Published: July 18, 2008
By Julian Evans
The newly-formed coalition government in Serbia wants to join the EU by 2012, The newly-formed coalition government in Serbia wants to join the EU by 2012, according to deputy prime minister Bozidar Djelic. "Will the EU accept us? It's up to them, but we will be ready", he says. "We want to achieve candidate status by the end of the year."
Serbia has been without a government for several weeks, after parliamentary elections in May failed to produce a clear winner. Djelic promised in May: "It won't take as long to negotiate a new government as it has in the past. We will have stable institutions before the summer." So it proved, with a new coalition being announced in mid-June, combining the Socialist Party with the pro-EU Democratic Party, of which Djelic is a senior member.
EU accession talks have been slowed by Serbia's inability to hand over several war criminals from the Yugoslav War of the 1990s to the Hague War Tribunal, though Djelic says: "I'm confident that the pro-European government will achieve a good report from the Hague prosecutor." The chances of that may have been improved when one of the most senior of the war criminals, former Bosnian Serb chief of police Stojan Zuplijanin, was arrested by Serb authorities and handed over to the Tribunal in May. Zuplijanin denied that the Serbian government had kept he and other war criminals in hiding: 'We have never had any support in Serbia from the democratic authorities."
Serbia has yet to shake off its negative reputation with some foreign investors. A new study by Ernst & Young found it was the "most misunderstood" market in eastern Europe, with the biggest mismatch between the negative perception of it among investors who didn't invest there, and the positive perception of it among investors who did invest there.
In fact, a new report from PricewaterhouseCoopers says that Serbia is one of the most attractive destinations for FDI in emerging markets. The research, which looks at factors such as wage levels, proximity to developed markets, and political risk, rated Serbia as the fastest-improving market out of 20 emerging markets included in the study.
Ian Coleman, UK emerging markets leader at PWC says: "Three countries – Bulgaria, Serbia and Romania – are ranked in the top seven in both the EM20 Manufacturing Index and the EM20 Services Index...In the case of Bulgaria and Romania, recent accession to the EU has reduced their country risk premia, which has had a positive effect on their rankings in both indices. While Serbia’s country risk premium is relatively high, it scores particularly well in the Manufacturing Index as the risk is counterbalanced by its proximity to large West European markets. Although there are still downsides to these markets in terms of infrastructure and governance issues, our analysis suggests that South Eastern Europe deserves to be given serious attention as a region with considerable potential."
Bozidar Djelic, deputy prime minister of Serbia, says: "Many people are surprised when they see our FDI figures. We've received US$13bn since 2001, half of which is in the last two years. We're already swarming with automobile investors - Fiat, for example, is investing Eu700mn for a new production facility."The government also has plans to float stakes in several state-owned companies on the Belgrade Stock Exchange, starting with a 25% stake in Telekom Serbia, which could go for up to Eu500mn. In June, the government announced a short-list of banks for the advisory role on the privatization, including Citigroup, Merrill Lynch, Morgan Stanley, Goldman Sachs, Credit Suisse, Deutsche Bank and RZB.
Djelic says: "The previous government distributed free shares in the state telecom company, the oil company, the state pharmaceutical company, the electricity company and the airports company. The shares are worth around Eu20bn in all. Now, there's huge pressure on the government to monetize these shares via IPOs. We plan to float four to six companies over the next two years. Our goal is to be in the business press every quarter with a significant transaction."
