Airport and Ground Equipment (APG)
Overview
The aviation industry in Serbia comes under the principal jurisdiction and management of the Civil Aviation Directorate of Serbia (CAD). The major air transport carrier in Serbia is Yugoslav Airlines (JAT), accounting for 98% of passenger traffic.
According to CAD, in 2007 the total airport throughput reached 2.7 million and is expected to increase to over 3.2 million by 2010. The total throughput air cargo is estimated to rise around 15% each year, achieving approximately 60,000 tons in 2010.
Currently there are 15 international air routes operating in Serbia. The country currently operates two major civil airports, the primary airport is located in Belgrade and the secondary airport is located in Nis. Belgrade Airport “Nikola Tesla” is the largest airport and air-traffic center in the former Yugoslavia. It handles almost 75% of the country’s international passenger traffic.
Serbian aviation experts and government authorities are aiming to transform the country into a regional hub. Currently, the upgrade of the transport infrastructure (road, rail, water, air) is a priority, though redevelopment of the civil aviation sector is a high priority.
Foreign investment and export opportunities offer potential. While the majority of investment involves local construction materials and services, the United States is an important player in exporting products ranging from ground support to security equipment.
The primary source for financing this development will come from the national budget, foreign official development assistance loans, and export credits. Procurement in the aviation sector is mainly carried out through open local or international competitive biddings.
Competitive Situation
The major competitive factors for securing contracts in the aviation sector in Serbia include a good reputation, competitive pricing, and a willingness to build long-term strategic partnership.
Domestic Production
Airport runway systems and air traffic control equipment manufactured in Serbia accounted for only 8% of the total market in 2007. Serbian companies or foreign subsidiaries could meet about 6% to 8% of total demand by manufacturing and/or assembling airport and air traffic equipment locally and by outsourcing some of the related services to small local private companies. None of the Serbian companies are presently serious competitors to U.S. firms, but they could be considered viable partners in providing the accompanying after sale services, as well as designing, manufacturing and assembling subcomponents.
U.S. Market Position
From 2002 through 2007, the U.S. accounted for approximately 30% of Serbia’s imports of airport equipment and air traffic control equipment. U.S. firms are expected to increase their exports over the next two to five years. U.S. exports have been primarily radar and navigational equipment, supplied by such firms as Hughes/Raytheon (civil aviation).
Third Country Imports
Over 60% of the airport runway systems and air traffic control equipment imported into Serbia from 2002 to 2006 was imported from third countries. Third country imports are expected to grow over the next two years at an average rate between 20% to 25%.
The largest source of Serbia's imports of airport equipment traditionally comes from Germany, followed by France, the United States, and Italy.
Major foreign suppliers include the firms Siemens-Cardion and Thales, which supplies lightning systems and radio-navigation and communication systems, and Mannesman, which is supplying the passenger and cargo ground transportation equipment. The French company Telefles is supplying the flex bands for transportation of passenger and luggage and cargo.
Best Prospects/Services
Over the short and medium term, demand is estimated to be highest for airport and air traffic control equipment and related services; for services related to concession of airport activities, to cargo handling outsourcing and management; runway systems improvement, and safety and security equipment.
The following products represent the best prospects for U.S. firms exporting to Serbia: passenger bridges, firefighting trucks, metal detectors, electronic sniffers, baggage X-ray inspectors, etc.
U.S. airport equipment firms primarily compete with companies from Israel, Denmark and Italy. Due to the competitive nature of the market and the high cost of capital in Serbia, firms providing the most attractive financing arrangements will generally be the most competitive. Because most of Serbia’s formal bidding procedures are related to tenders, U.S. suppliers should contact the U.S. Commercial Service early to find out about timing, strategy, and the levels of available assistance.
Foreign companies winning bids are typically associated with local firms. In the case of international bids, supplying goods and services for specific government projects, successful bidders are required to have local representation. Since the open period for bidding is often as short as one month; a partner resident in Serbia, able to act on tenders as soon as they are announced, is critical.
Opportunities
The international airports are the most important users of airport and air traffic control equipment and related services. Procurements by the newly spun off airport service providers are expected to increase in number as airport services are increasingly being outsourced. The biggest customer will be Belgrade Airport. The second most important users of airport equipment will be major international air carriers such as DHL, FEDEX, Lufthansa, Austrian, Air France, British Air, Swissair, Alitalia. Foreign and Serbian air carriers use equipment and services provided by the airports. The airlines’ greatest needs are for better and faster passenger and luggage check-in handling, transportation to and from the airport, professional catering services, and safer and faster fuel supply. To meet these needs new and modern equipment, technology, and know-how are required.
Resources
Airport “Nikola tesla” Belgrade
Mr. Bojan Kristo,
Director General
Fax: (+381 11) 2286-303
e-mail: director-general@beg.aero
Goran Jovicic
Security Department Director
Tel: (+381 11) 2286-430; (+381 11) 605-555 / ext. 27-55
Fax: (+381 11) 2286-429
e-mail: security@beg.aero
Government contacts:
Ministry of Capital Investment
Of the Republic of Serbia
Mr. Velimir Ilic, Minister
Mr. Radoslav Tomasevic, Assistant Minister
Belgrade, 22-26 Nemanjina St.
