I would like you to introduce the current situation of the city of Belgrade now that we are, I think, in a new stage.
It is true that the new government that started working after October 5th brought a completely new way of living, life style and rules of life. But I cannot introduce you to a new stage before I tell you what we had a year ago. We found completely neglected infrastructure systems in the city, which means that there was no investment for years in what was important for Belgrade people's lives. Public city transportation was in a catastrophic condition. Belgrade had parts of the city where water was not running during the summer. There were parts of Belgrade where central heating system did not work during the winter. Streets were not maintained. The City's corporation cleansing department was without equipment. The city was very poor, etc. We first decided which were the priorities. The first priority was to invest as much money as we had at the time into infrastructure. I have to mention that especially in the beginning and during the whole year we had a lot of foreign donations. Those donations helped us to more or less stabilize the situation in the city. We have determined our priorities and considering all the circumstances, we have achieved the maximum. Belgrade, before this government, was known as the most corrupted city in Serbia. You could not finish any kind of job in the city unless you paid for it. We introduced complete openness of our work (better: publicity of work). Everything that is offered and that is purchased goes through public tenders. There is a strict control of these tenders, which is the only way to be certain that we stop corruption. This way we saved a significant amount of money; as for the same goods we purchase them for a lower price than the previous government. For example, for a garbage truck that removes the garbage in the city they used to pay 260,000 DEM. Now we pay for the same truck 230,000 DEM.
This is what our plans are: investing in infrastructure. This is where we stand now. We have increased the number of vehicles for public city transportation by 100%. We have significantly improved the water supply. We built new pumping stations for water. We have invested a lot of money into the reconstruction of schools and kinder gardens. We asphalted over the streets that were in worst shape. We have changed all the infrastructure pipes: sewage system and water supply system. We have reconstructed the bridge of Branko that connects old and New Belgrade. We have invested the money in what citizens can see every day and what is important for their normal life.
Is it possible to privatize those public services that you were talking about?
In Serbia we finally have the legal preconditions for entering into privatization of public companies. There is a lot of interest shown from foreign companies for the privatization of water supply, sewer, corporation cleansing department, and corporation for the maintenance of the city greenery. We will not enter the privatization process until we stabilize those systems and invest in them so that they are more valuable. We consider our decision strategically and politically correct. We do not want simply to sell out all the important infrastructure systems, because in that case most probably the citizens of Belgrade would have a hard time bearing with high prices of those services. We are right now obliged to participate in those prices that the citizens cannot pay yet. Using the services of these public companies is very important for our citizens' normal life. With our budget we finance low prices in public transportation, heating, water supply and so on. In Serbia the average salary is around 250 DEM (125 Euro). In Belgrade it is a little bit higher, but it is still a small salary to pay the market price (prices based on the cost of production) of those services. Those prices are considered of social category.
Is there a willingness to liberalize the prices for municipal services and increasing them to a more realistic level?
The citizens of Belgrade cannot pay free market prices for those services. For example, the market value of the ticket for public transportation in one way is 25 dinars, which is a little below 1 DEM. The citizens are paying 10 dinars, which is 30 pfennings. The difference is paid by the city out of its own budget. Preserving the living standard of our citizens is our obligation. That is why we cannot liberalize the price, because the citizens cannot pay it. That is why it is not the time to privatize those services.
How do we get out of that vicious circle where you cannot increase municipal budget, but at the same time you have to increase investments in infrastructure?
It is very difficult. Belgrade has a budget of 330,000,000 DEM (115 million Euro). Belgrade has two million inhabitants. Compared to Berlin, Berlin has a little bit less than three million inhabitants and its city budget is around one hundred billion DEM. So we have to find our ways with the funds we have. The city assembly signed an agreement with the European Bank for Development. It was a necessary credit, but with very good conditions for the city. The loan was set for fifty million Euro. The funds were approved without any further guarantees, something that the European Bank does not do very often. The reason is that they looked into the city budget and they realized that it is filling up reasonably and stably and the money is seriously spent. The loan was set with an interest rate of less than four percent with the grace period of four and a half years and with a return period of fifteen years. It will be used in three different areas: One third goes for the city public transportation and purchasing of new vehicles, 150 vehicles. The other third will be set for finishing the factory for water processing Makis II. The third part will be used for the reconstruction and fixing of the heating system. The implementation of this loan will be done through public international tenders. The first part will start any day now and will be used for purchasing new vehicles for the city public transportation.
| Belgrade is open for foreign investments. We have activated a lot the municipal building land, which is also given through public tenders. Some foreign companies already came to Belgrade to invest. They are building big mega markets and business centers. Belgrade has several attractive locations in the center of the city for business centers and hotels. We have contacts with plenty of European and world companies that are very interested in investing here. We believe that we have as well foreign companies interested in construction.
How would you define your international strategy, marketing Belgrade as the city in which you should invest? How do you attract investors?
To attract investment into Serbia and Belgrade we have to have a stable political situation. They say that the largest rabbit in the world is investment. Without stable situation in Serbia we will not have big investments. This includes the normalization of the relationship between Serbia and Montenegro and stabilizing the economic situation in Yugoslavia. I believe that we have brought legislation that is stimulating foreign investments. What is convenient for this area is that the working force is very cheap, the market is very hungry for products and we believe that the foreign investors will find their interest to accomplish their projects here. Serbia and Belgrade need a lot of foreign investments. For example, Belgrade needs two more bridges. A bridge near Ostruznica was destroyed during the NATO bombing. It is not reconstructed yet. And Belgrade needs also solutions for transit transportation.
Another important element is to try to attract tourists. Now Belgrade is trying to improve the image for tourists. How important is tourism for the city?
It is very important. Belgrade is at the crossing of East, West, South and North of Europe. No matter all the war conditions that surrounded us, Belgrade saved its soul. I have met a lot of foreigners who are very fond of Belgrade and would like to come here. There are a lot of diplomats that are feeling here like at home. Belgrade, apart from its cultural inheritance, also knows how to offer its soul to people. Unfortunately Belgrade does not have enough hotel capacities. We are entering the privatization process of several hotels in Belgrade. The tender is already announced for seven or eight hotels. Those are hotels that need an improvement of their standard and quality. This is the precondition to have Belgrade not only as a transit tourism place, but as a place to stay as well. Rare is the city that has such beauty as the mouth of the two big rivers, Sava into Dunav. Unfortunately we do not have enough funds right now to improve and adopt the approach of the Sava and Danube the way that citizens deserve, but we have it in our plans.
Belgrade used to be an important business center for the Balkan area. During the past ten years multinational companies left. If we look at the next ten years, what will Belgrade look like?
I am certain that Belgrade will manage to get back everything it had ten years ago. I believe that it will become the center of this region as it used to be. A lot of companies are interested in this market, which is not a small one and I am certain that we will know how to use that. We have a strong support from Europe. I am certain that the rest of the world is supporting that idea as well.
For the readers of Forbes Global what would be your final message, especially since our readers are potential investors?
Come to Belgrade. Come to see how Belgrade is beautiful and healthy and you will not regret it. Invest in Belgrade and it will come back to you.
Thank you very much, Mrs. Hrustanovic
Thank you
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V.I.P. INTERVIEWS 
