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Serbia - Construction & Materials
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Date: 31-07-2011. - By

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Question: STRABAG is one of the leading Austrian companies working in Serbia, can you tell us more about the market entrance and your strategy on Serbian market?

Dragan Pavelic: From its home countries Austria and Germany STRABAG is active in most of Eastern European countries. The Balkans belong to the regions most negatively affected by the financial and economic crisis. Nevertheless, STRABAG continues doing business in these countries as we are convinced that the economy will improve soon. STRABAG d.o.o. Belgrade started its building construction activities on the Serbian market in 2002. In 2005 the Transportation Infrastructure segment was introduced. Today, STRABAG is active in the Transportation Infrastructures segments as well as in the fields of environmental technology and raw materials. The Serbian market has great potential to grow and this is where we see our place in the future.

Question: STRABAG is realizing several infrastructure projects in Serbia, can you tell us more about this and also about your strategy for future business development?

Dragan Pavelic: We have several projects that are ongoing, such as:

 -Gazela bridge reconstruction
 -Belgrade highway and bypass project – design and construction of sections on motorway E75
 -Reconstruction of regional road R-101 section Obrenovac – Ub
 -Reconstruction of magistral road M5 section Selište – Lubnica
 -Reconstruction of river Sava embankment in Mačva
 -Strengthening of right-bank embankment on Begej canal

 Recently finished projects include:
 -Construction of pump station, pipeline and water reservoir in Petrovac na Mlavi
 -Pump station, pipeline and water reservoir in Požarevac

Our company offers the entire range of infrastructure services such as railway construction, bridge and tunnel construction. Concession projects are also part of the repertoire. And our strategy for future business development is to perform works of the best quality and strengthen our position on the Serbian market.

Question: What are the key competitive advantages of Serbian market, what are the main obstacles for doing business?

Dragan Pavelic: There are clear advantages of Serbia as investment destination such as the geo-strategic position in South East Europe, a number of free trade agreements, natural resources, process industry and tourism, better investment climate, numerous tax and financial incentives for foreign investors.

Some of recognized weaknesses of Serbia which diminish attractiveness of local environment for foreign investments are: telecommunication infrastructure, transport and logistics infrastructure, quality of life, corruption, transparency and political stability, social climate, monopolistic behavior on the market, availability and quality of research and development. There are also unresolved questions about acquiring Construction land and restitution of private ownership of land, expropriated after World War II by the state.

Question: How do you evaluate the skills of Serbian labor force and administration effectiveness, considering the fact that these two factors are within the FDI attractiveness scale?

Dragan Pavelic: The quality of Serbian intellectual capital originates from educational system, which is generating well-educated, skilled, fast-learning, multilingual people, who are technically and IT literate. The challenge for Serbia is to provide fair conditions for public contracts in the market and improve transparency and good governance within the Serbian public administration as well as to improve the administrative capacity. Improvement of the state and local administrations and relevant administrative procedures would significantly strengthen the competitiveness of the Serbian economy.

Question: How do you evaluate the competiveness of Serbia in terms of infrastructure level development, what are your experiences from other regional markets, what is left to be done?

Dragan Pavelic: For the past decade Serbia has been emerging from a difficult period - isolation, sanctions, war, economic difficulties. Rebuilding the country’s economy has been very difficult in all sectors. Poor infrastructure, especially railroads and roads, has been identified as one of key limitations to greater investment and economic development. In this sense, the completion of priority transportation projects – such as Corridor 10 and the Belgrade motorway bypass – is essential, as is a major rehabilitation and improvement of the railroads network.

Question: Serbia is identified by many investors as Emerging market and Sourcing| Outsource location, what would be your message coming from years of experience in assisting Serbian economy ?

Dragan Pavelic: Serbia belongs to a category of small open economies, with an average level of national income. The long-term sustainable economic growth depends on a large extent on integration into international markets and increase in exports. International markets offer deep and relatively inflexible demand necessary for maintaining economic growth over a longer period. Besides this, demand enables a country to specialize for production of specific goods and services. Integration of the local economy into global markets, big companies and their supply chains, enable transfer of technologies, processes and ideas. Countries which are better integrated into global trends are provided with an opportunity to more rapidly absorb the knowledge required for further growth. The factors relevant for successful integration of a country into the world economy are related to the quality of the local business climate, macroeconomic and political stability, judiciary system efficiency, infrastructure quality as well as competent labor. Sustainable and accountable public finances are the keystone for broader market-oriented reforms, strong growth and poverty alleviation and successful re-integration into the European and global economic structures. All these factors jointly make a country more or less competitive at international level.

Misi Vallo
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