2012 Investment Climate Statement - Serbia

2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012

Openness to Foreign Investment

Serbia is open to foreign direct investment (FDI) and attracting FDI is a priority for the Government of Serbia. Serbia has a long history of international commerce, even under communism, and has attracted a sizeable foreign company presence.

Serbia has enacted specific legislation outlining guarantees and safeguards for foreign investors. The current Law on Foreign Investments establishes the framework for investment in Serbia. The law eliminates previous investment restrictions, extends national treatment to foreign investors, allows the transfer/repatriation of profits and dividends, provides guarantees against expropriation, and allows customs duty waivers for equipment imported as capital-in-kind.

In 2006, Serbia developed a range of incentives designed to attract FDI, including cash grants to investors that create specified numbers of new jobs, tax incentives in the form of credits, cuts in payroll contributions and reduced corporate tax rates. The Government expanded these programs in July 2008 and in May 2010. The Government maintains a specially designated organization, the Serbian Investment and Export Promotion Agency (SIEPA -- http://www.siepa.gov.rs ) to administer this investor incentive program.

Serbia is introducing a number of legislative changes designed to bring the country into compliance with European Union requirements in anticipation of gaining EU Candidate status in 2012. The Government is implementing a National Program for Integration into the European Union, a plan for harmonizing domestic legislation with EU norms in order to meet the criteria necessary for EU accession. The modernization of Serbian legislation is contributing significantly to improvements in the investment climate in a variety of areas, including foreign trade, corporate governance, environmental regulation, and intellectual property rights protection.

The Government’s "regulatory guillotine" project, initiated in 2009, continues to streamline laws and regulations that impede businesses by removing up to one third of Serbia's business regulations, many of which are unnecessary, outdated or contradictory. As a result of this process, for example, the Serbian Government has succeeded in reducing the time required to register a new business from an average of 51 days in 2005 to two days currently.

Of the 340 recommendations for regulatory reform under the “regulatory guillotine”, 196 were implemented by December 2011, generating an estimated $ 160 million in annual savings. Implementation of 36 of the recommendations is in process, and an additional 72 recommendations await implementation. The remaining 36 recommendations were abandoned following a Serbian Government analysis. Despite these efforts, the implementation of new laws and regulations remains slow.

Serbia encourages foreign participation in the privatization of state-owned or “socially owned” enterprises and non-Serbians have already purchased 174 companies through the privatization process. Foreign investors and entities may not, however, establish enterprises in the defense sector or areas legally designated as restricted zones although they may acquire minority rights to such investments, subject to Ministry of Defense approval.

Recent high-profile attempts to privatize large state-owned companies have not met with success. An October 2010 tender for 51% of Telekom Srbija shares failed because the offer of the single bidder, Telekom Austria, was lower than the prescribed EUR 1.4 billion minimum offer price. On December 30, 2011, Telekom Srbija signed a re-purchase agreement for 20% of the Telekom Srbija shares held by Greece’s OTE in hopes that the Government of Serbia’s full ownership of Telekom Serbia will attract more bids in the next tender. Also, a second attempt to privatize JAT Airways opened on August 1, 2011, but attracted no bids. Government officials are still debating the fate of JAT following the second failed attempt at privatization. Other large state-owned enterprises remain candidates for privatization of all or a portion of their shares, including Nikola Tesla airport, the state-owned power utility (EPS), and Galenika Pharmaceutical, but it is doubtful any action will be taken to privatize them in the near-term.

The number of “failed privatizations” has exceeded 25% since the beginning of the privatization process in 2000. Of 2,283 privatized companies, 644 privatization contracts were cancelled due to the buyers’ failure to fulfill the contract terms. Approximately 420 companies still await privatization. The 2008 Law on Privatization stipulates that the privatization of socially-owned entities (a Yugoslav-era definition for "worker-owned" firms, as opposed to larger state-owned firms) was to have been completed by the end of 2008, but approximately 100 socially-owned companies remain unprivatized.

The Serbian Investment and Export Promotion Agency (SIEPA) provides direct assistance to investors. In addition, the Privatization Agency provides information and works with potential investors to educate them about the privatization program and related investment opportunities. In 2010, Serbia established Economic Advisors to promote foreign investment at selected foreign missions, including the Serbian Consulate General in Chicago.

Serbia attracted $ 2.2 billion of FDI in the first ten months of 2011, according to the National Bank of Serbia’s October 2011 Balance of Payments report. Well-known multinational companies, including Italy’s Fiat and Benetton, Germany’s Siemens and Grundfoss, Belgium’s Delhaize, Korea’s Yura, and, from the United States, Cooper Tire and Rubber and Johnson Controls, announced major new investments in Serbia in 2011. Foreign investors cite Serbia’s central location in the Balkans, relatively cheap and skilled labor force, and active GoS support mechanisms for investors as incentives to doing business in the country.

Serbia’s ranking by key indices is as follows:




TI Corruption Index


3.3 – 86 of 178 countries

Heritage Economic Freedom


58 – 98 of 179 countries

World Bank Doing Business


92of 183 economies

Gov’t Effectiveness

(Worldwide Governance Indicators)


Governance Score (-2.5 to +2.5): --

-0.11 Percentile rank (0-100): 51.2

Rule of Law

(Worldwide Governance Indicators)


Governance Score (-2.5 to +2.5):


Percentile rank (0-100): 43.1

Control of Corruption

(Worldwide Governance Indicators)


Governance Score (-2.5 to +2.5):


Percentile rank (0-100): 51.7

Fiscal Policy

(IMF World Economic Outlook)

- 2011

Government deficit: 4.5% of GDP

Trade Policy

(Heritage Economic Freedom)


77.9 – slightly above the average 74.8

Regulatory Quality

(Worldwide Governance Indicators)


Governance Score (-2.5 to +2.5):


Percentile rank (0-100): 52.6

Business Start Up

(World Bank Doing Business)


– 92 of 183 economies

Land Rights Access

(World Bank Doing Business)


Construction Permits: 175 of 183 economies

Registering Property: 39 of 183 economies

Natural Resource Mgmt

(Natural Resource Management Index)


88.2 out of 100.

Conversion and Transfer Policies

The Serbian Foreign Investment Law guarantees the right to transfer and repatriate profits from Serbia.

Serbian law permits relatively free flows of capital, as follows:

(1) Payment and transfer of capital related to direct investments of residents and legal entities, entrepreneurs and physical entities, as well as non-residents in Serbia;

(2) Payments for the purpose of acquiring real estate by residents abroad and non-residents in Serbia;

(3) Payment for the purpose of purchasing equities abroad which do not represent direct investment, as well as long-term debt securities issued by OECD member countries and international financial organizations, or securities whose level of risk rating and issuer country may be prescribed by the National Bank of Serbia;

(4) Non-residents may not transfer capital for the purpose of purchasing domestic short-term securities.

