America’s active engagement, and a new, constructive, economic approach to solving complex and difficult topics representing the biggest obstacle to economic and political normalization in the region, have unblocked the cooperation process and introduced a new dimension to bilateral relations. I am deeply convinced that this will contribute to maximizing the potential to strengthen our economic ties ~ Marko Čadež
Chamber of Commerce & Industry of Serbia (CCIS) President Marko Čadež has no doubt that a new chapter of bilateral relations, and especially closer economic relations between the two countries, was opened at the highest level during recent talks in Washington.
“The agreement reached in Washington, and the speed with which its implementation began with the international Development Finance Corporation (DFC) and the work on defining specific projects, are important for the normalization of economic relations between Belgrade and Priština, and for the growth and development of the entire region, but also for future economic and overall relations between Serbia and America”, says our interlocutor.
Čadež believes that America’s active engagement, and a new, constructive, economic approach to solving complex and difficult topics that haven’t only burdened relations between Belgrade and Priština for year, but which also represent the biggest obstacle to economic and political normalization in the region, have unblocked the cooperation process.
“At the same time”, he adds, “it also brought a turning point, a new dimension and new prospects to Serbian-American bilateral relations. I am deeply convinced that this will contribute to maximizing the potential to strengthen our economic ties. Not only because of the significant funds with which the U.S.’s state development bank and its partners will support projects, but also because the U.S. administration is thereby sending an excellent message to its own business community, and the international one, that Serbia and the region represent a place worthy of their investments”, says the CCIS president.
How important are the infrastructure projects that will be supported by the DFC at this time when the country is confronting the COVID-19 pandemic?
– Strengthening regional economic integration and cooperation, building a common Western Balkan space as soon as possible and ensuring the deeper inclusion of the region in the unified legal and economic system of the European Union are of crucial importance for the economies of the region to recover from the consequences of the Coronavirus pandemic.
Stronger regional connectivity and the faster recovery of the Western Balkan economies will also be supported by capital transport and energy infrastructure projects, the implementation of which will be supported by the DFC, but also investments in equipping industrial zones in terms of infrastructure will also be extremely important for attracting new investors. Projects like the construction of the Niš-Pristina Highway, the construction and modernization of the railway on the northern and eastern branches towards Priština, and their further connection with the port of Drač (Durres) on the Adriatic coast aren’t only important for Belgrade and Priština, but also for the economy of the entire region. These projects are important for the economy, because of all the benefits that infrastructure development brings as a prerequisite for better economic cooperation, greater competitiveness and doing business more efficiently. They will also ease the implementation of the “Mini Schengen”, as the zone of a common regional market and the free movement of people, goods, services and capital.
It is equally important for our economies that support be provided to the SME sector, through a guarantee scheme and a special credit line, as well as support for private sector investment projects, companies in the areas of manufacturing and services – from energy and security, via the food industry and logistics, to IT and high technology.
Could it be said that the Mini Schengen idea has now gained momentum and significance?
– The fact that, according to the agreement from Washington, Priština is joining Serbia, North Macedonia and Albania in the building of a common regional market without barriers and the Western Balkans as a single investment destination represents a significant step forward in the realization of the Mini Schengen initiative.
I believe that Montenegro and Bosnia-Herzegovina will recognize the interest of their business communities and will also join us very soon.
That’s because, let me remind you, that the construction of a common regional market will expand the operational space of domestic business people. It will reduce costs significantly, increase competitiveness, accelerate trade and enable growth in the trade exchange within the region and with the world. At the same time, it will make the Western Balkans more attractive for the international business community, for foreign companies that are already present and want to expand in the region, but also for future investors who will be able to count on a large regional market of 18 million consumers.
Is there positive energy from all sides when it comes to strengthening economic cooperation between Belgrade and Priština, and the Western Balkans as a whole?
– The start of the implementation of the Washington Agreement within a period shorter than three weeks after it was signed is the best proof of that positive energy, and the interest of the business communities is the best incentive for those agreements and deals to be realized. It is up to us to make the best use of the opportunities creates by this agreement, to prepare and implement projects as quickly as possible, so that the economy and citizens feel progress as soon as possible.
