Bosnia and Herzegovina is richly endowed with natural resources and conditions which create superb environment for agricultural production, including availability of labor, land, and other natural resources, as well as suitable climate.
The enormous agricultural potentials are only partly realized, in spite of huge human and natural resources.
Strong development and permanent production growth, which characterized B &H agricultural sector is considerably below its real potentials and expected performances. Most of the food products are imported, and especially wheat, meat products, milk products and fruit juices.
Poor financial resources, needed for modernization of all segments of agricultural production (replacement of outdated technologies and equipment; upgrading of the existing structure of agriculture sector, etc) are one of the main limitations for faster development of this sector.
Nevertheless B & H agricultural sector has a great opportunity for potential investors, based on the following main advantages:
- Abundance of agricultural land – around 50 % of agriculture land is uncultivated
- Favorable climate conditions
- Good availability of skilled low cost labor & long tradition in agriculture
- Developed education system, R & D institutions, agronomic and veterinary support
- B & H is a considerable net importer of agricultural and food product
- Privatization of state owned companies
Bosnia and Herzegovina has a long tradition and widespread experience in the automotive industry. For decades, major brands have relied on the skilled workforce of BiH to assemble cars for Western markets. Before the 1992, Volkswagen produced passenger and commercial vehicles at a plant near Sarajevo, while Kosmos – Banja Luka and Soko – Mostar produced buses. As a consequence of existing final vehicle assembly and automotive components production, the powerful and diversified supply chain and supporting infrastructure had been established including education system, research & development institutions and specialized and competent labor force with metalworking, automotive and electrical engineering skills.
Within the past ten years, this industry has experienced dynamic development, and has become strongly export-oriented, exporting in average 90% of their production, in 30 countries all around world.
Today BH companies in automotive sector are producers of a wide spectrum of parts and components, such as: engines and gears and their parts, high-quality metal precision parts, drive shafts, brake parts and systems, clutches, steering parts and systems, pumps, filters, automotive electric parts (signals, relays, electronic switches), textile and leather products, plastic injection parts, aluminium wheels, car batteries, and various small parts such as springs, screws, hoses, and components of metal, rubber or plastic.
The main reasons why to choose Bosnia and Herzegovina as your destination for investing in automotive sector are as follows:
Strategic location: Geographical proximity to automotive manufacturing base in Europe allows foreign investors low distribution costs and “just-in-time” production delivery
Long and extensive tradition in auto-components supply and complementary metal processing sector
Constant export growth and reputable customers
Highly qualified and educated labor force capable to learn fast
Availability of research and development institutes (6 Faculties of Mechanics)
Quality production – ISO and industry certificates
Infrastructure in place and energy sources available
Banking and Financial Services
Bosnia and Herzegovina is the first country in South Eastern Europe that has completely reformed its banking system. Foreign banks have invested significantly. Unicredit Bank, Raiffeisen Bank, IntesaSanPaoloBank,HypoAlpe-Adria-Bank, Nova Ljubljanskabanka, ProCredit Bank, Turkish Ziraat Bank, Volksbank, Zepter Commerce Bank are all present in the country. Currently, according to the Central Bank of BiH, foreign banks own 86% of the banking sector, ensuring employment for 10.270 people. Bosnia Bank International is the only bank operating in BiH under Islamic banking principle.
Based on their analysis, on September 27, 2013, the Agency Standard & Poor’s has confirmed sovereign credit rating on Bosnia and Herzegovina at „B with stable outlook”. The international rating agency Moody’s Investors Service has announced on 10 July 2012 that the credit rating of Bosnia and Herzegovina remains B3. What has been changed compared to the previous rating assessment is the Outlook, as the Negative Outlook has been replaced with the Stable Outlook.
Overview of current sovereign credit rating of BH issued by the both agencies is provided in Table 1 bellow
|Moodys Investors Service||Standard Poor’s|
|Credit Rating||B3/ stable outlook||B / stable outlook|
|Date||July 10, 2012||September 27, 2013|
|Status||Stable outlook||Rating confirmed|
Source: Moody’s Investors Service, Standard & Poor’s
The introduction of a deposit insurance agency and competition between well-established international banks in BiH has significantly influenced the growth of savings and lowered interest rates on loans. Meanwhile, the country’s stock exchanges are enjoying a period of impressive growth.
Bosnia and Herzegovina has always been a major player in the construction world. BiH companies have acquired a solid reputation in all aspects of construction projects, ranging from design to structural engineering, building construction, civil engineering and the production of high-quality building materials.
The country abounds in natural resources such as timber, stone, gravel, sand, clay and metal ores. The potential for growth in Bosnia and Herzegovina construction market is very high. First priority was given to the repair and renovation of existing property and infrastructure.
More opportunities for growth in the B&H building industry are to be found in the civil engineering sector, where there are a number of schemes in addition to Corridor Vc under discussion for major road, rail and energy production developments. These are large-scale construction projects requiring the creation of consortiums to carry out the range of tasks involved and to be concurrent at the international tenders.
Construction companies supply key markets in the Middle East, North Africa, Russia and Asia due to a fact that local market demands decreased since 2009. Skilled labor force strongly recommended to the construction market abroad (2009/10 increased foreign works in 131%), due to the available capacities in B&H construction industry that is highly recognized all over the world.
Requirements and opportunities in construction industry exist and will be priority for the next period. Highway and railway are chance for the companies and construction industry as whole.
Testimonials & Success Stories
„FIPA has made a very significant contribution to the promotion of our operations in BiH and I would like to thank all the professionals who supported the endorsement of foreign investments in Bosnia and Herzegovina”
Nihad Imamović, BiH Auto Industry
Energy sector is one of the most powerful in B & H, with long tradition and huge potentials and opportunities for further development and investment. B&H is a member of the Energy Community of SEE established in November 2002 between EU and SEE countries in order to extend the EU internal energy market to South East Europe and beyond.