Serbian law permits non-residents to maintain both foreign exchange and dinar accounts without restrictions. These accounts can be used to make or receive payments in foreign currency.

Payments, collections and transfers on current transactions between residents and non-residents may be executed freely.

Foreign exchange is readily available and may be purchased through exchange bureaus by physical persons and through commercial banks by legal persons.

Expropriation and Compensation

In March 2009, the Serbian Parliament approved changes to the 2001 Law on Expropriation in order to harmonize the law with the Constitution, to expand the definition of "public interest" pursuant to which expropriation is permitted, and to clarify compensation amounts.

The law defines various economic and security justifications as authorized bases for expropriation and lays out procedures that must be followed to effect an expropriation. Previously, expropriation was possible for reasons that included: education, public health, social welfare, culture, water management, sports, transport, power and public utility infrastructure, national defense, local/national government needs, environmental protection, protection from weather related damage, exploration for or exploitation of minerals, and housing construction for the poor. The 2009 amendments additionally permit expropriation of land needed for re-settlement of people holding mineral-rich lands and property needed for certain joint ventures. Finally, the law clarifies that the competent subject matter courts have jurisdiction over expropriation claims.

Following a determination that there is a legal basis for the expropriation, a proposal for expropriation may be filed with the competent local authorities. The authorities are obliged to hold proceedings and issue a decision. The Ministry of Finance is designated as the competent authority to resolve appeals or complaints filed against first-instance decisions.

In the event of an expropriation, Serbian law requires compensation in the form of similar property or cash approximating the current market value of the expropriated property. The law stipulates various criteria for arriving at the amount of compensation with respect to different types of land (agricultural, vineyards, forests) or easements that affect land value. The local municipal court is authorized to intervene and decide the level of compensation if there is no mutually agreed resolution within two months of the expropriation order.

The Law on Foreign Investment provides safeguards against arbitrary government expropriation of foreign investments. There have been no cases of expropriation of foreign investments in Serbia since the dissolution of the former Republic of Yugoslavia.

There are, however, outstanding claims against Serbia related to property nationalized under the Socialist Federal Republic of Yugoslavia. In September 2011, 11 years after the country underwent major political changes that strengthened democracy, Serbia finally passed a Law on Restitution of property taken by the Government during the years of Socialist rule. The law, which went into effect October 2011, generally applies to property seized by the Government since the end of World War II (May 1945), but also includes special coverage for victims of the Holocaust, who are authorized to reclaim property confiscated by Nazi occupation forces.

The restitution law provides for restitution of property in-kind, when possible, and financial compensation in state bonds as an alternative in cases where in-kind restitution is not possible. Numerous categories of properties are exempted from the in-kind restitution principle, including properties of public companies and some other public organizations (e.g., police, schools, and hospitals), properties used by state bodies for representational purposes (i.e., former royal residences), foreign diplomatic premises, and privatized property. The list of exemptions essentially limits the list of properties eligible for restitution in-kind to a narrow inventory of central and local government property.

In instances where property is exempted from return in-kind, claimants will receive compensation in cash or bonds. Serbia has allocated EUR 2 billion (approximately $ 2.5 billion) for financial compensation in bonds. The bonds will be issued commencing January 1, 2015, be denominated in Euros, carry a 2% annual interest rate, have a maturity period of 15 years, and be tradable on the market. For citizens 70 years of age and older, the maturity rate will be 5 years. Claimants will have two years from passage of the law to file their restitution applications, and the filing process under the new law will supersede a 2005 law that provided for registration of potential claims. (The 2005 law covered property taken through confiscation, nationalization, agrarian reform, sequestration, expropriation and other regulations that became effective after March 9, 1945. Approximately 150,000 claims relating to about 75,000 properties were registered under this legislation.)

The restitution law caps the amount of compensation that any single claimant can receive at EUR 500,000 (approximately $ 640,000). The law establishes a reciprocity principle for foreign citizens that allows them to file claims in Serbia, if their home nation allows similar claims by Serbian citizens. Serbia has signed about 22 such bilateral agreements. American citizens may file claims under the new law.

Dispute Settlement

Serbia's judicial system is based on European civil law. However, higher court decisions can be used as “guidance” by lower courts. Serbia’s judiciary lacked independence and was subject to political manipulation during the communist and Milosevic eras. The Government of Serbia is working to reform the court system to create a more independent, efficient, responsible and transparent judiciary. The U.S. Government, through USAID and the Department of Justice, is providing assistance for improving criminal justice procedures and for court reform.

In December 2008, Parliament approved a package of judicial reform laws that included laws on the High Judicial Council, on the State Prosecutors’ Council, on the Public Prosecutor, on Judges, and on the Organization of the Courts. The laws created a new network of courts and prosecutors’ offices designed to improve the efficiency of the judiciary.

The new legislation also created High Judicial and State Prosecutors’ Councils, which are now responsible for the selection, discipline, and dismissal of judges and prosecutors, and for administrative oversight of the courts. In December 2009, the Councils selected prosecutors, deputy prosecutors, judges and magistrates for the new court system and nominated first-time appointees who were elected to their positions by the Parliament. Those appointments, as well as the new network of courts and prosecutors’ offices, took effect on January 1, 2010.

The December 2009 election process has been challenged by non-elected judges, prosecutors and deputy prosecutors, professional associations of judges and prosecutors, as well as high-ranking EU representatives. Approximately 1,500 appeals and constitutional appeals have been filed with the Constitutional Court of Serbia, all of which challenge the election process in one way or another. As of late 2010, the Constitutional Court had reviewed only two such appeals and in both cases found defects in the process, remanding the reviewed cases back to the High Court Council for reconsideration. The EU expressed serious concerns about the manner in which the election/appointment process was carried out in its 2010 Serbia Progress Report.

To address these challenges, on December 29, 2010, Parliament passed amendments and addenda to the laws on judges, prosecutor’s office, High Court Council and the State Prosecutor’s Council. These amendments, among other things, provided for the transfer of appeals pending before the Constitutional Court back to the High Court Council and the State Prosecutor’s Council for assessment by those bodies.

In 2011, the High Court Council and the State Prosecutor’s Council continued its comprehensive review of individual complaints of non-elected judges and prosecutors. While the State Prosecutor’s Council completed its review process at the end of the year, the High Court Council still has pending complaints. The review of these complaints will inevitably spill over into 2012 due to significantly higher caseloads and, more importantly, organizational and procedural problems within the High Court Council itself as a result of resignations and criminal and administrative investigations against Council members. The assessment process has been closely monitored by representatives of the international community and professional associations of judges and prosecutors, who have given it mixed reviews. This issue will undoubtedly continue to be the key focus of judicial reform in the first half of 2012.

