Bosnia and Herzegovina Country Report by SupremeLord

VIEWS: 301 PAGES: 40

									C      O      U     N        T   R   Y    F   A   C   T     S   H   E   E   T




                   Albania




    Bosnia and Herzegovina




                  Bulgaria




                   Croatia




     Republic of Macedonia




                  Moldova                     BOSNIA
                                                      AND
                  Romania



                                         HERZEGOVINA
    Serbia and Montenegro
               Montenegro




    Serbia and Montenegro
                   Serbia




    Serbia and Montenegro
O         U      T        L         I       N         E

1              Preamble ...............................................................................................................3
2              Brief History ..........................................................................................................4
3              General Country Information ................................................................................7
4              Politics ...................................................................................................................8
    4.1        Political Panorama ......................................................................................................8
      4.1.1    Bosnia and Herzegovina .............................................................................................8
      4.1.2    Federation of Bosnia and Herzegovina ......................................................................9
      4.1.3    Republika Srpska ......................................................................................................11
      4.1.4    Brcko district .............................................................................................................12
    4.2        EU Relationship .........................................................................................................13
5              Economics............................................................................................................14
    5.1        Economic Panorama .................................................................................................14
      5.1.1    GDP Indicators...........................................................................................................14
      5.1.2    Trade Indicators .........................................................................................................14
      5.1.3    FDI Indicators ............................................................................................................14
      5.1.4    Miscellaneous............................................................................................................15
    5.2        General Macro Economic Data .................................................................................16
      5.2.1    GDP Indicators...........................................................................................................16
      5.2.2    FDI Indicators ............................................................................................................16
      5.2.3    Demographic Indicators............................................................................................17
6              Key Achievements in Improving the Investment Environment............................18
7              Success Stories for FDI .......................................................................................20
    7.1        Hemofarm D.O.O. Banja Luka ..................................................................................21
    7.2        Hypo Alpe-Andria Bank d.d.......................................................................................22
    7.3        Bosna Bank International .........................................................................................23
    7.4        Alumina Factory “Birac”............................................................................................24
    7.5        Kakanj Cement ..........................................................................................................25
    7.6        Hadzici Bottling Facility.............................................................................................26
    7.7        Mittal Steel Zenica.....................................................................................................27
8              Main Actors in the Investment and Business Environment ................................28
    8.1        Public Actors..............................................................................................................28
      8.1.1    Bosnia and Herzegovina............................................................................................28
      8.1.2    Federation of Bosnia and Herzegovina ....................................................................30
      8.1.3    Republika Srpska ......................................................................................................31
      8.1.4    Brcko District.............................................................................................................32
    8.2        Private actors.............................................................................................................33
      8.2.1    Bosnia and Herzegovina............................................................................................33
      8.2.2    Federation of Bosnia and Herzegovina ....................................................................34
      8.2.3    Republika Srpska ......................................................................................................36
      8.2.4    Brcko District Chamber of Commerce.....................................................................37
9              Contact list of main actors...................................................................................38
    9.1        Bosnia and Herzegovina............................................................................................38
    9.2        Federation of Bosnia and Herzegovina ....................................................................39
    9.3        Republika Srpska ......................................................................................................39


C O U N T R Y FACT S H E E T       BOSNIA AND HERZEGOVINA                                                                                [2]
              PREAMBLE



       South East Europe (SEE) is increasingly becoming a key location for global investors seeking

       business opportunities and growth in market share. SEE continues to make significant

       progress on improving its business and economic environment. It has a dynamic market of

       55 million people and has room for considerable growth. Situated at the crossroads between

       the major markets of the European Union, Central Europe, Western Asia, Ukraine and the

       western part of Russia, SEE is primed to become a leading economic actor.



       SEE’s recent economic performance is very positive and has the highest growth levels in Europe.

       Regional real GDP grew by approximately 5 %1 in 2004 and by 4-5 % over the past 5 years

       compared to approximately 3.6 % in Central and Eastern Europe (Slovenia, Hungary, Poland,

       Czech Republic, Slovak Republic). The FDI levels exceeded € 8 billion in 2004.



       The OECD Investment Compact has developed Fact Sheets for all SEE countries (Albania,

       Bosnia Herzegovina, Bulgaria, Croatia, FYR Macedonia, Moldova, Romania, Serbia and

       Montenegro). The objective is to provide investors with a snapshot of important information

       and the latest investment reform progress in each country. The Fact Sheets are based on

       numerous primary and secondary sources (i.e. OECD, UN, EBRD, EIU, local consultants, …)

       and are updated on a regular basis.




       1. Annual average growth


C O U N T R Y FACT S H E E T      BOSNIA AND HERZEGOVINA                                                 [3]
              BRIEF HISTORY


       Chronology of History
       1908      Bosnia-Herzegovina annexed to Austria-Hungary.
       1914      A Bosnian Serb student, Gavrilo Princip, assassinates the Austrian archduke Franz
                 Ferdinand in Sarajevo. This precipitates World War I.
       1918      Austria-Hungary collapses at the end of the war. Bosnia-Herzegovina becomes part
                 of the Kingdom of Serbs, Croats and Slovenes.
       1941      Bosnia-Herzegovina annexed by Hitlerite Croatian puppet state. Thousands of Serbs,
                 Jews and Gypsies are sent to the death camps.
       1945      Bosnia-Herzegovina liberated following campaign by partisans under Tito. It becomes
                 a republic within the Yugoslav Socialist Federation.
       1991      Following the collapse of Communism, nationalists win the first multi-party elections
                 and form a coalition government despite having conflicting goals: Muslim nationalists
                 want centralised independent Bosnia, Serb nationalists want to stay in Belgrade-
                 dominated rump Yugoslavia, Croats want to join independent Croatian state.


       War on many fronts
       1992      Croat and Muslim nationalists form tactical alliance and outvote Serbs at independence
                 referendum. Serb nationalists are incensed as constitution stipulates that all major
                 decisions must be reached through consensus.


       War breaks out and Serbs quickly assume control of over half the republic. Ethnic cleansing
       rampant in newly proclaimed Serb Republic but also widespread in Muslim and Croat-
       controlled areas.


       The Bosnian Serbs, under Radovan Karadzic, lay siege to Sarajevo. The city is controlled by
       Muslims but they are unable to break out through lines set up to defend surrounding Serb
       villages. There is bitter fighting as well as many atrocities.


       1993      As tensions rise, conflict breaks out between Muslims and Croats, culminating in
                 the destruction of much of Mostar, including its Old Bridge. The bridge had graced
                 the city since it was built by the Ottomans in the 16th Century and was a symbol of
                 Bosnia's cultural diversity.


       The conflict is extremely complex. Muslims and Serbs form alliance against Croats in
       Herzegovina, rival Muslim forces fight each other in northwestern Bosnia, Croats and Serbs
       fight against Muslims in central Bosnia.
       UN safe havens for Bosnian Muslim civilians created to include Sarajevo, Gorazde and
       Srebrenica.




C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                     [4]
2. BRIEF HISTORY



           1995      The safe haven of Srebrenica is overrun by Bosnian Serb forces under General Ratko
                     Mladic. Thousands of Bosnian Muslim men and boys are separated from their families
                     and massacred, despite the presence of Dutch UN troops. NATO air strikes against
                     Serb positions help Muslim and Croat forces make big territorial gains, expelling
                     thousands of Serb civilians on the way.


           Dayton Peace Accord signed in Paris, creating two entities of roughly equal size: the Bosniak2
           /Croat Federation of Bosnia and Herzegovina and the Bosnian Serb Republika Srpska.


           After Dayton
           1996      The International Criminal Tribunal for the former Yugoslavia begins work in the Hague.
                     Drazen Erdemovic, a Croat who fought for the Serbs and took part in the Srebrenica
                     massacres, is the first person to be convicted. He is sentenced to five years in prison.
           1998      Elections see nationalist politicians do well. The first Bosnian Muslims and Croats
                     are convicted of war crimes in the Hague.
           2000      Moderate parties do well in elections in Muslim-Croat entity but nationalists gain upper
                     hand in Serb entity. Results force main Serb nationalist party to form coalition
                     government headed by moderate Prime Minister Mladen Ivanic.
           2001      March - The Croat representative in the collective presidency, Ante Jelavic, is dismissed
                     as his party threatens to declare an independent Croat republic.
           2001      May - Bosnian Serbs in Banja Luka and Trebinje use force to break up ceremonies
                     marking the reconstruction of mosques destroyed during the Bosnian war. Several
                     Muslim refugees are injured, cars set on fire, and delegates from the international
                     community are forced to shelter in local buildings.
           2001      August - Hague War Crimes Tribunal finds Bosnian Serb General Radislav Krstic guilty
                     of genocide for his role in the massacre of thousands of men and boys in Srebrenica.
                     Krstic sentenced to 46 years in prison.


           Three senior Muslim generals indicted on war crimes charges.


