ECONOMY

Serbia announces new job bonuses for investors

BELGRADE – Serbia yesterday signed a deal with 18 foreign and local companies, rewarding them with grants for creating jobs as part of a government plan aimed at reducing the country’s 30 percent unemployment rate. Manufacturers get -2,000 to -5,000 for each job created in projects foreseeing a minimum of 50 new jobs. Firms investing in research and development get between -2,000 and -10,000 per position in projects creating a minimum of 10 jobs. The grants totaled -5.2 million and were estimated to create some 2,500 jobs. «Our goal is to reduce the unemployment rate by half in the next five years,» Economy Minister Mladjan Dinkic said. «We can do that by speeding up the privatization process and by attracting investors. These companies have invested -150 million in 16 municipalities, including in underdeveloped regions, and all plan to employ more people.» Serbia spent the 1990s in economic isolation, punished with sanctions for the aggressive policies of late strongman Slobodan Milosevic in the wars that followed the breakup of Yugoslavia. It lost out on the economic boom experienced by its former communist neighbors who escaped conflict in the 1990s, and who are now European Union members. It has started attracting foreign capital only since late 2000, when Milosevic was ousted by pro-Western reformers. Some 1 million people are currently unemployed, roughly a third of the work force. The average salary among the 7.5 million population is around -300 a month. In 2006, the government gave -10.3 million to 13 companies for creating more than 5,000 jobs. Another tender for expressions of interest – the fourth round of the plan – was published yesterday, with September 14 as the deadline. Dinkic said the investors have to give banking guarantees, and unless they really employ as many people as they had originally pledged, they must return the money with interest. In 2006, Serbia attracted almost $4 billion in foreign investment, but prospects for 2007 appeared lackluster, as investors were spooked by a three-month political crisis following an inconclusive January election. Analysts say that to compete for foreign direct investment in the region, Serbia needs more than such incentive packages, notably improvements in the legal system and the country’s dilapidated infrastructure.