Daily Survey

Belgrade, August 23, 2012

SERBIA – ECONOMY

NEW DEFENCE INDUSTRY FACTORY BY YEAR'S END

BELGRADE, Aug 23 (Tanjug) –First Deputy Prime Minister and Defence Minister Aleksandar Vucic stated that a new factory of complex combat systems will be opened by the end of the year, and that Russia will help market products of the Serbian defence industry.At the end of his visit to Moscow during which he conferred with his Russian Deputy Prime Minister Dmitry Rogozin, Vucic said that as of Monday our experts will begin creating a program and joint models of cooperation between Serbia and Russia in this area, adding that he expects serious results."This is our goal and wish, and we will definitely open a new factory of complex combat systems by the end of the year, similar to what Djuro Djakovic once was, and in order to do that we need promotion of our products worldwide, and in this sense we expect great support from Russia," Vucic told journalists in the Serbian Embassy in Moscow.He underlined that talks with Rogozin were going in three directions, including strategic-political, advancement of the two country's defence policies, and the third and the most important for the Serbian citizens - development of our production and placement of our products in the market of the RF and the third markets.Rogozin, as Vucic said, expressed belief that Serbia will achieve serious results in the coming period, and have Russia's support in this sense.According to Vucic, the talks also addressed loans and investments in Serbia, which will be explained in greater detail as early as first half of September.

MRKONJIC: RUSSIANS COULD BE JAT AIRLINES' PARTNER

BELGRADE, Aug 23 (Tanjug) –Minister of Transport Milutin Mrkonjic said on Wednesday Russians could get involved in resolving the status of the Serbian company Jat Airways, for which the government is trying to find a strategic partner.When asked by reporters about Jat Airways and if Russians might become partners, Mrkonjic did not exclude the possibility, adding that activities directed towards founding a new Serbian airline continued."We already have the decision from the previous government to form a separate company and we think we are going to continue on that path, because we have no strategic partner candidates for now," he stated.The efforts to find a strategic partner to the national airline will continue in the coming days, he noted."This government's first task is to use the Ministry of Transport to remove the Jat issue from the agenda, so to speak," Mrkonjic remarked.There were no offers to buy 51 percent of Jat Airways at a price of EUR 51 million during the first tender in 2008.The government invited bids for potential strategic partners to found a new airline. Baltic Aviation from Latvia showed interest, but gave up later.Jat Airways finished last year with a loss of RSD 3.2 billion (EUR 1 = RSD 117).The airline has a fleet of 14 aircraf, 10 of which are Boeing 737-300 and 4 are ATR 72-200.

RUSSIAN PARTNER POTENTIAL SOLUTION FOR STEEL PLANT

VALJEVO, Aug 23 (Tanjug) –The Russian Federation is the first country with which Serbia could conduct talks on potential strategic partnership in the case of the Smederevo Steel Plant, Serbian Minister of Finance and Economy Mladjan Dinkic stated on Wednesday and expressed the expectation that some results would be achieved soon.Dinkic announced that a high delegation of Serbia would visit Russia, headed by President Tomislav Nikolic and Prime Minister Ivica Dacic, to discuss the enhancement of the two countries' economic cooperation, and one of the topics will also cover the Smederevo Steel Plant.Serbia has no iron or coke ore which means that the strategic partner can be sought abroad, including potential partners from Russia, Ukraine, China and India, Dinkic told reporters in Valjevo.However, the minister underscored that he will try to reach an agreement with Russia because they are the priority when it comes to the improvement of bilateral cooperation.Dinkic underscored that keeping the Smederevo Steel Plant alive is very expensive for the country.You need to know that when the steel plant is operating without a strategic partner, it entails costs of EUR 170 million annually, while its costs when it is closed total EUR 120 million, the minister said.Dinkic underlined that the Serbian government will do everything to get the steel plant going and ensure jobs for employees.In early July 2012, the production in the Smederevo Steel Plant was interrupted temporarily until September 1 because the U.S. Steel company withdrew late in January due to business losses and the ownership share in the Steel Plant was sold to Serbia at the price of USD 1.Around 3.000 out of 5.200 employees are still actively engaged in the maintenance and repairs in the plant so that the factory could be ready for the production renewal while other employees are on paid leave.In keeping with the plan drafted before the interruption of production, employees will get 60 percent of the average wages from the previous three months.