           2001      December - Amid growing international pressure, the main Bosnian Serb nationalist
                     party, the SDS, votes to expel all war crimes suspects, including wartime leader Radovan
                     Karadzic.
           2002      January - Muslim organisations unite in protest against US decision to arrest six Bosnian
                     terrorist suspects of Arab origin and take them to Guantanamo Bay in Cuba.
           2002      October - Nationalists win back power in Federation presidential, parliamentary and
                     local elections.


           Former Bosnian Serb President Biljana Plavsic changes her plea at the UN Tribunal in The
           Hague to one of guilty of crimes against humanity. The remaining seven charges are dropped.
           She is subsequently sentenced to 11 years in prison.


           2003      January - Three months after elections parliament approves new government led by
                     Adnan Terzic.
           2. Bosniak = Bosnian Muslim

    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                        [5]
2. BRIEF HISTORY


            EU officially embarks on its first foreign security operation by taking over policing duties from
            UN.


            2003       April - Mirko Sarovic, Serb member of presidency, resigns following report by Western
                       intelligence services on affair involving illegal military exports to Iraq and allegations
                       of spying on international officials.


            High Representative Paddy Ashdown abolishes Supreme Defence Council of Bosnian Serb
            Republic. He also alters constitutions of Bosniak/Croat Federation and Bosnian Serb Republic
            removing all reference to statehood from both.


            Borislav Paravac of Serb Democratic Party replaces Sarovic as Serb member of presidency.
            Srebrenica Muslim wartime commander Naser Oric arrested and taken to The Hague tribunal
            after being indicted for his role in crimes against Serbs in Srebrenica area.


            2004       July - Celebrations mark the reopening of the rebuilt 16th century bridge at Mostar.
            2004       December - Nato hands over peacekeeping duties to a European Union-led force,
                       Eufor.
            2005       March - High Representative Paddy Ashdown sacks Croat member of presidency Dragan
                       Covic, who faces corruption charges.
            2005       May - Ivo Miro Jovic appointed Croat member of presidency.
            2005       June - Bosnian unit with members from all three main ethnic groups heads for Iraq
                       to support forces of US-led coalition.
            2005       October - Entity and central parliaments back establishment of unified police force.
                       Following significant progress by Bosnia and Herzegovina the Commission recommends
                       the opening of negotiations for a Stabilisation and Association Agreement.
            2005       November - Stabilisation and Association Agreement (SAA) negotiations with Bosnia
                       and Herzegovina are officially opened in Sarajevo on 25 November.
       Source: http://news.bbc.co.uk




                                                                                         Source:
                                                                                         CIA Fact Book



    C O U N T R Y FACT S H E E T       BOSNIA AND HERZEGOVINA                                                       [6]
               GENERAL COUNTRY INFORMATION


                              Population
                             Total July (2005)                                                         4,025,476
                             Sarajevo (capital) (2004)                                                   297,399
                             Banja Luka (2002)                                                           196,500
                             Zenica (1991)                                                               146,000
                             Tuzla (1991)                                                                132,000
                             Mostar (1991)                                                               126,000
                             Prijedor (1991)                                                             112,000
                            Source: Economist Intelligence Unit and CIA Factbook


                              Official Languages
                             Bosnian
                             Croatian
                             Serbian
                            Source: Economist Intelligence Unit and CIA Factbook


         Ethnic Groups                                          %              Religions                                            %
         Bosniak (Bosnian Muslim)                              48              Islam                                                40
         Serb                                                 37.1             Orthodox                                             31
         Croat                                                14.3             Roman Catholic                                       15
         Other                                                 0.6             Other                                                14
       Source: Economist Intelligence Unit and CIA Factbook                  Source: Economist Intelligence Unit and CIA Factbook


                              Public Holidays                                                          Occasion
                             1st January                                                       New Year’s Day
                             7th January                                                Orthodox Christmas
                             14th January                                          Orthodox New Year’s Day
                             1st March                                                     Independence day
                             25th November                                                        National Day
                             25th December                                                     Christmas Day
                            Source: Economist Intelligence Unit and CIA Factbook


         Miscellaneous
         Currency                                                    Konvertibilna Marka (BAM also referred to as KM)
         Exchange rate                                                             Konvertibilna Marka per $ - 1.58 in 2004
                                                        Konvertibilna Marka per € 1.96 in 2004 (Marka pegged to €)
         Measures                                                                                                    Metric system
         Time                                                                            GMT + 1 (winter)GMT + 2 (summer)
         Fiscal year                                                                                                 Calendar year
         Land Area                                                                                                    51,129 sq km
       Source: Economist Intelligence Unit and CIA Factbook



C O U N T R Y FACT S H E E T       BOSNIA AND HERZEGOVINA                                                                           [7]
               POLITICS


       4.1. POLITICAL PANORAMA


       4.1.1. Bosnia and Herzegovina

         Institutional Break Down of Bosnia and Herzegovina
         2 first-order administrative divisions and 1 internationally supervised district*:
            • Bosniak/Croat Federation of Bosnia and Herzegovina (Federacija Bosna i Hercegovina)
            • Bosnian Serb-led Republika Srpska
            • Brcko District (Brcko Distrikt)*
       Source: www.fbihvlada.gov.ba, Economist Intelligence Unit, CIA Factbook



         Institutional Information of Bosnia and Herzegovina
         Institutional Form:
            • Emerging federal democratic republic


         Constitution:
            • Included in Dayton Accords (signed in 1995)
            • Each entity has a constitution.


         Head of State:
         Three member rotating presidency (elected for 4 years, chairman rotating every 8 months):
            • Ivo Miro JOVIC (presidency member since 9 May 2005-Croat, chairman since 28 June 2005)
            • Borislav PARAVAC (presidency member since 10 April 2003-Serb)
            • Sulejman TIHIC (presidency member since 5 October 2002-Bosniak)


         Head of Government (appointed by presidency):
            • Adnan TERZIC (since 20 December 2002)
            • Chairman of the Council of Ministers


         Parliamentary structure:
            • Bicameral Parliamentary Assembly (Skupstina):


                 - National House of Representatives (Predstavnicki Dom) (42 seats; 28 from Federation of
                    Bosnia and Herzegovina and 14 seats from the Republika Srpska)
                 - House of Peoples (Dom Naroda) (15 seats; 5 Bosniak, 5 Croat, 5 Serb: members elected
                    by Bosniak/Croat Federation’s House of Representatives and the Republika Srpska’s
                    National Assembly)
       Source: www.fbihvlada.gov.ba




C O U N T R Y FACT S H E E T          BOSNIA AND HERZEGOVINA                                         [8]
4. POLITICS



             Main Parties in National House of                                  Acronym        Positioning        % at 5 October
             Representatives of Bosnia and Herzegovina                                                            2002 election
             Party of Democratic Action                                              SDA    Bosniak nationalist        21.9
             Serb Democratic Party                                                   SDS     Serb nationalist          14.0
             Party for Bosnia and Herzegovina                                        SBiH      Multi-ethnic            10.5
             Social Democratic Party                                                 SDP        Center left            9.8
             Coalition (Koalicija):
                 • Croatian Democratic Community                                     HDZ          Center               9.5
                 • Christian Democrats                                               DK
           Source: www.fbihvlada.gov.ba, Economist Intelligence Unit, CIA Factbook



             Composition of the Council of Ministers of Bosnia
             and Herzegovina (appointed by head of government)                                                Name
             Chairman of Council of Ministers (since 20 December 2002)                         Mr. Adnan Terzic (Bosniak)
             Civil affairs                                                                     Mr. Safet Halilovic (Bosniak)
             Defence                                                                           Mr. Nikola Radovanovic(Serb)
             Foreign affairs & deputy chairman                                                 Mr. Mladen Ivanic (Serb)
             Foreign trade & economy                                                           Mr. Dragan Doko (Croat)
             Human rights & refugees                                                           Mr. Mirsad Kebo (Bosniak)
             Justice                                                                           Mr. Slobodan Kovac (Serb)
             Security & deputy chairman                                                        Mr. Barisa Colak (Croat)
             Transport & communications                                                        Mr. Branko Dokic (Serb)
             Treasury                                                                          Ms. Ljerka Maric (Croat)
             Central Bank and Office of High Representative (OHR)                                             Name
             Central Bank Governor                                                                             c
                                                                                               Mr. Kemal Kozari´
             UN High Representative (since 2002)                                               Mr. Paddy Ashdown
             UN High Representative (starting 31 January 2006)                                 Mr. Christian Schwarz-Schilling
           Source: www.fbihvlada.gov.ba, Economist Intelligence Unit, CIA Factbook




           4.1.2. Federation of Bosnia and Herzegovina

             Institutional Form and Head of State of Bosniak/Croat Federation of Bosnia and Herzegovina
             Institutional Form                Republic
             President                         Mr. Niko Lozancic
             Date of election                  27 January 2003
                                               Bicameral Parliamentary Assembly
             Parliament                        • House of Representatives of the Federation (98 seats;
                                                  election by popular vote)
                                               • House of Peoples (60 seats; half Bosniak, half Croat)
           Source: FIPA, Economist Intelligence Unit, CIA Factbook




    C O U N T R Y FACT S H E E T        BOSNIA AND HERZEGOVINA                                                                 [9]
4. POLITICS