Tel: 3616-426; 3616-431
Fax: 3617- 486
cabinet@mki.sr.gov.yu
Insurance (INS)
Overview
In the last three years the insurance sector went through a major upswing, particularly in the life insurance segment. Today, Serbia’s insurance market is worth around $835 million a year and is expected to post a growth rate of between 15% and 20% in 2008. In 2007, the total insurance premiums stood at 2.0% of GDP.
Until 2004, when the National Bank of Serbia (NBS) took over regulation of the insurance sector from the Ministry of Finance, the main characteristics of the insurance market in Serbia were a large number of companies with small capital; large number of employees; small revenues; and insufficiently developed activity. After the takeover of the authority, the number of organizations registered for insurance operations has notably decreased: in June 2004 there were 38 insurance companies in Serbia, at the end of 2004, there were 20, and in 2007 the total number of companies was 14 for insurance, 2 for re-insurance and 1 operating in both insurance and re-insurance. Seven of these are foreign while the remaining are domestically owned companies.
Foreign insurers’ market share grew from 1% to 50% over the past three years. The main reasons for the large interest of foreign companies are: high average GDP growth of 7%, positive macroeconomic developments, and sustainable economic growth. Several major players are already present at the market. In 2006, Italian Generali purchased over 50% of Delta Osiguranje. Following this transaction, Austrian Uniqua purchased 80% of Zepter Osiguranje. Slovenian, Austrian, and Croatian companies are also present in the market. In November 2006, the first Greenfield license was issued to French, Credit Agricole SA, and part of Credit Agricole Group.
In January 2008, Italian insurer Fondiaria SAI officially took over 83.2% of “DDOR Novi Sad” the second largest insurance company in Serbia, for 220 million euros. The total assets of DDOR are estimated at EUR 43.3 million, and the revenue from end of 2005 reached EUR 116.9 million, while net gross premium was EUR 96.1 million. DDOR has 22 branches and 31% market share on the Serbian insurance market. Experts generally believe that the company was sold for a much lower price than expected, mostly due to the instable political situation at the time of the privatization.
During 2005, Serbia's life insurance market went up 96% compared to 2004, and the expected growth in 2008 is approximately 40%. Its share in total insurance increased from 3% in 2004 to 11% in 2006. Life insurance expenditures per capita is still very low in Serbia at an average of $9.00. However, with some 200,000 life insurance policies, Serbia has strong potential for growth.
Best Prospects/Services
Invoiced gross insurance premiums in Serbia in 2007 were roughly $835 million, which is a 15% increase from 2006. The largest share of this revenue (about 90%) was achieved through property insurance, including mandatory insurance of motor vehicles and industries. This proportion is caused by several factors: relatively low living standard, political instability, and the lack of simulative legislature from the government. However, despite these factors, life, private health insurance, and private pension insurance, are the most promising segments of the insurance business in Serbia. Due to the very low amounts of the state pensions and the poor quality of the state medical system, citizens are forced to seek other sources of income and medical treatment. So far under the provisions of law, these insurance options are sold only in addition to the obligatory state pension and health funds.
Opportunities
Life insurance is a rapidly growing sector; its share of the total insurance market has gone up from half a percent in 2003 to 11% of the business in 2006. Currently, Italian Delta Generali and Austrian Uniqa hold a majority share of the market. This sector is promising for foreign investors due to its recent development and the weak competition. The market size went up by 96% from 2004 to 2005 and it is expected to maintain a very fast pace in the future.
The insurance law from 2004 introduced for the first time intermediaries and representatives in the insurance sector. Intermediaries in insurance are representing their clients with the insurer, providing counseling services and putting together insurance packages that will suit their customer needs. Among them, U.S. companies Marsh and AON are leaders in this business.
Resources
National Bank of Serbia
Insurance Supervision Department
General Manager: Mira Erić
Phone: +381 11 311-40-23, 697-634,
Fax: +381 11 311-72-92, 697-634
E-mail: osiguranje@nbs.yu , mira.eric@nbs.yu
Pollution Control Equipment and Services (POL)
Overview
Serbia is a promising but largely unexplored market for U.S. environmental pollution control products, equipment, services and technologies. In addition to domestic concerns such as human health, protection of nature, industrial efficiency, the process of Serbia's accession to the European Union, possibly in 2012, will require a massive environmental cleanup and strict implementation of environmental standards. In order to meet EU requirements for accession, initial estimates project that Serbia will need more than $5 billion for environmental projects. The EU is expected to provide major grant financing for environmental infrastructure projects. Serbia will need to import almost all of the technology, and U.S. companies possessing world-class, competitive technology, equipment, services and systems will be best poised to benefit from these opportunities.
Some U.S. companies are already successfully working in Serbia, such as Pall Corporation.
