Investment Opportunities in Bosnia and Herzegovina

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Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Investment Opportunities in Bosnia and
  Herzegovina

Bari, January 2004
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Contents
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• General information about Bosnia and Herzegovina
• Why invest in Bosnia and Herzegovina (economic
  environment and legal framework)
• Attractive economic sectors in Bosnia and
  Herzegovina
• Investment projects

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Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Area 51,209.2 sq.km
• Population 3.85 million
• Closeness to EU, Eastern Europe, North Africa and
  Middle East markets
• Political stability

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Why invest in Bosnia and Herzegovina?
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• 1. Accelerated economic reform process
• Fastest improvement of business climate in the
  Southeast Europe (SEE) Bulldozer Initiative
• Consists of business people and politicians in
  BH aimed at making the proposals for eliminating
  the legal and administrative obstacles for doing
  business in BH (2 x 50 reform measures for 3
  months)
• Target Creation of the most attractive business
  environment in the SEE
• Introduction of BH customs and tax
  administration system in 2003 (preparation for
  V.A.T.)
• Negotiations with WTO

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Foreign Investment Promotion Agency Bosnia and
Herzegovina
Why invest in Bosnia and Herzegovina?

• 2. Financial stability
• Most stable currency in Southeast Europe
• Convertible currency (pegged to Euro)
• Lowest inflation in SEE
• Permanent growth of foreign exchange reserves
• Inflow of foreign banks Hypo Alpe Adria Bank,
  Turkish Ziraat Bank, BBI, Commercebank, Balkan
  Investment Bank, Zagrebacka Bank UniCredito,
  Raiffeisen Bank, Hypo Vereins Bank, Volksbank,

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Why invest in Bosnia and Herzegovina?
Foreign Investment Promotion Agency Bosnia and
Herzegovina
2. Financial stability Banking sector

• CAPITAL STRUCTURE IN BH BANKING SECTOR ()

Source Central Bank of BH The data isnt
available but the of foreign ownership would
have been low
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Why invest in Bosnia and Herzegovina?
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• 3. Preferential export regimes
• EU member state countries
• Export of goods to all 15 EU countries
  without any quantitative restriction and without
  customs and other similar duties
• Preferential export regimes with USA, Australia,
  New Zealand, Switzerland, Norway, Hungary and
  Slovakia, Russia, Japan, Canada
• Free trade agreement with Turkey (consumer market
  of 70 million people)
• SEE Free Trade Agreement

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Why invest in Bosnia and Herzegovina?
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• 4. Privatisation
• Ongoing privatisation of strategic companies
  (International Advisory Group for Privatisation
  World Bank, USAID, Europe Commission, GTZ -
  Germany)
• Expected privatisation of state monopolies
  Telecommes, energy utilities gas
  electricity, refineries etc

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Why invest in Bosnia and Herzegovina?
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• 5. Favourable legislative treatment
• FDI Law
• National treatment of foreign investors
• Exemption from payment of custom duties and
  custom fees for investment
• Repatriation of profits
• Protection against nationalization, expropriation
  or similar measures
• Right to freely employ foreign nationals, subject
  to the labour and immigration laws in Bosnia and
  Herzegovina
• Tax incentives
• Five year exemption from payment of tax on
  profits in Federation BH
• Corporate organization
• There are no citizenship/nationality limitations
  for partners or the
• members of the management and supervisory
  boards

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Why invest in Bosnia and Herzegovina?
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• 6. Availability of skilled, educated and
  competitively priced labour force
• 7. An abundance of premises and sites
• 8. Improving business environment according to
  EU standards
• 9. Political risk insurance (38 ratified/signed
  Bilateral Investment Treats MIGA/World Bank
  IGA - domestic)

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Foreign Investment Promotion Agency Bosnia and
Herzegovina
Sector opportunities in Bosnia and Herzegovina

• Wood industry
• Agriculture and food
• Textile industry
• Power
• Metal processing
• Transportation
• Construction and construction materials
• Tourism

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Wood industry
• Almost 300 million cubic meters of forest (53 of
  total BiH area) of which one third is deciduous
  (beach and oak)
• Long tradition of exporting wood and wood
  products
• Sector with long-term perspectives quality
  management, design and marketing
• Significant capacities for production of wide
  range of wood products (sawn wood, veneer,
  plywood, construction carpentry, parquet,
  furniture)
• High existence of Italian equipment and
  technology in this sector (100 in some
  companies)
• Capacities for cellulose industry