             Main Parties in House of Representatives
             of the Bosniak/Croat Federation of                                 Acronym        Positioning        % at 5 October
             Bosnia and Herzegovina                                                                               2002 election
             Party of Democratic Action                                              SDA    Bosniak nationalist        32.7
             Coalition (Koalicija):
                 • Croatian Democratic Community                                     HDZ
                                                                                                  Center               15.8
                 • Christian Democrats                                               DK
                 • HNZ                                                               HNZ
             Social Democratic Party                                                 SDP        Center left            15.6
             Party for Bosnia and Herzegovina                                        SBiH      Multi-ethnic            15.3
           Source: www.fbihvlada.gov.ba, Economist Intelligence Unit, CIA Factbook




             Composition of the Government of the Bosniak/Croat
                                                                                                              Name
             Federation of Bosnia and Herzegovina
             President (since 2003)                                                            Mr. Niko Lozancic (HDZ)
             Vice-president (since 2003)                                                       Mr. Sahbaz Dzihanovic (SzBiH)
             Vice-president (since 2003)                                                       Mr. Desnica Radivojevic (SDA)
             Prime Minister (since 2003)                                                       Mr. Ahmet Hadzipasic (SDA)
             Deputy Prime Minister & Minister of Finance                                       Mr. Dragan Vrankic (HDZ)
             Deputy Prime Minister & Minister of Sport/Culture                                 Mr. Gavrilo Grahova (SzBiH)
             Key Ministers                                                                                    Name
             Agriculture, water and forestry                                                   Mr. Marinko Bozic (HDZ)
             Defence                                                                           Mr. Miroslav Nikolic (HDZ)
             Education & science                                                               Mr. Zijad Pasic (SDA)
             Energy, mining & industry                                                         Resigned; nobody appointed
             Health                                                                            Mr. Tomo Lucic (HDZ)
             Interior                                                                          Mr. Mevludin Halilovic (SDA)
             Justice                                                                           Ms. Borjana Kristo (HDZ)
             Labour & social affairs                                                           Mr. Radovan Vignjevic (SDA)
             Trade                                                                             Mr. Maid Ljubovic (SzBiH)
           Source: Economist Intelligence Unit, CIA Factbook




    C O U N T R Y FACT S H E E T        BOSNIA AND HERZEGOVINA                                                                [10]
4. POLITICS


           4.1.3. Republika Srpska

             Institutional Form and Head of State of Republika Srpska
             Institutional Form               Republic
             President                        Mr. Dragan Cavic
             Date of election                 28 November 2002
                                              Bicameral Parliamentary Assembly
             Parliament                       • National Assembly (83 seats; election by popular vote)
                                              • Council of Peoples (28 seats; 8 Croats, 8 Bosniaks, 8 Serbs and
                                                 4 members of smaller communities; elected by National Assembly)
           Source: www.vladars.net, Economist Intelligence Unit, CIA Factbook



             Main Parties in House of Representatives                                                            % at 5 October
                                                                                Acronym      Positioning
             of the Republika Srpska                                                                             2002 election
             Serbian Democratic Party                                            SDS       Serb nationalist           31.2
             Party of Independent Social Democrats                               SNSD         Center left             21.8
             Party for Democratic Progress                                       PDP            Center                10.7
             Party of Democratic Action                                          SDA      Bosniak nationalist         7.1
             Serbian Radical Party                                               SRS       Serb nationalist           4.4
           Source: www.vladars.net, Economist Intelligence Unit, CIA Factbook



             Composition of the government of the Republika Srpska                                          Name
             President                                                                       Mr. Dragan Cavic (SDS)
             Vice-President                                                                  Mr. Ivan Tomlienovic (SDP)
             Prime minister                                                                  Mr. Pero Bukejlovic
             Key Ministers                                                                                  Name
             Agriculture                                                                     Mr. Rodoljub Trkulja
             Defence                                                                         Mr. Milovan Stankovic
             Economic affairs & co-ordination                                                Mr. Omer Brankovic
             Economy, energy & development                                                   Mr. Djorde Lajsic
             Education & culture                                                             Mr. Gojko Savanovic
             Finance                                                                         Mr. Branko Krsmanovic
             Health & social welfare                                                         Mr. Marin Kvaternik
             Interior                                                                        Mr. Darko Matijasevic
             Justice                                                                         Mr. Saud Filipovic
             Trade & Tourism                                                                 Mr. Boris Gaspar
           Source: www.vladars.net, Economist Intelligence Unit, CIA Factbook




    C O U N T R Y FACT S H E E T       BOSNIA AND HERZEGOVINA                                                                [11]
4. POLITICS


           4.1.4. Brcko district


           The Brcko district is created on the territory of the Republika Srpska and the Federation of Bosnia
           and Herzegovina following an arbitration process set up by the Dayton Peace Accords. The local
           administration is aided by an international supervisory regime. The District derives its powers of
           local self-government by virtue of each Entity having delegated all of its powers of governance as
           previously exercised by the two Entities and the three municipal governments within the pre-war
           Opstina, as defined in the Dayton Agreement (1995) to the District Government.


           Source: www.ohr.int




           Source: www.fipa.gov.ba




    C O U N T R Y FACT S H E E T     BOSNIA AND HERZEGOVINA                                              [12]
4. POLITICS



           4.2. EU RELATIONSHIP

           Chronology of Key Events in EU-Bosnia and Herzegovina Relationship
           April 1992:              Bosnia and Herzegovina declares independence – the civil war starts.

           November 1995:           The Dayton Peace Agreement puts an end to the war.

           1997:                    Regional Approach. The EU establishes political and economic conditionality
                                    for the development of bilateral relations.

           June 1998:               The EU/Bosnia and Herzegovina Consultative Task Force is established.

           1999:                    The EU proposes the new Stabilisation and Association Process for five
                                    countries of South-Eastern Europe, including Bosnia and Herzegovina.

           June 2000:               Feira European Council states that all the Stabilisation and Association
                                    countries are “potential candidates” for EU membership.

           November 2000:           Zagreb Summit; the Stabilisation and Association Process is officially
                                    endorsed by the EU and the Western Balkan countries (including Bosnia
                                    and Herzegovina).

           2001:                    First year of the new CARDS programme specifically designed for the
                                    Stabilisation and Association countries.

           March 2002:              Joint Actions are adopted for the appointment of an EU Special
                                    Representative (EUSR) and the launching of the EU Police Mission (EUPM).

           June 2003:               Thessaloniki Summit; the Stabilisation and Association Process is confirmed
                                    as the EU policy for the Western Balkans. The EU perspective for these
                                    countries is confirmed.

           November 2003: The Commission produces a Feasibility Study assessing Bosnia and
                                    Herzegovina’s capacity to implement a future Stabilisation and Association
                                    Agreement. The study concludes that negotiations should start once
                                    Bosnia and Herzegovina has addressed 16 key priorities.

           June 2004:               EU decides on a European Partnership for Bosnia and Herzegovina.

           December 2004:           EUFOR replaces SFOR (“Althea” operation).

           2005-2006:               100mn € has been allocated through CARDS for this period.


           Source: http://europa.eu.int/comm/enlargement




    C O U N T R Y FACT S H E E T      BOSNIA AND HERZEGOVINA                                                      [13]
               ECONOMICS


       5.1. ECONOMIC PANORAMA


       5.1.1. GDP Indicators

         GDP Indicators                                           2003         2004         Forecast 2005             Forecast 2006
         GDP (mn €)                                               6,194        6,637              7,005                     7,622
         Real GDP Growth (%)                                       3.5            5                 5.2                      5.5
         GDP per capita at Exchange Rate (€)                      1,642        1,732                NA                       NA
         GDP per capita at PPP (€)                                5,825        6,010                NA                       NA
       Source: World Bank 2005 World Development Indicators; Economist Intelligence Unit; wiiw database 2005; Foreign Investment
               Promotion Agency Bosnia and Herzegovina (FIPA)



         GDP Composition by sector 2004 (%)
         Services                                                                        61.6
         Industry (not including construction)                                           22.2
         Manufacturing                                                                   12.2
         Agriculture                                                                     10.6
       Source: Economist Intelligence Unit




       5.1.2. Trade Indicators

         Balance of Payment Indicators 2004
         Exports goods FOB (mn €*)                                                     1,690
         Imports goods FOB (mn €*)                                                     5,390
         Trade Balance (mn €*)                                                          -965
         Current Account Balance (mn €)                                               -1,610
         Stock of External Debt 2003 (mn €)                                            2,412
       Note: * Estimates by Economist Intelligence Unit
       Source: EBRD Transition Report 2004, Economist Intelligence Unit



       5.1.3. FDI Indicators

         FDI Indicators for 2004
         FDI Inward Stock (mn €)                                                       1,328
         FDI Inflow per capita (€)                                                       78.5
         FDI Inflow (% of GDP)                                                            4.6
         FDI Inflow (mn €)                                                                383
         FDI Inflow Forecast 2005 (mn €)                                                  550
       Source: wiiw Database on Foreign Investment 2005, FIPA




C O U N T R Y FACT S H E E T        BOSNIA AND HERZEGOVINA                                                                          [14]
5. ECONOMICS



