Republic of Serbia Ministry of finance Administration for

Republic of Serbia Ministry of finance Administration for free zones Serbia = Good investment

Favorable geografic position. . . • Serbia is situated in the central part of Balkan peninsula and represents one true connection between South East Europe and Western and Central Europe • It covers an area of 88, 361 km² and has 7. 5 million inhabitants • Temperately continental climate with worm summer and strong winter • It is positioned at the border of the EU and the intersection of the Pan-European corridor no. 10 and no. 7 *Serbia is the connection of the East and the West

The Market… • Serbia is in the middle of the South East Europe Free Trade Agreement that provides duty-free access to a market of 55 million people • An access to another market of 150 million users is enabled by signing the free trade agreement with Russia. • Consistent growth of GDP points to the expansion of the market • Serbia is rich with young, perspective graduates who are ready to get involved in various business projects.

Free zones • Fenced and marked part of the Republic of Serbia`s territory where activities are carried out with many business benefits • Preferential customs treatment, tax relief and simplified administrative procedure make free zones investment attractive. • Free zones represent highly developed centers of technology, telecomunications , modern infrastructure and industry and logistic support. * Free zone

Establishing Zone Area The zone area shall be established when the Government grants Approval. The rights of the Zone Founder, Company for Zone management and Zone User, laid down by the Law on free zones, may not be diminished by any other law or regulation. The Company for the Zone Management shall submit the application to the Government through the Ministry of Finance to obtain the approval for establishing the zone area. • Zone Founder is a local self-government body, company, i. e. enterpreneur who adopted the decision or concluded contract with other Founder on establishing a zone. • Zone Area is the land determined by cadastre plot of land the surface expressed in respective units of measurement

Zone users… • Zone founder, • The Company for zone management, • Domestic and foreign legal and natural person that carries out activities in the zone

Why do the free zones exist…? • Free zones contribute business savings trough different benefits • Attracting investments help regional development • Increasing number of working positions • Logistic centres (needs and services are all at one place) • Free zones concentrate the International trade through controled channels

Benefits of investing in Serbian free zones… • Pan-European corridor 10 represents the link of Europe and Middle East. • Duty free access to the South East Europe Free Trade Area of 55 million users market • Free trade agreement with Russia which allows Serbia to enter the market of 150 million users • Unemployed, educated and professionally skilled workers • Simplified regulations on foreign trade and foreign investments • Low tax rates- VAT 18 % in free zones 0 • Lowest corporate profit tax rate in Europe- 10%

• In Serbia, labor is avaliable at very competitive prices, so the work costs are lower than in the countries of the region. Ø Average net income in region

Ability to connect to the domestic economy… * active refinement* • Goods from the Free zone can be temporarily taken out of the zone to the other part of the Serbian territory, or brought in the zone for the purpose of refinement, finishing, repairs, testing and marketing presentation.

PRODUCTION AND REFINING- example PRODUCTION OF SEMI GOODS IN THE FREE ZONE Company outside the Zone Refining outside the Zone Storage of raw material COMPANY IN THE FREE ZONE v Refining process which is carried out of the free zone, does not impair bussiness activities of the company! FREE ZONE BORDER Serbian border Export Import

Doing business in the zone… • Customs duties and other import charges shall not be paid for import of goods intended for carrying out of activities and construction of facilities in the zone. • The goods brought into and moved out of the zone, as well as the goods stored in the zone shall be treated as customs goods. • Person who trades the goods from the zone on the territory of Serbia shall be liable to declare such goods to the customs office; therefore adequate customs procedure may take place. • Control of the goods is carried out by customs authority • Transportation is free of VAT • The goods whose importation, i. e. exportation is prohibited may not be imported or exported into/from the zone.

Free Zone benefits. . . • Fiscal benefits (exemptions from any tax burden for FDI, VAT , company profit tax, property tax, income tax, etc. ), • Free of customs duties for goods and equipment and financial benefits (free cash flow) • Efficient administration, (one stop shop) • Simple and fast customs procedures • Local subsides for using the infrastructure (low price and service costs), • Liberal law on paper • Providing a set of services to users under preferential terms (transportation, loading, reloading, freight forwarding services , insurance and banking services)

The Development of the Free zones - The Free Zone Boom

Free zones in EU lappeenranta hangon prestwick ringaskiddz ronaldswaz latvia copenhagen humberside zantar shanon liverpool tilburz hamburg bremen zarnowie sherness bremenhaven szcze c cin emden kiel southampton cuxhaven duisburg deggendorf bordeaux vigo trieste barcelona madeira venice cadiz thessaloniki las palmas de gran canaria piraeus heraclion

