BELGRADE – Is it worth investing in Serbia and Montenegro? An array of officials from the newly created, loosely joined federation made the case for investment these past two days, at the third Summit of Serbia & Montenegro – an annual event called, in its previous forms, the Summit of Yugoslavia. The event, organized by the Greek company Tsomokos Group International, drew almost every important official from Serbia and Montenegro, with the notable exception of Serbian Premier Zoran Djindjic, who was involved in a mysterious road accident just prior to the event («He has chosen to minimize it – that’s all I can say,» said Crown Prince Alexander, an admirer of Djindjic’s and one of the event’s speakers). Greece was more thinly represented by Development Minister Akis Tsochadzopoulos and various business people. In contrast to other Balkan states, in which investors had shown interest right after the collapse of communism, Serbia was ostracized by the international community while Slobodan Milosevic ruled. International investor interest only began in October 2000, with Milosevic’s fall, and it is only since last year that aid began to flow in from international organizations, such as the European Bank for Reconstruction and Development (EBRD) and the International Financial Corporation. Serbia sorely lacked foreign funds and the occasional interest from Milosevic-lovers in Greece could hardly compensate for their absence. This delay means, among other things, that there is no quick killing to be made in the market: «The days of monkey see, monkey do are over,» said Philip Bay, regional director for southeast Europe of Colliers Continental Properties, referring to the early post-communist interest in other eastern European countries when all a would-be entrepreneur had to do was imitate the current trends. Serbia and Montenegro are full of well-educated, relatively poor people who can make excellent employees, as local officials repeated again and again. Still, is it worth investing in there? «In my opinion, yes,» said EBRD business group director for southern and eastern Europe and the Caucasus, Olivier Descamps. But «Serbia and Montenegro must increase their efforts to build institutions and accelerate reforms,» added Hasso Molineus, representative of the European Agency for Reconstruction in Belgrade. And, said Mike Ahern of PriceWaterhouseCoopers, «a culture of non-compliance (to laws) has taken hold.» Of course, to hear local officials, Serbia is already well on its way to reform: Foreign trade has been liberalized, «perhaps too much,» said Mladjan Dinkic, governor of the National Bank of Serbia. Indeed, incentives are quite generous: Foreign investors are promised a 10-year tax holiday and, thereafter, a 14 percent tax rate. But these generous incentives must be seen against other difficulties, for example, the lack of property titles, which especially discourages property investors, said Bay. As for the economy, the budget deficit widened significantly in 2002 (to 4.9 percent of the country’s gross domestic product, from just 1.5 percent of GDP) and the threat of inflation is ever-present. Serbia and Montenegro desire to eliminate the last vestige of Titoism, the «social ownership» once so admired by several high- and low-ranking members of Greece’s ruling PASOK party. «We want a clear ownership structure: either state-owned or private sector-owned firms. We will eliminate social ownership,» said Dinkic. In the past two years, 566 companies have been put up for sale, with a minimum stake of 70 percent on the block. «There are no direct negotiations, because this encourages corruption. There is only open competition,» said Dinkic. Of the 566 enterprises on offer, 388 were put up for auction and the rest through competitive bids. So far, 392 enterprises, employing a total of 52,283 people, have been sold, 315 of which by auction. More importantly, there has been no outcry about companies being sold cheaply. The book value of the 392 companies sold was, according to authorities, a little over 411 million euros. The State got 400.8 million euros from the sale. The most important factor behind Serbia and Montenegro’s drive to bring in foreign investors is unemployment. At present, there are about 900,000 unemployed in Serbia, said Radoslav Veselinovic, president of Serbia’s Chamber of Commerce. He also predicted that, of the 1.8 million currently employed, 500,000 would lose their jobs if reforms went through. «We urgently need foreign help and assistance… The best solution would be direct investment and development of small and medium enterprises.» But is the government up to the job? «My overall impression is that the pace of reforms is slow, both in the number of laws passed and their implementation,» said Veselinovic. Greek companies are active in Serbia. The National Bank, Commercial Bank and EFG Eurobank have been established here, as well as OTE Telecom. Yesterday, OTE International President George Skarpelis, confirmed his company’s interest in acquiring the management of Telekom Srbija’s mobile business. Telekom Srbija also holds the fixed-line monopoly, although that is to change by 2005. OTE had acquired a 20 percent stake in Telekom Srbija, along with Telecom Italia, which bought another 29 percent. Late last December, however, Serbia announced it was buying back Telecom Italia’s stake, at a profit, «to build a more efficient management,» according to Serbian Transport and Telecommunications Minister Marija Raseta-Vukosavljevic. Now OTE is the only other shareholder in Telekom Srbija and will have to renegotiate its role in the company.