Bosnia and Herzegovina is endeavored with various indigenous energy recourses, as follows:
- The main energy resource of B & H is coal (brown coal and lignite), with estimated reserves of 10 x 109 tons
- Only about 35 % of huge hydro potential of over 6000 MW is in use
- According to the extensive researches, there is significant wind energy potential
- Raw material resources for the bio-mass energy are extremely favorable, including approximately 1.5 million m3 of forest / wood industry residues (all wood waste, sawdust, chips, and chipped technical wood), etc.
- Potential for exploitation of geo-thermal and solar energy are available too, but have not been explored and exploited
- Preliminary research surveys of oil and gas, had indicated the presence of promising deposits on a number of sites in B & H (off-balance sheet reserves are estimated at about 50 million tons of oil)
Out of all natural resources of BiH, its timber is best known and 53% of the country is covered in forests that can serve the wood and furniture processing industry. Forests and forest lands in Bosnia and Herzegovina is spread over an area of 2.709.800 hectares.
Given their self-regeneration, natural structure, composition and natural mixed rejuvenation, are one of the basic resources in the development of the Strategy of Bosnia and Herzegovina in the future. Given the geographical position of Bosnia and Herzegovina and the influence of the Mediterranean, sub-Mediterranean, sub-continental and mountain climate, the plains of Posavina in forest composition appears a number of forest communities with over 100 woody species.
Besides wood resources, B&H forestry has a significant number of resources for production of:
Bio-energy on the basis of forest residues, sawdust and woodchips;
Non-timber forest products (NTFP): nuts, fruit, leaves, bark and roots from forest species; fruit, bulbs, roots, leaves and flowers from herbs and shrubs – commonly referred to as medicinal and aromatic plants (MAPs); mushrooms;
Endemic and scarce life forms;
Briquettes, pallets, etc.
Raw based on existing hundred years developed a strong wood industry with a tradition of production and a very wide range of wood products, but global recession trends significantly affected a lot of hard state BH wood industry in 2009.
Structure and range of products of wood industry are very diverse and almost everything is possible to produce in the wood industry in the world, can be produced in Bosnia and Herzegovina. The wood industry is focused on a higher level of finalization and higher exports of finished wood products.
Bosnia and Herzegovina is committed to the development and capitalization of Information and Communications Technologies, being aware that this key sector plays a vital role in any modern economic structure.
The ICT industry is developing and spreading within B&H too, becoming one of the drivers of the economic growth. Therefore, the year 2010 is recorded huge increase of IT companies’ number on approximately 2.000 compared with the 2003 when this number was approximately 300. While the small enterprises (up to 10 employees) were predominant in 2003, average number of employees increased on 26 in 2010.
Bosnia and Herzegovina’s ICT sector offers an array of opportunities to potential investors wishing to exploit their knowledge, sophistication, know-how and new business ideas:
- ICT is an Emerging Sector in Bosnia and Herzegovina
- The continued availability of high-quality engineering and science graduates at Bosnia-Herzegovina colleges and abroad
- A competitive cost environment
- Investing in Bosnia and Herzegovina’s ICT Sector presents a doorway to Southeast Europe
- Bosnia-Herzegovina must be EU compatible
- Privatization opportunities of strategic ICT companies still exist
- Availability of basic ICT infrastructure
- Availability of a huge number of small IT companies
- Cultural affinity
The metal sector in Bosnia and Herzegovina has a long history, great potentials and it has a natural competitive advantage mainly due to existing raw material resources, low wages and a heritage of the past. B&H metal processing offers strong human and resources base as well as long tradition enabling sustainable development of various value-added businesses.
The beginnings of the metal work in Bosnia and Herzegovina reach back into history, especially through the handicraft production and manufacture. It is reach in mineral resources (particularly iron ore, bauxite, lead, zinc and copper).The metal processing industry in B&H is quite large, covering the manufacture of basic metals: basic iron, steel and alloys and manufacture of fabricated metal products, such as forging, pressing, pressing and rolling of metals, powder metallurgy, treatment and coating of metals, general engineering. Metalworking sector it is highly concentrated in two large companies Mitall Steel Zenica and AluminiumMostar.
Mining sector offers – both to serve local processing industries, electricity generation and for the export. This segment of the industry is in the process of revitalization and re-engineering. The oldest mining areas are in central Bosnia (Mount Vranica) and eastern Bosnia. The most famous mines in Bosnia and Herzegovina are located in central Bosnia (Kamenica, Olovo, Dusina, Dezevice) and eastern Bosnia (Srebrenica and its surroundings).
Bosnia and Herzegovina has a long tradition and a good international reputation in textiles, clothing and footwear industry. B&H has achieved progress in modernizing its production units and introducing new technologies aimed at becoming part of the global market. B&H has a number of experienced and skilled workforces with both, academic and practical experience. The proximity of B&H to both Western and Eastern European markets is a major asset. B&H has the potential to attract companies wishing to relocate closer to their main markets, able to provide a short product delivery cycle to European retailers.
B&H textile and clothing industries have inherent skills, and good reputations as suppliers of textile and footwear based consumer products to the German and Italian markets of the European Union (EU). New partnerships are bringing in new equipment and management know-how, as well as money, to those companies that have already been privatized.
Why invest in Textile and footwear industry in B&H:
- Long tradition of clothing and footwear production
- Good reputation as supplier to the German and Italian markets
- Low labor cost
- Inherent skills in spinning, weaving and knitting in the workforce
- Close proximity to major world textile markets
- Development of SME’s