Serbia is the top country in the world looking by the performance index of greenfield direct foreign investments, as the regulatory reform, low labor costs and access to the EU market have more than made up for the country’s disappointing economic performances, the Financial Times reported on August 3.
The index measures the attractiveness of a country regarding greenfield direct foreign investments looking by its GDP, and is prepared by fDi Intelligence, FT’s data analysis department.
Serbia’s index is 12.02, whereas Cambodia and Macedonia follow with 11.24 and 9.18 respectively, the British business daily reported.
The index shows that Serbia attracted 12 times more greenfield direct foreign investments in 2016 than was expected from an economy of that size.
FT writes that, in 2016, foreign investors announced 77 greenfield projects, compared to 57 in 2015, of which more than a half (53%) in the manufacturing industry, primarily in the production of electronic components and car parts, whereas real estate and textile follow on the list of attractive sectors.
Serbia attracted the majority of the investors as an exporting platform rather than as a market in itself.
Although Serbia is 44th on the World Bank Doing Business list, foreign investors find it attractive thanks to the reforms which have, among other things, reduced the time needed to register a company and have a building permit issued.
At the same time, labor costs in, for example, a car part factory with 400 workers is half that of the regional competitors, such as Hungary and Turkey, as shown by fDi Benchmark, which compared business costs in various markets.
Serbia also has access to the EU single market for its industrial products, thanks to the Stabilization and Association Agreement it has with the EU.
Of the 94 analyzed countries, 68 have an index over 1, which means that their share in global greenfield direct foreign investments exceeds their share in the global GDP. An index lower than 1 is present in 26 countries. Of the 10 biggest economies in the world, only Great Britain (2.29), India (2.11) and France (1.06) have an index of over 1.
In preparing the index, fDi Intelligence uses the methodology developed by Unktad for total direct foreign investments and is used only for greenfield investments and not for, for example, integration and acquisition, credits within a company and other forms of cross-border investments.