30 Reasons to invest in Serbia – part two – doing business in Serbia

30 Reasons to invest in Serbia – part two – doing business in Serbia

In previous text on our blog, we stated several grant opportunities as reasons to invest in Serbia. In this text, our goal is to provide you with positive aspects of doing business in Serbia on macro and micro level. We divided them into four categories:

• Macroeconomic factors
• Geopolitical factors
• Legal factors
• Business strategy factors

Macroeconomic stability

Economy of Serbia has macroeconomic stability which may be seen in following 4 reasons to invest in Serbia:

1. Stable foreign exchange rate: according to the publication Macroeconomic developments in Serbia, published by the National bank of Serbia in November 2019, Serbian currency dinar (RSD) appreciated in previous two years, thanks to better macroeconomic fundamentals and favorable growth prospects
2. Low inflation: according to the National bank of Serbia’s data, inflation rate in previous 6 years was 2% in average and significant increase is not expected in following period
3. Stable credit rating: according to the last publicly available data, credit rating agencies Standard & Poor’s and Moody’s have positive outlook on Serbia credit rating, granting our country with BB and Ba3 rating, respectively
4. Low government budget deficit: according to the Fiscal council, independent state body, planning of 2020 budget is done correctly and deficit will be relatively low (0,3% of GDP or lower). Therefore, significant increase of public debt is not expected

Geopolitical position

Regarding Serbia’s geopolitical position, there are 3 main reasons to invest in Serbia:

1. Favorable geographic position: with its central position in the Balkans, Serbia is a good location for a company to serve customers from EU, rest of the Balkans, Eastern Europe and Middle East. Two Pan-European corridors pass through Serbia: Corridor 7 (Danube Corridor) and Corridor 10 (route Salzburg – Thessaloniki plus the corridor branch to Istanbul)
2. EU accession process: the most significant Serbia’s strategic goal is accession to the European Union. The negotiation process started in January 2014 and since then Serbia has managed to open 18 out of 35 negotiation chapters
3. Concluded trade agreements: according to the Development agency of Serbia, Serbia can serve a market of more than 1,3 billion customers duty-free or with lower tariffs. Namely, Serbia signed free trade agreements with the EU, Russia, Kazakhstan, Belarus, EFTA countries (Iceland, Liechtenstein, Norway and Switzerland), all border countries and Turkey. In addition, Serbia has Generalized System of Preferences with the USA, Australia and Japan

Legal factors

Among legal factors, we name following 2 reasons to invest in Serbia:

1. Simple procedures for establishing a company: the company in Serbia may be founded in several days. It takes few days to prepare all documentation and submit it to the Agency of business registers. The Agency registers the company usually in less than a week after submission. After registration, new company needs to open bank account and submit statutory documents to the tax authorities. There are several types of legal entities, out of which the most popular is d.o.o. (limited liability company). We have already provided more details on registering company in Serbia on our blog.
2. Small costs of setting up business in Serbia: legally, company can be registered in Serbia for less than 1 EUR (100 RSD – legal requirement for basic capital for d.o.o.). However, we usually propose our clients to put some more money (a few hundred/thousand euros) to cover costs of first several months, before company starts to generate revenue.

Business strategy factors

Other factors regarding business environment in Serbia that may be significant for potential investor’s business strategy are additional 3 reasons to invest in Serbia:

1. Many significant multinational companies already do business in Serbia: if some of these are global partners you are doing business with, your relationship with them may be additionally strengthened if you start you invest in Serbia. Some of the largest investors in Serbia are Gazprom, FIAT, Microsoft, Samsung, Panasonic, Coca – Cola, Pepsi, Ahold Delhaize, Schwartz Gruppe (Lidl), Metro AG, IKEA, Robert Bosch, Siemens, Swarovski, Intesa San Paolo, Unicredit group, Generali insurance group, Michelin, Continental, Leoni etc.
2. Good employment force: Serbian employees offer a unique combination of high quality and cost efficiency. According to the data of the Statistical Office of Republic of Serbia, approximately 45.000 graduates get certain level of university degree annually. A significant portion of them come from technical universities, IT and business related studies. Serbia has a long tradition of educating high quality technics and mathematics students: our country is very proud of Mathematical Grammar school, specialized high school whose students win awards on international competitions each year
3. Sectors with competitive advantage potentials: there are several industries with significant development potentials. Having in mind Serbia’s natural resources and geographical position, there are profitable opportunities in sectors such as agriculture, food processing, tourism, energy, transport and logistics etc. Serbia has managed to attract significant foreign direct investments in automotive components, tobacco and textile industry, as well as in real estate. Last, but not least, Serbia’s IT sector is rapidly growing each year, having in mind technical skills of Serbian workforce.

Final remarks

So far, we presented 19 reasons to invest in Serbia. In a following text, we will prepare the rest of 11 reasons from tax point of view.
WTS Serbia is a team of tax, finance and accounting professionals committed to helping domestic and foreign investors adapt to dynamic business environment of Serbia. If you are planning to invest in Serbia or you are planning to expand current operations, please contact our consulting team for support.