The major environmental concerns in Serbia are: insufficient level of treatment and coverage for municipal and industrial wastewater, uncontrolled dumping of solid and hazardous wastes and lack of proper disposal sites, as well as control of air pollution emissions in industrial areas.
U.S. companies operating in Serbia (US Steel and Ball Packaging) have already invested in protection of nature and industrial efficiency by acquiring equipment for control of air pollution and desulphurization installations.
Best Prospects/Services
Best prospects for U.S. companies are in the following sectors: energy saving equipment for industrial and urban purposes; wastewater and drinking water treatment; recycling and waste utilization; solid and hazardous waste collection, disposal and treatment; renewable energy equipment; and clean production technologies.
Co-financing of the environmental protection projects in Serbia will be ensured from several sources: the prices of municipal services and specific purpose charges, the state budget, the budget of self-government units and counties, extra-budgetary funds (the Environmental Protection and Energy Efficiency Fund), Serbian Waters, public-private partnership, foreign investments, international assistance and grants. In addition, if Serbia is able to sign the Stabilization and Association Agreement (SAA) with the EU, substantial money could be earmarked for environmental projects in Serbia.
Opportunities
Major opportunities exist in the field of water and wastewater treatment. Over 25% of the existing sewerage system needs to be replaced either because of age or outdated technology. More importantly, 90% of the villages have no sewerage systems. Most industries in Serbia need to construct or upgrade their wastewater treatment facilities in the next six years in order to meet the EU requirements. Renewable energy sources are still underused. Serbia has potential for generation of hydro, geothermal, and wind energy. In addition, with EU mandated biomass usage on the horizon, biomass production in Serbia has significant potential. Most industries and households require energy saving products and technologies in order to minimize the hazardous effect on the environment and reduce their energy bills. Serbia uses landfill disposal for municipal waste, which do not comply with the new requirements and need reconstruction. There is a critical need to find ways to handle hazardous, solid, and industrial waste, such as incineration, plasma technologies, waste-to-energy, recycling, and waste minimization. The air pollution control sector will provide opportunities for:
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Construction of desulphurization installations at large combustion facilities
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Installation of filters for reducing of heavy metal and organic pollutants emissions from the energy sector
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Reconstruction, modernization and capacity increasing measures for central heating systems
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Creation of the necessary infrastructure for enhancing the gas supply for household and industrial consumers
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Reconstruction and construction of facilities in the metallurgy sector for preventing dust, sulfur dioxide and heavy metal emissions
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Increasing the production of unleaded gasoline
Resources
Ministry of Science and Environmental Protection: www.mntr.sr.gov.yu
Ministry of Energy and Mining: www.mem.sr.gov.yu
Serbia - Energy Efficiency Agency: www.seea.sr.gov.yu
Montenegro
- Minister for Environmental Protection and Urban Planning: www.gom.cg.yu/minzastsred/
Pharmaceutical (DRG)
Overview
The total market size for pharmaceutical products in Serbia is estimated at $656 million annually. The market is dominated by local producers for generic products: Hemofarm, Actavis (owns Zdravlje-Leskovac) and Galenika, who account for more than 60% of the market. Despite active local manufacturing, foreign producers account for more than 90% of the market for innovative medicines. Imports are highly concentrated, the majority of which come from these top four groups: Roche (Swiss), Pfizer (USA), Novartis (Danmark), and GSK (UK). According to the local statistics, the United States exported $26 million worth of pharmaceutical preparations to Serbia in 2007, versus $10 million in 2003. U.S. firms also imported products from manufacturing facilities located in other countries.
Generics play a significant role in the market, owing largely to the low spending power of both the government and consumers. Domestic production of generics has increased steadily in recent years, accounting for about 45% of total output, although, overall, imports are making significant inroads. The cheapest medicines segment has recently been boosted by a 12% price rise, which will mostly affect local drugs.
Growth in pharmaceuticals should reach at least six to eight percent a year for the next five years. Several foreign companies, like Actavis and Henkel, made local acquisitions, providing further opportunities for foreign stakeholders. Privatization of state enterprises will continue, and the sector will attract a considerable amount of foreign investment.
Serbia operates a nationalized healthcare system, in which the government sets prices and subsidizes prescription medicines.
Best Prospects/Services
Among European countries, Serbia has one of the highest rates of cardiovascular disease, cancer, liver disease and cirrhosis. Poor diet, smoking and other unhealthy habits are often cited as causes. Pharmaceuticals that address these conditions, as well as their precursors e.g. hypertension, high cholesterol, etc., are in demand. With the market for pharmaceuticals, especially vitamins and minerals growing steadily, almost doubling in the last four years, local distributors are in constant search of new U.S. suppliers.
Opportunities
The market for natural medicines expanded significantly in recent years. While a U.S. supplier should be able to offer a full range of food supplements, there are a couple of products that are especially in demand (Calcium citrate/acetate/lactate, Iron sulfate, glucosamine sulfate). There is a significant demand for oncology products, vitamins/minerals and natural medicines aimed at prevention of diseases, as well as for drug/alcohol tests.