In December 2009, Parliament approved a new Bankruptcy Law that brings Serbian bankruptcy procedures closer to international standards. Under the 2005 law, the average bankruptcy procedure lasted for three years. The new law introduces “automatic bankruptcy” for legal entities whose accounts have been blocked for more than three years, and allows debtors and creditors to initiate bankruptcy proceedings. The law aims to provide a faster and more equitable settlement of creditors’ claims, lower costs, and to clarify rules regarding the role of bankruptcy trustees and creditors’ councils.

According to the law, foreign creditors have the same rights as Serbian creditors with respect to the commencement of, and participation in, a bankruptcy proceeding. Claims in foreign currency are included in the bankruptcy estate in that currency, but they are calculated in dinars at the dinar exchange rate on the date the bankruptcy proceeding commences.

In May 2006, Serbia enacted its first Law on Arbitration, which authorizes the utilization of institutional and ad hoc arbitration in all manner of disputes (commercial, labor, etc.). The law is based on the UN Commission on International Trade Law (UNICTRAL) model law. International arbitration is accepted as a means for settling investment disputes between foreign investors and the state. The Foreign Trade Court of Arbitration (founded in 1947) is located within the Serbian Chamber of Commerce and is a domestic arbitration body. Arbitration is voluntary and conforms to the UNICTRAL model law.

Serbia is a signatory to the following international conventions regulating the mutual acceptance and enforcement of foreign arbitration:

-- 1923 Geneva Protocol on Arbitration Clauses;

-- 1927 Geneva Convention on the Execution of Foreign Arbitration Decisions;

-- 1958 New York Convention on the Acceptance and Execution of Foreign Arbitration Decisions;

-- 1961 European Convention on International Business Arbitration; and,

-- 1965 Washington Convention on the International Center for the Settlement of Investment Disputes (ICSID).

Although Serbia is a signatory to many international treaties concerning foreign arbitration, in May 2007, Serbia’s Privatization Agency and an American investor became involved in a dispute over recognition of an International Chamber of Commerce (ICC)/International Court of Arbitration award in the investor’s favor. In July 2009, the U.S. Overseas Private Investment Corporation (OPIC), which had insured a portion of the investment, severely restricted OPIC's programs in Serbia as a result of the dispute. In January, 2011, the Serbian Government and the investor reached a settlement of their differences that is expected to lead to the reinstatement of OPIC programs in 2012.

Performance Requirements and Incentives

To provide financial incentives for foreign and domestic greenfield and brownfield investment in specific industries, the Serbian Government adopted in 2006 a decree authorizing cash grants to investment projects in all areas except for trade, tourism, hospitality and agriculture. Eligible companies must establish new ventures in manufacturing, in the service industry, or in research and development. In 2008, the Government expanded incentives applicable to investments in targeted sectors, i.e. the automotive, electronics, information and telecommunications technology industries. New incentive measures adopted in May 2010 provide additional incentives for investments in “devastated areas,” defined as regions where development is less than 50% of the national level and other areas designated to be of special state interest.

These incentives and conditions are as follows: (Note: None of these incentives have been challenged as violations of the WTO’s Trade Related Investment Measures (TRIMs) requirements.)

Investments in manufacturing:

-- Available incentive: starting at €2,000, up to €5,000 for each new employee,

-- Minimum investment: between €1 million and €5 million, depending on the unemployment rate in the local municipality,

-- Minimum number of new positions: 50.

Investments in international services:

-- Available funds: starting at €2,000, up to €10,000 per new employee,

-- Minimum investment: €1 million

-- Minimum number of new positions: 10.

Investments in targeted sectors, such as R&D, automotive, electronics, information technology, and telecommunications:

-- Available funds: starting at €5,000 up to €10,000 per new employee,

-- Minimum investment: €1 million,

-- Minimum number of new positions: 10.

Investments that exceed € 50 million and that create at least 300 new jobs may qualify for an incentive equal to 20% of the total investment value, and up to 25% in the case of investments that exceed € 200 million and 1000 new jobs.

The above incentive measures are temporary and will be available until December 31, 2012.

Serbia’s tax law offers several tax incentives to new investors. Corporate profit tax is levied under the current law at the uniform rate of 10%, with non-residents taxed only on income earned in Serbia. Companies are exempt from corporate profit tax for up to 10 years from the first year in which they realize profit, if:

1) they invest in fixed assets in an amount exceeding 600 million dinars (approximately $11 million); and

2) during the investment period employ at least 100 additional employees.

Companies that do not meet the requirements for the 10-year exemption still may use an investment tax credit that permits a reduction in tax due equal to 20% of the amount invested in fixed assets for the applicable tax period. This reduction may not exceed 50% of the total tax liability. This tax credit can be carried forward for up to 10 years if not used fully in the course of one year.

Investors in a number of sectors (agriculture, production of yarn and fabrics, garment manufacture, leather processing, production of base metals and standard metal products, production of any sort of machinery, electronic goods, medical instruments, or motor vehicles, recycling, and video production) may obtain a tax credit in the amount of 80% of investments made in fixed assets, with the unused portion carried forward up to 10 years. Small enterprises outside of these sectors may receive tax credits equal to 40% of the amount invested in fixed assets in the current year (but the credit cannot exceed 70% of the total tax liability).

In addition, the tax law offers incentives for employing new workers. An employer that employs new workers is entitled to a tax reduction equal to 100% of their gross salary. This tax credit is available for two years from the date of employment of new workers, provided that employment is not reduced during that period.

The tax law also provides for accelerated depreciation of fixed assets, tax exemptions for concession-related investments, exemptions from social insurance contributions, income tax credits, and customs duty exemptions for certain goods and equipment imports.

The Public Procurement Law adopted in December 2008 gives preference to domestic suppliers over foreign companies in public purchases if a foreign company’s offer is not more than 20% above the domestic offer (in price and other scored characteristics). The GoS is in the process of amending the Public Procurement Law to remove the advantage of domestic bidders when foreign bidders come from Central Europe Free Trade Agreement (CEFTA 2006) countries.

Right to Private Ownership and Establishment

Private entities can freely establish, acquire and dispose of interests in business enterprises. Private companies compete equally with public enterprises in the market and for access to credit, supplies, and licenses.

Protection of Property Rights

Serbia is still grappling with the consequences of the nationalizations and confiscations of all forms of private property following World War II. Related to the issue of property restitution (discussed above), prior owners of nationalized land became “users” of the land and acquired “rights of use” that, until 2003, could not be freely sold or transferred. In 2003, a new Law on Urban Planning and Construction recognized sales and transfers of property rights of use (the right of use was limited, however, to 99 years).

The October 2006 Constitution recognized private rights in “construction land” (a term of art referring generally to land in urban areas). A September 2009 Law on Planning and Construction (Official Gazette of the Republic of Serbia No. 72/2009) recognized the transformation of land use rights into rights of freehold private ownership of construction land. Companies that had gained land pursuant to privatization, bankruptcy or other means are able under the new law to transform usage rights into ownership rights by paying a fee representing the difference between the current market value of construction land and the costs of acquiring the land rights. However, the law did not set forth clearly defined procedures for property right conversions and thus was amended in April 2011 to do so. Investors continue to complain, however, that the law and its amendments have not produced the desired results, as land registries tend to avoid positive resolution of conversion requests, and public attorneys’ offices commonly challenge land registry actions that do recognize conversion applications.

