Serbia

Serbia is located in southeastern Europe. It was once part of Yugoslavia, but after the collapse of the country it gained independence. Serbia does not have a sea, but it has mountains, a wonderful climate, healing waters and a developed economy.

General information

Official name — Republic of Serbia. The state occupies an area of 88 499 km² (111th in the world). At the beginning of 2023, the population of Serbia is approximately 8,633,403 people.

Serbs are the largest ethnic group in the country, making up 83% of the total population if Kosovo and Metohija is excluded. The second largest ethnic group are Hungarians — 3.9% in all of Serbia and 14.3% of the population in Vojvodina. Other minorities include Bosniaks, Roma, Albanians, Bulgarians, Montenegrins, Macedonians, Slovaks, Ruthenians, Vlachs, Romanians.

The official language of the country — Serbian in Cyrillic. It has national status. Along with it, 12 more languages are also officially used at the regional and local levels. In the Assembly of the Autonomous Province of Vojvodina, since 2002, five languages can be officially used along with Serbian: Hungarian, Slovak, Croatian, Romanian and Ruthenian. In Kosovo and Metohija, Albanian also has regional status. As for the local level (community), a non-Serbian language receives official status there if the proportion of its speakers reaches a certain level. For example, in Vojvodina, a minority language receives official status throughout the community if representatives of this minority constitute at least 15% of its population. In Central Serbia, almost all communities use only the Serbian language. Only in certain communities of Central Serbia do other languages also have official status: Bulgarian in Bosilegrad and Dimitrovgrad, Albanian in three communities bordering Kosovo, Bosnian in several communities in the historical region of Sandzak.

Serbia — multi-religious country. The Constitution and laws of Serbia guarantee freedom of religion. The country is 92.5% Christian, 4.2% — profess Islam, representatives of other religions and atheists — 3.3%.

The official currency of the country is the Serbian dinar.

Belgrade — capital and largest city of the Republic of Serbia. It has a special administrative status within the country and is one of five statistical regions. The city is the largest economic and cultural center. The Belgrade District's GDP share is 40% of the country's total GDP. The city is home to the headquarters of a number of large companies, including Air Serbia, Telekom Srbija, Telenor Srbija, Delta Holding, Japan Tobacco. etc. The stock exchange and the National Bank of Serbia are located in Belgrade and the city is one of the leaders in the IT sector in Eastern Europe. Currently it is the main industrial center of Serbia. The city is home to the production of machine tools and industrial equipment, grain harvesters, tractors and other agricultural machinery, buses, telecommunications equipment, electronics, and household appliances. There are a number of chemical industry enterprises that produce plastics, rubber, varnishes, paints, polymer coatings, household chemicals, etc. The light and woodworking industries are also developed in Belgrade. The food industry is represented by the processing of agricultural raw materials and the production of food and beverages. The Belgrade District has more than 260,000 hectares of agricultural land, of which 150,000 hectares are cultivated. Belgrade port is located on the Danube and Sava rivers. The part of the port located on the Danube is intended for the transport of goods, while the port on the Sava River receives passenger and tourist ships. Two pan-European transport corridors pass through the city — VII and X.

The city of Novi Sad is the industrial and financial center of the Serbian economy, as well as a major cultural, logistics and transport center. There are a large number of banks in the city, including Bank of Vojvodina, Erste Bank, OTP Bank, Meridian Bank, Metals Bank. and NLB Continental Bank. Also located here is the second largest insurance company in Serbia, DDOR Novi Sad. and the office of the company "Naftna industry Srbije". The city exhibition center also plays a significant role in economic development.

Administrative divisions of Serbia — system of administrative-territorial units of Serbia, including 2 autonomous provinces — Vojvodina and Kosovo and Metohija, 174 local governments: the capital Belgrade, 28 urban settlements and 145 communities. According to the administrative-territorial division, the country is a unitary state.  After the reform, the country's territory is divided into statistical regions, districts, cities and communities.

History, geography, culture, mentality

The territory of present-day Serbia was inhabited several hundred years BC. In the 5th century BC. Celtic tribes came here and built the first cities here. The largest city was called Singidunum. In its place is now the capital of Serbia — Belgrade.

In the 8th century. the Serbian principality was founded under the control of the Vlastimirović dynasty.

In 1040, the Serbs living in the coastal area rebelled against the rule of the Byzantine Empire and created the independent Principality of Duklja. Subsequently, the domain of Raška was founded. They united in 1142 and the Grand Duchy of Serbia was formed. Stefan Nemanja ascended the throne in 1180. At that time, the Serbian state occupied the entire southwestern part of the Balkan Peninsula and left the Byzantine Empire.

