The Chamber of Commerce & Industry of Serbia has proposed to the government an entire set of measures that would provide our companies with more work and better positioning on both the domestic and foreign markets. This is now the most important next step because no state money could be pumped in to help the economy if the markets are not functioning if there is no demand for products and if there are no new jobs.
“We have preserved the backbone of the economy,” says Marko Čadež, president of the Chamber of Commerce & Industry of Serbia (CCIS), succinctly assessing the effects of the measures taken to date by the Government of Serbia in order to help the economy overcome the first blow of COVID-19. However, he notes, this is only one of the necessary steps. We discussed other measures in detail with the CCIS president, which first and foremost implies the creation of measures that will contribute to strengthening demand for the goods and services of our companies, both in the country and abroad.
In this interview, Čadež – who is also Chairman of the Board of the Western Balkans Chamber Investment Forum and a member of the Board of Directors of EUROCHAMBRES and Chairman of the Eurochambres Digitalisation Committee – also talks about the ways in which, under the conditions of strict health measures, members of chambers in the Western Balkans continue to strengthen their connections, but also how trends in digitalisation have impacted on all European economies, including Serbia’s.
Under conditions when the pandemic is not subsiding, to what extent can another aid package to the economy be effective in attempting to overcome the crisis?
Relying on the first, large package of emergency support to the economy in spring, then the additional July measures of direct aid, cushioned the economy against the unexpected impact of the Coronavirus this summer and represented another injection that’s particularly important for the most vulnerable part of the economy – micro firms, SMEs and entrepreneurs. They will enable business leaders to maintain the liquidity of companies achieved in past months and save jobs, to breathe more easily, to settle their other obligations regularly, not to lay off workers and to find new works in a more financially relaxed position and welcome autumn better prepared… Alongside additional measures of direct support, it is important to make maximum use of existing (from the first package) loans for liquidity and working capital of the Development Fund, and loans from commercial banks with state guarantees, which will be available to them until the end of the year.
What do business surveys say? Where is help hitting the mark and where do they lack support?
Direct state aid measures to date, in the form of minimum wages, deferrals of tax payments and the moratorium on loan repayments, have -along with additional credit support – targeted and preserved the backbone of the economy: company liquidity and jobs. Business leaders are grateful for that to both the state and the Chamber of Commerce & Industry of Serbia, which represented their interests and helped them to use the help as positively and efficiently as possible.
At the same time, the majority of surveyed business leaders see reduced demand on domestic and foreign markets as the main constraint in the period ahead. That’s because no state money could be pumped in to help the economy if the markets are not functioning if there is no demand for products, and if there are no new jobs. That’s why the CCIS has proposed an entire set of measures to the government that would provide our companies with more works and better positioning on both domestic and foreign markets, ease operations in the country and realise export arrangements with foreign partners.
We will pay special attention to communication with European companies that will certainly move their production operations from distant markets closer to their home countries, but also to the parallel attracting of FDI from other fast-growing, non-European economies
What does the CCIS propose specifically?
The economy considers that significant effects would be achieved through the greater involvement of domestic construction companies and the processing industry in the implementation of infrastructure works and other state projects, then through the inclusion of local companies in the supply chains of large domestic and foreign exporters, as well as in production that would replace imports wherever possible. In this context, it is very important that we now also support our large companies, which have mostly handled the burden of the crisis on their own, in order for us also to preserve the smaller companies that form parts of their supply chains.
Additional relief would be brought by a reduction in customs duties on equipment, parts and components that must be imported. Exporters would benefit greatly from new free trade agreements, greater support, i.e. an increase in the export insurance fund and assistance in entering non-European, fast-growing markets.
Does the state have space to provide stronger assistance in the coming period for the most endangered sectors, such as tourism, hospitality and passenger transport?
After the broadly set, linear measures taken to date, the government has launched measures of sector-based support to the most endangered, with the decision to help city hotels with one-off budget subsidies.
By helping tourism, hospitality or passenger transport, the state will indirectly help related activities that are suffering the most as a result of, for instance, reduced orders in the tourism and hospitality sectors.
Our position, as a business association, is that it is essential to help the most vulnerable as soon as possible, but also that it is equally important for support measures to be well-balanced and directed towards those who need help the most, in accordance with clear criteria.
That’s because not all sectors, nor all those operating within the scope of certain activities, are impacted equally. For example, spa and mountain tourism managed to overcome the consequences of the pandemic through income generated from domestic guests. Still, the epidemiological situation continues to block congress and city break tourism.
