Jul 16, 2009    INTERVIEW - Serbian Govt Must Pay its Debts to Private Sector, Cut Red Tape and GoThrough with Restitution To Stimulate Economy - Belgrade Commerce Chamber Head

BELGRADE (Serbia), July 16 (SeeNews) - The Serbian government must settle at least half of debts it owes to the private sector, cut red tape and go through with the restitution process in order to stimulate the country's flagging economy amid the global downturn, the head of the Belgrade Chamber of Commerce said.
"When we talk about the first measure I mentioned, we are talking about a relationship between lenders and debtors. And who is the biggest debtor? The state. If the state is liable for some two thirds of the debt in the country, it should pay off half of what it owes immediately," Milan Jankovic told SeeNews in an interview last week.

The government in Belgrade said earlier this year that it will start to pay off its debt to private companies in a bid to bolster commerce. The Serbian government owed private companies some 50 billion dinars ($758 mill ion/536 million euro) at the end of the first quarter, local daily Politika (www.politika.rs) reported last month.

Amid the current economic dislocation, Jankovic says, liquidity problems have blocked the operation of some 30,000 companies in Serbia.
"And if we follow the logic that Belgrade-based businesses, according to our data, account for close to 50% of the country's economy, we can assume that the city's 15,000 companies are blocked right now."
As for easing overregulation, the only way to remove the bottlenecks is by cutting, simplifying or speeding up licensing procedures, Jankovic added.
"It takes too long to register a company, and the same is true for registering new hires or changing the working status of current employees."

Serbia's Economy Minster Mladjan Dinkic, who launched the anti-red tape Operation Guillotine in September, said at the time the number of laws that make life difficult for investors is in the four figures, some dating as far back as the 1970s.

"The Guillotine is something else. The Guillotine refers to retiring outdated legislation that has had no practical application for decades. What I am referring to are regulations that are being applied on a regular basis, and which must be realistic and must provide a nurturing environment for Belgrade-based businesses."
As the restitution process makes headway, many new assets will be listed for sale on Serbia's real estate market, Jankovic added.
"Many of the families will not be interested in retaining this property in their ownership, be it a piece of land, a factory, a hotel or a building, especially at this moment," he said.

The proposal for the restitution law, whose draft is expected to be completed by the end of the summer, should be endorsed by the government in Belgrade by the end of this year, state-owned broadcaster RTS reported last month, quoting Finance Ministry's State Secret ary Slobodan Ilic as saying.
The estimated value of the nationalised property, which will be returned to former owners, will be disclosed once the draft is completed, Ilic said. In cases where restitution isn't possible, former owners will be reimbursed. The maximum value of the total compensation is around 4.0 billion euro, according to earlier drafts of the law.