I mprovement of the business conditions is a marathon race not a sprint, and permanent work on advancing business environment is required, says Dr Ronald Seeliger, President of the German- Serbian Chamber of Commerce (AHK Serbia) and Hemofarm CEO.
What is your assessment of the overall macroeconomic situation in Serbia?
– Serbia has succeeded in overcoming the major macroeconomic imbalances and the next task for the economy is to wake up and induce further growth. We need powerful, inclusive and sustainable economic growth, and subsequently further reforms are necessary in this segment. Some of the main challenges Serbia is facing are stagnant household incomes, a need for private sector job creation and structural reform of public enterprises as well as strategic reforms in the public sector. Additionally, further reforms are necessary in some ‘non-economic’ areas as well, and these must not be left out of focus. For example, rule of law fully exercised in practice, more intensive fight against corruption, further strengthening of legal safety and transparency in public procurement, improvement of the tax system and work of the tax administration, as well as the need for higher efficiency of the public administration – these are all challenges that the country will have to deal with in the long term. In short, the task Serbia is facing now is building muscle in the economic sector simultaneously with the increase of fitness in those other areas.
How strong is the spirit of reform in today’s Serbia, and how much effort is Serbia putting in creating business conditions that resemble those in the EU countries?
– I say too often that it is very important for Serbia to become a member of the EU, and in order to achieve this, it has to continue conducting structural reforms and changing certain patterns of doing business and behaviour thoroughly and in the long run. As already mentioned, it needs powerful and sustainable growth precisely for the purpose of faster approximation to the EU standards. Comparing the business conditions here and in the EU countries, some of them are quite similar, while on the other hand there are also things which are different. For example, what Serbia needs is predictability of business operation, which is again something I have often spoken of. Predictability of business operations i.e. possibility to do business within a clear, precise and expected framework is very important to every businessman and Serbia has to make better progress in this respect.
How willing are German companies to relocate their production to Serbia?
– At the moment, as I am informed in my role of AKH President, some companies are thinking about relocating parts of their production to Serbia. But let me be clear, until the final agreement is achieved, every investor simultaneously looks for back-up and places other countries under discussion. Business people look at several countries at the same time and then they decide where to start their operations. I will tell you something experienced from German practice: as a kind of rule, production is relocated from Germany to other countries because of the lack of workers in Germany. Only in exceptional cases, the companies were already active somewhere else in Eastern Europe before they moved to Serbia.
Given that the company you manage operates in an economic segment where technological and product innovation are very important, can you tell us how fast Serbia is moving towards a desired change in the structure of its economy, that is in the direction of a knowledge-based economy?
– The transition to a knowledge-based economy does not happen overnight. The first step has already been done with the introduction of dual vocational training. Furthermore, an industrialised country does not only need engineers but also well-trained, qualified people who understand the ideas of the engineers and know how to put them into practice. Speaking of which, education of engineers has a long tradition in Serbia and is quite well by international standards. With regard to university studies, I would say that more practical training during the studies is for sure needed here in Serbia.
After the introduction of dual education, Serbia has embarked on a vocational studies reform. Is AHK going to participate in this reform?
– Germany has vast experience in the field of dual education and AKH has been very active in advocating dual education within the secondary education system in Serbia. The reason is clear: dual education facilitates special ties between schools and companies, and generates more capable and better trained workforce. This is a field to which we can contribute and offer our assistance, although every state has to have a systematic approach in it. The so-called dual studies at universities in Germany and elsewhere do not follow a uniform pattern like the dual system of vocational education for youngsters between 14 and 18. For the university students, there are many competing models of dual studies. Like vocational training, university studies also require as much practical experience as possible. One thing is also certain – the AHK is at disposal if the Serbian side is interested in looking at such models which have been agreed between companies and universities in Germany. We fully support the idea of the dual studies.
You have been CEO of Hemofarm for seven years now. How much has the pharmaceutical market changed in this period, and how is it doing today?
– Important changes have occurred on the global market over the past several years. Digitalisation has become priority in every sense: both in manufacturing processes and in sales. We are also witnessing the fact that global pharmaceutical companies trade parts of the companies between themselves, in order to best adapt to the new postulates of the market game and to come out as winners. The following trend is also interesting: the Indian market is getting stronger day by day. These are all factors strategists in our field take into consideration when planning future activities. STADA, within which Hemofarm operates, is also a competitor in this global competition and we are doing everything in our power to adapt to it in the best possible way. Our goal is that STADA becomes one of the strongest global players in the coming period and to this end we are active in several fields. Europe remains in our focus but of course global performance is certainly one of our priorities. Let me say this: 2018 was the most successful year in STADA’s history so we have a lot to be proud of.
Do German companies feel the effects of the imposed fees in trading with Kosovo? Do these fees have an impact on your business?
– Not only German companies, but each company in Serbia which exports its products to the market of Kosovo is affected by the measures of Pristina. The recently published official data have it that at least EUR 90 million less of goods have been sold in Kosovo over the past three months due to the imposing of these enormously large fees to the goods from Serbia. The economy and the companies are suffering losses, the citizens are also suffering huge losses, and this situation is only favourable for smuggling activities. Being the head of a company that manufactures medicinal products, I am particularly annoyed by this situation. It is not about profit, but about health of people. Namely, the imposing of the high fees has predominantly affected the people of Kosovo, patients before all. Since Kosovo imposed the high fees for the products from Serbia, Hemofarm has not been able to provide medicines for the citizens of Kosovo, which Hemofarm had done for years before. This is the reason I appeal for the decision makers to cancel the fees as soon as possible. Thirdly, I would like to add the following: the decision on high fees has negatively affected the creating of the regional economic area as well, to which Germany and AHK invested a great deal of attention over the past years. We heard recently that the waiting on border crossings costs the Balkans one billion of euros each year, and that 80 percent of the time required for transport of goods is spent on border crossings, while only 20 percent is spent on the road. Just imagine the amount of capital being delayed unused! For that reason, as a president of AHK, I speak largely about the Western Balkans regional economic zone and its importance for the counties in this region.
What are your expectations from the Serbian Government with regard to facilitating conditions for doing business?
– In response to this question, I will remind you that AHK conducts annual surveys on business conditions among its member-companies. The results of the last year’s survey have shown optimism of the companies and a positive evaluation of the business climate in Serbia. In this research, German companies were, for example, satisfied with the productivity and motivation of employees, with their qualifications, academic education and costs of labour. German companies are actually those that prove it in practice by their reinvestments. There are Henkel, Continental, Leoni – all of them are the companies that have invested in Serbia again and again, built new factories and plants, hired additional people. I will also mention the example of Hemofarm, the company I lead. Since 2006, Stada Group, a member of which is Hemofarm, has invested EUR 300 million to modernise its operations, equipment and new plants here in Serbia. Soon we are expecting a new annual AKH analysis of the business conditions in Serbia and it is going to provide us the freshest insight into the frame of mind of the German companies operating in Serbia. As it has been the practice until now, the information we arrive at will be available both to the Government and to the general public, and I believe it will be of use for further improvement of business aspects.