Oct. 16 (Bloomberg) -- Serbia should let foreigners buy arable land to increase food production and encourage companies from abroad to borrow in dinars, an association of leading foreign investors said.
With the country mired in its second recession in three years, the government should reduce bureaucracy and corruption, and improve the rule of law to encourage competition and attract investment, the Belgrade-based Foreign Investors Council said in its 10th annual report, released today.
“The government should take all necessary actions to increase activity on the capital market in Serbia, including motivating foreign investors to issue dinar-denominated bonds and initiating Serbia’s first big initial public offerings,” said the group of 130 investors who employ 6 percent of the Balkan nation’s workforce and contribute almost 17 percent to its gross domestic product.
The government has said it wants investment to spark growth in the economy, which the central bank forecasts will contract 1.5 percent this year as Europe’s debt crisis crimps demand abroad for Serbian goods. Farming output, which accounts for two percentage points of GDP, will drop 22 percent, central bank Vice Governor Veselin Pjescic said Oct 10.
The organization, known as FIC and whose members include BASF SE, Erste Group Bank AG, Rio Tinto Plc, L’Oreal, Henkel AG & Co KGaA and Lafarge SA, has told Serbian authorities they need to speed up issuing of construction permits and make the labor market more flexible.
Serbia should give private investors a bigger role in developing roads and railways, while reducing tolls on existing highways to attract transit, the FIC said. Investors are interested in buying municipal bonds, which debuted in Serbia last year, as a form of financing infrastructure projects, it said.
The group also called for better protection of copyrights in the Balkan country and resolving property issues related to Communist-era confiscations.
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