Appealing to Minister Knežević: Three key reforms that Serbia needs

The international business association, the Business Support Network sent today an open letter to the newly appointed Minister of Economy Goran Knežević in which they are appealing to him to conduct three key reforms to improve the business environment.

The letter states that, for over 10 years, business people in Serbia have been waiting for these three key reforms for improving the Serbian business environment to be implemented – lower taxes and salary contributions plus progressive taxation of wages, resolving the problem of expensive and  inaccessible loans through ensuring alternative funding sources, exercising better control over numerous levies imposed by the local self-governments and setting clear criteria for determining their number and amount.

The Business Support Network goes on to say that, due to the absence of the said reforms, every single company in Serbia owes, on average, 196 times their share capital which means that they are operating on the verge of bankruptcy.

The average payment terms in the first half of 2016 were 132 days which makes us the worst in Europe along with Bosnia and Herzegovina where the average payment terms stand at around 130 days.

Only every third company, founded by the people under the age of 35, has managed to survive on the market for more than three years since inception which, again, puts us below the European average of 64.7% after the first three years of operations.

The Network further states that every 18th company in Serbia is engaged in some form of production which is the main driving force behind export and which the wealth and living standard of the Serbian population directly depends on. In Europe, every 4th company works in production.

When it comes to the SME sector, Serbia has three times less exporters (4.1%) than the European average (11.9%) which is a result of a chronic lack of working capital and high labour taxation which make our economy uncompetitive on foreign markets.

Numerous high levies imposed by local self-governments, substantial taxes and labour levies, along with absence of favourable financing sources for business owners have directly lead to the fact that, according to various estimates, between 550,000 and 750,000 people in our country are working in the “gray zone”.

The average share capital of small enterprises and small business owners in Serbia is only 5,060 EUR, the letter states which puts young and female entrepreneurs at risk and forcing them to often do business in the gray zone. They are usually reluctant to legalize their businesses because of many, very high levies.

Hundreds of thousands citizens are also directly affected by the absence of the aforementioned key economic reforms. These are the citizens who are legitimately employed by private companies that, apart from having to suffer under many levies, also have to deal with a weak purchasing power because their employers are not able to give them higher wages.

“In dozens of cities all over Serbia, both in Chinese and Serbian-run chops, employees get less than the minimum wage and, although working, they are considered socially vulnerable because they don’t have enough money to live on”, the letter states. Furthermore, Serbia is one of the very few countries in Europe where minimum wage is taxed exactly like net salaries which amount to several hundreds of thousands of Dinars a month.

(Economy, 16.08.2016)

This post is also available in: Italiano

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