Resources
Other resources can be found at the following websites:
Ministry of Health and Social Welfare of Serbia: www.zdravlje.sr.gov.yu
Health Fund of the Republic of Serbia: www.rzzo.sr.gov.yu
Velefarm: www.velefarm.co.yu
Association of Pharmaceuticals of Serbia: ww.farmacija.org
Agency for Drugs Registration www.alims.sr.gov.yu
National Institute for Pharmacy: www.ogyi.hu
Computer Hardware and Peripherals
In 2007, the IT market, including services, in Serbia reached a value of around $400 million. Hardware comprised 70% of the total market, while software constituted 16.5% and IT services the remaining 13.5% share. Independent experts expect IT spending in Serbia to rise 17.2% year-on-year in 2008, and at a compound annual growth rate (CAGR) of 11.6% over the next five-year period. In 2010, the value of the IT market is estimated to rise to $ 703 million.
The current IT consumption per capita of $50 in Serbia is much lower than in neighboring countries in the region and the IT market in Serbia is still in the process of reconstructing itself along with the entire economy. Major attention is still focused on the development of basic infrastructure with hardware purchases at the core. Once these infrastructures improvements are in place and have a chance to function for some time, attention will begin to shift to IT services and software solutions aimed at maximizing initial investment. As most companies do not have defined IT budgets, cash flow problems and a sluggish economy make IT one of the first areas cut from investment plans.
The emerging and but still immature (in terms of market penetration) PC market of Serbia offers great growth potential in the long term. Businesses and the public administration will continue to improve their basic infrastructure as their IT requirements increase. Moreover, households will seek greater internet access. In 2001, the value of the hardware market in Serbia was $120 million and has grown to $278 million (estimated) in 2007.
The top 10 suppliers dominate a market of about 200 companies. Competition is intense. During the previous decade, computer hardware was imported from Asia. Some of that hardware was of poor quality, and many users desired better quality, even at a higher price. In 2004, the government fostered the computer market by abolishing the 20% sales tax. Despite introduction of VAT of 18% on January 1, 2005, growth of around 20% was achieved in this sector in 2006 and continued in 2007 at rate of 16%.
Statistical data are not yet reliable for analysis, but experts estimate that U.S. companies had a significant percent of the total market in 2007(rough estimate up to 30%). Hewlett-Packard, IBM, Compaq, Dell, Gateway, Xerox and Cisco continue to be among the market leaders in Serbia. Toshiba, Siemens and Acer are the main competitors to U.S. equipment suppliers on the SAM computer market, while the main competitors to U.S. companies for peripherals sales are Canon, Epson, Minolta and Brother.
The government, state enterprises, large and small commercial enterprises, and commercial banks are highly receptive to U.S. computer technology. The total number of computers in Serbia is estimated to be 300,000, representing a remarkably low 3.75 penetration rate. A conservative 10% annual growth is expected over the next couple of years. Growth is expected to come from new market segments like small- and medium-sized enterprises, home users, as well as from continuing needs for computers and peripherals for commercial banks, big infrastructure projects, and further information technology needs of the Government administration.
The three most important competitive factors in the Serbia’s computer hardware and peripherals market are price, quality, and after sales support.
Best Prospects/Services
Best prospects include data communications and network equipment. Best prospect sub-sectors for U.S. suppliers include personal computers, servers, laptops, modems, printers and scanners.
Opportunities
The government and many domestic companies are in the process of introducing computer technology in their operations. Significant funds will be invested in equipment by such firms.
Serbia has free trade agreements with most of neighboring countries in the Balkans and with Russia.
Some local experts predict strong spending in the IT security and data protection segments. Spending on IT security is expected to double in the coming three years.
Resources
http://www.export.gov/marketresearch.html
Chamber of Commerce and Industry of Serbia
Association of ICT
Director, Aca Aleksic
Terazije 23, 11000 Belgrade
Phone: (381 11) 3304 558; Fax: (381 11) 3304 556
e-mail: aca.aleksic@pks.co.yu
Ministry of Telecommunications and Information Society
Ms. Aleksandra Smiljanic, Minister
Mr. Nebojsa Vasiljevic, Deputy Minister for IT
Address: Nemanjina 22
11000 Belgrade
Tel: +381 11 3616 273
Fax: +381 11 3616 273
E-mail: nebojsa@mtid.sr.gov.yu
Web site: http://www.mtid.sr.gov.yu/
Serbian Agency for Telecommunications RATEL
Mr. Jovan Radunovic, President of Managing Board
Address: Visnjiceva 8
11000 Belgrade
Tel: +381 11 241 786
Fax: +381 11 241 805
E-mail: ratel@ratel.org.yu
Web site: www.ratel.org.yu
Association of ICT -- JISA
11000 Belgrade, Zmaj Jovina 4/VI
Tel:+381 11 3281 727
E-mail: jisa@jisa.org.yu
Web: www.jisa.org.yu
Information Society of Serbia
11000 Belgrade, Kneza Milosa 9
Mr. Nikola Markovic, President
E-mail: nimar@afrodita.rcub.bg.ac.yu
For more information on market entry strategies contact:
E-mail: zorica.mihajlovic@mail.doc.gov
Telecommunications Equipment and Services (TEL)
Overview
Note: Data regarding the imports from the U.S. relates to the equipment shipped from the United States. Many U.S. companies are distributing equipment from their “outsourcing” countries, which are not treated as U.S. exports by official statistics.
