FOREIGN DIRECT INVESTMENT A GENERAL OVERVIEW AND ITS RELEVANCE TO SERBIA

FOREIGN DIRECT FOREIGN DIRECT INVESTMENTINVESTMENT

A GENERAL OVERVIEW AND A GENERAL OVERVIEW AND ITS RELEVANCE TO SERBIAITS RELEVANCE TO SERBIA

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTThe international movement of capital takes place in The international movement of capital takes place in

three major forms:three major forms:

1.1. International mobility of credit capital.International mobility of credit capital.

2.2. Portfolio investments.Portfolio investments.

3.3. Foreign direct investments. (FDI)Foreign direct investments. (FDI)• FDI is considered as the most desirable form of FDI is considered as the most desirable form of

international capital. As a result, corporations international capital. As a result, corporations and national states compete in the international and national states compete in the international arena against each other for the inflow of FDI.arena against each other for the inflow of FDI.

• FDI basically means the expansion of existing FDI basically means the expansion of existing and establishment of new economic and establishment of new economic organizations of the so call parent company. FDI organizations of the so call parent company. FDI is a long term investment of corporate capital is a long term investment of corporate capital abroad.abroad.

• Under the current economic and financial crisis, Under the current economic and financial crisis, FDI has become scarcer as the profitability of FDI has become scarcer as the profitability of enterprises declined.enterprises declined.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENT

FDI plays a major role in the economic FDI plays a major role in the economic development:development:

• For the exporting countries (outflow of FDI) , For the exporting countries (outflow of FDI) , export of capital allows for an increased use of export of capital allows for an increased use of capacities, expansion of markets, new capacities, expansion of markets, new technology development and of course higher technology development and of course higher return on investment capital.return on investment capital.

• For the importing countries (inflow of FDI), the For the importing countries (inflow of FDI), the benefits stem not only from the inflow of capital benefits stem not only from the inflow of capital but also from the inflow of new technologies and but also from the inflow of new technologies and know-how without need to purchase a license or know-how without need to purchase a license or significant amounts of capital in R&D. It also significant amounts of capital in R&D. It also means higher exports, the ability to finance new means higher exports, the ability to finance new investments which affects the growth of investments which affects the growth of employment, income and labor productivity.employment, income and labor productivity.


Defining FDI:Defining FDI:• FDI can be defined as an investment made by a FDI can be defined as an investment made by a resident of one economy in another economy.resident of one economy in another economy.

• The investment has to be of “lasting interest”.The investment has to be of “lasting interest”.

• The investor has a “significant degree of The investor has a “significant degree of influence” on the management of the enterprise.influence” on the management of the enterprise.

•The IMF defined the degree of influence of the The IMF defined the degree of influence of the investor as follows: For operational purposes, 10% investor as follows: For operational purposes, 10% of the voting shares or voting power is the level of the voting shares or voting power is the level necessary for the direct investment interest to exist necessary for the direct investment interest to exist (IMF, 1993, paragraph 362)(IMF, 1993, paragraph 362)


There are two types of FDI used for market entry There are two types of FDI used for market entry purposes:purposes:

1.1. Greenfield FDIGreenfield FDI

2.2. Mergers and acquisitions (M&As).Mergers and acquisitions (M&As).

1. Greenfield FDI:1. Greenfield FDI: • relates to investment projects that entail the relates to investment projects that entail the

establishment of new entities and the setting up establishment of new entities and the setting up ofof

offices, buildings, plants and factories offices, buildings, plants and factories from from scratchscratch. Its is a kind of working capital. Under . Its is a kind of working capital. Under this form of FDI, a direct investor provides this form of FDI, a direct investor provides resources to a direct investment enterprise in resources to a direct investment enterprise in exchange for a claim on the entity.exchange for a claim on the entity.


Greenfield FDI (continued).Greenfield FDI (continued). • Greenfield FDI involves capital used for the Greenfield FDI involves capital used for the

purchase of fixed assets, materials, goods and purchase of fixed assets, materials, goods and services, and to hire workers in the host services, and to hire workers in the host country.country.

• This form of FDI contributes directly to capital This form of FDI contributes directly to capital formation and helps generate employment in formation and helps generate employment in the host country.the host country.

• It adds to the productive capacity of the host It adds to the productive capacity of the host country through investment expenditures by the country through investment expenditures by the direct investment enterprise.direct investment enterprise.

