Dragica Tomčić, Economic Attaché, Embassy Of Switzerland:

We Gladly Share Swiss Know-How

It is evident that strengthening private sector-responsive education and vocational training should be continued, in order to reduce the high level of unemployment among young Serbians. We are glad that we were able to engage with Dr Ursula Renold, a top expert of the Swiss Economic Institute, to support implementation of the law on dual education in Serbia

Serbia can count on further institutional support from Switzerland in the continuation of its fiscal stabilisation process, confirms Dragica Tomčić, Economic Attaché at the Embassy of Switzerland. 

In which ways you can support the process?

– Switzerland is a reliable partner that supports fiscal stabilisation in several ways. Swiss support is provided mainly through strategic partners like the World Bank (WB) and the International Monetary Fund (IMF). With them, we help to strengthen key institutions with respect to fiscal stabilisation, such as the Tax Administration, the Public Debt Administration, the Statistics Office and the National Bank of Serbia. However, we also support the Public Finance Reform Plan through bilateral projects. For example, we collaborate with the Treasury Administration to implement the Public Accounting Reform and with the Central Harmonisation Unit to simplify the certifying of internal auditors. With the Ministry of Finance, we are discussing possible support for capacity building of the new Fiscal Risk Unit. We are also open to considering assistance in other priority areas regarding fiscal stabilisation.

According to your assessment, what are the key institutions and processes that can ensure the construction of an economic environment that could enable faster economic growth?

– Economic growth has accelerated and is expected to increase to three per cent of GDP per capita in 2018. Serbia has improved its macroeconomic performance, which contributed to FDI growth. Faster continued growth would require more investments in transport and communication infrastructure. It would also require technological advancement and skills development, in order to achieve greater workforce productivity. Moreover, Serbia should strive for truly “sustainable economic development” in order to achieve greater overall welfare for all citizens. This requires meeting the basic needs for improved quality life based on democracy, the rule of law and an economy that has its strength based in education, innovation, social cohesion and the protection of human health and the environment. This would help to improve the business climate, attract new investments and create more jobs, leading to faster sustainable growth.

There are around 570 companies with Swiss capital operating in Serbia at present. What trends do you notice in their operations, investment and cooperation with Serbian business partners?

– At present, the Serbian Business Register Agency lists 553 “Swiss” companies. However, this does not mean that they are all funded with Swiss capital; some 300 companies have 100% Swiss ownership share. We also have to bear in mind the fact that Switzerland houses the headquarters or European hubs of many multinational companies. We estimate that the total number of employees of Swiss companies in Serbia amounts to between 10,000 and 11,000, taking in account major Swiss and multinational companies like Nestlé, Sika, Roche, PharmaSwiss, Philip Morris, SGS etc., and also the growing number of ICT companies. Swiss companies are active in many sectors, the four most important of which are Business Support Services; Wholesale/ Retail; ICT; Construction and Engineering. Over recent times we’ve noticed growing interest among Swiss ICT companies in outsourced software engineering and software development services. Another interesting branch is the wood processing and furniture sector and, of course, business support services.

During my two decades of experience working in the Swiss Embassy and with the Swiss Business Community, I haven’t heard about major obstacles hindering their business operations in Serbia

In which areas do you see the potential for Serbian companies to be included in Swiss production chains?

