Slide1: Investment Opportunities in Bosnia and Herzegovina Foreign Investment Promotion Agency Bosnia and Herzegovina Warsaw, November 20, 2003


Plan of the Presentation: Plan of the Presentation General information about Bosnia and Herzegovina Business environment Legal framework Attractive economic sectors in Bosnia and Herzegovina Foreign Investment Promotion Agency Bosnia and Herzegovina


Bosnia and Herzegovina: Bosnia and Herzegovina Area – 51,209.2 sq.km Population – 3.85 mill. People Closeness to EU, Eastern Europe, North Africa and Middle East markets Political stability Foreign Investment Promotion Agency Bosnia and Herzegovina


Slide4: Foreign Investment Promotion Agency Bosnia and Herzegovina GDP Overview (in millions US $) Source: Federal Institute of Statistics of BH Federation and the RS Institute of Statistics


Slide5: Foreign Investment Promotion Agency Bosnia and Herzegovina Source: Federal Institute of Statistics of BH Federation and the RS Institute of Statistics GDP Per Capita - Overview (in US $)


FOREIGN TRADE EXCHANGE OF BOSNIA AND HERZEGOVINA: FOREIGN TRADE EXCHANGE OF BOSNIA AND HERZEGOVINA 1,111,454 1,111,454 975,193 975,193 136,261 136,261 O O ther countries ther countries 84,559 84,559 64,487 64,487 20,072 20,072 Franc Franc e e 87,408 87,408 74,611 74,611 12,797 12,797 USA USA 182,019 182,019 71,347 71,347 110,672 110,672 Switzerland Switzerland 201,676 201,676 195,453 195,453 6,223 6,223 Hungary Hungary 259,582 259,582 219,376 219,376 40,206 40,206 Austria Austria 492,985 492,985 374,344 374,344 118,641 118,641 Ital Ital y y 511,172 511,172 310,358 310,358 200,814 200,814 Serbia and Montenegro 514,689 514,689 430,917 430,917 83,772 83,772 Slovenia Slovenia 601,080 601,080 474,818 474,818 126,262 126,262 Germany Germany 758,477 758,477 608,541 608,541 149,936 149,936 Croatia Croatia 4,805,101 4,805,101 3,799,445 3,799,445 1,005,656 1,005,656 TOTAL TOTAL VOLUME VOLUME IMPORT IMPORT EXPORT EXPORT COUNTRIES COUNTRIES 1,111,454 1,111,454 975,193 975,193 136,261 136,261 O O ther countries ther countries 84,559 84,559 64,487 64,487 20,072 20,072 Franc Franc e e 87,408 87,408 74,611 74,611 12,797 12,797 USA USA 182,019 182,019 71,347 71,347 110,672 110,672 Switzerland Switzerland 201,676 201,676 195,453 195,453 6,223 6,223 Hungary Hungary 259,582 259,582 219,376 219,376 40,206 40,206 Austria Austria 492,985 492,985 374,344 374,344 118,641 118,641 Ital Ital y y 511,172 511,172 310,358 310,358 200,814 200,814 514,689 514,689 430,917 430,917 83,772 83,772 Slovenia Slovenia 601,080 601,080 474,818 474,818 126,262 126,262 Germany Germany 758,477 758,477 608,541 608,541 149,936 149,936 Croatia Croatia 4,805,101 4,805,101 3,799,445 3,799,445 1,005,656 1,005,656 TOTAL TOTAL VOLUME VOLUME IMPORT IMPORT EXPORT EXPORT COUNTRIES COUNTRIES Foreign Investment Promotion Agency Bosnia and Herzegovina Year 2002 In 000 USD


Net FDI in Bosnia and Herzegovina: Net FDI in Bosnia and Herzegovina Foreign Investment Promotion Agency Bosnia and Herzegovina Source: Ministry of Foreign Trade and Economic Relations In first three months of 2003 investments were 92.501.000€


Slide8: FDI Inflow in Bosnia and Herzegovina (000 USD) Comparing to 2001 FDI inflow in 2002 is higher for 120% Source: Ministry of Foreign Trade and Economic Relations (2002) Foreign Investment Promotion Agency Bosnia and Herzegovina


Slide9: Foreign Investment Promotion Agency Bosnia and Herzegovina Source: Federal Institute of Statistics of BH Federation and the RS Institute of Statistics Net wages and consumer basket in Dec 2002 compared to Dec 2001


