INVEST IN SERBIAINVEST IN SERBIA

PRESENTATION OUTLINEPRESENTATION OUTLINE

1. Key Drivers to FDI in Serbia

2. Strong FDI Figures

3. SIEPA Services

KEY COUNTRY DATAKEY COUNTRY DATA

Area: 88,361 km²Population: 9.5 millionCapital: Belgrade (1.7 million)State form: Democratic RepublicPresident: Mr. Boris TadicPrime Minister: Mr. Mirko CvetkovicCurrency: Serbian Dinar (RSD)GDP: €31.51 billion (2009)GDP pc: €4,304 (2009)Internet domain: .rs

KEY DRIVERS TO FDI IN SERBIAKEY DRIVERS TO FDI IN SERBIA

Enhanced Investment Stability

Booming Market Potential

Quality Human Resources

Strategic Geographic Location

Low Overhead Costs

Attractive Investment Incentives

Robust Recent Growth

The SAA with the EU signed in April 2008; membership application submitted in late 2009; acquis communautaire to be adopted by 2012

Serbia’s application for the WTO accepted; accession expected by the first half of 2011

PwC EM20 Index 2008–Serbia as the 3rd most attractive manufacturing and 7th Shared Services location among emerging markets

E&Y European Investment Monitor–nearly 150 new projects in Serbia in 2007, 2008, 2009; Serbia holding the 2nd spot in South East Europe

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

National treatment of foreign companiesFree transfer of financial and other assets, including profits and dividendsBilateral Investment Treaties with more than 30 countriesInvestment projects insured against non-commercial risks by all major national agencies

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

Business legislation reforms in line with the EU legal framework

Key investment-related reforms implemented:- Tax laws, including VAT Law- Business registration: 51 days 5 days- Foreign trade–top reformer in the world for 2006- The new Planning and Construction Law- The new Law on Competition Protection

Key investment-related reforms to be implemented:

- ‘The Guillotine of Regulations’–30% fewer regulations

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

The new Law on Planning and Construction:

- Freehold ownership of land

- Improved license issuing

As of May 2009, business registration done in up to 5 days

All common company forms available

ENHANCED INVESTMENT ENHANCED INVESTMENT STABILITYSTABILITY

BOOMING MARKET POTENTIALBOOMING MARKET POTENTIAL

Duty-free access to a 1 billion people market:

Customs-free exports to the EU Generalized System of Preferences for exports of 4,650 products to the United StatesFree Trade Agreements with the Russian Federation, Kazakhstan, Turkey, EFTA members, and BelarusFree Trade Agreement (CEFTA) in South East Europe

QUALITY HUMAN RESOURCESQUALITY HUMAN RESOURCES

35,000 university and 2-year college graduates and 75,000 high school graduates yearly Top quality technical education at both high school and university level A wide availability of highly qualified staffStrong command of the English language

QUALITY HUMAN RESOURCESQUALITY HUMAN RESOURCES

Rising unemployment as a result of privatization process layoffs; the unemployment rate particularly high in former, large industrial centers, making a skilled labor force widely availableHeadhunting agencies available in major citiesA 40-hour working week; overtime up to 4 hours/day, 8 hours/weekFlexible working forms available: part-time, work at home, etc.Two major labor unions, chiefly active in former state-owned firms

QUALITY HUMAN RESOURCESQUALITY HUMAN RESOURCES

STRATEGIC GEOGRAPHIC STRATEGIC GEOGRAPHIC LOCATIONLOCATION

Two European transportation corridors: - Corridor X: Salzburg-Thessalonica highway- Corridor VII: The River DanubeA total of €1.7 billion earmarked for further road network development on the Corridor XThe three remaining Corridor X sections to be completed in the next three years

LOW OVERHEAD COSTSLOW OVERHEAD COSTS

Europe’s second lowest Corporate Income Tax rateThe Value Added Tax rate among the most competitive in Central and Eastern Europe

LOW OVERHEAD COSTSLOW OVERHEAD COSTS

The average salary–60% of the level in CEE countries

Tax burden totaling about 65% of the net salary; reduction possible through tax incentives

The 9.4:1 salary ratio by specific industries; 4:1ratio by municipalities

ATTRACTIVE INVESTMENT ATTRACTIVE INVESTMENT INCENTIVESINCENTIVES

ATTRACTIVE INVESTMENT ATTRACTIVE INVESTMENT INCENTIVESINCENTIVES

Tax incentives:A 10-year Corporate Income Tax holiday for investment over €8 million and 100 employeesA 5-year Corporate Income Tax holiday for investment in undeveloped regionsCorporate Income Tax reduction up to 80% of the fixed assets investmentSalary Tax exemptions for employees below 30 and above 45 years of ageSocial insurance charges exemptions for employees below 30 and above 45 years of ageValue Added Tax exemption in Free ZonesCustoms-free imports of equipment and certain raw materials

ROBUST RECENT GROWTHROBUST RECENT GROWTH

ROBUST RECENT GROWTHROBUST RECENT GROWTH

Average exports growth over the 5-year period–33%

Strong exports performance driven by the Food, Textile, Metal, Chemical, Machinery, and Wood industries

Nearly 55% of foreign trade pursued with the European Union

ROBUST RECENT GROWTHROBUST RECENT GROWTH––THE THE CRISIS IMPACTCRISIS IMPACT

The crisis impact cushioned by: a) state-subsidized banking loans, b) active employment measures, c) public investment in infrastructure development

External liquidity secured through the €3 billion Arrangement with the IMF and the Agreement with foreign-owned commercial banks in Serbia

STRONG FDI FIGURESSTRONG FDI FIGURES

Total inward FDI between 2004 and 2008–over €11 billionInward FDI in 2009 reached about €1.8 billionA sharp upward trend in Greenfield projects–130+ such ventures in 2007, 2008, 2009About 70% of FDI stemming from EU countries

LEADING FOREIGN INVESTORSLEADING FOREIGN INVESTORS

SIEPA SERVICESSIEPA SERVICES

Free-of-charge assistance in all investment project stages; the Agency specialized in Greenfield projects An investment portfolio in excess of €1 billion Fiat, Kronospan, Ball Corporation, Grundfos, Knauf among major clients

CONTACT USCONTACT US

SERBIA INVESTMENT AND EXPORT PROMOTION AGENCY

3, Vlajkoviceva St.

11000 Belgrade, Serbia

Phone: +381 11 33 98 55 0

Fax: +381 11 33 98 81 4

office@siepa.gov.rs

www.siepa.gov.rs