The rise of the medieval Serbian state occurred in the first half of the 14th century. Stefan Dusan became king of the Serbs. During military campaigns, he conquered Albania, Epirus, Thessaly, the western part of Greece, Macedonia.

In 1389, on the Kosovo field, the Serbian princes were defeated by the Turkish army. After this, Serbia fell into the possession of the Ottoman Empire for several centuries.

The northern regions of the Serbian state went to Austria until the end of the 17th century. were under the rule of the Austrian Empire.

In 1804, the Serbs rebelled against the rule of the Turks and part of the territory of Serbia was liberated. In 1815, a second uprising took place under the leadership of Milos Obrenovic, and the Serbian Principality was created. It became part of the Ottoman Empire as an autonomous region.

In 1878, Serbia gained independence and received the status of a kingdom. After two wars in the Balkans 1912 — 1913, when the Turks were driven out of European territory, the lands of Macedonia and Kosovo became part of Serbia.

In 1914, the First World War was declared. After the end of the war, six countries of the Balkan Peninsula united and created a single state of Yugoslavia.

During World War II, the troops of Nazi Germany, Hungary and Bulgaria occupied the territory of all of Yugoslavia.

In 1944, the Soviet army and the partisans of Marshal Josip Broz Tito liberated Serbia. In 1945, Yugoslavia was declared a Federal People's Republic, which included Serbia with its autonomies, Montenegro, Bosnia and Herzegovina, Macedonia, Croatia and Slovenia. Until 1980, the country's unchanging leader was Josip Broz Tito. During this time, Yugoslavia became a powerful socialist state with developed democracy and a high standard of living.

After Tito's death in 1989, Slobodan Milosevic comes to power in Serbia. During this period, interethnic confrontations within the federation grew, which led to civil war and the collapse of Yugoslavia.

In 1991, Slovenia and Macedonia left the republic. An armed conflict began in Serbia, Croatia, Bosnia and Herzegovina. The bloodshed lasted until 1995. The country split into Macedonia, Croatia, Bosnia and Herzegovina, Slovenia and Yugoslavia in the form of Montenegro and Serbia.

In 1998, a confrontation began between Serbs and Albanians living in Kosovo. The conflict ended in 2000, after devastating NATO bombings of Belgrade and other major Serbian cities. After this, the government of the Republic of Serbia withdrew troops from its autonomous region of Kosovo. In 2008, Kosovo declared independence.

Serbia is located on the Balkan Peninsula. The country borders on Hungary in the north, and in the east — with Romania and Bulgaria, in the south — with Albania and the former Yugoslav Republic of Montenegro, in the west — with Croatia, Bosnia and Herzegovina, and in the southwest — from Kosovo. The country's territory extends from the Drina River in the west to the Timok River in the east. The hilly region of Šumadija is located in central Serbia, north of the Western Morava River valley. The Vojvodina plains are located north of the Sava River and are crossed by the Danube. To the south of Šumadija rise the mountains of the Dinaric Alps (highest point - Djaravica), Shar Planina, Prokletije, East Serbian Mountains and Stara Planina. The Kosovo plateau is located in the southwest. Many mountains in Serbia are climatic and health centers known for the successful treatment of various diseases.

Over thirty lakes (Djerdapsko, Vlasinnsko, Srebrno, Palichsko, Zlatarsko, Gazivode, Borsko, etc.) provide great opportunities for lovers of water recreation, fishermen, athletes and just tourists.

There are 5 national parks (reserves) in Serbia: mountains Kopaonik, Tara, Shara, Fruska Gora and the one-of-a-kind Danube Gorge — Djerdap. All of them are under state protection.

Four sites in Serbia have been included in the UNESCO World Heritage List due to their artistic, cultural, social and historical significance. From the imperial Roman palace of Felix Romuliana in Gamzigrad to the medieval Serbian monasteries of Studenica, Stari Ras and Sopocani, from a group of medieval monuments in Kosovo to the unique ancient tombstones known as stečki.

The culture of Serbia has always developed between East and West. This can be clearly seen in the architecture of the XII monasteries — XIV centuries "Rush School" — Romanesque appearance and Byzantine decor.

After the loss of independence in the 15th century. The Serbs came under the influence of the Ottoman and Habsburg empires and the Venetian Republic. The Turkish influence was the longest lasting, which is still noticeable in the language, cuisine, music.

Since the end of the 17th century. the center of education and culture moves to Austria-Hungary. “Baroque” styles are invading culture and art. and "rococo".

Since the beginning of the 20th century. Serbia keeps pace with Europe in matters of art, going through the stage from impressionism, expressionism and to postmodernism.

