ECONOMY

Serbian economy searching for more direct foreign investment

BELGRADE – Serbia’s government said yesterday it hoped to attract up to $200 million in badly needed foreign direct investment (FDI) in 2002, an increase of almost 50 percent from last year. «Our aim is to approach the Czech Republic, Hungary, Poland and Slovenia, measured by levels of foreign direct investment inflows, within a couple of years,» Dusan Zivkovic, head of Serbia’s Investment and Export Promotion Agency, told Reuters. But his FDI estimate for 2002 was still at the lower end of a previous government estimate of between $200 and $300 million in such inflows, seen as crucial for efforts to revive an economy impoverished by wars and sanctions in the 1990s. Zivkovic said FDIs amounted to $37 million in the first quarter of 2002, indicating a year level of close to $200 million. They stood at 140 million euros ($135.9 million) in 2001, up from 64 million euros in 2000, he said. «In the next 12-18 months we expect investments in hotels, congress centers, business premises and shopping malls,» Zivkovic said. «But then we also expect investments in export-oriented industries and some FDI-related export growth.» Expected FDIs included a 67-million-euro venture between Franco-German floor maker Tarkett Sommer AG and Serbia’s Sintelon and a 200-million-euro deal between French franchiser Cora and Serbia’s Delta to build two hypermarkets. Austria’s OMV has also announced plans to open up to 100 gasoline stations in Serbia in an investment valued at 100 million euros over five years. Courting investment Seeking to woo foreign investors, the reformers who toppled former President Slobodan Milosevic in October 2000 have launched a drive to liberalize the economy, and are expected to cut the tax for corporate profits from the current 20 percent. «The combined inflow of foreign direct investments and privatization receipts should range between $580 and $600 million this year, resulting in around $71-$73 per capita. The east European average is $71 per capita,» Zivkovic said. He added that in a liberalization of previous rules, a new investment law only banned foreigners from acquiring stakes in the arms industry and national parks. Strategic industries Foreign ownership remains limited to 49 percent in strategic industries such as flag carrier Yugoslav Airlines (JAT), and in Serbia’s telecoms and power utilities. But some reforms had been held up in Parliament, said Zivkovic, adding that investors complained about complex land ownership laws and construction regulations and new foreign exchange rules that make the dinar the country’s sole legal tender. In Serbia, where the euro is widely used as a trusted parallel currency, the law had caused trouble for some foreign firms, for example by pushing up air fares, he said. The EU milk quota for Greece was set in the late 1980s and came into force in 1991-92. This came to about 700,000 tons, or 1 percent of the EU total. This quota still applies today, when Greece is short of milk and is forced to import huge quantities of powdered milk; by contrast, Portugal has a quota of 1.6 million tons with a number of animals smaller than Greece’s 300,000.