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Serbia on the European track Challenges and Perspectives Berlin – May 2010 Božidar Djelić Deputy Prime Minister for European Integration and Minister of.

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Presentation on theme: "Serbia on the European track Challenges and Perspectives Berlin – May 2010 Božidar Djelić Deputy Prime Minister for European Integration and Minister of."— Presentation transcript:

1 Serbia on the European track Challenges and Perspectives Berlin – May 2010 Božidar Djelić Deputy Prime Minister for European Integration and Minister of Science and Technological Development

2 GERMANY IS A KEY PARTNER FOR SERBIA Germany is the most important trading partner for Serbia Economic and political cooperation with the Länder: Joint Commission Serbia – Baden Württemberg Joint Commission Serbia – Bavaria Initiative for establishment of the Joint Commission Serbia – North Rhine-Westphalia Strategic partnership between Deutsche Bahn and Serbian Railways Partnership signed with RWE on Serbias hydro potential development: Drina ( MW), Danube Djerdap reversible (up to 4x600MW) and Morava (200MW) Imminent decision on two thermoplant constructions, each 700MW, with RWE interested in Tesla 2

3 SERBIA IS AN INCREASINGLY IMPORTANT PARTNER FOR GERMANY Imports from Germany in 2009 were 1.39 bln EUR, while exports to Germany were 624 mln EUR Germany holds the 4 th place on the list of foreign investors in Serbia, with investments realized in period totaling bln USD More than 160 German companies are present in Serbia Forthcoming privatization of Telekom Serbia (40% of equity, 20% already held by OTE) of high interest for Deutsche Telekom President of Serbia Boris Tadić awarded with the Quadriga (2008) and the Steiger (2010) prestigious prizes for his contribution to the region and Europe 3


5 EU INTEGRATION IS SERBIAS CENTRAL STRATEGIC PRIORITY 71% of the population supports the European integration of Serbia Successful implementation of the Interim Trade Agreement as of 1 st January 2009 Very positive Progress Report for Serbia issued by European Commission in October 2009 Decision on the unfreezing of the Interim Trade Agreement on 7 th December 2009, implemented by the EU as of 1 st February 2010 Visa-free travel with the Schengen space achieved on 19 th December

6 SERBIA CONTINUES TO WORK ON MEETING THE CRITERIA FOR MEMBERSHIP Application for membership handed over by President Tadić to Swedish PM Reinfeldt on 22 nd December 2009 Expecting the start of the SAA ratification after the report of chief prosecutor of ICTY Serge Brammertz at the June 2010 EU GAC Hoping for green light to be given to the European Commission to prepare the avis on the application as soon as possible, hopefully before summer of 2010 Serbia is preparing answers to questions addressed to Croatia, Macedonia, Montenegro and Albania 6

7 SERBIA HAS BEEN IMPLEMENTING THE NATIONAL PLAN FOR EUROPEAN INTEGRATION FOR THE PAST TWO YEARS Implementation of and quarterly reporting on the National Plan for European Integration ( ) All-encompassing operational plan for approximating the acquis communautaire The entire National Programme reached 74% implementation rate for the period July March 2010 We aim to fully approximate the acquis communautaire by the end of

8 STRONG TRACK RECORD IN FIGHTING ORGANIZED CRIME AND CORRUPTION The head of the US Drug Enforcement Administration during a visit to Belgrade in April 2010 defined Serbia as its strategic partner in the region for fighting drug trafficking More than 4,000t of cocaine seized in Serbia and South America in collaboration with the DEA and British services Fight against corruption includes a law on seizing assets of organized crime convicts A much needed judiciary reform carefully implemented since December

9 IPA PROGRAMMING – SERBIA IS ABSORBING WELL, WITH A PERFECT COMPLIANCE RECORD * These allocations include Cross Border Cooperation Programmes in total annual value of approximately 11.5 million Total IPA allocation 2007 – 2013: 11.5 billion Total allocation for Serbia 2007 – 2013: 1.4 billion Year Allocation (million)* No. projects Comment100 million of budgetary support Programming has been launched189.9 million Preparations for IPA components III, IV and V have started 9

10 DECENTRALIZED IMPLEMENTATION SYSTEM (DIS) DIS means establishment of national institutional and legal framework for management of tendering, contracting, payments, monitoring, evaluation and auditing in accordance with EC rules DIS covers accreditation of each IPA component separately in six stages We have finalized 2 stages and we are currently in the most difficult stage (i.e. Gap plugging stage) All responsible persons and institutions have been appointed (in some cases we established new institutions) Accreditation last for 2 years According to Serbian DIS Roadmaps we expect accreditation by end of

11 Confirmation of macroeconomic stability in time of crisis 4,3Cuts in Government spending around 1 bn in 2009 % of GDP general Government deficit in 2009 and -2,9% GDP growth 4% of GDP general Government deficit in 2010 and 2% expected GDP growth Agreement with financial sector to maintain existing credit lines for Serbian economy in As results, stability of dinar exchange rate and foreign exchange reserves are achieved 6,1 bn of domestic saving in Q1 2010, 400 million higher than before economic crisis 3 BILLION STAND-BY ARRANGEMENT WITH THE IMF INSURES MACROECONOMIC STABILITY 11

