Regional Expert Advisory Working Group (REAWG) on

Economic Diversification in Rural Areas through Rural Tourism (ED-RT)

Second Interim Meeting , October 7th – 8th 2019 Ohid, North Macedonia

National report for Serbia

Prof. Dr.

Suzana Dordevic-MilosevicUniversity of Singidunum Belgrade

National Expert

Rural areas of the Republic of Serbia

OECD typology introduced.

Rural Serbia is a key part of the

population and resources in the

Republic of Serbia:

• 85% of the territory,

• 55% of the population.

Rural economy:

• 75% of the population deals with agriculture for their own needs,

• 56% of households have up to 3 ha of land,

• 84% of arable land is private,

• 67% of the rural population is aged 15-64,

• 21% is unemployment rate in rural areas,

• 41% of GDP comes from rural areas,

• 74% of the national average is GDP per capita in rural areas.

Rural problems and possible solutions

Rural problems:

• Depopulation, manifested as senilization of the villages and

devastation of rural areas,

• Deagrarization, manifested as decreasing of the agricultural

population and devastation of agricultural land,

• Ruined communal and social infrastructure,

• No developmental perspective.

Diversification of rural economy, harmonized with intensification of

agriculture wherever is possible in Serbia is the only way for the

recovery of the Serbian villages.

Rural tourism can initiate the development of rural areas and balanced

regional development. It is a source of additional income in

agricultural holdings. (National Program for Rural Development 2018-

2020)

Rural tourism

The Program for Development of Sustainable Rural Tourism in the

Republic of Serbia defines rural tourism as tourism that offers a visitor

a "rural environment" by allowing him to experience a combination of

nature, culture and people.

Rural tourism is very highly correlated

with: cultural tourism; nature and the

world; sports and adventure tourism,

including navigation; health tourism;

family and children's tourism; cruises;

tourism of special interest.

Rural tourism is highly correlated with:

tourist tours, short trips and MICE

tourism.

Rural tourism data

Data on number of tourists and overnight stays in rural tourism, capacities

in rural tourism and the contribution of rural tourism to the Serbian

economy are incomplete, often contradictory even in official documents.

According to the Statistical Office of the Republic of Serbia:

- Tourist’ arrivals/overnight stays in rural tourist households in 2017: Total

– 5,061/16,040; Foreign - 293/727, Domestic - 4,768/15,313.

- Offer of rooms and beds in rural tourist households in 2017: Total rooms

675 of which Spas – 104, Mountain resorts – 120, Other tourists’ resorts

390, Other resorts 61; Total beds 1723 of which Spas – 320, Mountain

resorts – 307, Other tourists’ resorts 941, Other resorts 155.

- Gross value added in 2017: 134 mil EUR (0.3% of GDP) for

accommodation services, 403 mil EUR (1.0% of GDP ) for food and

beverage services.

Legal framework for rural tourism

Rural tourism is regulated by a sufficient number of laws and by-

laws.The main laws affecting rural tourism are:

- Law on Tourism,

- Law on Catering,

- Law on Agriculture and Rural Development,

- Law on Incentives in Agriculture and Rural Development.

The other important laws are: Law on Food Safety, Law on Public-Private

Partnership and Concessions, Law on the Spatial Plan 2010-2020, Law

on Environmental Protection, Law on National Parks, Law on Planning

and Construction, Law on Secondary Education, Law on Higher

Education, Law on Emergency Situations etc.

Interviewed stakeholders in rural tourism were dissatisfied with some of

the legal regulations.

Institutional set-up for managing/supporting rural tourism

The institutional framework related to rural development, and consequently

economic diversification which includes tourism, is organized at three

hierarchical levels - national, regional and local.

National level

The Ministry of Trade, Tourism and Telecommunications managing and supporting

rural tourism through legislation and other basic activities: finance, organization,

education, etc.

Rural development is under the jurisdiction of the Ministry of Agriculture,

Forestry and Water Management, as well as the other ministries: Ministry of

Economy, Ministry of State Administration and Local Self-Government, Ministry of

Labor, Employment, Veterans' and Social Affairs, Ministry of Environmental

Protection as well the bodies of the Government.

Other institutions and organizations are: Tourist Organization of Serbia, National

Alliance for Local Economic Development, ICOM National Commitee Serbia,

ICOMOS Serbia National Commitee, National Council for Tourism Development of

Serbia, YUTA etc.

Regional level

The numerous institutions have different roles and responsibilities in the vertical

decision-making chain and varying levels of autonomy from the authorities: regional

networks of the Chamber of Commerce, Cooperative Association, Agricultural

Advisory Services, business incubators, professional bodies and associations,

etc.

The Provincial Secretariat for Agriculture, Forestry and Water Management plays

an especially important role in rural development. Also important are the Provincial

Secretariat for Interregional Cooperation and Local Self-Government, the Provincial

Secretariat for Economy, Employment and Gender Equality, the Provincial Secretariat

for Urban Planning, Construction and Environmental Protection, etc. All of them have

their own budget and are completely independent in its use. Their measures and

activities must be consistent with the measures and activities of national

ministries.