The projects envisioned by the Washington Agreement that will be supported by the DFC are important for our member companies, but also for the development of the entire region, and for stronger regional economic connections, which the Chamber of Commerce & Industry of Serbia and the Kosovo Chamber of Commerce advocate for and are already working on together. The formation of a joint team to support more efficient project implementation provides an additional contribution to the implementation of the Agreement, economic normalization, connecting our business people and regional cooperation, which we have been advocating for years and which we are working on together with other members of the Chamber Investment Forum.
What, if anything, are the challenges?
– Since the agreement was reached in Washington, I’ve been asked often what the guarantees are that the deals signed will be respected and the agreement will be implemented. The Washington Agreement is a framework that obliges politicians to implement specific projects. In addition to this, I see no reason not to fulfill the obligations undertaken, especially since this is one of those agreements that ensure no one loses anything and we all win together. It provides us with a great opportunity to make the best use of opportunities that open the way to a better life for the people who live in this area and the more successful operations of businesses. Business people support the agreement, because they recognize the benefits, as it will make their operations easier and enable them to earn money, hire people, and maintain their businesses.
The transformation of the Western Balkans into a single investment destination, which is now being joined by Priština, according to the Washington Agreement, represents a significant step forward in implementing the Mini Schengen initiative
This also applies to the deals reached and agreements signed within the scope of the Mini Schengen initiative. Their consistent and urgent application has been requested by the joint regional chamber of the Western Balkan six to all governments in the region. Following the recent establishment of the Business Council, as the advisory body of the Chamber Investment Forum, the Forum will monitor progress on removing mutual obstacles to more successful business on the ground on a daily basis, and will regularly inform the governments of the region about that, proposing measures to ensure the free movement of people, goods, services and capital, thus making it easier for entrepreneurs to do business and reduce costs.
How is the current structure of the trade exchange between Serbia and America, and what would you like to see in this regard?
– Economic cooperation between the two countries was primarily marked by the investments of American companies in Serbia during the previous period. There are ever more American investors in Serbia every year, and their contribution – through production, exports and employment – is increasing constantly. According to American sources, the total investments of U.S. companies in Serbia, including investments from their European branches and through global acquisitions, amount to about four billion dollars. I believe that the engagement of the DFC and other U.S. government agencies in Serbia and the region, as well as the new opportunities created for potential investors with the construction of a common Western Balkan market, are also excellent signals for U.S. private capital.
When it comes to mutual trade between Serbia and America, despite significant proportional growth over the past two years, the level of exchange achieved – 854.4 million dollars, including Serbian exports worth 303 million dollars – is far below the realistic possibilities. The potential for the growth of trade and greater utilization of the Generalized System of Preferences (GSP) is really large. The capacity to increase exports to the U.S. market and strengthen cooperation can be found in the agri-food sector, the metal (auto parts and metal processing), textiles, special-purpose and furniture industries, and in energy (wind farms, solar farms).
The exchange of services has become increasingly important in the total exchange of the two countries in recent years. Last year, along with the growth of both exports and imports by a third, the value of these services exceeded 800 million dollars. Unlike the trade exchange, which is burdened by a deficit, in the exchange of services Serbia, with exports last year worth 596 million dollars, has a surplus that exceeds the value of exported goods to America. Special potential to further increase the exchange of services lies with the fast-growing Serbian ITC sector, which the world and American media have dubbed the Silicon Valley of the Western Balkans, and which has innovative products that are already being used by American companies and institutions. This is particularly important for us, given that America holds a third of the world IT services market, is among the most innovative countries in the world and is the home of the largest multinational technology companies.
I discussed this at the beginning of the year, during my stay in America, with the leaders of the Council for the Information Technology Industry (ITI), from whom we received support for the initiative of CCIS and its members to open a Serbian house in Silicon Valley, which would host entrepreneurs and experts in technologies from Serbia and the Western Balkans and strengthen ties with this global technology hub. I believe that the COVID-19 pandemic has only temporarily postponed the agreements we reached at the time with the U.S. Chamber of Commerce regarding the visit of an American business delegation to Serbia and one of business leaders from Serbia and the region to America.