Last week I visited Serbia for the first time. Our excellent distributor in Belgrade Petar Kocovic made sure I was well looked after. We had an excellent turn-out for my presentations on CEOs issues and IT, IT Cost cutting and of course – the Hype Cycle.
While I was there Petar explained that the recession has only recently started to hit the region hard – really in the last 6 months. IT spend was down significantly (probably double digit percentage) in late 08 and there was another significant year over year drop in Q1 09. However the IT situation in this country is complicated by tax policies. It seems that for a short while (06 and 07 I think) Serbians were given a reduced VAT rate on some computer equipment – spurring investment, but I believe this ended last year. The government minister for Telecoms and Information Society Mrs. Jasna Matic joined us for the presentation. She was dealing with some concerns from our clients about a new tax on mobile phone bills proposed as part of an austerity plan.
Though Serbia has been prospering in recent years, it seems mobile telephones are still considered enough of a luxury by some, that they might be regarded as a fair tax target. After all, the government has international debts it must repay. However, in all modern societies the mobile phone is a critical business tool – particularly for very small companies. We might hope that small businesses will grow – to help generate sales tax revenues and soak up the social security costs of unemployment later in the economic cycle. This will be an interesting situation to watch.