Businesses: ‘Stability is needed in the Balkans to compete with China’

“Serbia has an unprecedented investment plan for its motorway, rail and river transport networks, and more than one Italian company is in pole position.” Just on Monday, the Minister for Transport and Infrastructure, Matteo Salvini, travelled to Belgrade on a mission aimed at boosting Italia’s investment and economic cooperation in Serbia. Our country has strong ties with virtually the whole of the Balkans, but it is undeniable that half of all our exports to the region are destined for Belgrade.

The street protests, however, have not gone unnoticed by the more than 1,200 Italian companies operating in the country, nor has the possibility that, after more than a decade, Serbia’s leadership might pass into the hands of someone other than President Aleksandar Vučić. “Any period of uncertainty can have an impact on the economic climate and investor confidence,” says Patrizio Dei Tos, head of Confindustria East Europe, which covers eight countries including Serbia and Albania. “It is natural that some companies have adopted a more cautious approach when planning new investments or organising their international operations.” For Dei Tos, however, it would be simplistic to explain Serbia’s economic situation solely through this lens: ‘Italian companies operating in Serbia and the Western Balkans are facing far more profound transformations: the slowdown in the European automotive industry, the reconfiguration of value chains, growing international competition and rising costs are redefining industrial strategies across the region. This scenario is also shaped by new factors in international competition, such as the entry into force of the free trade agreement between Serbia and China, which is altering the competitive landscape in which European companies also operate.”

Beijing, after all, is now the biggest economic player in Belgrade and has even overtaken Germany as an investor. Since 2014, China has also signed more than 10 loan agreements with Chinese banks for infrastructure projects, and has stepped up military cooperation with Serbia by selling it drones and advanced air defence systems, reflecting an ever-deeper strategic alignment.

To compete with the Chinese giants, Italian companies prefer to opt for continuity: “For investors,” argues Dei Tos, “what continues to matter most is the predictability of the regulatory framework, the certainty of the rules, administrative efficiency, the quality of infrastructure and the availability of skilled staff.” Minister Salvini, who met the Serbian president this week, put it another way: “I congratulated President Vučić and the government colleagues I met; I hope there will be continuity in government action in Serbia, given that elections are due to take place shortly.” And Italia was among the minority of countries that, at Thursday’s Coreper meeting, would have liked to give the go-ahead for the opening of the third cluster of negotiations on Serbia’s accession to the EU.