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Agriculture and food
• Over 1.5 million hectares of untainted
  agricultural land allowing production of organic
  food
• Various climate conditions - Continental on the
  north and Mediterranean on the south (fruits and
  vegetable processing)
• Herbs, forest fruits, wild mushrooms and lavender
  are harvested in large quantities
• Fast developing of fish farming (trout, carp)

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Agriculture and food
• National herd of livestock as good base for meat
  and skin processing
• Privatisation in tobacco growing and processing
  sector
• Possibilities for investment in brewing industry
• Water streams with a very high degree of purity
  (health spas)

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Foreign Investment Promotion Agency Bosnia and
Herzegovina
Sector opportunities in Bosnia and Herzegovina

• Textiles
• Long tradition of clothing and footwear
  production
• Good reputation as former supplier to the German
  and Italian markets
• Low labour cost
• Inherent skills in spinning, weaving and knitting
  in the workforce
• Close proximity to major world textile markets
• Development of SMEs

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Power
• 13 hydropower plants with installed capacity of
  2,034 MW room for many more (projects for
  building of up to 100 small power stations)
• Exporter of energy to the SEE region and Western
  Europe
• Power III project for reconnection and
  reintegration of Electric Power System of BH
  (enabling commercial trade with EU network)
• Privatisation process of the electric power
  system will be carried out from 2004 to 2006
• Two oil refineries available for privatisation
• Renewable Energy Resources Wind, Solar etc.

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Metal processing
• Reserves of coal, iron and bauxite
• Two important aluminium plants the biggest
  zeolite producer in Europe Aluminium Mostar is
  the largest exporter in BH
• Zenica steel factory the biggest FDI in BH
• Mechanical engineering sectors are appreciated by
  international standards
• Abundance of metal processing facilities
  available through privatisation process
• There are possibilities for value-added products
  based on domestic steel and aluminium

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Transportation
• CONSTRUCTION OF Vc CORRIDOR
• Budapest Sarajevo Ploce as a part of the
  EUs TEN Network
• Over of 56 of BH population situated within the
  zone of proposed corridor, which are generating
  app. 63 of GDP
• The most important transport project in BH -
  the priority regarding other other development
  projects
• Chance for tourism development
• Accessory structure (gasoline stations, motels
  etc.)

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Transportation
• The railway reconstruction as a part of Vc
  Corridor
• Highway Tuzla Oraje connection to Corridor X
  (Zagreb Beograd - Athens) - international
  tender announcement by the end of 2003
• Tuzla Sarajevo road - modernization
• Doboj Tuzla - Zvornik railway - modernization
• Two ports on river Sava (connection to Danube)
  needs regulation and reconstruction
• Already four international airports
• Public private partnership is needed

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Construction and construction materials
• Construction companies supply key markets in
  Middle East, North Africa and Russia (good
  international reputation for quality and
  reliability)
• Construction of new highways and railways within
  BiH (Vc)
• A good base for development of construction
  materials industry (forestry, stone, gravel,
  sand, clay and metal ores)
• Successful foreign investment in cement industry-
  Heidelberg Zement, Alas International
• Production of prefabricated houses and elements

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Sector opportunities in Bosnia and Herzegovina
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Tourism
• Unexplored and untouched destination
• Various cluster with the significant development
• potential beauty and health spas
• many winter sport resorts Olympic sites and other
  unexplored mountains
• adventure tourism such as rafting on Una,
  Neretva, Drina and Tara rivers, paragliding,
  alpine and rock climbing, mountain biking,
  hunting, fishing
• religious tourism Medjugorje etc.
• Possibility to take a part in the privatisation
  process
• Investment in the new facilities (Greenfield)

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Foreign Investment Promotion Agency Bosnia and
Herzegovina
FDI Inflow in Bosnia and Herzegovina
(USD) Compared to 2001 FDI inflow in 2002 is
higher by 120
Source Ministry of Foreign Trade and Economic
Relations of BH (2003)
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Foreign Investment Promotion Agency Bosnia and
Herzegovina