• The direct investment enterprise established The direct investment enterprise established through Greenfield FDI can be a branch, an through Greenfield FDI can be a branch, an unincorporated enterprise or an incorporated unincorporated enterprise or an incorporated enterprise (that is, a separate unit maintaining enterprise (that is, a separate unit maintaining its own accounting books).its own accounting books).


2. Mergers and acquisitions: 2. Mergers and acquisitions: • The second mode of entry of FDI is an M&A The second mode of entry of FDI is an M&A

transaction. This entails the taking over or transaction. This entails the taking over or merging of capital, assets and liabilities of merging of capital, assets and liabilities of existing enterprises.existing enterprises.

• Cross-border M&A’s have been a major driver of Cross-border M&A’s have been a major driver of FDI flows for the past few years, particularly FDI flows for the past few years, particularly among and in developed countries, but also in among and in developed countries, but also in some developing countries some developing countries (UNCTAD, 200).(UNCTAD, 200).

• Under M&A’s the target company that is being Under M&A’s the target company that is being sold and acquired is affected in that there is a sold and acquired is affected in that there is a change in its ownership.change in its ownership.

• Usually M&A’s combine an increase in share Usually M&A’s combine an increase in share capital of the target company and further capital of the target company and further dilution of the previous owners.dilution of the previous owners.


FDI in the long term:FDI in the long term:• Over the long term there is little difference Over the long term there is little difference

between Greenfield investments and M&A’s in between Greenfield investments and M&A’s in terms on their impact on an economy. terms on their impact on an economy. (UNCTAD)(UNCTAD)

• Over the long term FDI helps in establishing an Over the long term FDI helps in establishing an equilibrium to market conditions through the equilibrium to market conditions through the efficient allocation of productive assets. FDI efficient allocation of productive assets. FDI helps improve international competitiveness helps improve international competitiveness and foster a healthy competition in a globalize and foster a healthy competition in a globalize international sphere.international sphere.

• FDI entails the highest business risk amongst all FDI entails the highest business risk amongst all other methods of investment. It also entails (in other methods of investment. It also entails (in most of the cases) direct involvement in the most of the cases) direct involvement in the management and corporate strategy of the management and corporate strategy of the target company by the investor ( parent target company by the investor ( parent company). Its is proven that FDI yields the company). Its is proven that FDI yields the highest returns when compared to all other highest returns when compared to all other modes of investment.modes of investment.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTGlobal FDI:Global FDI:• Foreign direct investments have become the Foreign direct investments have become the

major economic driver of globalization, major economic driver of globalization, accounting for over half of all cross-border accounting for over half of all cross-border investments. investments.

• The most profound effect has been seen in The most profound effect has been seen in developing countriesdeveloping countries, where yearly FDI flows , where yearly FDI flows have increased from an average (per developing have increased from an average (per developing nation) of less than $10 billion in the 1970s to a nation) of less than $10 billion in the 1970s to a yearly average of less than $20 billion the yearly average of less than $20 billion the 1980s. From 1998 to 1999 itself, FDI towrds the 1980s. From 1998 to 1999 itself, FDI towrds the developing nations grew from $179 billion to developing nations grew from $179 billion to $208 billion and now comprise a large portion of $208 billion and now comprise a large portion of global FDI.global FDI.

• Although most of the FDI flows from developed Although most of the FDI flows from developed cpountries to developed countries, still the cpountries to developed countries, still the inflows to developing nations are significant and inflows to developing nations are significant and constitute a major force in economic growth.constitute a major force in economic growth.


Global FDI(continued)Global FDI(continued)• China is at the forefront of FDI growth, followed China is at the forefront of FDI growth, followed

by Russia, Brazil and Mexico.by Russia, Brazil and Mexico.• The "Asian Tiger" economies such as China, The "Asian Tiger" economies such as China,

South Korea, Singapore and the Philippines South Korea, Singapore and the Philippines benefitted tremendously and experienced high benefitted tremendously and experienced high levels of economic growth at the onset of levels of economic growth at the onset of foreign direct investment into their economies.foreign direct investment into their economies.

• With the advent and growth of the internet, With the advent and growth of the internet, many traditional cases of FDI which required many traditional cases of FDI which required huge amount of capital and physical huge amount of capital and physical investments are slowly becoming obsolete, investments are slowly becoming obsolete, especially for developed countries.especially for developed countries.

• The rise of small startups that require less The rise of small startups that require less research and development investment and the research and development investment and the shift towards knowledge based economies, shift towards knowledge based economies, where the emphasis is placed on human capital where the emphasis is placed on human capital rather than manual labour, has altered the rather than manual labour, has altered the playing field for FDIs. playing field for FDIs.


