The model of subsidizing investors, which was patented in 2006 by the then minister of economy of regional development, Mladjan Dinkic, modeled after the Irish and the Slovakian model, is to peak next year. The 2019 budget features RSD 15 billion for subsidies to private companies, which is around RSD 2.5 billion more than 2018.
The Fiscal Council says that the next year's budget keeps the practice of disclosing only the total sum of investments and providing a list of around 40 companies-recipients.
– This means that it remains unknown how much each investor gets individually, which reduces the transparency of the budget – the Fiscal Council warns in its “Assessment of the draft law on the budget for 2019”.
Experts have believed for a long time now that it is not justified to subsidize each job, but that priority fields must be defined. Milorad Filipovic, a professor at the Faculty of Economics, says that certain progress has been made and that companies which bring high technologies have been targeted recently. Technology parks are being opened and innovative activities are promoted increasingly, but the effects will only be visible in three to five years.
– Foreign investors have received EUR 443 million in subsidies so far, which is EUR 6,795 per new job on average. Keeping in mind that a fourth of investments are subsidies, it's unclear how we benefit from it – Filipovic comments on the policy of allocation of subsidies to foreign investors.
An analysis prepared in 2017 by Filipovic and Miroljub Nikolic, an expert associate of the Ministry of Economy, showed that the majority of subsidies were allocated in the most developed municipalities (140 projects), whereas only 30 projects in the least developed local self-governments got subsidies. Most of the money went to the manufacturing industry.
These are mostly relatively simple products with low added value, involving a lot of manual work by low-qualified workers, without considerable spillover effects and without the inclusion of local suppliers in production chains.
Of the 188 subsidized projects in the manufacturing industry, only four came from the high-tech field.