CEEBIC COMMERCIAL GUIDE
CEEBIC is a business facilitation program for U.S. firms interested in expanding into the Central and East European markets. Established in 1990 by Congressional legislation under the Support for East European Democracy (SEED) Act, CEEBIC is a one-stop shop and the US Government's clearinghouse for the most recent economic, commercial, and financial information on the 15 countries of Central and Eastern Europe. CEEBIC offers a wide array of services, business counseling, and information products designed to help primarily small- and medium-sized U.S. companies. CEEBIC's Washington-based trade specialists and dedicated overseas staff in 15 countries of the region work together to implement this unique program for U.S. firms.
BOSNIA HERZEGOVINA
COUNTRY COMMERCIAL GUIDE
CHAPTER 1: EXECUTIVE SUMMARY
Bosnia-Herzegovina (BiH) has made slow but steady progress over the past year in making the transition to a market economy. At the Federation and state levels, a multi-ethnic, social- democratic coalition (Alliance for Change) has replaced the nationalist parties long viewed as the main obstacles to economic reform. The Alliance has expressed strong commitment to accelerating the pace of economic reform, to building a viable market economy and to creating a more business-friendly investment climate. As signs of that commitment, in early 2002, the Council of Ministers approved an Action Plan aimed at removing barriers to investment; adopted a Poverty Reduction Strategy to create more jobs and increase exports; and initiated an anti-corruption plan to foster greater trust and confidence in the domestic economy.
Despite the plans and strategies, Bosnia's complex legal and regulatory framework, weak judicial structures and corrupt public administration system continue to discourage investment. BiH is ranked last in the region in terms of foreign direct investment (FDI). However, BiH authorities are keenly aware of the country's economic shortcomings, recognizing that economic reform and rule of law are crucial ingredients for both growth and poverty reduction. Their action plans are aimed at moving the reform agenda forward more vigorously.
BiH's economy is beginning to respond. In 2001, unofficial estimates show foreign direct investment at around $160 million, slightly up from the $150 million in 2000. While dwarfed by the billions in FDI going into neighbors Croatia and Slovenia, Bosnia's FDI is at least moving in the right direction. Official economic statistics present a sobering picture: per capita GDP stands at $1,100 and total GDP of less than five billion dollars represents only half of prewar levels. Unemployment officially averages 35-40 percent, though according to a recent World Bank study, the actual figure may be closer to one-half that value. Exports remain at only about one- third of their pre-war levels, far from adequate to generate the hard currency revenues needed to compensate for projected declines in donor assistance over the next several years. The most recent export figures (January-June 2001) are more encouraging, showing sharp gains in exports of clothing, furniture and leather goods.
Leading industrial sectors for U.S. exports include electric power and transmission, telecommunications, rail transport, and pollution control equipment. International financial institutions (the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank) and other co-financiers will continue to support reconstruction and rehabilitation of the country's infrastructure. Approximately US$ 230 million will be provided over the next three years for reconstruction of the electric power system and an additional US$ 17 million will be spent for environmental improvements at the country's four thermal power plants. Furthermore, US$ 20 million will be invested in reconstruction of the railway network including the purchase of track maintenance machines and equipment, and the restoration of the signaling system. The telecommunications sector will continue to generate sufficient revenues to fund further modernization and expansion. Two state-owned telecommunications operators are about to kick-start the countrywide expansion of their GSM networks while continuing to upgrade the fixed networks. The proposed liberalization of the telecommunications sector will ignite private investments in data and non-voice services thus generating demand for the related equipment.
CHAPTER 2: ECONOMIC TRENDS AND OUTLOOK
Since the signing of the Dayton Peace Accords at the end of 1995, Bosnia and Herzegovina has faced the triple challenge of recovering from the war, merging three ethnically-based economies still influenced by separatist agendas and overcoming 50 years of communist rule. While the post-war reconstruction phase is now largely completed, the economy is still in the midst of a transition that began in 1996. As a result, the economy continues to be heavily dependent on international aid, despite an influx of more than five billion U.S. dollars in aid since the end of the war.
A. Macroeconomic Conditions
Per capita GDP in 2001 stood at about $1,100 and with a total estimated GDP of less than $5 billion, BiH output is at only about half its prewar level. Strong post-war economic growth reflected more the infusion of donor assistance than increases in domestic production or private investment. As assistance levels have fallen in recent years, GDP has fallen in tandem. In 2001, the IMF estimated economic growth at 5.6 percent, and during the next several years, even assuming more aggressive implementation of economic reforms, GDP is projected to plateau at six percent. With donor assistance decreasing, BiH must necessarily increase private sector investment in order to maintain GDP growth.
Inflation is under control in Bosnia and Herzegovina thanks to the adoption of a currency board in 1997 legally mandating that the local currency (the Convertible Mark) be fully backed by hard currency or gold. Deposits in the Central Bank stood at more than one billion German marks in November 2001, reflecting growing confidence in the banking system. Previously, a relatively large inflation differential existed between the two entities, however, because of a faster-than-expected deceleration in inflation in the RS, rates equalized at around two percent in the last quarter of 2001,
Official statistics show unemployment at 35 to 40 percent statewide. That figure has fallen significantly from the 70 to 80 percent levels in the aftermath of the war. However, with a significant gray economy, unemployment figures are misleading. Since labor costs for employers are high, many hire employees off the books. According to a recent World Bank study, actual unemployment is likely closer to 20 percent. There is little doubt, however, that the job market remains weak and young people in particular have difficulty finding jobs.
Bosnia has run high trade deficits because with low domestic production, imports have satisfied demand for goods. However, the gap between imports and exports has been narrowing steadily. In 1997 the ratio of imports to exports was 4-to-1, but in 2001 the ratio is about 2.5-to-1. For the first half of 2001, exports (led by clothing, furniture and leather goods) rose by twenty percent, while imports fell by nearly five percent. Duty-free access of Bosnian exports to the EU fueled the export growth with sales to Germany up by 40 percent and to Italy by more than 20 percent.
In terms of fiscal policy, both entities have faced the challenge of keeping spending under control. At the state level, new expenditures have arisen as BiH builds up its central institutions. At the entity levels, spending pressures grow out of increasing demands to widen the safety net for pensioners and war veterans. With an army to maintain in each entity, military spending is the highest in the region, at 6 percent of GDP. Both entities are taking measures to cut the military, but while this will save resources in the long term, the entities will need to fund expensive severance packages in the short term. On the revenue side, tax collection has been inefficient. Annually, the entities lose 30 percent of their annual revenue from customs evasion. Additionally, unpaid sales tax cost entity governments approximately 1.5 million U.S. dollars per month. Smuggling of cigarettes alone deprives government coffers of an estimated KM 500 million in customs revenues. With assistance from the international community, the entity governments have been taking steps to create more efficient tax administrations and to grant greater powers to officials to collect taxes.
B. Government Role in the Economy
The public sector continues to maintain a heavy hand in economic activity. Despite several years of attempted market reforms, the private sector's share of the economy is a mere 35 percent. According to World Bank transition indicators, BiH lags behind its neighbors in every category of economic reform: governance and enterprise restructuring, competition policy, trade and foreign exchange systems, and banking reform/interest rate liberalization. Additionally, the pace of large-scale privatization has been disappointingly slow.
The election of a moderate multi-ethnic government in November 2000 at the state and Federation levels has given new impetus to the economic reform effort as the Alliance for Change coalition has shown a more concerted effort to tackle the impediments to economic growth. The state government has prepared a variety of action plans intended to establish priorities and to set deadlines for moving the economy forward. Among the top priorities are lowering barriers to investment, streamlining administrative procedures, establishing commercial courts, enacting tax reform (VAT), and bringing corruption under control.
CHAPTER 3: POLITICAL ENVIRONMENT
The 1995 General Framework Agreement for Peace in Bosnia and Herzegovina (the Dayton Accords) ended the 1991-95 war and created the independent state of Bosnia and Herzegovina (BiH), previously one of the constituent republics of Yugoslavia. The agreement also created two multi?ethnic constituent entities within the state: the Federation of Bosnia and Herzegovina (the Federation) and the Republika Srpska (RS). The Federation has a postwar Bosnian Muslim (Bosniak) and Croat majority while the RS has a postwar Bosnian Serb majority. The Constitution (Annex 4 of the Dayton Accords) establishes a central government with a bicameral legislature, a three-member presidency (consisting of a Bosniak, a Serb, and a Croat), a council of ministers, a constitutional court, and a central bank. The Accords assigned many governmental functions to the two entities, which have their own governments, parliaments, and police forces. The Accords also provided for the Office of the High Representative (OHR) to oversee implementation of civilian provisions. OHR also has the power to impose legislation and remove officials who obstruct the implementation of the Dayton Accords. The entities maintain separate armies, but, under the Constitution, these are under the ultimate control of the presidency of Bosnia and Herzegovina.
Following elections held in November 2000, a new central government took power on February 22, 2001, consisting of a post?election coalition that excluded the nationalist, ethnically-based wartime parties from power for the first time since the end of the war. This coalition, named the Alliance for Change, is centered around moderate parties committed to building on the foundation established at Dayton, with the Social Democratic Party (SDP) and the Party for Bosnia and Herzegovina (SBiH) being the largest two. The Alliance also came to power in the Federation. In the RS, Prime Minister Mladen Ivanic's moderate PDP party entered into coalition with the Serb nationalist SDS party.
In the Federation, the President appoints the Prime Minister subject to parliamentary approval. The Federation Parliament is bicameral. Parallel Bosniak and Croat government structures continue to exist in practice in some areas of the Federation. In the RS, the President and Vice- President are directly elected, while a Prime Minister selected by Parliament heads the government. The unicameral Parliament, called the RS National Assembly, is elected on a proportional basis. In the city of Brcko, which is a "self-governing neutral district," an internationally appointed supervisor with executive authority is empowered to address such issues as taxation, law enforcement, district management, and composition of the district assembly.
The U.S. enjoys wide respect and influence in BiH as a result of its essential role in promoting peace and stability in the region. The U.S. role was highlighted during the negotiation of the Dayton Agreement, which ended three years of brutal war and "ethnic cleansing" in BiH. Ethnic tensions remain and severe discrimination against ethnic minorities continues in areas dominated by Serb and Croat ethnic groups, with some discrimination in Bosniak-majority areas, particularly regarding the treatment of refugees and displaced persons.
U.S. policy seeks to maximize economic, social and political reform via full implementation of the Dayton Agreement and its accompanying annexes which address judicial reform, elections and democratic governance, returns of displaced persons and refugee, promote military stability, public security and law enforcement, and eliminate or reduce illegal institutions and corruption. The U.S. is fully engaged with the BiH government to enact these reforms.
Both the Federation and RS Constitutions provide for an independent judiciary; however, the legal system is unable to adequately protect the rights of either victims or defendants in either criminal or civil cases because of its inefficient criminal and civil codes and ineffective trial procedures. Even when the courts render a fair judgment, local officials and the court police often ignore or refuse to implement their decisions, seriously hampering economic activity.
CHAPTER 4: MARKETING U.S. PRODUCTS AND SERVICES
A. Distribution and Sales Channels
There are actually two distribution systems: one in the Federation of BiH and one in RS. This is the result of different legal frameworks in the entities. Although much effort has been made to harmonize the entities' legal systems, the fact is that there are still significant differences especially in their tax regimes. Consequently, many manufacturers have developed multiple distribution channels and contract with multiple distributors to cover both the Federation and RS.
