Bosnia and Herzegovina is still regarded as an economy in the midst of transition. The long term ambition of gaining EU membership has been providing the necessary drive for further economic growth and development.
Economy
Since 1995, economic growth has been consistently robust. Initially growth was mainly driven by post war reconstruction, however, more recently private sector investment has become the main impetus for growth. GDP has more than quadrupled since peace was achieved and exports have been growing by an average of 20 per cent a year since 1999. Growth accelerated to 6.8 per cent in 2007. Growth remained strong at 5.6 per cent in 2008, however, the economy is expected to contract in 2009. A contraction of half a per cent had been forecast but in light of the deteriorating economic outlook across emerging Europe, this has been revised down to a contraction of three per cent.
Investment Climate
The country has made considerable efforts to open the economy to foreign investment. Despite these efforts there are a number of obstacles that stand in the way of foreign investors, complex legal and regulatory framework, non-transparent business procedures and weak judicial structures. Reforms must be made to aid faster registration of business, improve the inspection system, implement bankruptcy laws and further privatisation of strategic enterprises. Privatisation in Bosnia and Herzegovina has been slow in comparison to other countries in the region, resulting in a lack of opportunities for investors interested in the country.
The transition toward market economy has led the government to address these obstacles. However, the process is still in the early stages. Due to this, levels of foreign investment have been low, with the exception of the banking sector, which is now dominated by Western banks.
More than 80 per cent of the foreign investment the country receives comes from European countries, with the remaining amount generated from 50 other countries throughout the world.
Telecommunications
The telecommunications sector in Bosnia and Herzegovina was liberalised at the beginning of 2006. Currently the Communications Regulatory Agency (CRA) of Bosnia and Herzegovina is working to resolve the remaining issues of interconnection and tariff rebalancing as the necessary preconditions for full market liberalisation.
The sector continues to be dominated by three state-owned incumbent operators – BH Telecom, Telekom Srpske, and Hrvatske Telekomunikacije Mostar -- which are the only providers of fixed and mobile telephony services. Telekom Srpske was privatised via a sale to Telekom Srbija for €646 million (approximately US$860 million) in December 2006. Telekom Srbija is the incumbent fixedline and mobile telephone provider owned by the Serbian government and the Greek operator OTE.
Opportunities
There are international tenders and consultancy and business opportunities in many sectors. UK Trade & Investment has identified the following sectors with the most potential:
• Tourism – development at all levels
• Power – upgrades and privatisation
• Telecommunications and IT – upgrades and privatisation
• Transportation – restoring infrastructure
• Construction – modernising and expanding capacity
Opportunities also exist in health and social welfare, textiles, wood and furniture, financial services and business regulatory reform.
UK Trading Relationship
Trade between the UK and Bosnia and Herzegovina has been steadily growing over the last few years, albeit from a low base. In 2008, British exports to Bosnia and Herzegovina amounted to £20.5 million, mostly of manufactured items, machinery, road vehicles, scientific and office equipment and chemicals. Bosnia and Herzegovina exports to Britain in 2008 amounted to £22.5 million, mostly of wood, furniture and apparel.
KEY FACTS
Official Name: Bosnia and Herzegovina
Capital: Sarajevo
Area: 51,129 sq km
Population: 4m (UN, 2008)
Major languages: Bosnian, Croatian, Serbian
GDP (current): US$15.14bn (World Bank, 2007)
GDP growth: 6.8% (World Bank, 2007)
GNI per capita: US$3,790 (World Bank, 2007)
Inflation (consumer prices): 8% (2008 est.)
Labour force: 1.196m (2008 est.)
Unemployment: 29% (2007 est.)
Monetary unit: 1 convertible marka = 100convertible pfenniga
Exports to UK: £22.59m (HMRC 2008)
Imports from UK: £20.54m (HMRC 2008)
CONTACTS
UK Trade & Investment
Kingsgate House
66-74 Victoria Street
London SW1E 6SW
Tel: 020 7215 3090
Email: liz.herisz@ukti.gsi.gov.uk
Web: www.uktradeinvest.gov.uk
British Embassy
Petrakijina 11
71 000 Sarajevo
Bosnia and Herzegovina
Tel: 00 387 33 282 237
Email: alma.kadunic@fco.gov.uk
Web: www.ukinbih.fco.gov.uk/en
Embassy of Bosnia and Herzegovina
5-7 Lexham Gardens
London W8 5JJ
Tel: 0207 373 08 67
Email: embassy@bhembassy.co.uk
Web: www.bhembassy.co.uk