The 2009 Law on Planning and Construction also addressed zoning and urban planning, construction permitting procedures, and legalization of property titles. Serbia has not yet enacted all by-laws needed to implement these provisions. Serbia’s Foreign Investors Council reported that the overall process of issuing permits remains non-transparent and heavily burdened with red tape. According to the Serbian Statistics Office, the number of construction permits issued in May 2011 was 13.1% higher than in May 2010. However, the index of value of planned work decreased by 46.7% during the same period. The number of construction permits issued in October 2011 increased by 22.8%, compared to October, 2010, and the index of planned works increased by 3.3% in October 2011 compared to October 2010. However, the number of permits issued for new apartment building construction fell 28.2% in October 2011 compared to the same period in 2010.

In December 2005, Serbia adopted a Law on Mortgages that allows banks to issue mortgages on buildings under construction. The previous law did not permit the registration of unfinished buildings in land registries, making it difficult to secure loans during construction. The Foreign Investors Council (FIC) has recommended extensive legislative changes in order to harmonize the mortgage laws with the 2009 Planning and Construction Law. Citing the law’s many omissions and uncertain provisions, the FIC suggests that the Mortgage Law should be completely redrafted.

Serbia’s real property registration system is based on municipal cadastre and land books. A modern Law on Cadastre and State Survey was adopted in August 2009 and is in the implementation stage. The law should result in a more efficient state survey of property and the establishment and maintenance of an accurate real estate cadastre. The World Bank is leading a cadastre modernization project that has yet to be completed; the deadline for cadastre registration was originally set at end of 2010 but then extended several times.

The World Bank Doing Business 2012 report ranks Serbia 39th of 183 countries with respect to time required to register real property (an average of 11 days). This ranking marks a significant improvement over the prior year’s results, when Serbia ranked 100th. A register of movable goods has been in place since 2005 under the auspices of the Agency for Business Registers.

Serbia has an adequate body of laws for the protection of property rights, but enforcement of property rights through the judicial system can be extremely slow. The World Bank Doing Business 2012 report, for example, ranks Serbia 104th of 183 countries with respect to time required to enforce a contract through the courts (average of 635 days). This ranking reflects a drop from 94th place in the 2011 report.

Intellectual Property Rights

Serbia is making progress on Intellectual Property Rights (IPR) protection. A modern legal framework is in place and state control over pirated goods has improved in recent years. Serbia has made strides towards modernizing its core IPR laws and harmonizing them with European Union, Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS), and other international standards. From 2009 through 2011, Parliament enacted seven new IPR laws, each dealing with a particular form of intellectual property rights: (1) the Law on Trademarks (2009); Law on Indications of Geographical Origin (2010); Law on Copyrights and Related Rights (2009); Law on Protection of Topographies of Integrated Circuits (2009); Law on Protection of Industrial Designs (2009); Law on Optical Discs (2011); and a new Law on Patents (2011). These laws, together with other legislation passed in recent years, extend legal protections to all major forms of IPR -- patents, trademarks, copyrights, rights of performers and producers, industrial designs, integrated circuits, etc. Serbia’s IPR legislation generally conforms to EU and international standards.

Serbia is a World Intellectual Property Organization (WIPO) member and a signatory to all key agreements administered by WIPO. Adequate steps have been taken to implement and enforce the WTO TRIPS Agreement. TRIPS-compliant provisions are included in Serbia’s IPR laws and enforced by courts and administrative authorities. The Serbian government signed and ratified the WIPO internet treaties on June 13, 2003.

On June 23, 2011, in an effort to improve IPR protection, the Government of Serbia adopted a Strategy on Intellectual Property Development for the period of 2011-2015. In accordance with the goals stated in the Strategy, a Permanent Coordination Body was established on December 5, 2011, to coordinate activities of the Tax Administration, Police, Customs, and Inspections in fighting piracy.

Serbia made significant progress in 2011 in completing a modern IPR legal regime with the passage of an Optical Disc Law, new Patent Law, amendments to the Copyright Law, and a Law on Protection of Trade Secrets. With the passage of these laws, and accession to the leading international IPR conventions and organizations, the legal framework governing intellectual property rights in Serbia is nearly complete. The most significant remaining missing pieces are: (1) amendments to the Criminal Procedure Code and related procedural laws, particularly in the area of cyber-crime; and (2) the adoption of implementing regulations for various IPR laws.

In spite of advances on the passage of key legislation, Serbia’s record in the enforcement of IPR laws and the protection of IPR rights remains mixed. Although pirated optical media (DVDs, CDs, software) as well as counterfeit trademarked goods, particularly sneakers and clothing, are still available, the GoS has stepped up its actions to combat illegal street sales. The Ministry of Trade and Services, for example, organized a public event to mark the destruction of tens of thousands of seized pirated optical discs in December, 2010.

Government efforts to combat software piracy have also been somewhat effective, as the estimated rate of software piracy has fallen from about 99% ten years ago to approximately 74% currently. A May 2009 Business Software Alliance (BSA) Global Software Piracy Study ranked Serbia 6th on its list of countries with improved piracy ratings. The May 2010 BSA Piracy Study identified Serbia as one of a handful of countries in which tax audits include software license verification. The BSA attributed improved IPR compliance, in part, to this practice. (See http://portal.bsa.org/globalpiracy2009/studies/09_Piracy_Study_Report_A4_final_111010.pdf)

Illicit internet downloading of music and films remains a serious issue. Film and music industry representatives estimate that more than 95% of the films and music downloaded in Serbia is through unauthorized channels.

At the American Chamber of Commerce Serbia’s annual conference on IPR for 2011, the following measures were recommended to improve IPR protection in Serbia:

-- Judiciary and legislature: a) concentration of territorial jurisdiction of courts in several centers leading to better specialization of judges on IPR issues; b) a lower threshold for qualification as high tech crime cases, as the current level prevents a number of cases from being handled by the relevant specialized authorities; c) stricter penal policy, especially for repeat offenders. Existing penal policies do not discourage IPR infringements, as most offenders are sentenced to probation, and undermine police morale, as their efforts are seen to be in some ways futile.

-- Other state authorities: a) reduction of the administrative burden for preparation of evidence in high tech cases (for example, in order to determine whether there has been a violation of IPR laws, police have to check and record every single seized item (including every one of the thousands of counterfeit DVDs seized in major police raids) within 48 hours, which is often impracticable; b) improvement of access to information on seized goods in order to increase awareness of rights holders and reduce storage costs; c) launching of a Customs Administration data base on seized goods that would be accessible to both custom officers and trademark holders.