Free zones in Europe icelandic lappeenranta prestwick ringaskiddz madeira las palmas de gran canaria hangon ronaldswaz latvi copenhagen a humberside zantar shanon liverpool sheremetie tilburz hamburg bremen zarnowie vo sherness bremenhaven szcze c cin emden kiel southampton cuxhaven duisburg deggendorf b. bzstrica zollbudape betriebsges graz bordeaux goricaosije st tirol sulina chisinau k vigo sr. mitrovic galati sombo celje zgb. a trieste r gorica senta saba tvardit braila venice f. z. a novic barcelona rijeka beogra constantz sad prahovo split kotor nis d vidin a rouss dragoma samsun e bourgas 3 pirot n trabzo f. z. isanbul cadiz bar svilengra n d ISE east anatolian istanbulataturk gibraltar thessaloniki leather mersin mardi aegea zumurtali n piraeus larnac n k antalz famagust a heraclion a kalafran a a

Free Zone Pirot • The Pirot Free Zone is located on Serbia's eastern gateway to the Middle East. One of the benefits of this location is its close proximity to E-80 and Corridor 10 international roadways, which represent the shortest link between Europe and Asia. • The Pirot Free Zone was founded in 1998 by an act of the federal government. • The Zone operates within the town of Pirot's industrial zone, and encloses an area of 17 hectares, although expansion to 50 hectares is possible • One of the leading free zones in the country.

Infrastructure and. . . • Free zone covers an area of 65 hectars. Production area takes 121000 m² and almost 20000 m² is for open and closed space storage. • There are the additional 9255 m² of office space. Services in the zone. . . • Users support has to ensure and protect business activities • Freight forwarding services abroad Domestic and foreign shipping • Loading and reloading of goods • Container terminals • Warehousing and storege (indoor and outdoor) • „One stop shop“organizationmeaning that the Zone's clients can handle all Customs permits and administrative procedures related to the flow of goods through the Zone in one location.

Benefits from investing in the Free zone Pirot. . . • Exemption from developing fees for city building land, otherwise payable by anyone who wishes to develop urban land in Serbia. • Exempsion from municipal administrative fees and expenses • Exemption from local taxes • Exemption from urban land use fees • Exemption from instalation fees for local water and sewer utilities • Discounted prices for the use of municipal services and water and sewer utilities Contacts: Pirot Free Zone Nikole Pašića bb, 18300 Pirot Tel. + 381 10 304 -071, 337 -799 Fax. + 381 10 304 -073 e-mail: freezpi@tigar. com web. www. freezpi. co. yu Manager: Dragan Kostić Contact person: Zoran Petrović, pomoćnik direktora

Free zone Subotica • The Subotica Free Zone is located in the northern part of Serbia and • the province of Vojvodina -next to the border with Hungary and the • European Union. The E-75 international highway passes through Subotica and represents a major pan-European road that leads from north to south and connects • with an international road network heading to the Near East. The existing • rail line that passes through Subotica is an integral part of the European • rail network. • The Subotica Free Zone was founded in 1996, when a joint stock company • was formed to manage the Zone

Infrastructure in the free zone • The Zone encompasses 15 hectares of land. It possesses 13000 square meters of production space, 26000 square meters of closed storage space, and 313 square meters of office space. • City water supply • Road network within the Zone • Two transformer sub-stations with 2 x 630 Kw. A capacities • Telephone lines • Projected connection to local gas lines

Business activities. . . • Within the Zone, users can engage in a wide range of activities, including production, warehousing, reloading and packing goods, banking, finance, insurance services, and travel services. • Any activity that doesn't pollute the environment is permitted within the Zone. • Subotica Free Zone itself offers a host of services to its users, such as shipping, loading and unloading, insurance, freight forwarding, and marketing. Contacts: Subotica Free Zone 94 Batinska st. , 24000 Subotica Tel. + 381 24 548 -277 Fax. + 381 24 548 -106 E-mail: suzona@eunet. yu Web: www. szsu. co. yu Manager: Sava Radak

Free zone Zrenjanin • Zrenjanin Is the largest city in Municipality of Vojvodina and the third city in Vojvodina regarding the population. • This city has the most water flows in its area ( The Danube , The Tisa , The Begej, The Tamis, also the river canal network Danube-Tisa-Danube) which puts him among the most atractive cities for investing in Serbia, according to USAID, SIEPA and American Chamber of Commerce.