             Top 5 Biggest FDI Investors 2004
             1                   Croatia                  518.2 mn KM               15.90%
             2                   Lithuania                493.6 mn KM               15.20%
             3                   Austria                    431 mn KM               13.30%
             4                   Slovenia                 295.3 mn KM                 9.10%
             5                   Germany                  242.6 mn KM                 7.50%
           With 1.96 KM per 1 € in 2004.
           Source: wiiw database on foreign investment 2005, FIPA



           5.1.4. Miscellaneous

             Country Credit Ratings (October 2005)
             COFACE Risk Category                                                           D
             OECD Export Credit Risk                                                        7
             Moody’s                                                                      B3
           Country Credit Ratings (October 2005)
             Unemployment (% of labour force)                                           45.5
             Labour Force (mn)                                                            1.1
             Inflation RPI                                                                0.8
             Private Consumption 2003 (% of GDP)                                        91.7
             Fiscal Balance 2003 (% of GDP)                                               0.4
           Source: www.coface.com; www.oecd.org; www.moodys.com; EBRD Transition Report 2004,
                   Economist Intelligence Unit




    C O U N T R Y FACT S H E E T       BOSNIA AND HERZEGOVINA                                   [15]
5. ECONOMICS



           5.2. GENERAL MACRO ECONOMIC DATA


           5.2.1. GDP Indicators

             General GDP Indicators 2003                                        GDP (mn €)                    GDP per capita at PPP (€)
             Albania                                                                  5,391                                   3,619 1
             Bosnia and Herzegovina                                                   6,194                                  5,825 1
             Bulgaria                                                               17,529                                    6,575
             Croatia                                                                25,009                                    9,373
             FYR Macedonia                                                            4,116                                   6,002
             Moldova                                                                  1,728                                   2,410
             Romania                                                                50,266                                    6,478
                                              2
             Serbia and Montenegro                                                  17,272                                    4,113
                        3
             SEEC-8                                                               127,505                                   44,395
           PPP=Purchasing power parity
           Note: 1) Estimate; 2) Excluding Kosovo; 3) wiiw estimate
           Source: National Banks, National Statistics Institutes of SEE countries and estimate by the Vienna Institute for International Economic
                   Studies (wiiw)



             Growth in Real GDP (annual average growth)                                  2003*              2004*             Forecast 2005
             Albania                                                                      6.0                 6.0                       6.0
             Bosnia and Herzegovina                                                       3.5                 5.0                       5.2
             Bulgaria                                                                     4.3                 4.5                       5.0
             Croatia                                                                      4.3                 3.2                       4.1
             FYR Macedonia                                                                3.1                 3.0                       3.3
             Moldova                                                                      6.3                 7.0                       6.5
             Romania                                                                      4.9                 5.0                       5.4
                                              2
             Serbia and Montenegro                                                        2.0                 3.0                       4.0
                        3
             SEEC-8                                                                       4.3                 4.5                       4.7
           Note: 1) Estimate; 2) Excluding Kosovo; 3) wiiw estimate
           Source: World Bank, 2005 World Development indicators - 2004 EBRD Transition report – INSTST Albania
           *Source: National Banks, National Statistics Institutes of SEE countries and estimate by the Vienna Institute for International Economic
                     Studies (wiiw)



           5.2.2. FDI Indicators

              FDI Inflows (mn €)                                2004*             Forecast 2005
             Albania                                               201                      400
             Bosnia and Herzegovina                               383                      550
             Bulgaria                                           1,958                    1,800
             Croatia                                               845                   1,000
             FYR Macedonia                                         121                      100
             Moldova                                               121                      100
             Romania                                            4,098                    3,500
             Serbia and Montenegro                                 804                      800
             SEEC-8                                             8,454                    8,100
           *Source: National Bank, BA-CA Konzernvolkswirtschaft, *2004 figure for Moldova is a projec-
                    tion by 2004 EBRD Transition Report.
           Source: WIIW Database on FDI 2005



    C O U N T R Y FACT S H E E T        BOSNIA AND HERZEGOVINA                                                                                [16]
5. ECONOMICS



              FDI Stock End of 2004 (mn €)
             Albania                                                                           1,165
             Bosnia and Herzegovina                                                            1,328
             Bulgaria                                                                          6,592
             Croatia                                                                       10,441
             FYR Macedonia                                                                         945
             Moldova                                                                               725*
             Romania                                                                       14,471
             Serbia and Montenegro                                                             3,361
             SEEC-8                                                                        39,028
           Source: National Bank, BA-CA Konzernvolkswirtschaft, *2004 figure for Moldova is a projec-
                   tion by 2004 EBRD Transition Report.




                                                             SEE FDI inflows in USD Million
                                                                                                                    11 695
                                                                      - 1999-2005 -
                                                                                                                    150
                                                                                                                       120
                                                                                                                    288
                                                                                                                    1 600
                                                                                                          9 309
                                                                                                          150        540
                                                                                          8 059               148
                                                                                                          343
                                                                                             97           1 028
                                                                                          71                        2 697
                                                                                             178
                                                                                          1 405            490
                        Macedonia                                                                         1 232
                          Moldova                                                         382
                           Albania                                4 404
               Serbia & Montenegro       3 657      3 755                                 2 070
                                                                            3 719
                                            32                       439
                                         38            176       102
                                            51     127               204        77
                                        112            143       165        132
                               BiH        177       25             130          135                                 5 300
                                                     150                    562                           5 020
                           Bulgaria       802                      803                    2 156
                                                     998                      266
                           Romania       1 025                    1 154       876
                                                    1 051
                                                                            1 080
                              Croatia    1 420                    1 407                   1 700
                                                    1 085                                                  898      1 000
                                                                             591

                                         1999       2000          2001       2002         2003          2004        2005
                                                                                                     (estimate) (projection)

               Source: EBRD



           5.2.3. Demographic Indicators

              Population vs Labour Force 2004                                   Population (mn)                           Labour Force (mn)
             Albania                                                                3.1                                          1.1
             Bosnia and Herzegovina                                                 3.9                                          0.6
             Bulgaria                                                               7.8 (2015 – 7.2)                             3.3
             Croatia                                                                4.5                                          1.4
             FYR Macedonia                                                          2.0 (2015 – 2.1)                             0.8
             Moldova                                                                3.8 (2015 – 4.2)                             1.4
             Romania                                                            21.9 (2015 - 20.9)                              10.0
             Serbia and Montenegro                                              10.6                                            23.0
             SEEC-8                                                             57.0                                            20.9
           Source: UN Reference Centre; Human Development Report 2005 International cooperation at a Crossroads: Aid, trade and security in an
                   unequal world.




    C O U N T R Y FACT S H E E T         BOSNIA AND HERZEGOVINA                                                                         [17]
              KEY ACHIEVEMENTS IN IMPROVING
              THE INVESTMENT ENVIRONMENT

         Investment Promotion
         • BiH Law on FIPA adopted and opening of FIPA offices in Banja Luka and Mostar in 2004
         • Establishment of Sector Authority for Development and Entrepreneurship
            (in Ministry of Foreign Trade and Economic Relations of BiH) in 2004
         • Establishment of Ministry of Development, Entrepreneurship and Crafts (2004)
         • Establishment of Agency for SME Development in Republic of Srpska (2004)



         Investment Policy
         • Harmonisation of customs tariffs in 2002
         • Law on Business Registration (2004): fast and uniform registration, harmonisation of State, Entity
            and Brcko District legislation to EU regulations
         • Reforms to facilitate export activities to domestic companies and to reduce administrative
            burdens for FDI (Jan 2005)



         Tax Policy
         • Law on customs tariffs (Jan 2003), harmonised with EU standards, but no unified customs
            administration at State level
         • Adoption of law on Indirect Tax in 2003



         Entrepreneurship and SME support
         • 5-year programme for SME development adopted in Republic of Srpska (2001)
         • Review of the effectiveness of existing FDI laws and regulations, and identification
            of necessary improvements (June 2001)
         • Adoption of SME Law by Republic of Srpska (2004)
         • Allocation of € 1.5 mn for SME support in 2004 in Republic of Srpska
         • Action Plan of BiH government for Implementation of Priority Reforms
            (completed March 2004)




C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                   [18]
6. KEY ACHIEVEMENTS IN IMPROVING THE INVESTMENT ENVIRONMENT



             Anti-Corruption
             • Law on Civil Service (2004):
                 - Establishment of Civil Service Agency (CSA) at State and Entity level that recruits and
                   evaluates civil servants
                 - Central registers of civil servants at State level and in Republic of Srpska
                 - Joint training curriculum for civil servants (developed by CSAs)
             • Start up of Bulldozer Project (initiative of High Representative Mr. Paddy Ashdown) in 2002
                Over 500 companies replied to questions of the Bulldozer Committee (existing of BiH
                businessmen and representatives of key financial institutions)



             Corporate Governance
             • Adoption of law on competition by State parliament in 2002
             • Law on consumer protection (2004) to introduce quality standards and curb counterfeit
                activity
             • Establishment of a BiH Court and Prosecutor’s Office (2003)
           Source: EPPA Monitoring Instruments 2000-2005; FIPA




