Serbia - Information and Communications Technology MarketSerbia - Information Technology
Overview
The Serbian ICT market was estimated to $ 2 billion in 2016. This sector accounts for 6 percent of Serbia’s GDP and it is the most vibrant and the fastest growing Serbian sectors for the last 10 years. According to the official Serbian statistics, total revenues from mobile and fixed telephony in 2016 reached $ 1.2 billion, and $ 200 million from internet service operations. A total of 65% of households in the country have a computer, 64% an internet connection, and 58% a fast internet connection.The public sector is the largest user segment, representing 30% of IT spending in Serbia. Retail sales recorded mild growth in 2016 thanks to marketing activities and special offers, but represent only 9 percent of the total IT spending in Serbia. In Serbia, there are about 35,000 ICT professionals representing about 0.4% of the total ICT professionals from European Union. In the IT sector, imports are still higher than local production. Many key global players such as Microsoft, SKF Group, Adobe, Oracle, Google, Hewlett Packard, SAP, IBM, Siemens, Intel, Cisco, NCR Corporation, Erickson and others, have already tapped into this potential, either by establishing their development centers in Serbia or outsourcing services to local IT companies.
ICT Market Data in thousands of USD
| 2014 | 2015 | 2016 | 2017(e) | |
| Total Local Production | 1.455.000 | 1.487.000 | 1.500.000 | 1.530 |
| Total Exports | 445.000 | 465.000 | 490.000 | 520.000 |
| Total Imports | 940.000 | 960.000 | 995.000 | 1.027.000 |
| Imports from the US | 35.000 | 40.000 | 50.000 | 50.000 |
| Total Market Size | 1.950.000 | 1.982.000 | 2.005.000 | 2.037.000 |
| Exchange Rate: 1 USD | 100 | 110 | 120 | 125 |
Note: Data regarding U.S. imports relates to shipments from the U.S. Many U.S. companies distribute equipment from other countries, and are not treated as U.S. exports by official statistics; (e) – Estimated
The mobile telephone market in Serbia recorded 9.2 million subscribers in 2016, reaching growth of nearly 8 percent compared to the previous year. Mobile telephone providers are rolling out new technologies and lucrative value-added services. Operators (Telekom Srbija- MTS, Telenor and ViP) have continued to invest in wireless data services, which is opening up new sources of revenue growth.
ICT Market Data
| 2014 | 2015 | 2016 | |||||||
| Number (in 000) | Penetration (%) | Number (in 000) | Penetration (%) | Number (in 000) | Penetration (%) | ||||
| Fixed Lines | 2,715 | 38.17 | 2,603 | 36.80 | 2,492 | 35.22 | |||
| Mobile Users | 9,345 | 130.76 | 9,156 | 129.38 | 9,230 | 129.52 | |||
| Internet Subscribers - Fixed Broadband | 1,227 | 17.17 | 1,321 | 18.48 | 1,431 | 24.2 | |||
| Cable subscribers | 1,497 | 20.95 | 1,596 | 22.55 | 1,754 | 32.37 | |||
Serbian Telecommunications Agency - RATEL reported that 2.49 million fixed line connections in 2016. The Internet market in 2016 maintained a positive growth trend from the previous years. Telecommunications Company “Telekom Srbija” remains to be the largest operator in the Republic of Serbia in 2016, with a market share of 46% in terms of the number of subscribers. Other ISPs that should be mentioned are: SBB Ltd. Telenor Ltd, PE “Pošta Srbije”, Vip mobile Ltd., etc. The increased competition in the broadband market and the growing user demands led to an improved quality of Internet services, reflected in the constant growth of high bitrate connections. In December 6, there were 221 Internet service providers (ISPs) registered in Serbia.
Serbia fully liberalized its telecommunications market in 2012, which primarily affected the fixed telephony segment. The liberalization allows all companies that have the necessary infrastructure, including cable operators, to launch fixed telephony services with only a certificate from RATEL.