The telecommunications sector is probably the most dynamic component of Serbia’s economy, and definitely one that is receiving priority attention from the government. The telecom sector already contributes around 2% to Serbian Gross Domestic Product (GDP) and is growing fast. Over the last five years, it has experienced impressive growth, offering Serbia the latest technologies in most branches of telecommunications. Although the telecom sector has a high annual growth rate of 18.3% and projected 5-year compounded annual growth rate of 16.8%, its further development to reach the level of developed economies requires urgent improvement of regulatory environment. Expected changes in the regulatory and business environment in the next two years will bring greater than average value growth
The dominant telecom company in Serbia is Telekom Serbia. The most current statistics (mid 2007) indicate that Telekom Serbia has 2,700,000 fixed line subscribers. Around 90% of the fixed line telephone networks have been digitalized. In Serbia, telephone penetration has reached an average 85.0 lines per 100 inhabitants.
During the last five years, mobile telephone services have developed rapidly in Serbia. The average annual increase in mobile subscribers is 50%. At the end of 2006, the country’s total number of subscribers exceeded 7.5 million subscribers. This figure is expected to reach eight million by mid 2008.
Serbia’s mobile penetration is estimated at 70%. Telenor (acquired domestic operator Mobtel in 2006), Mobile Telephony of Serbia (MTS), the mobile phone arm of state telecom provider Telekom Srbija, and Mobilkom Austria (recently was awarded third license) share the mobile market in Serbia. They are strongly competing in the introduction of new technology and new high-profit value added services. Significant opportunities for U.S. companies in this sector will be influenced by privatization of the telecom sector and need to modernize existing, and in some areas obsolete, equipment.
State telecom provider Telekom Srbija, which currently has 4.15 million subscribers, plans to increase the figure to over 5 million by 2008. Telekom has more than 600,000 post-paid customers but its goal is to double the number because post-paid users are a more reliable source of revenue. The company launched Serbia’s first 3G network and already has 20,000 users, approximately 2,000 video calls are made each day.
Telekom Serbia has invested heavily in modern data networks, and its mobile operations unit is gaining market share. The company returned to profitability in 2005 and 2006. Tariff rebalancing will provide a substantive boost, as 80% of traffic is domestic. Reduction in tariffs on international calls will not negatively impact profitability as most international calls have been switched over to VoIP over the past year. Transmission facilities are comprised of a national and international backbone consisting of about 3,000 km of optical cables for digital transmission systems with 2,5 Gbit/s and 622 Mbit/s capacities.
The rapidly growing cable television sector also provides opportunities for investment. There are telecommunications equipment manufacturers with innovative solutions for the particular problems of undeveloped countries: low-cost solution for line doubles (party lines); low cost small scale digital exchanges; home grown ADSL solutions, etc. Mostly European companies are present in this sector (Siemens, Alcatel, Ericson), while there is enough space for U.S. products presence.
U.S. telecommunications equipment is very well received in the Serbian market. U.S. telecommunication equipment manufacturers represented in Serbia include Hewlett Packard, Cisco, Juniper, 3Com, and Bay Networks. However, European producers such as Siemens, Ericsson, Nokia and Alcatel heavily dominate the Serbian market.
Best Products/Services
The best market prospects are for Internet-related equipment such as routers, switches, access servers, equipment for mobile telephony, cable operators’ equipment for transmission and fixed wireless equipment. There are also lucrative business opportunities for U.S. companies with technical skill and expertise in Internet applications. In particular, as GPRS usage becomes widespread and UMTS cellular telephony is introduced, there will be good prospects for the business-to-consumer market for publishing via Internet.
Opportunities
Significant opportunities for U.S. companies in this sector are related to the modernization of equipment, but competition is fierce, mostly from European companies, as stated above.
Three other major factors contributing to market growth are the continued increase in Internet users, the substantial increase in mobile phone use, and the increase of services offered by the cable TV operators, private radio stations and TV broadcasting operators. These factors should help create expanded demand for U.S. providers of advanced telephone service solutions, as well as value-added telecommunications services. Other best prospect sub-sectors include Internet services, wireless and broadband Internet access technologies, cable television, and voice-over-Internet.