There are three dominant types of distribution channels in BiH: i) for consumer goods, producer to wholesaler to retailer to consumer; ii) for industrial goods, producer to industrial user, and producer to distributor to industrial user; and iii) for services, service provider to consumer or industrial user. Insurance companies, marketing research firms, financial institutions (banks), advertising agencies, and transportation firms facilitate the movement of goods and services. Unique to BiH is the lack of public warehousing facilities.
Wholesaling: Wholesalers are the real channels for providing transportation, product storage, market information, financing, and risk taking. Most wholesalers are independent full-function merchant wholesalers performing the functions of importing and distributing the goods. Many wholesalers are engaged in retailing, but there are only a few of them that have made significant efforts to develop a retail operation. Shopping centers "Wisa" and "VF Commerce" are owned and operated by VF Commerce, a very successful wholesaling operation. Manufacturer-owned and retail-owned wholesale operations are almost non-existent in BiH.
Foreign companies control their distribution channels in a variety of ways. Some manufacturers have opened representative offices in order to control distribution channels. Wrigley and Oracle are good examples. Wrigley relies on three distributors and a number of small jobbers to penetrate the market. The company also has sales offices across the country to coordinate marketing efforts. Oracle covers the market through a network of business partners, usually smaller IT companies. Some companies like IBM rely on strong local companies to control distribution channels.
Some foreign companies have established a local presence to either build their own distribution operation or to sell directly to consumers. Siemens and Ericsson are an example of the latter. Siemens's sales office covers a variety of sectors from telecom to energy to medical equipment, marketing directly to larger consumers such as telecom operators, electric utilities, and hospitals.
Coca-Cola Beverages BiH is an example of a very successful manufacturer-owned vertical marketing system. Coca-Cola Beverages BiH commenced operations in BiH in 1996 and put an emphasis on building an intensive distribution system. The company began establishing regional sales branches and distribution centers while its coolers flooded supermarkets, groceries, gas stations, and cafeterias, providing saturation coverage of the market and enabling purchasers to buy the product with a minimum of effort. Soon the company served the entire territory of the Federation of BiH and with a view to expanding into the RS. At first, the company imported products from their bottling facilities in Croatia and elsewhere. As soon as the distribution system was in placein BiH, the company started investing in local production. It first contracted a local brewery to start a limited production. By 2001, Coke had built a state-of-the-art bottling plant in Sarajevo that supplies the entire BiH market. Today, the company has a full-fledged vertical marketing system designed to improve distribution efficiency and cost effectiveness that covers the whole country. Although the retailers are independently owned and operated, they cooperate with Coke because of its strong brand reputation and effective working relationships built up over the years.
Retailing: The country's numerous retailers come in a variety of forms, but in general retailers are too small and have too little financial power to control the channels of distribution. Expensive real estate is a significant problem for developing retail activity. As of late, shopping centers are becoming increasingly popular. The Slovene retail and wholesale giant Mercator advertises its upscale shopping center in Sarajevo as "the best party in town". The previously mentioned Wisa and VF Commerce are equally popular among shoppers. Compared with the polished and classy Mercator, the French Interex is a discount house that attracts price- conscious consumers. Food items are usually sold in small independent groceries. Clothing, electric appliances, and furniture are sold in specialty stores. The few chain stores in BiH include Bennetton and Bata Shoes, and Sarajevo has some upscale clothing stores such as Versace and Max Mara. Automatic merchandising through vending machines is also very limited. Recently, direct sales have become increasingly popular. Zepter (cookware, cosmetics), Amway (cosmetics, home cleaning products, vitamins), Royal Sales International (cleaning products, cosmetics, vitamins), Golden (cleaning products, comstics, vitamins), Oriflame (cosmetics), Tupperware, and Grawe (life insurance) are examples of direct marketing in BiH. Sales are usually carried out via formal or informal multi-level marketing groups or direct sale chains. Often informal gatherings and/or parties are used to present the products.
B. Use of Agents and Distributors; Finding a Partner
Finding an agent and/or distributor is the most effective way to market consumer goods. This is also true for many industrial goods, for example, computers. Reliable and capable potential partners can be found, but care needs to be exercised. It is recommended that a confirmed letter- of-credit be used when conducting business with a new local partner.
The Commercial Service can provide International Company Profiles (ICPs) that encompass a thorough background check on potential clients and representatives. Reports include up-to-date information on potential partners, such as: bank and trade references, principals, key officers and managers, product lines, number of employees, financial data, sales volume, reputation and market outlook.
Here are some American companies that have lined up distributors in BiH: Wrigley (Ataco), Kraft Jacobs (Piramida), Sara Lee (Andrea & Giovanni), Procter & Gamble (Orbico), Microsoft and Cisco (Logosoft), IBM (BBS), Goodyear (Unitrade), Caterpillar (Bostek), and many more.
C. Franchising
Franchising has not been used extensively in BiH as a way of marketing goods and services, though Hertz and Budget are examples of small franchising operations. This may indicate a potential market for a number of goods and services such as fast food, catering, and cleaning.
D. Direct Marketing
Direct-response selling is relatively small in BiH. There are only a limited number of businesses that sell goods via mail, telephone, or Internet.
E. Joint Ventures/Licensing
Joint Ventures
This is not a widespread type of business partnership in BiH. Foreign investors are more in favor of retaining full control of the business operation. However, there are a few examples of joint venture partnerships. Volkswagen has a 58 percent stake of an automobile assembly operation near Sarajevo. The remaining 42 percent is owned by the Slovene company Prevent. The Kuwait Investment Authority (KIA) entered into joint ventures with two state-owned companies. Now KIA has 50 percent stakes in the steel-production facility in Zenica (BH Steel) and in the real estate, trading, and investment company UNITIC in Sarajevo.
The Law on the Policy of Foreign Direct Investment and the Law on Companies regulate the establishment of joint ventures, investment in companies with mixed ownership, as well as other types of foreign or domestic investment. These laws, adopted in 1999, are very similar to the German Company Law. Establishment procedures require a local lawyer, a notary public, and registration with the local Court. The only significant restriction on foreign investment is the limitation of foreign ownership in the defense and public information sectors to 49 percent.
Licensing
Licensing is offers good business opportunities in BiH, but it requires a financially strong partner with good management skills. Coke’s bottling operation in Sarajevo is an example of a successful licensing venture in BiH. Pepsi also has a small licensed bottler in Banja Luka. Teloptic from Sarajevo has acquired a license from German Sinalco to bottle their soft drinks.
There are no specific laws regulating this area other than the Law on Obligations (“Commercial Code”) which addresses contract law. The licensing contract should also cover intellectual property rights issues (trademark, model, patent or copyright), payments/royalties, the term of the contract, restrictions on using trademarks, etc. A lawyer should be consulted to ensure that provisions of the contract do not contravene BiH law, making the agreement null and void.
F. Steps to Establishing an Office
The State Law on Foreign Trade Policy and the Federation Law on Foreign Trade (Article 39) entitle the establishment of a representative office. A representative office is not considered a legal person under BiH law. Rep offices are not permitted to conclude contracts in their names or use their accounts. Activities are limited to market research, contract or investment preparations, technical cooperation and similar business facilitation activities.
Prior to opening, the rep office must be entered into the Registry of Representative Offices, maintained by the State Ministry of Foreign Trade and Economic Affairs and the entity Ministry of Trade. Registration procedures and establishment are regulated by the Decree on Conditions for Establishment & Operation of Foreign Representative Offices (1995). An application must be submitted to the Ministry that contains the following documentation:
1) The Constitution Act (Decision of the founder (parent company) to establish the rep office) which contains the following information:
-- name and address of the founder;
-- name and address of the office (in BiH);
-- name and address of the branch office (if such exists) -- scope of activities of the office;
-- terms of reference of the office;
-- names of persons managing the office;
2) A certified document proving registration of the parent company in the home country;
3) A certified statement of liability for all liabilities that stem from activities of the office;
4) Appointment of the person in charge of the office (in BiH);
5) Information concerning the number of employees at the office, together with a breakdown of foreign employees.
All documents must be originals and an authorized court translator must translate the documents into local language. If documentation is complete and correct, the registration procedure should be completed within 30 days. The Ministry will appoint the office by a decree that will be published in the Official Gazette. After receiving the decree, the office must notify the Ministry of the beginning of the operation within 90 days. If the office fails to do so, the appointment will be cancelled.
More information on the registration process can be obtained from:
Mr. Dragisa Mekic Assistant Minister Ministry of Foreign Trade & Economic Affairs 71000 Sarajevo BiH Tel: 387-33-616-021 Fax: 387-33-616-021
A rep office is permitted to hold both foreign exchange and domestic currency accounts with local banks. Office equipment can be imported free of customs duties, on the basis of a temporary permit with the possibility for extensions. Office vehicles may be imported but only for expatriates. Expatriates are not required to pay local income taxes and contributions. Residence and work permits are required for expatriates.
G. Selling Factors/Techniques
Due to the tight credit situation, the ability to provide financing is a key factor in selling both industrial and consumer goods. Most buyers prefer to pay monthly installments, even for low-cost goods. Other factors/techniques critical to success are close and frequent contact with buyers, motivated and trained middlemen, and aggressive market promotion. Selling to state-owned companies and other state entities still depends on cultivating relationships. Foreign companies complain that state-owned company officials usually request some form of kick-back which U.S. companies are prohibited from offering. Therefore, internationally financed public procurements offer the best opportunity for transparent purchasing decisions. BiH’s emerging private sector should be targeted. Private sector growth augers well for western businesses that are accustomed to selling products based on pricing, product quality and servicing ability. Marketing techniques will not vary greatly within this business segment.
H. Advertising and Trade Promotion
1) Advertising Advertising is a key marketing tool in BiH. Companies of all kinds and sizes engage in some form of advertising in order to market their products and services. One of the largest obstacles facing marketers is the current lack of countrywide advertising media. Although advertising is primarily locally oriented, some nationwide exposure is available through the electronic broadcast media. Television, radio, and newspapers are the leading advertising media, followed by magazines and outdoor advertising.
Electronic media is the most popular advertising medium. There are more than 200 radio and TV stations throughout the country. In the Federation of BiH, 119 radio stations and 45 TV channels are currently broadcasting compared to 80 radio stations and 31 TV channels in the RS. No single television broadcaster as yet covers the entire country, but Mreza Plus, an independent network of stations, is represented in about 70 percent of the territory. Some TV stations like STUDIO 99 are directly involved in direct sales of consumer goods (Teleshop), while other stations (e.g. Hayat) provide space for direct marketers. There is a division between state-owned national stations and local independent stations. The state-owned stations, which are being transformed into public broadcasters, still dominate broadcasting, but local private stations are extremely proactive in seeking an audience. Cable television is in its infancy in BiH.
Typically, TV and radio broadcasting/production go hand-in-hand. There is one radio broadcaster, PBS Radio, which covers the whole country and there is a network of independent radio stations called “Boram” which has similar coverage. In addition, almost every city has a local radio station that provides advertising services.