    C O U N T R Y FACT S H E E T      BOSNIA AND HERZEGOVINA                                                 [19]
              SUCCESS STORIES FOR FDI


         Company               Sector       Country of origin   FDI         Type          Year
         Hemofarm Banja        Drug         Serbia Montenegro   € 10.2 mn   Greenfield    2003
         Luka                  production
         Hypo Alpe-Adria       Banking      Austria             Na          Acquisition   2001/2002
         Bank
         Bosna Banka           Banking      Saudi Arabia & UAE Na           Greenfield    2000
         International
         Birac                 Aluminium    Lithuania           € 16.1 mn   Privatisation 1978-2004
                               production
         Kakanj Cement         Cement       Germany             € 49 mn     Privatisation 2000
         Hadzici Bottling      Food industry Holland            $ 20 mn     Privatisation 2000
         facility
         Mittal Steel Zenica   Steel        UK                  $ 280 mn    Privatisation 2004




C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                            [20]
7. SUCCESS STORIES FOR FDI



           7.1. HEMOFARM D.O.O. BANJA LUKA

           TOTAL INVESTMENT IN 2003:                          € 10.2 mn
           KIND OF INVESTMENT:                                Greenfield
           EMPLOYMENT GENERATED IN 2004:                      116 new jobs
           FOREIGN PARENT COMPANY:                            Hemofarm Koncern A.D. VRSAC Serbia and Montenegro
           LOCATION OF INVESTMENT:                            Banja Luka
           OTHER SEE COUNTRIES WHERE
           COMPANY HAS INVESTED:                              Serbia and Montenegro

           Chief Executive:                                   Mr. Strahinja Kujundzic
           Sector of Activity:                                Drug production

           Novakovici bb Banja Luka
           Tel: +387 51 389 200
           Fax: + 387 51 385 457
           tmiscevic@hemofarm.rs.ba
           www.hemofarm.com




                         “The Hemofarm factory in Banja Luka was designed in accordance with all the principles and standards
                         of Good Manufacturing Practice and equipped with top quality equipment from the best Western European
                         producers.There is a well equipped laboratory in the factory for quality control and a modern high-rise
                         warehouse. Hemofarm Banja Luka is the second drug factory in Bosnia and Herzegovina. In view of its
                         technological specifications, it is one of the most up-to-date ones in this part of the Balkans.
                                                                                Mr. Strahinja Kujundzic, Chief Executive
                                                                                                                        ”
           Hemofarm is a company with four decades of experience in drug production. In the course of the
           last decade Hemofarm experienced real expansion. The Group is made up of the parent company
           and 21 subsidiaries in Serbia and Montenegro and abroad. Hemofarm koncern is a joint stock
           company with 100% of the equity capital. After the first round of property transformation Hemofarm
           koncern had 10,301 shareholders in all, 1,816 of them being internal and 8,485 external shareholders.
           The sales growth was reflected on the market share of the parent company and the subsidiaries.
           The share of Hemofarm Group in the total drug sales of local producers in the country during the
           first quarter of 2003 was 44 %. The Association of Pharmaceutical Producers data indicate that the
           market share in the same quarter this year is 46 %. Apart from being dominant in the domestic
           market, Hemofarm registers a significant 31 % export growth in relation to 2003. US$ 20.6 mn worth
           of drugs was exported during the initial four months of 2004. 61 % of the value was sold to the CIS
           countries, 30 % to the Southeast Europe region, 4 % to African markets, 3 % to the Middle East region,
           and 2 % to the EU market.


           A precondition for further growth of the Group’s market share is the continuous introduction of new
           contemporary pharmaceuticals to the market. In the first four months of 2004 eleven products were
           registered in the company’s home country and 8 abroad, while marketing authorisations for 4 new
           drugs in the company’s home country and 67 abroad are pending.


           High-quality product range, wide drug pallete, respect amongst customers and suppliers in the country
           and abroad are ongoing objectives and preconditions for further expansion of the Hemofarm Group.


    C O U N T R Y FACT S H E E T    BOSNIA AND HERZEGOVINA                                                                  [21]
7. SUCCESS STORIES FOR FDI



           7.2. HYPO ALPE-ANDRIA BANK D.D.

           KIND OF INVESTMENT:                       Acquisitions of private companies
           EMPLOYMENT:                               819
           FOREIGN PARENT COMPANY:                   Hypo Alpe Adria Group - Austria
           LOCATION OF INVESTMENT:                   Sarajevo, Mostar, Banja Luka, Tuzla, Bijeljina and Biha_
           OTHER SEE COUNTRIES WHERE
           COMPANY HAS INVESTED:                     Serbia and Montenegro, Croatia
           Date of Establishment:                    2001/2002

           Sector of Activity:                       Banking, Leasing, Consulting

           HYPO ALPE-ADRIA-BANK (Mostar office)
           Kneza Branimira 2b
           88000 Mostar
           Bosna i Hercegovina
           bank.bih@hypo-alpe-adria.com
           www.hypo-alpe-adria.ba
           www.hypo-alpe-adria.com



                         Hypo Alpe-Adria-Group has been represented as a bank in Bosnia and Herzegovina since
                         2001: by Hypo Alpe-Adria-Bank Mostar and by Hypo Alpe-Adria-Bank Banja Luka in the
                         Republica Srpska. Both banks offer a full portfolio of traditional banking services. From
                         an assets point of view, Hypo Alpe-Adria-Bank Mostar ranks third out of the 37 banks
                         in Bosnia and Herzegovina. At the moment the Bank employs 398 people. The Banja Luka
                         bank was acquired in 2002 under the name Kristalbanka and renamed Hypo Alpe-Adria-
                         Bank employing 360 people, operating in 29 locations and has over 180,000 customers.


           Hypo Alpe-Adria-Leasing has acted as one of the pioneers of the leasing business in Bosnia and
           Herzegovina since it entered the market in 2001. The company is the uncontested market leader
           with a market share of 68 percent. It employs 53 people and has branches in the strategically
           important towns of Sarejevo, Banja Luka, Mostar, Tuzla, Bijeljina and Biha_. The company is
           headquartered in the capital, Sarajevo, and thus in the region where growth is the most dynamic.


           In 2002 followed the foundation of Hypo Alpe-Adria-Consultants, which has 8 employees and
           specialises in real estate and investment management. It is the only consultants firm of its kind
           operating in Bosnia and Herzegovina.




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                    [22]
7. SUCCESS STORIES FOR FDI



           7.3. BOSNA BANK INTERNATIONAL

           KIND OF INVESTMENT:                                  Greenfield
           FOREIGN PARENT COMPANY:                              Islamic Development Bank1
                                                                Dubai Islamic Bank2
                                                                Abu Dhabi Islamic Bank3
           LOCATION OF INVESTMENT:                              Sarajevo, Biha_, Bugojno, Visoko
           SECTOR OF ACTIVITY:                                  Banking sector
           Date of Establishment:                               2000

           Trg djece Sarajeva b.b.
           71000 Sarajevo, B&H
           Tel: + 387 33 275-212, 275-202
           Fax: + 387 33 472 159
           info@bbi.ba
           www.bbi.ba




                          Bosna Bank International Sarajevo (Acronym: BBI) was established on September 19
                          2000 as the first bank in Europe to operate on the principles of Islamic banking. With
                          the founding capital in the amount of KM 47.52 million, BBI is ready to embark on the
                          rebuilding and further development of Bosnia and Herzegovina.


                          The founders of BBI are some of the most powerful financial institutions in the Gulf with
           resources exceeding US$ 22 billion and they are supporting the business development worldwide.




           1. Seated in Jeddah, Kingdom of Saudi Arabia is the major shareholder of BBI with 45,46% of the shareholding capital
           2. Seated in Dubai, United Arab Emirates is a shareholder of BBI with 27,27% of the shareholding capital
           3. Seated in Abu Dhabi, United Arab Emirates is a shareholder of BBI with 27,27% of the shareholding capital



    C O U N T R Y FACT S H E E T        BOSNIA AND HERZEGOVINA                                                                    [23]
7. SUCCESS STORIES FOR FDI



           7.4. ALUMINA FACTORY “BIRAC”

           TOTAL INVESTMENT IN 2004/2005:          € 16.1 mn
           KIND OF INVESTMENT:                     Privatisation of Birac
           TOTAL EMPLOYMENT 2005:                  1243-1301
           SHARE OF COMPANY OWNED
           BY FOREIGN RESIDENTS:                   63.86%
           FOREIGN PARENT COMPANY:                 UBIG - Lithuania
           LOCATION OF INVESTMENT:                 Republic of Srpska
           OTHER SEE COUNTRIES WHERE
           COMPANY HAS INVESTED:                   Serbia and Montenegro

           Chief Executive:                        Mr. Arvydas Zygis
           Sector of Activity:                     Aluminium production
           Date of Establishment:                  October 6, 1978

           Zvornik, 75400
           Tel: + 387 56 260 435
           Fax: + 387 56 26 726
           sec@birac.ba



           "Birac" has a capital of € 500 mn and was the first strategic company sold through privatisation in
           the Republic of Srpska. Lithuanian Ukio Banko Investicine Grupe (UBIG) privatised 63,86 % of the
           share capital. Apart from the purchase of the Birac aluminum factory, UBIG invested in the Balkan
           Investment Bank and in ten other big companies in the region. Total investments of UBIG in projects
           in Bosnia and Herzegovina mounted to € 13.3 mn. The Lithuanian group acquired large shares in
           the food producers PIK, Thitoprodukt and Semberka, the brewery Banja Luka Pivara, the bauxite
           miner Boksit, several grain and metal processors, bakeries, hotels and the telecommunications operator
           Telekom Srpska.


