SERBIASERBIA––NEW NEW INVESTMENT HOT SPOTINVESTMENT HOT SPOT

PRESENTATION OUTLINEPRESENTATION OUTLINE

1. Key Drivers to FDI in Serbia

2. Strong FDI Figures

3. SIEPA Services

KEY COUNTRY DATAKEY COUNTRY DATA

Area: 88,361 km²Population: 9.5 millionCapital: Belgrade (1.6 million)State form: Democratic republicPresident: Mr. Boris TadicPrime Minister: Mr. Mirko CvetkovicCurrency: Serbian Dinar (RSD)GDP: €34.26 billion (2008)GDP pc: €4,651 (2008)Internet domain: .rs

KEY DRIVERS TO FDI IN KEY DRIVERS TO FDI IN SERBIASERBIA

Enhanced Investment Stability

Booming Market Potential

Quality Human Resources

Strategic Geographic Location

Low Overhead Costs

Attractive Investment Incentives

Robust Recent Growth

The SAA with the EU signed in April 2008; membership candidacy announced for late 2009; accession preparations to be over by 2012

Serbia’s application for the WTO accepted; accession likely by mid-2010

PwC EM20 Index–Serbia as the 3rd most attractive manufacturing and 7th Shared Services location among emerging markets

E&Y European Investment Monitor–over 100 new projects in Serbia in 2007, 2008; Serbia holding the 2nd spot in South East Europe

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

National treatment of foreign companiesFree transfer of financial and other assets, including profits and dividendsFew restrictions on foreign investment

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

Business legislation reforms in line with the EU legal frameworkKey investment-related regulations adopted:- Tax laws, including VAT Law- Business registration: 51 days 5 days- Foreign trade–top reformer in the world for 2006- The new Planning and Construction LawKey investment-related regulations to be adopted:- ‘The Guillotine of Regulations’–30% fewer regulations- The amended Law on Bankruptcy

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

City building land still in state ownership; land lease term–up to 99 years, with land fees varying at the local levelThe new Law on Planning and Construction:- Freehold ownership of

land- Improved license

issuanceAs of May 2009, business registration done in 5 daysAll common company forms available

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

BOOMING MARKET BOOMING MARKET POTENTIALPOTENTIAL

Duty-free access to a 1 billion people market

A member of CEFTA in South East Europe–one of Europe’s fastest growing regions with 29 million consumers

The only country outside the Commonwealth of Independent States with a Free Trade Agreement with Russia

A preferential trade regime with the EU and USA for most products and services

FTAs with Belarus, Turkey inked, negotiations with EFTA members ongoing

QUALITY HUMAN QUALITY HUMAN RESOURCESRESOURCES

A 15% annual upsurge in the number of graduatessince 2004 Top quality technical education at both high school and university level A wide availability of highly qualified staffStrong command of the English language

QUALITY HUMAN QUALITY HUMAN RESOURCESRESOURCES

Rising unemployment as a result of privatization process layoffs; the unemployment rate particularly high in former, large industrial centers, making a skilled labor force widely availableHeadhunting agencies available in major citiesA 40-hour working week; overtime up to 4 hours/day, 8 hours/weekFlexible working forms available: part-time, work at home, etc.Two major labor unions, chiefly active in former state-owned firms

STRATEGIC STRATEGIC GEOGRAPHIC LOCATIONGEOGRAPHIC LOCATION

Two European transportation corridors: - Corridor X: Salzburg-Thessalonica highway- Corridor VII: The River Danube

A total of €1.6 billion earmarked for further road network development on the Corridor XThree major Corridor X sections to be completed in the next three years

LOW OVERHEAD COSTSLOW OVERHEAD COSTS

LOW OVERHEAD COSTSLOW OVERHEAD COSTS

The average salary–50% of the level in CEE countries

Tax burden totaling about 65% of the net salary; reduction possible through tax incentives

The 8:1 salary ratio by specific industries; 4:1 ratio by municipalities

ATTRACTIVE ATTRACTIVE INVESTMENT INVESTMENT INCENTIVESINCENTIVES

Financial incentives:Automotive, Electronics, IT: up to 25% of the total investment

The minimum investment amount–€200 million and 1,000 employees

Production: from €2,000 up to €5,000 per new job createdThe minimum investment amount–between €1 million and €3 million and 50 employees

Services: from €2,000 up to €10,000 per new job createdThe minimum investment amount–€0.5 million and 10 employees

R & D: from €5,000 up to €10,000 per new job createdThe minimum investment amount–€0.25 million and 10 employees

ATTRACTIVE ATTRACTIVE INVESTMENT INVESTMENT INCENTIVESINCENTIVES

Tax incentives:A 10-year corporate profit tax holiday for investment over €7 million and 100 employeesCorporate profit tax reduction up to 80% of the fixed assets investmentCorporate profit tax reduction of 100% of the gross salary for new employeesSalary tax exemptions for employees under 30 and over 45 yearsSocial insurance charges exemptions for employees under 30 and over 45 yearsCustoms-free imports of equipment and certain raw materials

ROBUST RECENT ROBUST RECENT GROWTHGROWTH

ROBUST RECENT ROBUST RECENT GROWTHGROWTH

Average exports growth over the past 5 years–33%

Strong exports performance driven by the food, textile, metal, chemical, machinery, and wood industry

Nearly 55% of foreign trade pursued with the European Union

STRONG FDI FIGURESSTRONG FDI FIGURES

Total inward FDI since 2004–over €11 billionBanking, telecommunications, other services accounting for a major portion of FDI influxA sharp upward trend of Greenfields–100+ such projects in 2007 and 2008About 70% of FDI stemming from EU countries

LEADING FOREIGN LEADING FOREIGN INVESTORSINVESTORS

SIEPA SERVICESSIEPA SERVICES

Free-of-charge assistance in all investment project stages; the Agency specialized in Greenfield ventures An investment portfolio in excess of €1 billion Embassy Group, Coca-Cola, JTI, Ball Corporation, Grundfos, Knauf among major clients

CONTACT USCONTACT US

SERBIA INVESTMENT AND EXPORT PROMOTION AGENCY

3, Vlajkoviceva St.11000 Belgrade, Serbia

Phone: +381 11 3398 550Fax: +381 11 3398 814

E-mail: office@siepa.gov.rswww.siepa.gov.rs