Yana Mikhailova, President Of The Swiss-Serbian Chamber Of Commerce, Regional Director - Nestlé Adriatic:

Swiss Companies Recognise Positive Changes In Serbia

Reforms undertaken in your country in the last few years, economic stability and strong macroeconomic indicators impact positively on conditions for doing business.

In the last few years the ICT sector has started becoming more attractive, with Swiss investors choosing Serbia to locate their development departments and service centres, such as in the cases of Namics and InterVenture. Serbia has a strong opportunity to become an attractive destination for the outsourcing of all kinds of services.

The Swiss-Serbian Chamber of Commerce (SSCC) was founded a little more than three years ago, with the aim of improving business communication between the two countries and introducing Swiss standards to Serbian business circles. Here Yana Mikhailova, Regional Director – Nestlé Adriatic, speaks about how satisfied they are with the results.

– Today the SSCC is a diverse business community uniting some of the world’s leading enterprises and SMEs from different industries, who work together to make Serbia a better place to do businesses. It’s satisfying to see the SSCC community growing stronger. We welcome new members who are willing to contribute to the SSCC’s purpose, participate in the further development of economic cooperation between Switzerland and Serbia, and promote Swiss ways of doing business: compliant, transparent, expert-driven and efficient.

Conferences and seminars organised by the SSCC aim to facilitate public–private dialogue, provide constructive feedback to stakeholders and offer concrete proposals on topics that are important and relevant to the Swiss business community operating in Serbia, such as dual education or SME development.

This year the SSCC participated in the 8th meeting of the Joint Economic Committee Switzerland-Serbia, which took place in Belgrade on 20th June. Furthermore, the SSCC signed the Service Performance Agreement with “Switzerland Global Enterprise (SGE)”. In cooperation with S-GE, the SSCC will increase capacities for providing business assistance to potential Swiss investors evaluating the possibility of entering the Serbian market.

Yet another important accomplishment of the SSCC is a strengthened relationship between SSCC members, which are now participating in Members’ reunions and field trips to members’ production sites, as well as contributing willingly to the SSCC agenda.

Switzerland is among the 10 largest investors in Serbia, having invested more than €500 million in the last decade. In which sectors do you see room for the SSCC to play a greater role in accelerating the development of the Serbian economy?

– Swiss investors are successfully operating in many sectors in Serbia, such as construction, food manufacturing, wood processing, the ICT sector, pharmaceuticals, the automotive and energy industries, as well as textile production.

Serbia offers good prospects for developing production and export, with its geographical position, well-developed infrastructure and the advantages of its well-developed framework of free trade agreements, not only within the region through CEFTA and the EU, but also with Russia, Ukraine and Turkey.

In the last few years the ICT sector has started becoming more attractive, with Swiss investors choosing Serbia to locate their development departments and service centres, such as in the cases of Namics and InterVenture. Serbia has a strong opportunity to become an attractive destination for the outsourcing of all kinds of services, not only IT services. In order to further accelerate the ICT sector, Serbia will have to swiftly address the issue of the availability of skilled workers, such as engineers, IT experts and other specialists.

Conferences and seminars organised by the SSCC aim to facilitate public–private dialogue, provide constructive feedback to stakeholders and offer concrete proposals on topics that are important and relevant to the Swiss business community operating in Serbia, such as dual education or SME development

The survey of Swiss investors suggests that conditions for doing business in Serbia were better in 2016 than in 2015. What remain the biggest criticisms when it comes to improving the business climate in Serbia?

– Reforms undertaken in Serbia in the last few years, economic stability and strong macroeconomic indicators, positively impact on the conditions for doing business. And Swiss companies recognise positive changes. SSCC member companies rated the business environment as satisfactory, with 63.6% of companies having a positive view of the business environment in Serbia, and nearly a quarter of surveyed companies expecting the business environment in Serbia to improve in 2017 compared to last year.

However, the survey confirmed that obstacles still persist and companies expect the local business environment to further improve. The survey results show that the key challenges of doing business in Serbia are still related to bureaucracy and administration, the tax system and the fight against corruption, as well as ensuring legal security and stability.

In addition, respondents referred to high social charges as an important factor impacting their businesses, which was already identified as an area for improvement during the SSCC’s Conference on SMEs, held in October 2016.

SMEs account for 99 per cent of companies in Switzerland and represent the basis for the country’s economic development. How can this recipe be applied in Serbia, where the development of SMEs is rather neglected?

– SMEs are the backbone and an important contributor to the resilience and stability of the Swiss economy. In Serbia, the importance of the development of small and medium-sized enterprises is well recognised and certainly not neglected, which is why the Serbian Government has launched its strategy aimed at creating a healthy economic environment for the development of sustainable and export-orientated SMEs.

The SSCC sees the importance of the SME sector in the further enhancement of economic relations between Switzerland in Serbia. In October 2016, the SSCC organised its “Conference on Small and Medium-sized Enterprises, SMEs”. The idea behind this event was to contribute to strengthening the competitiveness of Serbian SMEs which are expected to become important accelerators of economic growth, innovation, employment and market development.

