The prospects of the economy in Serbia will depend greatly on the recovery of the economy in the EU, and there’s not much we can do about that. However, experiences during the pandemic showed us that we need to further regulate various regulations and insist on maintaining a spirit of cooperation and empathy, particularly towards those hardest hit by the crisis.
The crisis will pass, but it is important to show that we are human, to take care of each other and to save businesses, says Dragoljub Damljanović, president of the French-Serbian Chamber of Commerce (CCFS). Judging by experiences from the period of the pandemic, this will prove challenging for companies from all sectors and will require a relatively long time to adjust.
How do your members evaluate their positions the “day after” the pandemic?
Members were confronted by a very difficult situation when business activities were reduced to a minimum and it was difficult to maintain operations at all and not lay off employees. The state of emergency has been revoked, but I don’t expect everyone to start working at full steam before the second half of the year. Depending on the sector of business, companies are aware that needs will increase significantly in many segments and that they should be ready to satisfy those needs.
Serbia is facing both economic and unresolved health problems, and we hope that there will be another package of measures to help the economy following the elections
On the other hand, some will need more time to make up for what’s been lost. It has so far been shown that there is more resilience among those companies that have diverse supply chains providing them with more options, but it is clear that business models themselves will change to a greater or lesser extent, and very few companies will be in the zone where there are no changes. However, the most important thing is for the business community to strive to help small and medium-sized enterprises that have been hardest hit by this crisis.
In your opinion, is the Serbian government succeeding with its measures to keep pace with the new challenges to the functioning of the economy?
I consider the measures to support the economy as being satisfactory, but there was initially a lack of technical implementation and documents on how to apply them. What is also lacking is greater flexibility in the Labour Law, in order to allow employees to work partly or to be temporarily unemployed for a longer period without being laid off, thus increasing the percentage of job retentions.
However, we must take into consideration that the actual recovery of the economy itself will depend on the recovery of the economy in the European Union and the recovery of foreign demand, which we cannot influence with our own instruments of economic policy. Serbia is facing both economic and unresolved health problems, and we hope that there will be another package of measures to help the economy following the elections.
How did the newly emerged situation impact on the development of dialogue within the business community and with state bodies?
The new situation led to strengthened dialogue within the business community, in order to find a common solution as quickly as possible. The Chamber launched an initiative in the second half of March to send a request to Finance Minister Siniša Mali, and twelve business association partners joined our initiative within 24 hours. This testifies to the business community showing unity with the aim of applying for the swiftest possible implementation of economic measures to help the economy.
The economy maintained a constant dialogue with representatives of the government and state bodies during the pandemic, and business associations like our Chamber played an important role as a link between the two sides
Through a large number of online gatherings and dialogue with the government and state officials, the economy maintained a constant dialogue, and business associations like our Chamber have likewise played an important role as a link between members and representatives of institutions by organising webinars and online conferences.
One of the strategic priorities of the CCFS is to establish a continuous dialogue with representatives of institutions, and at the end of June, together with partner associations, it is organising a dialogue with the Customs Administration.
How have these changes impacted on the reorganising of the CCFS’s working priorities in 2020?
The pandemic hit hard when it comes to the corporate event organisation sector for members and partners, which is vitally important to the Chamber. However, the Chamber succeeded in adapting to the new organisation of work from home and the organising of online gatherings. This type of gathering certainly marked the three months behind us, and will undoubtedly mark the coming months.
The Chamber continues to work towards holding online conferences, training courses and workshops in the period ahead, and we hope that we will be able to return to the organisation of physical events as of the coming autumn. The second sector of the Chamber’s activities – providing support to French companies interested in the markets of Serbia and the surrounding countries – is also one in which we will actively work by participating in online B2B meetings and sector-specific presentations.
The number of inquiries we receive has reduced, but we hope that companies will again start to be interested in Serbia in the second half of the year.
