Belgrade - Serbia and the Italian carmaker Fiat on Monday
signed a joint-venture deal expected to bring almost 1 billion
euros (1.3 billion dollars) in investment and revive the moribund
Serbian car industry.
Fiat would pour 700 million euros and Serbia another 200 million
euros into the Zastava factory in Kragujevac, which once made the
infamous Yugo car.
Fiat was slated to take a 67-per cent stake in the plant 110
kilometres south of Belgrade and raise output to 200,000 small,
A-segment cars in 2010, most of them for export. Serbia's government
would to keep the remaining stake for an unspecified period.
The deal would later involve the expansion of the production bus
parts with Iveco cargo vehicles and Magneti Marelli, the maker of
auto components, through two more joint ventures.
Serbian officials say the investment would create some 5,000 jobs
in the Kragujevac area, which was hard-hit when the former Yugoslavia
disintegrated in 1991, as well as force infrastructural development
worth tens of thousands of euros.
Eager to attract Fiat, Kragujevac has released the new venture
from all local taxes for the next 10 years and pledged free land for
any expansion project.
The new firm would replace the Zastava car factory, a monopolist
which sold tens of thousands of units annually before the breakup of
Yugoslavia in 1991.
It also exported a few hundred thousand units to the United States
in the late 1980s, in what was billed as the 'deal of the century' in
Yugoslavia.
The deal petered out quickly and was as quickly forgotten at home
- however, Yugo's reputation as one of the worst cars in history has
survived to today in the US.
The factory has been in the doldrums over since, surviving on aid
from the government while barely assembling a few thousand low-
quality vehicles such as the Yugo, which is largely unchanged since
it was presented as the domestic 'national car' in 1981.
The recession in Zastava, by far the largest employer in central
Serbia, badly depressed Kragujevac, a town with a population of
175,000, which in the 1950s was the 'industrial motor' of Serbia and
Yugoslavia.
The announcement of Fiat's investment in Zastava has stirred hopes
of a revival of the town, where the price of luxurious residences,
reportedly sought for Italian experts, has reportedly soared.
USA
Your Talkback on this Story