The recent amendments to the Law on Planning and Construction have significantly enhanced the business environment, allowing companies to invest more freely and create new jobs. These changes have released 88 million euros in capital that was previously tied up, awaiting the abolition of conversion fees for the right to use construction land into the right of ownership

We are highly satisfied with these modifications to the law, which have had a tremendously positive impact on our business operations. According to a survey by the National Alliance for Local Economic Development (NALED), 90% of businesses reported that the elimination of the conversion fee positively affected their operations. This overwhelming approval underscores the successful lobbying by businesses and the legislators’ responsiveness to these economic needs.

Law on Planning and Construction have significantly enhanced the business environment, allowing companies to invest more freely and create new jobs.

The amendment is a rare example of a systemic law receiving such unanimous praise within the business community. The abolition of the conversion fee has proven to be a targeted and effective measure, enhancing the business climate and fueling the investment ambitions of numerous companies. Now, businesses can more easily plan for revenue growth and new employment opportunities.

This legislative change exemplifies how state actions, with minimal direct market interference, can facilitate business expansion and economic growth. In just eight months since the implementation of these changes, 2,169 requests for conversion without compensation were submitted, with more than half already positively resolved. Notably, the number of requests surged twelvefold in the four months following an initial slower uptake, confirming that the abolition of the conversion fee was a well-founded demand by the business community. This adjustment has provided companies with more favorable conditions for investment, contributing significantly to the growth of Serbia’s gross domestic product.

According to a survey by the National Alliance for Local Economic Development (NALED), 90% of businesses reported that the elimination of the conversion fee positively affected their operations.

NALED’s research has revealed significant insights into how companies are leveraging the conversion of construction land use rights into ownership. Nearly half of the businesses planning or initiating requests for conversion aim to invest in these locations. A third are in the process of becoming landowners, while only 11 percent intend to sell their plots—likely to attract further investments from new ventures. Among those planning new developments, 66 percent are focused on production, energy facilities, and storage spaces, whereas one in four aims to construct residential and business facilities. Financial commitments from these companies are substantial, with a third planning to invest between 500,000 and 1 million euros post-conversion. Another 20 percent anticipate spending between 1 and 5 million euros, and 17 percent expect to invest over 5 million euros. The average plot size involved in these conversions is about 3.5 hectares, with a total projected investment of approximately 88 million euros on 1.2 million square meters of land—land for which no conversion fee will be charged. This scale of investment is predicted to yield significant tax and contribution revenues to the state, far surpassing the 30 million euros collected in conversion fees from 2013 to 2023.

Total projected investment is approximately 88 million euros on 1.2 million square meters of land—land for which no conversion fee will be charged.

Moreover, these investments are expected to boost employment significantly, enhancing the purchasing power of newly hired individuals and, consequently, spurring GDP growth through increased consumer spending. According to the NALED survey, half of the respondents anticipate that the policy of free conversion will positively impact employment, with each investment potentially creating around 50 new jobs.

On a more specific note, several large-scale investments illustrate the transformative impact of this policy. For instance, Neoplanta, a domestic food producer and part of the NELT Group, has initiated a project to install solar panels after converting their land rights. This 2 million euro investment will cater to 30 percent of the company’s annual electricity needs through green energy, marking a significant shift towards sustainable practices.

According to the NALED survey, half of the respondents anticipate that the policy of free conversion will positively impact employment, with each investment potentially creating around 50 new jobs.

Similarly, Philip Morris in Niš is set to invest 100 million dollars to expand its production of smokeless tobacco products, bringing its total investment in Serbia over 23 years to 1 billion dollars. Coca-Cola also plans a major investment of 35 million euros, having applied for free land conversion last autumn to facilitate expansion. These examples underscore the broader economic and environmental benefits anticipated from these policy changes, showcasing a future of growth and sustainable development.

The construction industry plays a vital role in Serbia’s investment projects, which include building new production, storage, and residential areas, as well as business facilities. Although construction growth was modest last year compared to 2022, with a 1.4 percent increase in issued building permits and a 5.1 percent decrease in location condition requests, there’s an expectation for growth. This anticipated growth, fueled in part by free land conversion, will require additional labor, a resource currently in short supply in Serbia. To address the labor shortage, Serbia has leveraged the Open Balkans initiative to open its labor market to workers from North Macedonia and Albania, enabling their free movement. Despite initial skepticism about this initiative’s effectiveness, within just one month, 2,200 workers expressed interest in working in Belgrade and other parts of Serbia, primarily from North Macedonia. The construction sector, in dire need of labor, is expected to see an even greater influx of workers from these countries, especially given the competitive wages offered. Serbian construction employers are adapting to labor market trends, offering monthly wages ranging from 800 to 1,750 euros, along with additional benefits like paid fieldwork, accommodation, transportation, and meals.

To address the labor shortage, Serbia has leveraged the Open Balkans initiative to open its labor market to workers from North Macedonia and Albania, enabling their free movement.

Looking ahead, Serbia is poised to continue attracting construction workers from the region for upcoming large-scale projects like highways, railways, EXPO27, and the metro, which are being implemented through public-private partnerships with major international companies. This influx is expected to occur not only through the Open Balkans initiative but also through other channels, including workers from Bosnia and Herzegovina and Montenegro, making the Serbian construction labor market increasingly competitive.