Infrastructure and. . • The Free zone covers an area of 6 hectars • 400 m² is for office space, • 6000 m² for warehouses and 5000 m² for open storage space. Contacts: Zrenjanin Free Zone 1 Cvetna st. , 23000 Zrenjanin Tel. + 381 23 536 -377 Fax. + 381 23 536 -277 free zone benefits • Imports and exports are • Raw material used for finished goods that are meant forexport can be imported duty-free. • Zone users can freely make use of foreign currency earned through operations within the zone. • Expropriation is not allowed in the free zone. • Zone users can lease, buy or build manufacturing facilities, warehouses or commercial buildings.

Free zone Novi Sad • Free zone Novi Sad is placed in the city of Novi Sad, the capital of Vojvodina province with international harbor on the Danube river. • The traffic of the zone is directly connected with Pan- European corridor no. 10 and train line Vienna-Budapest-Belgrade. • The distance from the border crossings to the neighboring countries (Croatia, Bosnia, Romania and Hungary) is about 80 km. The distance from “Nikola Tesla” Belgrade Airport is 100 km. • The city of Novi Sad is the centre of the great “Novi Sad Fair” and many leading banks in the country.

Infrastructure and… • 10 hectare of developed land with complete utility infrastructure and direct links to international road, rail and river ways. • An electric energy supply of 650 k. W with additional capacity available • A natural gas network, standard fire and lightning protection, water and sewer network • Telephone and ISDN lines Services in the zone. . . • Land leases for land intended for industrial and commercial construction with guaranteed fixed terms for up to 60 years. • Rental of storage and office space in buildings owned by the Zone. • Loading, unloading and reloading of goods-provided by a special department within the Zone. • Availability of a customs terminal for quicker and simpler customs procedures • 24 -hour security • Administration, freight forwarding and agency services

Target clients. . . • • • Export-oriented manufacturing companies whose products require imported materials Component assembly companies whose products are meant for sale on the foreign and domestic market Foreign companies that would like to outsource industrial processing or finishing to Serbian companies Companies that require a distribution center in the region Companies that would like to become more familiar with the Serbian market and have easy access to domestic trade fairs and other events Contacts: Novi Sad Free Zone 11 Hajduk Veljkova st. , 2100 Novi Sad Tel. +381 21 541 -216, 541 -223 Fax. + 381 21 541 -221 e-mail. office@szns. co. yu web. www. szns. co. yu Manager: Srđan Egić Contact person: Jadranka Jovanović

Ministry of finance Republic of Serbia Administration for free zones * Administration for free zones is established as administrative entity within the ministry in charge of financial affairs, in order to carry out state administration activities in the field of free zones. v • • • It operates on behalf of the state interest basing its activities on following Zone development Zone promotion Control and supervision of zones

Zone development… • Implements national policy for zone development aiming to increase inflow of direct investments and enhance engagement of the work force • Participates in the preparation of regulations in the field of zone operations; • Considers requests for approval of zone area and submits opinion to the Ministery in charge of finance. • Provides professional assistance to investors during the decision making process concerning investments in the zones • Arranges immediate contacts between interested investors and Companies for free zone management. • Cooperates with foreign institutions and zone experts

Zone promotion… • In cooperation with Agency for Foreign Investments and Export Promotion (SIEPA) , promotes investments and operations in the zone • Presents special benefits and business opportunities; • provides necessary information to investors through database on zone and business.

Control and supervision of zones… • reviews reports on zone operations and proposes their adoption to the ministry in charge of financial affairs • proposes to the minister form and content of the application concerning granting approval for establishing zone area.

Merging of Free zones and Industrial parks… • Attraction and retention of FDI is Serbia`s primal goal. Key instruments for creating favorable conditions for domestic and foreign investments are free zones and industrial parks.

Merging of the free zones and industrial parks… (new wave of development) • Preklapanje svih vrsta pogodnosti, državnih i lokalnih, na jednom mestu, što ceo koncept čini atraktivnim prostorom za ulaganje kapitala. • Stvaranje efikasnog ambijenta za proizvodnju i poslovanje uspostavljanjem stimulativne investicione i poslovne klime putem različitih olakšica i državnih stimulansa kompanijama u zoni, povećava mogućnosti za privlačenje investicija. • Kombinovanje koncepta slobodnih zona namenjenih uvozno-izvoznim proizvodnim aktivnostima sa konceptom infrastrukturno opremljenih zemljišta namenjenih prvenstveno poslovanju sa domaćim tržištem – industrijskih parkova, stvarajući, na jednom mestu, mogućnost za razvoj proizvodnji namenjenih kako izvozu tako i sopstvenom tržištu

Developement of Free Zones - The Free Zone Boom Free Zone brownfield Industrial park brownfield Domestic market All types of investment Industrial park Greenfield Domestic market Free Zone greenfield