in VOJVODINA,

SERBIA

BUSINESS OPPORTUNITIES

2017

NEW TECHNOLOGY

FREE TRADE

PRODUCTIVITY

Vojvodina is a northern Autonomous Province of the Republic of Serbia and it is sourrounded by the EU member states. The ideal geographic location of Vojvodina region, covering 21,506 square kilometers, and its abundancy in natural resources, provide excellent opportunities for agricultural production and export, production sites in various industries, logistics, and export processing zones.

SERBIA VOJVODINA

admin center capital

Novi Sad Belgrade

total area total area

21,506 km² 88,361 km²

population population

1.89 mil 7.09 mil

26 nationalities 6 official

languages

terrain rich fertile plains

time zone GMT + 1h

2

The closest airport is the Airport "Nikola Tesla" in Belgrade (70 km from Novi Sad). Vojvodina also has a well-developed system of roads and railways, as well as an extensive network of canals and navigable waterways.

3

4

growing your profits

Increasing productivity

boosting competitiveness

If you want to unlock your export potential and gain a duty-free access to a number of markets, optimize operational costs, employ high-quality workforce at competitive rates, or relocate and remain close to your distribution centers, Vojvodina is the region that meets your needs. Top-notch investment locations suitable for a wide range of activities and tailored to your specific requirements - provide an excellent starting point to boost your investment to its fullest potential.

Check out our video about Vojvodina

Source: NBS, Vojvodina Chamber of Commerce, Government of Vojvodina

With its long industrial tradition, well developed educational system, and innovation stimulating environment - Vojvodina is considered to be the engine of Serbia’s economic development. As a result of its advanced hi-tech culture that positively supports an aptitude for quickly applying new technologies, Vojvodina continues to significantly contribute to Serbian GDP creation.

VOJVODINA KEY EXPORT SECTORS: 84.9% MANUFACTURING

Food & Beverage Machines & Equipment

Chemicals Rubber & Plastic

Motor vehicles & trailers

15.3%

8.6% 7.4% 7.4% 6.3%

Year 2015

SERBIA VOJVODINA

GDP* € 32,908 million

*according to ESA 2010

Currency: Serbian Dinar (RSD)

unemployment 18.5%

Inflation y-o-y 1.5%

Active population 799,983 Export volume € 4.3 bn

Export growth 3.2% Export markets EU, CEFTA, Russia

5

6

VOCATIONAL SECONDARY SCHOOLS Metal processing Car mechanics Electrotechnical – automatics Electrotechnical – vehicle Electrotechnical A/C equipment Car electrics

FACULTY OF TECHNICAL SCIENCE NOVI SAD – 12,500 students

TECHNICAL FACULTY ZRENJANIN

3 UNIVERSITIES IN VOJVODINA: 1 state University - 14 Faculties 2 private Universities - 9 Faculties

Introduction of dual education

Strong command of the English language

As the land of farmers, iindustrialization in Vojvodina has first started within agricultural production. Next phase led to further development of industrial capacities, which has improved the production in Vojvodina in other sectors as well, and enabled construction of large number of factories. Those were mainly for different kind of metal production, metal processing, and machine tools industry, and later on construction of many foundries and metal casting foundries. Furthermore, Vojvodina was worldwide known for its industry

of electro motors Sever Subotica, Airplane factory Utva Pancevo, Factory of armatures, Factory of dental equipment and many others. Development of industrial production in Vojvodina had a significant influence on education in Vojvodina, thus encouraging development of human resources in certain industry sectors, which resulted in large number of technical schools (high schools and universities) that had a goal to form basis of professionals for industry of metal processing. Today, we have in Vojvodina more than 30 schools for machine industry, two colleges and Machine department on the University of Novi Sad.

It is a rich plain, also known as the Granary of the Balkans, due to its abundant agricultural resources. Extraordinary plain landscape with a lot of greenery, big rivers (one of the largest in Europe – Danube), canals, lakes, spas, "Fruska Gora" National park and Deliblatska desert (sandy terrain) are only a part of Vojvodina treasure. Land – The geography and climate of Vojvodina are extremely conducive to agricultural production. The arable area consists of 1.78 million hectares of fertile agricultural land, 84% of the province’s territory, providing a solid resource base. Most of this territory is under intensive steppe-field agricultural production. The fields are generally very fertile chernozem and alluvial. Climate – Vojvodina enjoys a moderate continental climate. With extremely favorable edaphic and climate conditions, it is suitable for agricultural production. Water – The region is also rich in water. Major rivers, the Danube, Sava and Tisa, flow through Vojvodina. One of the largest hydrological nodes in Europe is situated in Vojvodina with about 1,400 km of navigable rivers and canals. Rural activity – Vojvodina is unique in the high percentage of its rural population actively involved in primary agricultural production. Approximately 1.6 million hectares of agricultural land in Vojvodina is being used by either familiy holdings or big companies, who are involved in agricultural production.

