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Mihailo Vesović, Director Of The Chamber Of Commerce And Industry Of Serbia’s Division For Strategic Analyses, Services And Internationalisation

Good Policies & Economic Cooperation Go Hand-in-hand

Intensified political cooperation and the strengthening of mutual trust also has a favourable impact on the volume of economic cooperation, with Serbia ranking among the top countries in terms of the volume of Slovenian investments, while in recent times there has also been an increase in the flow of Serbian investments heading to Slovenia

The trade exchange between Serbia and Slovenia totalled 1.7 billion euros in 2022, which was up 292 million euros, or 20.7%, on 2021. Exports of Serbian products to Slovenia last year were worth 738.9 million euros, representing 54.1 million euros (or 7.9%) less than was achieved in 2021. The value of imports reached 957.1 million euros in 2022, which marks an increase of 237.8 million euros (or 33%) compared to 2021. The increase in goods imports from Slovenia in 2022 exceeded the increase in Serbia’s exports to this market, and thus the trade deficit with Slovenia stood at 218.2 million euros, after having totalled just 34.5 million euros in 2021.

Exports to Slovenia in the first quarter of the current year were slightly lower than the total recorded in Q1 2022 (down 2.6 million euros), while imports from Slovenia were up by approximately 3.6 million euros, thus the mutual trade exchange in the observed period of this year is almost the same as in 2022. These statistics were presented by Mihailo Vesović, Director of the Chamber of Commerce and Industry of Serbia’s Division for Strategic Analyses, Services and Internationalisation, in this CorD Magazine interview.

How much has cooperation between the two countries proved resilient against the global economic crisis of the last few years?

– There has been a noticeable upward trend in the trade exchange between Serbia and Slovenia over the last five years, with just a slight decrease in that exchange recorded in 2019. Expressed in percentages, this exchange has grown annually by between five per cent and as much as 20 per cent. The foreign trade balance was positive for Serbia during 2018 and 2019, while Serbia has had a trade deficit with Slovenia since 2017.

The Covid-19 pandemic showed that all companies that were able to reorient their operations to the markets closest to them geographically suffered the fewest shocks and recovered the quickest following the end of the crisis. A significant number of Serbian and Slovenian companies operated on both markets.

As an illustration of the volume of business cooperation between the two countries, we note that there were 4,409 Serbian companies registered as doing business with Slovenia in 2020, while that number increased to 4,502 during 2022.

Some 1,050 companies that are majority owned by registered enterprises or private individuals from the Republic of Slovenia were actively operating in Serbia during 2020, while in 2022 that figure rose to 1,066.

We often explain the success of joint cooperation between Serbia and Slovenia as being due to the fact that we once formed parts of the same country. How relevant to good cooperation is that shared past today, and how much can it be attributed to new relations that have been built by two independent countries?

– Trade cooperation between Serbia and Slovenia unfolds without major difficulties and is recording growth as a result of numerous factors, such as geographic proximity, a language barrier that’s only slight, brand recognition from the period of the shared country among consumers on both markets, and the significant Serbian labour diaspora in Slovenia.

The sectors in which the Slovenian and Serbian economies are very well-connected and compatible are primarily agriculture and the food industry, the metal industries, the sectors of tourism services and information technology (IT), which can contribute to increasing economic cooperation between Serbia and Slovenia

Diplomatic relations between the two independent countries officially began to be established on 9th December 2000. Relations between Serbia and Slovenia are extremely good, friendly and intense, with cooperation unfolding in many areas and at multiple levels, while commercial and political contacts are frequent and regular.

Slovenia actively supports Serbia’s accession to the European Union. It was during the Slovenian Presidency of the Council of the EU that the Stabilisation and Association Agreement with Serbia was signed. Slovenia contributed significantly to visa liberalisation for Serbian citizens and was among the main advocates for a formal date to mark the launch of negotiations on Serbia’s EU accession.

Slovenian companies were among the first European firms to invest in Serbia’s automotive and food industries. Considering the large influx of powerful foreign players in these sectors, where are opportunities to improve cooperation emerging today?

– The number of Slovenian companies operating in Serbia’s automotive industry is not large, but they manage to represent a serious player in the market competition despite their small number. Over the last decade, the automotive industry has been marked by the advent and accelerated growth of the electric mobility trend. Serbia is unfortunately lagging behind in this trend, but that’s precisely why great space exists to advance and expand operations.

Serbia has a very well-developed metal processing sector and mechanical engineering industry, which have for years represented some of the leading industrial branches and the primary pillars of Serbia’s processing industry. Thanks to their quality and potential, they have become widely recognisable on the global market. That’s why this sector provides an unlimited array of possibilities to expand and improve cooperation.

The agriculture sectors that are favourable for investment include: the production and processing of fruits and vegetables; the production of alcoholic and non-alcoholic beverages; the confectionery industry, bakery and milling industry, meat and milk production and processing and fisheries.

When it comes to the EU’s average GDP, Slovenia has reached a level of 88 per cent, while Serbia stands at 42 per cent. Do Slovenian investors still view Serbia as a place with a competitive workforce or are we also something more than that?

– The cost of labour in Serbia is significantly below the European average, so that was among the factors that made our market attractive to foreign investors. However, Serbia has a negative demographic trend and that represents a sustainability risk for the economic system, while cheap labour is not, and can no longer be, Serbia’s advantage. Many areas of business are marked by labour shortages, such as the manufacturing industry, while some service sectors in Serbia would be unable to function without temporary workers, such as construction, hospitality and transport.

The labour force problem cannot be solved by low labour costs coupled with the influx of foreign workers. We don’t see the competitiveness of the Serbian labour force as being reflected in it being inexpensive, but rather in its good price-quality ratio. High-quality labour must also have a reasonable market price.

We would also emphasise that Belgrade is not only the capital of Serbia, but also the economic centre of the region; that the influx of immigrants from Eastern Europe is a great opportunity for our economy and that ever more of our citizens are returning to Serbia.

SUPPORT

The Chamber of Commerce & Industry of Serbia, with its numerous activities, assists in the internationalisation of its members and their appearance on foreign markets, while it will soon have its own representative in Slovenia again

ADVANTAGES

Serbia is the region’s most attractive investment destination, on the basis of its physical and geographical characteristics, market size, free trade agreements and investor support system

OPPORTUNITIES

The state policy for attracting foreign investments was previously aimed at reducing unemployment, and it succeeded in that, while today it has shifting towards investments with greater added value