Resources
Ministry of Telecommunications and Information Society
Ms. Aleksandra Smiljanic, Minister
Mr. Nebojsa Vasiljevic, Deputy Minister for IT
Address: Nemanjina 22
11000 Belgrade
Tel: +381 11 3616 273
Fax: +381 11 3616 273
E-mail: nebojsa@mtid.sr.gov.yu
Web site: http://www.mtid.sr.gov.yu/
Telecom Serbia
Mr. Drasko Petrovic, General Manager
Address: Takovska 2
11000 Belgrade
Tel: +381 11 3616 273
Fax: +381 11 3616 273
E-mail: mjojic@ptt.yu
Web site: www.ptt.yu
Serbian Agency for Telecommunications RATEL
Mr. Jovan Radunovic, President of Managing Board
Address: Visnjiceva 8
11000 Belgrade
Tel: +381 11 241 786
Fax: +381 11 241 805
E-mail: ratel@ratel.org.yu
Web site: www.ratel.org.yu
For more information on market entry strategies contact:
E-mail: zorica.mihajlovic@mail.doc.gov
Medical Equipment (MED)
Overview
The continually growing demand for medical equipment in Serbia, as well as in many developing Balkan states, indicates a strong prospect for companies in this field to conduct beneficial business operations in the broader Balkan region.
According to Episcom sources, the Serbian market for medical equipment was estimated at $148 million in 2006. Imports account for approximately 90% of the Serbian medical market. The primary suppliers of such equipment are manufacturers from the EU with a lesser share from the United States. The vast majority of the market is supplied by imports from Germany and Italy. U.S. suppliers account for almost 15% of Serbia’s imports in this sector. The actual share of U.S. imports is much higher than what is indicated in official statistics, because a large percentage of imported medical equipment is produced by European subsidiaries of U.S. firms and thus registered as originating in the EU.
The Serbian import market for medical equipment is growing at a rate of 12% annually. This development is largely a result of the Serbian public sector, which is characterized by constant restructuring in order to become more effective and productive in service of the Serbian citizenry. Therefore, the ability of the public sector to become more flexible in adopting systems, practices, and policies that have been applied successfully in Serbia and many foreign countries, is a fundamental condition for achieving the desired growth through the implementation of Public Private Partnerships (PPP).
Public expenditure for healthcare is low, amounting to 3% of GDP in 2006. The Serbian government has committed to improving and modernizing their nationalized healthcare system, which everyone agrees is in desperate need of reform. Equipment upgrades are part of the goal. According to the National Investment Plan adopted in June 2006, around $300 million will be spent in this sector in 2007 and 2008
The Ministry of Health in Serbia is the major player in the Serbian medical equipment market. The Ministry develops health policies establishing fundamental objectives for health care, proposes the health care budget and the investment program for the sector, and monitors the work of state-owned health institutions. Equipment purchases and other major investments are financed from the government’s budget. The Act on Public Procurement requires open tenders for all purchases of goods and services exceeding a certain amount. Currently most purchases are made by publicly owned institutions, but private practices in medical sector have created some space for sale of equipment for e.g. dialysis, diagnostic imaging, etc.
The Institute of Health Insurance in Serbia administers healthcare systems which are based on compulsory payroll contributions from both employers and employees. Serbia has opted to retain a predominantly publicly-funded health system, with an increasing degree of private services.
The Health Ministry in Serbia has embarked on a program of reform in the health care system in an attempt to modernize it and bring it closer to Western standards. These ongoing and future reforms offer U.S. medical manufacturers opportunities to increase their market share in Serbia.
Best Products/Services
U.S.-manufactured medical equipment enjoys an excellent reputation in Serbia for its state-of-the-art technology, quality, and reliability. However, medical equipment importers and specialists emphasize the real and perceived lack of technical assistance and service support as one of the main obstacles to further growth of US imports on the market. One should also take into account that the Serbian market for medical equipment is still very price-sensitive because of limited resources.
Best sales prospects for U.S. medical equipment are expected to be cardiovascular diagnostic equipment, non-invasive surgical devices, anesthesia and intensive care equipment, diagnostic imaging (CTs, MEIs) and radiation therapy equipment, as well as for ultrasound equipment, urology equipment, laboratory and testing equipment, tissue and blood bank related equipment. Also, there are good prospects for products such as: ultra-violet of infra-red apparatus used in medical, surgical, dental, or veterinary sciences, as well as apparatus based on the use of X-rays of alpha, beta or gamma radiations, whether or not of medical, surgical, dental or veterinary uses, needles, catheters, cannulae and the like, used in medical and surgical procedures, medical lasers, endoscopes and laser instruments
GE Healthcare products are well known in Serbia.. In addition, U.S. company Medtronic already has a leading position in the sale of cardiovascular diagnostic equipment, pacemakers, and stents.
Local distributors of medical products and equipment claim that there is a large demand for diagnostic tests for drugs, pregnancy, and various illnesses. Local distributors also expressed willingness to import what they refer to as “hit” products (i.e., new US products for which equivalents do not exist in Europe). “New-ness” of products is very important for the Serbian market that is otherwise very price-sensitive: if the main competitors do not have such products, local distributors are willing to accept the relatively higher prices of American products.
Opportunities
There are good opportunities in the Serbian market for US manufacturers of sophisticated diagnostic equipment such as electrocardiographs, endoscopes, scanners, computer tomograph imaging equipment, pace makers, digitalized x-ray equipment, nuclear medical instruments and clinical laboratory equipment.