ILIC: GOAL TO ACCELERATE CORRIDOR 11 CONSTRUCTION

BELGRADE, Aug 23 (Tanjug) –Minister of Construction and Urbanism Velimir Ilic stated Wednesday that his goal is to accelerate the construction of Corridor 11.Noting that three Chinese companies have presented their offers for construction of the highway to Montenegro and that there are interested parties in Spain, Ilic said that a strong Swiss national company and the strongest bank in the world are the most serious candidates as they offer the best conditions, and are ready to start the job immediately.Ilic said for Belgrade TV Pink that he is working intensively on the plan for construction of the highway to Montenegro, adding that the government will decide on this issue.

DELHAIZE GROUP CONTINUES TO INVEST IN SERBIA

BELGRADE, Aug 23 (Tanjug) –Deputy Prime Minister and Minister of Foreign and Home Trade and Telecommunications Rasim Ljajic conferred with a delegation of Delhaize Group on Wednesday to discuss the retailer's future plans for development and investments in the country.The delegation was headed by Executive President for South East Europe Kostas Macheras who said that some of the main aims of the Delhaize Group in Serbia are to find a way to offer the lowest prices of high-quality products to consumers through various actions.He said that another aim of the Group is to strengthen the capacity of local producers, so that more products from Serbia could be marketed in Delhaize Group stores around the world in the future, the Ministry noted.Macheras informed Ljajic about the plans for opening a major distributive centre of the Delhaize Group in Serbia the construction of which should be completed by mid-2014.Ljajic expressed readiness of his Ministry to initiate changes to certain legislative acts and abolish bureaucratic procedures which hinder the operation of domestic and foreign companies.He stated that such an approach is necessary, especially for companies like Delhaize Group which employs more than 10,000 people in Serbia and which plans additional investment and job creation.

LJAJIC CONFERS WITH IKEA REPRESENTATIVES

BELGRADE, Aug 23 (Tanjug) –International home products company IKEA will open the first of its five stores in Serbia if procedures for issuing of construction and other licenses are completed in due time, Ministry of Foreign and Domestic Trade and Telecommunications stated on Wednesday.The possibility of opening of new stores was announced in the talks between Deputy Prime Minister and Minister of Trade Rasim Ljajic with IKEA representatives.Ljajic conferred with IKEA representatives for southeast Europe Dragan Skalusevic and Vladimir Vasiljevic on the company's business plans in Serbia, and manners in which the state can facilitate the position of similar companies in the market.Skalusevic, IKEA regional sales manager for southeast Europe, informed Ljajic about the company's plans to open five sales centers in Serbia in the coming period.Speaking about functioning of the Ministry of Foreign and Domestic Trade and Telecommunications, Minister Ljajic underlined that all sectors of the ministry will in future be fully available to domestic and foreign investors in order to facilitate their business, and ease or abolish complex bureaucratic procedures, the statement reads.Ljajic also announced recent change of certain trade laws, which would improve business atmosphere and attract investments in Serbia.

