Foreign Investors Council: Of around 400 last year’s recommendations for improvement of business climate in Serbia, progress made in only 23%

The Foreign Investors Council (FIC), which gives recommendations to the Government of Serbia for improving the business climate in the country, has once again given the highest rating for the progress made in the field of digitization and electronic operations, according to the publication White Book 2024, which was presented on Friday.

In the new, 22nd White Book, which contains 451 new recommendations for the improvement of operations in 10 priority fields, when it comes to the results made between November 2023 and October 2024, the pharmaceutical industry and the fight against illegal trade and inspection supervision also placed high.

In this year’s edition of the White Book, it is said that, of the total of 397 last year’s recommendations for the improvement of operations, there has been no progress in 77% of the cases, whereas progress has been made in 23%, with the progress deemed significant in 7% and moderate in 16% of the cases.

Based on the realized results, each field gets a grade of one (lowest) to three (highest).

The average grades in the 10 priority areas, according to this year’s White Book, are: 2.29 for digitization and electronic operations, 1.70 for the pharmaceutical industry, 1.55 for environmental protection, 1.33 for FX operations, 1.29 for fighting illegal trade and inspection supervision, 1.23 for real estate and construction, 1.1 for taxes, 1.09 for labor force, and 1 for the fields of food and agriculture, as well as tourism and hospitality.

In the section which considers digitization and electronic operations, it is pointed out that all companies in Serbia have been given a unique eBox which is linked with the address of the company registered with the Serbian Business Registers Agency.

Also, within the regional initiative Open Balkan, on the eGovernment portal, the service of the Open Balkan Identification Number has been enabled, so the citizens of Serbia who have a digital identity on the portal can generate this identifier which they will use for the services of e-government in North Macedonia and Albania and vice versa.

The work on the Strategy of Development of Artificial Intelligence in Serbia for 2024-2030 and on amendments to the Law on Electronic Government and the Law on Electronic Document, Electronic Identification and Trust Services in Electronic Business has started.

Increasing information security among priorities

The main recommendations for this field pertain, among other things, to increasing the information security of the public administration and public enterprises, the adoption of the new Law on Information Security and the harmonization with the EU directives, as well as the Law on Artificial Intelligence, which will regulate the implementation of this technology so as to enable the further development of innovations while honoring human rights and freedoms.

It is also recommended to reduce the costs of the electronic archiving of the documentation of companies through changing the regulations, which would exclude the majority of business documentation, because, as said, it is not of significance for culture, art, science and other categories of the Law on Archival Material and Archival Activities.

The White Book estimated that, in the field of labor, the beginning of the implementation of the simplified process of obtaining the single residence and work permit, as well as the adoption of a part of the bylaws to the Law on Occupational Health and Safety, was a considerable improvement.

Labor Law needs to be amended

As the main recommendations for the coming period, it is said that the key laws in the field of labor need to be amended, such as the Labor Law, and that all the bylaws which pertain to occupational health and safety need to be adopted. It is pointed out that the amendments should enable digitization in the administration of employment documents, more flexible conditions of labor outside the employer’s premises, the rationalization of the structure and the calculation of the salaries, as well as the specification of certain bases for the termination of employment.

The FIC believes that the biggest improvements in the field of real estate and construction, in the period between November 2023 and October 2024 were amendments to the Law on Planning and Construction, which removed the conversion of building land with a fee for certain subjects and defined the concept of green building and introduced the e-Space system.

Among the main recommendations for the coming period are the issuing of building permits within a unified procedure with a suitable content which would enable the registration of the ownership rights without an additional loss of time and expenditure of funds for the obtaining of additional documentation and their ex officio implementation.

In the field of fighting illegal trade and inspection supervision, the White Book positively rates the beginning of the implementation of the System for Electronic Exchange of Invoices (e-invoice), as well as the previous introduction of e-fiscalization, which have contributed to the fight against the shadow economy.

Specialization for judges for corporate violations should be introduced

The main recommendations for the future are the introduction of the specialization for judges for corporate violations, as well as the improvement of the system of fiscal charges for companies which operate in Serbia through the preparation of a register of valid fees for the purpose of a further control of parafiscal charges.

It is also pointed out that, in the previous period, no progress was recorded in the field of food and agriculture, and the main recommendations are to secure the harmonization of the Law on Food Safety and the regulations with the regulatory framework of the EU, as well as to implement a transparent and all-encompassing system of risk analysis for all inspection services, supported by a functional IT system and digital supervision.

According to the FIC, it is also necessary to adopt the new Law on Sanitary Supervision and the regulations for inspection work, harmonized with the Law on inspection Supervision and the EU regulations, as well as the Law on Official Controls modeled after the EU regulation.

Environmental impact assessment

As the main recommendation for the field of the living environment, the White Book says that it is necessary to soon adopt the Law on Environmental Impact Assessment so as to secure harmonization with the EU standards.

It is also added that Serbia has to accelerate the implementation of its plans for air quality and boost the monitoring systems in order to reduce air pollution levels, as well as to improve the waste management practice, that is, to increase the efforts of increasing the sorting of waste at the source and to remove illegal landfills.

The members of the FIC also believe that the trend of the availability of innovative medicines is encouraging, but warn that the introduction of innovative medicines in the list of medicines should not be a one-off investment, but that it is necessary for the therapy funds to be secured continuously every year. It is also pointed out that it is necessary to secure stable financing of generic medicines as well, with the expansion of the indications with a targeted transfer of the budget funds toward the NHIF, thereby compensating for their lack in the financial plan of the NHIF.

The main recommendations for the field of tourism and hospitality are to adopt the new Tourism Development Strategy and change the concept of the management of tourism destinations, as well as to introduce a new methodology for the assessment of the FX inflow of the tourism sector through the implementation of the methodology of satellite accounts in tourism.

Also, as added, it is necessary to amend the Law on Simplified Work in seasonal jobs and certain activities, to the end of expanding the encompassed activities to the sector of tourism and hospitality, as well as to amend the Law on the Value Added Tax for the purpose of expanding the activities that would be taxed according to a special, lowered rate for the purpose of increasing the competitiveness of Serbia as a tourism destination.

The FIC has 118 members, which operate in 23 sectors of the economy, and which have so far invested more than EUR 45 billion in Serbia, while directly employing around 116,000 people.

FIC-Savet stranih investitora

Agencija za privredne registre Beograd

FIC

SBRA

White Book

business climate in Serbia

business climate improvement

recommendations for improving business

foreign investors

digitization

FX operations

illegal trade

inspection supervision

Law on Electronic Government

artificial intelligence

Law on Information Security

Law on Occupational Health and Safety

Labor Law

Law on Planning and Construction