           The investments into the aluminum plant, which is one of the top companies in Bosnia and
           Herzegovina, increased up to € 5.1 mn and € 1.5 mn has been paid for company shares. After a
           break of almost one year, the Birac plant resumed the production of aluminum in August 2004, thanks
           to the UBIG financial injection.




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                   [24]
7. SUCCESS STORIES FOR FDI



           7.5. KAKANJ CEMENT

           INVESTMENT UNTIL 2010:                     € 49 mn
           KIND OF INVESTMENT:                        Privatisation of Kakanj cement plant
           TOTAL EMPLOYMENT:                          360 (30 new jobs created)
           FOREIGN PARENT COMPANY:                    Heidelberger Zement AG - Germany
           LOCATION OF INVESTMENT:                    Zenica Doboj and Lukavac
           OTHER SEE COUNTRIES WHERE
           COMPANY HAS INVESTED:                      Bulgaria, Croatia, Romania

           Chairman:                                  Mr. Hans Bauer
           Sector of Activity:                        Cement
           Date of Establishment:                     2000

           HeidelbergCement
           Central Europe East
           Berliner Strasse 6
           69120 Heidelberg, Germany
           Phone: +49 (0) 62214810
           Fax: +49 (0) 6221481757
           www.hzag.de
           http://www.heidelbergcement.ba

                        Heidelberger Zement acquired a 51 % participation in the Kakanj cement plant in Bosnia-
                        Herzegovina. The contract with the privatisation agency was signed on 21 July 2000 in
                        the presence of Prime Minister Bicakcic of Bosnia-Herzegovina.
                        The plant is situated in the canton Zenica Doboj, 50 km from Sarajevo. It was built in 1974
                        with an annual capacity of 550,000 tons. It covers about 35 % of Bosnian cement
                        consumption and produces composite cements (slag, fly ash). The plant has 360 employees.
                        “Following the privatisation of Kakanj Cement, all of the company’s employees were
                        retained, and a further 30 new jobs have been created at the firm in the course of the last
                        four years.
           Part of the HeidelbergCement investment has included the installation of a state of the art computerised
           administration system, accompanied by an employee-training scheme in computer literacy.
           This kind of investment represents a win-win proposition for workers, shareholders, customers and
           society as a whole. It raises productivity, and at the same time it raises the stock of commercial resources
           that exists in BiH. When you raise standards in one cement company, you create the impetus for a
           corresponding rise right across the cement sector, and that has a knock-on effect outside the sector.
           This privatisation has also had a positive and tangible impact on the company’s environmental profile.
           Following plant modernisation, production capacity has increased by 10 percent. At the same time,
           dust emissions have decreased by an astonishing 97 percent. Before privatisation, dust emissions
           exceeded 300 milligrammes per square metre – an utterly unacceptable figure, especially when you
           consider the fact that the statutory European Union limit is just 50 milligrammes per square metre.
           Today, the company emits 10 milligrammes per square metre.
           In addition, the plant has introduced ISO quality control and environmental management standards,
           and the company maintains a high level of public accountability through an annual Open Door event
           at which it informs the public about its activities.” (Remarks by Principal Deputy HR Larry Butler at
           a Ceremony Marking the Fifth Anniversary of HeidelbergCement’s Investment in Kakanj Cement)
           The Kakanj cement plant is one of the two plants in the country, the other plant - Lukavac - with a
           capacity of 350,000 tons is going to be privatised this year.
           The acquisition of the Kakanj cement plant is another step in the future development of Heidelberger
           Zement's network in Central Europe East. In this region Heidelberger Zement is already present in
           8 countries: 14 cement plants (Kakanj included), 7 lime plants, 100 ready-mixed concrete plants, 70
           aggregates plants and 3 dry mortar plants.
           Heidelberger Zement started its activities in Bosnia and Herzegovina in January 2000 by opening the
           first ready-mixed concrete plant in Lukavac.

    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                         [25]
7. SUCCESS STORIES FOR FDI



           7.6. HADZICI BOTTLING FACILITY

           INVESTMENT IN 2000:                       $ 20 mn
           KIND OF INVESTMENT:                       Privatisation of Hadzici Bottling Facility
           EMPLOYMENT:                               150-200 new jobs
           FOREIGN PARENT COMPANY:                   Coca-Cola Beverages Holding – NL
           LOCATION OF INVESTMENT:                   Sarajevo
           OTHER SEE COUNTRIES WHERE
           COMPANY HAS INVESTED:                     Moldova

           Sector of Activity:                       Food industry
           Date of Establishment:                    2000




                        The Coca Cola investment in BiH involves the rehabilitation and expansion of the Hadzici
                         Bottling Facility, a small bottling plant located in a suburb of Sarajevo that was damaged
                         and looted during the war. The company invested more than $20 million in upgrades,
                         including expansion and new technology. The new facility opened in August 2000 and
                         employs 150 to 200 local residents. The World Bank's Multilateral Investment Guarantee
                         Agency (MIGA) in co-operation with the European Union's Investment Guarantee Trust
                         Fund insures this investment by guaranteeing coverage against the risks of war and civil
                         disturbance.


           The project is ground-breaking in several ways:
                 • This large-scale investment has encouraged other foreign firms to follow suit. Others have
                    said that without the presence of a large multinational like Coca-Cola, they would have
                    hesitated to consider investing in the country.
                 • Coca-Cola Beverages was the first multinational company to register its operations in both
                    entities of Bosnia and Herzegovina (the Federation and the Republic of Srpska), and the first
                    to invest in a privatisation project. Political divisions within the country had made this type
                    of registration impossible in the past.
                 • The project supports rehabilitation and technological modernisation of a pre-war industry.


           The investment is creating new jobs, both in the production and distribution of Coca-Cola beverages,
           and is expected to have an impact on employment in related areas such as construction, supply and
           transport, and sales and marketing. (Source: www.miga.org )




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                     [26]
7. SUCCESS STORIES FOR FDI



           7.7. MITTAL STEEL ZENICA

           INVESTMENT 2004 - 2014:                   $ 80 mn (Share Capital)
                                                     $ 65 mn (Working Capital)
                                                     $ 135 mn (plant & Equipment)
           KIND OF INVESTMENT:                       Privatisation of BH Steel
           TOTAL EMPLOYMENT:                         2850
           SHARE OF COMPANY OWNED
           BY FOREIGN RESIDENTS:                     51%
           FOREIGN PARENT COMPANY:                   Mittal Steel - Netherlands
           LOCATION OF INVESTMENT:                   Zenica
           OTHER SEE COUNTRIES WHERE
           COMPANY HAS INVESTED:                     Macedonia, Romania

           Head of company:                          Mr. Lakshmi Mittal
           Date of establishment:                    2004

           Mittal Steel Company N.V.
           15th Floor
           Hofplein 20
           3032 AC Rotterdam
           The Netherlands
           Tel: +31 10 217 8800
           Fax: +31 10 217 8850
           www.mittalsteel.com


                        Mittal Steel acquired 51 % of BH Steel, located in Zenica, Bosnia, in August 2004. As part
                         of the agreement with the government of the Federation of Bosnia-Herzegovina and the
                         Kuwaiti Investment Agency, Mittal Steel agreed to invest $80 million in new share capital,
                         $65 million in working capital and a further $135 million on new plant and equipment
                         over ten years. The sums represent the biggest ever foreign investment in Bosnia-
                         Herzegovina.


                         BH Steel currently produces 220,000 tons of steel, made up of a variety of long products,
           including forgings, bar and rod. Mittal Steel is confident that its production capacity can be
           substantially increased by the implementation of the capital expenditure programme. This will
           include restarting the integrated production route at BH Steel, commissioning of electric arc furnace
           production, modernising the remaining facilities and improving the product portfolio.


           The acquisition complements the joint venture agreement reached earlier in the year with RZR Ljubija
           for the mining and development of the Ljubija iron ore mines.