GORENJE BEGINS BUILDING ANOTHER PLANT IN VALJEVO

VALJEVO, Aug 23 (Tanjug) –The Slovenian company Gorenje has started building a new home appliances factory in Valjevo, which will create 400 jobs, and Minister of Finance and Economy Mladjan Dinkic visited the city on Wednesday to mark the occasion.Gorenje is constructing a plant covering around 20,000 square metres next to another one of its factories. The plan is for the production in the new facility to begin in February 2013. The investment stands at EUR 20 million.According to Gorenje's investment contract in Valjevo, the government will provide subsidies of EUR 10,000 for every new job.Dinkic said he was pleased regarding the start of the investment, stressing that it would provide more than 1,000 jobs for the people of Valjevo together with the existing Gorenje factory.Gorenje's plan is to put the roof on the plant by mid-November. Trial production will start on January 15, and full production should begin on February 1, Dinkic stated, adding it was important the production would mostly be focused on export.Member of the Gorenje management team Branko Apat thanked the Serbian government for its cooperation so far and stressed that the plans were to make a million cooling devices a year.Besides the Valjevo factory that already employs 680 people, Gorenje also has plants in Stara Pazova and Zajecar, and once the new factory goes online, the company will be employing 1,500 people in Serbia, Apat noted.Valjevo Mayor Stanko Terzic said the city had the obligation to free Gorenje from paying utility taxes and all other taxes concerning construction and use of construction land for a period of 10 years.

SERBIA

DACIC & KELLY DISCUSS POLICE COOPERATION

NEW YORK, Aug 23 (Tanjug) –Prime Minister and Minister of the Interior Ivica Dacic has met with New York City Police Commissioner Raymond Kelly to discuss cooperation between the two police forces.The meeting marked the end of Dacic's visit to New York.Before this meeting, Dacic delivered a speech at the United Nations Security Council session that debated the latest quarterly report by Ban Ki-moon on Kosovo and Metohija.

VARSO: SERBIA-SLOVAKIA RELATIONS SINCERE AND GOOD

NIS, Aug 23 (Tanjug) –Slovakian Ambassador to Serbia Jan Varso said that the relations between his country and Serbia are sincere and good, and that Serbia is going along the same path of transformations as Slovakia did. Similar as Serbia, Slovakia was facing high unemployment rate at the beginning of that path, while today the situation is much different and the standard of Slovakian citizens is good, said ambassador in the talks with Nis Mayor Zoran Perisic.Perisic told reporters that Slovakia's air carrier is interested in introducing Bratislava- Venice-Nis line, and that the company is expected to state its conditions for such agreement. If the current investor Serbian-Italian company Italnis does not fulfill its obligations in view of construction of an aqua park and a tourist complex at Lozni Kalem near Nis Spa, the Slovenian partners will be interested in one investment of the kind, Perisic said.

KOSOVO

APPEAL IS WORD OF CAUTION TO FOREIGN INVESTORS

BELGRADE, Aug 23 (Tanjug) –Director of the Serbian government's Office for Kosovo and Metohija (KiM) Aleksandar Vulin has said that the launch of the procedure to review the constitutionality of privatizations in Kosovo is just the first step in the fight for the property belonging to the citizens of Serbia.It is a move that should warn foreign investors who want to buy property in the province that its ownership is under a big question, Vulin said."Our next step is finding protection at international courts," Vulin said in a statement for Belgrade-based daily Politika.Vulin recalled that under the effective UN Security Council resolution, "UNMIK has to respect the Constitution of Serbia, which, in turn, provides respect for all forms of property and the preservation of property rights arising from that."According to Vulin, "any privatization that is not in line with the Constitution and the spirit of Resolution 1244 in this regard must be declared void.""A question needs to be raised concerning the property of the people who were employed in these enterprises (socially-owned by the state) and its retirees, so that all people can claim some property rights in privatization," Vulin said, adding that the Office for KiM also wants to raise the question of why the privatization in Kosovo is a mono-ethnic affair."In this way, we want to warn the international community that the powers given to it have to be accompanied by a responsibility that cannot be smaller than the powers. We demand that the property of the citizens of Serbia in Kosovo and Metohija be protected," Vulin added.Vulin announced that the property issue would be one of the topics of the upcoming talks between Belgrade and Pristina. "We want to talk about the life in Kosovo in general, but we cannot be talking about the economy, the telecommunications, unless we proceed from the fact that because of the destruction and usurpation, Telekom Srbija has lost seven percent of the total value of its assets and 30 percent of the profits in KiM," Vulin said.