Could you give our readers an overview of Gemax?
Gemax is a privately owned company. It was established at the very beginning of the revival of private property in Serbia, in 1989, and we can say that we are the pioneers of private construction in Serbia. I was working in Sweden for 15 years and a part of the capital I brought with me was invested in this company. I also brought my know-how, experience and a part of the constructing culture of the western world. The knowledge I gained in Sweden helped me tremendously in creating the company's organization and in rising up a strong constructing enterprise. In the beginning of l990 we were already well known and highly respected in Belgrade. It was very difficult to develop the company in Yugoslavia having no banks and capital to support us, so we had to finance our development on our own. The isolation and the sanctions imposed on Yugoslavia made our development even harder. We might have achieved far better results in the privatization if there had been no isolation and wars. We are the last country in Europe entering the transition and the new regime is accelerating the privatization process. It is our only aim and our only chance to become connected with Europe's economy.
Talking about the company, Gemax employs 186 workers on a permanent basis plus 264 people, employed in subordinated constructing companies. The company is equipped with the latest technology for civil engineering, i.e. roads and infrastructure. The company is specializing in the construction of low buildings like villas, small offices and small factories. There was and there is still a big demand of these types of buildings in Yugoslavia.
You have mentioned the importance of capital. What significant financial results have you achieved this year?
Our annual turnover in the last year was 35 million DM. It should be a business secret, but I let you know that our general profit was under one million DM.
Do you find the opportunities of attracting capital today to be much better?
Yes of course, it is much better, because the new authorities are opened towards foreign investors. They are adopting new Laws and creating the basis for foreign investors to come to Serbia.
What are the major new projects you are looking in the short term?
We already became participants in the Serbian roads reconstruction program. That is a very ambitious project because the roads were all heavily damaged during the wars. In the last 15 years they have not been repaired or there has not been investment in them at all. The European Economic Community is aware that without a good road infrastructure there is no development. Therefore Serbia was given a significant credit with the amount of 250 million euros. Like I said before, we are taking part in that reconstruction program. I just came back from Germany two weeks ago and bought there new machines, so now we are ready to start.
We are also preparing the launch of a brand new business activity. It will be the building of low-cost apartments for the people with low incomes. As you know, the average salary in Serbia has been very low for the last 15 years and a major part of the population could not afford to buy an apartment. We intend to make an experimental housing project that will include 400 apartments. At the same time we will try to break all the records in lowering the costs of apartments, with the help of modern technology. I am sure that the market is going to "swallow" it immediately, because the Yugoslav army alone needs 10.000 apartments, and the police needs more than 3.000 apartments. Apart from that, private entrepreneurs must provide their best workers with apartments if they want to attract and tie them to their company. That is something we are doing, too. My company gave credits to its workers: 43 credits for apartments and l9 for houses. Many of the best people in the company are refugees from the Bosnian Federation and Croatia and they really needed the credits.
Where would you consider to be the building "hot spots": Novi Sad or Belgrade? And what are the main trends in the sector?
The construction business is in stagnation now. This is the worst situation of all times, but it was expected. We are living a transition process and it is inevitable to have a crisis. Unfortunately it affects the popularity of the new Serbian Government and it is a certain draw back in their program. The foreign investors are reluctant to come here. Generally speaking, foreign capital always needs some time to come to the country. The Government, leaded by Zoran Djindjic, is determined not to allow the printing of money that is not covered by the economy. We must create a healthy economy and live from the real incomes. That is something we all support. The negative consequences of that process are that it creates a social crisis based on general unemployment. But, I am sure that this crisis is only temporary and in the end of 2002 foreign capital will start to flow into the country. Now is the time for making preparations. Gemax created a great number of new jobs. If we realize only 10% of what we have planned, we will be more than happy. It is interesting that the people in Serbia, although they live in poor economic conditions, are mostly aware of the fact that the situation is going to improve soon. The investors will certainly ask why they should buy a building when they can rent it? Now they are waiting, but in a few years they will build here themselves.
How would you position your company in order to be the one to carry out these new construction jobs?
