USAID Business Survey Finds Slightly Improved Business Environment Burdened by Red Tape and Interest Rates

USAID Business Survey Finds Slightly Improved Business Environment Burdened by Red Tape and Interest Rates
Ambassador Michael D. Kirby at the Serbian Chamber of Commerce
USAID Serbia

For Immediate Release

Wednesday, November 13, 2013
Harry Lipper, Senior Development Outreach and Communications Specialist

Belgrade, November 2013 – USAID’S third annual survey of 1,000 Serbian businesses found that Serbian executives believe the business environment in Serbia improved slightly during 2013, though lengthy and expensive regulatory procedures continue to harm their companies' competitiveness. 

Introducing the report, Ambassador Michael D. Kirby noted some positive findings:  nearly half of respondents – 46 percent – reported that corruption did not affect their businesses in 2013.  That is a marked improvement over 2012, when just 26 percent said corruption was not a problem.

Ambassador Kirby was also pleased with improvements in the efficiency of government inspections, which reduced the burden placed on businesses.  Respondents said that time dedicated to inspections dropped to 22 hours in 2013 from 70 hours in 2011, and that fines continued to drop, averaging €1,154 in 2013, compared with €1,655 in 2012 and €2,128 in 2011. 

The USAID Business Enabling Project survey allows business leaders to rate the impact of regulations, economic policies, and access to finance on their competitiveness and growth prospects.  Many said they continued to face the same problems as in previous years in critical areas such as inflation, wage and value added taxes, and exchange rates. 

Business executives complained that inadequate sources of funding stifled expansion:  90 percent said high interest rates and fees stymied growth, 76 percent cited collateral requirements, and 72 percent blamed loans in foreign currencies.  They also said their companies spent nearly as much time and money dealing with regulatory issues in 2013 as they did in 2012. 

Looking ahead, Serbian businesses were cautious about the business environment in 2014:  31 percent said they were optimistic about 2014, while 60 percent said they were neutral about the prospects of increased profits, hiring more staff, or introducing new products and services.  This was about the same as last year, but down markedly from 2011 when 45 percent of respondents were optimistic.

The survey also found that just 7 percent of Serbian companies export goods, hurting economic growth.  Most focus on domestic markets, with 70 percent operating exclusively in their home municipality.