Local level

The local self-governments, municipal tourist organizations, civil society

organizations, producer associations, etc. are involved in rural development and

also in tourism development.

Status of rural tourism

Rural tourism destinations:

Traditional, popular holiday destinations (such as Zlatibor);

Rich agricultural areas (Vojvodina and Machva);

Remote areas (Strara Mt. and Golija);

Mountain or forest locations;

Protected areas.

Almost all destinations in the mentioned groups have some key tourist products very

highly correlated with rural tourism:

accommodation + cattering + cultural thematic routes, ecotourism, ethno tourism,

health tourism including spa, sports tourism, mountain tourism and special

interests - biking, wine-culinary and gastronomic routes.

Main factors promising success with rural tourism future development

• high attractiveness of the natural factors.

• The Human Development Index showing relatively high potential of

human resources .

• high attractiveness of the natural attractors (need more cooperation

between protectionists and tourism development stakeholders).

• cultural attractors mostly have to be further developed.

• man-made attractors to be increased and more diversified.

• Infrastructure problems solved (mostly problems with the water supply,

transport infrastructure, waste and sewerage systems, local public

transport, telecommunications and electricity supply in remote, but also

most visisted destinations such as Zlatibor and Kopaonik).

Strategic framework and programmes

Specific needs and constraints encountered by the rural population are recognized.

The main strategic document in rural development is the Strategy of Agriculture

and Rural Development 2014-2024.

The existing national and regional planning documents in rural tourism are:

1) Strategy of Tourism Development of the Republic of Serbia 2016-2025;

2) National Master Plan for the Development of Rural Tourism;

3) Strategic Master Plan of Destination;

4) Program for Development of Sustainable Rural Tourism in the Republic of Serbia;

5) Tourism Development Program of the Autonomous Province of Vojvodina 2018-

2022;

6) Marketing Strategy of Tourism in Vojvodina;

7) Operational Marketing Plan for Tourism Development Through the Promotion of

Multiculturalism in Vojvodina.

In rural municipalities, diversification of income and tourism development play

besides agriculture development a major role in strategies.

Actions and measures

Financing in tourism can be achieved through grants or through institutional financial intermediaries. Financial support instruments:

1) grants; 2) loans; 3) venture capital funds; 4) public-private partnership.

Activities of special importance for the development of tourism supported from the budget funds of the Ministry of Tourism or from the EU programs (IPARD, LIFE, HORIZONT 2020, COSME, COP, ERASMUS+, EaSI):

1) marketing/promotion; 2) improvement of tourist infrastructure and suprastructure; 3) support to tourist agencies in the field of receptive tourism; 4) development of online reservation systems; 5) construction and arrangement of attractions; 6) conferences and events organization; 7) strengthening of management structures; 8) development and implementation of international quality standards; 9) research, education and training activities in tourism; 10) developing international and regional cooperation and creating regional tourism

products; 11) development of innovation and entrepreneurship in tourism.

Direct financial support

IPARD Measure 7 - Diversification of agricultural holdings and business

development

Year Total

eligible

cost

Public expenditure Private

contributionTotal EU contribution National

contribution

EUR EUR % EUR % EUR % EUR %

2017 4,102,564 2,666,667 65 2,000,000 75 666,667 25 1,435,897 35

2018 10,256,410 6,666,667 65 5,000,000 75 1,666,667 25 3,589,744 35

2019 8,205,128 5,333,333 65 4,000,000 75 1,333,333 25 2,871,795 35

2020 8,205,128 5,333,333 65 4,000,000 75 1,333,333 25 2,871,795 35

TOTAL 30,769,231 20,000,000 15,000,000 5,000,000 10,769,231

The promotion of domestic tourism is being implemented since 2015

through vouchers for subsidized use of accommodation services in

catering facilities for a minimum of five overnight stays, outside the

residence of the user. Total of 100,000 vouchers of the 5,000 dinars value

each were distributed in 2018 and the same is planned for 2019.

The State Credit Funds for financing projects for improving the quality of

tourist offer of physical persons (registered agricultural household,

entrepreneur) and companies in the field of tourism in 2019: minimum amount

is 500,000 dinars for agricultural households, entrepreneurs and micro-legal

entities, and 2,000,000 dinars for other companies; participation of credit funds

is up to 50% of the total value of the project; up to 72 months is repayment

period, 12 months is grace period; interest rate is 1% per year.

Grants for financing tourism development projects in 2019 by the Ministry of

Trade, Tourism and Telecommunications for the non-profit institutions: up to

60,000,000 dinars from funds for up to 50% of the total value of the project;

project duration 12 months.