Why invest in Bosnia and Herzegovina?: Why invest in 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 B&H aimed at making the proposals for eliminating the legal and administrative obstacles for doing business in B&H (2 x 50 reform measures for 3 months) Target: Creation of the most attractive business environment in Bosnia and Herzegovina in comparison to other countries in the SEE region Introduction of single customs and tax administration system in 2003 (preparation for V.A.T.) Negotiations with WTO Foreign Investment Promotion Agency Bosnia and Herzegovina


Slide11: 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: Zagrebačka Bank – UniCredito, Raiffeisen Bank, Hypo Vereins Bank, Volksbank, Hypo Alpe Adria Bank, Turkish Ziraat Bank, BBI Foreign Investment Promotion Agency Bosnia and Herzegovina


Why invest in Bosnia and Herzegovina?: Foreign Investment Promotion Agency Bosnia and Herzegovina CAPITAL STRUCTURE IN B&H BANKING SECTOR (%): Why invest in Bosnia and Herzegovina? 2. Financial stability – Banking sector Sorce: Central Bank of B&H *The data isn’t available but the % of foreign ownership would have been low


Why invest in Bosnia and Herzegovina?: Why invest in 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, Russia, Japan, Canada, Australia, New Zealand, Norway, Switzerland, Hungary and Slovakia Free trade agreement with Turkey (consumer market of 70 million people) SEE Free Trade Agreement Foreign Investment Promotion Agency Bosnia and Herzegovina


Why invest in Bosnia and Herzegovina?: Why invest in 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 the biggest state monopolies: Telecommes, energy: utilities – gas & electricity, refineries etc Foreign Investment Promotion Agency Bosnia and Herzegovina


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


Why invest in Bosnia and Herzegovina?: Why invest in 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 BITs; MIGA/WB; IGA - domestic) Foreign Investment Promotion Agency Bosnia and Herzegovina


Slide17: Sector opportunities in Bosnia and Herzegovina Foreign Investment Promotion Agency Bosnia and Herzegovina Wood industry Agriculture and food Power Metal processing Transportation Construction and construction materials Tourism Textile and shose industry


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


Sector opportunities in Bosnia and Herzegovina: Sector opportunities in 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 Developed fish farming (trout, carp) Foreign Investment Promotion Agency Bosnia and Herzegovina


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


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


Sector opportunities in Bosnia and Herzegovina: 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 B&H Zenica steel factory – the biggest FDI in B&H Mechanical engineering sectors are considered good 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


Sector opportunities in Bosnia and Herzegovina: Sector opportunities in Bosnia and Herzegovina Transportation Construction of Vc Corridor “Budapest – Sarajevo – Ploce” as a part of the EU’s TEN Network Over of 56% of B&H population situated within the zone of proposed corridor, which are generating app. 63% of GDP The most important transport project in B&H - the priority regarding other other development projects Chance for tourism development Accessory structure (gasoline stations, motels etc.) Foreign Investment Promotion Agency Bosnia and Herzegovina


Sector opportunities in Bosnia and Herzegovina: Sector opportunities in Bosnia and Herzegovina Transportation The railway reconstruction as a part of Vc Corridor Highway Tuzla – Orasje 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 Foreign Investment Promotion Agency Bosnia and Herzegovina


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


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


Slide27: Sector opportunities in Bosnia and Herzegovina Foreign Investment Promotion Agency Bosnia and Herzegovina Textiles Long tradition of clothing and footwear production Good reputation as former supplier to the German and Italian markets Relatively low labour cost Inherent skills in spinning, weaving and knitting in the workforce Close proximity to major world textile markets Development of SME’s


Slide28: Foreign Investment Promotion Agency Bosnia and Herzegovina INVESTMENT PROJECTS Power: Refinery Brod, Oil Refinery Modriča, BiH Gas, Sarajevogas, new Hydro Electric Power Plants Wind Energy Trasportation: Brčko Port, Corridor VC, Energoinvest, Hidrogradnja, Unis Holding, Banking: Union Banka d.d. Sarajevo Food processing: Agrokomerc, Klas, Ilidzanski dijamant, Pomostar, Tobacco Factories, Tropic Fisheries, Mira Wood: Krivaja, Primus Maglaj, Natron Metal processing: Pobjeda Tesanj Privatisation opportunities: Bira, Granit, Metalno