Following is a listing of the most prominent radio and television stations:
TV Stations Public Broadcast System Bulevar Mese Selimovica 12 71000 Sarajevo Tel: (387)(33) 461-101 Fax: (387)(33) 461-537 Federation Television of Bosnia and Herzegovina Bulevar Mese Selimovica 12 71000 Sarajevo Tel: (387)(33) 461-522 Fax: (387)(33) 461-537 [email protected] ww.rtvbih.ba
OBN Bulevar Mese Selimovica 18 71000 Sarajevo Tel: (387)(33) 234-812, 234-815, 234-816 Fax: (387)(33) 460-534, 212-953, 234-814 [email protected] www.opeanbroadcastnetwork.com
TV Hayat Avde Sahinagica 14 71000 SarajevoTel: (387)(33) 271-110, 271-540 Fax: (387)(33) 271-111 [email protected] www.ntvhayat.com * NOTE: TV Hayat is member of TV network MREZA PLUS. This TV network consists of five TV stations (including TV Hayat) from throughout Bosnia and Herzegovina, as well as about a dozen smaller affiliate stations. It brodacasts a joint program every night from 20:00 to 23:00. Other members of Mreza PLUS are: RTV Mostar, HTV Oscar-C, TV Tuzla and ATV Banja Luka. The director of MREZA Plus is Darko Aleksic, tel: 387 33 269-860.
TV Mostar Rade Bitange 13 88000 Mostar Tel: (387)(36) 580-100, 580-101 Fax: (387)(36) 580-100, 580-101
HTV Oscar-C Smrcenjaci bb 88000 Mostar Tel: (387)(36) 341-933 Fax: (387)(36) 341-932
RTRS-Television Banski Dvor 78000 Banja Luka Tel: (387)(51)301-660 Fax: (387)(51)301-153
NRTV BL Radio 107,2 MHz Kralja Petra 78000 Banja Luka Tel: (387)(51)217-900, 217-899 Fax: (387)(51)217-898, 238-315
ATV Karadjordjeva 2 78000 Banja Luka Tel: (387)(51)306-490, 218-448 Fax: (387)(51)311-904
Radio Stations
BiH Radio One (PBS) FM 94.9 Bulevar Mese Selimovca 12 71000 Sarajevo Tel: (387)(33) 455-158 Fax: (387)(33) 455-113
Boram Radio Network
Marketing Office
Sime Milutinovica 15
71000 Sarajevo
Phone: (387)(33) 201-094
Fax: (387)(33) 261-231 Radio Federacije BiH FM 95.7 Bulevar Mese Selimovca 12 71000 Sarajevo Tel: (387)(33) 455-102, 455-130 Fax: (387)(33) 455-141 [email protected] www.rtvbih.ba Radio M FM 98.7 Fra Andjela Zvizdovica 1 71000 Sarajevo Tel: (387)(33) 666-822; 666-651; 666-657 Fax: (387)(33) 666-628 Radio Stari Grad FM 102.8 Zelenih beretki 4 71000 Sarajevo Tel: (387)(33) 262-563 Fax: (387)(33) 262-562 [email protected] [email protected] Dobre vibracije Rudarska 212 88000 Mostar Tel: (387)(36) 323-324 Fax: (387)(36) 323-324, 327-328
Omladinski radio X FM 105 Rade Bitange 13 88000 Mostar Tel: (387)(36) 551-109, 580-180, 580-181 Fax: (387)(36) 580-182, 550-338
Studio 88 FM 88 Rudanova 7 88000 Mostar Tel: (387)(36) 550-888 Fax: (387)(36) 550-888 RTRS-Radio Banski Dvor 78000 Banja Luka Tel: (387)(51)301-660 Fax: (387)(51)301-153
NES Radio 99,9 106,4 MHz Trg Krajine 1/X 78000 Banja Luka Tel: (387)(51)213-443, 218-380 Fax: (387)(51)213-443
Print Media Newspaper advertising continues to dominate local markets. The market is characterized by a large choice of newspapers and magazines with relatively small circulation. From 1992 to 1998, more than 350 printed publications were registered in BiH. Approximately 15 daily and weekly newspapers are currently published in BiH. No single paper is distributed nationwide.
The circulation of newspapers is low because the market lacks distribution channels and support logistics. Also, due to political and ethnic reasons, newspapers and magazines are only distributed in the entity where they are published. The need for a countrywide distribution network is recognized within the sector. Both publishers and distributors plan to develop circulation of print media in both entities.
The most popular newspapers are:
Oslobodjenje (daily)
Mr. Salko Hasanefendic, General Manager
Dzemala Bijedica 185
71000 Sarajevo
Tel: (387)(33) 668-694, 668-695, 205-492
Fax: (387)(33) 668-694, 668-695
Dnevni Avaz (daily)
Kemala Kapetanovica 17
71000 Sarajevo
Tel: (387)(33) 652-667, 658-931, 652-749
Fax: (387)(33) 652-075
Vecernje Novine (daily)
Pruscakova 13
71000 Sarajevo
Tel: (387)(33) 664-874, 667-560
Fax: (387)(33) 213-455
Oglasi (weekly)
OKO Publishing and Printing
Mr. Rasim Rapa
Puscakova 13
71000 Sarajevo
Tel: (387)(33) 443-092
Fax: (387)(33) 667-192
Glas Srpski (daily)
78000 Banja Luka
Tel: (381)(51) 12-844 Fax: (381)(51) 11-759
Nezavisne Novine (daily)
Mr. Zeljko Kopanja, General Manager
78000 Banja Luka
Tel: (381)(51) 211-604, 211-684, 211-628
Fax: (381)(51) 211-601
There are about 50 magazines published in BiH. Almost all the major magazines are privately owned and cover a variety of subjects including politics, sports, culture, fashion, automobiles, and entertainment. The more popular magazines in BiH include:
Svijet (weekly)
Dzemala Bijedica 185
71000 Sarajevo
Tel: (387)(33) 466-577
Fax: (387)(33) 456-142
Slobodna Bosna (weekly)
M. Kantardzica 3
71000 Sarajevo
Tel: (387)(33) 444-041
Fax: (387)(33) 444-895
Gospodarski Glasnik (monthly)
Chamber of Commerce of Mostar
Mr. Jago Lasic, President
Dubrovacka bb
88000 Mostar
Tel: (387)(36) 322-521, 322-498
Fax: (387)(36) 322-500
Dani (weekly) Mr. Senad Pecanin
Skenderija 31a
71000 Sarajevo
Tel: (387)(33) 649-943
Fax: (387)(33) 651-789
Reporter (weekly)
A-Press
Mr. Zoran Vucenovic
78000 Banja Luka
Tel: (381)(51) 45-731, 45-792, 49-192
Fax: (381)(51) 45-731
Outdoor Advertising Quality outdoor advertising as an organized marketing effort is new to BiH, and limited to larger cities and to main roads and highways. A Sarajevo-based company, Europlakat, has achieved a breakthrough in outdoor advertising by introducing quality billboards, bulletins, and displays.
Europlakat
Mr. Nijaz Gracic
Emerika Bluma 15
71000 Sarajevo
Tel: 387-33-668-420, 267-230
Fax: 387-33-207-286
Advertising Agencies There are four advertising firms in BiH offering professional and quality service.
McCann-Erickson
Skenderija 13
71000 Sarajevo
Tel: 387-33-267-111
Fax: 387-33-267-121
S Team Bates Saatchi & Saatchi Hasana Kainije 11
71000 Sarajevo
Tel: 387-33-272-380, 272-390
Fax: 387-33-232-941
Fabrika
Mr. Senad Zaimovic, Director
Alipasina 29
71000 Sarajevo
Tel/Fax: 387-33-262-430
SV-RSA
Gajev trg 2/I
71000 Sarajevo
Tel: 387-33-263-690
Fax: 387-33-667-240
Direct Mail Despite improved postal service, direct mail is virtually unknown in BiH. 2) Trade Promotion Trade events and fairs are probably the best way to market products and services in BiH and to locate partners and distributors. The trade fair sector in BiH has been growing rapidly in the last three years. Local and foreign firms rely on trade fairs to establish business connections, regain market visibility, and learn about new technology. While Sarajevo is the heart of most commercial activity, trade events are held throughout BiH. Regional centers like Banja Luka, Zenica, Tuzla, Mostar and Bihac are very active in trade promotion. Trade events calendar for 2002 is provided in Annex I.
I. Product Pricing
Most goods are price sensitive due to very low disposable income. However, quality matters for many goods such as luxury products, appliances, electronics, vehicles, etc. Liberalization of the market has put pressure on domestic producers to bring pricing down and more in line with costs. Prices of essential products and consumer goods are generally lower than in Croatia. However, the level of prices in BiH is relatively high compared to prices of similar products/services in Western European countries and especially compared to prices in the United States, which are on average 40 percent lower. Consequently, imported products are price competitive. Although the markets generally determine prices, certain goods and services are still subject to government control (electricity, gas, telecom services). The government has the ability to influence pricing policy at companies under its direct or indirect control.
J. Sales Service/Customer Support
Sales service and customer support is relatively undeveloped as a marketing tool. In this respect, foreign companies and their distributors are offering a new, upscale service. However, when selling capital goods, sales services and customer support in terms of maintenance and training is essential. This is another area where a well-trained local distributor can give a competitive edge.
K. Selling to the Government
There is no state-level law on procurements. Government procurements in the Federation of BiH are regulated by the Decree on the Procedures for Procurement of Goods and Services. Nevertheless, government-owned public enterprises such as telecom operators and power companies do not fall under this regulation. Although the government-owned companies have made some progress in terms of transparency, their tenders still do not conform to international standards. In general, state-owned companies prefer to buy from local companies. For this reason, developing a relationship with the government, state-owned companies or finding a well-connected distributor can make all the difference.
Nearly all government procurements at the moment are being financed through either multilateral banks or bilateral donor assistance. Therefore, the procurements are subject to donors’ rules and procedures. For example, tenders financed by the World Bank and the EBRD must be conducted pursuant to the respective organization’s procurement guidelines. This means that the tendering process is conducted in an open and transparent manner, with the emphasis on meeting the tender specifications and price competitiveness.
Tenders that are financed by bilateral donors are generally conducted in a manner that conforms to the donor country’s procurement rules. Typically, there is a competitive restriction attached to bilateral donor monies. These procurements are open only to companies from the donor country while third- country suppliers are excluded. However, there are exceptions. For example, the EU provides substantial funding through PHARE for procurements; PHARE-financed tenders are usually restricted to EU companies. U.S. companies that satisfy the requirements for designation as a European company would be eligible to compete in these tender competitions.
L. Need for a Local Attorney
The complicated and rapidly changing environment dictates the need for a local attorney. Bosnian attorneys’ experience base is limited with respect to legal questions and issues that arise in a market- oriented economy. Still, local lawyers are quickly learning as they gain experience in working with international organizations and companies who are operating in BiH. Companies’ in-house legal counsel should be prepared to oversee their in-country counsel, with explicit explanations and directions regarding objectives. Currently, there are no western legal firms operating in BiH and foreign lawyers are not permitted to practice in BiH.
CHAPTER 5: LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
A. Best Trade Prospects: Industry Sector
Sector Rank = 1
Power Transmission Equipment (PTE), Electric Power Systems (ELP)
The World Bank (Bank) and other co-financiers, including the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the United States Agency for International Development (USAID) are planning to invest about US$ 250 million over the next three years in reconstruction of the electric power sector in BiH. The project’s objective is to rehabilitate the high-voltage (400, 220, and 110 kV) network in order to enable BiH to operate its power system on an integrated basis and to rejoin the Union for the Coordination of Transmission in Europe (UCTE). The full Project Appraisal Document is available at www.worldbank.org/sprojects/Project.asp?pid=P058521. The beneficiaries and the implementers of the project are three electric power companies in BiH: Elektroprivreda BiH (EPBiH), Elektroprivreda of the Croatian Community of Herzeg-Bosnia (EPHZHB), and Elektroprivreda Republika Srpska (EPRS); and the Joint Power Coordination Center (ZEKC).