           Mittal Steel has stated its intention to retain all 2,850 active employees of BH Steel and expects to
           recruit further as BH Steel reaches its full production capacity.
           (Source: www.mittalsteel.com)




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                     [27]
              MAIN ACTORS IN THE INVESTMENT
              AND BUSINESS ENVIRONMENT

       8.1. PUBLIC ACTORS


       8.1.1. Bosnia and Herzegovina: State Level




                                  State of BiH


                                                                  EPPU




                  FIPA             Network of               Ministry of Foreign Trade and
                                    Regional                Economic Relations (MOFTER)
                                  Development
                                    Agencies
                                     (RDAs)
                                                            Division for Development and
                                                                  Entrepreneurship



                                                         Department for Promotion and
                                                        Development of Entrepreneurship



                                          Network of Regional
                                         Development Agencies
                                                (RDAs)




            NERDA                HERDA            SERDA           REZ-RDA         ARDA
           North east           Herzegovi        Sarajevo          Central      North west




C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                       [28]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


           8.1.1.1. Unit for Economic Policy Planning and Implementation of BiH Medium Term Development
                     Strategy (EPPU)


           Main goal of EPPU is to implementation the Mid-Term Development Strategy of BiH (PRSP). EPPU
           has two units:
                 • Unit for Monitoring and Implementation
                 • Unit for Economic Planning and Research


           PRSP objectives related to the development of SMEs in BiH:
                 • Adoption of an SME Strategy for BiH -> Enterprise Development Law
                 • Establishment of coherent and consistent legal and institutional framework for supporting
                    the development of entrepreneurship across all BiH
                 • Establishment of Guarantee Fund to support SMEs
                 • Encouragement of training and education of entrepreneurs and SME managers


           http://www.eppu.ba/


           8.1.1.2. Foreign Investment Promotion Agency (FIPA)


           FIPA is a government agency providing free information and contact services for foreign investors
           evaluating investment opportunities in BiH.


           Activities:
                 • FIPA offers practical assistance at all stages, from initial investment planning to full
                    implementation, to make any foreign investment project in BiH a successful event. All services
                    for foreign investors are free of charge and on a confidential basis
                 • FIPA provides investors with extensive information related to BiH business environment,
                    especially those about available investment projects, suitable business and cooperation
                    partners from BiH, about attractive companies in privatisation process.
                 • Building up partnership relations with 5 Regional Development Agencies (RDAs). FIPA signed
                    Memorandum of Understanding with RDA’s in April 2005.


           http://www.fipa.gov.ba/


           8.1.1.3 Network of Regional Development Agencies (RDAs)


           Establishment of 5 Regional Development Agencies (RDAs) in 2003 under framework of Regional
           Development Project supported by EC, covering the whole territory of BiH:
                      - North East BiH (NERDA)
                      - Herzegovina (HERDA)
                      - Sarajevo (SERDA)
                      - Central BiH (REZ-RDA)
                      - North-West BiH (ARDA)




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                    [29]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


           About the RDAs:
                 • Innovative point: inclusion of cantons and municipalities belonging to both entities
                 • Process of elaborating their Regional Development Strategies, according to EURED guidelines
                    (http://www.eured-bih.org ). The EURED project finished on October 31st 2005. RDA’s continue
                    to perform their activities by themselves.
                 • Creating regional partnership among all key local partners


           8.1.1.4. Ministry of Foreign Trade and Economic Relations (MOFTER)


           Establishment of a Division for Development and Entrepreneurship, including a Department for
           Promotion and Development of Entrepreneurship in 2003.


           Problems:
                 • No budget for programme funding.
                 • Only two employees to cover the workload.
                 • No SME Strategy (in drafting phase)


           Poverty Reduction Strategy Programme (PRSP) with a section on private sector development (World
           Bank and IMF support):
           GOALS of PRSP:
                 • Adoption of an SME Strategy for BiH -> Enterprise Development Law
                 • Establishment of coherent and consistent legal and institutional framework for supporting
                    the development of entrepreneurship across all BiH
                 • Establishment of Guarantee Fund to support SMEs
                 • Encouragement of training and education of entrepreneurs and SME managers


           http://www.mvteo.gov.ba/


           8.1.2. Federation of Bosnia and Herzegovina




                                                 Federation of BiH




                     Ministry of Development,
                                                                    Agency for Privatisation
                    Entrepreneurship and Craft




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                  [30]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


           8.1.2.1. Ministry of Development, Entrepreneurship and Craft

                 • Responsible for developing the SME sector
                 • Better budget status than at state level
                 • Working on:
                      - Draft of Enterprise Development or SME Law (Cf scope of Enterprise Development Law
                         at state level)
                      - SME Strategy
                      - SME Agency


           8.1.2.2. Agency for Privatisation


           Agency for Privatization in Federation of Bosnia and Herzegovina ( FPA ) is specialised organisa-
           tion in Bosnia and Herzegovina performing professional, advisory, promotional, educational and
           other business activities relating to privatisation process.


           apfbih@bih.net.ba
           www.apf.com.ba


           8.1.3. Republika Srpska


              Republika Srpska Government



                                                    Ministry of Economy, Energy and Development



                                                         Department for SMEs and Handicrafts


           8.1.3.1. Ministry of Economy, Energy and Development

                 • Developing the SME sector
                 • SME Strategy adopted in December 2001: SME Development Programme 2002-2005
                 • Approval of Law on Incentives for SMEs providing legal framework for SME Agency and Fund
                    for SME Development
                 • Department for SMEs and Handicrafts: Establishment of a Revolving Credit Fund for SMEs
                    in 2003 with 7.5 mn € start-up capital




    C O U N T R Y FACT S H E E T    BOSNIA AND HERZEGOVINA                                              [31]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


           8.1.4. Brcko District


                 Brcko District Government



                                                  Department of Development and Land Planning



                                                   Development Agency of Brcko District (BDDA)


           8.1.4.1. Department of Development and Land Planning

                 • SME Development
                 • Establishment of the Development Agency of Brcko District (BDDA)
                 • Elaboration of Regional Development Strategy (2002-2006)

           8.1.4.2. Development Agency of Brcko District (BDDA)

           Executive agency in charge of strategy implementation:
                 • Establishment of a business service centre
                 • Introduction of “one-stop-shop” for business registration


           www.rabd.org
           nukovic@rabd.org (Mr. Admir Nukovic Director BDDA)




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                   [32]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT



           8.2. PRIVATE ACTORS



                                                     State of BiH




                                                                                The Employers
                    Foreign Investors               Foreign Trade
                                                                                 Association
                       Association                 Chamber of BiH
                                                                                    of BiH




                         Federation                   Republika
                                                                                Brcko District
                           of BiH                      Srpska




                         Chamber of                  Chamber of                  Chamber of
                          Economy                    Commerce                    Commerce




                       10 Cantonal                   6 Regional
                       Chambers of                  Chambers of
                        Commerce                     Commerce


           8.2.1. State of BiH

           8.2.1.1. Foreign Investors Association (currently not operational)

                 • Facilitate active and constructive dialogue between investors and government
                 • Promote the increase of foreign investment


           Contact:        Mr. Alexander Zsolnai (HVB Central Profit Banka – Chairman & CEO)
                           Tel: +387 33 533 433
                           Fax: + 387 33 253 690

           8.2.1.2. Foreign Trade Chamber of BiH

           Activities:
                 • Representing interests of the member companies abroad directly and through diplomatic
                    and consular networks;
                 • Performing activities of public authorisations;

    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                          [33]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


                 • Co-operation with other Chambers in the country and abroad;
                 • Promoting and realising education programs;
                 • Developing business and computer systems and connecting to international data-bases;
                 • Developing favourable conditions for foreign investments and joint-ventures;
                 • Collecting and elaborating economic data and market analyses in the framework of foreign
                    economic relations;
                 • Promoting the Bosnia and Herzegovina economy and presenting the products of BH companies
                    at international fairs in the country and abroad;
                 • Supplying information on the legal system, economic legislation, including legal services to
                    foreign and local economic entities.


           http://www.komorabih.com
           cis@komorabih.com (general e-mail address)
                                                   ^
                                                    c
           mahirh@komorabih.com (Mahir Hadziahmetovi´, President of BiH Foreign Trade Chamber)


           8.2.1.3. The Employers Association of BiH


           Activities:
                 • Representation and advocacy of employer side interests in society
                 • In charge of Bulldozer Initiative (rapid improvement of business climate in BiH)


           http://www.buldozer.ba/


           8.2.2. Federation of Bosnia and Herzegovina


           8.2.2.1. Chamber of Economy


           Activities:
                 • Co-operation with the bodies of the executive authorities and administration of the BH
                    Federation
                 • Improvement of the economy and the entrepreneurship
                 • Promotion of the economy of the BH Federation
                 • Providing professional consulting services to the members and to the cantonal/regional
                    chambers in preparing and finalising of the projects.
                 • Public authorisations according to the law
                 • Functions of the Court of Honor and the Permanent Court
                 • Other activities related to functioning of the Chamber of Economy of Federation of B&H.


           www.kfbih.com
           info@kfbih.com




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                                 [34]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


           8.2.2.2. 10 Cantonal Chambers of Commerce


                 • Chamber of Economy of Sarajevo Canton
                   La Benevolencije br.8
                   71000 Sarajevo


                   President: Kemal Grebo
                   Tel: 033/250-190
                   Fax: 033/250-190
                   webmaster@pksa.com.ba
                   www.pksa.com.ba


                 • Chamber of Economy of Tuzlansko-Podrinjski Canton
                   Trg Oslobobenja bb
                   75000 Tuzla

