As long as Serbian companies do not become competitive enough to be able to secure growth on the basis of exports, the state must initiate domestic spending through investments in construction, agriculture, infrastructure and energy. These sectors are securing the largest number of jobs and profits, and investments will secure a chain effect of rise in demand and in products of other branches. This is why we will support the companies in trouble, protect domestic producers in public procurements, support the development of small and medium companies, bring back the glow to the military industry and develop an export support bank.
The main goal of economic development for which we stand is aimed at reducing unemployment by one third by 2015. This is possible if they meet the conditions of intensifying investment activities and increase business competitiveness on domestic and international levels. We will be advocating for a growth of real wage levels by 3 percent above inflation levels, which is realizable based on rapid productivity growth.
Government support to troubled firms: The measures of economic policy suggested by DSS are based on the concept of opening more new jobs than will be shut-down, with the establishment of an agreement between social partners on evenly sharing the burden of the economic crisis. Our direction of rehabilitation of enterprises affected by the crisis is focused on the reorientation of their development program. To support such programs we suggest the formation of adequate funds from special-purpose budget allocations.
It is necessary to increase the budget of the Development Fund by several times, with the purpose of financing rehabilitation programs in the economy. Funds for this purpose will be awarded on the basis of public invitations in order to ensure equal conditions for all companies interested in this kind of help.
Credit of the Russian Federation: The partnership between Serbia and the Russian Federation should be used as a basis for negotiations on the loan of the Russian Federation in the amount of 4 billion Euros for investments in the economy, based on 50% of the amount in the form of participation in financing infrastructure projects and 50% in cash directly intended for development projects of companies. The financial part of the loan will be implemented through the Development Fund, while the second part should be directed to support the implementation of infrastructure projects, via the Development Bank.
DSS is committed that the state assumes the role of investment driver, but particularly in infrastructure projects. DSS’s specific suggestions relating to investments in infrastructure are set out in the part concerning certain sectors of transport, energy, tourism …
Equal opportunity for all companies: DSS finds the “entrepreneurial approach” applied by the present government unacceptable, that it resolves the inability of some of the real sector companies to cope with the aftermath of the crisis by taking over these companies (Fertilizer Plant, the Serbian Glass Factory, IT …), by direct investments into the modernization of these companies (Smelter in Bor) or ad hoc rehabilitation programs based on budget allocations (in Kursumlija, Kragujevac …) Of course we are looking forward to, in these companies, work starting again, but what about the hundreds of companies that have the same problems, but are not a priority of any party, or are not sufficiently large to attract media attention. The state must provide equal opportunities and incentives to all.
Protection of domestic producers in public procurements: One of the effective measures to improve savings, and reduce opportunities for abuse is the merger of same or similar purchases of state bodies into joint, thereby increasing the volume of supply, reducing the number of procedures and increasing transparency of their implementation.
So the bidding process doesn’t exclude small suppliers, by asking for excessive qualification requirements (which is one of the most common forms of reduced competition in public procurement process) it is necessary to offer a number of ways of delivery or performance bonds.
Without subsidies for the realization of investments, with high interest rates on bank loans, the lowest subsidies for agriculture in the region and with no incentive for export, such as providers receive from other countries, Serbian companies are faced with competitors who are finding it easier to get jobs in public procurement procedures.
In evaluating bids are unreasonably valued criteria of acquired references, economic or technical abilities to perform the services, financial stability, given guarantees for sealing the work. In such procedures, our companies, even the best in their fields, often lose their engagements. Therefore, in the following period, the budget inspection, the state audit Institution and other bodies of control and supervision of spending funds should increase the activity of control of decision making criteria specified in the tender documents.
One of the incentives for the development of the domestic economy, especially domestic production, is the distinction between domestic suppliers who produce the goods offered in the public procurements and legal persons engaged exclusively in trade. Practice has shown that a large number of contracts are concluded with legal entities engaged only in commerce and employ only a few people, but have certain advantages in terms of financial ability.
