investing in 2010 This conference is supported by Foreword

Foreword Hashim Thaçi Prime Minister OF THE REPUBLIC OF KOSOVO

riends, allow me to share with you my personal Atlantic and regional integrations, through implementing conviction, that in these uncertain times, investing in the highest standards and criteria of good , Fa young country such as Kosovo, with a functioning responsibility and transparency. democratic system bolstered by healthy economic indicators presents a positive alternative for your business. Kosovo is a fledgling with a wide spectrum of developmental requirements, which perhaps been The declaration of independence from the Parliament of reflected in recent events. It will continue to transit through Kosovo on 17 February 2008 was a historical date and the growing pains common to many young nations but created a new stage for the people of Kosovo. will not be detracted from its core aims, central to which is to develop its economy through encouraging private The recognition of the independence of Kosovo from sector growth. 70 nations, among them the most powerful economies in the world, reflects the support the new country has Our government has identified its top priorities to within the international community and the legitimate accelerate the economic and social development right of the people of Kosovo for self-governance. of Kosovo on the way to economic growth and prosperity and I warmly invite you to become a part of We call upon the remaining members of the international this development. community to follow the lead set by the and the UK, amongst many others, by embracing our country and recognising our independence.

Our vision for the further development of Kosovo is for a nation developed in accordance with democratic principles, a sustainable economy, a multi-ethnic Sincerely environment, and a full commitment towards Euro- Hashim Thaçi

2010 | INVESTING IN KOSOVO 1 INTRODUCTION

Introduction H.E. Avni Spahiu, Ambassador of the Republic of Kosovo to the United States of America

t was October, two years ago, when the government of fifth largest proven reserves of lignite, where mining is the the newly independent Republic of Kosovo established country’s largest industry, followed by textiles, agriculture, Iits first Embassy in Washington DC. Today, we are here whilst there is also huge potential in tourism. Allow me to together in our third year of independence launching the assure you that Kosovo ought to be your next destination. First US-Kosovo Trade and Investment Forum. I believe this first US-Kosovo Trade and Investment Forum Kosovo will never forget the support it received from will provide first hand information on the investment the United States in the days when it was fighting for climate in Kosovo. It will also provide evidence of our freedom and during the difficult road to independence. commitment to supporting your business interests. We are now working closely in building a new democratic country sharing common values and ideals which lay the Investing in Kosovo will add to the recipe for building a foundations of present and future relations. brighter future for the youngest Europeans. Hoping to see you all in Kosovo! Apart from international recognition of its independence, Kosovo is eager to force a pace for . We are dedicated to further deepening and strengthening US-Kosovo trade and commercial connections. Therefore, welcoming the American business community will remain a priority commitment.

Kosovo has the youngest population in ; an excellent geographic position; a favourable investment HE Avni Spahiu, environment; low taxes; and a sound banking system. Ambassador of the Republic We are a land rich in minerals, possessing the world’s of Kosovo to the United States of America

2 INVESTING IN KOSOVO | 2010 Contents

Contents Economic Overview 4 Political history 12 NATURAL RESOURCES 15 Infrastructure 18 TOURISM 20 Energy 22 VENUE 25 Sponsors 26 Programme 29

Publisher: Chris Gerrard Contributors: Jonathan Capal, Justine Doody, Sarah Hugo, Robyn Kingston and Moin Siddiqi Art Director: Steven Jones Conference team: Deanne Lintorn, Jennie Wengrovius Joint CEOs: Leon Isaacs, Atam Sandhu Correspondence Developing Markets Associates Ltd (DMA), 150 Tooley Street, London, SE1 2TU email: [email protected] | web: www.developingmarkets.com | www.moneymove.org | www.sendmoneypacific.org DMA acknowledge the assistance of all the individuals and organisations who have contributed to his publication. The views expressed herein are the opinions of the authors, and do not necessarily represent the Embassy of Kosovo, the or DMA. All rights reserved. No part of this publication may be reproduced or transmitted in any form without the written permission of the publisher. Published by Developing Markets Associates Ltd (DMA) Printed by Gap Printing Picture credits: istockphoto.com

© Developing Markets Associates Ltd

2010 | INVESTING IN KOSOVO 3 Economic Overview

Economic Overview Transforming the recovery into long-term prosperity by MOIN SIDDIQI, economist

decade into its post-conflict transition, Kosovo, From the mid-2000s, Kosovo has staged an impressive a fledgling democracy in the heart of the Balkan recovery, helped by official aid and remittances. Europe’s A Peninsula, finds itself at a crucial juncture; moving youngest nation received EUR2.7bn from the international steadily from its reconstruction process to one of donor community over 1999-2007 and with an estimated sustainable economic development. While there are 700,000 Kosovans living abroad, remittance flows are positive trends, notably progress in nation building (from crucial to sustain growth in consumption. Resource scratch) and improving macroeconomic fundamentals, inflows were managed prudently, reflecting investments significant challenges remain. With the active support in public infrastructure and services – both hards (roads, from international partners, this decade should witness housing and utilities) and softs (education, healthcare and the rise of Kosovo as a small but dynamic marketplace in markets) as well as improving the investment climate. . Over 50,000 houses have been rebuilt and 1,600km of roads rehabilitated. Agricultural production now exceeds The government of Kosovo has made great strides pre-conflict levels. towards integration into the global and European communities after decades of isolation as a province Consequently, real GDP growth has averaged a highly of the former Yugoslavia. Significantly, the country has respectable 6% during the past decade. In fact, since embarked on an ambitious programme to improve the 2002, gross national output has surged by nearly five-fold; business climate by undertaking fiscal and legislative representing a compounded annual growth rate (CAGR) of reforms and by improving basic infrastructure. Promoting over 21%. Ahmet Shala, Kosovo’s Minister of Economy and inward investment is a top priority, as foreign aid will start Finance, explains “if you look at the GDP, in 2002 it was just to decline in coming years. EUR800mn and now it’s EUR3.9bn, so Kosovo is moving

4 INVESTING IN KOSOVO | 2010 Economic Overview

Public investment spending is rising, mainly due to the start If you look at the GDP, in 2002 it of the mega project ‘Route 7 corridor’ – the construction of Kosovo’s first highway. The estimates was just EUR800mn and now it’s its cost at EUR987mn (24% of GDP) over a four-year period. Given the country’s infrastructure needs, capital EUR3.9bn, so Kosovo is moving ahead expenditure accounts for about one-third of government spending. The IMF projects economic growth at 4.6% this year, edging up to 5.9% in 2011.

ahead quite quickly. Of course, there are big challenges, but The largely foreign-owned banking sector was relatively we are taking measures on key areas such as privatisation, unscathed by the credit crunch and remained both electricity, education, infrastructure and legislation. I believe healthy and well capitalised, although financial strength the energy we have put into making a business-friendly varies across individual banks. The three biggest lenders environment here will move the country ahead.” (ProCredit, Raiffeisen Bank and Nova Ljubljanska Banka) held about 90% of total deposits as of March 2010. The International Monetary Fund (IMF), which in July 2010 approved EUR108.9mn 18-month Stand-By Arrangement The (CBK) strengthened its for its 186th member, issued the following statement: supervisory capacity and instructed banks to lower the “Kosovo’s economic performance has strengthened ratio of loan to deposits to a prudent level in order to considerably over the past decade, but large imbalances prevent sudden liquidity shortages. The IMF stressed persist. The external imbalances reflect infrastructure the importance of strong risk and liquidity management, bottlenecks, especially in the transport system and effective supervision, and an appropriate bank resolution energy sector, that continue to stifle productivity and framework to mitigate future risks. In March 2010, non- competitiveness.” Against this background, the authorities performing loans at 4.6% of total lending, plus a loan-to- are taking concrete steps to reduce the budget deficit, deposit ratio of 78% compared favourably with other improve public financial management, and enhance tax Southeast European countries. administration, thereby restoring fiscal sustainability. These structural reforms will be supported by measures – aimed An FDI-friendly economy at improving the nation’s efficiency through privatisations and bolstering the performance of the energy sector. It is worth exploring the hidden natural and mineral wealth of Kosovo. Zinc, lead, nickel, gold, silver, chrome, Weathering the storm bauxite, and cadmium are deposited in the Trepca mineral-belt (in the north of Kosovo). Over 60% of The global financial crisis only had a moderate impact arable land is productive, while the southern mountains as Kosovo registered positive growth rates throughout offer potential for winter tourism in the Balkans. The the eurozone recession (see Table 1), despite a fall in young nation is eager to form links with the investment Diaspora remittances (estimated at EUR498mn in 2009), community. Higher foreign direct investment (FDI) inflows along with waning demand for exports. Currently, exports bringing technical and managerial inputs will help improve only account for around 4.0% of national GDP in Kosovo, connectivity, whilst expanding long-term output potential. and as such the impact of the latter has been limited. Encouragingly, inward investment continues to rise steadily To safeguard against regional contagion risk, Kosovo despite aggressive regional competition and tough market formed a multi-agency committee, led by the Central conditions. Since 2001, Kosovo has received over EUR2bn Bank of Kosovo (CBK), the Ministry of Finance and (USD3.1bn) worth of net FDI. This year and next, investors Economy and the Commission for Budget and Finance. are expected to pour EUR351mn and EUR701mn respectively into various sectors, according to the IMF The authorities also created a EUR200mn fund for any sector (see Chart 2). Currently, the top five investing countries needing liquidity, intensified on-and off-side supervision of are , followed by Slovenia, Italy, and banks and ensured closer policy coordination with other the UK. Sizeable volumes from Austria, Belgium, , European regulators (mainly Austria and Germany). Holland, Norway and Sweden were also reported. Tax cuts and other policy stimuli were implemented to sustain consumer/business spending during the downturn. Major foreign companies operating in Kosovo include In addition, as opposed to its neighbours, Kosovo has Raiffeisen Bank, BNP Paribas, ProCredit Bank Group, unilaterally adopted the Euro and ensuring the stability of Nova Ljubljanska Banka, Vienna Insurance Group, Uniqa, its currency has not been under threat. Xella L.L.C., Holcim, Strabag, Telekom Slovenia, Trofta, StoneCastle, Ferronickel, UNIQA, NewkoBalkan L.L.C., Private sector activity in recent months has strengthened, Gorenje, CISCO and Microsoft. The Business Registry with remittances and exports recovering (see Table 2). data for 2009 put the number of foreign and mixed-

