Veljko Jovanović, Vice President of the Serbian Chamber of Commerce & Industry

Energy Sector and Renewables Most Interesting for Investment

Slight indicators of Greece exiting its economic recession could be a good start for improving cooperation and investment in the energy sector and renewable energy sources, tourism, food processing and the furniture industry

Greece’s private companies show visible growth of interest in our market, but it is of course up to us to make them offers in the areas in which we want to cooperate, considers Veljko Jovanović, Vice President of the Serbian Chamber of Commerce & Industry.

What are the basic characteristics of foreign trade between Serbia and Greece?

Greece traditionally represents an important economic partner of Serbia. The dominant form of economic cooperation between the two countries is the exchange of goods, while there are higher forms of economic cooperation in the sense of Greek investments in the Serbian economy.

The commodity exchange is characterised by stability, versatility and almost constant growth from the year 2000 until 2009 when the global crisis emerged. Serbian exports to Greece entered a period of stagnation during the course of 2012, as a result of falling demand for Serbian raw materials and intermediate goods on the turbulent Greek market.

In 2015, total trade between Serbia and Greece amounted to $392.53 million. Of that total, imports valued $240.89 million and exports were worth $151.64 million. This ranked Greece 22nd in Serbia in terms of both imports and exports.

We have recently seen an increased share of products with a higher added value among Serbian exports to the Greek market. Which products are those?

The products dominating export to the Greek market in 2015 were: paper, cardboard and cellulose products (13.25%); iron and steel (9.95%); plastics in primary forms (8.28%); sugar, sugar products and honey (6.82%), metal products, nes (5.45%); solid vegetable fats and oils (4.80%), cork and wood (2.81%);. (Source: Customs Administration of the Republic of Serbia)

While we record constant growth in the foreign trade exchange, it is still at a relatively low level. Where do you see opportunities to expand cooperation?

In general terms, promising sectors for cooperation between Serbia and Greece, besides the banking sector – where the most significant Greek investments have been forthcoming – also include the telecommunications sector, energy, infrastructure, agriculture, hotels, wholesale trade and retail. According to the opinions of Greek business leaders, Serbia has great potential to attract foreign investment, particularly in tourism, energy and construction.

According to their view, Serbia has comparative advantages for the development of tourism – geographic location, professional people and good managers, rich culture and tradition, low tax rates and a cheap workforce. They also see potential in the area of alternative forms of generating energy – wind farms, hydropower plants, solar panels and biomass.

There is great potential for deepening cooperation between Greece and Serbia in the fields of renewable energy, the food processing industry and environmental protection. Is this potential better utilised today?

The conclusion that emerges from these meetings on the topic of improving economic cooperation between Serbia and Greece is that the business leaders of both countries have shown interest in cooperating, and that it is up to the institutions to attempt to return economic relations between Serbia and Greece to the level of cooperation from the 2000-2010 period, when they were at the highest level, both in terms of investment and the trade exchange. This is also the case with the aforementioned sectors. Mild indications that Greece is exiting its economic recession could be a good start for improving cooperation. If you talk with Greek partners, in the last few years you will have seen a growth of interest in our market, but it is of course up to us to make them offers in the areas in which we want to cooperate.

How much could the further economic connecting of Greece and Serbia be influenced by the fact that both are on the route of China’s New Silk Road, and what do you expect in this regard when it comes to increasing the volume of rail cargo from the port of Piraeus towards the Czech Republic and Hungary?

This issue is certainly important to the whole region and the connecting of regional infrastructure. We must use China’s interest in speeding up trade flows for infrastructure projects that will bring benefits to our region. This region has primary importance for China as a gateway to the EU. Of paramount importance is Corridor 11, the route that leads through Serbia to Montenegro. The rail routes to the north of Europe are also very important. Here we are also talking about multiple high-speed rail links; then this naturally calls for intermodal points, which are enormously important for regional development. When you offer developed infrastructure, then you do not have to think about many other subsidies for foreign investors, because you provide them with competitive conditions simply by lowering transport costs.

How much has the Greek crisis affected the scale of Greek companies’ operations in Serbia and the falling pace of new Greek investments?

Greece is one of the biggest investors in Serbia, with the total value of investment amounting to around 2.2 billion euros (according to the NBS, increased with the assessment of inflows to NBS coming from the accounts of Greek enterprises in Cyprus), realised in the privatisation process, through greenfield investments and in joint ventures. The majority of investments came in the pre-crisis period, until 2008, and were made in the banking sector.

As of 2014, the NBS uses a new methodology for the purposes of recording foreign direct investment that is consistent with the IMF Guidelines for the balance of payments and international investment position, sixth edition, and, according to that data, Greece investments in Serbia in cash in the first nine months of 2014 amounted to €46,922 million.

According to the opinions of Greek business leaders, Serbia has comparative advantages for the development of tourism – geographic location, professional people and good managers, a rich culture and tradition, low tax rates and a cheap workforce

Following the financial crisis in Greece, and under the pressure of the current government’s anti-crisis measures, the Greek state capital is no longer directed towards foreign countries, Serbia included. On the other hand, Greek private capital will definitely look for new ways to bear fruit, seeking alternative markets and profitable investment projects.

The Greek side has shown interest in investing in the energy sector and renewable energy sources (Aktor, Terna et al). Investments of companies in the food industry and furniture industry have been announced and should be realised in the future. In 2016 Lamda Development plans – after resolving its property issues – to start construction at the “Beko” site in central Belgrade – with the planned value of the project estimated by the investor at between 150 and 200 million euros. The Greek fund ELETSON also intends to continue the project of renovating hotel Yugoslavia in 2016.

How present are Greek companies as works contractors on major infrastructure projects in Serbia?

The Greek side has shown interest in investing in the energy sector and renewables. In these sectors Greek companies Aktor and Terna are present. Terna is engaged in the construction of several sections of Corridor 10 and engages Serbian companies that are working well as subcontractors. There are also prospects for joint actions on the markets of North Africa and the Middle East.

Around 80 Greek companies operate directly on the Serbian market, while another 150 are operating through joint ventures with local partners (mainly in the financial sector, infrastructure projects, trade, hospitality, consulting and legal services, agriculture and the food industry).