It was shown that in times of crisis for measures to protect the domestic industry resorted the most developed countries in the world. Support to domestic economy is not a matter of protectionism, but economic rationality as there is no more important task in times of crisis than preserving the local economy and jobs. It is high time to precisely define what a domestic product is and to provide its manufacturer with advantages over foreign products.
Small and Medium Enterprises and Entrepreneurs: Drivers of development: SMEs are the driving force of economic development, as they stimulate private ownership and entrepreneurial skills, they are flexible and can adapt quickly to fluctuations in the market. In addition, SMEs generate employment, utilize local resources of raw materials, have a positive influence on the diversification of economic activities and contribute significantly to exports and trade.
For DSS the main priorities for development in the SME sector are:
- Recognition of medium-sized manufacturing enterprises, through involvement in projects with large companies
- 3 years free of income tax for new companies and entrepreneurs
- Acceleration of procedures and reduction of administration for the establishment of enterprises and reduction of the founding capital to 100 Euros
- Allocation of 10% of municipality budget in the development projects and SMEs
- Refinancing of investments and interest-free loans
- Accelerated legalization of illegally constructed buildings in accordance with the law
- Development of business incubators
- The creation of communal landscaped industrial zones
In order to build an enabling economic environment that would be in the purpose of developing the SME sector, we shall insist on the creation of cheap, efficient and speedy administration, the streamlined procedures for the registration and functioning of enterprises.
Return of the defense industry: In the past, defense production employed over twenty thousand highly educated mechanical, electrical, chemical and other engineers and at one time was the driving force behind economic and technological development. The defense industry consists of the following companies with majority state capital: “Zastava Arms” Krusik, “Milan Blagojevic”, Prvi Partizan, “Prva Iskra”. They are very important organizations that provide for the development of new models and improving existing products in these sectors, such as the Military Technical Institute, Technical Test Center, and three technical repair institutes which are a part of the Ministry of Defense and the Army of Serbia.
DSS believes that funds must be raised to support this sector, primarily through the provision of sufficient capacity engagement from procurements of the Serbian military and agreements that state authorities will conclude on strategic/technological cooperation in the field of the military industry and the supply of consumables and equipment. Export of small arms and ammunition can be significantly increased if the funds to provide the technological improvement of production and export are provided.
One of the directions of reform and modernization in the military industry imposes the possibility of achieving strategic partnerships between individual organizations with global technological and market leaders in this type of activity, such as Russia and China.
Improving exports and trade deficit reduction: We will provide specific financial and administrative support to companies that have export programs in the form of cheap loans with long repayment periods and lower costs through guarantees, for export business because exports are the main source of long-term monetary stability and economic growth.
It is necessary to introduce new instruments of support such as subsidized loans for exporters, where 50% of interests paid under commercial terms by the companies to the banks, would be taken over by the state with funds from the Development Fund of Serbia and the Serbian Investment and Export Promotion Agency.
The State should establish a fund with much larger capital for government guarantees for export operations, which would reduce the cost of 1-2% of exporters, but also significantly speed up the process of obtaining a guarantee, which is sometimes a bigger problem than its costs.
It is necessary to support the increase in the rate of finalization of products for export and take action to achieve geographical diversification of exports, because almost the entire foreign trade surplus is realized in the markets of Bosnia, Montenegro and Macedonia.
Export-support bank: The establishment of specialized banks for export support (link) to Serbian companies will provide for direct financial support to export, not only through export subsidies, but also through export crediting, provision of easier access to guarantees and risk reduction in export businesses.
Since it is far easier to win or retain domestic than foreign markets, as a measure to establish a more positive trade balance is imposed support to programs of substituting imports with domestic products. It is appalling that significant import is realized in the trade of goods such as basic agricultural products, for example, beans, meat, etc., and at the same time, domestic manufacturers are facing difficulties to sell surpluses of these products.