Which sectors have so far proved most resistant to the crisis, and do they have sufficient potential to raise GDP or exports?
Great vitality has primarily been shown by agriculture and the food industry, but also by sectors and branches such as the chemical and pharmaceutical industry, the products of which have been in great demand in past months, especially during the state of emergency, both in the country and across the region. It is especially important that the state and the chamber jointly support companies from the industries of the largest exporters and sectors with the greatest export potential – processing companies from the food, metals, chemical and rubber and plastics industries.
We will ease their operations in the country and abroad with targeted measures, stimulate demand, remove obstacles to the resumption of exports to open the doors to new ones already. For Serbian companies – manufacturers of auto parts and components – news about the start of the recovery of the German automobile industry is particularly good.
Given that services, together with construction, account for 58% of Serbia’s GDP, it is important for the recovery of the Serbian economy that construction activities recover and that there is the greater engagement of construction operations and the accompanying construction materials industry, as well as exports of services, especially for the growing ICT sector.
It is especially important that the state and the chamber jointly support companies from the industries of the largest exporters and sectors with the greatest export potential – processing companies from the food, metals, chemical and rubber and plastics industries
How do you communicate with potential foreign investors under current conditions? Are other approaches needed in order to attract them today?
It’s important that we also continue including our companies in the supply chains of large, foreign companies and that we actively attract foreign investment, specifically investment in the production of higher value-added goods that would engage the domestic economy and contribute to increasing our export performance.
As a business association, we are also working on that together with the state – with the teams of the president and the prime minister. The best example of the state’s support to the economy in the area of internationalisation is the document that President Vučić signed this week together with German Economy Minister Altmaier, the implementation of which we’ve already started working on. The operational implementing of that partnership agreement in practice will bring new German investments, works for Serbian companies and new jobs for our people, and will do so in the mutual interest of both German and Serbian companies.
I believe this model of further strengthening cooperation with the German economy, as our number one foreign trade partner and one of the largest investors in Serbia, can also be applied in relations with other countries… When it comes to attracting foreign investment, we will pay special attention to communication with European companies that will certainly move their production operations from distant markets closer to their home countries, but also to the parallel attracting of FDI from other fast-growing, non-European economies.
Under these conditions, to what extent can the CCIS act as a bridge in connections between business leaders?
In all surveys conducted in recent months, our member companies pointed out that it is particularly important for recovery and increasing production and exports that – in addition to government incentives for producers and consumers, subsidies and soft loans – they receive assistance in the internationalisation of business, and that the CCIS plays its role in that, as their business association.
In order for us – in a situation when fairs have been cancelled, when there are no opportunities for direct B2B conversations and when it is difficult to travel – to enable businesspeople to maintain and establish contacts with partners abroad, to take advantage of the opportunities provided to them with the slow opening of economies, we are working, independently and with partner organisations, on organising, among other things, a series of online meetings and gatherings of our business leaders with partners from the region and around the world, using existing platforms and creating new ones for them to connect and communicate.
We are working, independently and with partner organisations, on organising a series of online meetings and gatherings of our business leaders with partners from the region and around the world… The Chamber Investment Forum of the Western Balkans is particularly active in that
I would emphasise in particular the commitment and activities of the Chamber Investment Forum of the Western Balkans, i.e. our joint regional chamber of commerce, aimed at building a common market of this region of almost 20 million consumers, as well as connecting our businesspeople in order to increase their mutual trade and trade with the world, through the unifying of the regional offer for buyers and investors.
Covid-19 is believed to have done more for the digitalisation and digital transformation of the economy than any other process. Where do you see the most remarkable shifts when it comes to our economy?
Confronted by the challenges posed by the global health crisis, we were compelled to skip five years when it comes to digital operations, for us to live and work today, everywhere in the world, as though it’s 2025. When it comes to our economy, in just the first few months after the Coronavirus pandemic arrived in Serbia, more than a third of companies had switched to digital operations, opened online shops or upgraded existing channels of online sales. Just as many companies are planning or already working on the digitalisation of their business processes, adapting rapidly to the new situation.
In this process, the Serbian economy – especially SMEs – are enjoying and can continue to count on the great support of the Centre for Digital Transformation of the Chamber of Commerce & Industry of Serbia, which works independently, but also together with colleagues from other European chambers within Eurochambres, on the creation of new digital services and platforms, and the improvement of existing ones, to help member companies.