The law on telecommunication is one of your main priorities now. What is the status of this law today and what do you expect from it? How will it clarify the current situation?
The law is prepared already and it will be presented to the government and parliament for further procedure. We had this law in public discussion for six months. I think that anyone who wanted to know or add anything to that law, had the opportunity to comment on it. We prepared everything for the discussion in the parliament, which is going to be hard, because it is one of the most reforming laws in our country. We have two laws, the first one is on the federal level and the other one is on the level of the republic. First of all, the law on the federal level has to be accepted to prepare the ground for the republican level, because it has to divide the frequencies. It has to set the lowest and highest frequencies for each user, like radio or TV stations and we have some special frequencies for the army, police and other needs. On the level of the republic we are preparing a detailed plan for the division of all kinds of frequencies, even for radio stations. There has to be five experts, that will make up a body, completely independent both politically and financially, elected by the republics parliament. They will be the ones deciding on the licenses for telecommunication, according to the concept, created by the commission that wrote this law. The commission was made up of twenty experts with different backgrounds, from universities, the telecommunication sector on the federal level, advisors from the European countries, from Great Britain, France and other European countries and specialists from the ministry of Transport and Telecommunications. I think they did a good job. It is quite a different law, from what we used to have before. Now we are waiting for the Parliament to say the final word. I am prepared for that. It is done according to the conditions of European laws.
Telecom Serbia is in need for further investments. How are you pushing for further network, infrastructure development from the side of the government, as well as from the side of the investors, like Italian Telecom and OTE?
One of the cornerstones of this law is that it will eradicate the monopoly in telecommunications. Telekom Serbia, had monopoly on fixed telephony since1997 and will have it until 2005 according to the previous law. The main job for us is to agree with them that they are going to loose their monopoly in fixed telephony. Of course we will have to offer them something in exchange. We have very big difficulties in Telecom Serbia, because the Greek and Italian partners did not invest enough in the company, I do not know why, but this is the main reason, why we lack in investments. Ten days ago we signed a contract with Ericsson worth 74,000,000 DM for delivering 150 base stations for the mobile telephony. It will be implemented in July next year. It will enable us to have 1,200,000 mobile subscribers and to provide all modern services that are already being implemented in Europe. I just came back from Stockholm, and they have so many opportunities for mobiles that we would like to be able to implement next year here. We have to push our providers to give us the possibilities they have. Our second aim is to attract investments in the fixed line telephony. We are in negotiations with Alcatel and Siemens, because their equipment already exists in Telecom Serbia. In the beginning of January we are going to sign the next contract with Alcatel and in the middle of the next year we are going to improve the conditions in fixed line telephony as well.
What will be the future of Telecom Serbia? Will you review the results of privatization of 1997 and maybe even change them?
The privatization is done already. We have a very strict contract. They are the owners of 49% of Telekom Serbia. That is it. They paid for that. If we want to do something with that contract, we would have to take them to court in Paris. Of course we are trying to negotiate with them in many ways, to review the contract, etc. Telecom Serbia could be a leading company. It could even be the best company in Serbia, it has all the potential. Then, we also have the question of debts. They have about 400,000,000 DM of debts. It sounds impossible? The way they accumulated this debt is that they gave themselves a loan. The Italians and Greeks gave a loan to their own company with 13.5% of interest rate. That is why we have such a huge debt. Personally, I think the company will survive. I believe it will be fine next year. At the end of next year it has to be financially positive.
Are you looking forward to the possibility of having a third mobile operator?
Yes, of course, they have to accepted the law. The law is providing us to have another license for mobile telephony.
Do you think it will be viable and economically positive? Can it improve the level of the services and quality of the network?
I think, yes, but I am not sure that we have enough space right now, for the third mobile operator. I am not so sure, because we are going to have in the middle of next year 1,200,000 subscribers for Telecom and 1,200,000 for Mobtel. We have 10,000,000 people, which means about 4,000,000 possible subscribers. Well, there is a certain space for the third mobile operator. I am not sure that financially for the Republic of Serbia it is the best solution. Maybe the privatization of Mobtel and Telecom Serbia is going to push them into bigger investments and provide us with new subscribers. After that we will not have the opportunity for the third operator. If there is a competition between Mobtel and Telecom, we will only win because we are the owners of 51% of Telecom and 49% in Mobtel, they are going to battle between each other and that is the best thing to do.
Now, let us talk about the most urgent investments needed in the transport sector?
There were no investments made in the infrastructure at all for the last 10 years. We have about 70,000 km of motorways. Every country in Europe invests between 15,000 and 45,000 $ per kilometer annually. We invested 1,800$, which is fifteen times less. You can just imagine the condition of the roads. 85% of the roads have to be reconstructed or rebuilt. We lost, a lot of transit traffic because of the poor conditions of the roads and this is unacceptable.
Are there any plans to integrate the Serbian highways into the European system?
Yes, of course, we are on the pan European corridor number ten. The main line is going from Zagreb, Croatia and than to Belgrade and down to the Macedonian border. We have two other branches, 10B and 10C, going to the Hungarian border and the Bulgarian border. We have big possibilities for the transit transport, but we have to invest a lot. First in the roads, and second thing is the service infrastructure around the roads, like gas stations and motels.