-- Development of regional cooperation: a) improved coordination of state authorities in charge of IPR protection via a permanent coordination authority (as provided by the IPR Strategy) or otherwise; b) the creation of a standardized, uniform registry of data with regard to the sanctioning of infringements of intellectual property rights.

Transparency of the Regulatory System

According to the World Bank Doing Business 2012 report, which measures the efficiency of business regulation across 183 economies, Serbia ranked 92nd. The decline in Serbia’s ranking from 2011 (88th) is attributable to a number of factors, including continued inefficiencies in transferring property, long delays in resolving bankruptcy cases (some of which were exacerbated by the introduction of a new system for professionalizing insolvency administrators and regulating their compensation), and the issuance of construction permits.

Construction permitting is particularly inefficient. Serbia ranked 175th among 183 countries in the issuance of construction permits because of excessive red tape (19 bureaucratic procedures for permitting) and long delays (an average of 279 days for issuance). Serbia’s ranking also fell in the following areas: contract enforcement (104th from 94th), tax payment (143th from 140), and in starting a business (92th from 81th). (Serbia’s effort to cut red tape and improve the efficiency of business regulations through the “regulatory guillotine” initiative are described above.)

To establish transparent rules and regulations, foster competition and attract investments, the Government of Serbia has established most of the necessary independent agencies and bodies, including the State Auditing Institution, Anti-Monopoly Commission, Energy Regulatory Agency, and Regulatory Agency for Telecommunications.

The Foreign Investors Council, an NGO that represents foreign investors in Serbia, publishes an annual “White Book” of recommended government actions to improve the transparency and efficiency of business regulations. In the 2011 edition, among the leading recommendations were: establishing an orderly process for the introduction of new taxes and fees by all government authorities; capping the level of fees and taxes imposed on businesses by local government authorities; eliminating specific fees and taxes imposed on all businesses (e.g., fees for the protection of woods and water) regardless of the field of business in which they operate. (The White Book can be found at the following link: http://www.fic.org.rs/cms/item/whitebook/en.html.)

The process for public participation in the drafting of new laws and regulations is inconsistent. Some major pieces of draft legislation are printed online on ministry or the Parliament’s websites and are discussed with members of the public by members of the government in specially scheduled, open meetings in Belgrade and other major cities. In other cases, draft laws and regulations are formulated within the government with little or no public participation, and the public has limited opportunity to learn the precise content of the law before its passage and publication in Serbia’s “Official Gazette.”

Efficient Capital Markets and Portfolio Investment

The banking sector comprises 91% of the total assets of the financial sector in Serbia. By the end of September 2011, consolidation had reduced the sector to 33 banks with total assets of $ 31 billion (about 70% of GDP), with 73% of the market held by foreign-owned banks.

The banking sector successfully weathered the 2008 global financial crisis, largely due to conservative banking policies and regulations that require high capital adequacy ratios and high liquidity. Serbia experienced no bank failures or bailouts during the crisis. The banks honored all withdrawal requests and appear to have regained consumer trust, as evidenced by the gradual return of the withdrawn deposits to the banking system during 2009 and 2010. By September 2011, savings deposits in the banking sector reached $ 10 billion, exceeding the pre-crisis October 2008 level.

The high rate of non-performing loans, however, is problematic. The non-performing loan rate increases from 16.9% of total loans issued at the end of 2010 to 18.8% as of September 2011. In addition, the banking sector is exposed to significant foreign currency risks, as 67% of all issued loans are indexed to foreign currencies (primarily the Euro). A sudden, swift depreciation of the dinar would cause repayment difficulties for a large number of borrowers who receive wages in dinars but whose loans are indexed to the Euro.

Credit is allocated on market terms but average interest rates are high, leading businessman in Serbia to complain of the high expense of commercial borrowing. According to the Belgrade Economics Institute, the average interest rate for business investment loans in Serbia is 7.9%, compared to 2.9% within the Eurozone (as of September 2011). The average interest rate on a mortgage loan in Serbia is 5.8%, compared with 3.2% within the Eurozone.

The business community has vocally lobbied the National Bank of Serbia (NBS) to lower its reserve requirement for commercial banks in an effort to secure easier, cheaper credit, but the NBS has resisted, arguing that its high reserve requirements help maintain the health of the banking system and the overall stability of the economy.

Portfolio investments are efficiently regulated. From January to October 2011 Serbia attracted $ 2.2 billion of portfolio investments from abroad. The Serbian Government regularly issues T-bills to finance the budget deficit; the stock of government T-bills held by commercial banks and other financial entities stood at EUR 2.7 billion in October 2011. In September 2011, the GoS successfully issued its first Eurobond, selling $ 1 billion of Euro-denominated bonds bearing a 7.25% interest rate in international financial markets.

Serbia has a capital market infrastructure, but the equity and bond markets are underdeveloped. Securities and Republic of Serbia bonds are traded at the Belgrade Stock Exchange (BSE). Out of 1,750 companies listed on the stock market, shares in fewer than 100 companies trade regularly (i.e., more than once a week). Total annual turnover at the BSE was halved in 2009 to 442 million Euros (about $580 million) and halved again in 2010 to about 222 million Euros (about $ 300 million). The Exchange recovered a bit in 2011 to a turnover level of about 280 million Euros ($ 380 million). These levels are far below the turnover on the BSE prior to the 2008 financial crisis -- in 2007 total turnover reached 2.2 billion Euros (about $ 3 billion). The BSE’s low turnover in the past three years is generally attributed to the struggling global economy.

In 2009, the Serbian Treasury began to issue dinar denominated T-bills for 3-month, 6-month, and 12-month terms. The program expanded in 2010 to include 18 and 24 month issuances, and again in 2011 to include 36-month issuances. The initial issuances had a 100% purchase rate, but by September 2011 the purchase rate dipped to as low as 10% for auctions of 24-months T-bills despite interest rates as high as 14.9%. As a result, the Serbian Government was compelled to borrow from commercial banks to finance its 2011 budget deficit. The total value of issued T-bills reached $ 3.6 billion as of October 2011.

In order to boost capital market development and reduce financial risks for investors, the Serbian Parliament since 2010 has adopted or amended a number of laws governing the capital markets and financial system. Parliament adopted a new Capital Markets Law and amended the Foreign Exchange Act in May 2011, and amended the Law on Financial Leasing in December 2011. These legislative measures are primarily the result of Serbia’s efforts to harmonize its legislation with that of the European Union in anticipation of gaining EU Candidate status. Taken as a whole, the new financial measures are intended to develop the domestic capital market, increase the availability of dinar loans, and stimulate investment.

The Securities Commission (SC), established in 1995, regulates the Serbian securities market. The SC supervises investment funds in accordance with the Investment Funds Law that came into force in January 2006, as amended in July 2009 and May 2011. As of January 2012, 20 registered investment funds operate in Serbia.

