Booz │ Allen │ Hamilton Invest in Serbia! USAID Serbia Competitiveness Project

Project Summary 4 Year $14.7 million project Objective:  Broad-based economic growth  Increased private sector competitiveness in targeted sectors Results: Increased sales, exports, investment and jobs measured by return on investment (ROI) of 25:1 Impact:  Increased capacity of key sectors and businesses to compete on global, regional and domestic markets  Increased productivity & improved business climate 2

Opportunities & Constraints Study Assessment of leading sectors to identify those with high potential, obstacles to growth and potential early stage activities Found common needs across sectors: I.Sales & Marketing II.Education & Training III.Policy Advocacy & Reform Conclusion: Support a broader set of sectors (11) to address the common themes and leverage impact 3 The Opportunities and Constraints Study brochure

5 Construction & Building Materials  MosBuild Trade Fair “1 st Ever Serbian Participation”  Belgrade Construction Fair  Market Linkage Support  FIDIC Establishment Renewable Energy :  Wood Waste Biomass Feasibility Study  International Investors Support  FDI promotion (Investor Handbook, Investor Targeting and Facilitation) The brochure published for MosBuild

6 Wood Processing & Furniture:  FSC Chain of Custody Certification  Milan Fair mentorship  Market linkages (regional trade fairs) Tourism:  IMEX Trade Fair  Convention Bureau Capacity Building  Domestic Tourism Development Film and Production:  Cannes Producers Network  Film Commission Establishment  Film Location Outsourcing Support

7 Other Sub-Sectors Apparel  Improving designer skills  International Market Linkages  Producers’ Catalogue Auto Parts  Just-in-Time Outsourcing IT  CMMI/other certifications to improve outsource potential  IT skills development  Software development for local market demand Logistics & Transport  Load Sharing Study

“Serbia is Number One Business Reformer in the World” World Bank, Doing Business 2006  CEFTA agreement in force  Stabilization and Association Agreement (SAA) signed; candidate status planned for 2008  WTO accession expected in 2008  Partnership for Peace, member since 2006  Legal reforms to align with EU legislation  Tax incentives (10% corporate tax, etc)  FDI Stock ( ): $13.5 bn  Project Policy Activities : Law on Undertaking Investment Projects Abroad, Spa Law, facilitating permitting in renewables

Serbia’s Market Access  Duty free exports to the EU for almost all products  FTA with Russian Federation - market of 150 mil. people. Limited number of exceptions  CEFTA – duty free access to 30 million people market

Government Financial Incentives Non-refundable funds for investments in all sectors, except agriculture, tourism, hospitality and trade Investment projects rated based on the evaluation criteria : investors reference; participation of domestic suppliers; effects on R&D, HR etc. See

Enhancing human capital  Well educated  Proficient in foreign languages  Productive (avg 11.8% increase in past five years)  Readily available; Competitively priced  USAID contribution: Trainings, ToT Skills Gap Analysis; Curricula changes Career Center Support

Conclusion: Respond to entrepreneurs and facilitate second stage of transition in Serbia  Cross-cutting technical assistance  Investment into preparation and follow-up of trade fair participation  Specific market research based on investor needs  Sector-specific policy assistance  Targeted workforce development based on market research and trends Booz │ Allen │ Hamilton