REGIONAL COOPERATION AND ECONOMIC INTEGRATION

FDI FLOWS IN SOUTH EASTERN EUROPE
for Privatization are amended, and it performs tasks in bankruptcy if the Bankruptcy
Council appoints it to perform the tasks, and in accordance with the law which regulates
the bankruptcy proceedings.
The important amendment of the Law on Privatization refers to the large companies that
are for sale, to which the state will write off debts to the state funds and public enterprises
and make them much more attractive for potential investors. These debts would be settled
later from the revenue accomplished by selling these companies. These measures should
enable faster privatization of over-indebted companies, which carry most of the burden of
excess labor. It is primarily about the public companies, whose successful privatization
would provide the success of the entire process of restructuring the economy in Serbia. It is
necessary to strengthen these companies and reduce the costs of their business. Therefore,
it is necessary that the government and the competent ministries apply the strategy of
restructuring public enterprises (the energy sector is the furthest one that they have gone
to). The reduction of surplus labor force in these enterprises is announced, as well as in
public administration. Social program, i.e. severance pay for these workers would be
funded from the Transitional fund.
The total inflow of foreign direct investment recorded by the National Bank of Serbia
(NBS) includes revenues from privatization and the new foreign direct investment.
The current statistics of foreign investment in Serbia are based on the records of capital
transfers led by the NBS on the basis of information supplied by commercial banks and
registers them as the inflow of FDI in cases in which the commercial banks, as the basis
of payment, specify code 557 (foreign investment). The moment of recording the inflow
is the one when the payment is realized, regardless of the contractual obligations. These
statistics allow tracking the total inflow of foreign investment from year to year, as well
as comparison of foreign investment in Serbia with foreign investment in other countries.
However, on the basis of this statistics, the origin of capital by country of payment can
be determined, which in many cases is not the actual country of the origin of the capital
invested. Companies from the United States are dominant by the amount of investment in
Serbia, which is achieved through their own companies - intermediaries. Available data
provide analytical monitoring of foreign investment (by country of origin, activities in
which foreign capital inflows, regions that are invested in), but still, it is necessary to
improve the foreign investment statistics and the methodology of collecting data on foreign
investment.
Agency for Privatization notes the data on inflows from the sale of companies in the
privatization process, as well as contractual obligations on the basis of investment and social
programs. On that occasion, it particularly emphasizes the inflows that came from foreign
customers, in other words value of contracts in which the customers are non-residential
legal / natural persons. Data on privatization inflows, collected by the Agency for
Privatization, do not include the amounts paid on the basis of the sale contracts that were
later on broken. On the other hand, once recorded (contracted) investment responsibilities
and obligations relating to the social programs are often not respected, especially regarding
deadlines. The result of this is the lack of accurate and updated record of privatization
inflows. If these data were reliable, from the total annual inflow of FDI the inflows of
privatization could be subtracted and in such a way the annual amount of greenfield foreign
investment could be received. Taking into account the very small number of greenfield
projects, it can be estimated that greenfield investment in Serbia after 2000. has never
exceeded the amount of 150 million dollars a year. This is certainly far from the development
325