12 FISCAL ADJUSTMENT SUPPORTING BALANCED GROWTH Nominal freezes of public wages and pensions until April 2011 will be replaced by structural sound spending reforms: Fiscal Responsibility Law will limit budget expenditures and public debt by defining their maximum share in the GDP and maximum annual change Achieving 1% of general government deficit by 2015 is a medium term goal In February 2010, Serbia was the only country whose risk category with the OECD was upgraded (form category 7 to 6) 12

13 REGIONAL INITIATIVES Development of the EU Strategy for Danube Region Establishment of the Western Balkan Technology Fund Transport Community of the South Eastern Europe Development of the Strategy for inclusion of the Roma population 13

14 FIVE REASONS TO INVEST IN SERBIA (1) 1. Stable political and favourable macroeconomic environment Stable government, with three more years in power European integration top priority Two year IMF program, supported by the EU and the World Bank 2. Comprehensive investment incentives Willingness to support all FDI through standard financial and tax incentives For large enough investments, Government is ready to consider favourable JVs and provide bureaucratic guidance 3. Access to both the EU and CIS markets Free trade agreements with EU, Russia, Belarus, Turkey and regionally CEFTA Ongoing free trade negotiations with Iran, Syria and Ukraine 14

15 FIVE REASONS TO INVEST IN SERBIA (2) 4. Highly-skilled, low-cost labour One of the best-ranked educational systems in CEE (by World Economic Forum GDI) Total monthly cost of EUR 500 per worker (half of CEE average of EUR 1,053) 5. Solid and improving infrastructure Heavy investments in the road and railway network, especially in the Trans European Corridor X Investments in energy infrastructure, production capacities and energy efficiency 15

16 SERBIA HAS THE BEST FDI TRACK RECORD IN THE REGION Source: National Bank of Serbia, Serbia Investment and Export Promotion Agency Leading Foreign Investors ( ) CompanyIndustry Investment (EUR mn) Telenor (Norway) Telecommunications 1,602 Philip Morris (USA)Tobacco611 Mobilkom (Austria) Telecommunications 570 Banca Intesa (Italy)Banking508 Stada (Germany)Pharmaceuticals475 Interbrew (Belgium/Brasil)Food and Beverages 430 NBG (Greece)Banking425 Gazprom (Russia)Energy400 Mercator (Slovenia)Retailing240 Fondiaria SAI (Italy)Insurance220 Lukoil (Russia)Energy210 16

17 SERBIA PROVIDES COMPREHENSIVE INVESTMENT INCENTIVES 10-year corporate profit tax holiday for large investments (over 7mn with min. 100 new jobs) Corporate profit tax credits of up to 80% of investment in fixed assets 1-3 year salary tax exemptions for specific employee categories 2-3 year social insurance charges exemptions for specific employee categories Imports of equipment exempt from customs duties Cash grants for Greenfield investments 17

18 COMPREHENSIVE INVESTMENT INCENTIVES Source: Serbia Investment and Export Promotion Agency 18

19 MOST FAVOURABLE FISCAL SYSTEM IN THE CEE REGION Source: International Monetary Fund 19

20 INVESTING IN SCIENCE AND TECHNOLOGY IS, FOR SERBIA, THE ONLY WAY TO CREATE A SUSTAINABLE ECONOMY AND SOCIETY Vision of the newly adopted Science and Technology Strategy: Serbia as an innovative country where scientists reach European standards, contribute to the knowledge of the entire society and the technological development of the industry 20

21 TWO KEY ELEMENTS OF THE STRATEGY FOCUS by defining seven national priorities in the field of science and technology: Biomedicine and human health New materials and nanosciences Environment protection and countering climate change Agriculture and food Energy and energy efficiency Information and communication technologies Improvement of decision making processes and affirmation of national identity PARTNER by creating stronger ties within the scientific community, between science and industry, with society and key international partners. 21

22 INCREASING AND DIVERSIFYING R&D EXPENDITURE, AS WELL AS INVESTING IN RESEARCH INFRASTRUCTURE, ARE PRECONDITIONS FOR SUCCESS On March4 th, 2010 Serbia signed a financial agreement with the European Investment Bank for 200 million EUR of investment in R&D infrastructure Negotiations are underway with CEB and other international financial institutions for a total of 420 million EUR of investment over the next five years 22

23 Projects within the Serbian R&d Infrastructure Investment Initiative include: Upgrading existing capacities (facilities renovation and new equipment) Development of human capital (Human Resources Program, the Petnica Science Center, new Center for Promotion of Science) Development of centers of excellence and academic research centers in priority research fields INCREASING AND DIVERSIFYING R&D EXPENDITURE, AS WELL AS INVESTING IN RESEARCH INFRASTRUCTURE, ARE PRECONDITIONS FOR SUCCESS 23

24 Development of information and communication technology infrastructure (Campus for faculties of technical sciences in Belgrade, Infrastructure for supercomputing initiative Blue Danube) Science and technology parks in Belgrade, Niš, Novi Sad and Kragujevac Apartment buildings for researchers in Belgrade, Niš, Novi Sad and Kragujevac INCREASING AND DIVERSIFYING R&D EXPENDITURE, AS WELL AS INVESTING IN RESEARCH INFRASTRUCTURE, ARE PRECONDITIONS FOR SUCCESS 24


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