2010 | INVESTING IN KOSOVO 5 Economic Overview

owned firms at 2,700, steeply up from 593 in 2004. Small and medium-sized enterprises (SMEs) form the bedrock of Kosovo’s private sector and a large chunk of foreign Investors enjoy customs-free access to investment goes into these – the engine of job creation and poverty alleviation. Western and Central European markets

Kosovo offers fiscal incentives such as low corporate … of 30mn customers profit tax of 10%, zero value-added tax (VAT) or export duty, simplified registration procedure, a cost-productive Potentials for dedicated investors exist in mining, base metal (flexible) workforce and most importantly, the Euro as processing, textiles, agro-business, construction/associated ‘sole tender’ provides Kosovo with a competitive edge infrastructure, wood processing, tourism, outsourcing, over its Balkan peers due to low transaction costs and the and information and communication technologies (ICT). elimination of currency risk. This should promote more Privatisations of the state-owned mobile operator VALA trade-investment. Moreover, UNMIK-Regulation 3/2001 and PTK, the post/ telecom operator are expected soon guarantees (unlimited) repatriation of interest, profits and (check). Also a relatively inexpensive, skilled labour force dividends (IPDs), prohibits favouritism and discrimination, with knowledge of major European languages is ideal for and provides protection against expropriations. setting up call centres or other consulting services targeting EU markets. English is widely spoken due to years of the Kosovo is strategically located in the Balkans to attract UN-led administration that ruled after the conflict. ‘vertical’ or asset-seeking FDI, which is usually export- oriented and involves relocating parts of the production The government aims to mobilise increased private capital chains to low-cost locations. The output is mainly exported through cutting transactional and regulatory costs and to the investor’s home country and/or regional markets. encouraging competition. Recently, a law on concessions Hence, FDI is unaffected by the host country’s market was passed to facilitate public-private partnerships (PPPs) in size. Investors enjoy customs-free access to Western and infrastructure. The construction of a thermo-power station Central European markets via the EU Autonomous Trade with the capacity of 1,000MW and new highways to , Preference (ATP) Regime and Central European Free Macedonia and (costing about EUR1.3bn) are either Trade Area (CEFTA) of 30mn customers. Quantitative and already well under way or in the planning stage. The opening qualitative restrictions apply on very few products. of a new highway linking Kosovo with the Albanian port of

6 INVESTING IN KOSOVO | 2010 Economic Overview

Tangible progress is evident in the construction of the country’s legal framework for private enterprise, following the enactment of the mortgage, bankruptcy, and immovable property rights and registry laws. The capacity to enforce new legislation still needs to be strengthened and some municipal regulations are still viewed as costly to businesses. A 2009 World Bank survey, comparing Southeast Europe’s 23 cities, ranked Prishtina 12th overall in terms of ease of doing business, ahead of major regional capitals such as Belgrade (13th) and Zagreb (19th). Early efforts in Kosovo have led to the adoption of key commercial legislations, chiefly in high-priority areas: business organisations, contracts, pledges and inward FDI.

Although Kosovo has instilled the appropriate institutions for economic governance, it needs fiscal sustainability and better delivery of public services. That said, Kosovo has had a limited experience of a functioning government of any kind. As a province of Serbia it never decided its own capital budget or current budgetary expenditure, collected revenues of any significance or ran a formal system of government. It relied heavily on annual federal transfers equivalent to 40% of GDP during the 1980’s, which dried-up in the 1990’s due to ethnic strife and the subsequent disintegration of former Yugoslavia.

Moreover, years of exclusion from the job market and poor education under the tragic ‘Milosevic’ era deliberately eroded human capital, with many citizens lacking the necessary skills and training. But new investments in schools, health clinics and industrial restructuring are Kosovo is committed to deepening its alleviating these problems. Despite the oppression and virtual non-entry to higher education, the Kosovans ran market reforms to protect its hard-won quite a sophisticated underground education network. gains, notably its single-digit inflation Generating new exports

Durres will reduce the over-reliance on importing goods Kosovo boasts one of the world’s most liberal trading from Serbia. This highway forms a part of the ‘Trans regimes. Exporters receive a full VAT rebate and zero European Corridor X’ – connecting the Adriatic Sea with tariff rates apply to imports of selective capital and Western Europe. intermediary goods. No trade protectionism measures are in place. Exports to the EU are subject to a zero tariff. Prishtina’s rapid accession to the World Bank and IMF Furthermore, the new Customs Code offers a number of should reduce country-risk. The membership of these investor friendly trade-facilitating incentives. international financial institutions (IFIs) will provide a source of external capital (in the form of grants, emergency Despite its favourable trading regime, Kosovo is currently financing and project funding) and policy advice to tackle not an export-oriented economy with only modest developmental challenges. production capacity. In 2009, merchandise exports accounted for only 9% of imports (see Table 2). As the Prioritising structural reforms economy grew between 2005 and 2009, imports almost doubled. The Eurozone is Kosovo’s largest trading partner. Kosovo is committed to deepening its market reforms to Exports are based almost exclusively on low value base protect its hard-won gains, notably its single-digit inflation metals and scrap. The World Bank advised Kosovo to and trade liberalisation, as well as mobilising private capital develop export-oriented policies to foster export of final in energy, transport and telecommunications. Unbundling its products and improve the trade balance. large parastatals and installing them with new management is seen as a conduit to unleashing the commercial potential The structure of imports is, however, dominated by and attracting private capital in would-be subsidiaries. machinery and raw materials and provides the basis

2010 | INVESTING IN KOSOVO 7 Economic Overview

for import substitution. This should enable Kosovo to produce export-oriented products in coming years. Europe’s new nation is ripe for About 40% of construction and agro processing materials are now being produced locally and therefore play an development. Mobilising private import substitution role. capital is critical The mining and energy sectors are potential key sources of future exports. Mineral exploitation from the Trepca mines – including zinc, lead, gold and silver – offer plentiful scope, and a strong upturn in global industrial activity will improve the commercial viability of existing and new projects. Similarly, (iii) improve the state’s capacity to channel resources to utilising vast ‘untapped’ brown coal or lignite resources of priority areas; 15bn tonnes (the world’s fifth largest) can provide cheap feedstock for building new power stations. This would (iv) trade expansion; transform the energy sector into an engine of growth by boosting domestic electricity supply and exporting surpluses (v) promote social development (including skilled to neighbouring countries. Kosovo has the potential for labour). energy export, if planned investments take-off over this decade. The government is also developing projects for Achieving such objectives will underpin higher total factor producing 400 MVh renewable hydropower energy. productivity, superior returns on investment and rapid growth, which over time can provide new production The pillars of a stronger economy capacities. As for the donors, their pledges to support Kosovo until its economy fully develops, and governance With most rehabilitation work nearly completed and a and market institutions reach maturity, are equally vital for basis for macro-stability in place, the most pressing goal the broader society. for Kosovo is to achieve output growth that is sufficiently robust to reduce unemployment and be regionally The government is resolved to enhance the well being and socially inclusive to foster national reconciliation. of citizens through sustainable development and inward According to the IMF, policymakers are to target GDP FDI. Fostering a skill-based economy, diversification and per capita growth of at least 5% per year – a prerequisite closing the ‘infrastructure gap’ are crucial to greater for increased job creation. prosperity. Skilled labour and technical capacities are important for diversifying exports towards production of An estimated 40,000 Kosovans enter the workforce every ‘value-added’ tradable goods. An OECD report, Business year. Ranjit Nayak, Kosovo’s World Bank representative, for Development: Fostering the Private Sector highlighted states: “Generating sustainable employment is key to a correlation between a country’s export variety and its reducing poverty and encouraging growth and requires level of productivity. a multi-sector approach since creating more and better jobs is a cross-sectoral challenge affecting a range of Kosovo has achieved an enormous amount since the issues.” The Bank is supporting a three-year Sustainable ending of the 1998-99 conflicts. The future is promising; Employment Development Policy Programme with grant it has the youngest population in southeast Europe funds of EUR60mn. with one-third of Kosovans younger than 15. With an improved educational system and vocational training, Attaining robust expansion demands boosting fixed human resources are fundamental to future growth. investment to 35-40% of GDP/year, which, combined with more jobs and solid gains in total factor productivity, In sum, Europe’s new nation is ripe for development. should sustain output growth at about 6-7%. But Mobilising private capital is critical. As multi-donor given relatively low domestic savings, Kosovo’s own money decreases, inward FDI will become the most resources to undertake huge capital investments will important factor to support economic activity over need to be underpinned by continuous external support the medium-term. The advice from the UN (including foreign investment) to fill the annual funding gap. Development Programme (UNDP) is simple “Sustainable post-conflict economic recovery requires an environment The Kosovan authorities and donors are agreed that the that assures citizen security, supports inclusive former must preserve enabling policies aimed at development, provides an adequate infrastructure, protects property and investment from predation, (i) good governance that fosters business facilitation and ensures predictable and fair taxes and incentives and economic diversification, while maintaining fiscal discipline; reduces the cost of doing business.” On these criteria, and in many others, Kosovo is making steady progress in (ii) expedite reform of the public sector; moving forward.

