FOREIGN DIRECT INVESTMENTS IN SERBIA

1. National Bank of Serbia FOREIGN DIRECT INVESTMENTS IN SERBIA Balance of payments data collection system

2. National Bank of Serbia 2 BACKGROUND Serbia has a nearly 40 year long experience with foreign investments. During 1967-1988 period foreign investments were were allowed in the form of joint ventures only. The 1989 reform gave FD investors the right of ownership and management. After 1991 FDI decreased due to the dissolution of the former Yugoslavia, war and sanctions. In 2002 the current Law on FI not only gave foreign investors the national treatment, but also introduced a number of incentives such as free imports of capital goods, tax incentives, protection from expropriation and nationalization etc..

3. National Bank of Serbia 3 BACKGROUND (contd.) Total FDI in the period 2000 -2005 amounted to about $ 4.531 million or $ 755 million annually (in the first quarter 2006 it amounted $ 215 million). The expected annual inflow of FDI is estimated to rise from $ 1.515 million in 2005 to $ 2.117 million in 2011.

4. National Bank of Serbia 4 LEGAL FRAMEWORK Law on Foreign Investments (for inward FDI) Law on Foreign Trade (for outward FDI) Decision on Conditions and Manner of Arranging Payments Made, Payments Received and Transfers Under Current and Capital Transactions in Foreign Currency and Dinars

5. National Bank of Serbia 5 LEGAL FRAMEWORK (contd.) Guidelines for Implementation of the (above) Decision Decision on Reporting Requirements in International Operations Guidelines for Implementation of the (above) Decision Forms

6. National Bank of Serbia 6 DATA SOURCES BASIC ITRS Statistics Office of Serbia Direct Reporting SUPPLEMENTARY Ministry for Foreign Economic Relations Privatization Agency Serbian Investment and Export Promotion Agency (SIEPA) Official Gazette Media

7. National Bank of Serbia 7 ITRS Reports on transactions in cash only Uses specific codes for transactions made through banks` accounts specifying amounts, currencies, FD investors and countries Identifies the country from which the payment is made rather than the investor`s country of origin

8. National Bank of Serbia 8 STATISTICS OFFICE OF SERBIA Reports on FDI in kind only Specifies amounts, economic uses of FDI Can supply information on individual companies engaged

9. National Bank of Serbia 9 DIRECT REPORTING (since October 2002) Based on the obligation of all direct investment entities whether existing or created by FDI. The only comprehensive source of FDI information including the stock of FDI related to International Investment Position. The response rate is low. The current survey form will be improved in accordance with the recommendations of the IMF`s technical assistance mission on BOP statistics.

10. National Bank of Serbia 10 THE CURRENT SURVEY FORM (for inward FDI) SPECIFIES Resident entity receiving FDI, each investment and each FD investor through reports once a year before March 31 for the preceding year and before the 10th of the month for the preceding quarter. Whether the investment is in an existing company or a bank or a new company or a bank or a subsidiary or institute or foundation. Foreign investor, his county of origin, his shareholding percentage, total amount of investment and monetary and non-monetary portion of investment.

11. National Bank of Serbia 11 THE CURRENT SURVEY FORM� (contd.) Tabular breakdown of FDI including opening balance, increases of investment through payments made in the form of reinvested profits, securities, tangible assets (fixed assets and goods), intellectual property rights and other payments in foreign currency, as well as withdrawals, profit/loss, reporting period closing balance and the amount transferred to foreign entity accounts.

12. National Bank of Serbia 12