We see our big chance in carrying out constructions financed from abroad. Even now we are doing a few projects for foreign investors. HVB bank, for example, from Austria bought the building that we constructed. Raiffeisen bank is our client, too. We also negotiate with an Austrian company called OMV. That company is building 50 petrol stations in Serbia. We are about to sign the contract for building two petrol stations for them. We also negotiated with a Greek company called Veropoulos that is building a big trade center in New Belgrade.
| The French Cora and German Metro are also building big shopping malls here. Practice announced the opening of a chain of stores in Yugoslavia. We have very intensive preparations for the jobs we will do. Many western and Russian companies from the financial sector announced their arrival to Belgrade. For the time being, they are buying only small offices and apartments. In most of the cases they rent the space. Some Israeli constructing companies contacted us also, they are interested in building big business centers here, and each of them will be 50.000 square meters of space. These are the first hints of the future economic trends in the new Serbia.
To win those bids, sometimes you have to create a consortium. Did you get many agreements of that kind with local or foreign companies? What kind of consortium experience do you have?
Our only chance to do bigger projects is to be connected with western companies. I am now negotiating with an American foundation about the joint entering of building a highways network. It is a huge project. We are sure that this contact will enable us to obtain good guarantees for credits and the professional support, and for Gemax, as a provider of working power and machines, can bring a lot of benefits to the company.
How were your experiences after your return from Sweden?
It was not very hard for me to fit into the Swedish culture. My family even got used to the food there. However, the habits gained in Sweden were hard to be preserved here, in Serbia. Here people are living in a completely different manner. You have probably seen the garden decoration. Paying the attention to the horticulture here is considered as a significant luxury. For the Swedish it is normal way of living. Without presence of the nature you are losing your personality. We are proud to be a role model and every day more and more companies follow our example. The people on the Balkans must have more than their neighbor has. It is a part of their mental structure.
Do you consider it as a task - to change the image of Belgrade? To make it more modern, younger and a bit more like Sweden?
That is our wish and I think we are managing to fulfill it. Here in this business center we have a tennis court, a gym and a sauna. Many diplomats are coming here. The Swedish ambassador told us that even in Sweden they don't have such beautiful business-centers. One of the tennis players here is Mr. Montgomery, the ambassador of the US to Yugoslavia. When he came here for the first time he was wondering how it was possible to have private property in Serbia at all. I am really proud of that center and even in Europe only a few centers can compare to ours. Many United Nations' diplomats rented a space in our building. When Mr. Milosevic drew them away from the Federal Government's building they had to move here, in the floor above. Mr. Igor Harinicki, the ambassador of the United Nations, also plays tennis here. One day he was complaining to me that he was thrown out from his office. I asked how big office he needed. He said that he needed from 300 to 400 square meters for the office alone. Within a week he moved in this building. He fairly warned me about the negative consequences of showing him my hospitality and told me that I should think it over. I answered him that I own this building and for that reason no one can take it from me. That is the way the Swedish culture was implanted in Belgrade. My son's name is Lenard and he was born in Stockholm. In the time we were choosing a name for him, the Serbian consul who was also our friend pointed out to me that finding a name was easy because the Swedish calendar is full of names. Every day is a name day. That day was Lenard's name day. My daughter has a Swedish name, too. Her name is Majra. But, it is an international name, too.
What would be your final message to the investors?
All investors are welcomed in Serbia. They should know that this is part of the world where the profit you make is the biggest, because united with Gemax, we do not have any competition. The big state-owned companies cannot compete with us. And only 15% of the economy is privately owned. Their arrival will accelerate the adoption of Laws like in Europe. Those Laws will create the legal framework guaranteeing their investments. That means a guarantee for us as well. We will all benefit in that way. Even the common people that are not interested in who owns the company that employs them. It is the same in the rest of the Europe. More than tree million Serbs are living abroad. They are very successful. We expect them to be the first people to invest in Serbia. Up to now they gained a lot of experience in doing business abroad. With up to date technology and with their capital they can help considerably the development of Serbia and gain a lot of profit too. I was a guest on the reception of a Swedish company in the hotel "Intercontinental" and I was extremely happy to see the members of the Serbian Government. They are very young, dynamic, educated, smart and multilingual politicians. There have not been people of such quality leading the country for a long time. And that is a firm guarantee for the future. The money will certainly come, but the principal issue for us is to know where we are going.
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