Russian emigration had a colossal cultural influence after the October Revolution. Over the course of 20 years (from 1921 to 1941), Russian specialists designed and built several thousand objects on the territory of the Kingdom, more than two thousand — in Belgrade.

Serbs — hospitable and open people, they sacredly honor their culture, rely on the centuries-old stronghold of their nation — Serbian Orthodox Church. Here they will happily discuss crop prospects or sports competitions, gossip about their personal lives or criticize the weather. However, when talking about politics, it should be remembered that the events associated with the collapse of Yugoslavia are too fresh in the memory of local residents. Relations with other nations of the former Yugoslavia, despite the active process of reconciliation, still remain difficult — in almost every family someone died in that war.

In Serbia, there is great respect for Russians and other peoples of the former USSR, who are welcome guests almost everywhere. The proximity of languages also contributes to this. A phrase in Russian will arouse keen interest from local residents here, and knowledge of a few of the most common local words almost completely erases the boundaries between tourists and local residents. Serbs (urban residents) have a good command of the main European languages — English, German, French, Italian.

When meeting, local residents, regardless of religion, greet each other in a European way — with a handshake. In some southern regions, hugs and kisses are allowed when meeting well-known people; this is unacceptable with strangers. When visiting someone's home, small gifts are common. The ability to speak and conduct a conversation is highly valued by local residents.

Power

Serbia — parliamentary republic. The president of the country is elected for a five-year term in direct general elections and can hold this position for no more than two terms. According to the Constitution, he is the Commander-in-Chief of the Armed Forces, represents the country in the world, appoints ambassadors and diplomatic representatives, proposes candidates for the post of Prime Minister to the People's Assembly, can dissolve the People's Assembly and veto adopted laws. 

The government is the bearer of executive power and consists of 20 members, including the prime minister, one or more deputy prime ministers and several ministers. Its composition is approved by the People's Assembly of Serbia by a majority vote, as is the head of the Cabinet of Ministers, whose candidacy is proposed by the President of Serbia.

According to the Constitution, the Cabinet of Ministers is responsible for determining and implementing policies, implementing laws and their development, organizing and controlling government bodies, etc.

In September 1990, during the democratic transition in Yugoslavia, a new Serbian constitution was adopted, which established a unicameral parliament — The People's Assembly, whose 250 deputies are elected for a four-year term.

Economy

Serbia's economic freedom score is 63.5, making it the 58th freest economy in the 2023 Index. His score is 1.7 points lower than last year. Serbia ranks 34th out of 44 countries in the European region, and its overall score is above the global average and below the regional average.

Serbia's competitiveness is supported by relative openness to global trade and ongoing regulatory reform. Banking continues to evolve. However, there is a lack of political will to carry out the deeper institutional reforms needed to reduce corruption and strengthen the judiciary, which is vulnerable to political interference.

Serbia — a state with a transition economy and predominantly market regulatory mechanisms. Macroeconomic stability and economic development of the Serbian economy are ensured mainly through structural reforms and the influx of foreign investment. The privatization of state-owned enterprises continues, the financial and private sectors are actively developing.

In order to increase the competitiveness of the economy and ensure high rates of economic growth in the country, the Serbian government plans to continue to focus all efforts on attracting foreign investment, increasing exports, and supporting start-up companies, small and medium-sized businesses.

Serious problems slowing down the pace of economic development are a significant amount of external debt, high government spending on social benefits, unemployment, and the need to create new jobs.

Positive conditions for economic growth — strategically advantageous territorial location, inexpensive and relatively qualified workforce, the presence of various integration and preferential agreements.

The free trade regime operates with the European Union, the countries of the European Free Trade Association (EFTA: Norway, Switzerland, Iceland and Liechtenstein), as well as members of the Central European Free Trade Agreement (CEFTA: North Macedonia, Montenegro, Bosnia and Herzegovina, Albania and Moldova). A bilateral free trade regime with Turkey is applied.

From July 10, 2021, the Agreement on the free trade zone of Serbia with the states — members of the Eurasian Economic Union.

Serbia is characterized by a negative balance of payments and significant dependence on energy imports.

The main partners for Serbian exports are Germany (14.0%), Italy (8.0%), Bosnia and Herzegovina (7.0%), Romania (5.1%), Hungary (5.0%) , China (5.0%) and Russia (4.0%).

The main suppliers of goods to Serbia are: China (13%), Germany (12%), Russia (8.0%), Italy (7%), Hungary (6%), Turkey (5%), Poland ( 3%), Iraq (3%), Bosnia and Herzegovina (3%), Romania (3%).