8 INVESTING IN KOSOVO | 2010 Economic Overview

CHART 1: Past and future trends in real growth rates (annual percent chg) 18.0 15.5 16.0 16.0 14.9

14.0 13.1 12.7 11.7 11.6 11.3 12.1 12.0

10.0 8.9 8.0 5.4 5.9 6.0 4.6 5.2 4.9 5.2 4.0 3.9 4.2 4.0 4.0

2.0 -1.8

0.0

-2.0 G DP G DP G DP G DP G DP G DP G DP Exports Exports Exports Exports Exports Exports Exports

-4.0 I nvestment I nvestment I nvestment I nvestment I nvestment I nvestment I nvestment

2007 2008 2009 2010 2011 2012 2013

Sources: Kosovo authorities and IMF projections

CHART 2: Foreign direct investment (net) in Kosovo (Millions of Euros) 800

701 700 640 617 579 600 553

500 453 401 400 341 351 301 300

200

100

0 2001-2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sources: IMF

2010 | INVESTING IN KOSOVO 9 Economic Overview

Table 1: Key Macro-economic and Financial Indicators (in percent, unless otherwise indicated) Est. Proj. Proj. Proj. 2008 2009 2010 2011 2012 2013 Nominal Gross Domestic Product (GDP) (in millions of euros)(1) 3,849 3,868 4,113 4,480 4,803 5,110 Nominal GDP growth 12.8 0.5 6.3 8.9 7.2 6.4 Real GDP growth (annual % chg) 5.4 4.0 4.6 5.9 5.2 4.9 Consumption 3.7 2.5 3.1 2.7 2.9 3.0 Investment 15.5 13.1 14.9 12.7 8.9 5.2 Merchandise exports 4.2 -1.8 16.0 11.6 11.3 12.1 Merchandise imports 6.0 3.5 10.8 5.1 4.8 3.8 Contribution of foreign aid to GDP growth 1.0 0.5 -0.4 -0.7 -0.7 GDP per capita (annual % chg) 3.8 2.5 3.0 4.3 3.7 3.3

Consumer price index (CPI), period avg 9.4 -2.4 1.7 3.2 2.2 1.9 GDP deflator 7.0 -3.4 1.7 2.9 1.9 1.4 Gross capital formation (%) of GDP 28.9 29.8 32.5 33.3 32.9 32.0 National Savings (%) of GDP 5.4 4.8 6.3 8.9 10.6 12.5 General government budget (%) of GDP Revenues(2) 24.5 29.7 28.9 27.5 27.9 26.5 Primary expenditures 24.7 30.3 32.0 32.8 31.7 30.8 Of which: Capital and net lending 7.6 11.7 13.3 14.3 13.2 12.2 Overall fiscal balance(3) -0.2 -0.6 -3.1 -5.3 -3.8 -4.3 Total public debt (in millions of euros) 690.0 729.0 789.0 929.0 1190.0 Of which: domestic debt 0 0 0 100 266

(1)The economy is currently service-based; with services comprising roughly 60% of GDP, while agriculture and manufacturing account for 20% each. (2)Assume budget grants of EUR75mn per year in 2010-12; (3)Incl. national interest payments. Sources: Kosovo authorities; and IMF estimates and projections.

Table 2: Balance of Payments, 2009-13 (millions of euros, unless otherwise indicated)

Est Proj. Proj. Proj. Proj. Proj. 2009 2010 2011 2012 2013 2014 2015 Exports (f.o.b) 163 220 280 326 393 502 622 Imports (f.o.b) 1,807 2,052 2,197 2,341 2,476 2,586 2,740 Merchandise trade balance -1,644 -1,832 -1,917 -2,015 -2,083 -2,084 -2,118 Goods and services balance -1,558 -1,727 -1,809 -1,867 -1,867 -1,838 -1,849

Merchandise imports (%) of GDP 49.2 50.0 49.0 42.0 40.7 39.0 37.4

Transfers 744 850 865 884 863 916 977 Of which: official transfers 247 316 278 250 185 208 228 Inflows of workers' remittances 498 522 564 598 634 672 712

Remittance (%) of GDP 13.0 12.7 12.6 12.4 12.4 12.5 12.6

Current account balance -720 -760 -815 -821 -809 -717 -653 As (%) of GDP, incl. grants -18.6 -18.5 -18.2 -17.1 -15.8 -13.4 -11.5

Foreign direct investment (net) 301 351 701 401 452 553 617 FDI inflows (%) of external deficit 41.8 46.2 86.0 49.0 55.8 77.1 94.5 Net foreign assets of CBK(1) 1,088 1,104 1,288 1,303 1,334 1,367 1,417 Gross international reserves 663 584 668 581 577 574 586

Public external debt 690 729 789 829 924 1,020 1,115 Total debt stock (%) of GDP 17.8 17.7 17.6 17.2 18.1 19.0 19.7

(1)The Central Bank of Kosovo; (2)Scheduled interest & amortisation payments as % of total exports. Source: IMF staff estimates and projections.

10 INVESTING IN KOSOVO | 2010 Economic Overview

Table 3: External Financing Requirements, (in millions of euros unless otherwise indicated)

2009 2010 2011 Gross financing requirements -853 -846 -901 Current account deficit, excl. grants 720 835 890 Amortisation of medium & long-term public debt 133 11 11 Available financing 853 803 838 Official current transfers from EC & IDA 0 75 75 Capital transfers 87 16 5 FDI net 301 351 701 Net bank financing -118 -12 -14 Government loans 0 4 8 Other financing 561 385 247 Net foreign assets of the CBK 23 -16 -184 Financing gap 0 43 63 Financing: International Monetary Fund - 43 63 Percent of quota - 64 93 Source: IMF. EC - The European Community; IDA - The International Development Association.

2%

13% Main Destination of Exports (Percent of total 2007) EU: European Union; CEFTA: Central European Free Trade Area.

43% EU CEFTA Other Europe Non-European Countries 42%

Source: The Ministry of Trade and Industry.

13% Main Source of Imports (Percent of total 2007) EU: European Union; 16% 36% CEFTA: Central European Free Trade Area.

CEFTA EU Other Europe Non-European Countries

35% Source : The Ministry of Trade and Industry.

2010 | INVESTING IN KOSOVO 11 Political history

Political history

he Republic of Kosovo, about the size of the U.S. dogged by tragedy and injustice. The Kosovo Albanians, state of Connecticut, is situated in the southern were looked upon from the start with suspicion T interior of the Balkan peninsula in south eastern and were deprived of basic rights. Books and school Europe. With a population of just over two million education in Albanian remained illegal as they had been people, it is inhabited primarily (over 90%) by Albanians, under Ottoman rule, and very few Albanians ever gained with minority groups of Serbs, Bosniacs, Turks, Gorani, positions in government administration. and Roma. The 1920s saw the rise of official Yugoslav government The Republic has fixed and recognised borders, campaigns, to depopulate Kosovo of its original although historically never constituted an independent state. inhabitants and to colonise it with Serb settlers. It had been a separate administrative unit under foreign By 1925, the government colonisation programme, had rule – Roman, Byzantine, Ottoman, Yugoslav respectively. brought some 70,000 Serbs to Kosovo, and in 1933, the Yugoslav government began negotiations with the Turkish As the Ottoman Empire crumbled, Kosovo briefly government for the deportation of the Muslim population liberated itself, but was eventually occupied by Serbia to Turkey. By 1935, an orchestrated wave of confiscation in 1912. The Conference of Ambassadors, which met in of land from Albanians was well underway. London between December 1912 to August 1913 to discuss events in the Balkans, confirmed the independence In 1941, in World War Two, Kosovo was invaded by of Albania, but agreed to recognise Serb rule over Kosovo, the Axis powers. By the end of November 1944, thus excluding 50% of the Albanian population from all of Kosovo had fallen into the hands of the Albania. It was a terrible mistake that haunted the Balkans victorious Yugoslav partisans, and had been returned to right to the end of the twentieth century. Yugoslav administration.

The history of the Kosovo Albanians from the beginning Tito’s communists originally promised to let the people of of Serb rule in 1913 to its very end in June 1999 is one Kosovo decide democratically as to whether they wished

12 INVESTING IN KOSOVO | 2010 Political history

to be part of Albania or Yugoslavia. Tito, however, soon On 28 March 1989, the parliament in Belgrade illegally reneged on his promise. Kosovo was thus incorporated rescinded the autonomy/federal entity status of Kosovo. into Socialist Yugoslavia in 1945. It was, nonetheless, In June of that year, Slobodan Miloševic fuelled the recognised as an “autonomous region.” The border nationalist sentiments of the Serb minority with his between Albania and Kosovo was closed and became as speech at Gazimestan near Prishtina to commemorate impervious as any communist border could be. Even in the six hundredth anniversary of the . the mid-1990s, long after the fall of communism in both countries, Kosovo Albanians still required special exit visas The events of 1990 made it evident to everyone that to visit Albania, which were usually denied. While Yugoslav there was no turning back from the brink. In May 1990, an communism brought the Kosovo Albanians a modicum amendment to the Serb law on universities made the use of rights as citizens, they were still deprived full equality. of “minority languages,” i.e. Albanian, illegal at institutions of higher education in Kosovo The founding of the University of Prishtina in February 1970 gave the Kosovo Albanians something essential that Finally, in July 1990, Serb forces intervened physically they had always been denied: access to higher education by breaking up and abolishing the Parliament and in their own language. Within one short decade, a new the Government of Kosovo. They also shut down all elite of professors, doctors, lawyers and educated political Albanian-language media. There was no more semblance figures rose to give leadership and direction to the of representative government, no more radio, no more country for the first time. television, not even a daily newspaper. In the autumn of that year, the Serbian occupation authorities then In February 1974, the new constitutions of Yugoslavia and closed down virtually all Albanian-language schools and Kosovo accorded Kosovo a status virtually equal to that educational institutions, firing teachers and professors. of the fellow republics in the Yugoslav federation. Kosovo Some 1,835 doctors and nurses were also expelled from could now manage most of its own affairs. It had its own hospitals and medical facilities, many of them forcefully.

