ADVANTAGE AUSTRIA is very active in supporting closer ties between the Austrian and Serbian business communities, and in contributing to increasing commercial relations between the two countries, says Erika Teoman-Brenner, Commercial Counsellor at the Embassy of Austria and Head of the Advantage Austria in Belgrade.
In this interview, Ms Teoman-Brenner speaks about visible progress in the business climate in Serbia, due to reforms, and further steps that are needed when it comes to the rule of law and, more specifically, to transparency and the length of administrative and regulatory procedures. “Any improvement in these areas will impact directly on the outlook of a potential foreign, but also domestic, investor”, says Teoman-Brenner.
How do Austrian companies that already operate here assess the overall business atmosphere in Serbia and what are their forecasts like when it comes to doing business in the coming year?
We know from our latest survey and our daily contacts with companies in Austria and here that their outlook for their future business in Serbia has slightly improved over the last year. They have succeeded in adjusting to the conditions of the market and have adopted their business model accordingly.
For those who operate here in manufacturing, Serbia is certainly very competitive in terms of labour costs. The service sector, in turn, is very dependent on domestic demand and sees certain limitations. On a more general level, the firm commitment of the Serbian government to follow the EU-path definitely re-enforces trust and confidence in the future on the part of our business community.
Zagreb recently hosted the conference AUSTRIA CONNECT – the first and largest gathering of Austrian companies active in the markets of the Balkans, which had a panel discussion dedicated to Serbia. From the perspective of potential Austrian investors, what are Serbia’s main advantages and in which areas do investors have reservations?
Actually, the panel discussions were focusing on project financing by international financial institutions in the respective countries. Regarding Serbia, we had invited the director of the German KfW to present their activities in Serbia. We all know that Serbia needs to invest a lot to upgrade its infrastructure, and Austrian companies have a lot to offer in this regard. Incidentally, I am happy to announce that our 2nd AUSTRIA CONNECT conference 2017 will take place in Belgrade!
When it comes to the general investment climate, Serbia has definitely made significant improvements in the overall business climate through the reforms in the labour and construction law. Apart from the obvious criteria, like costs of infrastructure and labour, they also evaluate very carefully the framework conditions for operating a business. This applies mainly to the rule of law and, more specifically, to transparency and length of administrative and regulatory procedures. Hence, any improvement in these areas will directly affect the outlook of a potential foreign, but also the domestic investor.
We recently had the opportunity to hear good news about the activities of Austrian investors in the fields of real estate and agriculture, for example. In which branches of industry are Austrian investors most interested?
It is hard to identify specific sectors, but what we see currently is the interest of Austrian companies rising in the field of assembling electrical and electronic goods, automotive supplies as well as outsourcing IT services.
Which activities ADVANTAGE AUSTRIA in the year behind us would you highlight as being the most important when it comes to strengthening mutual economic relations?
We had indeed a series of meetings and events which hopefully contributed to an increase in our commercial relations. Apart from our participation in various trade fairs in Serbia, we also invited Serbian companies to trade events in Vienna, for example to the MARKETPLACE AUSTRIA FOOD 2016 or the “FUTURE OF BUILDING” conference including B2B-meetings and site visits of outstanding projects.
Furthermore, we had large business delegations from Carinthia and Vienna, each headed by the President of the Regional Economic Chamber. A definite highlight was the visit of the President of the Federal Economic Chamber, Dr Christoph Leitl, to inaugurate our Serbian-Austrian project to support the introduction of dual vocational training in Serbia in cooperation with the Serbian Chamber of Commerce.
There is rising interest among Austrian companies in the field of assembling electrical and electronic goods, automotive supplies as well as outsourcing IT services
Some 440 Austrian companies currently operate in Serbia, which raises economic cooperation to a special level. A delegation of Austrian businessmen from Vienna also recently visited Serbia with the aim of exploring investment opportunities. President of the Chamber of Commerce of Vienna, Walter Ruck, said that so-called green technology is a very interesting sector. Can you tell us what this relates to?
We were very happy to see the great interest on the part of these companies in the future of infrastructure development in Serbia. We all know that Serbia is committed to generating 27 per cent of its energy need from renewable sources by 2020. This is a very ambitious target, but quite a few Austrian companies and their partners here have the necessary know-how and experience to take up this challenge.
The recent Serbian legislation on the feed-in tariffs and the PPA have definitely given the market a boost and we see a lot of potential for investments in this sector.
To what extent has the reform of the Serbian Chamber of Commerce according to the Austrian model contributed to establishing more effective contacts with businesspeople in Austria? In what phase of realisation is this project today?
The Federal Economic Chamber and the Serbian Chamber of Commerce maintain indeed very close relations on all levels of an organization. Indeed, we are very pleased to see that certain elements of our chamber system have been adopted also in Serbia. For us, the most important principle is probably a productive dialogue between the business world and the government.
Thanks to the initiative of the president of the Serbian Chamber of Commerce, Mr Marko Čadež, bilateral chambers and other international business representations have been recently invited to join the Council of Bilateral Chambers as a permanent platform for open and constructive dialogue with the government and state institutions. This is a very effective and results-oriented body.
The system of dual vocational training is the key for youth employment and economic growth. We see a great readiness on the part of Serbian decisionmakers to adopt such a system
Compulsory membership in the Serbian Chamber of Commerce is to be introduced as of 1st January 2017. It is said that the Austrian Chamber of Commerce has been used as a model, which has helped to reform chambers of commerce here in Serbia. Some businesspeople in Serbia oppose this idea, even announcing the launching of court proceedings. Associations of foreign investors in Serbia have also at some point voiced their opposition to this idea. How would you comment on this?
We are convinced that the new organizational structure of the Serbian Chamber of Commerce considerably contributes to strengthening the voice of the Serbian business community vis-à-vis the government and on the European level. This is particularly important in times when a country negotiates its access to the European Union.
Our experience also shows that legal membership guarantees that the interests of all companies, be they multinationals or small shop owners, are represented in an effective and balanced way.
What are your expectations of the announced introduction of the dual education system in Serbia, based on the Austrian formula? Is Serbia ready to accept such a system at this time?
We started out by asking our companies here in Serbia what their needs were in terms of training and recruiting qualified staff. On this basis, we sought the cooperation of the Serbian Chamber of Commerce and the Ministry of Education to start a pilot project and we are very pleased that this project is advancing in the right direction.
We are also ready to share our experience to formulate the legal framework that is indispensable to introduce the crucial aspects of dual training, i.e. the active involvement of the companies in the training. We are firmly convinced that a system of dual vocational training with a strong emphasis on a flexible and well-designed company based training is the key for youth employment and economic growth. We see a great readiness on the part of Serbian decision-makers to adopt such a system, albeit with modifications and adaptations to the requirements of the domestic situation.
What can Serbia learn from Austrian experiences regarding the establishment of start-up companies?
We see that Serbia has a very vibrant and creative startup scene, so we are not sure that we can teach them something… Our experience shows that financing is, of course, the number one topic when it comes to supporting startups, and that is probably not different in Serbia. However, it seems that it is not so much the initial financial support that is crucial for the success, but the support of the growth phase of the company.
One could also widen the definition of a start-up company, a term that is usually applied to Internet-based, new, innovative and fast-growing businesses. Some people in Austria argue that any small new business, like a carpenter or a plumber, deserves the same support and attention as a classic start-up since innovative ideas and openness to new digital applications are required in order for all of these trades to succeed.