11 May 2021
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  • 10:32 Integration is key to higher economic and social growth
  • 12:50 How the coronavirus outbreak is transforming the insurance industry
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  • 09:15 Why the Balkans are known in the world

February 10, 2021 – The Institute for Strategic Solutions hosted the regional event The Adriatic Journal 2021: Financial stability and digitalisation during and after Covid-19. The digital event took place interactively between Ljubljana and webcasting across the Western Balkans. One of the main points of discussion was Slovenian-Serbian economic cooperation and the financial challenges faced by the Balkan countries now and after the pandemic.

Author: Maja Dragović

The event hosted some of the most prominent representatives of the economy and politics in Slovenia and Serbia. They included Andrej Šircelj, Slovenian Finance Minister; Blaž Brodnjak, President of the Management Board of NLB, the parent bank of the NLB Group, and the largest banking and financial group based in the region which ranks third in Serbia in terms of market share; Nada Drobne Popović, President of the Management Board of Petrol; Vladimir Lučić, President of the Management Board of Telekom Serbia; Nenad Miščević, CEO of Nectar Group nad Sergej Simonitti, CEO of Coface PKZ. The conference also featured Gorazd Čibej, director of the Slovenian Insurance Supervision Agency and dr. Ante Žigman, president of HANFA (Croatian Financial Services Supervisory Agency).

So, recovery in the region certainly won’t be easy or quick. The whole of tourism, gastronomy, the service industry, as well as small and medium enterprises in general, will face quite challenging times in the coming period. “In reality, nobody really knows how the markets will evolve and how long the recovery of the economies will take. The challenge will be to ensure the long-term flexibility of the business models, combined with a proper financial strength of the companies”, says Pilgram, suggesting that the focus of the countries in the region should be on how to ensure a stimulating business environment, and how to attract additional foreign direct investments in order to accelerate the growth and enable a very fast recovery of the industry. But the economic burden of the pandemic is unevenly distributed: for example, sectors like tourism are hit much harder than technologically advanced production. Pilgram expects the same discrepancies to continue in the post-crisis period, where the flexibility to adopt to a new reality, working around remining restrictions, and taking advantage of the changed customers behaviour will be crucial for the success of individual businesses.

“Uncertainty materialised in 2020. The crisis that followed the outbreak of the coronavirus around the world became a reality, intensifying business uncertainties. With the development of vaccines, the world has found a solution to a challenge that has severely curtailed businesses around the world, including the Adriatic region, for several months. The consequences of the crisis are being felt by almost all industries. However, there are winners in the region. One of them is Serbia, which has weathered the coronavirus storm effectively and continues to do so. Its GDP has practically not decreased,” said at the opening of the event Tine Kračun, director of the Institute for Strategic Solutions (ISR) from Ljubljana and editor-in-chief of The Adriatic Journal.

This year’s event, which ISR organises every year to coincide with the launch of its annual publication the Adriatic Journal, was headlined Financial Stability and Digitalisation during and after Covid-19. Representatives of politics, the economy, regional regulators, as well as the director of development and research at the ISR, Jure Stojan (DPhil) presented the methodology for monitoring and forecasting social events in the future.

“In Slovenia, we have protected both jobs and business with coronavirus measures. One of the most effective measures was the furlough scheme. In this way, we prevented businesses from having to close down, as well as keeping people in employment” 

– Andrej Šircelj, Minister of Finance of the Republic of Slovenia

In his introductory address, Andrej Šircelj, Minister of Finance of the Republic of Slovenia, noted that Slovenia’s response to the coronavirus crisis was appropriate and timely, with the government measures ensuring the economy continued to operate. Slovenian public finances remained stable, that was also confirmed by the credit rating agencies, who predict a rapid recovery for Slovenia and mark it as one of the most reliable investment destinations, Šircelj emphasized. He added that today, the future is being planned at the global and European level. “All the challenges that lie ahead transcend national borders and the borders of continents. That is why we need to cooperate, at different levels, in all spheres. “

Slovenia and Serbia can create strong synergies

The panel discussion, moderated by Janez Tomažič, economics editor at Delo publication, looked at the current economic cooperation between Serbia and Slovenia and explored the possible ways to strengthen the cooperation in the future across the whole of the Western Balkans region.

“Synergies between Slovenia and Serbia can be extremely strong”

-Blaž Brodnjak, CEO of NLB Group

In Blaž Brodnjak’s opinion, Serbia is an example of a successful economic pragmatism, adding there are numerous opportunities for cooperation between the two countries. “Slovenia, for example, has problems with self-sufficiency, while Serbia can be a European champion in the production of organic food due to its natural resources. On the other hand, Slovenia, with its exceptional geographical position, has a great potential in logistics and is also at the forefront in the field of high technologies in renewable resources, which is an increasingly important agenda in the region. Opportunities for partnerships and connections are therefore presented by nature. When we talk about integration, of course we are talking about a common market in the entire Western Balkans region, following the example of the Scandinavian model”, said the President of the Management Board of the NLB bank. 

