We spoke with Prime Minister Ana Brnabić about the next steps of the government, and specifically regarding digitisation, dialogue with the business community and education reform.
How would you assess the overall macroeconomic environment in the country? Which measures does the Government intend to use to help accelerate economic growth?
– Thanks to reforms and fiscal consolidation measures that were implemented during the previous government’s term, Serbia has, for the first time after 10 years, received a prime minister whose mandate begins with the state coffers in good order. Macroeconomic and fiscal stability have been achieved, conditions for doing business have improved significantly, as evidenced by Serbia’s advancement on the World Bank’s Doing Business list by as many as 32 places, which we achieved last year. Also contributing to the improvement of the investment climate was inflation remaining within the envisaged boundaries and the dinar maintaining a stable exchange rate. Serbia’s credit rating also improved.
At the end of June, we had a surplus of 44.1 billion dinars at the general government level, despite a projected deficit of 36 billion. Likewise, public debt is falling faster than expected and was at the level of 65.7% at the end of June.
In the period ahead we will focus on better execution of capital investments and, considering the positive state of the budget, we will also consider which capital projects we can start this year, although they were not planned. During the term of this Government we will strive to further reduce unemployment, which is already down, to the level of the European Union.
All this testifies to us today having healthy public finances, and a stable and predictable macroeconomic environment. What is especially important for us and for investors is that these positive trends are sustainable and that this government is continuing to build on the foundations set by its predecessor, as well as starting to seek growth in some non-traditional areas, in order to create some new perspectives for Serbia and all of its citizens.
What do you consider as the biggest systemic obstacles to further strengthening economic activity, domestic and foreign investments, and exports, and how will the government address them in the period ahead?
– We are led by the principle that the state should be a partner of the economy and we are aware that unclear, often complicated and slow procedures deter numerous investors, whether domestic or foreign, and cause difficulties for people with excellent business ideas to start doing business.
An efficient state administration and simplified procedures are crucial to removing the barriers faced by the economy when communicating with the public administration, and in this process digitisation must play an important role. It will enable businesspeople to complete many jobs with the state swiftly and efficiently, using the electronic services that we are developing. For example, many projects related to improving conditions for doing business have already been launched, the E-Taxes system has started operating, we will soon finalise e-health booklets, the Government adopted the draft Law on E-Commerce and forwarded it to the Assembly. This is the basis for finally introducing electronic archives, assimilating paper and electronic documents, and many other things that will greatly ease the work of the administration and reduce the costs of doing business.
One thing that we need to promote more quickly and that we all have to work on together is strengthening the rule of law and a more efficient judiciary. This is essential for us to ensure greater legal security for business operations in Serbia. This is certainly also something that’s an important factor in our European integration, and the Government will continue working on it with dedication.
How do you now, with the insights gained as state administration minister and in the position of prime minister, view the possibilities for the state to be able to meet the economy’s demands for reduced tax burdens, fewer administrative procedures, and a reduction in the level of corruption?
– The good fiscal results we achieved last year and this, which have improved our economic ambience, have created space for us to be able to consider reducing the tax burden for the economy. Serbia is still in an arrangement with the IMF and maintaining fiscal stability and reducing public debt is our priority, but at the same time we are also focused on those things that could generate stronger economic growth next year and in 2019.
We are working on analyses of how we can reduce taxes on earnings and some other taxes, how to improve and stimulate non-cash payments, while it is important for the Finance Ministry to complete work on the Law on Charges. These things will contribute to the struggle against the grey economy, as well as fewer general impositions on the economy.
As I have already said, digitisation, within which I always also mean the introduction of e-government, is a key lever for the continuation of economic growth, and that’s why we’ve already started simplifying procedures and reducing administrative barriers, and making it easier for businesses to fulfil their obligations towards the state.
One thing that we need to promote more quickly and that we all have to work on together is strengthening the rule of law and a more efficient judiciary
What can Serbia do, and what does it intend to do, to improve the business environment and attract investments with higher added value?
– In the previous period, the Serbian government has seriously approached analysis of measures aimed at creating a better business environment, taking into consideration best practices from the region and worldwide. Even despite the shift on the “Doing Business” list, we are aware that there is still room for improvement, because our goal is for Serbia to be recognised as an attractive country for investment.
A stimulating tax policy is a very important factor in supporting an innovative ecosystem, through tax incentives for innovation, development, export, the development of entrepreneurship and strengthening the entrepreneurial culture, which is why the Government will consider incentives for newly founded enterprises, innovative companies, and a set of benefits for IT companies that invest directly in education.
When it comes to foreign investments, we are already working on the development of road and rail infrastructure, creating efficient state administration by simplifying procedures, which, along with the very good and highly qualified workforce that we already possess, are the main preconditions for attracting new investments and encouraging existing investors to invest additionally in our country. We have also embarked on reforming the education system, in order to make education that is adequate for the 21st century. We are introducing dual education, IT as a compulsory subject in primary schools and raising the capacities of colleges. I see this as an essential point that will provide our country with long-term, dynamic, sustainable development.