Competition from State-Owned Enterprises

Serbia maintains 35 large State Owned Enterprises (SOEs) and more than 650 municipal enterprises in select sectors of the economy. In accordance with the 2007 Law on Public Companies and Public Interest Activities, public companies can be established by the national, provincial or local governments to offer services of "public interest." Any other company (including those with a foreign ownership) or entrepreneur may offer public interest services as long as it receives the appropriate permission from the authorized institution, usually the relevant national ministry. Such private companies are entitled to equal treatment with the SOE, unless the law states otherwise.

Serbian law explicitly authorizes establishment of SOEs in the following sectors: production, transmission, and distribution of electricity; production and processing of coal; R&D, production, processing, transport and distribution of crude oil, natural gas and LNG; trade of crude oil and oil derivatives; railways; postal and air traffic services; information and telecommunications; issuance of the official gazette of the Republic of Serbia; publishing of school books; sage, management, protection and development of public interest goods (including water, roads, mineral resources, forests, rivers, and lakes); and utility services.

In some public sectors, Serbia has started opening or preparing for the opening of markets to competition. For example, in early 2010 the Norwegian mobile provider Telenor won a 10-year renewable license from Serbia's Telecommunications Agency (RATEL) to operate telephone landlines, thus ending state telecom operator Telekom Srbija's landline monopoly. The state-owned petroleum company was sold to Russia’s Gazpromneft in 2008, and liberalization of the domestic oil and oil derivatives market commenced on January 1, 2011. In 2011, the Serbian Government unsuccessfully attempted to privatize state-owned Telekom Srbija and the state-owned airline, JAT. Electricity production remains the monopoly of state-owned power utility EPS, but private trading in electricity is permitted and a flourishing private cross-border power market has developed.

SOEs in Serbia have both a Managing Board and Director to manage their operations. The SOEs may also have a Supervisory and Executive Board of Directors. All members of the Managing Board and the SOE Director are appointed by the Government at either the national, provincial or local level. The Director reports to the Managing Board, which in turn reports to the relevant Government ministry. In practice, the appointment of these positions tends to fall to the political parties that comprise the government in power. SOEs have an obligation to submit annual reports to the Government.

Corporate Social Responsibility

Corporate social responsibility (CSR) is a relatively new concept in Serbia and is still poorly understood by the Serbian public. The business sector is gradually becoming more acquainted with the concept of CSR, though many Serbian companies view CSR only as a public relations tool to help improve their image or reputation. Although the largest Serbian companies have a growing awareness of the importance of CSR, multinational companies that possess wide experience in this field are its primary and most effective practitioners. The corporate sector has become more active the last few years in partnering with NGOs and other relevant organizations to organize events and conferences to raise awareness of CSR principles.

In general, the Serbian public has a limited understanding of CSR principles and is often skeptical about the intentions of the business sector. According to CSR surveys conducted over the last two years by the Synovate market intelligence agency, only 34% of 2,241 respondents had heard of the concept, and only 11% were able to give examples of CSR. The survey also determined that consumer pressure is unlikely to motivate the corporate sector to be more socially responsible, as 60% of respondents said they would buy a product regardless of whether its manufacturer acted in accordance with ethical principles.

Several local organizations actively promote the concept of Corporate Social Responsibility in Serbia. The American Chamber of Commerce in Serbia promotes CSR, both among AmCham members and the wider Serbian business community and public. AmCham created a web-page with member success stories and developed a CSR-themed e-newsletter in 2010. These tools resulted in over 50 reports about various initiatives of AmCham members, as well as promotions and endorsements. AmCham also has two active projects in CSR: Meet the Business First Hand (initiated in 2006, revamped in 2008), and Able to be Able (initiated in December 2010).

USAID sponsors the annual Virtus awards, which recognize companies that most effectively and efficiently support non-profit actions or organizations for the public good. The award is presented by the Balkan Community Initiatives Fund to companies that have demonstrated the highest degree of social responsibility in Serbia. The fifth annual awards ceremonies were held on December 3, 2011, at which Erste Bank, Holcim, Telenor, B92 and Sunce Marinkovic were honored.

Since its launch in Serbia in 2007, the UN Development Program’s (UNDP) Global Compact initiative has organized a number of educational events intended to strengthen capacity in areas relating to CSR. Global Compact is a voluntary international network of companies and non-corporate actors committed to improving human rights, labor practices, environment protection, and anti-corruption efforts. All UNDP Global Compact members are obliged to incorporate theses principles in their business practices. In Serbia, this organization has created a Steering Committee comprised of five members, a Secretariat maintained by UNDP Serbia and the National Bank of Serbia, and five working groups. The Compact’s December 2011 meeting celebrated the year’s CSR achievements in Serbia, which included: collecting books and computers for a library in Kraljevo city affected by earthquake devastation; cleaning of a large waste area on Belgrade Big River Island; and organizing a public lecture on managing personal finances. Belgrade will host the October 2012 meeting of the European Network of the Global Compact.

Political Violence

Since October 2000, Serbia has been led by democratically-elected governments that have publicly committed to supporting stability and security in the region.

Sporadic, localized violence continues between competing political groups in the Sandzak region of Serbia. This violence is usually directed at opposing party figures and has not targeted unrelated civilians or businesses.

Immediately following Kosovo's February 17, 2008 declaration of independence from Serbia, groups twice broke away from larger demonstrations and attacked embassies of countries that had recognized Kosovo, including the U.S. Embassy in Belgrade. Since these attacks in February 2008 there have been no major violent incidents related to Kosovo in Serbia. However, extremists from Serbia have been accused of fomenting and participating in politically-motivated violence in northern Kosovo.

The October 10, 2010 Pride Parade in Belgrade was marred by significant violence. Approximately 6,000 demonstrators, mostly young soccer hooligans and nationalist extremists, attempted to attack and disrupt the parade. When police prevented them from reaching the parade, they attacked several buildings, including foreign embassies and political party headquarters, in downtown Belgrade. The rioters injured 147 police officers and caused approximately $1.4 million in property damage. The GoS cancelled the planned October 2011 Pride Parade at the last minute because of serious threats of violence by the same nationalist and extremist groups that attempted to disrupt the 2010 parade.

Following the assassination of Serbia’s prime minister in the spring of 2003 by a criminal group, the Serbian Government launched a crackdown on organized crime. Starting in 2008, the Government passed and began implementing new legislation to strengthen the tools available to law enforcement and prosecutors to combat organized crime. The Government also increased cooperation with other governments in the region, resulting most notably in the April 2009 arrest by Serbian police of a leading Serbian organized crime figure wanted by Croatia for alleged involvement in the murder of a prominent Croatian newspaper owner.

In September 2011, Parliament passed a new Criminal Procedure Code. The Code is designed to improve the criminal justice system by, among other reforms, introducing prosecutor-led investigations. The new Code takes effect in January 2012 for the specialized courts for organized crime, high-level corruption, and war crimes cases, and in January 2013 for the rest of the country’s legal institutions.