A third of Serbian exports is formed by large companies with foreign capital, such as Zidjin Bor Koper, HBIS Group, Tiger Tires, Naftna industrija Srbije, Leonija, Henkel ;, “Fiat Chrysler Cars”.

The main export positions of Serbia — These are agricultural products, clothing, tires, copper, cars, medicines, cardboard, shoes, metal products, electrical conductors, and wooden furniture. Food products form a fifth of Serbian exports: two-thirds of the country's agricultural products (corn, frozen raspberries, fresh fruits, frozen cherries, vegetable oil, etc.) are sold abroad.

The main imports are oil, medicines, paper and cardboard, electrical equipment, plastic and plastic products, gas, clothing, car parts, aluminum and aluminum products, cars, copper, fertilizers, metal products. The food import line is formed due to the supply of meat, bananas, oranges, and chocolate.

To join the European Union (candidate status received in 2012), Serbia brings its national legislation into line with European regulations and requirements.

The foreign trade policy of the Republic of Serbia also follows the requirements and rules of the World Trade Organization (WTO).

Foreign trade is actually conducted in a legal framework that is as close as possible to European standards. Strict antitrust and tender rules apply. The organization of supply of products to the Serbian market is conditioned by the manufacturer having quality certificates and other documents provided for by European or Serbian (harmonized with the EU) legislation.

Russia and Serbia

 Main areas of cooperation between Russia and Serbia after February 2022:

1. Trade: intensifying exports from Serbia to Russia and purchasing energy resources from Russia.
2. Registration of Russian companies and labor migration — as one of the factors in the flow of active social capital to Serbia.
3. Military-technical cooperation.

Despite the fact that Serbia has concluded an FTA with the EAEU, the list of exported and imported goods is not so large.

Both exports from Serbia to Russia and imports are showing growth after a difficult 2020. Since 2020, Serbia's exports to Russia have increased by 31%. Russia — is far from Serbia’s most important trading partner. In 2022, Russia ($996 million) was in sixth place in terms of imports from Serbia. The country is increasing exports to Russia, but the Russian Federation's share in Serbia's exports is 4.2%, for comparison: Serbia's main trading partner, Germany, occupies 14%. The main export item of Serbia to Russia in 2022 — machines, mechanical devices, nuclear reactors, boilers. Fruits and nuts hold second place. High annual growth in exports is shown by electrical machines and equipment and their parts. Note that fruits and berries — This is precisely the industry in which Russia cannot yet provide itself 100%. Thus, in the EAEU the level of self-sufficiency within this category does not exceed 46%. In 2019, Serbia exported $237 million worth of services to Russia, including construction services ($86.2 million), transport ($54.9 million) and other business services ($53.7 million). ). If you look at the overall dynamics of exports of products from Serbia, in 2022 Russia belongs to the group of countries for which the growth of imports from Serbia was greater than the growth of imports from other countries of the world.

Serbia imports from Russia mainly fuel and petroleum products (USD 2.17 trillion in 2022), mineral and chemical fertilizers (USD 333 million). It is significant that oil and petroleum products account for 36% of Serbia’s total imports.

Serbian business is extremely poorly represented in Russia. There is a Business Council of Russia and Serbia under the auspices of the Chamber of Commerce and Industry of the Russian Federation, and a multimedia catalog has been launched to search for business partners in Russia and Serbia.

Business climate

Serbia stands out as an exceptionally cost-effective and accessible place to start and operate a company, and the Serbian government has an unwavering commitment to entrepreneurship.

Advantages of doing business in Serbia:

• A very favorable geographical location and excellent connections with other countries of the world allow Serbia to be a link between East and West.
• Low operating costs with a moderate tax burden with an income tax of 15%. The average gross salary per employee is 830 euros, and developer salaries in Serbia are much lower than in developed countries in Western Europe or North America.
• A highly qualified and qualified workforce allows you to achieve high results, especially when it comes to the IT sector. The quality staff comes from multiple faculties and most students speak at least one foreign language.
• Simple procedure for obtaining a residence permit on several different grounds, one of which is a residence permit by registering a company in Serbia.
• Doing business in free zones in Serbia provides special benefits and preferential tax treatment.
• Most key industrial products are given duty-free treatment and a safe path to a market of 1.1 billion consumers.

In accordance with the legislation of Serbia, foreign individuals and legal entities can acquire ownership of real estate. The main restriction applies to transactions with agricultural plots. The owner of land in this category cannot be a foreign individual or legal entity. Another limiting factor when foreigners conduct real estate transactions in Serbia is the requirement to comply with the principle of reciprocity, i.e., the possibility of Serbian citizens acquiring similar rights in the territory of the state of which the foreigner is a citizen. Compliance with this principle is confirmed when registering a real estate transaction in court by sending a corresponding request to the Ministry of Justice of Serbia.