7

Gear up for greater profitability indicators

Ideal geographic location for JIT/JIS production Close proximity to leading car manufacturers Access to top OEMs – 1,250 km radius Cutting-edge technical education Tradition in high-quality production standards Optimal ratio: labor cost – productivity - quality

Premium food products for global markets No. 1 FDI sector: #companies, #investment volume, #workers High-quality resource base, optimal climate conditions Ample fertile soil: 1.5 mil ha – 84% of territory Strictly prohibited production and trade of GMO food Growth trend in the export volume share

Growing demand for modern real estate development Residential, office, and retail development projects Industrial zones for manufacturing facilities Free Zones in Novi Sad, Subotica, Zrenjanin, Apatin Intermodal logistics hubs: water, rail, road infrastructure National parks, nature resorts, rivers, lakes, canal networks, hotels, spa centers, resorts, golf courses, marina complexes

Hot spot for innovation-oriented ICT companies Reliable, high-quality, and cost effective alternative Sophisticated solutions at lower cost Easy access to best quality, experienced IT staff Continuous increase in a number of enrolled ICT students Vast international market expertise of local companies Strong capacity to adjust to new market demands

Abundant potential in renewable energy sources

Biomass, Wind power, Solar energy, Hydropower Easy access to raw material base 1.5 ha of arable land – full value chain coverage Ideal locations for wind power plants – average 6.27 m/s 20-30% higher insolation intensity than EU average Small hydropower plants potential – approx. 20.2 MW

8

By choosing to locate in Vojvodina, foreign investors enjoy the benefits of a highly competitive and advantageous tax system, essential for boosting company profits. In general, Serbia’s tax regime is highly conductive to doing business. Corporate profit tax is the lowest in the region, while VAT, salary tax and social insurance contributions are among the most competitive in Central and Eastern Europe.

9

Serbia 15 %

Romania 16 %

Hungary 19 %

Poland 19 %

Czech Republic 19 %

Croatia 20 %

Slovakia 22 %

Serbia 10 %

Czech Republic 15 %

Romania 16 %

Hungary 15 %

Slovakia 19-25 %

Poland 18-32 %

Croatia 12-40 %

Serbia 20 %

Slovakia 20 %

Czech Republic 21 %

Poland 23 %

Romania 20 %

Croatia 25 %

Hungary 27 %

10 year corporate tax holiday Carrying forward of losses 5 years Annual Income tax deductions Duty-free import of equipment Salary tax base deduction 65-75% contributions reimbursment

Serbia and China have signed a

Double Taxation Treaty on avoiding

double taxation!

If a resident taxpayer earns profit by conducting business in another state and tax was paid on that profit in another state, it shall be granted a tax credit on its enterprise profit tax account determined in conformity with the provisions of this Corporate Profit Tax Law, amounting to the tax paid in another state. At the moment 54 countries have signed the Double Taxation Treaty with Serbia.

The region of Vojvodina is uniquely positioned for global trading offering you a duty-free access to over 1 billion consumer base!

As the most developed part of Serbia, Vojvodina has unique economic and trade relations with the European Union and other European countries, which have enabled customs free export of all products bearing the Serbian origin label, excluding wine and baby beef. In addition, the EU FTA abolished customs duties and quantitative restrictions for import of Serbian textile products and guarantees to maintain the same policies in the future. Using this strategy the Serbian export of these products will become entirely free.

DUTY-FREE EXPORT TO OVER 1 BILLION CONSUMER BASE

Other Free Trade Agreements with:

10

NET Salary Personal Income Tax Contributions (employee) GROSS Salary Contributions (employer) TOTAL Cost

10% 19.9% 17.9%

378 40 99

497 89

606

LABOR COST STRUCTURE Average salary in Vojvodina, EUR

June 2016

In addition to the existing skilled and semiskilled labor pool in the manufacturing sector, the region of Vojvodina is characterized by the constant influx of newly qualified workers. An access to exceptional talent pool along with the multicultural diversity offers flexibility and adaptability, which has a profound impact on maintaining the unrivalled performance levels. Moreover, the income growth rate does not exceed the inflation rate and is much lower than the growth of income rate in e.g. Slovakia, Romania, and Bulgaria.

11

Excellent ratio between labor quality, cost and productivity is particularly appealing to foreign investors seeking to achieve higher profitability through cost effectiveness, while not compromising their quality standards.

For your greenfield and brownfield investments, Vojvodina offers a unique database of 120 greenfield and 100 brownfield sites! The new Law on Planning and Construction in Serbia has introduced a one-stop-shop concept for issuing relevant permits, designs and connection conditions through a “unified procedure”.

12

For projects of special importance for the realization of local economic development, municipalities and cities in Serbia have the right to alienate land in public ownership, whether at a price lower than the market price or free of charge! The condition is that the realization of the investment project increases the number of employees in the economy of the respective municipality/city for at least 1%, which will enable increase in public revenues.

