Serbia - Country Commercial Guide
Investment Climate Statement

This information is derived from the State Department’s Office of Investment Affairs’ Investment Climate Statement;  EB-ICS-DL@state.gov.

Last published date: 2021-03-08

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Serbia’s investment climate has been modestly improving in recent years, driven by macroeconomic reforms, greater financial stability, improved fiscal discipline, and a European Union (EU) accession process that provides impetus for legal changes that improve the business environment. The government successfully completed a three-year Stand-by Arrangement with the International Monetary Fund (IMF), with the government exceeding all its fiscal targets in 2018. The government signed a new 30-month Policy Coordination Instrument with the IMF in mid-2018. Serbia improved four places in 2020 on the World Bank’s Doing Business Index and is now ranked 44th globally in ease of doing business. Attracting foreign investment remains an important priority for the Serbian government. U.S. investors in Serbia are generally positive, highlighting the country’s strategic location, well-educated and affordable labor force, excellent English language skills, investment incentives, and free-trade arrangements with key markets, particularly the EU. Generally, U.S. investors enjoy a level playing field with their Serbian and foreign competitors. The U.S. Embassy in Belgrade often assists investors when issues arise, and Serbian leaders are responsive to our concerns.

Despite notable progress in Serbia, challenges remain, particularly with regard to bureaucratic delays and corruption. Other risks to the investment climate include unresolved loss-making state-owned enterprises (SOEs), a large informal economy, and an inefficient judiciary. Political influence on the decisions of nominally independent regulatory agencies is also a concern.

Serbian companies faced temporary export restrictions on certain agricultural products and on all medicines in March and April 2020 due to the COVID-19 pandemic. The Serbian government lifted the export restriction on medicines on April 24 and lifted restrictions on all other affected goods on May 7.

The Serbian government has identified economic growth and job creation as its top economic priorities and has committed itself to resolving several long-standing issues related to the country’s slow transition to market-driven capitalism. On the legislative front, the government has passed significant reforms to labor law, construction permitting, inspections, public procurement, and privatization that have helped improve the business environment. Both companies and officials have noted that the adoption of reforms has sometimes outpaced thorough implementation of these reforms. Digitizing certain functions (e.g., construction permitting, tax administration, e-signatures, and removing the previously ubiquitous requirement for ink stamps) has not yet brought a dramatic improvement in processing times and may not be consistently implemented.

The government is slowly making progress on resolving the fate of troubled SOEs. Where possible, this has been achieved through bankruptcy or privatization actions. For example, bankruptcy protections were removed for 17 SOEs in May 2016, and the situation of most of these companies has been resolved. The government is also slowly decreasing Serbia’s bloated public-sector workforce, mainly through attrition and hiring freezes, which continued through 2018.

If the government delivers on promised reforms during its EU accession process, business opportunities could continue to grow in the coming years. Sectors that stand to benefit include agriculture and agro-processing, solid waste management, sewage, environmental protection, information and communications technology (ICT), renewable energy, health care, mining, and manufacturing.

Women in Serbia generally enjoy equal treatment in business, and the government offers various programs to support women’s businesses. One program that started in 2017 provides approximately USD 1 million from the Serbian government budget to support women’s innovative entrepreneurship in the form of small grants.

Investors should monitor the government’s implementation of reforms as well as the government’s changing investment incentive programs.