Cross-Balkan investments gain momentum

05/03/2013

Small- and medium-sized businesses reap benefits of expansion across the region.

By Misko Taleski for Southeast European Times in Skopje -- 05/03/13

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Croatian food producer Podravka is planning to spend 200 million euros on expansion in the Balkans. [Podravka.com]

Balkan companies are increasingly seeking investment opportunities beyond their local markets, and small- and medium-sized enterprises have demonstrated success using this strategy to expand across the region.

"In the past couple of years … the political atmosphere is more relaxed, profit and cost are the main company motivators," Tome Nenovski, former vice governor of Macedonia's National Bank, told SETimes.

Government action has been instrumental in the process.

Serbia created incentives to encourage business expansion. Companies investing at least 10 million euros and employing at least 200 people will be free from paying taxes on revenue for the next 10 years.

"This will give greater convenience to foreign companies … to establish enterprises in Serbia," Mladjen Dinkic, Serbia's finance minister, said.

Serbia and Macedonia signed an agreement on mutual assistance in the EU integration process last month, and given the intensified economic activity among small- and medium-sized enterprises, the two countries also agreed to form a joint commission for economic co-operation.

"One of the priorities for Macedonia and Serbia is joint entry into third markets, which will maximise market penetration and profit," Nikola Popovski, Macedonia's foreign affairs minister, told SETimes.

In the past five years, Macedonian companies have opened offices in Serbia, Bulgaria, Albania and Kosovo, creating several hundred jobs with investments around 18.5 million euros.

Renova, a construction company from Dzepiste, Macedonia, invested 5 million euros in building a factory for plaster in Albania after opening a similar facility in Kosovo 10 years ago.

"The investments prove small- and medium-sized enterprises can earn significant profits," Nenovski said.

Other countries in the region are investing as well.

Croatia's Podravka food producer has expressed interest in acquiring Serbia's Bambi-Banat, Aleva and several smaller food producers. Podravka announced it is prepared to invest 200 million euros.

"On July 1st 2013 when Croatia becomes an EU member, it can allow Serbia's economy to enter the Union's 27 members through the investments," said Zvonimir Mrsic, president of Podravka's executive board.

Larger enterprises are expanding across borders as well by opening small- and medium-sized production facilities. Macedonia's leading pharmaceutical company Alkaloid opened a production facility in Belgrade with 60 employees through a 750,000-euro investment.

"The plan is to invest in know-how and human resources to achieve even greater results," Zivko Mukaetov, director of Alkaloid, told SETimes.

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Mukaetov also announced plans to open offices in Turkey, the Czech Republic and Slovakia.

Ading, a Skopje company that produces chemical construction materials, opened a 400,000-euro production facility in Plovdiv, Bulgaria, while Brako, a Veles, Macedonia, company that makes wire products, opened a facility along the Danube River in Pancevo, Serbia.

Penetration into new markets in the region is particularly important.

"The companies' names and products are branded, and can more easily enter regional markets. The amounts may look small, but in the condition of economic crisis, are very important for the Balkans -- and they are gradually multiplied," Nenovski said.

This content was commissioned for SETimes.com.
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