Organized crime in Serbia is frequently linked to sports hooliganism. In 2009, sports hooligans in Serbia attacked and killed a visiting French national. The government responded with a renewed crackdown on organized crime and sports clubs promoting hooliganism. In October 2010, Serbian ultra-nationalist soccer hooligans clashed with Italian police in the northern Italian city of Genoa during the two countries’ Euro 2012 qualifying game. At least sixteen people were hospitalized and 17 Serb fans were arrested after violent riots caused a 40-minute delay in the match, and then forced the game to be abandoned six minutes in. Serbian officials expressed concern afterwards about a right-wing extremist plot against Serbia’s entry into the European Union. Security forces increased their presence substantially at all ensuing international soccer matches in Serbia.


Although difficult to quantify, corruption in Serbia is believed to be pervasive. In the 2011 Corruption Perception Index survey compiled by Transparency International, an international anti-corruption watchdog organization, Serbia moved down the rankings from 78th place in 2010 to 86th. The drop was also accompanied by a decline in the country’s index score, which fell from 3.5 in 2010 to 3.3 out of 10 (10 being best).

In an effort to combat corruption, the Serbian Parliament in October 2008 approved the creation of the Anti-Corruption Agency (ACA). The ACA finally began functioning on January 1, 2010 as an independent government body accountable to the Serbian Parliament. The ACA is charged with unifying current anti-corruption activities, including: enforcing the National Strategy to Fight Corruption, monitoring conflicts of interest, tracking politicians’ property and assets, monitoring political party financing, and facilitating international anti-corruption cooperation. As a fairly new organization, the ACA continues to suffer from a lack of qualified staff and the requisite expertise to be fully operational and effective.

Some positive steps in 2011, however, strengthened the position of the ACA in the fight against corruption. In July 2010 the Serbian Parliament passed amendments to the Law on the Anti-Corruption Agency that permitted, among other things, certain public officials to hold multiple positions (an exception to the general ban on holding multiple public offices), a move that was widely interpreted as regressive. These amendments were declared unconstitutional by the Constitutional Court of Serbia in September 2011. The ruling granted the ACA initial full power of review over conflicts of interest and has prompted the ACA to pass a series of decisions to that effect.

Furthermore, in June 2011 the Serbian Parliament passed a Law on Financing of Political Activities that gives the ACA overarching powers to track political party financing, both during campaigns and subsequent Parliamentary and/or Government mandates. Certain obligations listed in the Law are also applicable to other bodies, including political coalitions and citizen groups. Accordingly, parties, coalitions and groups of citizens who receive funds must report receipts and expenditures to the ACA. The passage of the Law on Financing of Political Activities, and the ACA’s resulting oversight role, will be crucial in the 2012 Parliamentary elections.

Serbia is a signatory to the Council of Europe Civil Law Convention on Corruption and has ratified the Council's Criminal Law Convention on Corruption, the United Nations Convention Against Transnational Organized Crime, and the United Nations Convention Against Corruption. It is also a member of GRECO (the Group of States against Corruption), a peer monitoring organization that allows members to assess anti-corruption efforts on a continuing basis.

In Serbia, both giving and receiving a bribe is a crime. Bribes by local companies to foreign officials are also criminal acts punishable by law. Corruption offences are handled by higher courts and prosecutors offices. On January 1, 2010, the Organized Crime Prosecutor’s Office assumed jurisdiction over corruption related offences involving high-level public officials or which involve more than US $2.7 million in illicit proceeds.

In November 2010, the Serbian Parliament passed amendments and addenda to the Anti-Money Laundering and Counter-Terrorism Law. Among other things, these amendments require banks and other financial institutions to gather data about legal and natural persons that electronically transfer money and to monitor unusual transactions. The amendments also expand the role of the Anti-Money Laundering Unit of the Ministry of Finance by vesting it with supervisory authority over a number of institutions and business, including money transmitters and factoring and forfeiting entities.

Bilateral Investment Agreements

Serbia has concluded investment protection treaties/agreements with the following 49 countries: Albania, Austria, Azerbaijan, Belarus, Belgium and Luxemburg, Bosnia and Herzegovina, Bulgaria, Russia, China, Cyprus, Croatia, Cuba, Czech Republic, Democratic People’s Republic of Korea, Denmark, Egypt, Finland, Macedonia, Malta, France, Germany, Ghana, Greece, Guinea, Hungary, Holland, India, Indonesia, Iran, , Israel, Italy, Kazakhstan, Kuwait, Libya, Lithuania, Nigeria, Montenegro, Poland, Portugal , Romania, , Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, Ukraine, Zimbabwe.

The United States does not have a Bilateral Investment Treaty (BIT) with Serbia.

In April 2008, the Serbian Government signed a Stabilization and Association Agreement with the European Union. Implementation of the SAA's interim trade agreement with Serbia was put on hold for a period over the issue of Serbia’s cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY). Serbia unilaterally applied the interim trade agreement beginning February 1, 2009. In December 2009, the EU Council of Ministers decided to implement the interim trade agreement following a positive report from the ICTY prosecutor on Serbia's cooperation. The European Parliament approved the SAA in January 2011. In October 2011, the European Commission recommended EU candidacy status for Serbia. In December 2011, however, the European Council decided to postpone a decision on Serbia’s EU candidacy status until March 2012, pending evaluation of progress in Serbia’s dialogue with Kosovo.

The Serbian Government continues to pursue membership in the World Trade Organization (WTO). The Government made steady progress in multilateral and bilateral negotiations as part of the WTO accession process in 2011. Multilateral negotiations are at an advanced stage. Serbia still must finalize bilateral negotiations with a handful of countries, including the United States.

Serbia has been a member of the Central European Free Trade Agreement (CEFTA) since December 19, 2006. CEFTA is a multilateral free trade agreement among southeastern European countries, including: Croatia, Macedonia, Serbia, Montenegro, Bosnia-Herzegovina, Albania, Moldova and UNMIK/Kosovo. (Croatia will cease to be a CEFTA member upon entry into the European Union in 2012.) CEFTA’s primary objective is to facilitate and expand trade and investment among its members, whose collective population is almost 30 million. Serbia served as CEFTA Chair in 2010.

Serbia has also concluded bilateral Free Trade Agreements with Russia, Belarus and Turkey.

OPIC and Other Investment Insurance Programs

Serbia and Montenegro signed a bilateral agreement with the U.S. Overseas Private Investment Corporation (OPIC) in July 2001 and became eligible for OPIC programs in November 2001 upon the agreement’s ratification. OPIC products include:

-- (1) insurance for investors against political risk, expropriation, damages due to political violence and currency convertibility; and

-- (2) insurance for certain contracting, exporting, licensing and leasing transactions.

For complete information on OPIC programs, see: http://www.opic.gov.