Reconstruction of 400, 220, and 110 kV Transmission Lines
This component includes reconstruction of 400 kV, 220 kV, and 110 kV transmission lines, including right-of-way clearing, replacement of damage parts of existing towers, construction of new towers to replace destroyed ones, dismantling of damaged insulators, hardware and conductors and ground wires, and stringing. The cost of this component is estimated at US$ 24.5 million (US$ 17.5 million for 400 kV transmission lines and US$ 7 million for 220/110 kV transmission lines) and financing will be provided by the World Bank’s International Development Association (IDA). Transmission line reconstruction will be realized through supply and install arrangements, using the World Bank’s Standard Bidding Documents for the Supply and Installation of Plant Equipment. The cost of works will represent a substantial part of the estimated contract value (up to about 50% of the total contract value). The procurement method will be World Bank’s International Competitive Bidding (ICB).
Reconstruction of 400, 220, 110 kV Transmission Substations
This component includes rehabilitation and reconstruction of 400/220/110 kV transmission substations owned and operated by the three electric power companies. The cost of this component is estimated at US$ 61.4 million. The European Investment Bank (EIB) will provide US$ 61.4 million while the remaining US$ 7.8 million will be provided by the three electric power companies. Project procurement will be carried out in accordance with EIB rules. The contracts will include rehabilitation and/or procurement of primary electrical equipment (420 kV, 220 kV and 110 kV circuit breakers; 420 kV, 220 kV and 110 kV busbar disconnectors; 400 kV, 220 kV, and 110 kV line disconnectors; instrument transformers; power transformers; arresters; post insulators; line traps; support structures; busbars; connections) and secondary electrical equipment (protection, protective relays, control , metering, remote control equipment, communications equipment, fault recording equipment including breaker fail protection, and owner consumption (batteries, rectifiers, inverters, AC and DC cabinets).
Installation of a System Control and Data Acquisition (SCADA) System and an Energy Management System (EMS)
The system will consist of three regional control centers and an overall dispatch center, together with an associated telecommunications system to interconnect the regional centers with their 400 kV, 220 kV and selected 110 kV substations and hydro/thermal generating plant, as well as between the regional and central dispatch center. The cost of this component is estimated at US$ 44.2 million. The beneficiaries are ZEKC (US$ 7.6 million) and the electric power companies (US$ 12.2 million each). The component is financed by the EBRD and the bank’s procurement rules and guidelines will be applied (www.ebrd.com/english/procure/index.htm).
Reconstruction of Distribution Network
This component includes rehabilitation of distribution substations, comprising SF6 insulated switchgears, metal clad switchgears, pole mounted transformer stations, AC/DC auxiliary supplies, protection, instrument transformers, disconnect switches, power transformers, arresters, insulators, switches, rehabilitation of distribution lines comprising conductors and cables, splices and terminations, poles, crossarms, and towers, and structures and hardware. The cost of this component is estimated at US$ 41 million and it will be borne by United States Agency for International Development (USAID), Norwegian Agency for Development Co-operation (NORAD), and the government of Spain. Procurement method will be donors’ method.
Procurement Methods
World Bank-financed goods, works, and technical services will be procured in accordance with the “Guidelines for Procurement under IBRD Loans and IDA Credits”. More info about the World Bank’s procurement guidelines and procedures and the Bank’s standard bidding documents is available at the following web sites: www.worldbank.org/html/opr/procure/contents.html; www.worldbank.org/html/opr/procure/guidelin.html; and www.worldbank.org/html/opr/procure/bdocpage.html. For EBRD’s procurement rules and guidelines, please visit http://www.ebrd.com/english/procure/index.htm. For EIB procurement rules and guidelines, please contact Ms. Isabelle Maelcamp at the U.S. Mission to the E.U. (Phone/Fax: 32-2-508-2676 / 32-2- 513-1228; Email: [email protected]).
Procurement notices, invitations for expressions of interest, and tenders can be obtained from the United Nations Development Business, which provides information on business opportunities generated through the World Bank, regional development banks, and other development agencies. Development Business is available in either print format or by online subscription. For more information contact the Development Business Liaison Office at Tel: (202) 458-2397; Fax: (202) 522-3316 or e-mail: [email protected].
Sector Rank = 2
Telecommunications Equipment (TEL)
“The Policy for the Telecommunications Sector” adopted in 2000 outlines the proposed evolution of the telecommunications sector of BiH over the next five years. The proposal is consistent with the principles of telecommunications policy and the BiH Telecommunications Law adopted in 1999. The principal policy objective is to ensure that the whole population of Bosnia and Herzegovina has access to public- switched voice telephone services at affordable prices. This objective will be achieved through i) investing in infrastructure, modern management systems and services; ii) opening up service provision to the private sector, in both fixed and mobile services (liberalization); and iii) more effective regulation of prices and quality of service.
By the year 2007, the penetration rate (number of phone lines per 100 inhabitants) is expected to reach 30 percent assuming installation of 694,000 new lines and replacement of 241,000 lines. Under this assumption, an investment of about $878 million in the telecom sector would be required.
The timetable for liberalization of fixed services should, however, recognize the need to secure universal service objectives and allow for privatization. It is thus decided that competition will be introduced in phases over the next five years. First to be liberalized will be non-voice services, such as data communications and Internet access. The proposed liberalization excludes the commercial provision of IP telephony. Liberalization of domestic voice services will be pursued with the primary purpose of ensuring that operators are able to operate throughout BiH which is not the case at the moment. It is envisioned that international voice telephony services would be liberalized by 2005. Five years is sufficient time for privatization strategies to be implemented and for tariffs to be adjusted to be cost- based. Therefore, by 2005, further licenses can be issued for resellers and network operators to provide international services.
Cellular mobile radio services are of particular importance in ensuring universal access to public networks and therefore should be liberalized immediately. In accordance with international practice, the provision of cellular mobile radio services is subject to payment of a one-time fee. This fee constitutes fair compensation for the usage of the frequencies. However, given the imminent privatization of the government- owned operators, PTT BiH and Telekom Srpske were exempted from this one-time fee for the award of the public cellular mobile radio license. There is an ongoing discussion whether the third mobile operator Eronet should receive a license. Eronet is a joint venture between HTP Mostar and HT Croatia. In order to ensure optimal usage of frequency resources and provide potential private investors with legal security and predictability, the number of public cellular mobile radio operators shall be limited to four until December 2002. Other mobile services, such as GMPCS, radio paging and PMR, should be liberalized as soon as possible.
Sector Rank = 3
Railroad Equipment (RRE)
Bosnia and Herzegovina Railways Public Corporation (BHRPC) received a loan from the European Bank for Reconstruction and Development (EBRD) for reconstruction of the railway network in BiH. The proposed project, which has a total estimated cost of 21 million euros, will require the procurement of the following goods, works and services:
1. Purchase of track maintenance machines and equipment including continuous action tamper, dynamic track stabilizers, ballast regulator, trolley (track), trolley (OCL), and tools and equipment; and
2. Restoration of the signaling system along Pan European Corridor Vc and Parallel to Corridor X (Interlocking in stations, Level Crossings, Electric Traction Remote Control)
Tendering for the above contracts is expected to begin in the third quarter of 2002. Contracts to be financed with the proceeds of a loan from the Bank will be subject to the Bank's Procurement Policies and Rules and will be open to firms from any country. For EBRD’s procurement rules and guidelines, please visit www.ebrd.com/english/procure/index.htm.
Sector Rank = 4
Pollution Control Equipment (POL)
As part of the energy sector reconstruction project, the European Bank for Reconstruction and Development (EBRD) will provide about $16.9 million for environmental improvements at thermal power plants (TPP). This will include rehabilitation of the Unit 5 electrostatic precipitator at TPP Tuzla (EPBiH), completion of the cooling water re-circulation system and rehabilitation of the Unit 7 electrostatic precipitator at TPP Kakanj (EPBiH), reclamation of the Granica ash disposal site at TPP Gacko (EPRS), and introduction of new system of ash transport and disposal at TPP Ugljevik (EPRS). EBRD’s procurement rules and guidelines will be applied. See www.ebrd.com/english/procure/index.htm.
B. Best Trade Prospects: Agricultural Sector
Sector Rank = 1
Fruits and Vegetables
Total Value of Imports (1999) 826,000 USD
The agricultural sector remains underdeveloped with few opportunities for U.S. exporters or investors. However, for those U.S. firms with a longer term outlook, there may be interesting opportunities in processing of fruits and vegetables, poultry and meats. With a suitable climate and terrain for growing a variety of fruits and vegetables, the greatest investment potential in the agricultural sector lies in the production and processing of fruits and vegetables. Prior to the war, berry (strawberry, blackberry, and raspberry) production was in excess of 10,000 tons annually of which over 20 percent were exported. Much was used for the production of fruit juices and other processed fruit and vegetable products. The sector continues to be relatively strong; two private companies, producing cabbage salads, pickles and paprika export nearly 40% of production. The majority of farms are small, family-owned units; land ownership laws make it extremely difficult for large, single-owner land holdings. This structure best facilitates crops that require intensive hand labor. Consequently, berries, cabbage, cucumbers, tomatoes, potatoes, and paprika are all grown in large quantities in Bosnia and Herzegovina. Despite the abundance of produce, Bosnia and Herzegovina lacks an adequate food-processing capacity. Factories are operating at a fraction of their capacity and most are still awaiting privatization. As a result, the country imports many agriculture products it could produce locally and it has not been able to take full advantage of the export potential that exists in the food- processing sector.
Within the food-processing sector, one of the best prospects for trade is in packaged fruit juice. Currently over 80 percent of the store shelf space devoted to fruit juices is filled with imported brands. Fruit juice manufacturers produce juice by adding water to concentrate and then packaging the product. In many cases, foreign juice manufacturers buy the concentrate from Bosnia and then produce and package the juice. At a relatively low cost, Bosnian companies could produce and package the juice, decreasing the dependency on foreign juice imports.
Sector Rank = 2
Chicken and Poultry
Total Value of Imports (1999) 13,030,000 USD
Outside of the fruit and vegetable industry, there are limited opportunities for exporting agricultural products. However, import replacement opportunities exist, particularly in the chicken and poultry sector. Domestic production fulfils approximately one-third of the demand for poultry products. Although the local capacity to produce chicken exists, locally-produced chicken products cost an average of 30 percent more than foreign goods and much chicken enters the country illegally. Domestic producers will have to increase efficiency in order to compete with European exporters.
Strong potential exists for joint venture operations after the privatization of state-owned facilities. There are ample supplies of chicks, feed, and buildings for growing and finishing of broilers. Foreign interests will help to increase efficiency by introducing new refrigeration, storage, packaging, and transportation techniques, in addition to quality assurance programs. Export opportunities exist, although limited, primarily with Bosnia’s neighboring countries.
Sector Rank = 3
Milk and Dairy Products
Total Value of Imports (1999) 42,800,000 USD
Additional import replacement opportunities exist in the milk and dairy product sector. Government sources estimate that demand for dairy products, primarily milk, exceeds domestic supplies by approximately 98 million liters per year; thus 25 percent of domestic needs must be met by imports. Several factors inhibit greater domestic yields: lack of a veterinary certification system that is capable of guaranteeing product safety; hygiene and sanitary conditions inside the milk processing facilities; outdated and/or obsolete equipment and processes; lack of modern packaging equipment and machinery; and shortage of credit facilities.