Switzerland has strong knowhow in supporting the development of SMEs. However, when using the Swiss approach it’s important to consider the different context of Serbia and give priority to addressing issues that have a negative impact on SME development in Serbia.

Rule of law and law enforcement are crucial to the sustainable development of the private sector and entrepreneurship. One major problem is that inconsistent applications of the same law by different public institutions still remain. Sudden legislative changes in Serbia remain a major risk for SMEs, as small companies lack the resources to cope with the changes. Improving the efficiency of public administration by introducing e-government and m-government will foster the development of start-ups and SMEs.

One of the biggest obstacles to Serbian SMEs is the overall shortage of access to finance. Switzerland is renowned for providing support to the SME sector through numerous instruments, one of which is available to Swiss investors who start projects in Serbia: SECO Start-up Fund (SSF). The SSF promotes private sector investment projects in countries with developing or transition economies.

The acceleration of the development of SMEs requires the further improvement of the business environment and consistent support from all relevant stakeholders, including governmental and financial institutions.

Switzerland is renowned for its dual education system. Swiss companies in Serbia face similar challenges in finding skilled workers. In order to address the gap in skills, many SSCC members offer in-house training, apprenticeships and internship programmes to train newcomers and graduates

The value of the trade exchange between the two countries was around €286 million in 2016, with Serbia importing more than it exports. In which areas do Serbian products have the best chance on the Swiss market?

– Exports of Serbian products to Switzerland are growing every year and increased by 27 per cent in 2017, which is a good growth pace. Serbia is traditionally strong in exporting agricultural products, fruits and berries, metal parts and textiles, and these products will remain an important part of Serbia’s export, as they have already built a reputation on the market. However, the export of ICT products and services is expected to emerge in the coming years.

It is important to mention the fact that several SSCC member companies invested in production in Serbia with the aim of exporting to the markets of the EU, U.S. and other countries.

How would you assess the potential of Serbian companies when it comes to their inclusion in subcontractor and supply chains?

– Serbian Companies are already included in the supply chains of SSCC member companies, and this process will evolve. These companies are innovative, open for development and dialogue, and share important values, such as amenability, quality and transparency. Opportunities exist in the supply of raw and packaged materials and services. In order to realise these opportunities, Serbian companies need to meet quality requirements.

Dual education has become synonymous with Switzerland, which is also helping Serbian in this domain. What are the results like to date and how would you assess the readiness of the authorities to engage in the significant changes implied by a different education system?

– Switzerland is well known for its dual education system, which prepares graduates to enter the workforce, and currently Swiss institutions are providing assistance in developing a similar education system in Serbia. A good example of Swiss assistance on this issue is the new programme designed by the Swiss Agency for Development and Cooperation (SDC) “From Education to Employment, E2E”, which covers activities related to youth employment at the policy level and at the implementation level. The benefit of the Swiss dual educational system is in providing young people with a choice to start working right after completing school, well-equipped with professional skills, or to continue their further education. Vocational Educational Training Reform in Serbia is currently under development, while full implementation will require time.

Serbia has a strong base in academic education. What’s missing are links between the education system and industry, as the current educational model leaves a gap in certain skills usually covered by companies’ training courses.

Swiss companies in Serbia face similar challenges in finding skilled employees – graduates usually lack technical knowhow and managerial skills. In order to address the gap in skills, many SSCC members offer inhouse training, apprenticeships and internship programmes to train newcomers and graduates. For example, Nestlé’s Alliance for Youth programme is uniting companies around the globe to employ and train young professionals for work in companies.

The SSCC sees the importance of the SME sector in the further enhancement of economic relations between Switzerland in Serbia. Switzerland has strong knowhow in supporting the development of SMEs. However, when using the Swiss approach it’s important to consider the different context of Serbia and to give priority to addressing issues that impact negatively on SME development in Serbia

Early June saw the staging of the second all-Serbian summit in Switzerland, which is home to around 200,000 Serbs. This is the first serious step in activating the diaspora in the country. What are its capabilities, primarily when it comes to helping Serbian investors wishing to compete on the Swiss market?

– Activating the diaspora is an opportunity that has not yet been exploited to its full potential, as the diaspora could drive entrepreneurship in Serbia. There are a few good examples of investors who came from the Serbian diaspora in Switzerland and decided to invest in Serbia, and who now run successful businesses here.

What are the Swiss-Serbian Chamber of Commerce’s priorities for the period ahead?

– The World Bank’s 2016 Doing Business survey raised Serbia to the rank of 47, which indicates that improvements have been achieved, and that is a good signal for the business community. The challenge we are facing currently is to make the country’s growth momentum sustainable, accelerate the reforms and ensure law enforcement.

The SSCC will continue contributing to public-private dialogue aimed at addressing the main challenges of the Serbian economy, and working together with all SSCC member companies to make Serbia a better place to do business.