Belarus-Serbia bilateral trade is growing
Common interests are basis for cooperation
Expansion of trade and economic cooperation is the absolute priority for development of Belarusian-Serbian relations. The entry into the Belarusian market provides Serbian business with an opportunity to establish its presence on the territory of the Customs Union of the three states – Belarus, Russia and Kazakhstan. Export to Serbia can open up the Balkan region market for representatives of business circles from our country. The selected strategy of economic development involves setting up new productions, competitive on domestic and foreign markets. All this creates necessary preconditions for mutual exchange of finished products, modern equipment, work and raw materials.
The intergovernmental free trade agreement signed by our countries in March 2009 and amended in June 2011 is an important incentive aiming to boost Belarusian-Serbian trade.
The document envisages customs duty-free export and import operations in case of bilateral deliveries of commercial products excluding several goods. Among them are sugar, alcohol, cigarettes, automobiles, tractors, and other used vehicles, some other goods.
The agreement prohibits use of any special and quantitative restrictions or equivalent measures in respect of imported and exported goods originating on the territory of one of the countries during foreign trade operations. Thus, the agreement’s objective is elimination of technical barriers in bilateral trade and its regulation by common rules.
It should be noted that the document meets all the WTO requirements and EU recommendations. It is aimed at development of favorable conditions for free movement of goods and mutually beneficial cooperation.
Certainly, the protocol on amendments to the free trade agreement given the formation of the Customs Union of Belarus, Russia and Kazakhstan signed during a visit to our country of the Minister of Economy and Regional Development of Serbia Nebojša Ćirić in June 2011 will contribute to implementation of new joint projects and promotion of bilateral trade.
Amendments to the agreement will create new opportunities for growth of export of Serbian goods to the Belarusian market and to the markets of the other CU countries and in the opposite direction.
Dynamics of bilateral trade
In 2010 the volume of trade between Belarus and Serbia was $ 116.5 m, more than a twofold increase ($ 53.5 m) if compared with the same figure in 2009. Domestic goods for $71.2 m were exported to the Serbian market, against $ 25.3 m in 2009. Growth in the Belarusian export was the result of expansion of a product range and increased volumes of supplies of traditional goods, first of all, machine-building products.
Thus, in 2010 to the mine «Bor» in Serbia 10 «BelAZ» dump trucks were supplied for the total amount of $ 12.7 m. Moreover, March last year the «Belkommunmash» OJSC won tender to supply to Belgrade 83 low floor trolleybuses. As a result, the Belarusian export by item «Vehicles for transportation of 10 and more people » was almost $ 19.4 m, or 27.2% of the total volume of the Belarusian export in value. It should be noted that in 2009 no Belarusian vehicles were exported to Serbia.
There is demand for Belarusian agricultural machinery among Serbian farmers. In 2010 700 Belarus tractors and spare parts for over $ 12.5 m were exported which is considerably higher than the 2009 figure – 400 units for around $ 6.7 m.
Export of potassium fertilizers, tires, resin goods, synthetic fibers, fittings, seamless pipes, liquid gas tanks, metal ware, etc. grew. Moreover, in the range of goods exported to Serbia, new products appeared – wax, synthetic fiber straps, spray devices, transmission shafts, cable products, lenses, etc.
At the same time Serbia increased its export to our country. In 2010 it was $ 45.3 m against $ 28.2 m (following the results of 2009). There is demand in Belarus for Serbian fittings, accumulators and parts to internal combustion engines, pulp-and-paper industry products (paper, cardboard, and cellulose fibers cotton wool) and chemical goods (propylene polymers, varnishes and paints on the basis of synthetic water-free polymers etc.).
This growth in bilateral trade has remained this year. In January-July 2011 the bilateral goods turnover between the countries was $81.3 million, or 157.6 % year on year. At this period the Belarusian export was around $52.2 million, or 152.1 %.
Potential for promotion of bilateral trade
The future increase in bilateral trade and the Belarusian export can be based on growth in purchasing capacity of Serbian buyers.
The capacity of the Serbian consumer market rose steadily till 2009 thanks to gradual growth of the average pay in Serbia (from 91 Euro in 2001 to 378 Euro in August 2011), and buyer credits offered by local banks. It led to a doubled increase in retail trade.
By the way, largely due to subsidized credits provided by commercial banks to economic entities and natural persons it became possible to mitigate negative consequences of the global economic crisis for the country’s economy. It helped maintain production volumes at many enterprises of automobile, machine-building, furniture and electric industries. A significant role in efforts to support the construction industry was played by a program of subsidized housing credits. This program was developed by the Serbian government together with commercial banks.
In 2010 the similar strategy was continued. Moreover, the implemented policy was aimed at rigid financial discipline and saving of budgetary funds. Means obtained were spent on programs creating incentives for economy. As a result, in 2010 the volume of the gross national product was up 1.5 % year on year. Simultaneously, gradual recovery of purchasing capacity on the retail market was observed.
Opportunities existing on the Serbian market were used by some Belarusian manufacturers. For example, in 2010 the supply of refrigerators, deep-freezers and refrigerating equipment produced by the Minsk plant «Atlant» to Serbia reached 4.2 thousand units or $833 thousand against 3.1 thousand units or $670 thousand in 2009. It should be noted that in 2008 these products were not supplied to the Serbian market. Moreover, in 2010 the volume of sales of washing machines produced in Belarus rose.