There are ample opportunities for investors. Regarding milk production and processing, the government recently declared that Bosnia should become self-sufficient in milk production. Several large state- owned, milk processing facilities are slated to be privatized in the near future. Joint ventures, licensing arrangements and mergers could help domestic producers compete effectively with imports by introducing new quality and safety standards, more efficient supply-chain management, modernized equipment, and effective marketing strategies. Import replacement opportunities also exist for niche market products such as cheese, yogurt, sour cream, and ice cream.
Sector Rank = 4
Meats and Livestock
Total Value of Imports (1999) 33,200,000 USD
As with the dairy and poultry products, demand for meat greatly exceeds domestic production. Annually, 25,000 metric tons of products must be imported, representing nearly 50 percent of the market. As with other sectors, the primary impediments include lack of capital to modernize breeding, growing, and slaughtering facilities in addition to inadequate health and safety standards. Privatization of processing and slaughtering facilities would help to spur investment in new technologies and techniques to increase efficiency. Additionally, further development of fields of maize and other cereal grains would also increase domestic yields.
C. Significant Investment Opportunities
Through the Power III Project and the Privatization Assistance Project, the World Bank will assist the governments of BiH to privatize the energy and the telecommunications sectors. Recognizing the special circumstances of utility companies and certain other monopolies, the governments have decided to privatize them under special programs. The project will assist in financing both (a) further preparatory work, such as appropriate legislation and regulatory frameworks, towards the preparation of the divestiture of these companies, and (b) the sale of the companies to strategic investors.
Telecommunications
Both Republika Srpska and the Federation of BiH intend to accelerate the further modernization of the telecom sector with the help of strategic investors who would make the necessary investments and assume management control over the company. An open tendering procedure would be launched to appoint qualified privatization advisors using a portion of the funds provided under the Credit. The task of the advisors would be to: (i) help prepare the next steps in creating the appropriate regulatory framework required for a successful privatization; (ii) identify through an open and transparent process the most suitable way for attracting strategic investors for each of the BiH telecom operators; and (iii) negotiate with them on behalf of the authorities the sale of a controlling interest in the relevant operators.
Electricity sector
Preparatory work towards the unbundling of BiH power generation and distribution companies is being carried out under the Power III Project. The project will support this coordinated power sector reform program through measures at both the enterprise level and the sector level. At the enterprise level, the project will support the incorporation, commercialization, and privatization of the three power companies:
The initiation of comprehensive studies of the sequence, extent, and timing of restructuring and privatization of the power companies.
The development and implementation of detailed restructuring and privatization action plans, including implementation schedules .
The establishment of new financial management systems, based on international accounting standards.
At the sector level, the project will support the establishment of an independent regulatory framework for the electricity industry, and the transition to integrated operation of the BiH system and to a more competitive industry structure in accordance with EC requirements:
The establishment of an independent State Regulatory Commission.
The establishment of an Independent Systems Operator to operate the BiH system as a single control area, according to UCTE rules, and within the UCTE Control Block.
CHAPTER 6: TRADE REGULATIONS, CUSTOMS AND STANDARDS
Free Trade Agreements (FTAs):
Bosnia has signed three FTAs with the neighboring countries of Croatia, Serbia/Montenegro and Slovenia. Based on these agreements all goods originating in BiH that are exported to these countries enter free of any custom charges. Bosnia is now negotiating the same agreement with FYROM (Macedonia). The FTAs as well as the EU agreement permitting free entry of BiH goods has had a definite stimulatory effect on BiH exports.
Foreign Trade Regime and Customs
The Foreign Trade Regime of BiH is founded on the principals of a market economy and free trade as laid down in the BiH Constitution and in the Law on Foreign Trade Policy. The BiH trade regime is consistent with the basic WTO principle to support and promote free international flow of goods and services. All registered physical and legal persons, both local and foreign, may carry out foreign trade activities. The import of goods is free of any restriction on quantity or any other equivalent measures. Goods to be imported must comply with technical and quality standards and norms prescribed or required in BiH.
Customs Regulations
BiH Law on Customs Policy defines a legal framework which promotes the free flow of goods across state borders. BiH has a relatively low customs tariff structure at levels of zero, 5, 10 and 15 percent, with some exemptions. There is a major effort underway to create a modern data collection system that should be completed in June 2002, ensuring more efficient collection of customs duties and bringing current rampant smuggling under tighter controls. Rules of origin are set out in Articles 20 to 23 of the Law on Customs Policy of BiH.
Tariff Rates
The Law on Customs and Tariffs establishes tariff rates in the Federation and Republika Srpska for goods imported into the entities from outside BiH borders. Tariffs are prescribed in accordance with WTO regulations, though BiH only has observer status in the organization. Typical high-tariff goods include cigarettes, alcoholic products, meat and coffee.
Free Trade Zones
Originally intended to serve as sites for industrial and commercial development where firms could bring in imported raw materials free of customs duties, the FTZs have so far failed to take hold. Instead of being used for production of value-added goods for both domestic consumption and foreign export, the FTZs have instead acquired the reputation of becoming sanctuaries for customs dodgers, who try to sell tax-free goods directly on local markets. The IMF has attempted to discourage use of FTZs. (Also see Chapter 7, Section E).
CHAPTER 7: INVESTMENT CLIMATE STATEMENT A.1. Openness to Foreign Investment Changes in Bosnia and Herzegovina’s political landscape have brought positive changes to the country’s investment climate. The nationalist parties, long seen as the main obstacle to economic reform, have seen their political power significantly reduced for the first time since independence in 1992. In their place, the Alliance for Change, the social democratic-led coalition in power at the Federation and State-level governments, is committed to accelerating economic reforms. Bosnia can offer investment rewards to those who are prepared and persistent. In both entities, governments have recognized the need to move the economic reform agenda forward more vigorously, implement privatization fully and remove barriers to investment. Increased private investment, from both domestic and foreign sources, is vital to create sustained economic growth and to offset declining levels of foreign aid. Investment Laws: The state-level “Law on Foreign Direct Investment,” passed by the National Parliament in May 1998, provides a broad definition and framework for foreign investment. The law accords foreign investors the same rights as domestic investors. Further, with the exception of armaments and public information, which limit the percentage of foreign control to 49 percent, there are no restrictions on the types of business activities. Investors are also protected from changes in laws regarding foreign investment. Should the government make changes, the investor may choose the most favorable set of rules to abide by. Finally, the law prohibits expropriation and nationalization of assets, except under special circumstances and not without due compensation. The law supercedes all previous legislation. Both entities have recently passed implementing legislation that is substantively identical. Privatization: While privatization of small and medium-sized firms has made good progress, the sale of large, strategic enterprises has lagged in both entities. To date, only about 5 percent (7 of 138) strategic firms have sold. The US-led international advisory group on privatization (IAGP) currently has preparations underway for more than 50 of these firms, with 26 tenders issued to date. The new governments in both entities have placed increased emphasis on speeding the privatization of strategic enterprises. Privatization in the telecommunications and energy sectors offer significant investment opportunities for foreign investors. The Law on Foreign Direct Investment treats foreign investors the same as domestic investors, thus providing a legal guarantee against possible discrimination when bidding on tenders. Additionally, the entity governments work closely with international organizations when drafting and awarding tenders, thus providing further protection to foreign investors.
A.2 Conversion and Transfer Policies The Law on Foreign Direct Investment also guarantees the right to transfer and repatriate profits/remittances and it permits local and foreign companies to hold accounts in one or more banks authorized to initiate or receive payments in foreign currency. The implementing laws in both entities include transfer and repatriation rights. The Central Bank’s adoption of a currency board in 1997 guarantees that the local currency (the Convertible Mark) be fully backed by hard currency (Euros) or gold. The currency board mechanism has also fixed the exchange rate at 1 KM/1 German Mark (0.51 Euro). Practically, for investors, this ensures the easy convertibility of Convertible Marks into foreign currency. The currency board mechanism has also meant that inflation has not been a problem. A.3 Expropriation and Compensation As noted above, the state investment law forbids expropriation of investments, except when it is in the public interest. According to Article 16, foreign investment shall not be subject to any act of nationalization, expropriation, requisition or measures which have similar effects, except in the public interest in accordance with applicable laws and regulations, without any type of discrimination and against the payment of appropriate compensation. Laws in both entities implement this guidance. Neither entity has expropriated any foreign investments to date. A.4 Dispute Settlement Judicial System: Bosnia’s judicial system, which is still evolving, does not yet adequately cover commercial activities. There are no commercial/economic courts in Bosnia and Herzegovina and no efficient way to resolve commercial disputes. Contract law, in practice, is almost unenforceable. Businesses may lodge complaints; however, due to backlogs in the courts, the average suit to collect unpaid accounts takes an average of a year and a half to come to trial. Further, business people report that judges typically seek bribes or are subject to influence by public officials. Even when there is a positive decision from the court, there may be no way to enforce a judgment. Further discouraging complaints, the plaintiff must pay a high up-front tax on civil suits. On the positive side, there are several projects underway to strengthen commercial law and to train judges. OHR recently established an Independent Judiciary Commission (IJC) to supervise reform and restructuring of the judicial system. Bankruptcy Law: Legislation regarding bankruptcy and company formation is the responsibility of the entities. The Federation Parliament passed a bankruptcy law in 1998. The RS has yet to adopt a new law and currently adheres to bankruptcy laws from the former Yugoslavia. Efforts are underway by the German development agency, GTZ, to harmonize the laws between the entities. Aside from the lack of an updated law in the RS, the Federation courts lack the capacity to effectively adjudicate bankruptcy decisions. The Federation law stipulates that cantonal courts must handle bankruptcy cases, because there are no economic courts at the entity level. Since the courts are overburdened, cases can take years, although the Federation law spells out deadlines for cases.
