Most regions of eastern Europe will point to their logistical position and financial and fiscal package incentives for attracting investment. Serbia’s region of Vojvodina, however, offers the added attraction of first-rate infrastructure compared with other parts of eastern Europe and a high ratio of worker productivity and skills versus wage costs.
Vojvodina’s two million inhabitants account for a quarter of Serbia’s population, and the region’s people are highly educated and skilled. It is the most developed region in the Republic of Serbia and has the advantage of bordering EU member states Hungary and Romania, as well as Croatia, which is on its way to accession. This year Serbia signed an agreement with the Central European Free Trade Agreement, which opens the region to a neighbouring market of more than 50 million consumers, and there is also a free-trade agreement with Russia, allowing for exports that attract only 1% customs duties.
“We are also offering to cover a European market in just-in-time and just-in-sequence production mode,” says Branislav Bugarski, director and CEO of Vojvodina Investment Promotion Fund. “We have outlined several sectors where we strongly believe we have a competitive advantage. One would be automotive components and general manufacturing. Another is agribusiness. Vojvodina is primarily an agricultural region, with 30% to 40% of our GDP coming from this sector. There is also a great deal of potential in ICT and business services.”
Mr Bugarski points to Novi Sad University, with its 30,000-strong student body, a first-rate engineering department and a relatively small but dynamic cluster of 30 IT companies. These are basically spin-offs from the university. They have a turnover of more than €20m, which is all export-oriented. “We have skilled IT workers in this cluster and wages are highly competitive with other eastern European countries,” he says.
“We have also worked with the World Bank on a benchmarking study on business services, which is a sector that includes call centres, technology repair centres and others. These are more value-added jobs to which can be added the advantage of good language skills. There is also a big potential market in property, commercial as well as residential, and tourism cannot be overlooked because the Danube River flows through the region.”
Most investment inquiries come from Germany, Austria, Switzerland, Italy and Slovenia, countries with a long tradition of doing business in Serbia. “In terms of cash inflow, we have had a huge investment from Norway’s Telenor, which bought a local company,” says Mr. Bugarski. “Most of the FDI we’ve received so far has come through the privatisation process or mergers and acquisitions. We are now trying to attract more greenfield investments.”
Vojvodina can assure investors in greenfield sites a stable supply of gas and electricity at competitive rates compared with the rest of eastern Europe, with electricity tariffs forecast to rise to only €0.497 per kilowatt-hour by 2010. Once installed, investors will find well-developed transport routes for export. There are two main road and railway transport corridors, one going towards Budapest and Vienna, and the second from Belgrade through Vojvodina to Zagreb and Ljubljana.