Bosnia urged to shake Up Uncompetitive Economy

Bosnia’s economy is the least competitive in the Western Balkans and authorities must take urgent action to address the problem, business community warns. Bosnia is a "complicated and complex environment in which to do business... we have not seen a lot of progress in this area over recent years," the head of the World Bank mission in Bosnia, Marco Mantovanelli, said. "This economy is least attractive for an investor in the region," he added, urging the authorities to act "to improve the business environment and the overall competitiveness of the economy". In its recently published Global Competitiveness Report, which ranks countries against 111 different indicators, the World Economic Forum ranked Bosnia in 102nd place out of 139 economies observed.

The World Bank’s 2010-2011 "Doing Business" report ranked Bosnia in 110th place out of 183 countries in the survey. Mantovanelli highlighted the time and cost needed to register a business or to obtain a construction permit as worrying. Simplification of red tape should be a priority for Bosnia’s new state and entity governments, which are yet to be formed following October general elections, Mantovanelli said. This will not solve all the problems, but "it does not require a lot of funds... [and] is a necessary ingredient in the recipe for job creation in this country," he added. High payroll tax, equalling 69 per cent of a salary, is also cited a key impediments to job creation in Bosnia that also scares away potential investors. "Entrepreneurs in Bosnia cannot progress while being forced to carry such a huge burden... but the authorities do not talk to us about our needs," Remzo Baksic, from the Bosnian association of employers, said.

"They only talk to us when they want to show to some international organization that they consult with business community... but nothing ever comes out of it," he added. Representatives of the Foreign Investors Council, FIC, agree with Baksic's observation and stress that Bosnian authorities mostly fail to take business opinions into account. The FIC’s Sead Miljkovic said the council annually sends the authorities recommendations to make the country more business friendly, but they are usually ignored. Miljkovic said the FIC respects the fact that Bosnia has to deal with a complex administrative setup, including separate governments in the two autonomous entities, as well as a central government, linking the two, but this was not an excuse for the failure to resolve “purely technical” problems. "We understand that the country’s legal and political system is fragmented so we focus on technical issues... but there is no response," he said. "Capital is like a river; when it reaches a barrier, it changes course," he warned.

Miljkovic said the authorities had already adopted numerous development strategies and projects but these mostly gather dust in a government drawer. "We constantly hear talk about Bosnia’s competitive advantages in the energy sector but not one serious development project was implemented in this sector in the past 20 years," he noted. Continued neglect of problems faced by the business community can only result in further job losses, at a time when official unemployment rate is over 40 per cent, the owner of the country’s leading construction company, Faruk Sirbegovic, said. "The authorities know what needs to be done, we do not need new strategies,” Sirbegovic added. “They should just take out the old strategies, update them a bit if needed and start working".

News source Balkan Insight link: article

Western Balkan business summit in Baltimore

The U.S. state of Maryland, U.S. organizations - Balkan Alliance and the Port of Baltimore, on the occasion of the first economic summit in the U.S. and the Western Balkans to be held in the spring 2011th in Baltimore, will organize today in the city pre-summit business event at which will participate 40 companies and organizations and states, as well as ambassadors of the Western Balkan countries.

The aim of this event is to provide American companies with detailed information on investment opportunities in the Western Balkans, as well as the economic summit next year will bring together U.S. and Balkan companies, when is expected the arrival of a delegation of high political level. At today s event will be ambassadors for the Western Balkans, Secretary of Maryland, John McDonagh (John McDonough), as well as representatives of the State Department.

Among the best American companies, which are interested to learn more about investment opportunities in our region, today will attend the event following ones: McCormick (McCormick), Pfizer, Boeing, Lockheed Martin, Cisco, KSI technologies and so on.  This event is the introduction into the promotion of future economic summit among U.S. companies. Economic Summit for the Western Balkans and the U.S. will be held on 23 and 24 March 2011 at the University of Baltimore, the organization states, Maryland and U.S.-Balkan Alliance.

News source: MIPA link: article

Pre-accession assistance for the Western Balkans, Iceland and Turkey IPA Conference 2010, 6-7 December

The European Commission, in cooperation with the World Bank, is hosting a two-day conference in Brussels on 6 and 7 December 2010 to discuss how the Instrument for Pre-accession Assistance (IPA) can be improved to have the most positive impact on the progress of the Western Balkans, Turkey and Iceland towards the European Union. The conference will also address cross-border cooperation in the Western Balkans. The conference will look at the challenges facing the Western Balkans and Turkey and the role of financial assistance in their path to EU membership. Iceland will also participate to the conference.

