Belgrade, Serbia and Montenegro, August 1,
2003—Financing options for small businesses in Serbia have improved
considerably through a new leasing law adopted with support from SEED,
the IFC-managed small and medium enterprise (SME) facility in the Balkans.
The law, passed by Serbia’s parliament on May 27, authorizes the creation
of new independent leasing companies with minimum capital of Euro €100,000.
It also sets clear and transparent standards for their supply of equipment
to local companies on contract.
The move is expected to fill an important financing gap for Serbia’s SMEs,
who often need new equipment for their operations but cannot obtain the
term loans from local banks required to make the purchase. Since Serbia’s
leasing companies will retain legal ownership of the assets they lease,
they will be able to overcome this obstacle by qualifying SMEs based more
on their generated cash flow, rather than credit history, collateral, or
capital base typically required by banks. The result is expected to be
a shot in the arm for the local small business sector, the key source of
job creation in developing and transition economies.
SEED (Southeast Europe Enterprise Development) is a multi-donor initiative
with the objective of strengthening SMEs in Albania, Bosnia and Herzegovina,
FYR Macedonia, and Serbia and Montenegro. Last year it used $21,000 to
provide an expert consultant and methodology for interaction with Serbia’s
inter-governmental Committee for Leasing.
At present, 5 banks have already set up leasing companies: Raiffeisen Leasing,
Hypo-Leasing, Ljubljanska Bank Leasing, Volksbank- VB, Styria Bank - S
Following the successful adoption of the Leasing law SEED has organized
targeted workshops and seminars for financial institutions and SMEs. These
will be followed by a large national awareness programme targeting other
financial institutions and SMEs. The new law should offer investment opportunities
for IFC to expand the activity of new leasing companies, in parallel SEED
will be approaching potential partners and looking at new ways to facilitate
establishment of leasing companies in Serbia. In support of this initiative
SEED and IFC also played a major role in improving the tax environment
for financial leasing transactions. Serbia’s Sales Tax Law was amended
on July 7 and now Serbia has a regulatory framework that meets worldwide
standards for leasing.
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people’s lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. From its founding
in 1956, IFC has committed more than $31 billion of its own funds and arranged
$20 billion in syndications for 2,636 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY01 was $14.3 billion.