– As you know, the Swiss economy is one of the world’s most advanced economies and occupies the rank of number one in the global innovation index of the WIPO (World Intellectual Property Organisation). Switzerland has strong clusters in life sciences, ICT and advanced engineering, including, for example, Biotech, Med-Tech, Fintech, Cyber Security and Robotics. The Mechanical, Electrical and Metal (MEM) industry is the largest industrial employer in Switzerland and one of the country’s biggest exporters. Switzerland is an ideal innovation and production site for MEM companies. It has high standards in terms of quality, precision, safety and reliability, which ensure the sector is very competitive internationally. On the other side, the food industry is a strong pillar of the Serbian economy. Agriculture is the most important economic sector and a primary source of employment. Strong global demand for food offers new market opportunities for the Serbian agribusiness supply chain, and hence great potential for job growth. As such, revitalising agribusiness is essential to reducing the unemployment rate in Serbia. The potential is also great in ICT, which is becoming an important pillar of the Serbian economy. Many ICT companies have strong technical skills and have been able to engage in partnerships with international firms in high-value markets, resulting in exports hitting records in 2017. Switzerland’s development cooperation with Serbia amounts to 100 million Swiss Francs for the 2018-2021 period. One of its three objectives is to promote inclusive and sustainable economic growth, which includes supporting innovation and employment. There is mutual interest in strengthening cooperation in this area.

How are the experiences of Swiss companies when it comes to doing business in Serbia; what do their experiences suggest when it comes to eliminating operational bottlenecks?

– During my two decades of experience working in the Swiss Embassy and with the Swiss Business Community, I haven’t heard about major obstacles hindering their business operations in Serbia. Many Swiss companies have been present in Serbia for decades and know the market very well. The latest survey conducted by the Swiss-Serbian Chamber of Commerce showed that 90 per cent of SSCC members are satisfied with the business environment in comparison to 2017, when “only” 64 per cent had a positive view. The 2018 report highlights bureaucracy and complicated administrative procedures as the main obstacles to doing business. The surveyed Swiss companies expect to see further positive changes in areas like public institutions’ efficiency, the simplification of procedures, the fight against corruption and in ensuring legal security and stability.

How do Swiss investors assess the availability of a skilled workforce in Serbia?

– On one side, Serbia is considered one of the leading investment locations in CEE, with strengths in human capital. The availability of qualified and motivated employees, and the possibility of cooperation with universities in the area of training of young engineers, is attractive for potential investors and favourable for choosing Serbia as a new business location. However, Serbian educational institutions are also facing challenges, both in accommodating the booming interest among high-school graduates and in supplying the market with more experts. On the other hand, we can also hear from our companies that they are facing difficulties in finding worker profiles tailored to their needs, mainly due to the insufficient practical knowledge of young people.

With the Ministry of Finance, we are discussing possible support for capacity building of the new Fiscal Risk Unit. Our experience shows that the local level is keen to implement reforms, though it needs the strengthening of capacities and more resources

 

What are your expectations regarding the continued development of dual education in Serbia?

– We are very positive about developments in this field. We see that this is the right juncture for the changes in this area. Both the Ministry of Education and the Serbian Chamber of Commerce & Industry are fully committed. We are glad that we were able to engage with Dr Ursula Renold, a top expert of the Swiss Economic Institute, to support implementation of the law on dual education in Serbia, and that we can share Swiss knowhow through her.

What are your experiences of cooperation with local governments and their capacities to improve fiscal responsibility?

– Access to sufficient financial means is still critical for local governments to exercise their functions. Switzerland directly supports over 40 municipalities in increasing revenues through the more systematic collection of property tax. As a result, the best performing municipalities have been able to triple their income, which is quite remarkable. At the same time, Switzerland is supporting municipalities in consulting with citizens, for example by organising public hearings, on how the funds collected are spent. Citizen involvement in budgetary decisions is not only important for needs-based service delivery and financial accountability at the local level, but rather has also become a legal requirement at the national level. Swiss project partners also raise practical issues faced by municipalities in property tax collection, a solution to which would require legislative and policy measures at the national level. In parallel, Switzerland is addressing improved public service delivery by supporting public finance management reforms in six municipalities. Results so far have been very good, with budget processes strengthened and transparency and accountability increased. Our experience shows that the local level is keen to implement reforms, but that it needs the strengthening of capacities and more resources. Experiences are encouraging and provide a solid basis for a scaling-up of activities and addressing subnational Public Finance Management reforms in a more comprehensive way.