Serbia-Montenegro wants Japan as strategic economic partner

Serbian Minister of Finance Mladjan Dinkic said today in Tokyo that Serbia-Montenegro can expect new loans upon repayment of remaining debts and highlighted that the greatest obstacle for Japanese investors is a lack of information on the Serbian economy.

Following the write-off of 51 percent of Serbia-Montenegro’s debt to Japan through the Paris Club of Creditors, Serbia-Montenegro’s outstanding debt to Japan stands at $128 million, of which 15 percent will be written off after the arrangement with the International Monetary Fund is concluded, it was said at a meeting held at the Japanese Bank for International Cooperation.

After repayment of debts, Serbia can expect approval of a soft loan, with an interest rate between 1 and 2 percent and a 40-year repayment period, for the construction of a new bridge on the Danube River, worth around €120 million.

Speaking to Serbian reporters, Dinkic said Japan expressed interest in the markets of Serbia-Montenegro, Romania and Bulgaria, owing to the fact that production costs have risen in other East European countries that have joined the EU, such as the Czech Republic and Poland.

The Minister of Finance said that Serbia’s advantage in relation to Romania and Bulgaria are lower production costs and a free trade agreement with Russia, as well as maintaining a highly qualified workforce. Recently the country has also significantly reduced its political risk.

The Japanese negotiators were satisfied with the evaluation of the World Bank that listed Serbia-Montenegro as having the most improved business climate in 2004, Dinkic said. He explained that the greatest obstacle to Japanese investors is a lack of information on the Serbian economy, which is a special reason for him to try to attract Japanese investment.

Today Dinkic met with representatives of the Japanese government, the Japanese External Trade Organisation, the Japanese Bank for International Cooperation, the National Bank Governor, representatives of the ministries of foreign affairs and finances, as well as with representatives of banks and brokerage firms.

The minister said that Serbia-Montenegro wants Japan as its strategic economic partner and presented the facts proving a significant improvement in investment conditions. Dinkic said that the Belgrade delegation’s presentation on macroeconomic development and investment opportunities in Serbia was well received by the Japanese hosts.

Dinkic urged the Japanese representatives to push for the revision of Serbia-Montenegro’s status in the Organisation for Economic Co-operation and Development (OECD), which has remained unchanged for two years and represents an obstacle to investment in Serbia.

In the OECD study, Serbia-Montenegro received a grade of seven, which is much lower in relation to neighbouring Croatia. Dinkic said that Serbia-Montenegro has done a lot on the stabilisation of macroeconomic opportunities and reduction of political risk, and for that reason it deserves a better mark.

The minister said that his major task is to help change Serbia’s image in Japan, where little is known about Serbia except for the wars and its relation with the Hague tribunal.

He said that the Japanese are very cautious when it comes to doing business and that is why it is necessary to give them as much information as possible on the economic and political climate in Serbia. To that end, a delegation of the Japanese External Trade Organisation has scheduled a visit to Serbia for next year.

The parties also agreed that tourism is a great opportunity for economic cooperation between the two countries, and in recognition of that the Serbian Minister of Finance presented a package of promotional material that the Serbian Tourist Organisation prepared in Japanese.

In addition to Belgrade and Novi Sad, the destinations offered to the characteristically adventuresome tourists from Japan were Oplenac, Zlatibor, Fruska Gora, Sremski Karlovci, Kovacica and Palic.