BENEFITS: • Imported raw materials and semi-finished products set aside for export

are exempted from customs duty and other import duties • Imported equipment, machines and construction materials (for

construction of facilities) are exempted from duty and other taxes • Import of goods into the zone is duty free. Goods from the Zone can be

placed to the home market after customs clearance i.e. after paying customs and VAT

• Exemption from VAT on coal, heating oil, gas and electricity • Goods from the Zone can be temporarily carried out of the Zone to

additional processing • Free Zone has its own Customs office which enables faster customs

procedures • Companies delivering logistics services to Users of the Free Zones are

exempt from paying VAT for the delivered services.

Promotion

13

There are 14 registered and operational Free zones in the Republic of Serbia, from which 4 are in Vojvodina region: Apatin (including Odžaci & Sombor), Subotica (including Kikinda), Zrenjanin, Novi Sad

Promotion

More info at http://www.ras.gov.rs/invest-in-serbia/why-serbia/financial-benefits-and-incentives

27

RE-TRAINING PROGRAM max cca. € 750 per employee

14

In addition to existing benefits (strategic geographical location, duty-free exports, favorable tax system, educated and skilled labor, etc.) investors may be awarded funds for financing investment projects in the manufacturing sector and the services sector which may be subject to international trade.

15

Promotion

On the following pages you will have the opportunity to check out some of our selected LOCATIONS AVAILABLE FOR INVESTORS in Vojvodina region. These sites are located in the ADMINISTRATIVE CENTER OF VOJVODINA, CITY OF NOVI SAD

France

Italy

Spain

UK

Novi Sad

Belgrade

Total area 54ha

Ready to build 6ha Intended use Manufacturing Plot coverage 50% Plot ratio 1,5 Infrastructure Complete Ownership City of Novi Sad

The North IV industrial zone is located on the highway E75, several kilometers from the center of the City of Novi Sad. The total land area of the zone is 54ha. The City of Novi Sad is constructing building (built to lease) for the company LEAR in this zone on the 8ha of the land. The city will develop 6ha of construction land more for the potential investors. The zone is equipped with complete infrastructure and utilities. It will have access to the highway E75.

16

Total area 28.670 m²

No. plots 8

Intended use Manufacturing

Plot coverage 50%

No. of floors GF-GF+1

Plot ratio 0,5 - 1,5

Infrastructure Complete

Ownership City of Novi Sad

The plots are located in the industrial zone “North II” in the vicinity of marshaling yard and waterway Canal DTD. The location has excellent road connection with highway and the urban area of City of Novi Sad. The plots can be combined according to the investor’s requirements. The site is fully equipped with utilities. Conditions for construction are regulated by the General regulation plan of the area for business in the northwest part of the City of Novi Sad.

17

The Cable Factory – Novkabel based in Novi Sad was established in 1921 and represents the oldest cable factory in the Balkans. The Novkabel Company was producing a wide range of energy cables and conductors, tele-communication and electronic equipment cables to suit various requirements of industries such as construction, mining, shipbuilding, oil, transportation, automotive and other industries. By the time development of new products and product range enable factory to achieve about 16,000 registered products. After unsuccessful privatization Novkabel Company is in the process of reorganization.

The Port of Novi Sad on the River Danube and the Novi Sad Marshalling Yard are in the vicinity of the production complex. Novkabel spreads on a land area of almost 44 hectares in the industrial zone of Novi Sad with more than 100,000 sqm of the closed production space. The complex is divided into 3 different plots. Plot A with the land area of 32 ha is not used by existing Novkabel production and is available for renting and/or purchase. The production halls No 1 to 5 are approx. 11,000 sqm each. The plot B with the area of 10 ha is used by Novkabel for the existing cable production. The plot C with the area of 2 ha is available for purchase.

18

greenfield projects in 2015 total Serbian FDI

total Serbian export

36%

32%

320

EUR 8.3

70,000

Foreign investors

Million FDI investments

New jobs created

19

Promotion

Government of Vojvodina is focused on further economic and social development of the region, including strong support for new foreign investments. Our goal is to bring new technologies to our region and to open new workplaces, especially for young generations. As a one-stop-shop service for foreign companies interested in doing business in our region, Vojvodina has special purpose agency - Vojvodina Investment Promotion – VIP, that offers comprehensive package of advisory and assistance services to foreign companies looking to establish their business in the region of Vojvodina. We offer: Tailor made solutions for your investment Search through our unique location database Institutional support from the beginning Contacs with all relevant partners for your business Aftercare support Vojvodina Government and VIP Agency represent your trusted source for obtaining the most reliable information needed for making an informed investment decision.

All of our services are free of charge and fully confidential.

20

CONTACT

E-mail: chinainvestments@vip.org.rs

Tel: +381 21 487 4244