Investment opportunities in Serbia

According to a World Bank report, Serbia has improved its business climate over the past few years and has worked on conditions related to fast company registration and favorable tax treatment for foreign investors. Given the confidence and stability of the economy, Serbia welcomes investors from all over the world to operate in the country's main industries.

Investment opportunities in Serbia

Key advantages of investing in Serbia

  • Companies can be easily registered in this country as fewer formalities are required.
  • Taxation regime in Serbia — one of the lowest in Europe.
  • An investor can easily open a subsidiary or branch.
  • The Serbian economy has undergone significant changes and has taken a positive direction.
  • The state is an important business hub that allows foreigners to place their investments in various sectors.
  • There are several tax incentives for foreign investors who want to open companies here.
  • There are Free Economic Zones with excellent infrastructure and a number of tax advantages.
  • In the free trade zones of Serbia, VAT is not charged on imported and exported goods.
  • Serbia connects the eastern and western parts of Europe due to its strategic location.

Investment sectors in Serbia

Automotive industry

Over the past ten years, Serbia has become one of the leading European destinations for foreign investment in the automotive industry.

The development of the automotive sector in Serbia began in 1939, when the assembly of military trucks began in the city of Kragujevac, today's center of the Serbian automobile industry. Since then, having received a license from FIAT, the small plant in Kragujevac has been transformed into the Serbian automaker giant Zastava. Over the next 55 years, Zastava will produce more than 4.5 million vehicles, 650,000 of which will be destined for export.

In 2008, FIAT acquired the Zastava logging plant. with an unprecedented investment project worth 940 million euros. The plant was completely renovated and new equipment was installed to produce the new FIAT 500L minivan.

Currently, FIAT is the only passenger car manufacturer in Serbia and is the backbone of the automotive industry.

As cars become not only mechanical but also electronic products, the production of these systems becomes the dominant force driving new investment.

The main product groups in the Serbian automotive industry are:

  • Tires
  • Wiring harness
  • Windshield wipers
  • Hoses
  • Various metal components

Given current investment trends, in the future they will be replaced by products such as electric motors, turbochargers, radar and optical sensors, electronics and energy converters.

Electronics industry

The development of the electronics industry in the country really began in the 60s with the formation of the Electronics Industry Company as a leading force. The city of Niš was rightly considered the Yugoslav electronics center, where factories could produce the entire range of products, ranging from semiconductor components for electronic assembly to finished products such as televisions, sound systems, radios, optical instruments, measuring instruments, etc.

The electronics industry ecosystem includes the formation of universities with a comprehensive curriculum in electronics and electrical engineering, as well as research institutes located on the basis of both academic institutions and companies. There are also many joint venture agreements with leading international companies in this field.

Woodworking industry

Over the past decade, the Serbian forest industry has become the most attractive sector for foreign investors. French Tarkett, Italian Ditre and Gruppo Fantoni, Austrian Kronospan and many others have built their factories in Serbia to supply products not only to the local market and the EU, but also to the ever-growing Russian market.

There are 3,350 enterprises in the woodworking and furniture industry, employing 55,005 people. More than 90% of enterprises are privately owned and mainly located in the central regions of Serbia. Most of these companies are involved in timber and wood products, while the rest are in furniture manufacturing. The sector's share in Serbia's GDP is 1.4%, and the contribution of the wood processing industry to total exports is 7.5%, with a positive growth trend continuing over the past few years.

Advantages of the sector:

  • Highly skilled workforce with a strong tradition in woodworking, furniture manufacturing and export.
  • 2.2 million hectares of forests and woodlands, FSC supplies, a fleet of locally produced chipboards, polyurethane and other materials.
  • Serbia is one of the largest producers of sawn hardwood in the Balkans. Sawmills account for 49% of the total wood processing industry, with lumber accounting for 19.8% of exports in this sector.
  • 3350 companies (More than 90% of enterprises are privately owned and located mainly in the central and southern regions of Serbia).
  • 55,005 workers (23,902 in the timber industry, 21,725 in the furniture industry, 9,378 in the paper industry).
  • Forest industry exports worth €1.8 billion.
  • Companies with deep export experience and flexibility to meet requirements for furniture quality, production time, and customized product development.

Agro-industrial sector

With more than 5.1 million hectares of agricultural land, of which 60% is arable, and ideal climatic conditions, Serbia has been blessed with a variety of varieties of fruits and vegetables.

Agriculture and food production in Serbia have an extensive tradition. The country has been producing and exporting prunes and pork to Central Europe since 1820. Serbian canned ham has found buyers throughout the United States over the past 50 years, and beef and goat meat are present in Arab countries as well as European markets.

The food industry is one of the strongest aspects of the Serbian economy. The trade balance of agricultural products is in constant surplus.

Vegetables and fruits

Fruit production is one of the key sub-sectors of Serbia's economic development and therefore receives strategic attention from the Serbian government.

In terms of the number of apples in 2019, Serbia became the first exporter from Europe to the Russian Federation.

In 2019, exports of frozen raspberries, blackberries, mulberries, etc. accounted for 31.7% of world exports, placing Serbia in first place in the export of this product group in the world. Serbia is one of the three largest suppliers of frozen fruit to Austria, the Russian Federation and Germany. About 90-95% of raspberry production is intended for export, mainly frozen bulk. This represents a huge potential for investors who are considering Serbia as a production facility for their end products with all kinds of different berries such as spreads, jams, toppings, ingredients for ice cream production, fruit cubes for yoghurt production, etc.