The conference will outline the post crisis difficulties faced by candidate countries and potential candidates and the need for deeper partnerships between the EU, the European financial institutions and the World Bank to help them meet these challenges. It is an occasion to discuss with candidate countries and potential candidates their own assessments of needs for preparing for EU accession, and for achieving broader development aims, macro-economic stability and sustainable growth. The participants will examine how political and economic support, EU financial assistance and other donor financial support can be made more coherent and mutually reinforcing; and how IPA can be further improved to support sustainable results and impacts.

The conference will also be used to launch a stakeholder’s consultation on the future of pre-accession assistance after 2013. Participants will have the opportunity to set the tone for the debate on what form EU financial mechanisms should take in order to best assist sustainable change and efficient reforms that benefit the citizens of the Western Balkans, Turkey and Iceland. The second day focuses on cross-border cooperation between the Western Balkan countries. This meeting will take stock of the regional efforts and achievements during the period 2007-2010, and discuss future prospects for cross-border cooperation in the region. There is a large interest in the conference, which gathers over 450 participants, among whom ministers and senior officials from beneficiaries of the Western Balkans, Turkey, and Iceland as well donor agencies, international financial institutions and civil society organizations.

News source: Worldbank link: article

Hungary warns EU treaty change must not slow Croatia entry

The European Union should decide on a crisis mechanism swiftly and modify the bloc's treaty but this must not impede Croatia's accession process, Hungary's top EU affairs official said on Thursday (18 November). Hungary, which assumes the EU's rotating presidency in January, believes any changes to the Lisbon Treaty, sought by France and Germany to create a permanent mechanism for handling financial crises, should be done in a focused, simple way. "We acknowledge that this has to be resolved urgently, this crisis-handling mechanism. The Irish crisis also shows this," Hungarian State Secretary for EU Affairs Enikő Győri told Reuters.

"[But] we would not like if this treaty modification due to the crisis mechanism would slow down Croatia's accession [...] because if a country meets [the criteria], then it's our moral obligation to allow the country to get the green light." Earlier this month the EU told Croatia - a southern neighbour of Hungary - that its negotiations to join the bloc had entered their "final" stage". The EU did not give Croatia a date for completing talks or joining the 27-member bloc because it wants the former Yugoslav state to provide more evidence that it is serious about fighting corruption and coming to terms with the legacy of war. Győri said in an interview that if Croatia manages to close further policy chapters before the end of 2010, chances would rise for ending accession talks with the country under Hungary's stewardship of the EU.

"If at least three more chapters are closed this year then we have better chances for being able to complete accession talks under the Hungarian Presidency - if not, our chances are worse or the task will be more difficult." She said it could become clear in February or March whether Croatia had made sufficient progress on a critical chapter about corruption and war crimes, and whether it could be closed. She said Croatia should "do its homework" but the stakes must not be raised for the country. "This is not only about Croatia, but about the Western Balkans. And we believe that for the stability of the entire continent it is important that Croatia should be admitted [into the EU] and then it could prove that if a country is ready, makes serious sacrifices for this [...] it brings a result."
"If not, then the enlargement process will lose its credibility in the eyes of citizens in the Balkans."
Győri said Hungary would also like to see Bulgaria and Romania to join the EU's border-free Schengen zone if they met technical standards.

When asked if this could happen under the Hungarian Presidency she replied: "We'll see. This is very difficult politically, but our stance in general is that if a country meets conditions [...] then we should not create artificial obstacles." In August, France called on the EU executive to force Romania to stem the flow of Roma people leaving the country, suggesting it could otherwise block Bucharest's entry into the Schengen zone.

News source: EurActiv link: article

Senior Loan Slovenian bank, Nova Ljubljanska Banka

The EBRD is considering granting a 5-year, senior unsecured loan of €50 million to Nova Ljubljanska Banka dd (“NLB”) to support NLB’s subsidiaries in the Western Balkans. The loan will be used for on lending to NLB’s banking subsidiaries in the region for further on lending to the local SME sector in the respective countries.

The credit line will be supporting significant regional player with strong commitment to Western Balkans and should facilitate lending to the real economy. In the Western Balkans, SMEs remain under pressure for funding. EBRD line aims at helping the recovery and the growth of the real economy and encouraging the banks to increase their lending to this sector.

