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REGIONAL INITIATIVES AND ECONOMIC COOPERATION - PowerPoint PPT Presentation


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2008. THE CONTINUAL GROWTH OF THE REGION. Regional C ooperation on S ocial- E conomic D evelopment in South Eastern Europe Sarajevo, May 15 th , 2008. REPUBLIC OF SERBIA. Ministry of Economy and Regional Development. Velimir Gavrilovi ć, Assistant Minister.

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2008

THE CONTINUAL GROWTH OF THE REGION

Regional Cooperation on Social-Economic Development in South Eastern Europe

Sarajevo, May 15th, 2008.

REPUBLIC OF SERBIA

Ministry of Economy and Regional Development

Velimir Gavrilović, Assistant Minister

regional initiatives and economic cooperation
REGIONAL INITIATIVES AND ECONOMIC COOPERATION
  • Regional Cooperation Council
  • Central European Free Trade Agreement
  • OECD Investment Compact Initiative
  • SEE Investment Committee
  • Business Advisory Council for South Eastern Europe
  • Energy Community of South Eastern Europe
  • Cooperation Process in South Eastern Europe
  • Central Europian Initiative
  • Organization of the Black See Economic Cooperation
  • The Adriatic – Ionian Initiative
  • South Eastern Cooperative Initiative
  • The European Common Aviation Area Agreement
  • Danube Cooperation Process
  • International Sava River Basin Commision
  • Migration, Asylum, Refugees Regional Initiative
cefta
CEFTA

CEFTA (South East Europe Free Trade Area) – market of app. 30 million consumers

██EU member states

██EFTA member states

██CEFTA member states

real gdp growth rate in see countries
Real GDP Growth Rate (%) in SEE Countries

* Estimation

** Projection

*** GDP growth forecasts for 2008 (Source: http://www.ebrd.com/country/sector/econo/stats/gdp.xls)

Source: EBRD Transition Report – update May, 2007

growth comparison with other regions
Growth Comparison with Other Regions

Source: EBRD Transition Report 2007

inflation gdp deflator annual
Inflation, GDP Deflator (Annual %)

Source: The World Bank Group

foreign direct investment net in mil eur
Foreign Direct Investment, Net, in mil. EUR

* Estimate

** Projection

*** EBRD forecasts for 2008 – in millions US $ (Source: http://www.ebrd.com/country/sector/econo/stats/fore.xls)

Source: EBRD Transition Report – update May, 2007

credit ratings of see countries
Credit Ratings of SEE Countries
  • Long Term Issuer Default Rating
  • Country Ceiling for Foreign Currency Bonds - Long Term
  • Credit rating foreign currency

Source: INVESTMENT COMPACT FOR SOUTH EAST EUROPE - REPORT OF ACTIVITIES Paris, France November 2007

transition in the region
Transition in the Region

Three phases of reform:

  • First phase: small-scale privatisation, price, trade and foreign exchange liberalisation
  • Second phase: large-scale privatisation, banking, and non-bank financial institutions
  • Third phase: governance, competition, and infrastructure

Source: EBRD Transition Report 2007

wide variation in reform
Wide Variation in Reform

Source: EBRD Transition Report 2007

strong growth and reforms but deep unhappiness
Strong Growth and Reforms, but Deep Unhappiness
  • Most people strongly committed to democracy but moderately to markets
  • Widespread dissatisfaction
  • Upheaval in labour markets
  • Long-term unemployed
  • Brain drain has serious implication for the future
  • Self employed and skilled more satisfied, support markets

Source: EBRD Transition Report 2007

most p eople p erceive r elative d ecline
Most People Perceive Relative Decline

Source: EBRD Transition Report 2007

weaker support for markets but still positive
Weaker Support for Markets, but Still Positive

Source: EBRD Transition Report 2007

good r esults
Good Results
  • Croatia and FYR of Macedonia are among the top 10 reformers in the World Bank’s Doing Business Report for 2007 and Serbia topped this poll in 2006
  • Anti-corruption measures in the region are recognized and are resulting in SEE countries moving further up Transparency International’s ratings
  • All the countries in the region have managed to catch the EU accession train with SAA signing
  • SEE is increasingly perceived as a good destination for investment
southeast europe attractiveness survey

Southeast Europe Attractiveness Survey

ERNST & YOUNG RESEARCH… April 2008

216 directors from around the world were asked whether they find a certain country from Southeast Europe attractive for investment.