The ideal climate for vegetable production makes Serbia a major exporter and supplier of vegetables to South-Eastern Europe. The most popular vegetables produced in Serbia are paprika (pepper), cabbage, tomatoes and potatoes.

Pepper production is focused on pasteurized peppers in various forms. Due to its dry matter content, most of the red pepper is used to produce aromatic spices, as well as to prepare a traditional Serbian winter dish — "Ajvar" paste.

Besides pepper, cabbage production ranks second in Serbia and is a traditional winter dish.

Over the past few years, the production of green peas and sweet corn has been steadily increasing due to the increasing demand for frozen ready-to-eat products around the world.

Meat production

Livestock farming and meat processing in Serbia have long traditions. The most popular meat products — fresh or smoked pork and beef, as well as poultry. At the same time, products such as pates, raw sausages of various types, hot dogs, smoked beef and pork are widely distributed in all supermarket chains in the Balkan region.

Serbian slaughterhouses and meat processing plants have a strong position in the CEFTA market.

The Free Trade Agreement defines new quotas for duty-free exports from Serbia to Turkey of beef, sunflower oil, sunflower seeds, soybeans, animal feed and pet food, as well as export quotas for peas, beans, green peas, sweet corn, and prunes were increased. Thanks to the Free Trade Agreement, Serbia will be able to export 5,000 tons of fresh, chilled or frozen beef duty-free.

  • 4894 manufacturers
  • 70,349 employees (food and beverage industry)

The high-quality food industry sector has the potential to further develop Serbian agriculture.

Organic products

Currently, more than 6,300 certificate holders work diligently and dedicatedly on more than 21,000 hectares of the most fertile soil, growing organic grains, fruits, vegetables and industrial plants, including wheat, raspberries and sunflowers.

In 2019, Serbia exported 13,284 tons of organic products worth 29.7 million euros.

Some of these products are produced in traditional ways using old indigenous breeds, generational knowledge and a close, respectful relationship with the land. Others are innovative, designed for modern consumers and markets, such as specialty extra- and cold-pressed pumpkin and sesame oils, frit chips, roasted pepper spreads, wild fruit jams, etc.

Metalworking

The industry's long tradition dates back to 1853, when a newly built foundry successfully cast its first cannon, marking the beginning of the development of the Serbian metallurgical and mechanical engineering industry, as well as production in Serbia. Currently, it is still one of the most important sectors of the Serbian economy. accounting for 6% of the national GDP, with highly qualified workers trained in accordance with European standards.

Companies within this sector vary in size and structure, as the metalworking sector is relatively diverse.

Metalworking accounts for 20% of Serbian exports, as it has always been very export-oriented and open to cooperation with foreign companies. Italy, Germany and Bosnia and Herzegovina are the most important markets, while thanks to the FTA with Russia, Serbia has increased exports to the Russian market.

The metallurgical cluster of Vojvodina is the most significant metallurgical association in Serbia.

The metallurgical cluster in Western Serbia was founded in 2014 on the initiative of the Regional Development Agency Zlatibor and companies that had already collaborated through the CBC EUMETAL 2 Project. The cluster consists of 11 SMEs from the municipalities of Arile, Pozega and the city of Užice, characterized by tradition and experience in metallurgical industry.

Information and communication technologies

As the global ICT market continues to evolve towards outsourcing software development, design and offshore systems integration, Serbia is well positioned both geographically and structurally to provide a cost-effective and reliable alternative to more established markets. Outstanding intellectual capital, attractive labor costs, excellent skills, good communication networks and excellent English language skills — These are just some of the key competitive advantages that convince international companies to expand their business in Serbia.

ICT is becoming one of the pillars of the Serbian economy. A large number of Serbian companies in this field offer very strong technical skills, which have attracted international firms to cooperate and earned them a place in high-value market niches. The country ranks 40th in the list of largest software exporters in the world.

Microsoft's fourth development center in the world opened in Serbia, which over time has turned into an innovation center.

Textile industry

Textile and clothing production in Serbia has a long tradition and has been one of the main export industries for many years. There are now about 1,800 active companies with more than 43,000 employees.

Wonderful traditions, high-quality products at competitive prices, as well as a skilled workforce and relatively low subcontracting costs are key reasons why foreign investors may invest in the textile industry.

Companies such as Calzedonia, Benetton, Golden Lady, Pompea, Falke, Geox and many others widely use their production facilities as secondary production sites for the production of high-quality clothing.

Over the past 10 years, the Serbian fashion industry has transformed from a domestic manufacturing industry into a design sector serving the global market.

Serbia's textile sector primarily trades with EU member states (Italy, Germany, France, Romania and Slovenia), regional countries (Montenegro and Bosnia and Herzegovina), the Russian Federation, Turkey and China.

Advantages of the sector:

  • High quality products at competitive prices.
  • Short delivery times and reasonable transport costs.
  • Long tradition of providing services to global industry leaders.
  • Free trade agreements with the EU, Russia, USA, CEFTA, EFTA, Turkey, Belarus and Kazakhstan, providing efficient access to various markets.
  • Developed education system — includes both high schools and universities.
  • Highly export-oriented sector.

For a business to successfully enter the investment market in this region, it is necessary to conduct a thorough analysis and assess all risks and opportunities; this work should be entrusted to the appropriate specialists. One of these professional teams operating on the international market — this is Russian-Eurasian Business Broker (REAB).

1/5/24
Julia Taraday, REAB Consortium
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