INVESTMENT INVESTMENT OPPORTUNITIES OPPORTUNITIES

IN VOJVODINAIN VOJVODINA

VOJVODINA INVESTMENT PROMOTION – VIPVOJVODINA INVESTMENT PROMOTION – VIPBranislav Bugarski, VIP CEOBranislav Bugarski, VIP CEO

DICTANCES FROM MAJORDICTANCES FROM MAJOR EUROPEANEUROPEAN CITIESCITIES

SUCCESS STORIESSUCCESS STORIES

MARKET ADVANTAGESMARKET ADVANTAGES

• CEFTA – FTA – 28.98 million

• EFTA – FTA – 12.6 million

• RUSSIA – FTA – 140 million

• TURKEY – FTA – 76.8 million

• BELARUS – FTA – 9.6 million

• EU – preferential status

• USA – preferential status

CONSUMER MARKETS:CONSUMER MARKETS:

DOUBLE TAXATION TREATDOUBLE TAXATION TREATIIES ES Albania Belgium Belarus B&H Bulgaria China Cyprus

FinlandFrance Germany Ghana

Hungary India Italy

South Korea

Kuwait Latvia

Macedonia

Malaysia Moldova

Netherlands Norway Poland Romania Russia

Slovak Republic Slovenia

Sri Lanka

Sweden Switzerland

Denmark

Egypt

UKUkraine

Turkey

Czech RepublicCroatia

OVERVIEW OF TAX RATESOVERVIEW OF TAX RATES

Annual Income Tax Annual Income Tax 10/15% (for annual income below or above 8 average annual salaries)

Social Insurance Social Insurance Contributions Contributions

Pension and disability insurance 11% Health insurance 6.15% Unemployment insurance 0.75%

SALARY TAX IN SALARY TAX IN CEE COUNTRIESCEE COUNTRIES

(%)(%)

TAX RATESTAX RATES BENCHMARK BENCHMARK

VAT EU + CEE VAT EU + CEE (%)(%)

CORPORATE CORPORATE PROFIT TAXPROFIT TAX

(%)(%)

QUALITY WORKFORCEQUALITY WORKFORCEAverage salary in Vojvodina, March 2011

NET Salary (EUR)

% 338.71

Personal Income Tax

12.00 48.31

Contributions (employee)

17.90 84.73

GROSS Salary 471.75

Contributions (employer)

17.90 84.73

TOTAL COST 556.48

EMPLOYMENT SUBVENTIONS EMPLOYMENT SUBVENTIONS

NATIONAL EMPLOYMENT SERVICENATIONAL EMPLOYMENT SERVICE

GOVERNMENT OFGOVERNMENT OFTHE AP VOJVODINATHE AP VOJVODINA

GOVERNMENTGOVERNMENT OF OF THE REPUBLIC OF SERBIATHE REPUBLIC OF SERBIA

€ 2,000 - € 10,000 per employee (over 50 new employees)

€ 1,300per every new job created Subventions for traineeship programs

€ 900 for co-financing retraining programs1,000 – 4,000 per employee (over 50 new employees)

SUBSIDIZED INVESTMENT LOANSUBSIDIZED INVESTMENT LOAN INVESTMENT LOANS

Municipalities: Žitište, Plandište i Nova CrnjaUp to € 8 million3 years grace period 2.5 % interest rate

DEVELOPMENT FUND DEVELOPMENT FUND OF THE REPUBLIC OF SERBIAOF THE REPUBLIC OF SERBIA

LONGTERM & SHORT TERM LOANSLongterm loans - 3 years (12 moths grace period)2.8% interest rateShort term loans – up to 12 months 4.2% interest rate

VOJVODINAVOJVODINADEVELOPMENT FUNDDEVELOPMENT FUND

TAX TAX INCENTIVESINCENTIVES

10-year corporate profit tax holiday 10-year corporate profit tax holiday for investment over app. €7.5 million and 100 new employees

Corporate profit tax credits up to 80% Corporate profit tax credits up to 80% of the fixed assets investment Carrying forward of losses Carrying forward of losses over a period up to 5 years Accelerated depreciation Accelerated depreciation of fixed assets 5-year corporate profit tax holiday for concessions Salary tax exemptions Salary tax exemptions for employees under 30 and over 45 years Annual income tax deductions Annual income tax deductions up to 50% of the taxable income Social insurance contributions exemptions for employees under 30 and over

45 years Customs-free imports Customs-free imports of equipment based on foreign investment Salary tax base deduction Salary tax base deduction in the fixed amount of € 62 a month

INVESTMENT OPPORTUNITIESINVESTMENT OPPORTUNITIES

• METAL PROCESSING METAL PROCESSING

• AUTOMOTIVE COMPONENTS AUTOMOTIVE COMPONENTS INDUSTRYINDUSTRY

• ELECTRONIC & ICTELECTRONIC & ICT

• PHARMACEUTICAL INDUSTRYPHARMACEUTICAL INDUSTRY

• AGRIBUSINESSAGRIBUSINESS

METAL PROCESSING METAL PROCESSING

Category Job description Total Costs € Gross € Net €

Production

Blue Collar productionBlue Collar production 390 331 239

Blue Collar metal Blue Collar metal industryindustry 412 349 252

Machine assemblerMachine assembler 503 427 306

Machine technicianMachine technician 573 487 348

Electrical technicianElectrical technician 558 473 339

CNC/PLC operatorCNC/PLC operator 491 416 299

CNC/PLC programmerCNC/PLC programmer 612 519 371

Engineers

Electrical engineerElectrical engineer 874 741 527

Machine engineerMachine engineer 755 640 456

Maintenance Maintenance engineerengineer 795 675 480

““Just–in-timeJust–in-time”” andand ““just-in-sequencejust-in-sequence”” possibilitiespossibilities