The Kosovo Albanians were aware that they were The founding of the University of Prishtina outnumbered, and outgunned. There could be no course of action but peaceful political resistance, a strategy in February 1970 gave the Kosovo propagated from the start by their leader, Dr Ibrahim , a prominent writer. With time, under the Albanians something essential that they Democratic League of Kosova (LDK), they created their own parallel state structures (the Republic of Kosovo, had always been denied unrecognised internationally), including a government (in exile), a state president, a parliament, schools and a parliament, its own police force and its own national modicum of social assistance for the population, supported bank. Kosovo was equally represented, with the other six primarily by the 3% tax paid by Kosovo Albanians. republics, in the federal presidency. On 2 July 1990, 114 of the 123 members of the Parliament of 1981 marked the beginning of the gradual Serb takeover Kosovo, meeting in the street outside their locked assembly of Kosovo and the situation for the Kosovo Albanians building, declared Kosovo to be an “equal and independent worsened throughout the 1980s. entity within the framework of the Yugoslav federation,” i.e. a Yugoslav ‘Republic of Kosovo’. On 7 September of that Belgrade showed no intention or interest in settling year, at a secret assembly in Kaçanik, they promulgated a Kosovar grievances. The Serb leadership decided to resolve new constitution for the Republic of Kosovo. A year later, the Kosovo question by openly depriving the Albanians of on 22 September 1991, this parliament proclaimed the their economic existence, i.e. by starving them out and independence of the ‘Republic of Kosovo’. In a national forcing them to emigrate. A process of “differentiation” referendum held on the issue on 26-30 September 1991, was introduced, by which tens of thousands of Albanians 99.86% of voters (with an 87.01% turnout) approved lost their jobs and livelihood. Virtually all Albanians were the move. An official government in exile was set up in fired from management and government positions for Germany under Prime Minister Bujar Bukoshi and in May being disloyal to the Serb state. Deprived of their jobs, 1992 Ibrahim Rugova, still living in Prishtina, was elected many of them had no choice but to flee abroad in search President of the internationally-unrecognised state. of work in Western Europe. Belgrade had reverted to the strategy it had used successfully in the 1930s: ethnic The population grew increasingly impatient with the cleansing, though in the 1980s still in a discreet form. long years of peaceful political resistance under Ibrahim With hundreds of thousands of Kosovo Albanians seeking Rugova. In April 1996, the then virtually unknown Kosovo refuge abroad, the international community now began to Liberation Army (KLA, Ushtria Çlirimtare e Kosovës), take note of the Kosovo question for the first time. established in the first half of the 1990s, began carrying

2010 | INVESTING IN KOSOVO 13 Political history

out coordinated attacks on persons representing and collaborating with the Serb regime.

The broke out in the early months of 1998, when Serb troops began a major offensive in the region, attacking whole villages, and killing the resistance leader Adem Jashari and his enire family.

The country first received major international attention in January 1999 with the discovery, by a delegation of the Organisation for Security and Cooperation in Europe under William Walker, of the bodies of forty-five Albanian civilians in Reçak, massacred by the Serb paramilitary police. Last-minute internationally-brokered peace talks were held in France in February and March, but to no avail. The Serb side refused to sign the peace accord, thus making NATO intervention inevitable.

NATO forces began their bombing campaign over Serbian military targets in Serbia and inside Kosovo on 24 March 1999. The Belgrade authorities launched a well-prepared and well-orchestrated campaign to cleanse Kosovo of all of its Albanian population. Over half of Kosovo’s population were deported, or else put to flight, most of them being expelled or taking refuge in Albania and Macedonia. The bombing campaign lasted until mid-June 1999, when Belgrade finally agreed to withdraw Serbian military, paramilitary, and police forces from Kosovo. The war was over. The Serbian occupation had come to an end. Kosovo had won its freedom. By early October 2010, the newest nation The UN set up a mission in Kosovo to be known as the in the world the Republic of Kosovo, Interim Administrative Mission in Kosovo (UNMIK), and French politician Bernard Kouchner was had been recognised by 70 countries appointed as Special Representative of the UN Secretary- General to oversee the new administration. By August, 850,000 Albanian refugees had returned to Kosovo. By early October 2010, the newest nation in the world On 28 October 2000, local elections were held, the first free the Republic of Kosovo, had been recognised by 70 ’s history. The majority of the population countries, which amount to over 70 percent of world voted for the Democratic League of Kosova (LDK) under GDP. Kosovo has been recognised by 22 out of 27 EU Ibrahim Rugova. Parliamentary elections followed a year countries, seven out of the G-8 countries and all of its later, on 17 November 2001, with the LDK once again the neighbours bar Serbia. leading party, but without an absolute majority. Kosovo became a member of the World Bank and Parliamentary life thus resumed on 10 December 2001 the International Monetary Fund in June 2009. And, in with the first session of the new Kosovo Assembly. July 2010, The International Court of Justice ruled that On 28 February 2002, Bajram Rexhepi was elected Prime Kosovo’s 2008 deceleration of independence from Serbia Minister, and Ibrahim Rugova subsequently assumed the did not break international law, cementing the country’s title of Head of State. Thereafter, most administrative nation status. competences in Kosovo gradually transferred from UNMIK to the elected government authorities. On September 27, 2010, Kosovo’s President Fatmir Sejdu resigned from office. Mr Jakup Krasniqi was appointed After almost a decade as a United Nations administered acting President. In the middle of October, LKD Party left territory (1999-2008), at the conclusion of a long the ruling coalition government. Early elections are set to international process to determine the final status of Kosovo, take place on 13 February 2011. The new government chaired by Former Finnish President Martti Ahtisaari as the with a fresh mandate will continue with the young Kosovo Status Envoy for the UN, Kosovo finally declared its nation’s vital agenda of EU integration and a path towards formal independence on 17 February 2008. economic development and prosperity.

14 INVESTING IN KOSOVO | 2010 NATURAL RESOURCES

Natural resources

estled in the heart of South East Europe, Kosovo provide good returns. A ready workforce of experienced is landlocked with mountains to the north, west and qualified mine workers in situ provides a further N and south and low flood plains in the centre. It is incentive. Opportunities also include new exploration rich in natural resources both above and below ground. work to uncover new deposits. In total there are 470 quarries operating in Kosovo whereby 24 are fairly large, Mining i.e. companies seeking international cooperation.

Kosovo’s mineral reserves of coal, lead, zinc, lignite, bauxite In addition, natural stones, including onyx marble, white, and nickel are virtually unexploited. It has an estimated gray and black marble, marble gray granite, from Kosovo 15mn tonnes of coal of which just 2% has been mined. have been used in cathedrals, gardens and palaces Trade corridors are already well established, with demand throughout the Mediterranean and Balkans for centuries. for Kosovo’s mineral exports coming from all over the Other decorative stones include gneiss, andesite, world, including China, Belgium and Spain. Mining offers a magnesite, serpentite, quarzite, trachyte, and porphyry. strong investment opportunity for companies looking to Kosovo is well connected to its European neighbours invest in Kosovo’s young economy. A geophysical survey with highways linking it directly to Albania, Macedonia completed in 2006-2007 revealed higher than expected and Serbia. deposits of gold, chrome and nickel, as well as aluminum, copper, iron metals and lead-zinc deposits. Capital investment in mineral exploitation is a high priority for Kosovo’s economic development and the legislative The government’s ongoing privatisation programme and regulatory framework has been specifically designed provides an opportune time for investors to enter the to be business friendly. The Independent Commission market either privately or via joint venture. Investing for Mines and Minerals (ICMM) regulates Kosovo’s in existing mines can be an attractive prospect as they minerals sector, issues exploration and mining licenses, come complete with production history. With updated and ensures legislative compliance with international machinery and equipment they have the potential to mining, environment and safety standards. ICMM

2010 | INVESTING IN KOSOVO 15 NATURAL RESOURCES

also provides key technical information to prospective bidders. Regulations are in compliance with the latest best practices for international mineral mining, environmental protection and business. Mining licences are issued for an initial term of twenty five years.

Agriculture

Kosovo’s climate and environmental conditions are well suited to both livestock farming and crop cultivation. Thus, Kosovo should be able to meet domestic demand as well as produce surplus for export.

Over half (53%) of the country’s 10,900sqKm (Kosovo is approximately one third the area of Belgium) is agricultural land and more than a third (41%) is forest and forestry land. Of the agricultural land, 51% is currently used for grains such as corn, wheat, barley, 45% for meadows and pastures supporting the country’s 100,000 sheep and 250,000 cattle, and 3% of the land for vineyards and groves.

Domestic consumption currently far outstrips production, thus the potential for growth across the whole of the agricultural sector is significant. It is estimated that only 15%-20% of meat eaten in Kosovo is locally produced. Similarly, demand outstrips supply in dairy farming and products are being imported despite the fact that Kosovo’s dairy industry has the potential to not only provide for domestic market but to export surpluses.

At present, much of Kosovo’s land is used for subsistence farming. The tradition of dividing land into small family units has hindered the development of this sector. Landowners Domestic consumption currently far are currently being encouraged to lease or sell land to commercial farmers to help develop agriculture as a outstrips production, thus the potential for profitable industry. With limited mechanisation in this market there are numerous options for investment. growth across the whole of the agricultural

To assist the sector, the government has introduced sector is significant specific incentives for farmers and processors to encourage them to increase production and ultimately for this, but it failed to realise full capacity. In recent years enter foreign markets. These incentives include free access there has been renewed interest from the private sector. to a market consisting of 28mn consumers through the With financial input and better management techniques, Central European Free Trade Agreement (CEFTA); a zero it is thought that this sector will be very profitable. percent tariff rate for most agricultural and capital inputs; With attractive incentives on tax and customs from the and a VAT exemption on a range of agricultural inputs. Government and a domestic market providing low cost To support the sector, Kosovo has a young, energetic and raw materials, there is a real opportunity for Kosovo to comparatively cost effective workforce. develop this sector and export products abroad.

In sum, there is real potential to turn Kosovo’s agricultural Wine making sector into a large, profitable industry supplying both the domestic and foreign markets. Wine production in Kosovo has a long tradition dating back to at least the thirteenth century; yet it is only since Food Processing the 1970s that it started to develop into a large-scale industry when the bulk was produced for export – To maximize value-added from the agricultural sector, largely to Germany. In 1989, at its peak, 40mn litres were Kosovo is keen to develop its food processing industry. exported from the Rahovec wine factory alone, one of In the past a state owned enterprise had been responsible four state owned vineyards. However, this momentum

16 INVESTING IN KOSOVO | 2010 NATURAL RESOURCES

Kosovo’s forests and wood processing

Forestry and wood processing provides another opportunity for investors. With 41% of Kosovo’s terrain made up of forests, this sector plays a crucial role in Kosovo’s economic make up constituting to 1.8-2.6% of GDP and employing 8-10% of the population. Over half of harvested wood is used for domestic heating purposes while a large proportion of the remaining is used to produce products such as doors, window frames and furniture etc. The manufacturing of other wood products such as fencing, pallets and prefabricated products is still underexploited. Equally, wood chopped for firewood is simply that – sawmills are not taking advantage of the bi-products of the process such as the sale of sawdust and woodchips.

Before 1989, Kosovo exported wood products to EU (then EEC) and US markets. In more recent years it has tended to focus on the domestic market, whilst exporting to a limited number of EU countries –Netherlands, Germany and Switzerland – primarily in the hotel furniture business.

