Only 5% of companies in Serbia engaged in production while betting shops and fast food joints are flourishing

Only every 18th company in the country is engaged in production while service sector is flourishing, particularly betting shops, restaurants, hair and other beauty salons. And all of this is happening despite the fact that the funds that the Serbian government has allocated for production are three times bigger than in 2015.

This is also what the Secretary General of the Entrepreneurship Sector at the Serbian Chamber of Commerce (SCC), Branislava Simanić confirms. She says that many more small businesses have been opened this year but these are mostly restaurants, mobile catering facilities, hair and beauty salons and similar.

She also reminds that the state has adopted the Strategy for Development of Small and Medium Enterprises, Entrepreneurship and Competitiveness covering the period from 2015 to 2020 and that the Strategy envisages changing certain laws in order to cut back on costs associated with running a business.

The Business Support Network says that, out of a total of 92,000 companies in Serbia which have submitted their end-of-the-year financial statements, only every 17th or 18th is engaged in production. This practically means that just over 5,000 companies are production ones, or slightly over 5%.

Investing in production is expensive

– Investing in production is expensive because the investing process lasts between two and four years and only after that period the facility will start generating stable revenue, the investment will return and profit will be made – the Director of the Business Support Network, Dragoljub Rajić explains.

When it comes to the service sector, the investment process lasts only a few months like, for instance, in the ICT industry, or it can last up to 2 years which is the case with the hospitality industry and related sectors – Rajić adds.

He explains that it is much easier to invest in services because generating profit is much quicker, which is the reason why the governments of the countries in our region and in Europe are trying to disburden the production sector from the costs. The fact remains that every production company has a service supplier and many people earn their living in the service sector.

– On average, one production company in Europe works with four service SMEs which follow the production company, and if the production company is bigger, this number can go up to a dozen of SMEs – Rajić says.

Better conditions are necessary

Serbia has a problem with its foreign trade deficit because of insufficient production while the current level of production is also not enough to fund the entire state system.

– A lot more needs to be done on creating conditions for SMEs to grow and have access to funding, as well as to transfer of know-how and technology which is vital for the SMEs to start exporting – Rajić adds.

He explains that, when it comes to the structure of our export companies, out of approximately 1,800 of them, 82% export to the ex-Yugoslav countries, while only 400 or 500 export further to the EU countries and other global markets.

Between 11.5% and 12% of the SMEs in the EU are engaged in export, while that percentage in Serbia is only 4.4.

(Blic, 29.08.2016)

This post is also available in: Italiano

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