Economy Ministry refutes media reports about misappropriation of state subsidies

Following yesterday’s media reports about Serbian government misappropriating budget funds allocated to investment incentives and boosting economic development, the Ministry of Economy issued a statement.

“The Republic of Serbia has accomplished the best results in the region when it comes to attracting investments and any attempt to throw a shadow on this process is tendentious or is a product of basic ignorance of the procedure for allocation and disbursement of incentives. The process of approval and disbursement of incentives is strictly controlled and monitored so that not a single dinar from the budget would be paid out before the incentive recipient fulfils their contractual obligations,” the Ministry writes.

“The incentive contract is signed upon the proposal from the Ministry of Economy, and after other line ministries, State Aid Commission, Council for Economic Development and the Government of the Republic of Serbia give their consent.

All information on signed contracts is published on the website of the Ministry of Economy.

The signing of a contract, however, does not mean an automatic disbursement of funds. The Law on Investments stipulates that the recipient company is allowed to withdraw funds in stages, only after meeting the conditions from the contract (primarily referring to the amount of investment and the number of new jobs the recipient company creates).

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We also require that the entire incentive, paid out from the budget, should be covered by the bank guarantee provided by the recipient company, until all contractual obligations are fulfilled and until the completion of the monitoring phase”, the Ministry notes and adds:

“In terms of companies mentioned in the media reports, allow us to explain why the reported information is inaccurate:

  1. In regard to the company Truck-Lite Europe d.o.o., the contract on the allocation of incentives was signed, but since the company has not met its contractual obligations, the contract has been terminated, and no state subsidies have been paid to the company.
  2. In regard to the company Mei Ta Europe d.o.o., in the first three stages to date, the company has fulfilled its contractual obligations in terms of new investments and new employees. At the moment, according to an independent auditor’s report, the company exceeded the planned investments by the end of 2018 by 20 million euro. And the number of new employees has also been exceeded, so instead of employing 350 workers by the year-end, in line with the contract, according to the data from the Central Register of Mandatory Social Security, on September 19th, the company had 393 employees working permanently there, and 1,715 working on temporary assignments. The operating loss, as reported in the annual business report for 2017, is expected, since during the first years of the preparation and business launch, investments are usually higher than the operating income therefore overhead is higher than revenue.
  3. CG FOODS EUROPE d.o.o has signed the contract on 10th July 2015. This is a greenfield investment. The company built its factory by the end of 2017, an exploitation permit was acquired and equipment was purchased. According to the official records of the Central Register of Mandatory Social Security, on 30th June 2018, the company had 108 employees working permanently there, and 108 working on temporary assignments. The company still hasn’t received all of its subsidy instalments. 
  4. In 2017, ZG Lighting SRB signed a contract on the allocation of incentives. Currently, a revised business plan is being prepared, in which the investor proposes measures to streamline their business and have better work organization in the implementation of the project. Competent authorities will carefully consider this proposal, before giving an official opinion about it.

Once again, we would like to underline that not a single dinar from the budget of the Republic of Serbia is paid out in the name of incentives until the recipient company has met its contractual obligations first.

In the past two years and eight months (since the Law on Investments came into force), thanks to the incentives of the Ministry of Economy and the Government of the Republic of Serbia, a total of 510 million euro of investments have been in Serbia and 28,778 new jobs were created as a result of these investments.”

(Blic, 27.09.2018)

https://www.blic.rs/biznis/vesti/ministarstvo-privrede-demantovalo-informacije-o-podsticajima-za-investicije/3xq027q

This post is also available in: Italiano

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