ISPs offer a variety of broadband internet access options at speeds of up to 16 Mbps on the retail market. Due to increased competition among ISPs, the price is decreasing. According to the 2015 ITU Broadband Commission Report, Serbia ranked 33 out of 170 International Telecommunication Union (ITU) member countries in terms of mobile broadband penetration. In May 2015, Serbian mobile operators were awarded 10-year licenses renewable for two years to use the spectrum in the 1710-1785/1805-1880 MHz band for the introduction of 4G services.
Local Competition
Computer software is one of Serbia’s main export products. Serbia is globally acclaimed for being the biggest exporter of raspberries, but the value of exported software and services is almost twice as big as the export of raspberries. In 2008 the value of exported services was around USD 100 million and by 2016 it reached as much as USD 450 million. Substantial export results were achieved with the state investing around USD 80 per capita in IT development which is far less than the European average. ICT is considered a priority sector for the Government and it will increase the support for this sector over the years, especially given the sector’s strong results in attracting investors and employment.
Leading Sub-Sectors
The best prospects for U.S. suppliers in this market are for internet-related equipment such as routers, switches, and access servers, equipment for mobile telephony, cable operator equipment for transmission, and fixed wireless equipment. There are lucrative business opportunities for U.S. companies with technical expertise in internet applications. As GPRS usage becomes widespread and UMTS cellular telephony is introduced, there will be good prospects for the business-to-consumer market for publishing on the internet. Other prospects include internet services, wireless and broadband internet access technologies, cable television, and VOIP solutions.Opportunities
The U.S. remains the top exporter of ICT to Serbia. The cloud computing sector is growing at 30% per year and is about 5% of the total IT market. It is the fastest growing segment of IT consumption in the country. The highest demand is on PaaS. It was estimated by the IT Cluster Vojvodina that during 2016-2020 there could be about 30,000 new jobs opened by IT startups in Serbia, primarily related to offering cloud solutions to the public sector as well as to small and medium businesses. The value of cloud services in 2016 was about $6 million.While IT spending in the financial and other sectors will probably remain at the same level, the largest opportunities lie in the public sector, which will contribute to the growth of the market. Government spending on ICT will focus on areas like e-Government, e-Taxation and the justice system. Serbia’s e-Government project will include the following three large infrastructure projects:
- e-Schools
- Serbian Cloud Data Center and
- e-Inspector.
For more information please contact Commercial Specialist, Zorica Mihajlovic at: zorica.mihajlovic@trade.gov.
Web Resources
- Ministry of State Administration and Local Government
- Ministry of Trade, Tourism and Telecommunications
- Serbian Agency for Telecommunications RATEL
- Association of ICT – JISA
- IT Cluster Vojvodina
Infrastructure
Overview
Due to its position on the geographic borderline between the East and West, Serbia is often referred to as a gateway of Europe. Two important European corridors, VII – the River Danube and X – the international highway and railroad, intersect on the Serbian territory, providing excellent connections with Western Europe and the Middle East. However, due to a serious lack of funding for new developments and general maintenance during last 25 years, the current situation in the sector is far below its potentials. The current infrastructural network is consisted of the following transportation grids:Roads
The road network of the Republic of Serbia is 40,845 km (25,380 miles) long, out of which 415.7 km (257 miles) of highways with toll collection, 246.5 km (153 miles) of semi-highways with toll collection, 5,525 km (3,433 miles) of arterial roads, 11,540 km (7,171 miles) of regional roads, and 23,780 km (14,776 miles) of local roads.Railroads
Transport of goods via railroad is very cost effective and through Pan European Corridors X and VII, Serbia offers an access to all European destinations. As in many countries, the railway system in Serbia suffered due to lack of investments in previous years, but serious efforts have been made by the Government of Serbia in order to restructure and modernize railway network in Serbia. Serbian Railways has signed contracts with 43 international forwarding companies and due to that, "shuttle" container trains started using Serbian railways for pan-European transport. Also, the maximum spindle capacity of the Serbian railways system is 22.5 t. Finally, the priority for the next period is the development of multimodal transportation (transition from road to railway and river transportation).Air