                                       ^   ^
                                            c
                   President: Imsir Imsirovi´
                   Tel: 035/258-275
                   Fax: 258-271
                   kpktz@bhbusiness.com


                 • Chamber of Economy of Unsko-Sanski Canton
                   501. Slavne Brigade bb
                             c
                   77000 Biha´

                                   ^
                                          c
                   President: Ismet Pasali´
                   Tel: 037/310-995
                   Fax: 037/310-996
                   pkusk@bih.net.ba
                   www.pkusk.com.ba

                                                   ^
                 • Chamber of Economy of Zenicko-Dobojski Canton
                   M.Tarabara br.15
                   72000 Zenica

                                               ^
                   President: Ibrahim Avdic
                   Tel: 032/403 028
                   Fax: 032/286-779
                   pkzedo@bih.net.ba
                   www.pkzedo.com.ba




    C O U N T R Y FACT S H E E T       BOSNIA AND HERZEGOVINA          [35]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


                 • Chamber of Economy of Bosansko-Podrinjski Canton
                   Gamal Abdel Ganema br.19
                                   ^
                   73000 Gorazde

                                                ^
                   President: Zijo Terovic
                   Tel: 038/227-644
                   Fax: 038/227-350

                                                                    ^
                 • Chamber of Economy of Zapadno-Hercegovacki Canton
                                           ^
                   Fra Grge Martica bb (Building of Canton)
                                       ^
                   88240 Posusje


                   President: Zvonko Landeka
                   Tel: 039/682-246; 039/682-247
                   Fax: 039/682-248


                 • Chamber of Economy of Hercegbosanski Canton
                   Trg Kralja Tomislava bb
                   80101 Livno

                                           ^
                   President: Ivo cavar
                   Tel: 034/203-613
                   Fax: 202-256


                 • Chamber of Economy of Srednje-Bosanski Canton Jajce
                                   ^
                   Zgrada opcine
                   70101 Jajce

                                                    ^^
                   President: Asim Gradincic
                   Tel: 030/658-678
                   Fax: 658-678

                                                          ^
                 • Chamber of Economy of Hercegovacko-Neretvanski Cantona Mostar
                   88000 Mostar

                                                     ^
                   President: Perica Jurkovic
                   Fax: 036/397-354


           8.2.3. Republika Srpska


           8.2.3.1. Chamber of Commerce and Industry


           Activities:
                 • Bundle business opportunities for local and foreign investors


    C O U N T R Y FACT S H E E T           BOSNIA AND HERZEGOVINA                  [36]
8. MAIN ACTORS IN THE INVESTMENT AND BUSINESS ENVIRONMENT


                 • Survey of all enterprises in Srpska
                 • Training courses for local businessmen
                 • Supporting the privatisation process in Srpska
                 • Organisation of trade and business fairs


           www.pkrs.inecco.net
                                                ^^
           mladenm@komorars.ba (Mladen Micic, President)


           8.2.3.2. 6 Regional Chambers of Commerce


           Contact information of 6 regional chambers of commerce:


                 • Banja Luka: pkbl@inecco.net or info@bl.komorars.ba
                 • Beograd: pkrs.bg@yubc.net
                 • Bijeljina: info@bn.komorars.ba
                 • Doboj: info@do.komorars.ba
                 • Pale: info@is.komorars.ba
                 • Trebinje: info@tb.komorars.ba


           8.2.4. Brcko District Chamber of Commerce


                 • Improvement of the economy and the entrepreneurship
                 • Promotion of the economy of the Brcko District
                 • Providing professional consulting services




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                [37]
              CONTACT LIST OF MAIN ACTORS


       9.1. STATE OF BOSNIA AND HERZEGOVINA

       Presidency                                   Directorate of European Integration
       Titova 16                                    Fra Andjela Zvizdovica 1/B Tower
       71000 Sarajevo                               71000 Sarajevo
       Tel: (+387 33) 664 941                       Tel: (+387 33) 552 460
       Fax: (+387 33) 472 491                       Fax: (+387 33) 552 461
       www.predsjednistvobih.ba                     www.dei.gov.ba

       Parliament                                   Investment Guarantee Agency
       Trg Bosne i Hercegovine 1                    Fra Andjela Zvizdovica 1
       71000 Sarajevo                               71000 Sarajevo
       Tel: (+387 33) 219 190                       Tel: (+387 33) 252 340
       Fax: (+387 33) 445 390                       Fax: (+387 33) 252 352
                                                    www.igabih.com
       Council of Ministers
       Trg Bosne i Hercegovine 1                    Foreign Trade Chamber of Bosnia and
       71000 Sarajevo                               Herzegovina
       Tel: (+387 33) 471 630                       Branislava Durdeva 10
       Fax: (+387 33) 211 464                       71000 Sarajevo
       Chairman: Mr. Adnan Terzic                   Tel: (+387 33) 663 631
                                                    Fax: (+387 33) 663 632
       Ministry of Foreign Trade and Economic       www.komorabih.com
       Relations
       Musala 9                                     FIA - Foreign Investors Association
       71000 Sarajevo                               Tel: (+387 33) 230 719, 230 720
       Tel: (+387 33) 473 123                       Fax: (+387 33) 230 721, 230 722^
       Fax: (+387 33) 445 911                       Chairman: Mr. Ekrem Dupanovic
       www.mvteo.gov.ba
                                                    OECD Country Economic Team
       Central Bank of Bosnia and Herzegovina       Mr. Dragisa Mekic
       Marsala Tita 25                              Assistant Minister
       71000 Sarajevo                               Ministry of Foreign Trade and Economic
       Tel: (+387 33) 278 100                       Relations of BiH
       Fax: (+387 33) 278 299                       Sector for Foreign Trade Policy and Foreign
       www.cbbh.gov.ba                              Investments
                                                    Musala 9
       Mr. Aygen Yayikoglu                          71000 Sarajevo
       EBRD Country Office                          Tel/Fax: (+387 33) 220 546
       4 Obala Kulina Bana                          Dragisa.Mekic@mvteo.gov.ba
       2nd Floor
       71000 Sarajevo                               World Bank Office
       Tel: (+387 33) 667 945                       Fra Andjela Zvizdovica 17/B Tower
       Fax: (+387 33) 667 950                       71000 Sarajevo
                                                    Tel: (+387 33) 251 502
       European Commission Delegation               Fax: (+387 33) 440 108
       Dubrovacka 6                                 mail_to_bosnia@worldbank.org
       71000 Sarajevo
       Bosnia and Herzegovina
       Tel: +387 33 254 700
       Fax: +387 33 666 037
       delegation-bih@cec.eu.int


C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                         [38]
9. CONTACT LIST OF MAIN ACTORS



           9.2. FEDERATION OF BOSNIA AND HERZEGOVINA
                                                                     ^
           Chamber of Economy of Federation BiH         Mr. Jago Lasic
           Branislava Durdeva 10                        Chamber of Economy of Federation of Bosnia
           71 000 Sarajevo                              and Herzegovina
           Tel: (+387 33) 663 370                       Vice-president
           Fax: (+387 33) 663 635                       Branislava Durdeva br.10
           www.kfbih.com                                71000 Sarajevo
                                                        Tel: (+387 33) 217 782
           Mr. Avdo Rapa                                Fax: (+387 33) 217 783
           Chamber of Economy of Federation of          info@kfbih.com
           Bosnia and Herzegovina
           President                                    Agency for Privatisation in the Federation of
           Branislava Durdeva br.10                     Bosnia-Herzegovina
           71000 Sarajevo                               Alipasina 41
           Tel: (+387 33) 217 782                       71000 Sarajevo
           Fax: (+387 33) 217 783                       Tel.: (+387 33) 212 884
           info@kfbih.com                               Fax: (+387 33) 212 883
                                                        apfbih@bih.net.ba
                                                        www.apf.com.ba


           9.3. REPUBLIKA SRPSKA

           Chamber of Commerce of Republika Srpska
                       ^^                               Directorate for Privatisation of Republic of
           Dure Danicica 1/II                           Srpska            ^
           78000 Banja Luka                             Mladena Stojanovica 7
           Tel: (+387 51) 310 908                       71000 Sarajevo
           Fax: (+387 51) 303 273                       Tel: (+387 51) 308 311
           www.pkrs.inecco.net                          Fax: (+387 51) 311 245
           info@komorars.ba                             dip@inecco.net
                                                        www.rsprivatizacija.com




    C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                          [39]
C   O   U       N        T       R         Y      F    A     C      T          S      H      E     E      T




             This country fact sheet has been published by the OECD Investment Compact for South East Europe.
             For further information please contact:

             Mr. Anthony O’Sullivan                              Ms Georgiana Pop/Mr. Jan Roelants
             Head of the OECD Investment Compact                 OECD Investment Compact
             for South East Europe                               for South East Europe
             Tel: + 33 1 45 24 76 37                             Tel: + 33 1 45 24 88 10
             anthony.osullivan@oecd.org                          georgiana.pop@oecd.org
             www.investmentcompact.org                           www.investmentcompact.org




            C O U N T R Y FACT S H E E T   BOSNIA AND HERZEGOVINA                                         [40]

								
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