Dragan Kostić, Director of the Pirot Free Zone

Success Based on Highest Standards

Thanks to the Pirot Free Zone having amassed almost two decades of experience and proven its success, it doesn’t seem pretentious that the company has set some fairly high standards for itself – namely, in striving to create the most favourable business environment and thus attract as many domestic and foreign companies engaged in export-orientated high technology production as possible, while, of course, offering the best possible services to the Zone’s clients

The Free Zone Pirot JSC spans over 116 hectares, is fully equipped in terms of infrastructure and houses sixteen production firms and more than 100 retail companies that have a combined total of almost 5,800 employees.

Excellent infrastructure and an efficient administration, coupled with special incentives for construction, optimum utilisation of existing facilities, doing business and hiring new workers, make the Free Zone Pirot one of the top free zones in Serbia.

Earlier this year you signed two new contracts with production companies in the Pirot Free Zone. Which companies are coming to the zone; when will those investments be implemented and how many new jobs will they create?

– This year has been dubbed the year of support for small and medium-sized enterprises and we will act accordingly. Following the implementation of large-scale investments, it will be the turn of SMEs. Both existing and future SMEs will support the operations of large companies by providing them with services.

The negotiations with investors that have taken place in the last few months have been completed successfully and contracts have been signed with several companies in the Pirot Free Zone. Consequently, the number of SMEs in the Pirot Free Zone has increased this year and we currently have 16 production companies operating here.

The Pirot Free Zone was recently recertified as an integrated management system (IMS). What standards does this recertification relate to specifically, and how do they contribute to the development of business in the free zone?

– The Recertified Integrated Management System pertains to quality management systems that in line with the standard SRPS ISO 9001:2008, environmental management system (SRPS ISO 14001:2005) and occupational health and safety (SRPS OHSAS 18001:2008). This certificate expires in the last quarter of 2018.

industrial-zone-pirotThe main reason for the implementation of IMS is to increase the quality of our services. By providing high-quality services, we strive to make our clients’ operations easier and to enable them to focus on their core businesses, in order to achieve better results. Their good results are the best promotion for the Free Zone and can result in the attracting of new users, as well as enabling existing users to increase their capacities.

Moreover, following a large number of requests from users and an increase in the number of administrative tasks, we also received IMS recertification in order to continue carrying out our daily activities in an uninterrupted manner, boost the quality of our services and solidify our business confidence.

What has the Pirot Free Zone been doing to attract new investors and do you plan to bring new companies here any time soon?

– The Free Zone Pirot is open to new investments and has been working to create a favourable business environment and thus attract domestic and foreign companies engaged in export-orientated production, as well as provide quality service to its clients.

Bringing in new clients is uncertain at present – at least until production facilities are open. We have held talks with a substantial number of potential zone users, with whom we have had numerous discussions and reached different stages of negotiations.

By providing high-quality services, we strive to make our clients’ operations easier and to enable them to focus on their core businesses, in order to achieve better results

However, we have only established cooperation with those companies that have been insistent upon realising their plans. We negotiate with potential users on an almost daily basis, but we cannot say with certainty that they will become new zone users. Negotiations with investors are ongoing and we are doing our best to bring in serious investors willing to develop their businesses over the long term.

There is also an industrial park in the Pirot Free Zone. What kind of benefits are brought by the synergy between these two formats?

– Having a one-stop-shop actually enables the synergy between the industrial park and the free zone. The Pirot Industrial Park provides infrastructure for users of land plots here, while the Free Zone Pirot provides a set of consolidated incentives, including state benefits for the creation of new jobs or preferential trade agreements with various countries (EU, CEFTA, EFTA, Russia, Belarus, Kazakhstan, Turkey, the U.S.), custom incentives, and incentives provided by the local government (such as exemptions from paying various construction fees, partial coverage of waste collection costs etc.).

The Free Zone Pirot has personnel licensed to carry out freight forwarding services, which enables the expediting of import and export procedures. The Zone also has a customs office and customs terminal where goods are inspected, which also boosts operational efficiency.

industrial-zone-pirotWe have also provided a parking lot for haulage vehicles. In addition to haulage services, we organise domestic and international transport, provide storage services, and goods loading/unloading in both indoor and outdoor warehouses at affordable prices.

 Companies can build their own storage or production facilities in the industrial park, which is fully equipped in terms of infrastructure. Investors are offered three types of benefits by the Pirot Free Zone: state incentives (the Law on Free Zones, duty and VAT exemption), local incentives, and many other services offered by the Free Zone Pirot Joint Stock Company (freight forwarding services, customs representation, organisation of transport and assisting investors with investment procedures).

Serbia still has relatively few free zones, though they have proved to be a good format for attracting investors and developing the overall economy. Why is that so?

-Free zones promote efficient economic instruments that facilitate fast FDI influx into the host country, boost employment, provide access to new technologies, enable workforce training and increase industrialisation and export levels.

Serbia’s free zones have achieved better results in recent years than businesses that operate elsewhere, in terms of increasing FDI, export turnover and value, and in terms of the number of employees.

The Free zone Pirot has personnel licensed to carry out freight forwarding services, which enables the expediting of import and export procedures

However, Serbian free zones are not currently competitive compared to their global and regional counterparts, which do provide better conditions for investors. The fact that certain tax exemptions will be in place until Serbia joins the EU, that we have simplified VAT procedures, that the Master Plan for Free Zones is completed and assets for infrastructure have been allocated will certainly increase the attractiveness of our free zones compared to those of neighbouring countries, as well as attracting foreign investments and boosting employment in Serbia.

Unlike direct government subsidies for new jobs, investors can take advantage of the benefits of free zones after they become operational in them. The free zone concept is based on the principle that investors are exempt from paying taxes after they complete the construction of their production facilities and hire workers. Once the effects of direct investments become evident, companies in the zones then become eligible for customs and tax exemptions, which were among the initial motives for their investments. The State then receives new revenue by charging VAT on higher public consumption as a result of new jobs being created.

If this proposal is accepted by legislators, relevant analyses show positive effects on employment, regional development and technology transfer, in addition to an increase in the overall number of free zones in the country.

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