JELENA CORSOVIC

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Improved Serbian Business Environment and

Opportunities for Investors

April, 2015

Improved Serbian Business Environment Content

Business Environment and Opportunities

Privatization Process

Political Overview and Economic reforms

Forecasts

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Political Overview and Economic reforms

April, 2015

POLITICAL OVERVIEW:

Very stabile government, constituted on April 27,

2014

Prime Minister

Aleksandar Vucic,

Serbian Progressive

Party

Pro EU Government

In January 2014 Serbia started the EU membership negotiations.

Screening process successfully completed

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Government goals:

New Labor Law Bankruptcy Law

Law on Inspections Oversight entered Parliamentary

procedureLaw on Planning and Construction

Developing eGovernment Increase predictability of fiscal and para–fiscal burden

Making the level field business environment:

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Business Environment and Opportunities

April, 2015

Serbian Investment and Export Promotion Agency Allocated FundsFinancial Support to Investors

Why?19 calls

281.2 million € allocated

strategic geographic location

Among the lowest corporate tax rates in

Europe of 15%

Serbian Investment and Export Promotion Agency Allocated FundsFinancial Support to Investors

Serbian Investment and Export Promotion Agency Allocated FundsFinancial Support to Investors

In 2011, Serbia was the leader in CEE in attracting FDI with € 2.2 billion of inbound investments.

Starting a business in Serbia provides for an opportunity for

customs-free export to a market of 1 billion people.

Serbia is the only country outside of the Commonwealth of Independent States that enjoys a free trade agreement with Russia, but also with Turkey, EFTA, Belarus and Kazakhstan. It is also a member of the CEFTA with 29 million people and one of the biggest markets in the region.

Serbia's labor force offers a unique combination of high quality, wide availability and cost effectiveness.

SERBIAN MARKET OVERVIEW:

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Advantages

The amount of funds which can be awarded to large enterprises is determined up to 50% of the eligible costs for the implementation of the investment project.

The amount of funds may be increased by up to 20 percentage points for small-sized companies and up to 10 percentage points for medium-sized companies.

Serbia`s favorable business environment features:- highly competitive tax rates - and low operating costs.- Educated workforce at competitive rates

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TAX RATES IN SERBIA

20%

20%Copyright, property, profits from gambling and other types of incomeAnnual income tax 10/15%

Corporate profit taxTaxes on dividents, shares in profits, royalties, interest and capital gains

15%

10%15%

Salary tax and income from self-employmentCapital incomes and capital gains

Social Security Contributions

Personal income taxes

For legal entities

Pension and disability insurance -14%Health insurance - 5.5%Unemployment insurance - 0.75%

TAX RATES:

Value Added Tax (VAT) Standard rate 20%Reduced rate 10%

12 / 12 / 14FOCUS SUL MERCATO SERBO

Serbia can serve as a manufacturing hub for duty-free exports to a market of 1 billion people that includes the European Union, the Russian Federation, Kazakhstan, Belarus, Turkey, South -East (CEFTA),EFTA

Upon the completion of negotiations with Egypt, the territory with duty-free

access for Serbian products will expand by an additional 77 million people.

LIBERALIZED TRADE

1.083.259.142Total Market Size

Generalized system of preferences

CEFTAEFTATurkey

Free Trade AgreementFree Trade AgreementFree Trade Agreement

29.990.54213.000.00075.000.000

Preferential Trade Regime 494.070,000EU

USARussia, Belarus, and Kazakhstan Free Trade Agreement 168.640.600

302.558.000

Serbia's Preferential Trade AgreementsMarket Trade regime Number of inhabitants

12 / 12 / 14FOCUS SUL MERCATO SERBO

Exports to the EU market are free-of-customs according to the Stabilization and Association Agreement.

For several food products (baby beef, sugar, and wine) export

quantities are limited by annual quotas.

Imports from the E.U. are pursued based on the Interim Trade Agreement, as part of the Stabilization and Association Agreement, providing for progressive abolishment of import customs duties for industrial and certain agricultural products from E.U. countries by 2014.

Exports to and from EU

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Since 2000. Serbia has attracted more than €22.4 billion of inward foreign direct investment.

A list of leading foreign investors that have already invested consists of: FIAT, Telenor, Microsoft, Coca-Cola, Delhaize, Michelin, Gazprom, Bosch, Siemens, Banca Intesa Sanpaolo, UniCredit and many others

FDI BY COUNTRIES

Currently leading spot on the country list is held by Netherlands, followed by Austria, Greece, Norway and Luxembourg, while major investor countries also include Germany, Italy, Slovenia, and the Russian Federation. (USA usually invests through its European affiliates)

FDI BY INDUSTRIES

Service sectors have proven to be the most attractive to international investors. Banking and insurance recorded the largest FDI inflow of €5 billion. Manufacturing industries € 4.8 billion, followed by wholesale, retail and repair of motor vehicles and real estate activities.

FDI facts and figures

Forecasts

April, 2015

Market that investors and traders are willing to examine more closely

Over the medium to long term, structural reforms should create a fundamentally healthier economy.

SEE has lagged behind and now might be the time for a fresh look.

It ranks in the top 10 markets for sales growth potential this year

Forecasts for Serbia and SEE region

Privatization Process

April, 2015

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PRIVATIZATION PROCESS IN SERBIA:

Serbia passed a law to privatize almost 600 state-owned firms with a deadline of end 2015.

Some 160 companies are now in the process of restructuring

The state will also allow for debt equity swaps for highly indebted firms and might also grant some debt write-offs to secure the sale.

THANK YOU!