ECONOMY

Serbia attracts more FDI

BELGRADE (Reuters) – Serbia should retain its allure for foreign investors this year and bring in at least $3 billion (-2.3 billion) in privatization deals and new projects, a foreign investors’ group said yesterday. «I expect revenue from privatizations and other foreign direct investment this year to range between $3 billion and $3.5 billion,» Bosko Kostic, chairman of the Foreign Investors Council, told a news conference. The council groups 110 foreign companies which have spent more than $4 billion over the past four years to establish and run business in Serbia. Kostic said much of the expected revenue should come from the sale of a minority stake in the Naftna Industrija Srbije (NIS) oil monopoly. «The government will put on sale a 25 percent stake, and the workers, who stand to get around 12 percent of the NIS capital, will probably offer their shares,» said Kostic, the head of Raiffeisenbank in Belgrade, which advises the government on the sale. He declined to indicate the transaction’s expected value. Company executives said a well-trained and cheap work force, proximity to rich Western European markets and membership of Southeastern Europe’s free trade area established late last year all made Serbia appealing to foreign investors. «Being part of the new CEFTA free trade area in the region and having a free trade agreement with Russia make Serbia an even more attractive investment destination,» Slobodan Milosavljevic, the head of the Serbian Chamber of Commerce, said. Milosavljevic, on the board of the Dunav state-owned insurer, said sell-offs in the financial sector could bring hundreds of millions of euros in revenues. In 2006, Serbia attracted a record $4 billion in foreign direct investment, with sales of a mobile operator, a mobile license, several banks and its biggest pharmaceuticals company accounting for the bulk of the inflows. With sources of privatization income expected to gradually dry up, foreign investors appealed to politicians to ensure Serbia is attractive also for greenfield projects. «The government should draft a strategy on attracting foreign direct investments after the privatizations are over,» Kostic said. Serbia has yet to form a new government since the January 21 inconclusive general election. But neither sluggish talks between pro-Western parties expected to form the new coalition nor the unresolved status of its Kosovo province deterred foreign investors, business representatives said. «The past several years have clearly showed that the issue of Kosovo is not a decisive factor for those who wish to invest in Serbia,» Kostic said.