A.5 Performance Requirements and Incentives According to the state investment law, both entities and Brcko District may establish progressive and favorable tax conditions to encourage foreign investment. Further, the law also waives customs duties for foreign investors. Both entities are eager to attract foreign investors. Anecdotally, American firms have reported to the Mission that they have been granted customs exemptions for importing production inputs (though others, like Coca-Cola, report being targeted for unfavorable tax treatment). Entity governments have not established performance or local sourcing requirements, nor do they impose geographic restrictions on foreign investments. A.6 Right to Private Ownership and Establishment Under the state investment law, a foreign enterprise has the same rights as a Bosnian enterprise or citizen. Consequently, foreign entities can establish and own business enterprises with the same rights as domestic entities. The only exceptions, as named above, are armaments and public information, where foreign control is limited to 49 percent. Foreign interests must follow the same regulatory procedures when establishing their enterprises. Efforts are underway in both entities to streamline and simplify the registration process for both domestic and foreign investors. A.7 Protection of Property Rights Secured Property Transactions: To secure loans for capital investment, a recognized and reliable system of property registration and transfer of collateral, in the form of both immovable and movable property, is essential. Both entities have recently passed laws on secured transactions that aim to create an environment more amicable to investment. The legislation includes: reduced risk for creditors; quick, cheap and simple non-possessory security rights; mechanisms for the satisfaction of claims by the holder of security; prompt enforcement of claims; effective means of publicizing the existence of security rights; rules establishing priority over competing rights of persons holding security; and, the availability of security over all types of assets, debts, and between types of persons. However, adequately protecting and facilitating the transfer and acquisition of property rights requires an accurate central registry of property. Property registers are largely unreliable. According to laws in both entities, property transfers must be registered with municipal authorities; however, in practice, transactions are often not recorded due to high taxes. This leads to inaccurate and unreliable property records that leave property transfers open for dispute. Protection of Intellectual Property Rights: The protection of intellectual property rights is underdeveloped in Bosnia. Not only does weak regulation and enforcement of IPR affect the domestic market, but Bosnia’s porous borders make it a distribution point for pirated goods to the rest of Europe. According to the Motion Picture Association, “Piracy in and from Bosnia and Herzegovina is endangering all regions including the EU.” As an applicant to the WTO, prior to entry Bosnia must adopt the following laws: Copyright Law, Patent Law, Trademark Law, Industrial Design Law, Law on the Geographical Indications of Products and Services and the Law on the Protection of Layout Design of Integrated Circuits. All have been passed except for the Copyright Law, which is expected to pass in 2002. Under the proposed copyright law, which is in accordance with WTO standards, infringements are subject to a 4,000 KM fine (up from 400 KM) with enforcement by the financial police. In case of an IPR infringement, a U.S. company would be well-advised to hire a local attorney, who can then pursue the matter in the local courts. A.8 Transparency of the Regulatory System Establishing a business in Bosnia can be an extremely burdensome and time-consuming process for investors. In the Federation, there are 14 different administrative approvals needed for registration. The average time to complete the process in the Federation is 95 days and 70 days in the RS; however, the entire process can often take a year or more. Registration can sometimes be expedited if a local lawyer is retained to follow-up each step of the process. Businesses must register in each entity in which they wish to conduct operations; however, investors in one entity may register their business as a branch in the second entity, significantly reducing the time and administrative hurdles to begin operations. The myriad of state, entity and municipal administrations creates a heavily bureaucratic system lacking transparency. This is particularly problematic for investors. All three levels of government (municipal, cantonal, and entity-levels) establish laws and regulations affecting businesses, creating redundant and inconsistent procedures that encourage corruption. Once a business begins operations it is subject to inspections from a number of entity and cantonal/municipal agencies. They include: financial police, labor inspectorate, market inspectorate, sanitary inspectorate, health inspectorate, fire fighting inspectorate, environmental inspectorate, institution for the protection of cultural monuments, tourism and catering inspectorate, construction inspectorate, communal inspectorate, and veterinary inspectorate. Anecdotal information indicates that inspections by the financial police can tie up key personnel in the firm days or even weeks. In one complaint to the Embassy, a company had financial inspectors at its premises for 140 days in one year. There have been some positive achievements in efforts to create a more transparent business environment. The Office of the High Representative has been leading the international efforts by conducting audits of entity institutions. Additionally, in January 2001, the so-called Payment Bureaus were dismantled. These Socialist-era institutions were designed to maximize government control over the economy. In addition to performing customs, tax administration and statistical functions, they were responsible for processing and clearing all non-cash transactions throughout the country, making it impossible for private sector commercial banks to operate. As part of the effort to eliminate the payment bureaus, the US financed a state-of-the-art clearing house within the Central Bank that currently processes some 70,000 transactions per day. A.9 Efficient Capital Markets and Portfolio Investment Capital markets are only in the very early stages of development. Both entities have established separate stock markets that are scheduled to open in the spring of 2002. It is hoped that these markets will provide the means to permit trading of shares (vouchers) acquired in the privatization process. A small private bank, Gospodarska Banka, announced in late March 2002 the first public offering of bank stock. Gospodarska is seeking to market 100,000 shares priced at KM 100 per share in order to expand its capital base. They will be the first publicly traded bank shares on the Federation stock market. Given general public skepticism toward financial institutions arising from the government’s confiscation of hard-currency savings accounts in the early nineties, financial planners see a widespread need to educate the public to the benefits that a stockmarket offers. Allocation of credit and financing is based increasingly on market supply and demand as banks continue the slow process of privatization. Despite the influx of deposits to foreign banks, the availability of credit still remains limited as foreign banks, applying traditional risk management measures, have found few safe places to invest in a country still fraught with a weak economy and an uncertain legal and regulatory environment. Financing available from local banks for working capital still tends to be costly, particularly for short-term (one year or less) credits, though for longer-term loans (up to 3 years), interest rates have recently begun falling to the low double digits on an annual basis. The limiting factor on capital investment is not availability of financing but rather availability of financially sound projects. Foreign banks find themselves having surplus liquidity, with the result that funds are being re-cycled to Germany, Austria and Croatia rather than into the local Bosnian economy. Bankers are hopeful that the situation will improve as the economy picks up and higher quality investment projects surface for financing. A.10 Political Violence The Dayton Peace Accords have brought relative peace and stability to Bosnia since its signing in 1995. Armed conflict has ceased and there have been no attacks targeting foreign investments. However, underlying tensions between the three ethnic groups remain and occasionally surface in the form of public protests. In May 2001, for example, riots ensued in two Republika Srpska towns after ground was broken to reconstruct two mosques destroyed in the 1992-1995 war. A.11 Corruption
Corruption remains prevalent throughout political and economic institutions. However, the situation is improving. The new, multiparty governments are making a concerted effort to combat corruption. The political elite that once ruled business and governmental institutions is slowly being replaced as privatization proceeds. One of the most visible areas of corruption affecting foreign investors is business registration and licensing. As discussed above, businesses must navigate a burdensome and complicated web of regulatory procedures to obtain the necessary licenses to begin operations. With the large number of officials involved, there are multiple opportunities for payment of “service fees.” Domestic and international entrepreneurs often are forced to pay bribes to obtain necessary business licenses, or simply to expedite the approval process. New firms feel the brunt of the complicated bureaucracy. According to a World Bank survey, new firms spend up to 18 percent of their monthly expenses on bribes and 20 percent of their time dealing with government officials. The World Bank study is serving as the basis for an anticorruption action plan. As part of that plan, the Office of the High Representative (OHR) has strengthened and expanded the powers of its Anti-Fraud Unit (AFU), enabling it to promote institutional reform, transparency, and public education on corruption. The strategy for reducing corruption emphasizes reforms to increase transparency and accountability in the public sector; to introduce greater competition in the private sector; and to rebuild public trust in an independent judicial system. B. Bilateral Investment Agreements Bosnia has signed investment agreements with the following countries: Austria, Belgium and Luxembourg, Bulgaria, Czech Republic, Egypt, Finland, Greece, Netherlands, Croatia, Iran, Italy, Qatar, Kuwait, Libya, Hungary, Macedonia, Malaysia, Germany, Pakistan, Romania, Russia, USA, Slovenia, Spain, Sweden, Turkey, Ukraine, Great Britain and Yugoslavia. C. OPIC and Other Investment Insurance Programs OPIC’s activities include: (1) insurance for investors against political risks, expropriation of assets, and damages due to political violence and currency convertibility; and (2) insurance coverage for certain contracting, exporting, licensing and leasing transactions. Political risk insurance is also available from the Multilateral Investment Guarantee Agency (MIGA), a World Bank affiliate. The International Development Association (IDA), a member of the World Bank Group, approved a program to provide guarantees against a range of political risks primarily for short-to-medium-term commercial transactions between Bosnian enterprises and foreign companies, suppliers and banks. The guarantees are issued by the Investment Guarantee Agency (IGA), an independent local corporation. See Chapter 8 of the CCG for contact information. D. Labor Bosnia has a highly educated workforce with relatively low labor costs. Given the weak economy, official unemployment remains stubbornly high at approximately 40 percent, compared with 15-20 percent levels in other countries in the region. (Note: a recent World Bank study concludes that the actual unemployment rate in BiH is likely in the same range as its neighbors. End note.) Official figures, however, may greatly exaggerate the level of unemployment. Tax rates on labor are high, discouraging hiring of new workers and increasing incentives for gray market employment. Employees and employers share the costs of health care, pension, child-care and unemployment insurance. However, many employers underreport their labor force in order to avoid paying taxes and benefits. E. Foreign Trade Zones/Free Ports According to the Law on Customs Policy, the entities may designate free trade zones (FTZs). Currently, there are seven FTZs in the Federation and none in the RS; however, the RS government currently is implementing legislation to create an FTZ in Banja Luka. The FTZs function mainly as duty-free zones for consumers, rather than as areas for foreign investment activity. Efforts are underway on the state- level to place these zones in accordance with existing EU standards, to attract export-oriented investments. The IMF is working to prohibit the FTZs because they are viewed as a potent source of tax evasion. F. Foreign Direct Investment Statistics
Foreign direct investment (FDI) in Bosnia and Herzegovina has been low compared to other countries in transition. FDI in 2001 was estimated at about 160 million US dollars, a small fraction of the billions of dollars of FDI going to Bosnia’s neighbors, Slovenia and Croatia. However, a precise FDI figure in Bosnia is difficult to calculate, as there is no central statistical body on any level that tracks investment. There have been some recent FDI success stories. In 2001, the Swiss firm Lamano Trading Co. purchased the TKM textile factory in Mostar. Lamano’s investment has helped the struggling company to restart production and once again thrive. Other successes include the UNIS/Volkswagen joint venture where a Slovenian investment will support the production of 30,000 to 35,000 automobiles, most of which will be exported. Fabrika Cementa Lukavac, a borrower in USAID’s Business Finance Program, was sold in April 2001 to Atlas International of Austria for US$15.7 million. Atlas International committed to invest an additional US$53 million over three years, retaining all employees and adding 108 new staff by 2004. In terms of U.S. investments, the largest U.S. manufacturing facility in Bosnia is Coca-Cola, which to date (spring 2002) has invested about KM 100 million (about USD 50 million) in a modern bottling plant located just outside Sarajevo.
CHAPTER 8: TRADE AND PROJECT FINANCING The Banking System and Local Financing Re-structuring and privatization in the banking sector have been moving slowly. The sector still remains relatively concentrated, with most assets in a small number of state-owned banks. However, the banking sector has recently experienced significant improvements as a result of strong leadership from the Central Bank. Increased capital requirements, independent bank regulatory agencies, deposit insurance agencies and the entry of several foreign banks have all bolstered confidence in the banking system. In response, individual bank deposits in Federation banks were up by 178 percent in 2001. Banking reforms in the Republika Srpska have proceeded more slowly. Although banking legislation has largely been harmonized between the two entities, the RS Parliament has yet to pass implementing legislation. Additionally, the RS maintains its hold on the banking sector, failing to liquidate insolvent institutions. As a result, the RS banking sector lags behind the Federation in terms of total deposits, with 86 percent of deposits held in Federation banks. Trade and project financing through private commercial banks remains at present a costly option for U.S. firms. Until banks are able to offer more competitive terms, U.S. investors would be well-advised to seek financing from the agencies listed below.
U.S. Trade and Development Agency (TDA):
TDA is an independent U.S. government agency, which promotes American private sector participation in developing and middle-income countries, with special emphasis on economic sectors that represent significant U.S. export potential. Through funding of feasibility studies, orientation visits, specialized training grants, and various forms of technical assistance, TDA helps U.S. businesses compete for infrastructure projects in emerging markets. TDA assists in building mutually beneficial partnerships between American companies and local project sponsors, which result in increased U.S. exports, and the completion of high quality, successful projects in host countries.
TDA has been significantly involved over the past few years in the reconstruction efforts in Bosnia- Herzegovina. TDA program funds have supported numerous projects in the sectors of energy, telecommunications, transportation and environmental technologies.
