In the next period, the state’s measures must be directed at encouraging investments in areas that have been recognized at the EU level as key in the coming decades, such as the development of new technologies and renewable energy sources.
We have talked to Vlatko Sekulović, an attorney at the Sekulović Law Firm and a member of the Managing Board of the Italian-Serbian Chamber of Commerce, about the effect that the coronavirus had on the arrival of foreign investors and legal regulations in Serbia.
According to your estimates, how will the whole situation with the COVID-19 pandemic affect the arrival of foreign investors in Serbia?
The COVID-19 pandemic affected the movement of people worldwide, so, for example, air traffic between the US and the EU is still suspended. The movement of investors is therefore limited by various measures implemented by individual countries. Certainly, this situation does not benefit the arrival of foreign investments in Serbia, nor new cross-border investments anywhere in the world. As the situation becomes less strict, which we all hope for, greater mobility of people will ensure the continuation of investments. This especially refers to those investments that imply locating a certain production in Serbia, which require that executives from an investment company need to experience the conditions under which they can invest in our country. In other words, investments made via financial transactions are less sensitive to restrictions on freedom of movement, and those involving the construction of new production facilities are more susceptible to the negative effects of the COVID-19 pandemic.
What other measures could the state implement to reduce the economic consequences (of the pandemic)?
According to comparable data and based on the opinions of relevant financial organizations, Serbia applied a set of measures that has somewhat eased the economic situation, while taking upon itself to cover the cost of payroll tax and contributions which are public revenue. This measure had a significant economic and psychological effect, whereas in a situation rife with fear caused by an unknown disease, the state functions as a system of risk dispersion, thus reducing anxiety among both employees and employers. In the next period, the state’s measures must be directed at encouraging investments in areas that have been recognized at the EU level as key in the coming decades, such as the development of new technologies and renewable energy sources.
“Certainly, this situation does not benefit the arrival of foreign investments in Serbia, nor new cross-border investments anywhere in the world”
Domestic legislation has largely been harmonized with the EU standards. What are the key challenges in the functioning of the legal framework?
As is often the case with this area, at least as far as the economy is concerned, the main challenge is still the implementation of the law. We have to increase the efficiency of courts, especially higher ones, as well as to have courts share a common stance not only based on decisions of the highest judicial bodies, but also at the level of appellate courts. We are faced with the practice whereby two different councils of the same appellate court have different views in cases that are factually and legally exactly the same. Regarding specific changes in the legal framework, we need to harmonize or replace various bylaws, e.g. regulations governing certain technical aspects, which have not been changed since the 1970s.
What advice will you give to your clients in the future regarding potential investments in Serbia?
Bearing in mind that Italy, through specialized financial institutions, has earmarked significant funds under extremely favourable conditions for Italian companies intending to invest abroad, it is certain that potential investors have even better conditions for the realization of their business ideas in Serbia, so we are definitely going to focus our advice on that aspect.