Zorana Mihajlović Ph.D., Serbian Deputy Prime Minister and Minister of Construction, Transport & Infrastructure:

New Government Brings New Energy

I believe the new government will bring new energy and continue to implement reforms at an equally strong pace. My team and I will invest all the necessary energy, work and knowhow to connect Serbia with the region and the world. Another of our goals is for Serbia to enter the club of the world’s top 20 countries in terms of conditions for doing business

We have proven possible many things that were unimaginable until a few years ago – says Zorana Mihajlović, Serbian Deputy Prime Minister and Minister of Construction, Transport and Infrastructure, quoting a series of examples from the work of her ministry.

Do you expect the arrival of the new prime minister to bring new priorities for the government?

– I am convinced that the new government will bring new energy, but that the goals will remain the same. I expect Ana Brnabić to continue leading the team gathered in the Government of Serbia along the road of further economic development, investments in infrastructure, the continuation of the existing foreign policy and European integration, but also the continuation of reforms initiated in the public sector and other areas. As one of the goals I would also emphasise exploitation of the full potential of China’s global project “One Belt – One Road”, in which Serbia is also is a part. This is a huge chance for Serbia that we should not miss.

But what we should not allow is for the new government to be slower than the existing one. However, knowing Ana Brnabić, with whom I worked on the improving of Serbia’s position on the World Bank’s Doing Business list and the introduction of electronic building permits, I believe she will continue the launched reforms, and she will have my full support in that.

How would you assess the overall economic situation in Serbia?

– The economic situation in Serbia has improved drastically in recent years, and there is evidence of that in almost every field. These results and conducted reforms have also been recognised and praised by international institutions like the IMF and World Bank. First of all, the budget balance is not only good every year, but is also going beyond the plan. From a country that had falling GDP we have become a country that records constant GDP growth, even in years when fiscal consolidation is carried out.

In May we recorded a budget surplus that was about 60 billion dinars ahead of the plan for this year. We have reduced the unemployment rate from 23.1% in 2012 to around 14.6% at the end of the first quarter of 2017.

Serbia is today a country where over 200 kilometres of highway and nearly 300 bridges have been built in the past three years, a country where people are again working and building, and where a building permit can be obtained electronically in an average of five working days. Just according to criteria for issuing construction permits, on the last World Bank Doing Business we beat 150 countries – because that’s how many places we jumped with the introduction of e-permits. In the ministry that I head, we have enabled domestic companies to compete for jobs worth €977.7 million over the next two years, which will certainly invigorate domestic industry and consumer spending, and improve citizens’ living standards.

Are you concerned by the slowdown in GDP growth and do you believe it is realistic to expect to achieve planned growth of 3.5%?

– There is no reason for concern, and that is confirmed primarily by the latest reports and analyses of the world’s leading stakeholders. For example, in its May report the World Bank even raised its annual growth estimate for 2017 from the original 2.8% to three per cent, while the forecast for 2018 has been confirmed at an initial estimate of 3.5%. And the EU, following its analysis, announced excellent forecasts according to which Serbia’s GDP growth will be 3.2% this year and 3.6% next year.

How much does the ineffective work of public companies burden the healthy part of the economy and will the Government finally address these essential reforms?

– The reform of public enterprises is also a task that we have committed ourselves to, under the auspices of the programme with the IMF. I will hold on in the department that I lead, where we have launched something that was unthinkable before us – comprehensive reform of the Serbian railway system. To date we have successfully implemented the reform of Serbian Railways JSC., the railway market has been opened up for the first time and we already have one private operator. The number of employees has been reduced by more than 3,000, while 1,090 kilometres of unprofitable railroads have been removed, a historical electricity debt of about five billion dinars has been settled, and for the first time an audit has been carried out on the property of the railway.

Are you satisfied with the pace at which Serbia withdraws loans for large national development projects?

– When I took over as the head of the Ministry of Construction, I gave myself the task of completing the main transport directions, road and rail Corridor 10, in order for those travelling along the route from Eastern to Western Europe would choose Serbia, as the fastest and simplest route.

During 2014 and 2015 we completed all loans and started spending them. An example of this is the so-called Russian loan of $800 million plus Serbia’s share of $141 million, which they withdrew slower than us. And today projects from the Russian loan have been contracted worth $696.5 million. All that remains is to contract another $244 million for works on the open rail track along the Belgrade- Stara Pazova section. This year alone, on a total of 30 projects financed by various loans, and whose implementation is controlled by my department, about 51 per cent of the planned funds had been withdrawn by 15th June, and an even better result is expected in the coming months, with the construction season in full swing.

The team that I lead has succeeded in speeding up works on the most important infrastructure projects. As a result of that, road Corridor 10 will soon be completed, after a wait of 30 years.

We mustn’t allow the new government to be slower than this one, but knowing the Prime Minister I believe she will continue the launched reforms and in that she will have my full support

Are works on the main road directions being carried out according to the planned schedule?

– The largest part of Corridor 10 is finished. The sections Crvena Reka- Čiflik and Čiflik-Staničenje, covering a distance of 24.5 km, will open in July. All that will remain for the beginning of the next year is a small part of the most difficult section through the Grdeličko Gorge.

