The Serbian Ministry of Construction, Transportation and Infrastructure has initiated the process of amending the country’s Planning and Construction Act, with the aim of boosting the construction industry and making the legal environment in the sector more predictable, reliable, and investor-friendly. The Serbian construction law has been revolutionized the last few years, with the introduction of e-permits and the unclogging of many sclerotic procedural labyrinths, so the readiness of the Serbian government to continue with the reforms and modernization is generating new excitement in the construction sector.
We have singled out a few of the amendments in the pipeline which show the direction in which Serbia’s construction policy is headed.
The validity of location conditions – one of the first and most important papers in the permitting process, which shows the investor what can be built on certain piece of land and under which conditions – is to be extended from one to two years. Similarly, the period for commencing work under a construction permit is to be extended from two to three years, and the conditions for extending this period have been relaxed. These amendments will allow investors more time to raise funds and make proper preparations for their investment cycles.
The procedure for amending planning documents is set to be simplified where the proposed amendment affects less than 50% of the area covered under the plan. This amendment will allow faster adaptation of the planning documents, thus shortening the path to changing the parameters of development where both investors and authorities agree on the need to modify the existing planning features of certain locations. Of course, diminishing public participation in changes which may dramatically affect almost half of the area covered by a planning document can be seen as excessive and ripe for misuse. Hopefully, the bylaws that will regulate this matter in more detail will properly set the procedural rules so as to eliminate these risks.
The existing law allows the development of certain types of facilities (such as infrastructure, energy facilities, etc.) on agricultural land, subject to approval of the ministry competent for agriculture. The draft law will also allow such facilities to be built on forestry land as well, and abolishes the requirement for ministerial approval. While the concept of approval under the existing law was under-regulated, thus giving too much discretion to the ministry, the new solution seems to go to the opposite extreme, neglecting the importance of preserving agricultural and forestry land.
Instead of listing all the facilities for which no permit is required, or which require a simplified construction permit, the amendments envisage that the ministry will specify such facilities in its bylaws. Such approach promises more flexibility, because a bylaw list can be more easily adapted to the requirements of the market than a list set out in the law.
These are just some of the innovations that the amendments will introduce. In addition, the amendments should clarify some of existing provisions and regulate certain matters in more detail, thus responding to the inconsistencies and ambiguities that appeared in the implementation of the law so far.
Nevertheless, some points requiring action by the legislator still remained unaddressed. This is the case with licenses for contractors and designers, for example, as, even though the market is deficient in licensed contractors and designers for complex projects such as large infrastructure facilities and renewable energy projects, the ministry is still not willing to relax the requirements for obtaining licenses or at least to allow engagement of licensed subcontractors to be sufficient to fulfill the licensing requirements. Hopefully, by the time the draft amendments are ready for parliamentary procedure, the ministry will recognize and address this issue.
To conclude, the upcoming amendments are more than welcome – and they will be even better if they pick up the outstanding licensing issues. Readiness for prompt implementation of the amendments, which also includes a swift adoption of all necessary bylaws, remains a challenge – one which all the investors expect to be successfully addressed.
By Milan Dakic, Partner, BDK Advokati
This Article was originally published in Issue 5.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.