Development of the forestry and wood processing industry is supported by the government and incentives, such as the zero tax on the import of equipment and capital goods, applies as for the agricultural industry. There are a number of organisations promoting growth within the industry, such as Kosovo’s Forest Agency (part of the Ministry of Agriculture, Forestry and Rural Development) who are responsible for ensuring the biodiversity of the forests is maintained as well as producing good yields. Also, Kosovo’s climate and high altitude of aiding the development of the wood processing industry is the Association of Wood Processors of Kosovo, introducing 200-300m above sea level makes it an new technologies and looking for new markets to export to. Opportunities exist in every aspect of the Kosovo ideal setting for wine production wood industry. Given Kosovo’s long tradition in the wood processing sector, there are many skilled craftsmen available and many private/ family owned companies who would was lost due to management changes in the factories make excellent outsourcing partners to foreign investors. and the disruption commerce suffered during the war years. Paradoxically, these factors came at a time when Conclusion there was a huge boom in the wine industry with the whole world seemingly opening up to alternative wine Kosovo is a country rich in natural resources. However, producing countries such as new world. resources are currently underexploited. The government’s ongoing privatisation programme provides a real Kosovo’s climate and high altitude of 200-300m above opportunity to develop Kosovo’s natural resources into sea level makes it an ideal setting for wine production. profitable and competitive industries. Investment is The introduction of the Wine Law in 2005 and the creation required to bring the market sectors up to date in terms of the Wine Institute at Rahovec in 2007 have helped install of equipment, management and best practices. Investors international best practices and the overseeing of quality will find the environment supportive and accepting, with controls, while privatisation has brought modernisation. the government offering specific tax incentives to help There is now the hope and desire for Kosovo’s wine boost the agricultural industry and forthcoming measures producing industry to flourish again. Attention to quality on alcohol tariffs to help rebuild the vineyards. Due to rather than quantity is important in the rebuilding of the historical significance of these industries, Kosovo’s the wine industry due to the metaphorical ‘wine lake’ in population is already well trained and experienced the present market with many producers looking to cut workers who have learned their skills from generations of back production. trades and craftsmen.

2010 | INVESTING IN KOSOVO 17 Infrastructure

Infrastructure

osovo’s infrastructure suffered from underfunding of the journey. Kosovo has a road network of 8,522km. from the 1970s until the end of the 1990s, and the MTC is responsible for 1,951km, of which 647km are main K 1999 conflict took a heavy toll on the country’s roads and 1,304km are regional roads, while municipalities transport networks. But since then Kosovo has made have responsibility for 6,571km, where 571km are urban great strides in rebuilding and upgrading its infrastructure roads and around 6,000km are local roads. to encourage economic development and increase regional linkages. Road construction projects in recent years conducted with the support of the European Union have improved Government strategy and partners the condition of roads significantly – 88% of main roads and 74% of regional roads are now classified as in good The Ministry of Transport and Telecommunication (MTC) condition, while 12% of main roads and 26% of regional is responsible for transport infrastructure as well as the roads are in satisfactory condition. Local roads remain telecoms and postal sectors. In 2005, the Ministry laid out in need of some rehabilitation. Given the importance of its Draft Kosovo Transport Policy and Plan as a framework roads to Kosovo’s overall transport strategy, improvement for development in the transport sector. The Plan provides of the road system is a major priority in the government’s for the construction of a multimodal transport network Transport Plan, and in 2008, the Kosovan government to interlink Kosovo’s transport routes with regional and invested EUR130mn in road infrastructure. trans-European networks. In 2007, feasibility studies were completed on Route 6, MTC is cooperating with the South East Europe Transport a road system linking Niš in Serbia with Prishtina and Observatory (SEETO), a regional transport organisation Albania, and Route 7, to link Prishtina with created in 2004 by the , the and Macedonia. When complete, both projects will form United Nations Mission in Kosovo and the governments part of SEETO’s Core Regional Transport Network. of Albania, Bosnia and Herzegovina, , the former The two projects are to be funded by the government in Yugoslav Republic of Macedonia, Montenegro and cooperation with donors and/or PPPs, and are listed as Serbia. SEETO coordinates progress on the multimodal priorities in the government’s Medium Term Expenditure South East Europe Core Regional Transport Network, Framework (MTEF) for Kosovo 2009-2011. a proposed comprehensive network covering all modes of transport in the region and taking account of present The World Bank is supporting the construction of the and future capacity needs. Morinë – Merdare motorway, a 120km road that will link Kosovo with Serbia and Albania, giving it access to Alongside regional and international cooperation on Albania’s ports on the Adriatic. The road is the largest development, Kosovo is actively seeking to involve the investment project that the Kosovan government has private sector in the enhancement of the transport undertaken in the past 20 years and it will create up to network. The government declared the formation of 3,000 jobs in Kosovo. Public Private Partnerships (PPPs) to be a national priority in June 2008, and set up the centralised PPP Unit, Getting railways back on track Partnerships Kosovo, to promote and implement PPPs in the country. Current projects include the privatisation of Kosovo has a rail network of 433km, of which 333km Kosovo Railways and the construction of Route 7, a road is used for passenger and freight traffic and 100km is system linking Kosovo’s capital, Prishtina, with Montenegro for industrial use. The railway links most major centres and Skopje in Macedonia, at an expected project cost of within Kosovo and connects with the rail lines of Serbia EUR1.15bn. and Macedonia at the borders; rail lines run North- South and East-West from Prishtina. Kosovo Railways, a Roads to prosperity government-owned company, owns and maintains the rail infrastructure and operates passenger and freight Over 95% of Kosovo’s transport is either carried out by services. The government plans to split the entity into two road or involves road movement at the beginning or end separate organisations, one in charge of infrastructure and

18 INVESTING IN KOSOVO | 2010 Infrastructure

turned into a civilian facility in the future, for now, PIA has a monopoly on civilian air traffic into Kosovo. The is situated 15km southwest of Prishtina and acts as a regional hub, serving 1.2mn passengers and 14,000 flights in 2008, from international airlines like British Airways, Malev and Austrian Airlines. Passenger traffic grew by 11% between 2007 and 2008, and is projected to increase by a further 10% by the end of 2009. PIA received certification from the International Civil Aviation Organisation (ICAO) in December 2008. The airport has seen considerable infrastructure improvements in the last two years, with EUR50mn put into runway repaving, new lighting, new baggage control systems and a VIP terminal.

Partnerships Kosovo has recently concluded the process of concessions for Prishtina International Airport, with the Limaks – Aéroports de Lyon consortium confirmed as the successful bidder in June 2010. Under the terms of the PPP, the concession for the airport is for the duration of 20 years on a design-build-finance-operate-transfer (DBFOT) basis. A minimum investment of EUR85mn will be required for an infrastructure development programme that will involve the construction of a new terminal, a new apron, taxiways, air traffic control facilities, a water treatment facility and parking spaces. This year, PIA is expected to see a net profit of EUR10mn, The World Bank is supporting the and the Ministry of Transport thinks that the airport should generate EUR400mn in profits over the 20-year construction of the Morinë – Merdare concession period. motorway, a 120km road that will link Communications and connectivity Kosovo with Albania Kosovo’s telecoms industry has been liberalised and the sector has an independent regulator, the one responsible for maintenance and operation, leading Telecommunications Regulatory Authority (TRA) up to the privatisation of Kosovo Railways in 2010. The established in 2003. The national fixed-line operator, government also intends to establish a separate regulatory PTK, completed the transfer of its fixed-line network authority with responsibility for the rail sub-sector. to digital infrastructure in 2007. Fixed-line penetration, however, lags behind mobile telephony, which is growing Much of Kosovo’s rolling stock has been lost and the fast – increasing competition in the mobile market saw condition of the rail infrastructure and rolling stock still mobile subscriber numbers rise by 60% in 2008. Mobile remains poor. Only 40% of the network is in service, penetration is at 60%; the mobile operators in the market causing pressure on the road network which must carry are national fixed-line operator PTK’s mobile arm, Vala, freight that would more naturally be handled by the Albania Mobile Communications (AMC), which is a rail system. Kosovo’s Transport Plan envisages a need subsidiary of Greece’s OTE, UK company Vodafone and for EUR500mn investment in rail infrastructure over Turkish-owned Eagle Mobile. Two mobile virtual network the next 20 years, with a further EUR230mn required operators are licensed to operate in the country, but only for rolling stock. In the government’s MTEF for 2009-11, one, D3, is in operation. it has allocated EUR19.5mn for rail improvements. To fund the rehabilitation of the rail system in the long Internet penetration was 20.9% at the end of September term, the government hopes to attract private sector 2009. Broadband uptake is increasing as operators build investment through the concessioning of Kosovo Railways. out infrastructure – it had reached 6% by the end of 2008 and is expected to rise to 9% by the end of 2009. Ten ISPs Airport concession taking off are licensed to provide Internet access. To improve rural broadband access, the regulator has drawn up a draft Kosovo has two , a military facility at and strategy for rolling out national wireless broadband, under the civilian airport, Prishtina International Airport (PIA). which up to four operators will be given licences to offer Although it is suggested that Gjakova Airport may be wireless broadband services across Kosovo.