In two years we have completed the construction of almost 200 kilometres of highway. We are also working faster on Corridor 11, which will provide those traversing Serbia with route to Montenegro and the coast. Last year we opened to traffic about 40 kilometres of the highway from Ljig to Preljina, while this year I expect about 50 kilometres of Corridor 11, from Obrenovac to Ub and from Lajkovac to Ljig, to be completed. The Part of the road from Ub to Lajkovac was completed at the end of 2014, while we are still waiting for the completion of the highway section from Surčin to Obrenovac, as well as the part from Preljina to Boljar via Požega.

We want to build a Moravian corridor, or a 110km-long highway that would connect more than half a million citizens who live between Čačak and Kruševac. That highway should connect the two most important roads in Serbia, corridors 10 and 11.

One of the priorities is the modernisation and reconstruction of the Belgrade-Budapest railroad. Everything is proceeding according to plan on the Serbian side, and we are even a few steps ahead of the Hungarian side. We soon expect the start of works on the Stara Pazova-Novi Sad section, while in November we expect the start of works on the Belgrade-Stara Pazova section. This railway route is very important for us, which is why we will start negotiations on how to effectively link the Belgrade-Budapest project with the port of Piraeus in Greece, because the essence of the entire project is to enable better transit from Greece through Serbia to the rest of Europe. We are talking about this with partners from China and Hungary, while we also plan to include Greece and Macedonia in the talks.

How much essential progress has been made in promoting the use of rail transport links and waterways, which are interesting to businesses due to more competitive prices?

– Competitiveness is not only a matter of price, but also technological and organisational advantages, which is why our efforts to raise competitiveness have already seen us reconstruct 127 km of railroads, with works underway on 85km, and we are also starting work on another 155 km of railroads this year. Reliability and safety have been improved, as well as the speed of trains, which have gone up from about 40-50km/h to 100-120km/h. We will carry out the reconstruction of the Belgrade-Budapest railway so that trains can travel at speeds of up to 200km/h.

Best testifying to how competitive the railroad Corridor 10 through Serbia is, compared to railroads traversing Bulgaria and Romania, is the fact that Serbia Cargo, thanks to its competitive prices and technological advantage, has contracted the transport of trains carrying goods of companies Siemens and Bosch. And these cargo trains spend around 16 hours transiting through Serbia, with a delay of less than 15 minutes per 600km.

When it comes to waterways, statistics show a positive shift. Compared to 2015, when around 8.5 million tonnes of goods were transported along Serbia’s inland waterways, the volume of transport in 2016 was 10.5 million tonnes, while the volume of cargo in Serbian ports increased from 4.5 million tonnes to nearly 6.5 million tonnes.

The Ministry has also launched projects to improve river transport infrastructure. We are also working on raising the level of navigation safety in the Serbian section of the Danube, in order for it to become one of the best arranged river sections in Europe.

For the first time after 30 years, we are also launching an investment cycle that should make our ports more competitive on the European transport market. Our aim is for the Port of Smederevo to become one of the dominant inland ports in Europe for handling cargo, primarily related to the steel industry, and then to build the infrastructure for the Port of Apatin.

In the ministry that I head, we have enabled domestic companies to compete for jobs worth €977.7 million over the next two years, which will certainly invigorate domestic industry

Apart from road economies, what are the most important priorities of your ministry?

– It is exceptionally important for Serbia, in both economic and political terms, to connect its infrastructure with the region and the world, and in all jobs related to that my team and I will invest all the necessary energy, work and knowhow. Another priority is to reconstruct 1,100km of regional roads in Serbia, in which €400 million will be invested. In addition to the construction of roads and railways, we are also working on the development of airports in Serbia. This autumn I expect to sign a contract on a concession for Belgrade Nikola Tesla Airport with one of the bidders who will submit binding bids in the next round. By investing in the Belgrade airport, this investor will contribute to the airport developing even faster and to Belgrade becoming a hub of the region for air transport as well as road and rail. We are also investing in Niš’s Constantine the Great Airport, which is very important regionally and for us.

Another priority is reform of the cadastre that we are preparing, and which will primarily enable faster registration of ownership, in just a few days, and through electronic channels.

As chair of the Gender Equality Coordination Body, I can say that improving the position of women in Serbia will remain one of the priorities for us. I also chair the Coordination Body that deals with the social inclusion of Roma, and our goal is to fully integrate Roma into our society. The first meeting of the Working Group dealing with these issues was held recently, while in the period ahead we will intensify activities in this area.

How much could Serbia advance this year on the Doing Business list?

– We expect to improve by about ten places this year, while a bigger leap could follow when we prepare largescale cadastral reform. We will reform the cadastre on the basis of the model of the electronic construction permit, which is why I expect equally great success on the Doing Business list when this reform comes to life. Our goal is for Serbia to enter the club of the world’s top 20 countries in terms of conditions for doing business.

To what extent do business associations contribute to the creation of better government policies?

– All of our measures are aimed at attracting more investors and easing operations for those who already do business in our country. That’s also why we formed the Working Group to improve Serbia’s position on the Doing Business list.

In order to improve the business climate even further, the Government also formed the joint Working Group with the Foreign Investors Council. Our desire is for us in that same way, together, to arrive at the best solutions for companies that operate in Serbia, whether they are foreign or domestic. Our goal is to identify and remove possible obstacles to doing business, and to secure the best possible conditions for businesses to function.