Global FDI trends: Global FDI trends: • Historically, FDI has been directed at developing Historically, FDI has been directed at developing

nations as firms from advanced economies nations as firms from advanced economies invested in other markets, with the US capturing invested in other markets, with the US capturing most of the FDI inflows. While developed most of the FDI inflows. While developed countries still account for the largest share of countries still account for the largest share of FDI inflows, FDI inflows, data shows that the stock and data shows that the stock and flow of FDI has increased and is moving flow of FDI has increased and is moving towards developing nations, especially in towards developing nations, especially in the emerging economies around the world. the emerging economies around the world.

• Aside from using FDIs as investment channel Aside from using FDIs as investment channel and a method to reduce operating costs, and a method to reduce operating costs, many many companies and organizations are now companies and organizations are now looking at FDI as a way to internationalizelooking at FDI as a way to internationalize. . FDIs allow companies to avoid governmental FDIs allow companies to avoid governmental pressure on local production and cope with pressure on local production and cope with protectionist measures by circumventing trade protectionist measures by circumventing trade barriers. The move into local markets also barriers. The move into local markets also ensures that companies are closer to their ensures that companies are closer to their consumer market, especially if companies set consumer market, especially if companies set up locally-based (national) sales offices.up locally-based (national) sales offices.


So, who invests? So, who invests?

• FDI outflows declined from over 600 billion US$ FDI outflows declined from over 600 billion US$ in 2007 to arounf 400 billion US$ by last year. in 2007 to arounf 400 billion US$ by last year. This is a decline of 33% over a period of 4 This is a decline of 33% over a period of 4 years!!years!!

• The bigest outflow of FDI comes from the OECD The bigest outflow of FDI comes from the OECD countries (an international economic countries (an international economic organization of 34 organization of 34 economicallyeconomically advanced advanced countries founded in 1961 to stimulate countries founded in 1961 to stimulate economic progress and advance world trade).economic progress and advance world trade).

• The second highest outflow comes from the G-The second highest outflow comes from the G-20 economies (a group of 19 economically 20 economies (a group of 19 economically strong countries plus the EU). strong countries plus the EU).

• The third highest outflow comes from the EU.The third highest outflow comes from the EU.


So, who invests (continued):?: So, who invests (continued):?:

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTAnd who gets the funds? And who gets the funds? • There is a change of trend over the past 2 years There is a change of trend over the past 2 years

with the advanced economies of the G-20 with the advanced economies of the G-20 getting most of the funds. Prior to 2007 the getting most of the funds. Prior to 2007 the OECD’s used to absorbe most of the funds. OECD’s used to absorbe most of the funds. Europe is and was the last. Europe is and was the last.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTAnd in which area the funds flow?And in which area the funds flow?According to the World Bank FDI flows in the According to the World Bank FDI flows in the

following general areas:following general areas:• Investments that require natural resourses such Investments that require natural resourses such

as minerals, raw materials and agricultural as minerals, raw materials and agricultural products.products.

• Investments that require cheaper or skilled and Investments that require cheaper or skilled and specialized labor.specialized labor.

• Investments that require new markets for sales.Investments that require new markets for sales.

• Investments that require increase of production Investments that require increase of production productivity aiming at reducing costs.productivity aiming at reducing costs.

• Investments that require existing capacities in Investments that require existing capacities in order to maintain and promote long-term goals order to maintain and promote long-term goals and financial targets of their companies.and financial targets of their companies.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFDI and Serbia.FDI and Serbia.• Since year 2001, Serbia has attracted over $20 Since year 2001, Serbia has attracted over $20

billion of inward foreign direct investment.billion of inward foreign direct investment.• Since the onset of economic reforms, Serbia has Since the onset of economic reforms, Serbia has

grown into one of the premier investment grown into one of the premier investment locations in Central and Eastern Europe. A list locations in Central and Eastern Europe. A list of leading foreign investors is topped by world-of leading foreign investors is topped by world-class companies and banks such as FIAT, class companies and banks such as FIAT, Telenor, Stada, US Steel, Michelin, Gazprom, Telenor, Stada, US Steel, Michelin, Gazprom, Siemens, Intesa Sanpaolo and many others.Siemens, Intesa Sanpaolo and many others.

