When it comes to Vojvodina, its food, pharmaceutical and mechanical industries have and are already utilizing their potential, but the results could be even better
The Chamber of Commerce and Industry of Vojvodina is marking a significant anniversary this year – 100 years of establishment. We spoke with the President of the Chamber of Commerce of Vojvodina, Boško Vučurević about the investment climate in Vojvodina today, which sectors are the most promising and how has this year been for the province.
The Chamber of Commerce and Industry of Vojvodina (PKV) celebrates a centenary this year. How much obligation does this carry?
— On 1st February 1919, in the Main Hall of Matica Srpska, the representatives of merchants and artisans formed the Merchant & Artisan Chamber of Commerce of Novi Sad, which was the foundation of today’s Chamber of Commerce and Industry of Vojvodina. PKV’s centenary proves that Vojvodina has an exceptional entrepreneurial spirit. Great entrepreneurs were members and presidents of the PKV. We owe them all our gratitude for keeping the Chamber going in difficult times and for promoting its work. The Chamber is not just us, who are gathered under its auspices today. The Chamber is the trust that business people put in it, which continues to this day. For this reason, the PKV has a task and an obligation to expand the network of contacts, and to improve the existing one; i.e. to connect business people through business forums, international conferences and trade fairs. We cooperate with chambers of commerce and relevant institutions in over 30 countries all over the world, and every year, the list of countries where we find quality business partners is expanding. Bilateral meetings of our business people are a key segment of the international business forums we organize. In our work, we place special emphasis on the cooperation with regional chambers of commerce in the neighbouring countries, because developed regions are synonymous with strong countries.
How would you rate the business climate in Vojvodina?
— Macro-economically speaking, the business climate in Vojvodina is stable. Global monetary and fiscal indicators, which are defined at the country level as a whole, are favourable, with the inflation and exchange rates fluctuating within projections. There is a rise in employment, earnings and turnover in retail. When the business climate is analyzed on a sectoral basis, we hope that, in the second half of this year, the manufacturing industry will start to recover, primarily in the production of petroleum products, chemical products and the textile industry. Positive developments are noticeable in agriculture and the food industry, where solid growth is achieved, which, in turn, has mitigated the general decline in industrial production.
This year, the value of Vojvodina’s external trade, including exports, has increased. What do these data tell us and what are your expectations for the rest of the year?
— Year-on-year, the value of total external trade, including exports, has been growing in the entire region. The total value of external trade generated by the region of Vojvodina in the first six months of the current year stands at 6.2 billion euro, which is an 8.5% increase over the same period in 2018, with the exports growing by 8.3%. The manufacturing sector’s exports have contributed 3.9%, which has influenced the fluctuations in exports for the most part. According to the external trade data, manufacturing industry’s exports grew in 16 out of 23 segments and the most pronounced growth was recorded in the production of tobacco products (+ 107.3%) and manufacture of computers, electronic and optical products (+ 47.8%), year-on-year. On the other hand, overhauls at the oil refinery in Pančevo and Petrohemija resulted in a decline in exports of petroleum products (-19.5% y-o-y) and chemical products (-29.1% y-o-y). Exports of pharmaceutical products (-3.6% y-o-y) have also contributed negatively. In the first half of 2019, Vojvodina’s total external trade represents 51.2% of last year’s trade, while the realized export makes 51.9% of last year’s exports, which speaks in favour of an increase in the value of external trade parameters. Favourable trends are also noticeable in the external trade deficit, which, in the first six months of the current year, accounts for less than half, more precisely 40.8%, of Vojvodina’s deficit last year. As all indicators show favourable trends, we expect to continue the same trend by the year-end.
Which goods from Vojvodina are exported the most and to what markets?
— In the first six months of the current year, the ignition conductor sets are the product that has the biggest share in Vojvodina’s exports (9.1%) and are mostly exported to the EU Member States, more specifically to Germany (48.4% of the total value of exports of the said product), Hungary (18.5%), Sweden (14.4%), Romania (12.6%) and Austria (4.1%). Maize ranked second in value (excluding seed) with a share of 6.0% in the region’s total exports, and has been exported mainly to Romania (57.7%), Italy (19.9%), Austria (12.5 %) and Bosnia and Herzegovina (4.4%). Next are circulation pumps for heating systems and the like (2.7%) exported by Vojvodina’s companies mainly to the Netherlands (50.5%), Hungary (11.3%), Great Britain (10.4%), Turkey (9.8 %) and the Russian Federation (8.6%), followed by medication sold in pharmacies (2.3%) which is mostly exported to Germany (30.8%), the Russian Federation (22.2%), Italy (7.4%), Belgium (5.3%) and Bosnia and Herzegovina (4.6%). Parts and accessories for motor vehicles (1.8%) occupy the fifth place in the list of products and are mostly exported to Germany (41.7%), Austria (15.6%), Italy (8.8%), Hungary (8.2%) and France (5.8%).
Which sectors have potential but need a bit of push?
— When it comes to Vojvodina, its food, pharmaceutical and mechanical industries have and are already utilizing their potential, but the results could be even better. There is always a need for assistance, but these are business segments that have formed strategies, policies and corporate culture. For them, the greatest “help” is operating in a stable economic environment and predictable business elements, and of course, that they all have equal treatment, regardless if they are domestic or foreign. The IT sector is constantly talked about and the results are visible. It is still somewhat unclear whether this sector requires assistance or whether the free market environment without significant state influence suits them more.
Agriculture is a very important business segment in Vojvodina. What do you, as a chamber, offer to agricultural and food companies?
— The share of agriculture in the formation of the gross domestic product in Vojvodina is significantly higher than the share in the country as a whole. The difference is almost six percentage points and the share stands 13.2%. At the same time, the industry recorded a share of 36.4%, which is five percentage points higher than for Serbia as a whole. Considering that the manufacturing industry is the most important part of the industry as a whole and that the food industry accounts for almost 20% of the manufacturing industry, the significance of such a widely observed activity of primary food production and its processing into food products becomes clear. Bearing this in mind, a significant part the Chamber of Commerce and Industry of Vojvodina’s activities, mostly done by the Agriculture Association but also of other associations – the Industry Association and the Service Association – is directed towards improving the functioning of business entities in this sphere. The activities are reflected in the relentless work of the relevant association groups, exerting influence on the regulations in respective fields, as well as in numerous business meetings, forums, bilateral talks and meetings with various institutions, which all have a single common goal – to open new markets and neutralize and mitigate problems that may arise. We are very pleased that the data from the first half of this year show the vitality of Vojvodina’s food industry and an increase relative to the same period last year, which unfortunately was not the case with Serbia as a whole. It is very important that in parallel with the existence of large market stakeholders that have their own rules of business, a strong segment of small and medium-sized companies has been created with a clear business strategy and product programmes aimed at premium users and a larger customer segment. We believe that our activities will help positive trends to continue.
What did you propose to institutions in terms of improving the economic environment? Is there a need for new legislation?
— Within the framework of the common chamber system and following an initiative from our members, our task is to constantly influence the improvement of the economic environment, which we are working on, together with our members. The regulation is in a constant process of change. We estimate that, in the medium term, the activities of the relevant state authorities towards reducing salary tax, boosting the legal cash flow and increasing workers’ wages, as well as devising measures and arrangements regarding the free flow of goods in external trade are all very significant.