Investment climate

The investment climate in Serbia has improved somewhat in recent years due to macroeconomic reforms, financial stability and fiscal discipline. Attracting foreign investment is an important priority for the government. Serbia has replaced its 30-month Policy Coordination Instrument (PCI) with the International Monetary Fund (IMF) with a new two-year stand-by agreement. in December 2022, which provides direct assistance to the Serbian budget to cover high energy import costs. Foreign investors are generally positive about doing business in Serbia due to the country's strategic location, well-educated and English-speaking workforce, competitive labor costs, generous investment incentives and free trade agreements with the EU and other key markets.

The Serbian government has identified economic growth and job creation as top priorities and has introduced significant reforms to its labor laws, building permits, inspections, public procurement and privatization, which have helped improve the business environment. If the government implements promised reforms during the EU accession process, business opportunities should continue to grow. Sectors that will benefit include agriculture and agro-processing, solid waste management, sanitation, environment, information and communications technology (ICT), renewable energy, healthcare, mining and manufacturing. Companies and officials note that the adoption of reforms sometimes outstrips their implementation. Digitization of some government functions (such as building permits, tax administration and electronic signatures) has not yet resulted in significant reductions in processing time and cannot be implemented consistently. The government is making slow progress in resolving troubled state-owned enterprises, where possible through bankruptcy or privatization. The government plans to privatize 58 more companies and is also gradually reducing Serbia's bloated public sector workforce, mainly through staff reductions and hiring restrictions.

Attracting FDI is a priority for the Serbian government. The Investment Law extends national treatment to foreign investors and prohibits discriminatory practices against them. The law also allows for the repatriation of profits and dividends, provides guarantees against expropriation, allows for exemption from customs duties on equipment imported as capital in kind, and allows foreign investors to qualify for government benefits.

Foreign and domestic individuals have the right to create and own enterprises, as well as engage in all types of income-generating activities. There are no screening or approval mechanisms for incoming foreign investments in Serbia.

Some types of business activities require licenses (for example, financial institutions must obtain a license from the National Bank of Serbia before registration). Licensing restrictions apply to both domestic and foreign companies operating in the fields of finance, energy, mining, pharmaceuticals, medical devices, tobacco products, weapons and military equipment, road transport, customs processing, land management, electronic communications, auditing, management waste, as well as production and trade. hazardous chemicals.

Serbian citizens and foreign investors enjoy full private property rights. Individuals are free to create, acquire and dispose of shares in commercial enterprises. By law, private companies compete equally with state-owned enterprises in the market, as well as for access to credit, supplies, licenses and other aspects of doing business.

Food and Agriculture: Foreign citizens and foreign companies are prohibited from owning agricultural land in Serbia. However, restrictions on foreign ownership of agricultural land do not apply to companies registered in Serbia, even if the company is owned by foreigners. According to unofficial estimates, Serbian subsidiaries of foreign companies own about 20,000 hectares of agricultural land in the country. EU citizens are exempt from this ban, although they can buy up to two hectares of agricultural land under certain conditions: they must have resided permanently in the municipality where the land is located for at least 10 years, and have been farming on the relevant land for at least 10 years. at least three years and have appropriate agricultural machinery and equipment.

The government declared 2017-2027 the “Decade of Entrepreneurship” with special programs to support women's entrepreneurship.

Business and investment support structures

There are several key structures and organizations in Serbia aimed at supporting business and investment:

• Serbian Investment and Export Promotion Agency (SIEPA). This agency is involved in attracting and supporting foreign investment, as well as developing exports. SIEPA provides information on investment opportunities, advises investors and assists in the process of investing in the country.
• Development Fund of the Republic of Serbia. It provides financial support to small and medium-sized enterprises (SMEs) in the form of loans, guarantees and other instruments to stimulate economic development.
• Serbian Credit Rating Agency and Credit Guarantee Agency. This agency provides guarantees and support for entrepreneurs, especially SMEs, to obtain loans from banks and financial institutions.
• Serbian Chamber of Commerce. This is a non-profit organization that represents the interests of business in Serbia. It provides consulting and information support to entrepreneurs, promotes the development of trade and investment.
• Foundation for Innovation and Technological Development. This organization supports innovation and technology development by providing financial assistance and support for innovative projects and start-ups.
• National Bank of Serbia. As the country's central bank, it plays a key role in regulating the financial system and ensuring macroeconomic stability.

These structures and organizations work together to support business, investment, innovation and economic development in Serbia by providing financial assistance, advisory support and information for entrepreneurs and investors.