The Development Agency of Serbia (RAS) has around a hundred active projects at any given moment, which confirms the fact that Serbia is an extremely attractive investment destination. At the same time, there is a growing number of foreign investments that imply the transfer of higher-level technology. In the period ahead, RAS will continue to work intensively on the inclusion of local companies in international supply chains.
Serbia will attract around 2.5 billion euros worth of foreign investments again this year, which confirms its status as the region’s most attractive location for investment. However, Radoš Gazdić, acting director of the Development Agency of Serbia (RAS), has announced changes in the structure of investments and a shift towards investments with a higher level of technology. Nevertheless, Serbia’s reality is regions with lots of unemployed workers, where investments in labour-intensive branches still represent a way of mitigating poor economic prospects.
How is the structure of foreign direct investment in Serbia when it comes to the transfer of new technologies?
The Republic of Serbia has for the last several years already been recognised by leading international institutions as a leader in attracting direct investment and as an extremely attractive investment destination. The presence of leading world companies from different industries has manifold significance – investment, knowledge transfer, the introduction of new standards, training of local workers and the improvement of competitiveness, but certainly also as a kind of promotion and sign for other companies that have not yet decided to launch operations in Serbia.
Lately, there has been growth in the kinds of direct investments that imply the transfer of new technologies, as we have projects that include higher level technologies. Some examples of this include ZF Friedrichshafen AG in Pančevo (production of electronics for hybrid vehicles), Continental in Novi Sad (development centre for electronic systems for vehicle interiors), Integrated Micro-Electronics in Niš (production of print circuits), Johnson Electric, Siemens and similar firms. There is certainly a logical progression for there to be a greater emphasis on this type of investment in the period ahead.
In the previous year we launched a pilot programme to support the inclusion of SMEEs in supply chains, which has been significantly improved this year and will also remain in focus next year.
What share of foreign direct investment has been made in the IT sector specifically?
The Government of the Republic of Serbia has defined the IT sector as one of its priorities. The Strategy for IT Development for the 2017-2020 period has been adopted, along with the Action Plan for its Implementation. Through its commitment to the digital transformation process, and accordingly its support to the creative industries and education, Serbia is keeping pace with the Fourth Industrial Revolution.
When it comes to the IT sector, we can say that it’s actually developing more through domestic companies. It is now almost commonplace to say that our IT specialists and IT companies are very well known and recognised around the world, that our students are traditionally winners of various international competitions, such that our IT engineers are today almost a resource that is in a deficit.
On the other hand, we should certainly mention the Microsoft development centre in Belgrade, which opened back in 2005 as the only one in this part of Europe and only the fifth worldwide. Likewise, in Novi Sad Schneider Electric also has its own research, development and production centre for the optimised management of electricity that is one of only four such centres that this company has worldwide.
Do you monitor or otherwise evaluate the successes of the many programmes that now exist to include domestic companies in world trade or production chains, given that they usually follow some form of investment in local suppliers?
Through its activities, RAS focuses in particular on the inclusion of local companies in supply chains. We actually approach this in two ways – firstly by attracting direct investments that have a need to include domestic/local suppliers in their production chain, and then through support for the advancement of domestic SMEEs to ensure their inclusion in international supply chains.
In the previous year, we launched a pilot programme to support the inclusion of SMEEs in supply chains, which has been significantly improved this year and will also remain in focus next year.
According to your estimates, what kind of result will Serbia record this year in terms of FDI?
According to the statistics of the National Bank of Serbia, inflows to the Republic of Serbia based on foreign direct investments (net financial obligations) amount to slightly over two billion euros. That’s 5.4% more than in the same period last year. With this in mind, we can conclude that this year will be at the same level as last (when the noted inflow amounted to just over 2.5 billion euros), if not with slightly higher amounts of investment.
The Development Agency of Serbia has around a hundred active projects at any given moment, which confirms the fact that Serbia is a leader in attracting direct investments and an extremely attractive investment destination.
How much has the investment in the construction of a motorway network impacted on strengthening interest among investors when it comes to less developed parts of Serbia?
Apart from the other advantages that Serbia offers as an investment location, such as competitive operating costs, a high quality and highly educated workforce, access to a market of over 1.1 billion consumers via free trade agreements, political and economic stability, financial incentives, operations in free zones and so on, the geographic position and developed transport infrastructure are certainly among the most significant factors.
It is a fact is that developed infrastructure reflects the level of development of each country. For every company, whether domestic or foreign, the location where they will operate is very important, as is its connectivity to major transport arteries. The greatest concentration is always around the main routes, such as motorways, frequently utilised national roads, railways, airports and the like.
If we take this year alone as an example, we have examples of some very significant investments that followed the improvement of transport infrastructure. Connected to this is the arrival in Čačak of companies Wieland and Vorwerk and the fact that Leoni and Taypa Textiles are constructing their own factories in Kraljevo, which will together create thousands of jobs and invest more than 100 million euros.
How much has the shortage of workers, which some investors complain about, become a problem for attracting FDI?
Workforce availability differs from municipality to municipality. In those municipalities with low unemployment rates, we won’t have labour-intensive projects. On the other hand, we have municipalities with high unemployment rates and there the focus is on investments that imply labour-intensive projects. There is certainly a determination to achieve the balanced development of all regions or municipalities.
There are also sometimes situations in which there is a lack of know-how and skills among the available workforce. That is resolved through education. The introduction of dual education is a good step towards advancing the education of future generations, and ultimately towards increasing the opportunities for them to be provided with prospects for future employment through their work and experience in a real working environment.
Here we also have examples of good practice through cooperation with investors like Johnson Electric, which cooperates with a technical secondary school in Niš and the technical colleges of the University of Niš.