Refinery Brod:: Refinery Brod: 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 Foreign Investment Promotion Agency Bosnia and Herzegovina


Oil Refinery Modriča:: Oil Refinery Modriča: 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 Foreign Investment Promotion Agency Bosnia and Herzegovina


BiH Gas:: BiH Gas: Activity: gas production and transport Number of employees: 33 Project: Development projects of gas transmission network in BiH Project value: 205 million USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Sarajevogas:: Sarajevogas: 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 Foreign Investment Promotion Agency Bosnia and Herzegovina


Construction of new Hydro Electric Power Plants and Modernization of existing coal burning plants: : Construction of new Hydro Electric Power Plants and Modernization of existing coal burning plants:  14 hydropower plants throughout BiH with installed capacity of 1263MW Room for many more (projects for building of up to 100 small power stations) Vrhpolje, Konjic, Ustikolina,Glavatičevo, Vranduk, Buk Bijela, Srbinje, Krupa, Banja Luka, Mostarsko Blato (TE –TO Banja Luka, second block) Foreign Investment Promotion Agency Bosnia and Herzegovina


Brčko Port:: Brčko Port: Goods handling, packaging and distribution of goods, other related services Employees: 400 Investment: Port transport systems, storage facilities (including tanks for crude oil and fuel, etc.) Total area : 92.000 m2 Investment value (stage 1): 55.000.000 USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Energoinvest:: Energoinvest: 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: Partners in over 100 countries State capital for sale: 88.100.000 USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Hidrogradnja:: Hidrogradnja: - Hydro technical projects - Industrial projects - Civil engineering and building construction - Production of construction material - Other services Objective: Cooperation with other companies in the framework of specific projects either on the turn-key basis or as contractor or consultant Partners: Jordan, Libya, Malaysia Foreign Investment Promotion Agency Bosnia and Herzegovina


Unis Holding :: Unis Holding : 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 Foreign Investment Promotion Agency Bosnia and Herzegovina


Bjelašnica – Igman Ski & Tourism Center :: Bjelašnica – Igman Ski & Tourism Center : 6 Hotels - 800 beds (83 million USD) 7 Apartment buildings - 500 beds ( 6.5 million USD) 10 Hotels-rest houses - 300 beds (2.5 million USD) Shops, restaurants, offices, utilities & services buildings for 3000 persons Distance from Sarajevo : 25 km Tender for four hotels has been launched recently Foreign Investment Promotion Agency Bosnia and Herzegovina


Union Banka d.d. Sarajevo :: Union Banka d.d. Sarajevo : Banking services and payment operations on the BiH territory. 13 business units with 182 employees Privatization expected to be completed soon Shareholders with majority state-owned shares E-mail: unionbank@bih.net.ba Foreign Investment Promotion Agency Bosnia and Herzegovina


Agrokomerc:: Agrokomerc: Food Industry : primary foodstuff production, healthy food production, pharmacy chemical fruit industry and service sector Employees: 3826 Market: Local Market State capital for sale: 135.000.000 USD Foreign Investment Promotion Agency Bosnia and Herzegovina


KLAS d.d. Sarajevo :: KLAS d.d. Sarajevo : Food industry (Flour, bread, baked goods, finished and semi finished food…) Number of employees: 1019 Search partner for production and processing of strawberry-like fruits with the aim to make profit of production, processing and export of strawberry fruits Investment value: 1 million USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Ilidžanski Dijamant :: Ilidžanski Dijamant : Producer of natural mineral water Number of employees: 35 Equipped by latest technology implemented from Germany Capacity: 9000l of mineral water per hour Need to invest in marketing and in vehicules Investment value: 2 million USD www.ilidzanskidijamant.ba Foreign Investment Promotion Agency Bosnia and Herzegovina