Long-term loans for the development of rural tourism subsidized by the

Provincial Secretariat for Economy and Tourism for the holders of a

commercial family agricultural household in the territory of AP Vojvodina in

2019: 300,000 - 10,000,000 dinars; 1-4% annual interest rate, 7 years repayment

period, 2 years grace period.

Public opinion on available support for rural tourism

Satisfaction with state and municipal support is expressed in

general, Dissatisfaction is expressed with state support in segments:

- household production of quality alcoholic drinks served in rural tourism;

- organization of the tours in rural areas; - rural tourism household with a complete offer (organization,

accommodation, food, drinks); - CSO that offers organization, accommodation and food for

tourists; - a local self-government that offers the organization and transport

of tourists; - as well as dissatisfaction with the corruption (membership in

parties as a prerequisite to obtain support)

Still to be more analysed

Opportunities for rural tourism development

Closer cooperation between the Ministry of Agriculture, Forestry and Water Management and the Ministry of Trade, Tourism and Telecommunications in the formulation of laws and by-laws will contribute positively to the development of rural tourism in Serbia.

Increasing state subsidies to stakeholders in rural tourism, as well as providing favorable loans, would significantly contribute to increasing offer and quality in rural tourism in all segments: organization, accommodation, food and beverage production and serving, etc.

Changing the legislation to appreciate authentic and unique live tourist rural attractions (Rajac and Rogljevo cellar and others) as a special category with special rules would significantly contribute to their valorization, the satisfaction of the owners of the mentioned attractions and their motivation to continue and increase their business.

Changing the legislation in terms of more pleasant and more favorable business environment for rural tourism households: no payment of lump sum tax by number of beds regardless of their occupancy, no forcing households to make business only through private agencies which do not want such connection, not obligatory renewal of contracts with agencies every two years.

Recommendations

1. Utilizing rural tourism as an effective rural economy diversification tool – strengthening, shortening & greening agriculture-tourism value chains

- Institutional support for linking agriculture with tourism should be stronger / performance based, final product success oriented

- Particular emphasis should be given on organic production and the concept of integral development of organic agriculture and tourism

- It is necessary to make more creative use of Serbian agro-tourism resources through more promising directions of integral development of agriculture and tourism on sustainable base.

Positive effects are:

- increasing the volume of agricultural production, arrivals and tourist overniht stays;

- improving the quality and attractiveness of agro-food and tourism products;

- growth in income from agriculture and tourism, as well as accompanying activities, directly or indirectly related to agriculture and tourism;

- employment growth in the agricultural food sector, tourism and rural economy, with an increase in their contribution to GDP growth and exports;

- diversification of agricultural production, non-agricultural rural economy and tourist offers;

- reducing poverty and social exclusion of the population and improving the demographic picture of those areas in which agriculture and tourism develop in the long term and integrally.

2. Upgrading policy and legislation

- Organize reliable statistical monitoring of the basic tourist parameters (research, primary data / evidence based policies design)

- Closer cooperation between the Ministry of Agriculture, Forestry and Water Management and the Ministry of Trade, Tourism and Telecommunications (instead of pure clearing proposals of laws and strategies participation of various sectors in its design)

- Financial support to rural tourism development should go from diverse sectors (integrated approach to development of destinations instead of sectoral support)

- Changing the legislation to appreciate authentic and unique live tourist rural attractions of national importance (policy reconciliation).

- Changing the taxation to encourage RT such as: no payment of lump sum tax by number of beds regardless of their occupancy or for using nature protected areas

3. Improving institutional capacities

- Institutional support to the sustainable integral development of agriculture and tourism in Serbia should be significantly increased through establishing permanent coordination between diverse sectors including education

- The institutional capacities of all levels should be improved in terms of collecting and processing data which enable precise measurement of the interactions between agriculture and tourism.

4. Recommendations for improvement of public awareness and participation

- provide advisory support as much as extension align with financial one through NTOS and their counterparts on the local level, formal and non-formal educators; those which carry out the activities of promotion and improvement of tourism as well as receptive tourist organizations of Serbia etc.

- education of tourist entrepreneurs as much as rising of public awareness with the potential customers should include skills for making local partnerships, create active interactive links with urban areas and creating and making permanently active and growing practice of conducting local development of rural tourist destination through establishing and strengthening short and green value chains for rural tourism

- Educating tourists

5. Recommendations for improvement of regional (cross-border) cooperation

- Tourism in border regions has an opportunity to activate rural economies in places which are often neglected. Nature of this regions are shared resources, meaning that they are naturally one destination. Rural tourism development can be applied in these regions due to the exceptional and mainly well conserved nature (high mountain chains and big rivers) and their attractive cultural heritage including multiculturalism. (CBC)

- Cross-border cooperation should be supported though all levels starting with ministries, primarily those responsible for rural development and tourism to local administrations, through civil to business sectors (PPPs)

Next steps

1. rationalizing text2. filling list of institutions and governmental bodies3. final check with the Ministry representative

THANK YOU FOR YOUR ATTENTION!