Investments stable, headcount number on decrease - German companies do not feel effects of started reforms in Serbia

German companies operating in Serbia see this year with less optimism than last year. Expectations are more modest with respect to business development as well. New hires this year are planned by only the third of German-Serbian companies (every second one in 2014), while, similar as last year, 39% firms wants to invest more in 2015. When asked whether they would invest again in Serbia, 88% firms answered they would. Positive answer, however in 2014, was provided by 92% of firms.

These are some of the most important indicators of the Poll on business environment in Serbia for 2015 conducted by the German-Serbian business association (DSW).
At today’s presentation of results in Belgrade, Martin Knapp, the head of the Delegation of German trade in Serbia, said that 101 firms participated in the poll which has been the biggest number so far.

- Germany is one of the most important foreign trade partners of Serbia, With an increase of German-Serbia goods exchange of 6,1% compared to previous year, turnover of EUR 2,96 billion was generated and thus it is nearing an amount of EUR 3 billion – Knapp said, reminding that some 370 firms with German capital operates in Serbia, , employing more than 25.000 people.

For this year, Knapp announced, set up of German-Serbian chamber of commerce was planned, the first bilateral chamber in Serbia which will comprise the Delegation of German trade in Serbia and the German-Serbian business association with its 300 members. Knapp announced for June 9 a big meeting in Munich , a chance for Serbian companies to present to German ones. As he outlined, German companies find particularly interesting processing sector and that “steps have been taken to find adequate Serbian companies which would be suppliers for German ones”.

Dr. Ronald Seeliger, president of the German-Serbian business association and GM at Hemofarm, presented poll results conducted in February this year.

- Taking into an account this year’s and last year’s results, estimation of overall situation in economy of Serbia is identical. Two thirds of surveyed companies expect worse business situation this year. Out of 100 companies in the poll, only 10% expects improvement in 2015 compared to 2014. Just like in previous years, there is no specific hope for economic growth and this attitude has remained stable since the world crisis begun in 2008/2009.

Companies, members of the German-Serbian association, are moderately optimistic when it comes to economic perspective. The attitude of many is that specific results of reforms which the Government of Serbia started implementing last year, are not completely visible yet. Some 42% of the surveyed estimates the process of reforms as unsatisfactory. However, 44% think the process does not run in the satisfactory manner. Only 14% company reps estimates the process as a good one.

Dosage of optimism is generated through the data that companies estimate their own business as better than general economic environment. Their own business, one third of the companies estimated as good, almost 60% as satisfactory, and only 4% is not satisfied. Less than a half of surveyed expects improvements in their companies, and 50% forecasts unchanged business situation. Only 7% think situation will deteriorate compared to 2014.

Expectations are modest when it comes to new hires. In 47% firms, they do not expect headcount number change this year. But, double number of surveyed companies than in 2014, 17% estimates headcount decrease. Similar as in the previous year, 39% companies want to invest more than in 2015. Still, 22% of them estimates there will be investments decrease this year. The figure is a bit higher than in last year’s poll. Within the poll conducted in 16 countries of MEE, participants estimated other countries in the region as well. In the category of desirable business location, Serbia ranked 11 out of 20 countries.

-We have to observe Serbia in international framework, we are here because we have good results and they can be better –Ziliger said.

Despite the problems which were mentioned, 88% firms provided positive answers to the question of whether they would invest in Serbia again (92% u 2014) and the companies which have already been operating in Serbia have better opinion of Serbia than the companies which have never run business here.

The head of the Delegation of German trade in Belgrade, Martin Knap said there are no signs significant German companies operating in Serbia would leave our country. Still, he warned that it should be taken into account that the region stepped into competitiveness strengthening , outlining that three German investors late last year, when they considered business environment in Serbia, pick up to invest in, not in Serbia.

Unlike legal safety, economic policy, public administration and transparency at tenders for public procurements which had the worst average rating upon evaluation in the poll, satisfactory grades were given to criteria which refer to labor market in Serbia: German-Serbian companies are satisfied with productivity, staff motivation, their qualifications, academic background and general availability of experts.
German-Serbian business association carried out the poll on business environment in Serbia for the fifth time.

I.B.