Foreign direct investments in Serbia have been subsidised by the state for more than 15 years and over 93% of the funds have been allocated to foreign investors, writes Biznis i Finansije magazine.
Only 2.1% of the investments have been allocated in the segment of high technologies, and in the last five years, almost 80% of the total state subsidies have been allocated to labour-intensive activities with earnings below the national average.
By the end of 2019, a total of EUR 638 million was allocated to subsidise 2,912 investments, worth more than EUR 2.7 billion. In the period from 2016, when the Investment Law was adopted, to 2020, 121 agreements on the allocation of funds for investment incentives were signed.
The total value of these investments was more than 2.5 billion euros, the state incentives amounted to 459 million euros, while according to the signed agreements, these investments were expected to create about 46,000 jobs. Considering the average value of the subsidies, foreign investors were granted 6.4 times more funds per project than needed.
Investment activity has intensified in the last two years, when about 60% of all incentives were approved as in the previous five years, according to comparative research by the Faculty of Economics in Belgrade and the Foundation for the Development of Economic Sciences (FREN).
According to Milorad Filipovic, professor at the Faculty of Economics in Belgrade, the value of subsidies per employee granted to foreign investors is 30% higher than those granted to domestic investors. The investment-to-subsidy ratio is higher with domestic investors than with foreign ones; foreign investors invest 43 euros for every 10 euros of subsidy while domestic companies invest 55 euros, i.e. foreign investors receive 23 euros of subsidy for every 10 euros of investment while Serbian companies receive 18 euros.
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