We expect economic ties between Austria and Serbia to continue to flourish in the years ahead, forging stronger business connections than ever before
Serbia has been, and remains, an important market for Austria, says Advantage Austria Director Jürgen Schreder, noting that the existing numbers and current examples of FDI suggest that Austrian-Serbian economic relations are experiencing an upward trajectory.
How will observed global trends impact overall trade activities between our two countries and Austrian FDI in Serbia?
— Austrian-Serbian trade relations are outstanding and constantly on the rise. We are very proud that Austrian exports to Serbia actually surpassed the billion-euro mark in 2022 for the first time, and that Austria is also among the few countries to have had an increase in exports to Serbia during the first half of 2023, while Serbian imports are also becoming increasingly important for Austria, especially with regard to services. Our expectation is that they will continue to increase in the coming years and that our bilateral trade will be stronger than ever. Furthermore, Austrian FDI in Serbia looks very promising and there was another increase in 2022, to 3.22 billion euros.
There is still strong Austrian interest in the Serbian market and perhaps an interesting fact is that the number of inquiries from Austrian companies regarding the establishment of a company in Serbia has increased over the last year, which makes us very optimistic. We just recently had the ground-breaking ceremony of another Austrian company here in Serbia, and with the specialised Expo 2027 to be held in Belgrade we see a lot of potential for Austrian companies! So, to summarise, Serbia has been, and remains, an important market for Austria and we don’t expect a slowdown or a decrease of interest in this regard.
Apart from the current global economic challenges, how do Austrian companies operating in Serbia assess the overall business climate?
— Entering and operating on a foreign market has always had its challenges and Serbia is no exception to that. Over recent years in particular, with the geopolitical changes and emerging trends, the perception of and outlook on the business climate in Serbia has been mixed.
However, our 2022 “Austrian Business Confidence Survey”, which is conducted each December, showed that the general perception of the business environment has roughly remained the same over the last few years. The outlook for 2023 was optimistic among most surveyed companies, and they expected to generate increased revenue for 2023.
Furthermore, I just attended the Austria Connect SEE in Bled last week, which is a conference for the Austrian business community in the WB6 countries, as well as Croatia and Slovenia. There I had the chance to talk to a lot of business representatives who operate in Serbia, and I would describe the outlook as quite positive. The Western Balkans continues to be an important business location for Austrian companies and interest is continuously increasing. I would really like to point out that the RAS (Razvojna agencija Srbije – Development Agency of Serbia) is a major asset for doing business in Serbia. It invests a lot of resources to improve the business environment in Serbia and to lower the hurdles for foreign companies.
Nevertheless, generally speaking, there is still some room for improvement regarding public procurement, the combating of corruption and cutting red tape, which again correlates with our 2022 survey. One of the most pressing issues for foreign investment in Serbia is the reduction of bureaucratic obstacles.
Areas of responsibility are sometimes not well defined, and companies have to do their utmost only to be told that they have to start over in a different place. If stories like these are shared between businesses, it does not portray Serbia as the best place to do business and that might discourage companies from entering the market.
I believe that, in order to continue attracting companies from Europe, Serbia should really aim to encourage companies to invest here and not hinder them in their intentions.
How does the current workforce shortage situation in Serbia impact the decision-making of Austrian companies, for whom the availability of a qualified workforce is a crucial factor in choosing locations for new foreign operation hubs?
— The workforce shortage is not just a problem of Serbia, but rather of Europe as a whole, so it is nothing new for Austrian companies. The lack of skilled workers has thus far not greatly impacted the decision-making process of companies, at least as far as we know. As there is still a difference in comparison to Austria, where the issue is even more pressing. The workforce is a crucial factor for the success of companies. However, Serbia has a great pool of skilled workers, maybe even more than Austrian companies in some regard. A lot of Austrian investments – especially in the production sector – are very well analysed strategically and part of this also includes workforce availability.
We’ve seen a significant increase in inquiries from Austrian companies looking to establish themselves in Serbia over the past year. This positive trend has filled us with optimism
Furthermore, as I mentioned earlier, there is still great interest from Austrian companies, so although the shortage is present, so far it hasn’t had a negative impact on potential investments.
In that respect, do you see advantages of the Open Balkan initiative in terms of the circulation of workers? — We see Open Balkan as a big chance for businesses, but certainly also as a big challenge for some countries – especially in terms of the circulation of the workforce.
A lot of Austrian companies operate in several Western Balkan countries, so we see this as a chance for them to be able to also circulate their workforce within their companies, which would result in better training opportunities and knowledge- and experience-sharing. Generally speaking, I believe that the circulation of workers can be a great benefit for companies, as there is a larger pool of potential employees with different skillsets, and they might be able to learn from one another.
However, it certainly also has its challenges, which might become a struggle for companies as access to foreign labour markets becomes easier. People might be more drawn to leave their country and home in search of better working and living conditions in a different location. This is where I might see a challenge for companies and where they really have to invest and be motivated to retain their employees with different benefits, training options etc. If done correctly, however, Open Balkan is a great opportunity for everybody to increase their business and it might even provide a chance for companies to expand on markets.
In which ways does digitalisation influence dual secondary-vocational education in Austria, and what lessons can Serbia learn from this experience?
— Well, regardless of opinion, there is certainly no way to stop or slow down digitalisation and it was merely a matter of time until it entered the education system. Dual secondary-vocational education has a long history in Austria and is a big pillar of business success and the economy, and we do see movements and trends within it as being positive, provided they are done correctly. Education and learning is a progress and introducing new tactics and skills can never be a bad thing in that regard, so although dual VET has been established in Austria for decades, it still evolves and improves continuously.
Furthermore, we’ve recently seen that the dual education system in Austria might be the best in Europe, as we managed to secure more than 18 medals at the Euroskills competition in Gdansk, Poland. As you may know, we’ve been supporting Serbia on the implementation of the dual VET System in recent years and I am thrilled that we actually started Phase 2 of the project in October 2023! So, we are looking forward to also sharing those new trends in dual VET with Serbia in the coming years.
Reducing bureaucratic obstacles is a critical concern for foreign investors in Serbia
Open Balkan facilitates the movement of the workforce, which offers significant advantages
The Serbian Development Agency is a valuable asset for conducting business in Serbia