Serbia running out of steam in reform process, warn foreign investors

Serbian PM Ana Brnabić announced a reform of the country's tax administration. [Belgrade Security Forum/ Flickr]

Foreign investors insist Serbia must continue along its EU accession pathway and modernise its state administration and legislation, particularly in the realm of tax policy. A recent evaluation of reforms suggested Belgrade is lagging behind. EURACTIV Serbia reports.

Jana Mihajlova, the president of the Foreign Investors Council (FIC) in Serbia and Nestle Adriatic CEO, told a presentation of the White Book in  Belgrade on 8 November, that the Serbian government had over the past year achieved good macroeconomic results but stressed that boosting economic growth is still key.

Mihajlova said it was important for the government to continue membership negotiations with Brussels and use it as a framework for improving business conditions, the law and implementation.

The three key things the FIC expects from the government are the creation of stronger economic growth by making fiscal consolidation sustainable, the advancement and implementation of laws, and the continued harmonisation of laws with EU standards, Mihajlova said.

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A joint working group of the government and FIC representatives is intended to help accelerate reforms aimed at swifter harmonisation with the EU acquis, a crucial part of any EU candidate country’s membership bid, and improving the implementation of laws.

The biggest progress over the last year has been made in the building sector, which scored the highest average mark of 2.13. Protection of financial services users also scored highly and progress was made in the area of transportation and the tobacco industry.

Sectors are ranked on a sliding scale from ‘3’ to ‘1’, with the former denoting most impressive progress. Efforts to combat the grey economy only scored 1.55.

From October 2016 to October 2017, the least progress was made in corporate law, corporate tax, restitution and milk production quality standards, which were all marked with a ‘1’.

The Council marked 63 sectors and six fields in total. In 2017, it gave 459 recommendations, as opposed to 413 in 2016, while the average score in 2017 was 1.37, as opposed to 1.39 in 2016.

The average waiting time for progress in implementing FIC recommendations in 2017 is 3.45 years, as opposed to 3.10 years in 2016.

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Serbian Prime Minister Ana Brnabić said at the presentation that the government is devoted to creating a favourable business environment in order to attract investors but also to enable the entrepreneurs who were already doing business to be satisfied and to keep investing.

Brnabić announced that a draft law on parafiscal levies, which businesses often complain about, would soon be put to public debate, in a bid to establish control in the collection of numerous fees and taxes, which is important for both the business community and the government.

She also announced a reform of the Tax Administration, which would keep only its core operation, while the other ones would be unbundled. It would also involve the strengthening of the inspection mechanism

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The Serbian leader stressed that one of the pillars of reform in the coming period would be the rule of law, including a more efficient judicial system for the economy and the population in general.

The White Book for 2017, the 15th such publication in a row, contains analyses of 18 laws and bylaws and 24 written initiatives for amendments to the current regulations.

The FIC gathers more than 130 companies, 74% of which are from the EU. The Council members employ close to 100,000 people and account for about 25% of Serbia’s total exports. Those companies have invested more than €34 billion in Serbia so far.

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