In July 2009, OPIC severely restricted its programs for Serbia over an investment dispute involving an American company that held OPIC policies on its Serbian investments. Specifically, OPIC suspended programs for Serbia for any activity involving the Government of Serbia or Serbia’s Privatization Agency, and for projects in which the investor is required to post an on-demand guarantee or in which the parties have agreed to a dispute resolution procedure. The Serbian Government and the investor concluded a settlement agreement in January, 2012 that is expected to lead to the reinstatement of OPIC programs for Serbia.

Serbia became a member of the Multilateral Investment Guarantee Agency (MIGA), a World Bank affiliate, in April 2002.


Serbia has a total labor force of approximately 2.92 million people, of which 2.22 million are employed. The unemployment rate as of November, 2011 stood at 23.7% of the workforce (per ILO methodology), with 691,841 out of work. Approximately 402,520 people work in the agriculture sector.

The private sector employs approximately 67.9% of workers in Serbia, while 31.2% are employed in the public sector, including the government and state-owned companies. “Socially-owned companies” employ 1.8% of the workforce. (Note: The privatization process is gradually eliminating the remaining socially-owned companies in Serbia.) Moderate cuts from the top-heavy public payrolls occurred in 2010 in accordance with the International Monetary Fund’s Stand-By Arrangement with Serbia.

Labor costs are relatively low in Serbia. The minimum wage for the June- December 2011 period was set by the Social Economic Council at approximately $ 240 per month. According to figures released in November 2011, the average net take-home salary was approximately $ 470.

Foreign-Trade Zones/Free Ports

Serbia has eight designated free trade zones (FTZs) (Subotica, Pirot, Zrenjanin, Kragujevac, Sabac, Novi Sad, Uzice, and the Nis-based Free Zone South, which is spread over three separate locations. The Serbian Government plans to establish additional FTZs in 2012.

FTZs are established in accordance with the 2006 Law on Free Trade Zones and are intended to attract investment by providing tax-free areas to companies. Business activities conducted in these areas receive benefits such as unlimited imports and exports, preferential customs treatment and tax relief/VAT exclusions. Goods coming in or out of the FTZs must be reported to the customs authorities and payments must be made in accordance with regulations on hard currency payments. Earnings and revenues generated within an FTZ may be transferred freely to any country, including Serbia, without prior approvals, and are not subject to any kind of taxes, duties or fees. Companies must provide information to the Administration for Free Trade Zones and, other than the financial benefits described above, are subject to the same laws and supervision as other businesses in Serbia. The law allows up to 100% foreign ownership of the FTZ’s managing company.

Foreign Direct Investment Statistics

The National Bank of Serbia (NBS) and the Republic Statistics Office report that foreign direct investment (FDI) in Serbia was $ 2 billon for the first ten months of 2011. Total FDI in 2011 was expected to reach $2.5 billion. According to Serbian Investment and Export Promotion Agency (SIEPA), two-thirds of investments were Greenfield investments.

Details on specific foreign investment transactions are reported by (SIEPA) (http://www.siepa.gov.rs/site/en/home/). The largest FDI transaction announced in 2011 was a $ 1.2 billion takeover of the Serbian retail chain Delta Maxi Group by the Belgian retail Delhaize Group. Other large investments announced in 2011 included a $ 127 million investment of the Italian-Serbian consortium ItalNis Group to build the biggest water park in the Balkans; a $ 90 million investment by the Israel company BIG CEE in a trade and business center in Novi Sad; a $ 70 million investment by the United States’ Cooper Tire and Rubber Company in a tire plant in Krusevac; a $ 51 million investment by the UK/Serbian consortium GVA Grimley/ BlackOak Development in the Fashion Park Outlet Center in Indjija; and a $ 51 million investment by the Austrian Falkensteiner Michaeler tourist group in a hotel in Belgrade. Retail was the leading FDI sector in 2011, followed by production of basic metals and financial services, real estate, construction, IT and communications, mining and transportation.

According to the NBS, the leading investor country in Serbia in 2011 was Luxemburg, followed by the Netherlands, Austria, Germany, the Russian Federation, Spain, France, Hungary, Italy, Cyprus, the UK and the United States. (Note: Many firms, including U.S.-based firms, invest through subsidiaries registered in Luxembourg or the Netherlands.) According to the American Chamber of Commerce in Serbia, U.S. companies have invested over $ 2.0 billion in Serbia.

The following are major FDI transactions completed or announced in Serbia in 2011:

Company: Delta Maxi Group

Country: Belgium

Investment: $1.2 billion takeover of the Serbian retail chain Delta Maxi Group

Company: Continental Wind Partners

Country: United States

Investment: $360 million in the first phase of a large-scale wind energy farm

Company: ItalNis Group

Country: Italy/Serbia consortium

Investment: $127 million investment in the biggest water park in the Balkans, to be based in Nis (South Serbia)

Company: BIG CEE

Country: Israel

Investment: $90 million in a trade and business center in Novi Sad

Company: Cooper Tire and Rubber Co.

Country: United States

Investment: $65 million in a tire plant in Krusevac

Company: Grundfos Holding

Country: Denmark

Investment: $65 million in establishing a production facility for electric pumps

Company: GVA Grimley/ BlackOak Developments

Country: UK/Serbia consortium

Investment: $51 million in the Fashion Park Outlet Center in Indjija

Company: Falkensteiner Michaeler Tourist Group

Country: Austria

Investment: $51 million in the fist Falkensteiner hotel in Belgrade.

Company: Benetton

Country: Italy

Investment: $55.5 million in the privatization of the Nis-based textile company Nitex

Company: Ball Packaging

Country: United States

Investment: $45 million expansion of aluminum can production line.

Company: Aquaprofit

Country: Hungary/Serbia consortium

Investment: $38 million in a spa and wellness complex in Vojvodina

Company: Aviv Arlon

Country: Israel

Investment: $36 million in a retail park in Pancevo

Company: Siemens

Country: Germany

Investment: $31 million in the expansion of facility capacities for wind turbines in Subotica

Company: Fresenius Medical Care

Country: Germany

Investment: $30 million in production of medical tools

Company: Energozelena

Country: Belgium/Serbia consortium

Investment: $27 million in the first company for meat industry waste treatment

Company: CGS Mitas

Country: Czech Republic

Investment: $26 million in the expansion of capacities in Ruma for production of agriculture and industrial tires

Company: Harsco / Claredon International

Country: US/UK cooperation

Investment: $25.6 million in a production plant for refraction of copper from slag

Company: Messer Tehnogas

Country: Germany

Investment: $19 million in an oxygen production plant in Bor

Company: Yura Corporation

Country: South Korea

Investment: $16.6 million in a car wire production plant in Leskovac

Company: Continental-ContiTech

Country: Germany

Investment: $12.8 million in production of rubber parts for the car industry

Company: Johnson Controls

Country: United States

Investment: $12 million in production of automobile interiors (to supply Fiat) in Kragujevac.