The Ministry of Health is also looking for innovative ways to work with medical equipment suppliers. They are considering the option of public-private partnerships in which a company would equip and administer a certain medical center or hospital unit. At this early phase of this project the Ministry is willing to listen to different proposals.
Having in mind the current state of medical equipment in Serbia, hospitals suggest that several sub-sectors will be especially prominent in the near future. Therefore, the biggest opportunities for the coming years are expected to be in the following medical equipment sectors: health informatics equipment, home health care and rehabilitation equipment, pathology equipment and services, diagnostic imaging equipment, especially ultrasonic diagnostic equipment, patient monitoring systems including intensive care units, dialysis equipment, day hospital and day surgery concepts.
Medium and long-term procurements will be made for information systems developed for the National Health Insurance Fund, as well as training, public information and technical assistance, and support for outpatient and inpatient care. Hospitals perform regular procurements of diagnostic equipment, modern patient monitoring systems, and hospital management systems.
The proposed donor program for Serbia represents a best market opportunity for U.S. companies. In total, donations/grants/loans are expected to be around $205.6 million and will focus on: pharmaceutical support, health IT systems, medical equipment and civil works, policy development and capacity building, as well as health information system design.
Resources
Other resources can be found at the following websites:
Ministry of Health and Social Welfare of Serbia: www.zdravlje.sr.gov.yu
Health Fund of the Republic of Serbia: www.rzzo.sr.gov.yu
Medicines and Medical Devices Agency of Serbia n: www.alims.sr.gov.yu
Velefarm: www.velefarm.co.yu
Association of Medical; Devices Distributors ww.pks.co.yu
Distributors of the U.S. medical equipment in Serbia
Franchising (FRA)
Overview
As one of the largest markets in the region, second only to Romania, Serbia has undertaken aggressive reform programs to reestablish the country as a regional center. Since 2001, GDP per capita has tripled to over $5,000, which is ahead of most other countries in the region. In 2004, the economy reached its record growth rate of 9.3% and is expected to maintain the highest growth rate in the region of around 7% in 2008.
The upswing in production has fueled a steady increase in purchasing power, which is manifested in the double-digit rise in household consumption and retail trade. Serbia is still one of the few unsaturated markets in Europe. Today, Serbia is an importing market and consumer preferences are highly turned towards the products originating from the United States and other developed countries. An increasing number of international trading companies are taking advantage of the rapid local market expansion, and OECD awarded one of them, German Metro Cash & Carry, Investor of the Year in South East Europe for its €150 million investment in Serbia.
Consumer and economic conditions in Serbia are developing quite favorably for the entry of international franchising. Business and government experts generally agree that the foreign franchising industry will be the pioneer of further economic growth and technical development.
Serbian customers are intrigued by a variety of new products. Both quality merchandise and quality services are lacking on the market. Therefore all new marketing ideas, promoted through franchised systems are welcome. Awareness of how successful franchising is in the United States is very strong and many Serbian businesses are interested in acquiring the rights to operate American franchises primarily in the services sectors.
Today, there are approximately 270,000 entrepreneurs, including 90,000 SME’s, operating in Serbia. Experts expect this number to increase to over 400,000 in the next 5 years, which provides promising opportunities for U.S. franchisors. Serbia has a large number of companies and private entrepreneurs in Serbia with sufficient funds to commence franchising operations without having to borrow. Obtaining finance for franchisees in Serbia also is possible.
Best Products/Services
There is a strong potential market for franchises in restaurant, catering, and apparel sectors. Serbians spend a disproportionate amount of their income on eating out. Typical Serbian restaurants are heavy on meat. Italian and French cuisines are very popular, but few Asian or Mexican restaurants exist in Serbia. Currently, there are three U.S. fast food chains: McDonalds with several restaurants throughout Serbia, Pizza Hut with one restaurant in Belgrade, and Kentucky Fried Chicken, which just opened. The number of foreigners living in Serbia is increasing, which is another target market for franchisers. The U.S. Commercial Service in Belgrade has been approached by several Serbian businessmen, inquiring about possibilities of obtaining a U.S. franchise in these sectors. One of the primary success factors is location. Real estate owners are well aware of this fact and pricing their property accordingly.
The apparel sector is another good prospect for U.S. franchisers. Other than establishment of retail outlets, production franchises would support the government strategy and revive the deeply troubled textile sector.
Franchising concepts such as dry cleaning, auto repair, pet grooming, etc., that have lower buy-in costs than restaurants, also have strong potential in Serbia. There is a general lack of consistency across local service providers, making franchised concepts potentially popular.
Opportunities
Though Serbia has no specific franchise laws (it is regulated by the Law on Contracts and Torts), both government officials and business circles agree that the foreign franchising industry could be the pioneer of new investment, and that interest in franchising is growing daily. Generally speaking, the business community in Serbia is relatively familiar with the concept of franchising, as it is understood in developed markets in Europe. Awareness of franchise businesses in the United States is very strong. Traditionally, local consumers, who associate them with superior quality, excellent customer service, and generally a western lifestyle, perceive U.S. brands very well.