Nova Ljubljanska Banka d.d. (“NLB”) is the largest bank in Slovenia with a market share of over 30 percent. NLB is 51.1 percent directly and indirectly owned by the Republic of Slovenia and 30.6 percent by KBC Bank N.V. NLB has a strong and a long standing commitment to the Western Balkans region where it has banking subsidiaries in Serbia, Bosnia and Herzegovina, Montenegro, and FYR of Macedonia among others.

News source: EBRD link: article

The world’s next breadbasket

The countries of Central and Eastern Europe and Central Asia have vast untapped agricultural resources and can play a vital role in improving world food security, the FAO and EBRD said at the opening of a two-day meeting in Istanbul today.
With global demand for food, feed and fibre set to double in the first half of the century as the world expects a population increase of 2.3 billion people while facing daunting environmental challenges, agriculture must become more productive and more sustainable, the organisations urged. According to FAO estimates, the world will need to produce 70 per cent more food by 2050 to meet increased demand.
At the meeting in Istanbul representatives from international financial institutions, development agencies, donor governments, the private sector and government officials discussed how targeted investment and improved policies could help unleash the region’s agricultural potential while protecting the natural resource base and the welfare of producers and consumers.

News source: EBRD link: article

Slow courts , corruption, concern investors in Balkans - Unclear property titles a major headache

After spending the first half of a $20 million investment to drill for gold, silver and zinc in Albania, Canada's Tirex Resources suffered the fate all emerging market investors fear: the unexpected legal curveball. Two years into the project, a man appeared, claiming ownership of part of the land at their mountain top base camp. "It is a minor issue as it doesn't impact our operations, but it is a nuisance nonetheless. To attract more foreign investment, these types of nuisance claims need to stop," Bryan Slusarchuk, the CEO of Tirex Resources, told Reuters.

Complications are common in the Western Balkans, a relatively poor area of 20 million people that wants to join the European Union. Unclear property laws, a slow-moving judiciary, ethnic divisions and corruption continue to be major obstacles. Some countries have a growing pile of legal disputes, and some firms say the rules can appear stacked against, or at least at times unfavourable to, foreign investors. Only Serbia and Croatia on average attract more than 1 billion euros of foreign direct investment a year. Albania's FDI has reached 400 million euros this year, according to the prime minister; in Bosnia, before the crisis in 2008, it was 637 million euros before a sharp fall in 2009.

The wheels of justice often move slowly, exacerbating issues such as unpaid debt worsened by the economic downturn. "In the financial crisis you obviously had the problem of escalating debt in all kinds of businesses," said Kjell-Morten Johnsen, president of the Foreign Investors Council in Serbia and CEO of Telenor there.

"You can easily look at 12 to 24 months before a (court) case like that can be finished, and that becomes a big obstacle if you have a lot of customers who are not paying their bills." Administrative red tape is another obstacle in Serbia, the largest regional economy, and other Yugoslav successor states. "Some investors probably get discouraged when they see how long it will take to complete (the paperwork) and adapt to the legislative requirements," said Aleksandar Radosavljevic, CEO of Carlsberg in Serbia.

In Croatia, the emerging Balkan country likeliest to join the EU in the next few years, investors complain about issues similar to its poorer neighbours on the slower EU approach lane. A backlog of almost one million cases sits in its courts. "Many (foreign investors ) are still involved in ongoing trials and would be afraid to speak out because of the fear of repercussions," a senior EU business official in Zagreb said.

In Bosnia, comprising two largely autonomous halves, the fragmented legal system and different levels of administration and decision-making make life even harder for investors. "There are two separate legal systems, two bourses that conduct the trade and two different sets of rules that regulate that sphere," Sead Miljkovic, a lawyer with Wolf Theiss in Sarajevo and a Foreign Investment Council board member. "If you have to enforce some provisional measure, you must wait for the court's decision for six months, you are simply paralysed," he said.

In Albania, where outsiders, let alone their investment, were unwelcome in the Communist era, the government late last month passed a law to protect foreigners by offering to represent them in court and compensate for any losses due to any blocking of their activities in land disputes.The passage of the new law came after two dozen firms were embroiled in issues such as faced by Tirex.