Development of the Serbia construction industry led to an increased demand for plywood, sanitary ware, ceramic tiles, and furniture produced in Belarus. There are still more opportunities for Belarusian manufacturers to expand their operations on the Serbian market. For example, the «Pinema» OJSC – the only CIS producer of geo-textile materials used in construction – expects fruitful cooperation with enterprises located in Serbia and in other states of the Balkan Peninsula.
Key industries of the Serbian economy
The food industry. Serbia has well-developed agriculture thanks to rich land resources and weather conditions favorable for growth of vegetables and fruit. Big yields of grain (basically maize and wheat), sugar beet, sunflower, cannabis, tobacco, potato and other vegetables as well as fruit are harvested here. Serbia is the world's largest exporter of prunes, plum trees cover over 50 % of garden acreage. The country is also the world leading raspberry manufacturer (85 thousand tons annually or 15.2 % of the world’s output), maize (the largest manufacturer in Europe after France and Hungary, export is around 2 million tons).
The main exports of the country are grain crops, fruit and vegetables in the form of juice, concentrates, mashed products, jams, frozen and dried products, butter and oil, sugar and confectionery. Export of meat gradually grows. Serbia exports its food products mainly to the EU countries.
At the same time the Serbian meat and milk output cannot satisfy the domestic demand. That is why there could be demand for Belarusian milk and dairy products in Serbia. For example, produced by «Bellakt» JSC, «Lida milk-canning plant» JSC, «Glubokskiy molochnokonservny combinat» (Dairy Products Plant) OJSC, « Polotsk dairy plant» JSC, etc. High quality of products of these manufacturers is confirmed by international certificates. Serbian consumers have an opportunity to appreciate unique tastes of goods produced by Belarusian confectioners. The oldest confectionary enterprise located on the territory of the Republic of Belarus – the «Krasny pischevik» OJSC – offers its pastila and marmalade products (zephyr, marmalade), toffee, dragee, sweets and many other products.
Moreover, Belarusian producers can find customers and business partners in Serbia in other sectors of the consumer market. For example the production private unitary enterprise «Victoria», the leading Belarusian producer of cast aluminum cookware with anti-stick coating or without it regards Serbia as its prospective market.
Traditionally, the Serbia automobile industry is one of the main economic sectors. However, in the 90s of the last century it was gripped by stagnation. Development of the Serbian automobile industry has continued thanks to foreign capital attracted in 2000-2009 and entry into the local market of companies FIAT, Michelin, Dräxlmaier and Delphi. Today many globally known car manufacturers produce cars in Serbia, contacts with over 70 suppliers of vehicle spare parts, materials and semi-finished goods are maintained. They produce cars, commercial vehicles, trucks and buses.
Development of the automobile industry is the priority of the Serbian economy in the coming years. The proof – seven new projects for the total amount of € 140 million signed in 2010. Magneti Marelli, Yura Corporation, Norma Group, Dytech are among companies willing to start production in Serbia. At the same time there is market demand for heavy payload equipment to work at mineral deposits and for passenger transportation. It allowed «BelAZ» and RUE «Belkommunmash» to enter into the Serbian market.
Other branches of economy
Belarusian enterprises have an opportunity to contribute to the economic development of Serbia and to participate in implementation of different projects on its territory. The construction industry is one of the fastest to develop in Serbia. Over the last few years projects have been implemented here with participation of foreign partners aimed at upgrading of transport infrastructure, construction of housing and commercial premises. In 2009 Serbia received a $33 m credit from the World Bank to boost efforts to upgrade the South part of the transnational corridor no. 10 running across the Serbian territory. It includes highways and railways. Apart from that, € 20 m were allocated to improve infrastructure of the transport corridor Horgosh - Novi Sad. The global economic crisis has somehow slowed down implementation of these projects, however at present active work is underway. Today Belarusian builders can actively participate in it.
The forecast growth of the Serbia pharmaceutical market is 8 % annually. Around 50 local companies operate in this sector, they satisfy approximately 60% of the demand. The remaining 40% are covered by import, mainly from the EU countries. Our pharmaceutical producers can also participate in health care and drug safety programs by supplying their drugs and developing new drugs with Serbian colleagues.
Actually, areas of common interest between Belarusian and Serbian businesses can be found practically in all branches of economies of both countries. Efforts of government authorities and involvement of Belarusian and Serbian business representatives in international exhibitions contribute to establishing mutually beneficial contacts.
Search for partners
In 2009-2010 Belarusian manufactures took part in a number of exhibitions held in Serbia, including the International agro-industrial exhibition, specialized woodworking, transport exhibitions, etc.
In May 2009 in Minsk the Serbia National exhibition was held and a delegation of entrepreneurs headed by the Minister of Agriculture of Serbia took part in the «Belagro-2009» fair.
In June 2010 in Belgrad the first National industry and technologies exhibition «Belarus Expo» was held. Over 100 Belarusian economic entities interested in new partners and expansion of their presence on the markets of Serbia and other states of the Balkan region displayed their products and services. Within the framework of the exhibition a meeting of the Business Council of the two countries, a number of seminars and round tables took place, business talks were held where the parties specified prospective fields of cooperation. Participation of Serbian construction companies in the «Budpragress-2010» exhibition revealed common interests and allowed outlining prospects for further cooperation. In particular, following the results of the forum the Serbian company «INM», a roofing and front profiles producer, made a proposal to start joint production on the territory of Belarus.
The «BUCK» company expressed readiness to cooperate with Belarusian architectural and design bureaus.
The free trade agreement between Serbia and Belarus creates necessary conditions for growth in bilateral trade, however it is important that Belarusian economic entities be more active in their efforts to penetrate Serbia market with cooperation proposals, thus strengthening partnership relationships between business communities of both countries