The Commercial Service is actively promoting franchising as a viable business concept in Serbia as well as promoting the attractiveness of franchise businesses from the United States. To that end, during December 2007, CS Belgrade oversaw the opening of the Center for Franchising within the Serbian Chamber of Commerce (PKS), an initiative proposed to PKS by CS Belgrade that establishes a ‘one-stop shop’ for franchising opportunities. In addition, CS Belgrade co-sponsored the 2nd Franchising Conference with PKS that attracted over 60 participants on December 18, 2008. This conference also served as an introduction to a series of 20 Franchising Seminars that will be organized in 2008, by the newly established Franchising Center within PKS.
Given the importance of trade secrets and trademark protection, substantial work has been done on IPR protection, both in legislative and enforcement aspects. (For more information on franchising opportunities please read the separate market research: “Franchising Market in Serbia” article treating this sector in market research library database.) Careful choice of local partners, protection of IPR and a smart pricing policy remain critical to success.
Resources
Serbian Chamber of Commerce - Franchising Center
Ms. Marica Vidanovic, Head of Center
Phone: +381 11 3304 518
E-mail: marica.vidanovic@pks.co.yu
Center for Franchising website: pks.komora.net/fransizing
Agricultural Sectors (AGS)
The Agricultural sector, including hunting and forestry, contributed about 11% to Serbia's gross domestic product (GDP) in 2007. Including the food industry, this contribution rises to 22%. About 25% of Serbia’s labor force is employed in the agricultural and food-processing sectors. In 2007, total agricultural production declined by 21%, due to bad weather and drought conditions during the growing season. The Serbian Ministry of Agriculture has not provided direct government production support for field crops but will provide subsidies to farmers for certain inputs, crop insurance as well as low interest short and long-term loans for registered farmers.
Serbia's concerted efforts to join the World Trade Organization (WTO) continued in 2007. The Serbian government hopes that the accession process to this important international body will be successfully completed by the end of 2008 or early 2009. Agricultural exports continued to grow and contributed about 19% of total Serbian exports in 2007. Serbia's total agricultural exports were estimated at $1,690 million, an increase of 33% over the previous year, with agricultural trade surplus reaching an all time record of $574 million this year. Serbia's agricultural exports consisted mostly of sugar, corn, wheat, fruits and vegetables (fresh and frozen). Most of Serbia's agricultural and food exports went to former Yugoslav Republics, including Montenegro, Macedonia and Bosnia-Herzegovina and the European Union (EU).
Serbian food imports are also rising. Agricultural imports are mostly high-value food items; with European products dominating the import market. Total imports are estimated at $1,116 million, an increase of 23%. Demand for high quality consumer oriented products are expected to continue to rise, which prompted the opening of a number of new European supermarkets and large retail outlets in 2007. European agricultural exports to Serbia are mostly of high-value food items.
U.S. agricultural and food exports to Serbia increased by almost 50% in 2007. Total imports from the U.S. were estimated (CIF value) at about $22 Million, or about 2% of Serbia's agricultural import market. U.S. agricultural exports consisted mainly of tobacco, prepared food and dietetic food, alcohol, frozen seafood, pistachios, snack food and planting seeds. U.S. exports of these products to Serbia are expected to continue to grow in the short term. In the medium term, Serbia is likely to increase U.S. imports of soybean meal, poultry meat for processing and high value consumer products and beverages. U.S. soybean meal exports are currently competing with cheaper Argentinean and Brazilian supplies. Possibilities also exist for expanding U.S. exports of high value products, such as nuts, raisins, snacks, beverage ingredients, etc.
FAS office contact:
Hassan Ahmed, Agricultural Attaché
FAS / USDA
US Embassy Belgrade
Kneza Milosa 50
11000 Belgrade
Serbia and Montenegro
Phone: ++ 381 11 306 4802
Fax: ++ 381 11 306 4922
E-mail: AgBelgrade@usda.gov
Useful Links:
USDA sites:
USDA: http://www.usda.gov/
FAS Attaché Reports: http://www.fas.usda.gov/scriptsw/attacherep/default.asp
Ag Exporter Magazine: http://www.fas.usda.gov/info/agexporter/agexport.html
Serbian Gov sites:
Ministry of Agriculture (in Serbian): http://www.minpolj.sr.gov.yu/
Marketing Information System site (in Serbian, some features in English) : http://www.stips.minpolj.sr.gov.yu/index.php
Republic Statistical Office (in English and Serbian): http://www.statserb.sr.gov.yu/
Non-Gov Ag sites:
Commodity Exchange Novi Sad, Serbia (in English and Serbian): http://www.proberza.co.yu/indexe.htm
Agricultural news from Serbia (in Serbian): http://www.serbiafood.co.yu
Database of Serbian Agricultural Companies (in English and Serbian): http://www.hranaipice.com/en/index.html