• Serbia's strong FDI track-record is substantiated Serbia's strong FDI track-record is substantiated by internationally recognized awards for local by internationally recognized awards for local Greenfield investors. Between 2004 and 2006, Greenfield investors. Between 2004 and 2006, Greenfield projects in Serbia were awarded by Greenfield projects in Serbia were awarded by OECD as the largest investments of this type in OECD as the largest investments of this type in South East Europe. The first Award was South East Europe. The first Award was presented to Ball Packaging Europe presented to Ball Packaging Europe (headquartered in USA), followed by METRO (headquartered in USA), followed by METRO Cash & Carry (Germany), and Israeli Africa-Israel Cash & Carry (Germany), and Israeli Africa-Israel Corporation/Tidhar Group for their Airport City Corporation/Tidhar Group for their Airport City Belgrade real estate projectBelgrade real estate project

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFDI and Serbia (continued).FDI and Serbia (continued).• In year 2011, Serbia attaracted FDI inflow of 2 In year 2011, Serbia attaracted FDI inflow of 2

billion ($US). Prime Minister Mirko Cvetkovic in billion ($US). Prime Minister Mirko Cvetkovic in an interview at Serbia Times on 1/3/2012, an interview at Serbia Times on 1/3/2012, underlined the importance of FDI for Serbia underlined the importance of FDI for Serbia although he expresed his fears that FDI might although he expresed his fears that FDI might be in 2013 the same as in 2012, if the crisis in be in 2013 the same as in 2012, if the crisis in the Eurozone continues.the Eurozone continues.


FDI and Serbia (continued).FDI and Serbia (continued).• Serbia has a long history of international Serbia has a long history of international

commerce, even under communism, and it once commerce, even under communism, and it once attracted a sizeable foreign company presence, attracted a sizeable foreign company presence, mainly due to its access to mainly due to its access to ComeconComecon, and Non-, and Non-Aligned Movement markets. Aligned Movement markets.

• The record braking level of FDI in 2006 was due The record braking level of FDI in 2006 was due to the sale of Mobtel.to the sale of Mobtel.

• Leading investor nations in Serbia over a period Leading investor nations in Serbia over a period of 10 years: Austria ($2.68bn), Greece of 10 years: Austria ($2.68bn), Greece ($1.62bn), Norway ($1.55bn), Germany ($1.62bn), Norway ($1.55bn), Germany ($1.30bn) and Italy ($0.95bn).($1.30bn) and Italy ($0.95bn).

• In a recent poll for investors, conducted by the In a recent poll for investors, conducted by the German Chamber of Commerce, Serbia came on German Chamber of Commerce, Serbia came on top as an investment destination in South-top as an investment destination in South-Eastern Europe, with 97% of companies being Eastern Europe, with 97% of companies being pleased with businesspleased with business


FDI and Serbia (continued).FDI and Serbia (continued).• Although most investments in previous years Although most investments in previous years

came primarily from the EU, greater interest is came primarily from the EU, greater interest is being shown from countries like India and being shown from countries like India and Russia. China is following in the game with Russia. China is following in the game with interests in infrastructure and other interests in infrastructure and other investments.investments.

• On September 25, 2007, the Government of On September 25, 2007, the Government of Serbia and Indian firm Embassy Group signed a Serbia and Indian firm Embassy Group signed a memorandum of understanding on the memorandum of understanding on the information technology park construction in the information technology park construction in the town of Indjija near Belgrade. The five year plan town of Indjija near Belgrade. The five year plan predicts building a business area of 250,000 predicts building a business area of 250,000 square meters and employing around 25,000 square meters and employing around 25,000 people. This is planned as the largest Greenfield people. This is planned as the largest Greenfield investment in Serbia, accounting for a minimum investment in Serbia, accounting for a minimum of $600 million.of $600 million.


FDI and Serbia (continued).FDI and Serbia (continued).

• On December 24, 2008, presidents of Serbia On December 24, 2008, presidents of Serbia and Russia, Boris Tadic and Dmitry Medvedev and Russia, Boris Tadic and Dmitry Medvedev have signed oil and natural gas deal under have signed oil and natural gas deal under which Gazprom‘s oil arm Gazprom Neft gets a which Gazprom‘s oil arm Gazprom Neft gets a 51% stake in state-owned Petroleum Industry of 51% stake in state-owned Petroleum Industry of Serbia for 400 million euros in cash and 550 Serbia for 400 million euros in cash and 550 million euros in investments. As a part of the million euros in investments. As a part of the deal, a 400 km (250 mi) leg of the South Stream deal, a 400 km (250 mi) leg of the South Stream gas pipeline will be built through Serbia, an gas pipeline will be built through Serbia, an investment valued at another 2 billion euros. investment valued at another 2 billion euros.


