Serbia’s booming construction sector and ongoing infrastructure projects establish it as a vital economic hub in the region. In 2023, construction works valued at over EUR 5 billion contributed around 5.5% to the national GDP. The country’s strategic location and ambitious infrastructure plans have attracted significant foreign investment. With projects like highways, railways, and energy facilities underway, Serbia is strengthening its position as a critical economic connector in Southeast Europe.
EXPO Belgrade 2027 – Infrastructure Development
Serbia recently secured the opportunity to host the high-profile EXPO 2027 international exhibition. It has taken decisive steps toward realizing the exhibition, which has been declared a project of national significance. Preparations for the event are expected to involve a wide range of infrastructure projects, including transportation networks, public spaces, and facilities upgrades with a lasting impact. Seen as an opportunity for local and international companies, the project is expected to stimulate economic activity significantly. In the context of EXPO 2027, Public-Private Partnerships (PPPs) could play a crucial role as one of the essential methods to support economic growth and investment in infrastructure development.
The Notion of Public-Private Partnerships
PPPs were introduced in the Serbian legislature through the Public-Private Partnership and Concessions Act (Act) in 2011 and amended twice in 2016. Article 7 of the Act defines PPPs as long-term cooperation between a public and a private partner for financing, constructing, reconstructing, managing, or maintaining infrastructure and other facilities and provision of services of public importance, which can be contractual or institutional. This legislative definition draws inspiration, at least in part, from the European Commission’s Green Paper on Public-Private Partnerships and Community Law on Public Contracts and Concessions.
PPP Projects in Serbia
PPP Projects are generally regarded as beneficial for local economic development and growth. The number of PPPs in Serbia has seen an upward trajectory in recent years, reflecting a growing appreciation for their role in leveraging private sector efficiency and resources. As of April 2024, the Serbian Commission for PPPs has approved 284 PPP projects, approximately 90 of which incorporate a concession component. High-profile initiatives like the concession of Belgrade Airport and the E-763 highway PPP represent significant national projects. However, most PPPs are smaller, local endeavors that, while less grand in scale, are crucial in their impact. These local PPPs play an essential role in enhancing the business environment and contribute to local communities’ economic development and sustainability.
Significantly, a substantial portion of the PPPs in Serbia are carried out by small and medium-sized enterprises (SMEs). These PPPs play a pivotal role in fulfilling the demand for specific public and utility services within communities and stimulating local economies. By engaging SMEs, PPPs contribute to generating employment in the private sector, which in turn helps streamline public sector staffing at the regional level. In this regard, PPPs are often directly associated with or sometimes can become synonymous with local economic development (LED). By leveraging the capabilities and investments of the private sector, PPPs help catalyze economic growth in services and regions that might otherwise struggle to attract direct investment.
A recent study sheds light on the sectors most frequently served by local PPPs in Serbia. Transportation services lead with 28% of the PPPs focused on this area, followed closely by public lighting, which accounts for 24.5%. Other significant sectors include the production and distribution of heat (8.5%), communal waste management (6%), local road reconstruction (9.5%), and the management of public garages (2.5%). The remaining 16% of PPPs span a variety of other services. The study’s insights are essential in understanding the realities of how PPPs are being utilized to develop public infrastructure and services across Serbia, and they point to potential areas for further development, especially in underrepresented regions.
Final Remarks
In conclusion, Serbia’s pursuit of PPPs reflects a strategic approach to infrastructure development, emphasizing collaboration between the public and private sectors to drive economic growth and enhance service provision. The upcoming EXPO Belgrade 2027 presents an opportunity for further infrastructure development through PPPs, which is crucial in driving investment and economic growth.
By Ognjen Colic, Partner, and Nikola Ivkovic and Dusan Jablan, Associates, Gecic Law
This article was originally published in Issue 11.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