POMOSTAR :: POMOSTAR : Food industry (Production of 17 sorts of high quality jams) Number of employees: 10 Project: Company is for sale Description: 500sqm of usable surface in a Free Zone, production capacity 1.2t / day Upon request: Plan of building, computed production costs and complete list of machines Investment value: 60 000 USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Tobacco Factories :: Tobacco Factories : SARAJEVO: 519 employees Partners: Germany, Ireland and USA State capital for sale: 24.520.000 USD BANJA LUKA: 275 employees Market: Sole manufacturer of cigarettes and market leader in Republika Srpska State capital for sale: N/a MOSTAR: 164 employees Partners: Zimbabwe, Malawi and Macedonia State capital for sale: 8.149.000 USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Tropic Fisheries Banja Luka:: Tropic Fisheries Banja Luka: Agriculture and fisheries (production, fish canning and processing, sale of fresh, frozen and smoked fish) Number of employees: 60 Production capacity: 900 tones of Californian trout, 10 millions eggs and 15 tones of fish products Project: Purchase trout fishpond and its adaptation Investment value: 1 million USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Mira :: Mira : Food Industry: cakes and biscuits Employees: 590 Turnover: 5 million USD Objective: Search partner for packaging automatisation (150 000 USD of value) Have other available projects Market: Sweden, Canada, Slovenia, Croatia… www.miraprijedor.com Foreign Investment Promotion Agency Bosnia and Herzegovina


Krivaja:: Krivaja: Wood Industry (furniture production,construction, wood cutting, transport, other related services..) Employees: 4161 State capital for sale: 39.560.000 USD Foreign Investment Promotion Agency Bosnia and Herzegovina


Natron Maglaj:: Natron Maglaj: 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 Foreign Investment Promotion Agency Bosnia and Herzegovina


Primus Maglaj: Primus Maglaj Wood industry (production of all types of windows, glass for thermo isolation, production and treatment of wood products) Employees: 90 Business partners from Italy, Austria, Germany Search foreign partner for Joint Venture in order to develop activities. Web: www.primus-maglaj.com.ba Email: primus@bih.net.ba Foreign Investment Promotion Agency Bosnia and Herzegovina


Pobjeda Tešanj:: Pobjeda Tešanj: Metal industry and production of the parts for automobiles (oil and motor pumps for vehicles…) Employees: 330 Partners from Italy, Spain, Czech Republic and ex-Yu Excellent geographical position only 15 hours by truck from EU markets. Standard ISO 9001 introduced, Standard TS 16949 planned for 2004 Foreign Investment Promotion Agency Bosnia and Herzegovina


Bira:: Bira: Home Appliances Manufacturing Joint-stock company with limited liability State 67.0%, private 33.0% Capital Offered for Tender: 67.0% of total share capital Present company’s output includes:       Refrigerators, fridge freezers and freezers of various size;      Washing machines Potential to manufacture various home appliances One of the ten largest exporters in Bosnia and Herzegovina Foreign Investment Promotion Agency Bosnia and Herzegovina


Granit:: Granit: FACTS: Mining, cutting, shaping and processing of stone Limited Liability Company 67 % state owned , 33 % private Capital offered for tender: 67 % = KM 7.703.770 (book value) Leading stone quarrying company in Bosnia and Herzegovina with massive reserves Profitable at the current production level OPPORTUNITIES: Good long-term economic prospects in the region Substantial opportunities to expand and improve productivity High investment returns Foreign Investment Promotion Agency Bosnia and Herzegovina


Metalno:: Metalno: Limited liability company 51% state ownership, 49% private ownership Capital Offered for Tender: KM 9,860,218 Manufacture and assembly of metal constructions Metalno offers an investor:   ·         Central business location in Bosnia and Herzegovina; ·         Good road and rail connections; ·         Comprehensive steel fabrication facilities; ·         Growing business prospects locally and internationally; ·    Knowledge and experience of working to European standards; ·         Experienced management; ·         Skilled and flexible workforce; ·         Sound reputation for competitively-priced, good-quality products; ·         Relatively low investment requirements. Foreign Investment Promotion Agency Bosnia and Herzegovina


We invite you to BiH Investment Conference:: We invite you to BiH Investment Conference: 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@fipa.gov.ba Foreign Investment Promotion Agency Bosnia and Herzegovina


FIPA – your first contact point -our services are free and confidential: Branilaca Sarajeva 21 71 000 Sarajevo Phone: ++ 387 33 278 080 Fax: ++ 387 33 278 081 E-mail: fipa@fipa.gov.ba Web site: www.fipa.gov.ba Foreign Investment Promotion Agency Bosnia and Herzegovina FIPA – your first contact point - our services are free and confidential