FDI and Serbia (continued).FDI and Serbia (continued).• Blue-chip corporations making investments in Blue-chip corporations making investments in

Serbia include: US Steel, Philip Morris, Microsoft, Serbia include: US Steel, Philip Morris, Microsoft, Fiat, Coca-Cola, Lafarge, Siemens, Carlsberg and Fiat, Coca-Cola, Lafarge, Siemens, Carlsberg and others.others.

• In the energy sector, Russian energy giants, In the energy sector, Russian energy giants, Lukoil and Gazprom have made large Lukoil and Gazprom have made large investments.investments.

• The banking sector has attracted investments The banking sector has attracted investments from Banca Intesa (Italy), Crédit Agricole and from Banca Intesa (Italy), Crédit Agricole and Société Générale (France), HVB Bank Société Générale (France), HVB Bank (Germany), Erste Bank, Raiffeisen Zentralbank (Germany), Erste Bank, Raiffeisen Zentralbank and Hypo Group Alpe Adria (Austria), Eurobank and Hypo Group Alpe Adria (Austria), Eurobank EFG and Piraeus Bank (Greece), and others. EFG and Piraeus Bank (Greece), and others. United States based Citibank, opened a United States based Citibank, opened a representative office in Belgrade. representative office in Belgrade.

• In the trade sector, biggest foreign investors are In the trade sector, biggest foreign investors are France's Intermarché, German Metro Cash and France's Intermarché, German Metro Cash and Carry, Greek Veropoulos, and Slovenian Carry, Greek Veropoulos, and Slovenian Mercator. Mercator.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFDI by Industries in Serbia:FDI by Industries in Serbia:• Over the past six years, service sectors have Over the past six years, service sectors have

proven to be the most attractive to international proven to be the most attractive to international investors. Banking and insurance recorded the investors. Banking and insurance recorded the largest FDI inflow of $5.8 billion. Manufacturing largest FDI inflow of $5.8 billion. Manufacturing industries held the 2nd spot with $3.9 billion, industries held the 2nd spot with $3.9 billion, followed by real estate and renting, transport followed by real estate and renting, transport and telecommunications and trade.and telecommunications and trade.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFDI inflow incentives in Serbia:FDI inflow incentives in Serbia:State GrantsState Grants• A new investment package has been prepared A new investment package has been prepared

for investors into Serbia. State grants are for investors into Serbia. State grants are offered for Greenfield and Brownfield projects in offered for Greenfield and Brownfield projects in all industries, except for primary agriculture, the all industries, except for primary agriculture, the hospitality industry, retail, and the production of hospitality industry, retail, and the production of synthetic fibers and coal. synthetic fibers and coal.

• For standard-scale Greenfield and Brownfield For standard-scale Greenfield and Brownfield projects in the manufacturing, export-related projects in the manufacturing, export-related services sector and tourism, non-refundable services sector and tourism, non-refundable state funds are offered in the range between state funds are offered in the range between €2,000 and €10,000 per new job created within €2,000 and €10,000 per new job created within three years.three years.

• For large investors, a special financial package For large investors, a special financial package is available. If a project's value exceeds €200 is available. If a project's value exceeds €200 million, with the minimum of 1,000 new jobs million, with the minimum of 1,000 new jobs created within 3 years, the state may cover 20% created within 3 years, the state may cover 20% of the investment. Investments of over €50 of the investment. Investments of over €50 million that create the minimum of 300 new jobs million that create the minimum of 300 new jobs within 3 years, can be subsidized up to 20% of within 3 years, can be subsidized up to 20% of the project's value. the project's value.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFDI inflow incentives in Serbia (continued):FDI inflow incentives in Serbia (continued):• For large-scale projects, the amount of grants is For large-scale projects, the amount of grants is

determined by the government, depending on determined by the government, depending on the investment's importance, value, and term.the investment's importance, value, and term.

• In case of standard-scale projects, state funds In case of standard-scale projects, state funds are awarded upon the validation based on the are awarded upon the validation based on the following criteria:following criteria:

1. Investor's references.1. Investor's references.2. Participation of domestic suppliers in the final 2. Participation of domestic suppliers in the final

product and the investment effect on local product and the investment effect on local companies.companies.