In your opinion, will the pandemic contribute to accelerating the digital transformation of the Serbian economy and increase the volume of remote work?
What is already underway is the transformation of business, with consumer habits diminishing, all industries that are able to be online in technology, management, customer relations set to try to continue to work in that way. This event has accelerated that which would have happened over the course of a few years because now it isn’t only that companies which previously didn’t even consider organising work from home have started to do so, but also that citizens are finding new applications that they haven’t previously tried and that can help them in their daily lives.
It is certain that the pandemic will have consequences for bilateral French-Serbian relations, but the interventions of the French government to help French companies provides hope that investments
I’m delighted, for example, with the way small farmers began to organise into e-markets and continued to operate despite the pandemic. When this period is over, it will be a new period for the world economy, and digitalisation will be accelerated in all business sectors. However, we shouldn’t forget that there are things that can’t be done online; human contact is irreplaceable, the efficiency of group work in a limited space is much better compared to when we sit in front of computers alone. Digitalisation and physical presence are complementary.
In terms of infrastructure, how ready is Serbia to support the relocating of parts of the business to the online world?
If operations have slowed down in some spheres, a large number of companies haven’t abandoned ongoing processes of digital transformation during this period, while every third company has even accelerated digital projects. This is most evident in online trade and remote working during the crisis caused by the pandemic, both around the world and in Serbia.
One of the government’s priorities is the accelerated digitalisation of public services, so now we often talk about how it will soon be the case that, for example, all requests in cadastral records will be submitted and scheduled via the internet. This testifies to the desire for digitalisation to be implemented in all segments of the economy and society. This is a journey that will take time, but we can already see that a large percentage of traditional companies plan to introduce new digital transformation projects, primarily with the development of new digital products, cooperation with start-ups and other innovative companies, improving the user experience or existing digital products.
How do your members estimate labour costs considering the new types of protection measures against the pandemic?
Companies have adapted to the crisis in various ways through the organisation of partial work from home and reducing the number of working hours, while a few had to close parts of business processes. Some companies managed to quickly change their way of doing business, which indicates that those companies were more ready to face the crisis.
Most of our members continued to perform their activities through work from home, while production companies duly met the requirements for obtaining work permits during the curfew. Members inform us that their companies are undertaking all necessary health measures prior to people returning to work, such as masks, gloves, disposable barriers, disinfection of all surfaces etc. We still don’t have precise information in order to be able to quantify what the additional labour costs will be in that sense, but they are certainly not negligible.
Considering that companies with localised production have been shown to have sustained less damage than those with globalised supply chains, do you expect such experiences to influence interest among French investors in relocating part of their operations to Serbia?
It is clear that this crisis will lead all economies to reconsider their strategic goals and directions, and it seems that it’s necessary for some key production areas to be located closer to Europe. There is also a chance for Serbia. It is certain that the pandemic will have consequences for bilateral French-Serbian relations, in the form of reduced economic activity in our countries, but we are witnessing an increase in French investments in Serbia year on year, and I’m sure that investors from that country will increasingly recognise the potential of Serbia and the relocating of part of their operations.
The French government, through its plan for emergency situations that provides support to export companies confronted by the immediate consequences of the crisis, has secured their cash flow and ensured their international recovery after the crisis, which provides hope that investments will also continue at this pace in Serbia.
Does the newly emerged situation create space for companies to redirect towards research and development? Do the Serbian Government’s measures in this domain encourage such trends?
This situation certainly opens the way for various research and development programmes, primarily in the field of digitalisation, but also in other sectors. Serbia has all the conditions, experts, good colleges and places for research, and I believe that the number of such places will only increase. Testifying to this is the opening of science and technology parks and digital education, all of which lead to Serbia becoming a country recognised for creating new technologies.
Some government measures in this direction include the reducing of the tax on profits generated from the income of intellectual property developed or mostly developed in Serbia from 15 to three per cent. This measure is certainly one of the reasons why development companies are relocating their development centres to Serbia.
