2. Presentation to Round Table Fred Millan Team Leader Regional Socio-Economic Development Programme (RSEDP2 ) Wednesday 21 st April 2010

3. RSEDP2 Support to Regional Development Agencies RSEDP 2 (M€ 4.9) is a Technical Assistance Project funded by the EU and comprises 4 components: 1Increase the efficiencies of the RDAs 2Promote and Association of RDAs 3Municipal Cooperation 4Grant Scheme Promotion and Management. 2nd Call circa M€10, June 2010 with 2 lots (large and small scale projects e.g. Large up to €500,000 and Small up to €150,000.

4. 2 nd Call Grant Scheme The 2 nd Call is under consideration, to be confirmed. Likely that: Launched in June 2010 Grant Fund circa M€10 Large & small scale projects (e.g. Large up to €500,000 and Small up to €150,000.) All Serbia Eligible organisations could include: Regional Development Agencies Regional SME agencies Municipalities (LEDs) Chambers of Commerce and Industry (CoCIs) Industry Associations and Cluster Associations EU 27 Countries (Industry, Business associations, RDAs & CoCIs etc.)

5. 1 Capacity Building for Regional Development? 2Capacity to do what? KEY QUESTIONS

6. Serbia Population of SERBIA 7.3 Million Working age population (15-64) 4.9 Million Participative working population 60.5% (71%.) 2.5 Million in employment Public Sector jobs 40%, Private 40%, “Informal” 20% (EU average 20-25% in public sector) Unemployment rate 17.9% (9.5%) Long term unemployment 10.9% (3.1%) Youth unemployment 42.5% (18.3%) 15+ yrs accessing higher education 14% (40%)

7. Serbia Competitiveness Agriculture sector comprises 1.3M (17% pop) and 12% GDP Rapidly aging farming population SMEs generate 35% of GDP and 43% of employment 300,000 SMEs, 95% comprise 10 employees or less Serbia has a high rate of business start-ups (and failures) 3% of R and D invested by SME/businesses Export values represent only 47% of imported values GDP per capita circa €4,650 (EU 27 average circa €25,000) In Europe, Growth Competitiveness Index (GCI) for Serbia is 45 from 49, ahead of Macedonia, Moldova, Bosnia and Albania

8. Dominance of Belgrade 3 rd largest city in South Eastern Europe, after Athens and Istanbul Belgrade population circa 1.7million (23%) 31% of Serbia employed population 30% of SMEs are located in Belgrade Contributes circa 35% to national GDP Capital, financial, legal, political centre Headquarters of the 20+ largest businesses Only Significant International Airport. Pressures – Transport, Utilities, Environment etc.

9. THE REGIONAL ISSUE JOB LOSSES & MIGRATION Needs: NEW JOBS IN THE PRIVATE SECTOR JOBS IN HIGH GROWTH COMPANIES JOBS IN EXPORT

10. Regional Development Regional development is employment creation! -New jobs taken up by unemployed -By people moving to new jobs -Opportunities for school leavers & unemployed - But who will make the job offers? -Who will create the new jobs? Essentially Private Enterprises, much less the Public Sector!

11. Private Enterprises will create new jobs -They are main target groups for regional development actions (production, services, tourism) -Necessary to understand what impedes enterprises from expanding and creating jobs -Regional development is most effective where there are organisations who understand the needs of businesses -Developing initiatives to help businesses overcome constraints. ENTERPRISE IN THE PRIVATE SECTOR

12. RSEDP2 GRANT SCHEME OBJECTIVES The main objectives of the RSEDP2 Grant Scheme is to fund regional development projects addressing: Needs of manufacturers in (growth) sectors Barriers that constrain regional economies; Cooperation/partnership between the public and private sectors; Unemployment and under employment.

13. Project Concepts Area-based Development Partnerships Structural Changes at the Regional Level Quality, Standards & Better Services Qualification & (re) Skilling Networking & Internationalisation Enhancing economic/social efficiency & effectiveness Mobilising Communities JOB CREATION !!!

14. Business Infrastructure Supply Chains and Clusters Value Chains Training and Employment

15. “Business Infrastructure” Infrastructure works / equipment relating to existing business parks and or business centres where services are provided, e.g. Whe re businesses are impeded because of design or specification of existing infrastructure – poor access, parking, reception, seminar facilities, inadequate technology for training etc. OR... Developing a “Centre of Excellence” within an established cluster (Automotive, Pharmaceutical, Agro Processing), including laboratories, testing and calibration, certification facilities to encourage best practice and innovation. e.g. Innovation Centre or Centre of Excellence should be supported by Trade/Industry Associations, Chambers of commerce or Groups of Municipalities.

16. “SUPPLY CHAINS/CLUSTERS” Large companies procure a wide range of supplies – goods and services - (often) from smaller, local suppliers but ONLY if local companies can supply at right - Quality, -Price, -On time and -Volumes (sustainable over time). If not, particularly FDI companies secure supplies from approved supply chain outside the country. e.g. FIAT will have 100’s of suppliers across numerous sectors from pencils to CAD IT. But HOW MANY local companies supply this type of international company?

17. A Simple Model Connecting your organisation to a cluster or hub to access numerous organisations through a support centre

18. Clusters Work Silicon Valley has moved from an aerodrome of empty hangers in 1948 to the most famous model of cluster development for advanced technologies and IT innovation much of it driven by US government treasury support to NAS A and support technologies.

19. “Value Chain” Adding Value to existing raw materials is a very simple way of increasing the profit accrued, generating jobs and accessing new or higher values markets, e.g. Adding value to fruits and vegetable by pre packaging for consumer retail markets, e.g. MAXI retail “sliced” oranges (chill packs) @ 56dr per pack 0.2KG. But whole oranges are 89Dr per kilo in Maxi (much less in fresh fruit markets.)

20. Adding Value Companies such as MAXI are good at adding value to basic products, fruits, vegetables... MAXI Exclusive appeals to those individuals and families with busy lives who can afford and are prepared to purchase “pre – packed ready - prepared foods even as simple as sliced oranges or tomatoes, despite they are 4 to 10 time the costs of the basic items in the local fresh markets.

21. “Adding Value” = additional profits & jobs Chilled pre packs can add 5 to 10 x the original value of agriculture commodities.

22. “TRAINING & EMPLOYMENT” 45% young adults under 24 years are unemployed! In UK and Europe this has been successfully tackled by matching unemployed people (appropriately trained) to companies seeking and willing to fill vacancies. 80% of trainees have been retained by their “donor” companies. The key is to understand the needs of the companies/sectors and train selected young adults with relevant skills = Parallel activities Unemployed adultsDonor Companies -Select TraineesSelect willing companies -Basic Class based TrainingInduct HRD managers -Customise to individuals Company Training -Match trainee Agree contract (1 year basic) -Monitor trainee Monitor Company -Screen TraineeSuccessful Trainee retained.