SERBIA Trends and Developments Contributed by: Vera Davidović, Dušan Jablan, Uroš Rajić and Marko Jović, Gecić Law
Challenges for SMEs and digital transformation
looms, Serbian SMEs must increasingly meet higher compliance and technological standards to compete. Closing these gaps is not just a bureaucratic exercise; it is about ensuring that the positive reforms at the top, in regulations and large companies, permeate the entire economy. Only then will the benefits of corporate govern - ance improvements and market integration be fully realised for Serbian society. Bridging governance gaps Despite substantial progress, gaps remain in Serbia’s corporate governance framework, par - ticularly regarding the application of ESG prin - ciples and the integration of sustainability into corporate strategy. Companies are increasingly expected to address these gaps to comply with regulations and meet the expectations of inves - tors, partners, and customers. Conclusion: Towards European Integration Corporate governance in Serbia has evolved sig - nificantly, moving from basic frameworks toward sophisticated systems that incorporate inter - national best practices and address emerging sustainability concerns. Serbia’s ongoing align - ment with the EU acquis, particularly in areas like cross-border mergers and European corporate forms, demonstrates its commitment to integra - tion with European markets. The introduction of ESG requirements presents both challenges and opportunities for Ser - bian businesses. While compliance demands resources and expertise, it also encourages more sustainable and responsible business practices that can enhance long-term value creation and competitiveness. As Serbia continues its European integration journey, we can expect corporate governance to remain dynamic, with continued legislative
Despite the reforms mentioned earlier, Ser - bia continues to struggle to implement strong corporate governance practices throughout its economy. SMEs, vital to Serbia’s economic structure, often fall short in governance stand - ards and digital technology adoption. Address - ing these shortcomings is crucial for achieving inclusive and sustainable growth. As these companies grow or seek outside investment, the lack of a governance structure can become a hurdle. For instance, accessing bank financing or venture capital is harder with - out transparent financial reporting and sound management practices. Another ongoing challenge is the digitalisation gap. Serbia has made good progress in e-gov - ernment and digital infrastructure for business - es, yet there are still notable gaps in implemen - tation and usage. A 2024 World Bank-supported report on Serbia’s business environment high - lighted that despite reforms, SMEs continue to face high parafiscal fees and cumbersome procedures, partly due to limited integration of digital services. Moreover, digitalisation within companies is uneven. Larger Serbian companies have gen - erally adopted modern IT systems for finance, inventory, and customer management. However, many smaller businesses operate with minimal digital tools. Cybersecurity and data protection present additional challenges in the digital realm. In summary, the challenges of SME govern - ance and digital gaps are recognised hurdles in Serbia’s overall progress. Tackling them will require a combination of policy support, edu - cation, and market pressure. As EU integration
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