Air transportation is the fastest and the most convenient way of transportation. Serbia can be reached by air using one of two available international airports in Serbia - Nikola Tesla Airport and Nis International Airport. An airport in Vrsac is currently being used only for domestic non-commercial flights, training and leisure aviation, while it is expected soon to be granted an international certification. Transportation by air to and from Belgrade is possible to almost every destination in the world, either directly or by layover. Starting June 23, 2016, National Air carrier, Air Serbia, will introduce direct flights to New York City.River
Serbia offers an outstanding potential when river transportation is concerned. A highly cost-effective way of transport can be pursued on three rivers giving a total of 959 km of safe navigable routes. 588 km of the International River Danube, represents the most reliable navigable route that can be used for transportation throughout the year. In addition, artificial canals Rhine-Main-Danube, an international canal that allows barge traffic between the North Sea and the Black Sea, and Danube-Tisa-Danube create a network of routes providing access to all Danube basin countries. The Sava River links the following countries in the region: Slovenia, Croatia, Bosnia & Herzegovina and Serbia, and it is in the process of gaining the status of International Navigable Route.Infrastructure
| Length of road network | 40.485 km |
| Length of railway network | 3.809 km |
| Length of navigable routes | 959 km |
| Number of private ports | 11 |
| Number of intern. airports | 2 |
Leading Sub-Sectors
The pan-European Corridor 10 highways and railroads, along with the future highway informally called Corridor 11, which will run from Timisoara, Romania to Montenegro’s port of Bar, are priorities for Serbia’s infrastructure development. The EU considers these corridors to be part of the core road and railway network that the region should develop. Officials announced a plan to set aside USD 1.1 billion to improve infrastructure in the Western Balkans, including USD 110 million in grants under the Instrument for Pre-Accession Assistance (IPA).Serbia intends to convert all of its military airfields, eight in total, into commercially managed airstrips. The government also plans to invest nearly USD 550 million in inland waterways, mainly for environmental remediation and ordinance removal projects in the Danube River basin.
The state-owned railway company, Zeleznice Srbije, is planning to carry out infrastructure development and rolling stock projects worth EUR 2.5 billion, stated the Deputy Prime Minister and Minister of Construction, Transport and Infrastructure Zorana Mihajlovic. The current value of the projects amounts to EUR 1.5 billion, while the construction of the Belgrade-Budapest railroad will increase the value by another approximately EUR 1 billion.USD 1.2 billion over the next three years.
The Serbian government and Belgrade authorities, in cooperation with the United Arab Emirates-based real estate developer Eagle Hills, are working on ambitious development project called Belgrade Waterfront. Eagle Hills is expected to invest about USD 3.5 billion to build 1.8 million square meters of business, residential, cultural, and retail space in downtown Belgrade.
The parliament adopted a law on utility services, which is expected to draw private investment in this sector through PPPs as well as facilitate investments in the underdeveloped wastewater, sewerage, water supply, and waste management sectors.
Opportunities
Recent reforms in the legislation are performed not only to satisfy the requirements of the ongoing accession procedures to EU but also with the scope of changing the business environment and make the economy more efficient and eligible to foreign direct investments. Two major improvements related to the infrastructure, are:- The new Law on Planning and Construction: The introduction of an electronic system for issuing building permits is founded by the new Law on Planning and Construction, and as such represents one of the most important reform challenges faced by the Republic of Serbia in 2015. The mentioned Law has entered the process of unified procedure in issuing all acts in the process of construction, and the application and the beginning of issuing electronic construction permits started on January 1, 2016 by the introduction of a functional system for the issuance of E-permits.
- Methodology for Selection and Prioritization of Infrastructure Projects is part of the National priorities for international assistance (NAD) 2014-2017 with projections until 2020, adopted by the Government of the Republic of Serbia in November 2013
The Government foresees the U.S. as a capable partner to cooperate with implementing a significant number of projects from the Single Project Pipeline. Under implementing we understand cooperation with US companies in preparation, construction and procurement (EPC Model) of certain projects, on one side, and a more comprehensive cooperation in full project implementation, which would include financing of the Project from US sources, on the other.