62% of directors were from Western Europe, 17% from North America, 9% from Southeast Europe, 5% from Asia, 4% from Central and East Europe and 3% from the rest of the world.

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Criteria used for grading: labor costs and skill level, domestic market, transport, logistic and telecommunication infrastructure, quality of life, transparency and stability, corporation tax rates, cost of land and related regulations, flexibility of labor regulations, potential productivity increase, foreign directors treatment, specific language and cultural capabillity.

67% directors found business environment significatively improved in the region in the past 3 years.

43% of interviewed directors expressed their interes to continue investing in the region.

Southeast Europe Attractiveness Survey

see survey country r anking
SEE Survey Country Ranking
  • Croatia and Bosnia and Herzegovina were not included in last years survey while Moldova was.* Source: Croatian National Bank
attractiveness of the european regions for potential investors
Attractiveness of the European Regions for Potential Investors

Source: Ernst & Young Southeast Europe Attractiveness Survey 2008 – 102 international executives

costs and productivity drive attractiveness
Costs and Productivity Drive Attractiveness

Source: Ernst & Young Southeast Europe Attractiveness Survey 2008 – 216 international executives

labor intensive activities dominate
Labor Intensive Activities Dominate

Source: Ernst & Young Southeast Europe Attractiveness Survey 2008 – 216 international executives

a leading destination for shared services centers scc
A Leading Destination for Shared Services Centers (SCC)

Source: Ernst & Young Southeast Europe Attractiveness Survey 2008 – 216 international executives

weaknesses in quality and infrastructure
Weaknesses in Quality and Infrastructure

Source: Ernst & Young Southeast Europe Attractiveness Survey 2008 – 216 international executives

knowledge based activities generate low interest
Knowledge Based Activities Generate Low Interest

Source: Ernst & Young Southeast Europe Attractiveness Survey 2008 – 216 international executives

favourable tax regime
Favourable Tax Regime

Corporate Profit Tax Rates

Montenegro9%

Serbia10%

Bulgaria10%

Romania 16%

Hungary16%

Poland 19%

Croatia 20%

Czech Republic 21%

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Favourable Tax Regime

Personal Income Tax Rates

Bulgaria 10%

Serbia 12%

Montenegro 15%

Romania16%

Hungary 18-36%

Poland 19-40%

Croatia 15-45%

Slovenia16-41%

is policy reform making a difference to the investment environment in south east europe
Accession to the European Union (EU) is a strong impetus, but more could be done to achieve far-reaching policy reform.

Reforms are not proceeding at the same pace and some SEE countries still need to make further efforts in establishing the basic legal and institutional framework for key policy dimensions related to investment.

Policy inconsistencies send conflicting signals to investors.

The gap between the leading reformers in the region, and other SEE countries is widening.

Time is running out for the region to achieve its full investment, growth and employment potential.

Is Policy Reform Making a Difference to the Investment Environment in South East Europe?

Source: Progress in Policy Reforms to improve the Investment Climate in South East Europe - Investment Reform Index 2006

the region needs better
THE REGION NEEDS BETTER:
  • Policy consistency
  • Public governance – regulatory reform, anti-corruption, competition
  • Judiciary
  • Title to land regulation
  • Investments in knowledge
  • Response on other economic, social and security challenges
the region needs more
THE REGION NEEDS MORE:
  • Greenfield investments
  • Government’s investments in infrastructure
  • Exports
  • FDI – SME linkages
  • Intraregional trade and investment
  • Energy efficiency
  • Renewable energy
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THANK YOU

FOR YOUR ATTENTION

Ministry of Economy and Regional Development of the Republic of Serbia

www.merr.sr.gov.yu

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