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Serbia is on a good path towards developing a new economic model based on green growth through more intensive use of digitalisation, circular economy, adoption of innovative solutions for greater decarbonisation and better utilisation of renewable energy resources. This goal is particularly important in a situation where the COVID-19 pandemic has shown how closely human health is tied to the planet and that renewal must be socially and economically sustainable.

In achieving the goals of the green transition, not only Serbia receives substantial professional, technical and financial assistance from its European partners and financial institutions. But Serbia also has the opportunity to apply German experiences, transfer technologies and expand its cooperation with companies from Germany which is not only the strongest EU economy, but also a leader in the use of green solutions for long-term sustainable growth.

These are the main messages of the participants of the 2-day online “Green Industrial Policy” conference, held on 26th and 27th May. The conference was organised under the German Development Cooperation by the Embassy of the Federal Republic of Germany and the German-Serbian Initiative for Sustainable Growth and employment.

At the ceremonial opening of the conference, opportunities for further cooperation were addressed by Ana Brnabić, Prime Minister of the Republic of Serbia, His Excellency Thomas Schieb, Ambassador of the Federal Republic of Germany to the Republic of Serbia, Dr Maria Flachsbarth, Parliamentary State Secretary at the Federal Ministry of Economic Cooperation and Development of the Federal Republic of Germany (BMZ) and Dragan Stevanović, State Secretary at the Ministry of Economy of the Republic of Serbia.

The conference gathered senior state representatives from Serbia and Germany, the EU Delegation to Serbia and the United Nations Development Programme (UNDP), economic associations, representatives of the Serbian industry as well as financial institutions, development banks and commercial banks operating in Serbia.

The participants discussed regulations and public policy instruments for promoting green growth, the perspectives of the domestic industry to develop new business models through enhanced digitalisation, corporate responsibility in business value chains and green financing opportunities for funding economic growth based on a cleaner environment.

Circular economy as one basis of a new industrial policy

One conclusion from the conference is that Serbia has visibly started to improve its regulatory framework through a set of amendments and the adoption of new legislation in energy, mining and environmental protection, headed by the umbrella Law on Climate Change. An industrial policy strategy for the forthcoming ten years has been adopted, after consultations with a large number of experts and business representatives from 300 companies.

The new industrial policy strategy envisages raising the competitiveness of the Serbian economy through digitalisation, innovation, quality investment into advanced technologies, restructuring exports and business operations based on circular economy principles. To this end an implementation roadmap was, the first document of its kind in the Western Balkans.

The participants of the first panel on the development and application of green policies to promote green growth concluded that this legal framework is a good basis for the further development of legislation in accordance with the Green Agenda for the Western Balkans, which represents the translation of the EU Green Deal that aims to make the European Union climate neutral by 2050.

Comprehensive support to small and medium-sized enterprises is most important

The second panel that included industry representatives showed that domestic companies already develop business models with the aim of achieving zero carbon emissions and by initiating highly innovative and ambitious projects to develop green products and services.

The business representatives stated that this kind of development is expert-intensive and requires long-term investments, thus making professional, technical and financial support necessary, primarily to small and medium-sized enterprises that represent the core of the domestic economy. This type of support becomes particularly important in a situation where having a competitive advantage in the European market, the main export market for domestic enterprises, increasingly depends on whether the business processes are sustainable.

The panellists concluded that for Serbia to achieve ambitious climate goals it is also necessary to have a special support programme for small and medium-sized enterprises operating exclusively on the local market as without professional and financial capacities a green transition is difficult to reach.

Preconditions for increasing green finance 

Regarding opportunities to finance green growth, the representatives of development and commercial banks in Serbia provided a detailed presentation of the available forms of technical and financial support for small and medium-sized enterprises, entrepreneurs and households to improve energy efficiency, the use of renewable energy sources, recycling and solid waste disposal.

The participants discussed desirable changes to legislation, tax and accounting regulations in order to improve the conditions for increasing the green portfolio in the total loan supply as well as to promote the development of the capital market through attracting private equity funds.

The panellists concluded that the development of tax incentives for green growth must be followed by clear and well-designed regulatory changes, primarily regarding market-based trends in the price of electricity and the gradual replacement of coal with renewable energy sources. Just as it is for businesses, it is very important for financial institutions that the legal framework is predictable, equal for all, and that work is being done in parallel on strengthening institutions.

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