Mihajlo Vesović, director of the sector for strategic analysis, services and internationalization at the Serbian Chamber of Commerce, said that Slovenian companies are among the most successful investors in Serbia and that many Serbian SMEs are involved in their supply chains.“We need to think about regional cooperation. Digitalisation, Industry 4.0, Tourism, Green and Circular economy. The most important thing for the region’s economy is that, in addition to the mini-Schengen we are talking about in the Western Balkans, the EU’s borders are also opening up for the countries in the region. Closed borders restrict the flow of people, capital and goods, and open borders would allow momentum and growth”, Vesović concludes.

The most important thing for the region’s economy is that, in addition to the mini-Schengen we are talking about in the Western Balkans, the EU’s borders are also opening up for the countries in the region”

-Mihajlo Vesović, director of the sector for strategic analysis, services and internationalization at the Serbian Chamber of Commerce

“During the Covid-19 health crisis, we set ourselves a few goals: to preserve the health of the employees, ensure business continuity, and enforce proportionate measures”

– Nenad Miščević, Nectar Group

The number of Serbian investors in Slovenia is also on the increase. One of them is the Nectar group who bought Slovenia’s Fructal in 2011. Despite the crisis, the company continues to grow. “During the Covid-19 health crisis, we set ourselves a few goals: to preserve the health of the employees, ensure business continuity, and enforce proportionate measures. In 2020, we increased our market share in strategic markets. This helped our company to overcome a difficult period,” said Nenad Miščević, the group’s CEO, adding that managed this through growth and agility, as well as process simplification and digitalisation.

Another big regional player from Serbia – Telekom Srbija, the Serbian telecommunications operator – is currently in the process of implementing several ambitious projects that involve the economy and entrepreneurship. “This year, Telekom Srbije is opening a venture capital fund that will provide finance for start-ups”, explained Vladimir Lučić, President of the Management Board of Telekom Srbija. He added that the fund will be led by experienced people from the US and Israel. “We want to strengthen the start-up community and in the next five years, we will invest millions of euros in start-ups in the region. The telecoms provider also has ambitions to expand beyond the region, with plans to offer television services in Austria, Germany, Switzerland, the USA and Canada. “Our target group is people from the region who live in these countries.”

“This year, Telekom Srbije is opening a venture capital fund that will provide finance for start-ups”

– Vladimir Lučić, Telekom Srbija

Coronavirus impact on the energy sector

“The data shows the rebound is already happening, as is reflected by the oil prices which are close to the levels in January and February last year”

– Nada Drobne Popović, President of the Management Board of Petrol

Nada Drobne Popović, President of the Management Board of Petrol, which recently signed a contract to purchase Crodux, a trader in petroleum products in Croatia, noted that the restriction of movement during the coronavirus had a big impact on energy traders. “Transit has been difficult, imports and exports have decreased. Certain sectors are still affected. There was also a drop in sales of derivatives to individuals,” she said, adding that at Petrol they believe the rebound after the crisis will be in the shape of the letter V.  She concluded that the future consumption in energy will change in such way that more energy sources will be used.  “Companies will have to adapt to this, including e-mobility.”

Sergej Simoniti, President of the Management Board of Coface PKZ, is convinced the coronavirus crisis presents a great opportunity for the region and beyond. He highlights the example of the tourism sector.  To survive during and after the crisis, businesses need to consider two important factors, suggested Simoniti. “First, how entrepreneurs and businesses introduce more flexible business models. And the answer to that is diversification. Companies with diversified products have weathered the crisis much better. Second, if businesses depend on distant suppliers. Such businesses are exposed to additional risks. These risks can be reduced by open economic space, localisation of suppliers and diversification of products.” He added that how the state withdraws from the economy will also have a significant impact on businesses.

“Dependence on tourism has dealt a severe economic blow to the countries in the region. But tourism has a peculiar characteristic that tourists will return as soon as they are able to”

– Sergej Simoniti, President of the Management Board of Coface PKZ

New conditions and risks an opportunity for greater innovation of insurance companies

The regional event also devoted part of the discussion to the issue of transformation of the operation of insurance companies during the corona crisis and the adjustments they made in their operations and customer relations. Gorazd Čibej, director of the Slovenian Insurance Supervision Agencysaid that the most important risks include the risk of operational downtime, health risk of a pandemic and cyber risk (“Covid-trio”). They are all intertwined and point to the growing vulnerability and uncertainty of today’s globalized world, where an event in a region can spread rapidly and ultimately have a global dimension. All of the above must be taken into account by insurance companies in their planning and operations, said Čibej. Dr. Ante Zigman, president of the Croatian financial services supervision agency HANFA believed that the listed challenges push insurance companies to adapt to new circumstances, to innovation, to finding new channels to get closer to the user. He is convinced that insurance companies will use this for growth, development and innovation.

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