If amendments to the Law on Spatial Planning and Construction are given a green light in the National Parliament, the fee that is paid for converting land from the right of use to the right of ownership (the so-called land conversion fee) will be abolished.
This means that if they buy the property of bankrupt companies, investors will also get attractive locations and a lot of land for a small amount of money. Previously, investors could use this land for construction only if they paid a substantial amount of money for the land conversion fee. It has been estimated that in this way, the Serbian budget stands to lose billions of euros. Although the line minister, Goran Vesić, claims that about 5,000 currently “captured” locations will be released for use in this way, it is clear that only investors will benefit from the cancellation of the land conversion fee.
These companies include former state-owned giants like IMT, the Port of Belgrade, the Belgrade Beer Industry – BIP, the shipyard in Novi Sad and potentially the Belgrade Fair.
The obligation to charge a land conversion fee was introduced so that the process of privatization of failed companies would not turn into a land grab, with the simultaneous shutdown of the factories themselves and the dismissal of workers. A special law on conversion fee was adopted in 2015, and at that time, it was estimated that the state budget stood to get 1.5 billion euros from the fee collection.
In the meantime, the price of land, like all other real estate, has increased significantly in the meantime, especially in big cities.
There are no precise estimates of how much the budget could be damaged by cancelling the conversion, and the figures that are mentioned in the public are drastically different – from three billion to tens of billions of euros.
Belgrade Fair and Port of Belgrade
The analysis conducted by the Anti-Corruption Council says that giving land to investors without compensation would be unconstitutional. The Council also cited the Belgrade Fair as an example, which could be privatized. The Fair covers 11 hectares of city land, not counting the remaining 11 hectares of green space.
“If the conversion fee were to be abolished, the future owner of the Belgrade Fair would, without a single dinar invested, also become the owner of the city land on which the Belgrade Fair, the value of which would be several dozen times higher than the value of the purchased capital of the Belgrade Fair,” warned the Anti-Corruption Council.
IMT, BIP, Shipyard in Novi Sad…
Among the most attractive locations for which conversion land would not have to be paid is the land that the IMT Company (a producer of agricultural machinery) has in Novi Beograd. Last year, the company’s assets were purchased by the ABL Solvent Company, which is owned by Davor Macura, for around 70 million euros. IMT spans 35 acres, which has 25 registered buildings, 30 buildings that were constructed without a building permit and 22 non-registered buildings. The investor cannot build on that land but has the exclusive right of use.
The square metre of land in that zone costs 71,957 dinars. When we multiply that by the exact area, that is, the number of square metres (35 hectares, 79 acres and 93 square meters), it turns out that the conversion would cost around 260 million euros. The state budget would lose that amount of money if the land conversion fee is abolished.
The Belgrade Beer Industry (BIP), whose most valuable property is located near the Mostar interchange (Mostarska petlja) in Belgrade, could also be a target. This company was bought last year by Auto Čačak, which is connected to SNS, for only 17.8 million euros.
As far as the Novi Sad shipyard goes, the Novi Sad branch of the Democratic Party (DS) stated yesterday that the Novi Sad budget stands to lose tens of millions of euros if the land conversion fee is abolished and even more in the future. Veljko Krstonošić from the DS cited as an example the land on which the Novi Sad shipyard is located which spans 4,000 square metres. If this land is sold without the new owner having to pay the land conversion fee, the Novi Sad budget stands to lose around 100 million dinars.
The reason tycoons bought the former state companies, such as Novitet, Elektroporcelan, Dnevnik and Grafika amb, for a very low price is the fact that, once the purchase went through, they were given the right to use but not own the land that these companies have.
“The biggest looting of Serbia” and the appeal to the Constitutional Court
The Freedom and Justice Party (SSP) said that it would appeal to the Constitutional Court if the land conversion fee is cancelled. That party asked the members of the Parliamentary Committee for Constitutional Affairs and Legislation who voted in favour of the land conversion fee being abolished whether they did so as lawyers or as party pawns and whether they were aware that by voting in favour of the cancellation of this fee “they are participating in the biggest looting of Serbia”.
“… If the land conversion fee is abolished, tycoons will be given the most valuable resource we have, which is space, and they will leave the citizens and the public budget without tens of billions of euros,” said Nebojša Zelenović, an MP.
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