Eco­nomic, in­sti­tu­tional re­forms draw steadily more for­eign in­vestors to SEE

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Is the SEE re­gion at­trac­tive for in­vestors? Why?

As a pool of emerg­ing mar­kets with strong growth po­ten­tial, the SEE coun­tries have firmly po­si­tioned them­selves on the map of at­trac­tive in­vest­ment lo­ca­tions. We see steadily grow­ing num­bers of for­eign in­vestors in Albania, Bos­nia and Herze­gov­ina, Croa­tia, Kosovo, FYR Mace­do­nia, Mon­tene­gro and Ser­bia, drawn pri­mar­ily by the re­gion's in­sti­tu­tional and eco­nomic re­forms. Com­pet­i­tive ad­van­tages such as low labour costs, cheaper raw ma­te­ri­als, sig­nif­i­cant growth po­ten­tial, prospects for pri­vati­sa­tions, low do­mes­tic com­pe­ti­tion, and favourable tax in­cen­tives have in re­cent years helped the re­gion draw in­vestor in­ter­est. Do­ing busi­ness in SEE has be­come much eas­ier.

Which in­dus­try sec­tors are the most at­trac­tive for investments in SEE?

Some of the main in­dus­tries, where sig­nif­i­cant growth and devel­op­ment has al­ready been ac­knowl­edged, in­clude banking, en­ergy and telecom­mu­ni­ca­tions. With tax sys­tems that of­fer a plethora of ad­van­tages to for­eign in­vestors, like for ex­am­ple cor­po­rate in­come tax rates from 9% to 20%, cer­tain in­dus­try sec­tors pro­vide ad­di­tional in­cen­tives. Tourism and en­ergy are of par­tic­u­lar in­ter­est in Albania and Mon­tene­gro, nat­u­ral re­sources in Ser­bia, agri­cul­ture in Bos­nia, IT in Croa­tia and Kosovo, and cloth­ing and auto parts in FYR Mace­do­nia. Most of the SEE coun­tries also have an ex­ten­sive net­work of free zones, where fur­ther tax in­cen­tives and ex­emp­tions ap­ply, like a 10-year cor­po­rate tax break in FYR Mace­do­nia's free zones and VAT ex­emp­tion in one of Ser­bia's 12 free zones. It is worth not­ing also the ma­chin­ery and equip­ment VAT pay­ment de­fer­ral of up to 12 months in Albania, as well as Mon­tene­gro's flat 9% cor­po­rate in­come tax rate, one of the low­est in Europe.

What are the ad­van­tages and dis­ad­van­tages

of SEE for fu­ture in­vestors?

A ma­jor ad­van­tage is the con­tin­u­ous align­ment of leg­is­la­tion to EU norms, with more work to be done. While the re­gion is fac­ing cer­tain chal­lenges - in terms of bi­lat­eral co­op­er­a­tion and in­fra­struc­ture net­works - the com­mon vi­sion of EU mem­ber­ship keeps it firmly on the path of per­pet­ual growth.

In the past, po­lit­i­cally driven ra­tio­nale and the un­der­de­vel­oped in­fra­struc­ture of­ten made do­ing busi­ness in SEE dif­fi­cult. Also, trade be­tween the SEE coun­tries was lim­ited and each coun­try would in­di­vid­u­ally look out for its own in­ter­ests by fo­cus­ing on do­ing busi­ness with part­ners across the globe.

But this is chang­ing! The re­gion, shar­ing sim­i­lar reg­u­la­tory frame­works and a com­mon vi­sion of EU in­te­gra­tion, had no need to rein­vent the wheel in in­sti­tu­tional and eco­nomic re­forms, but just to in­sti­tute prac­tices that have al­ready been suc­cess­fully im­ple­mented in other parts of the world. Once it was un­der­stood that com­pet­i­tive economies can­not sur­vive in iso­la­tion and build­ing in­ter­de­pen­dency with neigh­bours is es­sen­tial, the coun­tries in the re­gion started en­cour­ag­ing in­vest­ment and trad­ing links across bor­ders.

What are your ex­pec­ta­tions for the devel­op­ment of SEE in the near to medium term?

Do­ing busi­ness in South­east Europe has be­come much eas­ier and ap­peal­ing to in­vestors. Euro­fast has grown along with the re­gion, which gave us the in­valu­able com­pet­i­tive ad­van­tage of in-depth knowl­edge and first­hand ex­pe­ri­ence of the re­gion. This is the rea­son why we en­cour­age busi­ness­men to se­ri­ously con­sider ex­pand­ing abroad and ex­port­ing their prod­ucts and ser­vices. Be­ing a reli­able re­gional part­ner, who has it­self de­vel­oped and grown or­gan­i­cally through­out the years, we are in a per­fect po­si­tion to guide our clients and as­so­ciates in the mar­kets we are present in.

Panos Dial­li­nas, Re­gional Di­rec­tor, Euro­fast

Euro­fast is a busi­ness ad­vi­sory em­ploy­ing over 200 ad­vi­sors at 21 of­fices in South­east Europe (SEE) and the Mid­dle East. With over 28-year ex­pe­ri­ence, hav­ing worked with many global brands and lead­ing in­sti­tu­tions, op­er­at­ing in the man­u­fac­tur­ing,...

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