ECONOMY

SE Europe investment

SOFIA – Senior government officials from across Southeastern Europe met with business leaders yesterday to explore opportunities for more investment and economic growth in one of Europe’s poorest regions. More than 1,000 top government officials, businessmen and experts from seven Southeastern European countries – Albania, Bulgaria, Croatia, Serbia and Montenegro, Romania, Moldova and the Former Yugoslav Republic of Macedonia – as well as from EU members Slovenia, Greece and Italy, gathered in Sofia to jointly promote the region’s advantages as an investment target. «Each of the regions’ countries is rather small in terms of market opportunities… so we should open the doors and lower border barriers for people and business,» said Bulgarian Prime Minister Sergei Stanishev. Business leaders – including managers from some 50 international companies including Microsoft and Russian oil giant Lukoil – said they also needed stronger links between the countries in the region and more skilled labor. UN Assistant Secretary-General Kalman Mizsei warned that high unemployment and some political uncertainties could hurt economic development. «Issues such as the future shape of the Union of Serbia-Montenegro, the fate of Kosovo, or prospects for reform… for Bosnia-Herzegovina… put a political risk premium on investment in the region,» Mizsei said. Montenegrin President Filip Vujanovic said that while the region had its own development opportunities, «the future of the region is to become part of the European Union.» Southeastern European countries, recovering from decades of totalitarian rule and nationalist violence, still need huge investment in the public sector to increase standards of living and meet European Union requirements. Bulgaria and Romania are scheduled to join the EU in 2007, and Croatia is holding membership talks with the European Commission. Experts, however, said yesterday that the region’s economies were clearly moving ahead. A regional study released by the Bulgaria Economic Forum, which organized the meeting, said the region had made strong progress since the 1990s and outpaced Central Europe’s macroeconomic growth with a 5.4 percent increase in GDP for 2004. Foreign investment has also increased in the past two years, experts said. Last year, investment in Southeastern European countries was estimated at over 8 billion euros, or about US $9.6 billion, which is about 60 percent higher than the average investment in the previous five years, according to Investment Compact, an agency of the Stability Pact for Southeastern Europe. «While foreign direct investment inflows are potentially transformative, they are primarily privatization than green-field related,» Mizsei said. He urged countries in the region to improve the business environment for small and medium-sized enterprises, saying, «Their potential to promote growth, employment and poverty reduction… has yet to be realized.»