Contact: Jeanette Miller Director, Business Development for Southeast Europe U.S. Embassy A. Hebranga 11 10000 Zagreb CROATIA Tel: +385-1-492-1679 Fax: +385-1-492-1900 Mr. Ned Cabot, Regional Director 1621 N. Kent Street #200 Arlington, VA 22209-2131 USA Tel: (703) 875-4357 Fax: (703) 875-4009
Overseas Private Investment Corporation (OPIC):
OPIC is a self-sustaining U.S. Government agency that sells investment services to small, medium and large American businesses expanding into emerging markets around the world. OPIC’s three main activities are risk insurance, project finance and investment funds. OPIC financing through the investment guaranty program and the direct loan program is limited to $200 million. The OPIC- sponsored equity funds make their own, commercially-based investment decisions while fulfilling OPIC’s policy mandates. The most important fund for the region is the $150 million Southeast Europe Equity Fund (SEEF) managed by Soros Private Funds Management.
Contact: Mr. John Moran, OPIC Director for Southeast Europe U.S. Embassy Hebrangova 11/ll Zagreb, Croatia Tel: +385-1-492-1677 Fax: +385-1-492-1900
Mr. James Gale, OPIC Investment Development Manager 1100 New York Avenue, N.W. Washington, D.C. 20527, USA Tel: +202-336-8629 Fax: +202-408-5145
Southeast Europe Equity Fund (SEEF):
SEEF is the result of an OPIC initiative to accelerate private sector investment in Southeast Europe. Following a competitive tender process, OPIC selected Soros Private Funds Management, LLC (“SPFM”) to sponsor and manage the fund. SEEF makes direct equity and equity-related investments in attractive privately owned or privately managed companies operating in nine countries and territories in the region (Albania, Bulgaria, Bosnia and Herzegovina, Croatia, FYR Macedonia, Montenegro, Romania, Slovenia and Turkey). The total capital of the fund is $150 million, including a $100 million loan commitment from OPIC. The fund seeks to liquidate its holdings within 3 to 5 years through sales to strategic or financial buyers or through public offerings.
Contact: Mr. Philippe Rombaut, SEEF Senior Regional Executive c/o 45, Oborishte Street, P.O. Box 147, 1504 Sofia, Bulgaria Tel: +359-2-943-4417 or 943-4163 Fax: +359-2-943 49 79
Mr. David L. Mathewson, SEEF Manager 888 Seventh Avenue New York, NY 10106, USA Tel: 212-333-9727 Fax: 212-245-5154
World Bank (IBRD):
Between January 1996 and February 1999, the World Bank approved 533.4 million USD in funding for Bosnia for a total of 24 priority reconstruction projects. Of this amount, 25 million USD is in grants. The rest are loans to support the structural transition of various sectors in BiH including privatization of enterprises and banks. Contact information: World Bank – Sarajevo Hamdije Kresevljakovica 19 Sarajevo 71000 Tel: (387)(33) 217 760 Fax: (387)(33) 440- 108 Resident Rep: Joseph Ingram
International Finance Corporation (IFC):
IFC, a member of the World Bank Group, offers a full array of financial products and services to companies in its developing member countries: long-term loans, equity investments, quasi-equity instruments (subordinated loans, preferred stock, income notes), guarantees and standby financing, and risk management (intermediation of currency and interest rate swaps, provision of hedging facilities).
Contact: IFC – Bosnia and Herzegovina H. Kresevljakovica 19 Sarajevo 71000 Tel: +387-33- 440-291 Fax: +387-33-440-108 Program Manager: Haris Kuskunovic
European Bank for Reconstruction and Development (EBRD):
EBRD assists 27 countries to implement structural and sectoral economic reforms, promoting
competition, privatization and entrepreneurship, taking into account the particular needs of countries
at different stages of transition. As a guideline, the standard minimum involvement for EBRD is 5
million euros, though this may be reduced if the project has fundamental benefits for the country.
EBRD has established links with a variety of financial intermediaries to provide financing for projects
that are too small to be funded directly. This allows EBRD to support SMEs, which are vital for
generating a strong private sector.
In Bosnia, EBRD has provided assistance to various public sector projects such as telecom, transport, electricity transmission/distribution and civil aviation. The Bank is now actively seeking private sector projects. For example, a loan has been provided to the Sarajevo Brewery for capital equipment improvements. EBRD has also assumed an equity stake in the private Market Banka. EBRD and IFC together established the Micro-Enterprise Bank in November 1997 to grant loans ranging from KM 2,000 to KM 50,000 to micro and small enterprises.
Contact: EBRD – Sarajevo Obala Kulina Bana 4, 2nd FloorSarajevo, BIH Tel: +387-33-667-945 Fax: +387-33-667-950 Resident Manager: Serban Ghinescu
CHAPTER 9: BUSINESS TRAVEL Business Holiday Schedule 2002 January 2 (Wednesday) New Years Day (BH) (Sarajevo and Mostar only) January 6 (Sunday) Christmas (BH) (Banja Luka only) January 7 (Monday) Christmas (BH) (Banja Luka only) January 8 (Tuesday) Christmas (BH) (Banja Luka only) January 14 (Monday) New Years Day (BH) (Banja Luka only) January 15 (Tuesday) New Years Day (BH) (Banja Luka only) February 22 (Friday) Bajram - Kurban (BH) (Sarajevo and Mostar only) March 1 (Friday) Independence Day (BH) (Sarajevo and Mostar only) April 1 (Monday) Easter (BH) (Sarajevo and Mostar only) May 1 (Wednesday) Labor Day (BH) May 2 (Thursday) Labor Day (BH) (Sarajevo and Mostar only) May 3 (Friday) Good Friday (BH) (Banja Luka only) May 6 (Monday) Easter (BH) (Banja Luka only) June 24 (Monday) Pentecost (BH) (Banja Luka only) August 15 (Thursday) Assumption Day (Mostar and Sarajevo) November 1 (Friday) All Saint’s Day (BH) (Mostar and Sarajevo) November 25 (Monday) Statehood Day (BH) December 5 (Thursday) Bajram - Ramadan (BH) (Sarajevo and Mostar only)
CHAPTER 10: ECONOMIC AND TRADE STATISTICS
APPENDIX A: Domestic Economy
1999 2000 2001 Population (millions) 1/ 4.3 4.3 4.3 GDP (current prices, billions of USD) 1/ 3.8 4.2 4.9 Real GDP Growth Rate (percent) 1/ 9.9 5.9 5.6 GDP Per Capita (current prices in USD) 1/ 883 977 1140 Government Spending (percent of GDP) 1/ 69.1 65.9 56.1
Inflation (percent) 2/ (overall) 3 Federation -0.9 1.2 RS 15.1 13.6
Unemployment (percent) 3/ 40 40 na Foreign Exchange Reserves (billions of USD) 1/ 0.47 0.45 0.77 Average Exch. Rate for 1 USD 2.1 2.2 2.2 Debt Service Ratio (percent) 1/ 29.3 29.9 na U.S. Econ/Mil Assistance (millions of USD) 4/ 192 101 95
------
Sources:
1/ IMF estimates 2/ Economist Intelligence Unit 3/ EBRD 4/ US Embassy, Sarajevo
APPENDIX B: Trade Statistics (millions of USD)
1999 2000 2001 Total BiH Exports 1/ 649 732 857 Total BiH Imports 1/ 2,502 2,348 2,299 ------
Sources:
1/ IMF estimates
CHAPTER 11: U.S. AND BIH CONTACTS
U.S. CONTACTS American Embassy Sarajevo Alipasina 43 71000 Sarajevo Bosnia and Herzegovina Tel: (387)(33) 445-700 Fax: (387)(33) 659-722 www.usis.com.ba
Ambassador Clifford Bond Mr. Christopher Hoh, Deputy Chief of Mission Ms. Beryl Blecher, Regional Senior Commercial Officer Mr. Edin Fetahovic, Commercial Specialist Mr. Harvey Lee, Economic Counselor Mr. William Cammett, Economic Officer Mr. Douglas Ebner, Public Affairs Officer
USAID Obala Kulina bana 1 71000 Sarajevo Tel: (387)(33) 667-900 Fax: (387)(33) 667-892
Mr. Edward Kadunc, USAID Director Mr. Robert P. Jacobs, USAID Deputy Director Ms. Ellen Leddy, Project and Program Officer Mr. Meritt Broady, Project Officer, Municipal Infrastructure Services Mr. Daniel Rathbun, Director, Economic Restructuring Office (ERO) Mr. William H. Lawrence, Senior Private Sector Advisor (ERO)
BIH CENTRAL INSTITUTIONS BiH Council of Ministers: Ministry of Foreign Affairs Address: Musala 2, Sarajevo Tel: (387)(33) 667-979, 444-691 Fax:(387)(33) 444-766
Ministry of Foreign Trade and Economic Relations Musala 9, Sarajevo Tel: (387)(33) 473-123, 445-911 | Fax: (387)(33) 445-911, 658-872 Ministry of Civil Affairs and Communications Musala 2, Sarajevo Tel: (387)(33) 444-537, 663-718 Fax: (387)(33) 444-537
Ministry of European Integration
Trg BIH 1, Sarajevo
Tel: (387)(33) 217-883
Fax: (387)(33) 217-882
Ministry of Treasury
Trg BIH 1, Sarajevo
Tel. (387)(33) 663-519
Fax: (387)(33) 471-822
OTHER BIH INSTITUTIONS
Central Bank of Bosnia and Herzegovina (CBBiH) M. Tita 25, Sarajevo Tel: (387)(33) 664-548 Fax: (387)(33) 444-785, 210-517 Mr. Peter Nicholl, Governor Mr. Kemal Kozaric, Vice Governor Mr. Dragan Kovacevic, Vice Governor Mr. Ljubisa Vladusic, Vice Governor
Department of Civil Aviation (DCA) Envera Sehovica 2, Sarajevo Tel: (387)(33) 653-016 Fax: (387)(33) 653-008
Foreign Investment Promotion Agency (FIPA) Strosmajerova 3/II, Sarajevo Tel: (387) (33) 278-080 Fax: (387) (33) 278-081 Mr. Mirza Hajric, Director
FEDERATION INSTITUTIONS Government and Ministries Prime Minister Alipasina 41, Sarajevo Tel: (387)(33) 656-963, 650-457, 663-649 Fax: (387)(33) 444-718, 664-816
Deputy Prime Minister Sarajevo Tel: (387)(33) 663-314, 664-102, 203-147, 203-148 Fax: (387)(33) 203-152