2010 | INVESTING IN KOSOVO 19 TOURISM

Tourism

iven its strategic location between Europe Private Enterprise Programme. Over 70 exhibitors and the Middle East, ease of access, wealth of presented their in-bound tourism and two new initiatives G natural beauty and multilayered cultural history, were launched – a new tourism focused website, the Western Balkans has been attracting a growing www.KosovoGuide.com, and a catalogue of about 30 number of tourists over the past decade. In 2007 a total new local tourism offers. of 11.7 million people visited the region spending over USD12.3bn. Given Kosovo’s past its share in this market To support developments in the sector, Kosovo boasts a growth has been somewhat restrained. However, as the young, skilled and energetic workforce. With many of the country’s economy and profile grow, this is changing and population having studied or lived abroad, tourists and now provides a real opportunity for investors will find locals hospitable and eager to leave a investors to enter the market early and capture future good impression of their country. growth in demand. Tourism currently accounts for 8-10% of national GDP. Kosovo does not have any visa requirements for EU or US citizens and is only a short journey time from most of Government Western Europe. It uses the Euro as its official currency and English and German are understood in most parts, The government intrinsically recognises the importance making it an appealing destination for Europeans. of tourism to Kosovo’s future social and economic development and as such provides an accommodating Opportunities regulatory environment attractive to the foreign investor. Tourism opportunities cover a variety of categories The Kosovo Tourism Promotion Board has adopted a in Kosovo including nature; culture; winter activities; top-down approach to external and internal marketing, adventure; and health – each one offering its own unique engaging support from the Prime Minister down to experience to the would-be tourist. regional municipalities. Officials have recently launched a global marketing campaign aimed at promoting the country Kosovo has a rich and varied landscape, with mountains as a secure and welcoming place for tourists with a clean, surrounding it on three sides, magnificent rivers, canyons safe environment. Led by Saatchi and Saatchi, the campaign and interesting wildlife and flora. This stunning landscape focuses on the people of Kosovo; of youth and hope – is the perfect setting for a number of sporting activities, ‘Kosovo – The Young Europeans’. The campaign aims to including skiing, hiking, and mountain biking, and exploring place Kosovo alongside other popular Balkan destinations the Rugova Canyon, its caves and the Mirusha Waterfalls. such as Albania, Croatia, and Montenegro. Further to this, Kosovo’s thermal springs are well known in the region for their health benefits. The Kosovo Tourism Association (KOTAS), a not for profit non-governmental organisation (NGO), also Kosovo also has an ancient cultural background including works to ‘support the development of mutually beneficial relics believed to date back to neolithical times and tourism [and related sectors] programmes and initiatives remains of an ancient Roman city, Ulpiana, from the 2nd implemented at all levels’. In April 2009 Kosovo held its first century. It is impressively home to four World Heritage Tourism Fair where the welcome speech was delivered by medieval orthodox churches and monasteries which the Prime Minister, organisations present covered many represent a fusion of Byzantine and western Romanesque aspects of Kosovan tourism from businesses promoting ecclesiastical architecture. visits to cultural and religious sites to sporting activities. The message from the Fair was to encourage visitors to Skiing in has become increasingly come and visit for a weekend, to come and get a feel for fashionable as a more economical holiday choice to the new Kosovo. Western Europe’s resorts. Kosovo’s mountains provide great potential for growth in the ski industry. Currently, April 2010 saw the second Travel Day Fair in Kosovo, the main ski centre is in the Sharr mountains in the with further support coming from USAID’s Kosovo south at Brezovica, providing facilities for 50,000 skiers

20 INVESTING IN KOSOVO | 2010 TOURISM

Infrastructure

Infrastructure in Kosovo is undergoing investment and essential upgrading. This will benefit the tourist industry by enabling visitors to reach their destinations easily.

Prishtina Airport currently receives over a million passengers a year and in May 2010, the Turkish-French consortium Limak - Aeroport de Lyon, were successful in their bid to manage the airport for the next twenty years. The newly privatised airport expects passenger numbers to rise to 1.3 million during 2010.

The contract signed between the government and Limak – Aeroport de Lyon calls for an investment of EUR100mn. This will allow for the construction of a new terminal. Other projects may include the construction of a new tower.

Over the past three years more than EUR26mn has been invested including providing a new lighting system, repaving of the runway, a new baggage system, five new platform buses and a new VIP terminal building.

Kosovo has its own national airline, Kosovo Airlines – established in 2003 by Kosovo’s main travel company, Eurokoha. While Prishtina Airport serves most European countries and further afield, Kosovo Airlines operates through partner airlines primarily with flights to Germany and Switzerland and, in the summer months, with 14 ski slopes stretching over 16km. The resort is to Turkey. Plans are currently afoot to expand with flights calling for further development and expansion. Although to Albania, Italy, Vienna, London and Brussels, although a delays have been encountered, privatisation of the resort number of internationally recognised airlines currently is on the agenda. It is estimated that investment in the cover these routes. region of EUR60mn is required to bring the resort up to international standards. With all-year-round tourist Kosovo Railways is also looking for investment, for both attractions, developing the mountains for tourism is an passenger routes and freight. During times of conflict, the attractive opportunity for foreign investors. Conditions railway system suffered heavy war damage and is now in the region provide excellent weather and long ski in need of repair and modernisation to open up routes seasons (from November to May). There is no reason connecting Kosovo with essential EU bound networks. why Brezovica cannot achieve the same success as the Investment in the infrastructure of roads and public Bansko resort in Bulgaria. Investment in the resort will transport is required to provide improvement in opening attract interest from a number of complementary sub- up the country to visitors who want to experience its sectors including; sports and ski infrastructure; hotels and rural beauty. restaurants; entertainment and leisure facilities; and of course transport. Conclusion

The rugged and dramatically beautiful ‘Accursed Overall, Kosovo has a wealth of positives to draw Mountains’ in the west, bordering Albania and Montenegro upon to create a strong foundation for a profitable also provide a good investment opportunity. An area of tourist industry. Much is already in place but requires land, currently owned by the socially owned enterprise investment and concentrated marketing to maximise ‘Sharrprodhimi’ in the municipality of Dragash, is in need the industry’s potential. The fact that the majority of the of investment. The land will be of primary interest to population is under 35 is ideal for investors looking for an bidders engaged in eco-tourism as it is home to a variety energetic, enthusiastic workforce to serve the industry. of Balkan plants and alpine flora. This beautiful land Equally, the people of Kosovo are friendly and polite covers approximately 22,000 hectares and lends itself and are proud to introduce their new country to the to adventure tourism with opportunities for mountain world. By welcoming in tourists this message will biking, skiing, paragliding, horse riding and rock climbing. spread fast.

2010 | INVESTING IN KOSOVO 21 energy

Fuelling future growth

osovo has an abundance of natural resources, The two existing lignite mines at Mirash and Bardh are soon especially in those used for energy production. to run out. New investment is being sought to ensure a K In recent years, however, it has struggled to meet continuous supply to domestic power stations. The World its own domestic energy demands. To address this, Bank has awarded Kosovo a USD10.5mn grant to help the Ministry of Energy and Mining (MEM) has formulated attract private investors to develop its lignite mines and comprehensive plans that will transform the country from build new capacity for lignite thermal power generation. a net importer of electricity to a net exporter over the The financial support has helped to set up the proper forthcoming decade. regulations and laws to support inward private investment.

Mining To help meet Kosovo’s energy demands, a new mine in Sibovc has been identified that will ensure a lifetime Most of Kosovo’s wealth lies underground. The country (40 years) supply of coal for the newly planned power has rich deposits of natural resources offering huge plant. Sibovc has a surface area of 19.7 km², and geological potential. It is estimated that it has between 11.5bn and reserves of lignite of 990mn tons out of which 830mn 14bn tonnes of lignite; 89mn tonnes of chrome; 48mn tons are exploitable. Costs for opening this new mine are tonnes of lead and zinc; 16mn tonnes of nickel; 13.2mn estimated at EUR237.5mn over the period 2006-2012. of known bauxite; and enough magnesite, copper, gold Private investors will hold the majority of shares in the and silver to last a hundred years. They also have a rare, Sibovc mine although the Government of Kosovo will still high-grade, valuable deposit of halloysite clay, one of only five sites globally. Lignite plays perhaps the most vital role In 2005 the government established the Independent Commission for Mines and Minerals (ICMM) to issue in Kosovo as the main supplier to the permits and licences for exploitation and promote foreign direct investment (FDI). So far Kosovo’s minerals local energy market and natural resources have attracted much international attention. In 2007 a total of 70 licenses were issued by the ICMM for exploration. Global companies such as Lydian have some ownership. The MEM expects that the tender Resources (UK) have entered Kosovo in the exploration for the development of a new power plant using Kosovo’s of zinc, lead and silver and hope to achieve first mover lignite resources will become the biggest investment project advantage by beginning commercial production in 2011. in Kosovo’s history, with an estimated EUR3.5mn in FDI.

According to Tim Coughlin, the CEO of Kosovo Resource Electricity supply Company (KRC), “mining laws are already international and infrastructure standard and there is significant regulatory emphasis on protecting the environment and engaging local Despite Kosovo’s reserves, the Kosovo Energy communities”. With a strong history in mining, Kosovo has Corporation (KEK), Kosovo’s state-owned, biggest and a labour force well-equipped to support any new initiatives. only power generating company, has been unable to meet its domestic peak demands and has been known to Lignite plays perhaps the most vital role in Kosovo as the import up to 400MW of capacity during winter months. main supplier to the local energy market. Kosovo has the fifth largest lignite reserve in the world. Reserves Electricity in Kosovo is currently produced by two are exploited in surface mines to provide a very cheap lignite-fired thermal power plants, known as Kosovo A source of energy for thermo-electric power plants. At an and Kosovo B and a small hydropower plant. Although exploitation cost of 1.1 EUR/GJ of energy, Kosovo’s coal the power plants have a rated generating capacity of is the most economical in the region. With such enviable 1,478MW, the two facilities only have available capacity reserves, this sector will play a huge part in Kosovo’s of 800MW at this time. The hydropower plant generates future economic development. an additional 32MW. Although most transmission lines

22 INVESTING IN KOSOVO | 2010 enerGy

these developments Kosovo aims to become a power exporter. The additional production capacities will be utilised to export electricity to other countries. According to the Kosovo Times, surplus energy is hoped to translate into as much as EUR15mn worth of exports after 2016.