Such opportunism by trickters has cost Albania 8 million euros in fines in several cases in the last three years from the Paris-based International Court of Arbitration. Sokol Nako, a managing partner of the Wolf Theiss law firm, blamed loopholes and inaccuracies in the Albanian system, corruption at local and central government and the mess of several property codes for the problems investors faced. "I think the (new) law will discourage anyone bent on playing such games," said Nako, a former justice and EU affairs minister, referring to problems like those Tirex had. Yet a bill to create an administrative court in Albania fell victim to a row between the government and the opposition over last year's election. The law, which would have ruled on some 5,000 cases stuck in other courts since 2005, was due to pass last Thursday but failed. 

News source: Balkans.com link: article

Analyst: ‘Imperfect’ EU remains attractive for Balkans

The Balkan countries are under no illusions about the EU – it is an ''imperfect human creation'' but is still their best option for guaranteeing stability and prosperity following the wars of the 1990s, Ivan Vejvoda, executive director of the Balkan Trust for Democracy, told EurActiv Slovakia in an interview.

Ivan Vejvoda is executive director of the Balkan Trust for Democracy, a project of the German Marshall Fund of the United States dedicated to strengthening democratic institutions in Southeastern Europe.
He previously served as a foreign policy advisor to Serbian Prime Ministers Zoran Živković and Zoran Djindjić and was a key figure in the opposition movement in Yugoslavia in the 1990s.

European countries and EU foreign affairs chief Cathy Ashton recently persuaded the Serbian president to withdraw his original proposal for a UN resolution criticising the International Coirt of Justice ruling on Kosovo. It is considered a tremendous success for European diplomacy. Do you agree?

Absolutely. I would agree completely that it is a success overall, both for the European Union and for Serbia, and I would add Kosovo because what it demonstrates is the willingness on the part of everyone to go forward to find a solution to what would otherwise be a frozen conflict – something that is not possible to solve.

Here, because we have the European Union, we have a magnet for the whole region – including Serbia – to want to move forward and become a part of the EU itself, which means stabilising, bringing back normality and solving problems like all other countries have in the global economic crisis: unemployment, falling standards of living…

The only way to do that is to have allies and assess realistically what your position is, and I think the resolution and the compromise that was achieved point directly in this direction.... 

News source: EurActiv link: article

Parliament clears visa-free travel for Albanians, Bosnians

The European Parliament yesterday (7 October) backed visa-free travel to Europe's Schengen area for Albanian and Bosnian citizens, setting the EU assembly on a collision course with France, which opposes the proposal following its controversial crackdown on illegal Roma camps.
The draft bill, which was endorsed by an overwhelming majority in Parliament yesterday (7 October), faces stiff opposition from France when it is submitted for approval by the 27 EU member states in the EU Council of Ministers.

"I now hope that we will have an agreement with ministers at first reading," said the European Parliament's rapporteur on the resolution, Slovenian MEP Tanja Fajon (Socialists & Democrats).
"This would allow citizens of the two countries to travel freely to spend Christmas with relatives elsewhere in Europe," she said. France is opposed to lifting visa requirements for Bosnian and Albanian citizens. Paris is still suffering from  the political repercussions of its controversial expulsion of illegal Roma migrants, some of whom were EU nationals of Romanian and Bulgarian origin.

News source: EurActiv link: article

The World Bank will convene an international conference, co-financed by UK AID/DfID, on Poverty and Social Inclusion in the Western Balkans

The World Bank will convene an international conference, co-financed by UK AID/DfID, on Poverty and Social Inclusion in the Western Balkans, to be held in Brussels on December 8^th and 9^th, 2010.

The conference will mark the conclusion of a very successful collaboration between the World Bank and DfID in strengthening collection and analysis of micro-economic data and producing policy relevant research in the region. The conference is also part of the European Year for Combating Poverty and Social Exclusion organized by the European Commission.The objective of the conference is to bring together leading academics and researchers from European Member States, the six countries of the Western Balkans and international organizations active in the area of combating poverty and social exclusion to:

- Showcase recent policy research on poverty and social inclusion in the Western Balkans
- Promote dialogue between academics and policy makers and identify
priorities for the future research agenda on poverty and inclusion.
- Encourage collaboration between researchers in EU Member States and Candidate
and Potential Candidate countries, with a view to the formation of research networks
that could be leveraged in the future to apply for EU funding.

The conference will focus on poverty and social inclusion broadly defined. It will offer an opportunity to discuss analysis and policy options on issues including: measurement of poverty and social inclusion, impact of the crisis, labor markets, migration, social protection, and vulnerable groups.

News source: Worldbank link: article