AUTOMOTIVE SUPPLY INDUSTRYAUTOMOTIVE SUPPLY INDUSTRY

Average total cost: € 405 (Net € 250)

Number of employees: 8,548

ELECTRONICS & ICT ELECTRONICS & ICT

Trim your operating costs, increase work productivity, maintain quality Trim your operating costs, increase work productivity, maintain quality

• Intensive development of EMS sector EMS sector

• 1,000 students 1,000 students in Serbia graduate in Electrical Engineering and Computer in Electrical Engineering and Computer ScienceScience = 7% of total university graduates

• 68% of the market value comprises equipment, 20% are services, and the remaining 12% goes to packet software

• ICT ClusterICT Cluster - 28 companies - 28 companies in Vojvodina which employ 1,employ 1,5500 engineers00 engineers, and in 2010 have had over EUR EUR 4444 million in annual turnover million in annual turnover

• Rising market volume trend with intensive R&D investments

• Approx. 10 % of total FDI inflow - € 530 million, 2,381 employees

• Estimated 10% annual production growth rate

• Investment opportunityInvestment opportunity: Privatization of Jugoremedija Privatization of Jugoremedija

Cost effective healthy investments committed to high quality standardsCost effective healthy investments committed to high quality standards

Average gross salary – January 2010: € 630

Number of employees – average 2009: 3.087

PHARMACEUTICAL INDUSTRYPHARMACEUTICAL INDUSTRY

• Arable areas covering 1.78 million hectares - 89% of the total land

• The region is rich in water - rivers the Danube, the Sava and the Tisa flow through Vojvodina

• 40% of total industrial production and 30% of total export

TOP EXPORT COUNTRIES Romania, Hungary, Italy, Slovenia, Bulgaria,

Greece, Germany, Austria, Belgium and Holland

AGRIBUSINESSAGRIBUSINESS

INVESTMENT OPPORTUNITINVESTMENT OPPORTUNITIESIES„„VRSACKI VRSACKI

VINOGRADI“ VINOGRADI“ VINEYARDVINEYARD

„„VRSACKA VRSACKA PIVARA“ PIVARA“ BREWERYBREWERY

„„AGROZIV“AGROZIV“MEAT INDUSTRYMEAT INDUSTRY

„„JUGOREMEDIJA“ JUGOREMEDIJA“ PHARMACEUTICAL INDUSTRYPHARMACEUTICAL INDUSTRY

AGROAGROZZIVIV

• Leading chicken meat producer in Serbia

• From animal feed to processed chicken products

• Feed production 1,100 t per week

• Slaughter capacity 180,000 chicken a week

• Largest vineyard in the region

• 1,300 ha of vineyards

• Mainly white grape varieties

• Winery’s capacity 10,000 l/h

• Storage capacity 321,000 hl

• Yield in 2009 was 7,500 t of grapes

VRVRSSACKI VINOGRADIACKI VINOGRADI

• One of the oldest breweries in the region• 91 % state owened

• 340 employees• Products:

ligth and dark beer andnon-alcoholic bevereges• Annual production:

beer - 10,000 lnon-alcoholic beverages – 2,500 l

• Production capacity: 320,000 hl/year

VRSACKA PIVARAVRSACKA PIVARA

JUGOREMEDIJAJUGOREMEDIJA

Ownership: Ownership: 48% State, 52% private stake holders 429 employees429 employees Sale structure in 2008 on domestic market was 87 % domestic market was 87 % and foreign market foreign market

13% 13% Holds 7% of Serbian market Exporter to Russian market via FTA The Company owns quality assurance certificate ISO 9001quality assurance certificate ISO 9001, and GMP, and GMP It has total land surface of 72,692 m2land surface of 72,692 m2 (production facilities on 9,250 m2,

administration buildings 1,921 m2, warehouses 5,153 m2 July 2009 - New New plant for production of solid and semi-solid medicines plant for production of solid and semi-solid medicines

(pills, film pills, coating pills, creams and suppositories), quality control is complied with both domestic and European pharmaceutical regulations. The plant has established and certified quality system.

→→ Location Marketing

→→ “Tailor made solutions” for potential and existing investors

→→ After Care

→→ Policy advocacy

→→ Development of business incubators

Vojvodina Investment Promotion - VIPVojvodina Investment Promotion - VIP

Vojvodina Investment Promotion – VIP

Narodnog fronta 23d, 21000 Novi Sad, SerbiaTel: +381 21 472 3241 Fax: +381 21 472 1921

E-mail: office@vip.org.rsWeb: www.vip.org.rs

Thank you for your attention!Thank you for your attention!