than expected in September.

Despite news of a slowdown in the German economy, there is no hint of a reduction in the operations of German companies in Serbia for now

And our best response to the risks of a potential spillover of the crisis will be for us to raise the vitality and capacity of the domestic economy, improve the competitiveness of local companies, network them with partners around the world, strengthen regional cooperation and make the business environment more attractive for both local businesses and the international business community.

Apart from expansions in the capacities of existing German investments, are there any announcements of new ones?

– It has been announced that several more major German investors will confirm their decisions to invest in Serbia by the end of this year. Until then, in expectation of the official opening of factories of both old and new investors, which are already being built or extended, I would remind readers that in recent months, among other things, MTU Aero Engines AG has formally confirmed that it is building a facility for the repair and servicing of aircraft engines in Serbia and that Boysen received land for a factory in Subotica.

Encouraged by the positive experiences of major German companies that have already invested, employ about 60,000 workers or have suppliers from Serbia, interest is also growing among those that haven’t previously done business in our country of cooperated with our companies. German SMEs are also increasingly interested in Serbia.

We also received confirmation of this during Prime Minister Brnabić’s recent visit to Berlin – during talks with representatives of the German Association for Small and Medium-sized Businesses (BVMW), the Foundation for Family Business and BITKOM, the German digital association. It has already been agreed that BVMW member companies will come to Serbia in mid- January to more fully acquaint themselves with conditions and investment potentials, and the experiences of those who operate here successfully.

A business and consular delegation from Baden Württemberg arrives in October, and after business forums held in recent years in the states of Hesse and North Rhine-Westphalia regions, at which business and investment opportunities in Serbia were presented, we are next heading to Bavaria. Together with association OWWF Bayern, we are preparing a major forum in Munich for next March that will include the participation of around 50 of our companies from the food, IT, chemicals and furniture manufacturing industries.

You often highlight the importance of including Serbian enterprises in the supply chains of German companies. How successful are our companies in this regard?

– Interest is constantly growing among German companies that have already convinced themselves of the reliability, quality and ability of our companies as suppliers, and our companies are increasingly ready to respond to their demands. The last gathering under the scope of the Western Balkans Purchasing Initiative, held in Dortmund this June, brought together around 370 entrepreneurs from Germany and the Western Balkans.

Participants included 51 German companies and 130 companies from the region, the majority of which – including 38 Serbian firms – hail from the sectors of metal processing, electrical parts, plastics and auto parts. In the course of only one day, they had around 700 b2b meetings – as many as 200 more than in the previous year. Also contributing to the increasingly successful performances of our companies is the training course “Ready for the German Market”, which is organised by the Chamber of Commerce & Industry of Serbia in cooperation with GIZ and BME.

Here in Belgrade, the CCIS organises supplier days for individual foreign companies, including German companies. This unique service on our market has, in the past two or three years, been utilised by almost a thousand Serbian companies, mostly from the metal and food sectors. For example, companies Teknia, Goma Line, Moretto etc. became suppliers of Eberspächer, and this German group of companies is currently negotiating with another two factories in Serbia.

German SMEs are also increasingly interested in Serbia. We also received confirmation of this during Prime Minister Brnabić’s recent visit to Berlin

This autumn we are organising a supplier day event for German company Spectro, from the AMETEK system, and local fruit and vegetable producers had another opportunity to present themselves to Lidl this September. Otherwise, the products of more than a hundred Serbian companies have made it onto the shelves of German retail chains METRO Cash & Carry and Lidl in Serbia, some of which have even become part of their global supply chains.

To what extent could labour shortage prove a challenge in attracting new German investors?

– Serbia offers foreign investors a whole range of reasons to invest in our economy, including the quality of the workforce, with which German investors are happy, despite the lack of some profiles that we are working on remedying together. Along with German support, based on the experience that German companies brought from home and shared with us selflessly, we have introduced dual education to high schools, and we recently also received a law on dual education at university colleges…In the previous school year, around 2,700 high school students underwent preparatory work experience at about 200 companies for one in six occupations – with profiles developed thanks to a German project.

Around 300 companies have also this year opened their doors to about 1,150 new first-year students who are studying these educational profiles.

Alongside the fact that its companies top the lists of foreign investors in Serbia, Germany also invests heavily in training staff in the sphere of non-formal education. Likewise, the Klett School of Dual Education offers high-school graduates and existing employees training as mechatronics specialists according to the German model.

All educational programmes are available both to staff who will work within “German” investments and in domestic companies. Support for the development of training centres has also been announced, in order to equip secondary schools as best as possible for the retraining of personnel.

In which areas do the CCIS and AHK Serbia cooperate most closely in terms of improving the business environment?

– Apart from cooperation on the development of dual education, joint activities within the scope of German Supply Initiative and other projects implemented jointly by the CCIS and AHK Serbia, we also have a number of joint legislative initiatives aimed at improving the economic environment and assisting companies in their daily operations.

For example, together with other business associations, we have proposed amendments to the Law on Foreign Exchange Operations, in line with the economy’s demand for the further liberalisation of capital flows and easing the automation of payments.

We are also cooperating on proposals for solutions to the future Law on the Protection of Competition, in order to align this area with EU legislation and establish fair and transparent operations for market participants. We jointly insist on eliminating the problem of retaining haulage vehicles at border crossings during goods export operations, in order to reduce the time and costs of transport for businesspeople and to enable the delivery of goods in accordance with contractual obligations.