INVESTMENT PROJECTS

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Refinery Brod
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• The only crude oil refinery in BiH
• Objective
• - revitalize the units in the New process line
  with the capacity of 3,000,000 tons of crude oil
  per year and the Hydrocracker for long term safe
  operation.
• - to modernize the equipment, especially in the
  part of instrumentation and system for control
  and monitoring of the units
• Partners BP, LUKOIL, TECHNIP, SHELL
• Investment value 200 million USD

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Oil Refinery Modrica
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Rehabilitation and modernization of distillery
  equipment in order to improve service quality and
  to become more competitive on the market.
• Project value 6.4 million USD

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BiH Gas
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Activity gas production and transport
• Number of employees 33
• Project Development projects of gas transmission
  network in BiH
• Project value 205 million USD

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Sarajevogas
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Trade, transport and distribution of natural gas
  for 500.000 people
• Employees 204
• Market Sarajevo Canton
• Partners Different consumers and equipment
  suppliers, foreign and local installations for
  gas technique
• State capital for sale 4.469.181 USD

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Energoinvest
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Projecting, engineering, consulting,
  financial-banking affairs in the field of
  energetic industry, environment protection and
  water use
• Employees 937
• Market Malaysia, Libya, Turkey, Mexico, USA,
  Egypt, Iran.
• Partners in over 100 countries
• State capital for sale 88.100.000 USD

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Unis Holding
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Market research, management of holding companies,
  real estate services, foreign trade services
• Employees 93
• Market World wide
• Partners Volkswagen, Olivetti, Ericsson
• State capital for sale 19.158.500 USD

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Jelingrad
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Activity Manufacture of road construction
  equipment, machine tools, agricultural machines
  and wood processing equipment
• Employees 39
• Opportunity to acquire 2 well located industrial
  buildings in excellent condition
• Possibility to continue subcontracting business
  specialised in parts for heavy road construction
  and agricultural machinery
• Tender due February

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Agrokomerc
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Food Industry primary food production, healthy
  food production, pharmacy chemical fruit industry
  and service sector
• Employees 3826
• Market Local Market
• State capital for sale 135.000.000 USD

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BANJALUCKA PIVARA
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Bear production
• Employees 399
• Tender due 10.01.2004.
• Bid deadline 10.03.2004.
• Market Local Market
• State capital for sale 53,81 of the equity of
  the Company

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Krivaja
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Wood Industry
• (furniture production,construction, wood
  cutting, transport, other related services..)
• Long wood processing tradition, experienced and
  qualified work force, well known brand name
• Employees 3788
• Market USA, Italy, Germany, Great Britain
• State capital for sale 159.560.000 USD
• www.krivaja.com.ba

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Natron Maglaj
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Wood Industry
• (Cellulose, paper, cardboard production, packing
  paper, bag production, rubber cardboard,
  servicing and repair)
• Employees 1400
• Fifty years old experience and international
  reputation.
• Technology of the famous world producers (Sweden,
  Finland, Japan, Germany, Italy and USA)
• State capital for sale 60 million USD

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Enker Teanj
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Manufacture of engine spark plugs and industrial
  ceramic
• Employees 381
• State capital for sale 7.080.000 USD
• Established brand identity, low labour costs,
  strategic location in Balkan region, increasing
  sales
• www.enker.com
• closed

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Metalno
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Activity Manufacture and assembly of metal
  constructions
• Employees 394
• State capital for sale 6.100.000 USD
• Knowledge and experience of working to European
  Standards with good international networks
• Central business location in BiH with good road
  and rail connections

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We invite you to BH International Investment
Conference
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• WHEN 26-27. February 2004 in Mostar
• WHY To present full investment opportunities
  (projects, locations, partners...)
• Great chance to communicate directly with your
  business and government potential partners
• HOW Online inscription on www.fipa.gov.ba
• For further details please contact FIPA
  www.fipa.gov.ba or fipa_at_fipa.gov.ba

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FIPA your first contact point -our services
are free and confidential
Foreign Investment Promotion Agency Bosnia and
Herzegovina

• Branilaca Sarajeva 21
• 71 000 Sarajevo
• Phone [phone]
• Fax [phone]
• E-mail fipa_at_fipa.gov.ba
• Web site www.fipa.gov.ba