1. New Thermal Power Plant: ‘Kosova e Re’

The construction of the new ‘Kosova e Re’ to be built between 2009 and 2020, and linked to the new Sibovc mine has a planned capacity of 1,000 MW with an installed capacity of 600MW in Phase 1. According to the Ministry of Energy and Mines, Kosova e Re will be built of two blocks of 300 megawatt-hours each, where the first unit is expected to start producing electricity by the end of 2015 and the second unit six months later. Construction costs are estimated to be up to EUR1.2bn, and will be co- financed by the Government of Kosovo and the winner of a tender, although the amount of public participation in this project has yet to be decided. The steering committee for the construction of the new power plant has selected four international consortia, which have met the criteria to participate in the tender. The Plant will apply best environmental practices and standards. are operational following post-conflict repairs, substations remain in poor technical condition. Poor management, 2. Kosovo A and B severe capital under-investment, lack of preventative maintenance and problems of cash collection and The government aims to improve the production capacity commercial losses (customer debt amounts to around of Kosovo A by repairing three of its power units. Once EUR400mn) have led to power shortages and outages. this is completed, it will then have a capacity of 600MW. Costs for rehabilitating Kosovo A are estimated at According to MEM, demand for electricity in Kosovo has EUR154mn. The operational units of Kosovo A are to been increasing over recent years; annual demand has be decommissioned by 2017 to comply with the Large grown by 44% since 1998 and currently electricity usage Combustion Plant Directive. peaks at approximately 1,200MW. GDP is expected to grow by 9% between 2009 and 2015 and investments Furthermore, private sector participation is being called are expected to reach EUR10.7bn. In order to support upon to modernise Kosova B (an existing lignite fired these trends, Kosovo will need considerable extra power electric power generation plant). Shares will be sold in capacity. Furthermore, with links to the electricity grid Kosova B. of South East Europe (through the Energy Community), Kosovo is in a strong position to utilise its resources and The government is also offering a bill-operate-transfer become a net exporter of energy. (BOT) in the Pristina District Heating Combined Heat & Power from the Thermal Power Plant Kosovo B. Over To resolve Kosovo’s domestic energy supply problems, 60,000 houses will be connected to the central heating the government has put together a comprehensive scheme. Phase 1 is expected to require EUR24mn (2008- strategy. A new power plant, investments in renewable 09) and Phase 2 EUR19mn in (2012-13). A private sector energies, improvements to existing infrastructure and the investor is required. restructuring of KEK through privatisation are aimed to increase production, improve efficiency and help bring 3. Hydro-Power Plants (HPPs) down emissions. Given the emissions caused by thermal power production, Kosovo is planning 2,000 MW in new production Kosovo is keen for foreign investments in renewable capacities over the medium-term. Kosovo needs energy projects. The government, with financial assistance approximately EUR350mn for developing the Zhur from the World Bank, has also engaged consultants to hydropower plant, some EUR1.2bn for the first stage of conduct preliminary assessments for the construction of TPP Kosova e Re (also known as New Kosova) and up to the new hydro power plant at Zhur. The Zhur HPP is EUR100mn for developing small hydropower plants. With envisaged to take five years to complete and will have

2010 | INVESTING IN KOSOVO 23 enerGy

a maximum capacity of 305MW and annual production region. There is a 400kV line that connects Kosovo with of 398GWh. It is estimated that the total investment Serbia, a similar line connects Kosovo to Macedonia and required is approximately EUR350mn. Montenegro, and 220kV lines connect to Macedonia and Albania. Construction of a new 400kV line is underway The government has also identified 60 sites where between Kosovo and Albania. small HPPs can be built with a total capacity of 680 GWh/year. The total investment needed is expected Furthermore, Slovenia and Kosovo recently signed to be approximately EUR100mn. Private investors are a Memorandum of Understanding on cooperation to be selected and planned incentive schemes are to between the two countries in energy and mining. The two be adopted including feed-in tariffs, priority access to countries plan to intensify their cooperation in exchanging distribution networks and take-or-pay power purchase their experience in structural adjustments of the energy agreements (PPAs). sector, market development, energy efficiency and the development of renewable energy sources. 5. Privatisation of KEK

In 2006, Kosovo signed up to the ‘Energy Community Treaty’ when it was extended to cover the whole of Improving connectivity with neighbouring the Balkan Peninsula. The Treaty aims to establish an integrated market in natural gas and electricity, a stable countries is important to the stability regulatory and market framework and a single regulatory space for trade. In order to meet with the requirements of energy supply in the region of the Treaty, significant work is being planned to bring the Kosovo energy sector into line. One of the requirements of the Treaty is for Kosovo to unbundle the functions Regulation of mining, power generation, network distribution and supply, and to prepare for the privatisation of the assets of The government of Kosovo is committed to creating an KEK. The unbundling of KEK was initiated in 2005 with the attractive investment friendly environment. The PPP Law establishment of KOSTT (Kosovo Electricity Transmission is investor-friendly and in accordance with international System and Market Operator) as a separate company, best practices (UNCTRAL, EBRD, EC guidelines etc). In which today operates independently and is responsible addition, the Law on Publicly Owned Enterprises (POEs) for Transmission System Operations and Trade (TSO) provides a transparent and predictable process for private throughout Kosovo. sector participation and is clearly articulated to assure private sector participation. In 2008, the government of Kosovo approved the unbundling of Kosovo’s electricity distribution network The Parliament of Kosovo has adopted and promulgated and supply to form a new company for privatisation. primary legislation for the energy sector which is in The total investment required is expected to amount to compliance with the appropriate EC Directives and other EUR400mn. Private sector participation in the distribution European Union laws. According to the Law on Energy network and supply side of KEK is anticipated to improve Regulator the Energy Regulatory Office (ERO) has and expand the distribution network, increase billing and been established as an independent agency to exercise collections, reduce electricity losses, and improve the economic regulation in the energy sector (Electricity, security of supply and overall service quality. District Heating and Natural Gas).

In the past two years KEK has managed to achieve In general the ERO is responsible for: the establishment double-digit growth in its billing and collection figures, it and enforcement of a regulatory framework for the energy has managed to decrease commercial and technical losses sector in Kosovo, in order to achieve compliance with from its assets, and increase the production of coal and the obligations under the regional Treaty establishing the electricity generation. KEK has also decreased its overall Energy Community; ensuring non-discriminatory access expenditures, whilst improving continuously its services of all users to the energy networks at prices reflecting for the customers. true economic costs; ensuring the effective unbundling of the vertically integrated utilities and the non cross- 6. Connectivity subsidisation of prices; promoting competition and the efficient functioning of the energy market; and, promoting Improving connectivity with neighbouring countries economic efficiency by providing the appropriate long is important to the stability of energy supply in the and short term pricing signals.

24 INVESTING IN KOSOVO | 2010 VENUE

Harold Pratt House

uring the years 1919-1920 an elegant town Up the winding staircase on the second floor was a library house was erected at the Southwest corner of which also functioned as a dining room and is now used D Park Avenue and 68th Street for Mr. and Mrs. by the Council as the Library. Harold Irving Pratt. Since this was the house which was officially opened as the Council of Foreign Relations’ new The current Mansion Ballroom was the Pratt’s formal headquarters on April 16, 1945, it is interesting to trace drawing room. At Mrs. Pratt’s insistence it was square, the story of the house and its owners. being modeled after a room she had seen in Ireland. It is decorated with pine paneling and beautiful chandeliers Mr. Pratt’s father had been connected with Pratt’s Astral Oil, each of whose crystals are different. and during the latter part of the 19th century, it merged with John D. Rockefeller’s Standard Oil of New Jersey. It was also Mrs. Pratt’s wish to use the hand-painted Venetian type doors for the entrance to the library and For the major part of his working life Mr. Harold Irving Pratt, the drawing room, although the architect demurred that the youngest of Mr. Charles Pratt’s eight children, was the they did not fit with the English architecture. managing director of Charles Pratt and Co. He had been a Council member from 1923 until his death in 1939. Comfortable bedrooms on the third floor, many with fireplaces, housed Mr. and Mrs. Pratt, their son and In 1944 when the Council was outgrowing its existing space, two daughters. The fourth floor contained children’s Mr. Hamilton Fish Armstrong telephoned Mrs. Pratt to see playrooms and sewing rooms and the fifth floor house if she would donate her house which was then boarded up the majority of the seventeen servants employed to keep as no one was living in it. The next day Mrs. Pratt called to the house functioning. say that she would give the house to the Council. The Pratt family gave three pictures of themselves seated The building was designed by an outstanding architect of with the original furnishings. These are located in the the time, William Adams Delano, of the firm of Delano marble foyer between the meeting rooms and on the and Aldrich. Only the best materials available were used south wall of the large meeting room. in constructing the house which is reputed to have cost over one million dollars in 1920.

The exterior is of limestone, custom made in the United States and the inside floors are mainly parquet, oak, or a self-polishing marble. As is typical of other houses of the Contact us period, a large kitchen and service area were installed in 58 E. 68th St. at Park Ave. New York, the basement. The Pratt’s dining room was on the main NY.10065 floor where the current Drawing Room now exists. Tel: 212 434 9576

2010 | INVESTING IN KOSOVO 25 Sponsors Our Partners

Bechtel

Bechtel is a global engineering, construction, and project infrastructure projects in the world, including major management company with more than a century of motorways, new links with major highways, reconstruction experience on complex projects in challenging locations. of existing systems under operating conditions, major tunnel Bechtel is a global leader in developing, managing, and sections and large interchanges. Bechtel has been involved constructing civil infrastructure. From airport, rail, and in the construction of more than 17,000 miles (27,500 km) highway systems to regional development programmes, of highways and roads, on projects including the Albanian Bechtel builds the infrastructure necessary to improve Motorway, the Autostrada Transilvania in and the the quality of life and sustain economic growth. Gowanus Expressway which serves New York City. Most recently, Bechtel began work on a joint venture with Turkish Since its foundation in 1898, Bechtel has successfully company Enka for the construction of the Morine-Merdar completed some of the largest and complex civil Motorway in Kosovo.

Enka

Enka is the leading EPC company in Turkey. Since its The financial stability and strength of Enka are globally founding in 1957, Enka has worked on more than 435 recognised, combining substantial revenues together with projects in 33 countries. Today, Enka’s 12,500 employees proven profitability over many decades. are working in 13 countries serving customers in a broad range of industries including power plants, industrial factories, petroleum and chemical facilities, airport terminals, high-rise “A class” offices, residential buildings, Enka recognises and acknowledges the importance hotels, building development projects, new reclaimed of achieving world-class performance with respect to islands, and motorways. In 2010, ENR named ENKA as protection of health, safety and the environment (HSE) 50th largest international contractor in the world and first throughout all phases of the project and utilizes its among Turkish contractors. The Enka Group’s revenue in proven HSE policies, systems and procedures during the 2009 was USD5.2 billion. execution of its Projects. Visit www.enka.com

Kostt J.S.C.

