Hugo van Veghel, Chairman of the Belgian-Serbian Business Association

hugo van veghelOur mission is to connect and point out opportunities for all who do business in Serbia and in/with Belgium. Members also help to promote each other’s business. Networking happens at our friendly, meetings and events, both formal and informal. We see growing interest in the country’s business environment every year.

The Belgian-Serbian Business Association (BSBA) was established precisely seven years ago. How much has the business climate in Serbia changed during that time?

– People in the street are certainly not as excited as I am, but I would simply say close your eyes and imagine the picture of that environment seven years ago and when you have it open your eyes again. Look around and you have to admit that a lot has changed for the better. We see more international brands operating in the country, between Belgrade and Novi Sad you can see along the highway new construction preparing for improved logistics. I see in that a good indicator for the results of change so far and confidence in further improvements in the future.

One of the biggest investments in Serbia actually came from Belgium when Delhaize bought Maxi for €932 million. How much did this acquisition impact on Belgian investors; did it increase their interest in Serbia?

– Companies like Delhaize, now Ahold Delhaize, act as ambassadors for business explorers. We hear that indeed when prospective Belgian investors visit Serbia. The Belgian direct impact in their staffing is now minimised, with its management now mainly composed of domestic staff. But there is not only Delhaize. Our METECH company in Smederevo has strong leadership under Mr Rutten, who doesn’t hesitate to invite business relations to visit Serbia, and BLOCKX in Bački Petrovac is not shy about promoting their investment in the country. During a visit of 17 Belgian real estate professionals last month, the presence of BESIX was seen as an important indicator for positive change.

Supporting SMEs is a cornerstone of the EU’s drive for growth and jobs. Since 99% of all EU companies are SMEs, accounting for 67% of jobs, it’s clear that what is good for small businesses is good for Europe’s economy

Do Serbian companies sufficiently take advantage of the retail chain provided by Delhaize, and what is lacking in order for Serbian products to be more present on the shelves of this international retail chain?

– Local companies were struggling, mainly with financial capacity, to reach an agreement with retailers like Delhaize. It is up to the producers themselves to seek and use the right financial support instruments. It is noticeable that banks which employ more friendly SME practice take into account a larger number of qualitative factors and their final lending decisions rely more heavily on the assessments of the owner’s potential, vision, approach to business, experience, reputation etc. We are convinced that banks will, in general, adapt to a more SME-friendly stance. You can see from marketing campaigns that Delhaize (Maxi) is strongly promoting domestic products. I am sure that it was not easy for domestic producers, certainly at the beginning, to comply with the standards imposed by the retailer.

I remember specifically that former Delta suppliers needed time to build up a new relationship of trust with Delhaize.

You said on one occasion that supporting the development of SMEs was one of the BSBA’s goals. How developed is this sector in Serbia; can you compare it with the SME scene in Belgium?

– Supporting SMEs is a cornerstone of the EU’s drive for growth and jobs. Since 99% of all EU companies are SMEs, accounting for 67% of jobs, it’s clear that what is good for small businesses is good for Europe’s economy. In Belgium, the forecast is that in 2017 SMEs will experience 4.2% growth in employment and 8.4% value added. For some time there has also been a trend to shift to micro enterprises (less employment per unit).

Serbian Economy Minister Goran Knežević said at a COSME event last May that Serbia and Europe draw their biggest potential and strength from small and medium-sized enterprises, which make up 98% of companies in Serbia and contribute with more than 50% of GDP. Compared to official figures from 2013, it means a slight fall back in the SME component, hence in its contribution to GDP. This trend should be stabilised and all efforts to promote SMEs as business entities, as well as support to enhance their efficiency. Fighting the grey economy should be a primary concern.

The competition abroad is also very hard and unless you are seeking to work far below normal wages it will not be easy to get work

When it comes to the comparative advantages of Serbia over other countries where investors can place their money, the “high-quality workforce” comes to the fore. Is this reason enough to attract new investors?

– In the conclusion of the last EU Western Balkans Investment Climate Forum, it is stated: “Young people face particular difficulties in labour market access, fuelling their exodus and thus leading to the brain drain.” I believe that this is not completely correct. Access is difficult for too many, but mainly because they do not have the skills required by investors.

The government is aware of that and started with support from Austria, Germany and Switzerland to introduce dual education in order to integrate the needs of economic actors into the skills development of young people. Also smaller initiatives like the ADA financed SEED framework is developing LPE (Local Partnership for Employment), in cooperation with a Belgian consulting house in Serbia, which seeks cooperation between the public, private and civil sectors in improving the employment climate at the local level.

Related to the exodus, I can say that more students in higher education see and use the opportunities for studying and gaining experience abroad. The best thing is that more of these students are realising that the best place to promote their knowledge and new skills is Serbia.

Believe me, the competition abroad is also very hard, and unless you are seeking to work far below normal wages it will not be easy to get work. Most important to your question, however, is that investors see in the available workforce willingness to work, and that is certainly present and noticed in Serbia.

What are your plans for the period ahead; what will the BSBA deal with?

– Apart from our regular activities at the BSBA and the promotion of the SME sector, we will continue to be actively involved in the Mixed Chambers Council of the Serbian Chamber of Commerce & Industry. In 2017, we will have another series of working lunches for our members on current topics by relevant authorities on the chosen subject. One of these topics being planned is the reform in administrations, more specifically the issues of inspections and the mitigation of effects of the grey component of the economy.