Mike Michel, FIC President (Yettel CEO)

Serbia is an outstanding investment destination. The continuation of structural reforms and the harmonising of national policies with those of the European Union can only increase the competitiveness and attractiveness of the country for further investments

Despite major turmoil on the global market having led many companies to be more cautious in running their businesses, Serbia is still a great place to invest, says FIC President and Yettel CEO Mike Michel. We dedicated this interview to discussing the opportunities that lie ahead for Serbia, but also to the initiatives being launched by the FIC in an effort to support Serbian society in generating even more robust economic growth.

In light of the renewed interest in the EU enlargement process and the opportunities presented by the European Growth Plan for the Western Balkans, what do you think are the most important steps the Serbian government should take to catch up and capitalise on these opportunities?

— That would certainly be further economic integration with the EU market. The Western Balkan countries, Serbia included, should keep working on structural reforms and aligning their policies with the EU’s in order to boost competitiveness and secure a place in supply chains. The Growth Plan, through a combination of reforms and investment, can yield quick and tangible results, such as the opening of the regional market, accelerating business growth and providing access to Eurozone payment systems and digital markets, to mention just a few. The Western Balkan countries will have access to six billion euros in loans and grants directly allocated to their national budgets. This is a unique and fantastic opportunity, and I believe strongly in the capacity of Western Balkan countries to utilise it to accelerate strategic investments and improve the business climate.

If you had to compile a list of priorities, what would you outline as the most important game-changers for driving growth and attracting FDI in Serbia?

— Serbia is a great place to invest, a regional leader, attracting around 4.5 billion dollars in foreign direct investment in 2023 alone. I expect this figure to increase in 2024. However, recent events, especially in Europe, have disrupted supply chains and impacted the fragile ecosystem, such as the investment environment. Foreign investors continue investing, but with caution.

WE ADDRESS IMPORTANT TOPICS

The years 2023 and 2024 have been extremely successful for us, during which we’ve achieved excellent cooperation with numerous institutions and addressed important topics like ESG, transfer prices, the further development of the telecommunications sector and green financing. There is a lot ahead of us, while the crowning of our work, as always, will be the launch of the White Book

For Serbia to achieve a steady GDP growth rate of five per cent, we need a sustainable 25 per cent investment share in GDP. Moreover, to have steady GDP growth of five per cent, we need a significantly higher share of domestic investment, and that is something the state should focus on. We must push for both foreign and domestic investments to maintain the ecosystem and more domestic private investments are needed to close the gap.

As motors of the Serbian economy, how can FIC members contribute to this effort?

— Thank you for recognising us as we like to see ourselves: as the driving engine of the Serbian economy, with 122 member companies, more than €44 billion in investments, and more than 115,000 direct employees. We see FIC as the long-term and reliable partner to the Government and society at large, with multiple positive roles in Serbia: bringing in new investments and creating jobs; introducing modern technologies, facilitating innovation; promoting ethical business conduct and involving local SMEs in our value chains and integrating them into global markets.

We all need to work together to build a better environment with a functional state, more competitive businesses and a higher standard of living for citizens. The FIC offers its knowledge and experience in navigating economic transition, and we are ready to leverage this for the greater benefit of the Serbian market.

What are the key opportunities and challenges for foreign investors in Serbia’s current economic climate?

— I like to look at challenges as opportunities – not just when talking about the FIC, but in general. According to the NBS, inflation in May 2024 was back in the target corridor after a certain period, and it is necessary to continue that trend. We also need to streamline fiscal burdens to incentivise investments and stimulate economic growth. It is essential to trim public expenditure and finalise the restructuring of infrastructure companies, particularly in the energy sector, in order to effectively manage the fiscal deficit and public debt.

The FIC has hosted impactful discussions on key issues in financial services, telecommunications and agriculture over recent years. What factors have contributed to their success?

— I would say, firstly, the willingness for open dialogue on both sides: the business sector and investors, on one side, and the Government on the other. Back in 2017, the White Book Task Force was formed with the idea of improving the implementation of recommendations. We look forward to continuing to use the White Book Task Force as an institutional mechanism for ongoing and successful dialogue, while the White Book remains our greatest achievement, and the most frequently updated guide on how the business environment in Serbia can be improved.

The FIC is a long-term and reliable partner to the Government of the Republic of Serbia that’s ready to make its knowledge and expertise available for the benefit of Serbian society

In 2023, and now in 2024, we have not just continued our activities, but intensified them. We have established excellent cooperation with the National Bank of Serbia and also raised awareness of ESG and transfer pricing. In 2024, the FIC and EBRD organised the second conference on financial services with a focus on green and digital, and we had a successful event called FIC insight into the telecommunications sector, at which we discussed the importance and impact of continuous investment in the mobile telecommunications sector on the quality of services for users. Several more important topics await us until the end of the year, including, of course, our key event in the launch of the White Book 2024.

How do these new forms complement the White Book and the Task Force as an institutional mechanism for continuous and successful dialogue between the Government of Serbia and the business community?

— They complement existing efforts to a great extent, as there can never be too much dialogue. This is the only way to ensure that new and current laws are implementable and conducive to growth.

What would you highlight as the most important changes benefiting the business community and society resulting from work within the White Book Task Force?

— In the first trimester of 2024, the Serbian economy showed positive developments, indicating a growth rate of 4.7%, a slowdown in inflation and an increased level of FDI. This is a clear indicator of the benefits of an open and constructive dialogue between the business community and the Government, as exemplified by the White Book Task Force. I think that when it comes to capital, strategic investments, there is a huge need for cooperation between the Government and investors, always keeping in mind that a lot can also be done by domestic companies.