KOSTT J.S.C. is the Kosovo Electricity Transmission, to society and environment, integrated in European System and Market Operator, an organisation which plays mechanisms. The company aims to ensure: an important role in the energy sector in Kosovo. • qualitative services by implementing technical – As a transmission system operator, KOSTT J.S.C. manages technological achievements in developing transmission and operates the electricity transmission system of Kosovo system and is responsible for the bulk transmission of electric power on the main high voltage electric networks. As a • transparency and non-discrimination in competitive market operator, it is responsible for the organisation and electricity market administration of trade in electricity and the management of the settlement process. • advancement of position in a regional and European level supported by continuous improvement of human KOSTT J.S.C. aims to be a profitable company, to provide resources. secure and stable transmission of electricity, responsible

26 INVESTING IN KOSOVO | 2010 Sponsors

Bank for Business (BpB)

Bank for Business (BpB) is one of the two locally owned and has a market share of around 5%, with total assets of banks out of the 8 banks operating in Kosovo. BpB was EUR 92 million and equity of EUR 9.5 million. the third commercial bank to be licensed by the Central Bank of Kosovo in 2001 and since then, the Bank has During the last 12 months, there have been major quality successfully continued its activity. An Italian Bank (Banca Di improvements and at the same time, significant growth Cividale) is also a shareholder in BpB since its inception. deposits and loan portfolio, making our bank a serious actor in banking industry in Kosovo. BpB offers a wide range of services to retail (private individuals), Micro and SME’s and Corporate clients. BpB In addition very recently the Bank has signed a operates in all the main cities and towns, with a strong partnership agreement with (finance agreement) with network of 7 branches, 21 sub-branches and 12 small the European Bank for Reconstruction and Development offices. BpB currently has 339 full time employees and (“EBRD”) and very soon, the Bank will sign enter into provides banking services to more than 120,000 business similar arrangements with other IFIs too. The aim is to and private clients. strengthen the institution and speed up the process of growth which, in the medium term, would make BpB BpB recently has had a significant growth and now is well a strong and sustainable partner for local and foreign positioned to expand its market share. As of the end of institutions wishing to enter the market. August, 2010 BpB was ranked sixth in terms of asset size

Boga & Associates mining and petroleum concerns, non-profit organisations, Boga & Associates, established in 1994, has emerged as one embassies, public utilities, commercial companies, of the premiere law firms in Albania, earning a reputation international and governmental agencies. The firm has for providing the highest quality legal, tax and accounting also an outstanding litigation practice, representing clients services to its clients. Boga & Associates also operates in at all levels of Albanian courts. Kosovo (Pristina) offering a full range of services. The firm offers its clients all the legal, tax and accounting The firm maintains its commitment to quality through the services required to conduct business in Albania and skills and determination of a team of attorneys and other Kosovo, effectively. Over the years the firm has advised professionals with a wide range of skills and experience. in the areas of privatisation of national resources and enterprises, concessions, real estate transactions, setting Boga & Associates represents a broad spectrum of high- up of businesses, credit facilities, custom and tax issues, profile clients, including telecommunication companies, all with a keen sensitivity to the rapid changes in the financial institutions, airlines, industrial complexes, energy, Albanian business environment.

Delia Group

Delia Group is one of the oldest and leading companies We are currently working on a number of projects such as in Albania and now also active and recognised in Kosovo. the construction of the section Rubik-Rreshen (Lot 3) of the motorway Durres-Kukes, the construction of the section The company has participated and it has been awarded Komoran-Arllat of the motorway Prishtine-Peje and on national and international tenders on the construction the construction and operation of two Hydropower Plants, of objects financed by the Albanian Government, World namely HPP Mollas (21MW) and HPP Thane (3MW). Bank, European Bank, EBRD and various private, domestic and foreign investors. Delia Group mainly concentrates on Since its creation Delia Group has significantly managing and construction of civil infrastructure; however, strengthened and expanded its position in the home recently it has expanded its activities in the energy sector. and Kosovo market as demonstrated by the increase in The rich and diverse portfolio of the company includes the annual turnover during these years. When compared construction of rural and national roads and motorways, with the year 2005, the increase in the annual turnover road maintenance, construction of clinics, schools and of 2009 corresponds to the level of 252 per cent. apartment buildings, water supply and canalisation and The respective figure for the period January – September the construction and operation of hydropower plants. 2010 corresponds to 265 per cent.

2010 | INVESTING IN KOSOVO 27 Sponsors

KEK J.S.C.

Kosovo Energy Corporation J.S.C (KEK J.S.C.) is the sole KEK J.S.C. is an ethical company and provides secure, electricity provider in the Republic of Kosova, legally reliable and reasonably priced services while being incorporated at the end of 2005. an environmentally responsive, transparent and commercially orientated organisation that is responsive A vertically integrated company, business includes coal to customer needs. mining, generation, network and supply. The company at present includes two open-cast mines, the Mirash and KEK J.S.C. has approximately 372,000 customers Bardh mines, two power plants, Kosova A and Kosova B, most of which are household consumers and employs 51,969km of distribution network covering the whole of 7,500 employees. Kosovo and the supply division handling customers and the energy sale functions.

PTK J.S.C.

Founded in 1959 as the Post, Telephone and Telegraph PTK has a clear vision to be the driving force in creating of Kosovo, PTK today is comprised of three separate prosperity for the nation and enriching the lives of all business units: Post of Kosovo, Telecom of Kosovo, and Vala Kosovars, through the passion of their workforce and mobile network operator. These three business units are leveraging of proven cutting edge technologies. PTK licensed by the Kosovo Telecommunications Regulatory J.S.C. has in the region of 2,500 full-time employees Authority and on 29 June 2005, PTK was transformed and a structured five year business plan with significant into an internationally recognised joint-stock-company. investment potential of EUR550mn.

Kalo & Associates

Established in 1994 Kalo & Associates is recognised as a office offers a full service of all core aspects of business leading law firm in both Albania and Kosovo. It is a full law in all key sectors of the market to domestic, foreign service law firm providing a broad range of legal services and multinational companies. Kalo & Associates in Pristina in all core areas of commercial and corporate law for is in an excellent position with an impressive capacity to domestic, foreign and multinational companies. It has a manage representation of foreign investors in an efficient, sophisticated practice dedicated to providing clients with responsive and conscientious manner in Kosovo. high-quality, efficient and cost-effective legal services. IFLR1000 describes the firm as having “a practice that is In the establishment of the office in Kosovo, Kalo & consistent with what you would expect from a top Washington Associates brought on board two successful and law firm”. Chambers & Partners quotes a client who has reputable Kosovar lawyers, Ahmet Hasolli and Gazmend expressed confidence in the firm’s unshakeable integrity Nushi to lead the office. Both partners of this office by stating that: “this thoroughly reputable group always are extremely well-established lawyers in Pristina with a leaves you completely satisfied”. wealth of local experience and expertise to offer foreign investors in the field of commercial and business law. This The firm has also had long standing experience inthe partnership represents our strong local identity, strategic region, being one of the 4 founding members of the vision and consistency in the provision of quality legal reputable South East Europe Legal Group (SEE LEGAL), services. The excellent reputation of Kalo & Associates has an alliance of premier national law firms from 12 seen the Pristina office instructed by various well-known jurisdictions in South East Europe that provides seamless international companies such as Bechtel Inc, Enka, Phillip legal services with a particular focus on cross-border Morris, Vodafone, Alcatel-Lucent Italia, Morgan Stanley. The commercial transactions (www.seelegal.org).

28 INVESTING IN KOSOVO | 2010 Programme The US-Kosovo Trade and Investment Forum 27 October 2010 PROGRAMME FOR THE DAY

07.45am – 08.15am 13.00pm – 14.15pm Registration and refreshments Session 3 – Investing in the Energy and Mining sector Chair – Hon Christopher Hall, President of the American University in Kosovo and President of the American Chamber 08.15am – 08.45am of Commerce, Kosovo Opening of the Forum • Hon Dr Justina Shiroka-Pula, Minister of Energy and Mining, Government of Kosovo Welcome and introduction from Hon Ahmet Shala, Minister • Dr Ali Hamiti, Chief Executive, Kosovo Energy Regulatory Office of Economy and Finance of Kosovo, HE Avni Spahiu, Kosovo • Ferat Shala, Managing Director, Trepca Mining Complex Ambassador to the US, and HE Rosemary A. DiCarlo, Deputy • Fadil Ismajl, CEO, KOSTT Permanent Representative to the United Nations U.S. Mission • Arben Gjukaj, Managing Director, KEK JSC

Q & A Session 08.45am – 10.15am Session 1 – Setting the scene: Kosovo – The world’s newest business partner 14.15pm – 14.45pm Chair: Rod Morris, Vice President, Insurance, Overseas Private Refreshments break Investment Corporation (OPIC) • Hon Ahmet Shala, Minister of Economy and Finance, Government of Kosovo 14.45pm – 16.00pm • Gani Gërguri, Acting Governor, Central Bank of Kosovo Session 4 – Investment Opportunities in Kosovo – the time is now • Michael Adams, President, Bechtel Civil • Vullnet Latifi,Director, BPB Bank Chair: Atam Sandhu, Chief Executive, Developing Markets Associates Q & A session • Hon Besim Beqaj, Minister of , Government of Kosovo • Mustafë Hasani, Chief Executive, Kosovo Investment Promotion Agency 10.15am – 10.45am • Lorik Fejzullahu, Head of the Public-Private Partnership Unit, Session 2 – Investing in Agriculture and Infrastructure/ Ministry of Economy, Government of Kosovo Telecommunications development • Representative, Privatization Agency of Kosovo • Sokol Elmazi, Partner, Boga & Associates Chair: HE Avni Spahiu, Kosovo Ambassador to the US • Hon Fatmir Limaj, Minister of Transport and Q & A Session Telecommunication, Government of Kosovo • Hon Blerand Stavileci, Minister of Agriculture, Government of Kosovo • Jane Armitage, World Bank Director and Regional Coordinator 16.00pm – 16.30pm for South East Europe Closing remarks from Hon Ahmet Shala, Minister of Economy • Dr Shyqyri Haxha, CEO, PTK – Directory of Post of Kosovo and Finance, Government of Kosovo, HE Avni Spahiu, Kosovo

Q & A session Ambassador to the US and Atam Sandhu, Chief Executive, Developing Markets Associates

12:00pm – 13.00pm 16.30pm – 17.30pm Networking lunch Networking drinks reception