Ministry of Finance Mehmeda Spahe 5 71000 Sarajevo Tel: (387)(33) 203-147, 203-148, 203-149 Fax: (387)(33) 203-152 Ministry of Agriculture, Water Resources Management and Forestry Hamdije Kresevljakovica 3, 71000 Sarajevo Tel: (387)(33) 443-338, 473-124 Fax: (387)(33) 663-659 Ministry of Defense Hamdije Kresevljakovica 98 71000 Sarajevo Tel: (387)(33) 664-926, 470-663 Fax: (387)(33) 663-785 Ministry of Education, Science, Culture and Sports Adema Buca 34 88000 Mostar Tel: (387)(36) 562-051, 562-052, 562-053 Fax: (387)(36) 562-054
Sarajevo Office: Maka Dizdara 2, Sarajevo Tel: (387)(33) 663-691, 663-693, and 664-381 Fax: (387)(33) 664-381
Ministry of Energy, Mining and Industry Adema Buca 34, Mostar Tel: (387)(36) 562-025, 562-027 Fax: (387)(36) 562-029, 562-026
Sarajevo Office: Alipasina 41, Sarajevo Tel: (387)(33) 663-779, 663-675 Fax: (387)(33) 642-064,444-715
Ministry of Health Alipasina 4 71000 Sarajevo Tel: (387)(33) 664-246 Fax: (387)(33) 664-245
Ministry of Interior Mehmeda Spahe 7 71000 Sarajevo Tel: (387)(33) 667-246, 667-769 Fax:(387)(33) 472-976 Tel: (387)(33) 444-728, 472-781 Fax: (387)(33) 472-781
Ministry of Justice Valtera Perica 15 71000 Sarajevo Tel: (387)(33) 656-743, 666-971 Fax: (387)(33) 656-743 Ministry of Regional Planning and Environment Titova 7a, 4th floor 71000 Sarajevo Tel: (387)(33) 473-124 Fax: (387)(33) 663-548
Ministry of Social Affairs, Displaced Persons and Refugees Alipasina 41 71000 Sarajevo Tel: (387)(33) 204-552, 663-977, 615-798 Fax: (387)(33) 663-977
Ministry of Trade Stjepana Radica 33 88000 Mostar Tel: (387)(36) 312-191, 310-148, 318-685 Fax: (387)(36) 318-684 Sarajevo Office
Branilaca Grada bb 71000 Sarajevo Tel: (387)(33) 641-996 Fax: (387)(33) 663-714
Ministry of Transport and Communications Railway Station 88000 Mostar Tel: (387)(36) 550-025 Fax: (387)(88) 551-278 Sarajevo Office Alipasina 41 Sarajevo 71000 Tel: (387)(33) 668-907, 667-868 Fax: (387)(33) 667-866
FEDERATION AGENCIES
Federation Banking Agency Cemalusa 6 71000 Sarajevo Tel: (387)(33) 668-810 Fax: (387)(33) 680-811 Mr. Zlatko Bars, Director Mr. Mustafa Brkic, Deputy Director
Federation Customs Administration Mula-Mustafe Baseskije 6 71000 Sarajevo Tel: (387)(33) 442-256, 207-697 Fax: (387)(33) 206-340
Statistics Institute Branilaca grada 52, 54, Sarajevo Tel: (387)(33) 615-974 Fax: (387)(33) 664-553 Federation Privatization Agency Alipasina 41, Sarajevo Tel: (387)(33) 212-884, 212-885 Federation Tax Administration Alipasina 45 71000 Sarajevo Tel: (387)(33) 202-007, 202-008 Fax: (387)(33) 209-056
REPUBLIKA SRPSKA INSTITUTIONS Government and Ministries Prime Minister 78000 Banja Luka Tel: (387)(51) 213-314 Fax: (387)(51)- 213-315
Ministry of Industry and Technology Tel: (387)(51) 218-641, 218-641 Fax; (387)(51) 218-657 Ministry of Administration and Local Self-rules Tel: (387)(51) 218-956 Fax: (387)(51) 217-115
Ministry of Economic Relations Tel: (387)(51) 215-651 Fax: (381)(78) 215-651
Ministry of Veterans, War Casualties and Labor Tel: (387)(51) 217-074, 217-336 Fax: (387)(51) 217-003
Ministry of Agriculture, Water Resources and Forestry Tel: (387)(51) 218-851 Fax: (387)(51) 218-871
Ministry of Defense 78000 Banja Luka Tel: (387)(51) 218-807 Fax: (387)(51) 212-574
Ministry of Education Vuka Karadzica 1 78000 Banja Luka Tel: (387)(51) 218-887, 218-286 Fax: (387)(51) 218-895
Ministry of Energy and Mining Trg Srpskih Junaka 4/3 78000 Banja Luka Tel: (387)(51) 215-118 Fax: (387)(51) 213-433 Ministry of Finance Vuka Karadzica 4 78000 Banja Luka Tel: (387)(51) 217-626, 217-561 Fax: (387)(51) 218-634 Ministry of Foreign Economic Relations Srpska 2 78000 Banja Luka Tel: (387)(51) 215-651, 18-641 Fax: (387)(51) 215-651
Ministry of Health and Social Welfare Zdravke Korde 8 78000 Banja Luka Tel: (387)(51) 216-599 Fax: (387)(51) 216-599 Ministry of Interior Vuka Karadzica4, 78000 Banja Luka Tel: (387)(31) 331-106 Fax: (387)(31) 331-206
Ministry of Justice 78000 Banja Luka Tel: (387)(51) 218-839 Fax: (387)(51) 218-847
Ministry of Refugees and Displaced Persons Vuka Karadzica 4 78000 Banja Luka Tel: (387)(51) 218-915 Fax: (387)(51) 218-891
Ministry of Religion 78000 Banja Luka Tel: (387)(51) 217-262
Ministry of Science and Culture 78000 Banja Luka Tel: (387)(51) 217-071 Fax: (387)(51) 215-397
Ministry of Sports and Youth 78000 Banja Luka Tel: (387)(51) 218-697 Fax: (387)(51) 218-697
Ministry of Trade and Tourism 78000 Banja Luka Tel: (387)(51) 463-290 Fax: (387)(51) 212-720
Ministry of Transport and Communications 78000 Banja Luka Tel: (387)(51) 464-974 Fax: (387)(51) 464-973
Ministry of Urban Planning, Utilities and Environment 78000 Banja Luka Tel: (387)(51) 215-511 Fax: (387)(51) 215-548
Ministry of Veterans, War Casualties and Labor Affairs 78000 Banja Luka Tel: (387)(51) 217-074 Fax: (387)(51) 217-003
REPUBLIKA SRPSKA AGENCIES
Agency for Privatization and Development Tel: (387)(51) 471-747 Fax: (387)(51) 471-747
Banking Agency Marije Bursac 4 78000 Banja Luka Tel: (387)(51) 43-814, 41-420 Fax: (387)(51) 44-732
Customs Administration Mladena Stojanovica 4 78000 Banja Luka Tel: (387)(51) 42-009 Fax: (387)(51) 44-251
Statistics Bureau Jevrejska 28 78000 Banja Luka Tel: (387)(51) 35-384 Fax: (387)(51) 41-679
BUSINESS ORGANIZATIONS Chambers of Commerce of Bosnia and Herzegovina
Branislava Djurdjeva 10, 71000 Sarajevo Tel: (387)(33) 663-370, 667-940 Fax: (387)(33) 663-632, 663-635 Mahir Hadziahmetovic, Director
Chambers of Economy in the Federation: Federation Chamber of Commerce Branislava Djurdjeva 10, Sarajevo Tel: (387)(33) 663-370, 667-940 Fax: (387)(33) 663-632
Chamber of Commerce - Bihac Region 77000 Bihac Phone/Fax: (387)(37) 333-390 Chamber of Commerce Mostar Dubrovacka bb, Mostar Phone: (387)(36) 322-498 Fax: (387)(36) 322-500 Chamber of Commerce - Sarajevo Region Hamdije Kresevljakovica 3, Sarajevo Tel: (387)(33) 664-597, 666-987 Fax: (387)(33) 664-597
Chamber of Commerce - Tuzla Region Trg oslobodjenja bb, Tuzla Phone: (387)(35) 250-518 Fax: (387)(35) 252-541
Chamber of Commerce- Posavina Canton Ulica III, Orasje Tel: (387)(31) 713-565 Fax: (387)(31) 713-565
Chamber of Commerce- Zenica-Doboj Mehmedalije Tarabara 15, Zenica Tel: (387)(32) 23-028 Fax: (387)(32) 36-779
Chamber of Commerce- Gorazde Zijada Sofovica 8, Gorazde Tel: (387)(38) 227-644 Fax: (387)(38) 227-644
Chamber of Commerce- Jajce Tel: (387)(30) 658-578 Fax: (387)(30) 658-013
Chamber of Commerce – Siroki Brijeg Fax: (387)(39) 682-161
Chamber of Commerce- Livno Stjepana II Kotromanica Tel: (387)(34) 200-901 Fax: (387)(34) 202-256
Chambers of Economy in the Republika Srpska: Republika Srpska Chamber of Commerce- Dure Danicica 1/II, Banja Luka Tel. (387)(51) 301-908, Fax: (387)(51) 301-838
Chamber of Commerce - Banja Luka Region Djure Danicica 1, Banja Luka Tel: (387)(51) 230-907 Fax: (387)(51) 303-560
Chamber of Commerce - Bijeljina Region 76000 Bijeljina Phone: (387)(55) 407-255 Fax: (387)(55) 472-255
Chamber of Commerce - Doboj Region 74000 Doboj Phone: (387)(53) 241-980 Fax: (387)(53) 241-590
Chamber of Commerce - Pale 71000 Pale Phone: (387)(57) 226-381 Fax: (387)(57) 226-377
Chamber of Commerce - Trebinje Region 89000 Trebinje Phone: (387)(59) 260-040 Fax: (387)(59) 260-040
INTERNATIONAL COMMUNITY: ORGANIZATIONS AND AGENCIES The Office of the High Representative (OHR) Marsala Tita 28, Sarajevo Tel: (387)(33) 447-275 (main switchboard) Fax: (387)(33) 447-420
Ambassador Wolfgang Petritsch, High Representative Organization for Security and Cooperation in Europe (OSCE) Obala Kulina bana 19, Sarajevo Tel: (387)(33) 444-444, 471-657 Fax: (387)(33) 442-479
Ambassador Robert Beecroft, Head of Mission EC Customs and Fiscal Assistance Office (EC-CAFAO) Bistrik 9, Sarajevo Tel: (387)(33) 666-040, 666-041 Fax: (387)(33) 666-039 Mr. Allan Leon Jensen, Head of Mission
European Bank for Reconstruction and Development - (EBRD) Obala Kulina Bana 4/II , 2nd. Fl., Sarajevo Tel: (387)(33) 667-945, 667-646, 667-947, 667-948 Fax: (387)(33) 667-950 Mr. Srbin Ghinescu, Resident Representative
European Commission (EC) Dubrovacka 6, Sarajevo Tel: (387)(33) 666-036, 666-044, 666-038 Fax: (387)(33) 666-037 Ambassador Hans Jorg Kretschmer
International Financial Corporation (IFC) Hamdije Kresevljakovica 19/5 Tel: (387)(33) 440-293 Fax: (387)(33) 440-108
International Monetary Fund - IMF M Tita 25/III, 71000 Sarajevo Tel: (387)(33) 668-167 Fax: (387)(331) 659-096 Mr. Bruno de Schaetzen, Resident Representative Multilateral Investment Guarantee Agency (MIGA) 1800 G Street 12th Fl., Washington, D.C. Phone: 1- 202- 458-5467 Fax: 1-202-522-2630
United Nations Development Program Titova 48, Sarajevo Tel: (387)(33) 665-694, 665-695 Fax: (387)(33) 665-681
The World Bank Hamdije Kresevljakovica 19/5 Tel: (387)(33) 440-293 Fax: (387)(33) 440-108 Mr. Joseph Ingram, Resident Representative
International Management Group (IMG) M. Kantardzica 3/11 Sarajevo 71000 Tel: (387)(33) 666-020 Fax: (387)(33) 668-280
Drafted: ECON MGlazier Cleared: ECON HLee FCS BBlecher
POL VDePirro OPA KWilliams AID DRathbun DCM CHoh