You’ve stated that digitisation in all economic segments is one of the new government’s priorities. In which sectors do you see room for the fastest growth of digitisation?
– Digitisation must be a continuous and comprehensive process that will encompass different spheres of society. It will change our lives fundamentally. My goal is for citizens and businesses to be at the centre of electronic administration, to no longer be couriers of the state, but for them to become their service. This is a key condition that will enable faster growth of the competitiveness of our economy and more innovations, a different relationship between the state and its citizens.
With this in mind, the Government of Serbia has established the Office for Information Technologies and Electronic Administration; we are strengthening IT programmes and capacities in schools with which we prepare the youngest generation for the future, while we’ve extended quotas for IT studies by more than 700 places.
We provide support for the development of the digital economy, create conditions for the digitisation of the entire society, and we also plan to invest tens of millions of euros in infrastructure.
In this way, we will change the way of thinking that inhibits creativity, and we will teach young people not to give up when they encounter obstacles, rather to believe in themselves and go out of their way to realise their ambitions. To fight and seek solutions, instead of seeing only obstacles. That’s a long journey and I am determined for us to make it together.
Are the existing education system and the level of digital literacy of those already employed ready to respond to the challenges of e- and m-government?
– Creating new experts is one of the priorities of this Government, and the key for that high-quality education that encourages innovation and critical thinking, and provides young people with skills they can apply easily.
Teachers have already passed the applicable internet training for the preparation of IT classes, which become mandatory in the fifth year. This training will continue into next year for teachers who teach in primary school, while by September all schools will be connected through the academic broadband network of Serbia.
It’s important we restore confidence in the education system and that’s why we offer it support in every way, in order for personnel employed there to be ready for new “e-challenges”.
I would like to use this opportunity to thank all companies and civil society organisations that helped the Government and the Ministry of Education to complete this important work. Without the partnership with the economy and the civil sector, many of the novelties being launched in education in Serbia in terms of digitisation would not have been possible.
The good fiscal results we achieved last year and this have created space for us to be able to consider reducing the tax burden for the economy
What tangible steps does the Government intend to take in the field of digitisation aimed at providing a favourable environment for the efficient development of digitisation in Serbia?
– As a society, we must step up to meet changes that will accelerate our accession to the group of developed economies, and great potential for faster development lies in digitisation. The government has already taken certain steps, namely by raising the level of the Ministerial Council for Innovative Entrepreneurship and Information Technology to a higher level, the level of the prime minister.
The Office for Information Technology and Electronic Administration has been established, as the centre of functioning in the Government, and we also intend to set up a Coordination Body for IT and e-government, which, besides myself, as prime minister, would include the director of the Office for IT, the directors of the IT sectors of all state bodies, representatives of universities, the economy and nongovernmental organisations. So, we will include all segments of society, because digitisation is an inclusive and comprehensive process.
As of the beginning of this year, 6.7 million documents became available in electronic form, which will save citizens six million hours of waiting at counters and require them to pay as much as 245 million dinars less per year for various charges. We are investing in IT education and working on legal regulations that will ease the launching of private IT business; we are also working to improve the system for linking institutions and information exchange, as well as on establishing a cyber security centre.
Through the digitisation process, the state administration becomes a true service for citizens and businesses, and by investing in IT we want to show that this sector has great importance and a huge role to play in the country’s development. We can’t be competitive in the 21st century with counters and stamps.
In your opinion, how is the quality of public-private dialogue? In this context, how would you assess the contribution of the Foreign Investors Council to this dialogue over the last 15 years?
Conditions for doing business in Serbia have improved considerably over the last three years. Public finances are under control, and the macroeconomic environment is stable and predictable, which is important for businesspeople and for increasing investments.
The dialogue between the business community and the Serbian government is very important and such invitations should always be answered positively, as this is one way of continuing to solve the problems faced by businesses in their everyday operations. For me, dialogue is crucial, because even when we don’t agree, we still need to talk. I believe that constructive dialogue and conflicting stances always yield the best solutions.
The Foreign Investors Council has been a significant partner of the Serbian Government all these years, capable of recognising and supporting economic policy, while at the same time helping us, with its opinions and research results, to face everything hindering the business world and how we can work together to improve the business environment.
A dialogue with investors and the business community will remain among the priorities of the Government that I lead, in order for us to more easily achieve our common objective – a successful, efficient and wealthier Serbia.
I would like to thank all members of the Foreign Investors Council for understanding that reforms often go slowly, but also for recognising that the Government has sincere intentions and is working with devotion every day on implementing them and changing Serbia for the better. Thanks for criticism that’s always constructive and helped us to advance faster and change all segments of our society. Only together can we be successful.