I think there are a lot of possibilities for foreign investments here, to build the motels for instance or, to get concessions on roads. After the adoption of the Law on Foreign Investments the foreign businessmen will have exactly the laws they need to be sure that their investments here in Serbia are safe.
| Talking about concessions, the road tolls and the income from them are very low. How can you encourage the foreign investors to invest in the road system of Serbia?
We have to liberate the toll payment system. Where we are going to give concessions, the road tolls will be set by the investor. On the other hand we are going to have a big problem, because normal people using the highways will be able to pay high prices. They do not pay too much for using the roads. They even do not pay too much for the gas, because the price of the gas is one of the lowest in Europe. Only 4% of the price of gasoline is aimed for the reconstruction, and investment in road infrastructure, which is the lowest percentage. In Italy they have 50% of the price of the gas for the road infrastructure. That was a major issue on the last session of the government when I said that it was impossible not to have a budget for the road infrastructure. If you want to build roads, you must have a budget for that. The idea was to have a bigger part of the gas price for the road infrastructure. I think it is accepted, but we will see in the next discussion of the budget. Railways are the second thing.
What about the modernization, of the national air carrier?
There you have to deal with two companies: JAT and the Airport. The airport was established by JAT thirty years ago, but we are trying to cut the link between these two companies. The government wants to establish a direct ownership to the airport of Belgrade. After that we can privatize, make concessions or anything we like. The master plan already exists for the airport. It was upgraded during the last six months. Tomorrow we are going to sign the contract for the loan between European Bank and the Serbian government for 13,000,000 EURO for investments in airport and 37,000,000 EUR for the road infrastructure and it is just the beginning, because we plan for the next year 150,000,000 EUR for different contracts for infrastructure and airport. JAT has the same story as many other companies here. For the last ten years air carriers got a lot of money, but here the situation was different, since we had the problem of sanctions and they were not allowed to fly. They have a fleet of about 33 planes and 19 of them are in condition of flying. Two years ago they started a contract with Airbus. For the next year we have to pay 25,000,000 USD for the first rate of this credit. Previously, JAT has bought planes and did not finish payments for the first contract they had with Boeing. The planes now are too old and they did not fly enough to pay back the loan. They have very old planes out of use and they have to pay for them too, this is the problem. Now they have a new contract, which they started for no other reason than, perhaps political. The situation is very complex, they have a lot of debts now and the value of the company is less than we expected.
How about the future of JAT?
We are in a very good position both geographically and politically. So we are preparing to be a hub for cargo transport, and that is exactly what Europe is awaiting for us. We have to use that opportunity, but we have to invest in the same time a lot, that is the second thing. I think that JAT can have a good future.
The air company like JAT is not important only because of the travelers, but it is also a good way to communicate the image of the country. In this respect, what is your communication strategy for JAT?
We are ten years late for doing something great. We can at the moment, as I see it, make connections with European countries, but flying to America, as we had before, is impossible at the moment. I think that we need to have reestablished next year all connections between Belgrade and the major cities of Europe. JAT had 3,500,000 passengers in one year in 1991. It was the peak of the number of passengers, now its 1,500,000, the number is increasing though. In the next two or three years it will be the same number as before. We also plan to be cheaper than our main competitors. For that we also need investments, because, when you have the first flight, it is never economically viable. You have to wait for two or three months or more to be profitable in one flight.
Since 1990 you were a leading planner at the Transportation Institute. How was the transition for you from going from the public sector to the position of minister?
Actually, I did not have an idea how it should have looked like and I do not think that any of the ex ministers knows how it looks right now. It was a very calm work here, but now we work twenty four hours per day. I had also a lot of job when I was in the Transportation Institute. The last two years I spent there we had an enormous job to do, because the NATO aggression destroyed a lot of bridges and infrastructure. I traveled a lot then, since I was the one in charge of making the plans for the bridges and road infrastructure. I made all the plans for the railway infrastructure, for the roads I was just present. We built a bridge in Novi Sad in five months. I think I am prepared enough for this job. It is something totally different, of course. I am not sure that we have enough people trained for this job. I am talking about the people working in all ministries. We do not have enough educated people for different tasks. I am talking about economic sense of the job here in the ministry. I am not talking just about planning of infrastructure, which is our specialty. I am talking about contracts and relations with European organizations and with the bank system and with all those kinds of job we have now. I am talking also about the preparation of new laws in condition of the existing one and European Union. Sometimes we have to use people from outside the ministry and engage them by contracts to work for us. It is a big job to organize everything, take care about everything, at the same time you have to travel a lot, because you have to make connections all over Europe, meet people, possible investors, government, people from European Union, European Commission. You have to fly, talk, be on the conference, present the situation in Serbia and the conditions we are facing with. It is a challenge and I would have accepted it anyway.
What will be your final massage to the readers of Forbes Global who are, as you know, investors?
They have a lot of opportunities to invest here in Serbia. We are trying to lay the framework. They can be sure that we will not fail their trust. They can come and try to invest. First they have to come and see what is going on here, to face that we have a lot of companies that are prepared for partnerships. We have good construction companies, that are famous all over the world, but because of ten years of neglect, we have to face this condition. Those companies are prepared to go in joint venture and to do a great job if you give them possibility to do it.
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V.I.P. INTERVIEWS 
