Seven new investors in free zones in Serbia until the end of 2016 – Investments of around EUR 70 million expected in the next two years

(Photo: Privredna Komora Srbije)

- It's hard to estimate what the value of these investments will be, but according to the data we have, investments in the amount of EUR 70 million and the employment of around 5,000 workers are expected in the next two years – Milan Ristic, chairman of the Free Zone Administration, says for eKapija.

This, as our interviewee points out, leaves out the Chinese investments in Zelezara Smederevo, which will also operate under this regime.

Fourteen free zones are currently operational in Serbia, which, according to Ristic, is sufficient, so the opening of new ones hasn't been planned. Nevertheless, the investors will have new capacities at their disposal, since the expansion of the area of the existing ones has been planned.

Free Zone Novi Sad will get an additional 14 ha, and the new parcels will be available to the investors at the beginning of August. The total turnover of goods in this free zone in 2015 amounted to EUR 92,025,483.00, whereas the value of export reached EUR 16,268,385.00, which is 24.51% higher than in 2014.

In two months, 7 manufacturing clients and 52 trading clients will be operating across a total of 89 hectares of Free Zone Novi Sad, and the zone's most recent resident is the company Alex Chi Fashion, which announced that it will equip and put into operation the clothing production program and employ 200 workers this September.

- We can confirm with certainty that 200 new workplaces will be opened by the end of the year, although we expect the number to be much higher, based on the negotiations we are having – Novi Sad Free Zone points out and adds that, in the last two years, the interest of Italian and Turkish companies has grown.

The interest in Free Zone Pirot hasn't let up either. It will be expanded in the next two months, as will be Free Zone Svilajnac. Free Zone Pirot, which has consistently placed among the top 50 in the world for the past two years according to Financial Times surveys, says for eKapija that the future 4 ha expansion is meant for both new and old investors, namely: Tigar Tyres (car tire production), Irelly d.o.o. (wood processing) and Parga (metal constructions and machine processing).

- We are also negotiating with new companies from Turkey and Italy and we expect that the expansion of the number of the zone's clients will lead to the opening of around 140 workplaces.

Belgrade is also ready for investors. As it has been confirmed to eKapija by the Free Zones Administration, the location Baric, within Free Zone Belgrade, where the company MEI TA Industries is supposed to start its investment activities, should receive the authorization for the beginning of operation by the end of this year.

The availability of land fully equipped with the necessary infrastructure, the foreign trade agreements which enable the entrance to a market of around a billion residents and the favorable geographical position are seen as the main advantages which make free zones in Serbia competitive, whereas the exemption from customs duties and value-added tax on processed materials, equipment and the consumption of energy-generating products are cited as the biggest advantages of operating in free zones.

The fact the Serbia, due to the shortage of budget money, charges the companies operating in free zones with income tax of 15%, which competitors like Turkish and Macedonian zones don't, has earlier been cited as an obstacle to drawing a larger number of investors to free zones in Serbia.

The chairman of the Free Zones Administration says that they think that the number of investors in free zones might increase if producers were fully or partially exempt from paying income taxes for legal entities, but that the stable political situation in Serbia makes local free zones comparatively more attractive than those in Turkey or Macedonia.

- The fact that there's an increasing number of Turkish investors in Serbia, who are above all interested in working in free zones, speaks in favor of this – Ristic says.

Active free zones in Serbia made a turnover of around EUR 5 billion in 2015, which is higher by 97% relative to last year. More than 200 multinational companies, which employ over 20,000 people, operate within them and the total investments in free zones in 2015 amounted to over a billion euros. The export of goods from free zones is increasing year by year and makes up 20% of Serbia's total export.

Ivana Bezarevic