SOCIETY-SERBIA: Capitalism Brings Such Rich Confusion

By Vesna Peric Zimonjic Reprint | | Print |

Vesna Peric Zimonjic

APATIN, Serbia, Nov 12 2003 (IPS) - Serbia is among the poorest countries in the Balkans with an average monthly salary of barely 200 dollars. But there are ways to become a millionaire.

Many of the 6,800 small shareholders of Pivara Apatin (Brewery Apatin) in this tiny town 170 km north-west of Belgrade found that way without trying.

The town of 20,000 became the talk of the country soon after the Belgian brewer Interbrew bought the controlling 50.1 percent share held by the state in September. The company immediately offered to buy all remaining shares at 189.50 dollars per share.

People in Apatin became rich overnight. But not without consequences.

"An average small shareholder had some 1,000 shares," Milan Trtica who heads the production line at Pivara Apatin told Serbian reporters visiting the town. "For many it was wealth overnight – hundreds of thousands of dollars. For some it was more than a million. For generations whole families worked and still work here."

Established in 1756, Apatin is the biggest brewery in Serbia. It covers 40 percent of the domestic market. Interbrew said after acquiring the factory that it plans to expand production to serve a third of markets in the remaining countries of former Yugoslavia – Slovenia, Croatia, Bosnia-Herzegovina, Macedonia and Montenegro.

Its plans were good news in town. Truckloads of hard currency arrived in Apatin under heavy guard. The Belgian brewer understood the desire to collect in cash. "It’s understandable after what we went through," Trtica said. "Few people trust the banks."

Payments to small shareholders began last month, with police on guard at the two local banks where people came to collect the money.

Serbs have paid for keeping money in banks. Serbia lived through a decade of wars, international sanctions and poverty in the 1990s. Its banking system collapsed in the early 1990s when the former regime of Slobodan Milosevic froze 4.5 billion dollars of private savings, and turned them into war funds.

Some Serbs are beginning to see money again. The new administration began to introduce reforms after taking over three years ago. One of them is privatisation of businesses that had survived the 1990s. The government recently sold its share of the two biggest tobacco companies to two international giants for nearly 700 million dollars.

After almost 60 years of communism and state-controlled economy, Serbia is turning to capitalism.

"Capitalism is something very new for Serbs," analyst Misa Brkic told IPS. "But it’s sad that it has entered factories, and not the broader public or the minds of ordinary people. That is why we see the rush for cash and no thought for the future. No one has explained to those people, not even in media, that there are other things than simply taking a large sum of money at once."

Workers at Pivara Apatin had become small shareholders in 1991, only months before the war that tore former Yugoslavia apart. The last pre-war administration had started market reforms in the former federation along the lines that Serbia is seeing now.

Many factories and plants were turned into shareholder companies. The state took 52 percent of shares, the rest were distributed to the workers and pensioners.

"People didn’t know what the shares were when they got them," says Danica Radulovic, head of marketing at the Apatin brewery. "They didn’t know what to do with them, but kept them anyway."

In order to re-start the privatisation process, the new regime recognised the transformation of ownership in companies that undertook the process under the 1991 legislation.

Many thousands of people around Serbia have learned now that the shares they kept at home are worth something, especially if they were in businesses that survived the 1990s. Among them are the people in Apatin.

Strange things have been happening in the town for some weeks now. People in the streets refuse to say whether they are shareholders. Many say they afraid of robbery or other serious crime if people were to think they have a lot of money.

But after becoming rich they went on a shopping spree. Local officials say the town of 20,000 now has some 7,500 newly registered cars.

The rush for real estate is unprecedented. Real estate prices have soared from 400 dollars per square metre of an apartment to more than 1,000 dollars. People from Apatin have begun to buy property in the province capital Novi Sad and in the Serbian capital Belgrade. Some plan to send their children to study abroad.

This kind of capitalist wave is soon likely to hit the southern towns Nis and Vranje.

The state sold its share of local tobacco giants Duvanska Industrija Nis and its sister company Duvanska Industrija Vranje last August to the multinational giants Philip Morris and British American Tobacco (BAT). The talk of the town in Nis and Vranje are the offers made to thousands of small shareholders last week. The shares are worth 100 and 130 dollars respectively.

The smallest package is 500 shares per shareholder. Several have up to 4,200 shares each. Many families that have worked at the tobacco factories for generations have tens of thousands of shares per family.

The story of how to become a millionaire, Serbian style, is moving south.