Yana Mikhailova, president of Foreign Investors Council – Results take time
Yana Mikhailova at the celebration of 15 years of the Foreign Investors Council’s activities
Foreign investor who develop their business in Serbia have long-term interest in the country, and the enhancement of the business climate needs to take the course of more favorable conditions, especially for smaller investors, in order for them to more easily handle the bureaucracy and changes in the market. Predictability, transparency and equality are the main principles of the Foreign Investors Council (FIC), an organization which has been following the same goal for a decade and a half – to be Serbia’s partner for growth.
The organization recently celebrated 15 years of activities in Serbia, and the anniversary was an opportunity for us to talk to Yana Mikhailova, president of the FIC.
How do they see the reform process, what are they reasons for being optimistic, what are Serbia’s advantages compared to other countries when it comes to investments, and where is there room for them to further contribute with their expertise, are some of the questions we sought answers to. Let us remind that the Foreign Investors Council now brings together over 130 companies, which have invested more the EUR 28.7 billion in Serbia, participating with 21.7% in the GDP and 22.2% of Serbia’s exports, while directly employing more than 94,000 people.
eKapija: In all these years, the FIC has been openly advocating the enhancement of the competitiveness of the Serbian market, better business conditions and Serbia’s efforts to join the EU. Which changes that have taken place in these 15 years would you highlight as the most important for the business environment?
– We believe that the business climate in Serbia is now considerably better compared to more than a decade ago, but there are still challenges ahead of us. Regarding positive changes, we can say that there have been significant changes in the economic policy and that important reforms have been carried out, whereas a large number of laws have been harmonized with those of the EU. Also, Serbia’s strategic orientation towards European integration has been defined. Finally, the financial and the banking sector has been consolidated and privatized in general, which is important to all investors.
eKapija: The impression, then, is that doing business in Serbia is far easier than a decade and a half ago, but that there’s still room for improvement. What would you emphasize as the priority in further reforms?
– I fully agree with that impression. We are always looking into the future, and the Council’s biggest expectations are tied to an acceleration of important structural reforms, especially the privatization and the corporatization of public companies, as well as a consistent and efficient implementation of law. Some of the ways of achieving this are: by establishing the missing institutions, by implementing clear procedures and guidelines, by abolishing unnecessary bureaucratic procedures and by training employees, while paying special attention to institutions in charge of market supervision – the Tax Administration and inspection services. Last, but not least, is to further harmonize the Serbian legislation with the legal acquis of the EU in an efficient manner.
eKapija: Regarding the EU, foreign investors are following the process of Serbia’s getting closer to the European community with impatience. The opening of another three chapters regarding the economy has been announced to take place before the end of the year. To what extent will the further liberalization of the market reflect on foreign investments in our country?
– Serbia is deeply tied to the EU market, and the acceleration of the accession process and a further liberalization of the market would certainly contribute to a greater inflow of foreign direct investments. The Council advocates the economic integration of Serbia into the European Union, as this contributes to the predictability and the transparency in the business environment and raises the competitiveness of the Serbian market. In the negotiations, the candidate country needs to carry out all-encompassing reforms and to increase its administrative capacities for enforcing new regulations, which is one of the key problems in Serbia today. The scope of economic negotiations is wide, as it contains an evaluation of economic criteria of the European Union, and the country needs to show that it has a functioning, competitive market economy. The Euro-integration process is therefore an excellent mechanism for the evaluation of the local legislative framework and its influence on the economy, the citizens and the society as a whole.
eKapija: In which areas is the dialogue between the FIC and Serbia the most intensive?
– Early this year, the Council founded a Working Group together with the Government, for the purpose of resolving the highest priority issues, the way our members see them. The expert groups established thereof deal with the following priorities of the Council: taxes, labor right, food inspection and safety, real estate and construction, electronic business and e-government, bankruptcy proceedings and foreign exchange operations.
eKapija: The aim of this Working Group is to carry out the recommendations from the White Book, striving to have 50% of the recommendations solved in the next issue. Will this goal be achieved? Can this be expected in the new White Book, which comes out in November?
– The analysis is in progress and it is difficult to predict the results at the moment. What’s important to us is that this Government has shown readiness to work with us on solving the burning issues, thereby contributing to facilitating doing business in Serbia. In other words, we are happy that this Working Group is providing the much needed structure, and when there’s a structure and a concrete goal, tangible progress can be expected. There is, however, always the question of time in this process. Investors are usually impatient to see the results. A better business climate means better business activities in this market, which is important for making long-term business plans and achieving good results. However, it has to be kept in mind that certain topics are sensitive and it often happens that there is not enough time to solve the situation in a suitable manner. To take the announced amendment to the gender equality regulations as an example, we can expect a long process of finding the best possible solutions to sensitive questions.
We welcome everything that’s necessary in this process of public consultations in order to reach the best solution for all involved parties. We should also mention the goal we’ve defined together – to realize a progress of 50% on an annual level, instead of the previous average of 35-45%. That is pretty ambitious and it should be viewed from a positive angle. With this Working Group, we hope for better results next year as well, and any increase compared to last year’s result of 35% can be considered as progress.
eKapija: To what extent does the investment climate in Serbia stand apart compared to the progress made in the region?
– Serbia’s position relative to its neighbors is relatively good, but it doesn’t compete with them exclusively. Serbia is a good place to invest in if you are a big company and if you are bringing big investments. In that case, you have better internal capacities to deal with the changes. Nevertheless, it’s important to make the business climate better for all investors, not just for big companies, as, if you are a small investor, you will encounter more obstacles, bureaucracy and strong competition, while having far smaller internal capacities to handle sudden changes.
eKapija: What is the key value that might convince undecided investors to choose Serbia among several markets?
– Serbia has an advantage thanks to its excellent geo-strategic position and a well developed framework of free trade agreements, not just in the region, through the CEFTA agreement, but with the European Union, Russia, Ukraine, Belarus, Turkey and the EFTA signees as well. Also, employees in Serbia have a very solid professional education and are motivated by good working conditions, competitive benefits and education programs to continuously enhance their productivity and efficiency.
eKapija: What will the FIC focus on in the upcoming year?
– We will continue promoting a sustainable business environment, as this is our mission. What’s more, the Council will continue being the key point of the private sector in the EU integration process, as we have unique capacities to support this process, as more than 75% of our members come from the EU or have a foothold in the EU market. Whatever we do, we will do it in a way that will make the Serbian economy more open to investments to the benefit of all companies working here, and most of all for the benefit of the people who live in this country.
eKapija: Where do you see Serbia in 15 years?
– We would like to witness a much more modern Serbia with a regulatory framework fully harmonized with the EU countries, so that investors would know what to expect and thereby be able to prepare themselves for the changes. This would create a much better predictability of the business environment, as well as stability, both of which are important to investors. Finally, we would like to see a much better legal security in Serbia, the kind that would lead to a greater inflow of foreign direct investments, all of which would contribute to the economic growth and a better life for all, both the investors and the society as a whole.