Serbia's political instability has made Western investors hesitant to participate in privatisation, and it's going to take major moves such as big-name IPOs to lure them, a senior official said on March 07.
More than 2,000 firms have been sold since 2000, when the fall of autocrat Slobodan Milosevic ended a decade of isolation, and the economy has grown by an average 6 percent a year. But despite prudent macroeconomic policies and cutting red tape, the transition has also been marked by weak coalitions and slow, tortured progress towards the European Union.
"The foreign companies participating in privatisations in Serbia mostly come from Croatia and Slovenia," Luka Andric, State Secretary in the Economy Ministry said in an interview on.
"They are confident in their knowledge of the market. Investors from Western countries are hesitant to participate because of political instability." The latest government split, which might mean new elections, has nationalists and liberals squabbling over whether Belgrade should pursue closer ties with the EU or turn to Russia.
Serbia has taken some $11 billion in foreign investment in the last eight years, versus almost $20 billion clinched by fellow ex-Yugoslav Croatia. Neighbouring Bulgaria, an EU member, attracted $7.5 billion in 2007 alone.
Andric said that to attract more investors, Serbia planned to float shares of big state companies including landline monopoly Telekom Srbija as well as Galenika pharmaceuticals, both profitable, well-run firms with a strong brand. "With this move, we hope to attract foreign investors and turn the Belgrade stock market into a significant regional player," Andric said.
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