3. Investment sustainability.3. Investment sustainability.4. Effects related to R&D.4. Effects related to R&D.5. Effects on human resources.5. Effects on human resources.6. Environmental impact.6. Environmental impact.7. The value of international turnover for 7. The value of international turnover for

investments in the services sector.investments in the services sector.8. Imports substitution.8. Imports substitution.9. Effects on the development of the local 9. Effects on the development of the local

community.community.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTFDI inflow incentives in Serbia. Taxation:FDI inflow incentives in Serbia. Taxation:• Serbia provides the second lowest corporate Serbia provides the second lowest corporate

income tax in Europe, together with other income tax in Europe, together with other favorable taxes and costs. Taxation is favorable taxes and costs. Taxation is considerred an important element for FDI considerred an important element for FDI inflows. inflows.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSo, how is Serbia doing in FDI comparred to So, how is Serbia doing in FDI comparred to

other countries in the region?. other countries in the region?. FDI net Inflows in billions of U$. Source: World Bank, May FDI net Inflows in billions of U$. Source: World Bank, May

20102010

CountryCountry 20062006 20072007 20082008

SerbiaSerbia 4.54.5 3.453.45 2.992.99

CroatiaCroatia 3.463.46 4.994.99 4.84.8

BulgariaBulgaria 7.767.76 11.7111.71 9.29.2

RomaniaRomania 11.3911.39 9.939.93 13.913.9

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSo, how is Serbia doing in FDI comparred to So, how is Serbia doing in FDI comparred to

other countries in the region? (continued). other countries in the region? (continued). • Serbia could definatelly do better.Serbia could definatelly do better.• In the past 5 years Croatia surpassed Serbia in In the past 5 years Croatia surpassed Serbia in

FDI inflows.FDI inflows.• Serbia is fourth in the region.Serbia is fourth in the region.• Serbia and Croatia combinned, are lower than Serbia and Croatia combinned, are lower than

inflows of FDI to Bulgaria.inflows of FDI to Bulgaria.• Same of course applies when comparred to Same of course applies when comparred to

Romania that is the number one country in the Romania that is the number one country in the region in terms of FDI inflows.region in terms of FDI inflows.

• It is evident that political and ecomomic stability It is evident that political and ecomomic stability combinned with an EU mebership (and perhaps combinned with an EU mebership (and perhaps a NATO membership) makes the difference.a NATO membership) makes the difference.

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSo, what Serbia should do in order to attaract So, what Serbia should do in order to attaract

higher levels of FDI inflow?higher levels of FDI inflow?• Stronger and clearer legal system especially Stronger and clearer legal system especially

caterred to FDI (today the legal franmework for caterred to FDI (today the legal franmework for FDI is governed by the Constitution and the FDI is governed by the Constitution and the Privitization law).Privitization law).

• Investing in stronger economic structure and Investing in stronger economic structure and moving away from a monopolistic economy.moving away from a monopolistic economy.

• Fostering healthy competition in major Fostering healthy competition in major industries.industries.

• Clear government policy and strategy in Clear government policy and strategy in attracting FDI in specific sectors, especially in attracting FDI in specific sectors, especially in the Green Energy sector.the Green Energy sector.

• Sustain growth of GDP. ( Sustain growth of GDP. ( In 2012 it is expected that In 2012 it is expected that economic growth is not going to reach the targets of 1.5% but economic growth is not going to reach the targets of 1.5% but rather 0.5%)rather 0.5%)

• Reduce unemployment in order to increase Reduce unemployment in order to increase domestic spending power.domestic spending power.


higher levels of FDI inflow?(continued)higher levels of FDI inflow?(continued)• Improve accouting and financial reporting Improve accouting and financial reporting

system.system.• Fight corruption and create transparency Fight corruption and create transparency when when

it comes to institutions and procedures.it comes to institutions and procedures.• Fight administration barriers.Fight administration barriers.• Better use of available human recourses.Better use of available human recourses.• Improve labor flexibility and adaptation to new Improve labor flexibility and adaptation to new

industries through government sponsored industries through government sponsored training.training.

• Accelerate transition period and processes Accelerate transition period and processes leading towards EU entry.leading towards EU entry.

• Create more political stability.Create more political stability.• Invest in infrustructure.Invest in infrustructure.• Keep reinvestments at high levels and Keep reinvestments at high levels and

preferably within Serbia.preferably within Serbia.


higher levels of FDI inflow?(continued)higher levels of FDI inflow?(continued)

AND MOST IMPORTANTLY:AND MOST IMPORTANTLY:

THINK GLOBALLY!!!!!THINK GLOBALLY!!!!!

Thank you for your attention.Thank you for your attention.

Documents

FOREIGN DIRECT INVESTMENT A GENERAL OVERVIEW AND ITS RELEVANCE TO SERBIA