Could you give us an overview of the structure and main activities of Siemens in Bosnia and Herzegovina?
We started working here in 1995, the year when the Dayton Peace Agreement was signed. At that time, Sarajevo was still under siege from the Serbs so my first visit to Sarajevo was under the tunnel that was dug under the airport and that was the only mean of communication with the outside world. It was a very interesting trip; we went over the mountain Igman and then through the tunnel to Sarajevo. Actually, this was already a kind of a business trip. Siemens was delivering a high voltage electric cable of 110 KV to supply Sarajevo with electricity. What is interesting is that this cable was also brought through the tunnel and through the mountain Igman under the grenades and shells. But we did it! So the first time electricity had been brought to Sarajevo after 3 years of war, Siemens did it through this cable that was donated from the German government. The German government also sponsored the delivery and installation. After that, we were the first to establish a company here and it was Siemens Sarajevo. We had three people in the office from the very beginning: the secretary, my bodyguard and me. It was still very dangerous here and very often we had to travel through the territory of Republika Srpska. The next step was the creations of the branches in Mostar and in Banja Luka. At the beginning Siemens wanted to have offices only in Sarajevo and maybe a small office in the Serb part and Croat part of the country under the supervision of the Sarajevo office. At that time it was legally not possible to have an office in Banja Luka with a company based in Sarajevo and you simply could not register it there. That was probably one of the ways for the Serbs to show their independence - if Siemens is there, it should not be leaded from Sarajevo but eventually from the central office in Vienna. Siemens in this region operates from the head office in Vienna. Siemens Austria had the regional rights to operate in countries like Slovakia, Slovenia, Croatia, Bosnia, Yugoslavia, Romania… and other countries of this region.
The first year was hard. After this first job of delivering of the cable we did not get any new contracts for a whole year. The first contract was signed in 1996, and the first credit line with the country of B&H from any firm is that with Siemens. The security for this credit was in that time the so-called IGA - International Grant Agency that started functioning the same year. This agency could cover only the political risk not the commercial, so it was a very big risk to give 20 million-DM for the first credit line. It was divided in three parts: 10 million DM went to the Federal Ministry of Health in Sarajevo, 5 million to the Federal Ministry of Health in Mostar and 5 million to the Ministry of Health of Republika Srpska, in Banja Luka. With this money we delivered mostly medical equipment. I must say I also had to fight with my office to start working with a credit line in Bosnia. We got the permission after three weeks from our board. I am saying all this because I am very happy, that we are very successful in the last years. I think it is a strong signal to other foreign companies. After that we started working with credit lines worth 20 or 30 million DM. At the moment we have one of about 48 million DM from various fields, like communication, energy and so on. For instance, we have a very interesting project, it is a small hydro power plant. We started with the first two small hydro power plants by just offering corporate credit lines to the small investors for let say 2-or3 million DM. Also in this case, the results, and the success for us were very surprising. The only delay in all these operations was caused by the case of Hercegovacka Banka. It is a bank from Mostar that was controlled by some people who were not acceptable by the international community, and the OHR, the Office of the High Representative. They were hard Croats liners and in the part of the country where Croats are in majority. One of our clients, department of The Federal Ministry of the Health situated in Mostar, had an account in Hercegovacka Banka at the time, when the scandal was going on and that caused the delay that I mentioned before. Apart from that, in our 6 years of existence here, this was the only problem, and that was caused by political reasons.
What are the main telecommunication projects that Siemens is involved in at the moment?
As you probably know, everything is divided in this country. So are the telecommunications. We have Telecom Srpska in Banja Luka, Eronet in Mostar and Telecom B&H in Sarajevo. While in the Federal part of the country we have 10 cantons and 10 different ministers, in Republika Srpska, it is more centralised, and there is only one ministry. As a result of this, we have 10 different customers of telecommunication services. From one side it is good, but if we compare Bosnia and Slovenia, let say in buying medical equipment, Slovenia is a much richer country with 2 million people, they have only one magnetic resonance machine, the most expensive part of medical equipment. In B&H we have two machines, and now they are planning to by a third one. And this is a poorer country. The same happens with communications. We have three costumers now. In Banja Luka we are covering 100% the delivering of equipment for their mobile operator. In one part of Federation of Bosnia and Herzegovina, we are reaching 50 or 60% and 100% in another part. When we talk about telecommunications divided, we have to mention also the fixed network. In Sarajevo we delivered 8 international telephone exchange switchboards (EWSD) and in Republika Srpska we are present through our subcontractor ISKRA, from Slovenia. If we compare this part of the economy with Slovenia, there are 2 million people and they have more than 1 million subscribers for the mobile network. Here we have almost 4 million citizens and in this moment I think we have about 300 000 subscribers.
Soon the Communication Regulatory Agency will grant a 3rd GSM licence; in what way will this affect your activities?
It is an important question for us. I think it will be either Deutsche Telekom, owners of 51% of CRONET (one of two providers in Croatia), or Mobil Com from Austria. I have also heard rumours about Russians that are also willing to get the licence.
| What are your most profitable activities?
In the very beginning it was the medical equipment. As you might know, the Siemens medical equipment is the most used in the world. This part of Siemens company has more offices, than Germany has embassies in the world. That was our main business. Later on, when we reached the maximum and could not sell more equipment, we tried with telecommunications. It was our co-business that now gives us about 60 to 70 percent of our income. Now, we are changing our strategy again and our goal is energy. This country has enormous potentials in energy.
Energy is quite an unusual activity for your company, isn't it?
Siemens is also dealing with another project in this sector. We are in talks with the authorities from Banja Luka to get a concession for the building of a thermo power plant, using coal and gas. In Banja Luka they are planning to invest in new pipeline gas system and some concessions are already given to certain investors, the biggest is from Moscow. Our aim is to build it and operate it. We have two or three power plants of this type in the world already and we want to become electricity providers in Banja Luka, or even export it. Energy in the last 2 or 3 years became a good business. There is also a big Aluminium factory in Mostar that buys one hundred percent of its electricity from the Elektroprivreda BiH as provider.
From what you just said it seems that it is still difficult to do business in the whole BiH. Is that a reality?
Yes. It is not as bad as it was just after the war. Before, in 1996 when we signed a contract with ELEKTROPRIVREDA BiH Sarajevo for a hydro power plant, immediately we were on the so- called black list on the Elektroprivreda Herceg Bosna Mostar. We had to make business with the Elektroprivreda Herceg Bosna through our offices in Spain and then, we were on the black list in Sarajevo Elektroprivreda. So, in that time we had to be very careful not to do anything wrong. It is not like this anymore. There are problems but it is much easier to cope with it.
Siemens is also involved in a project concerning issuing ID cards and driving licences. What can you tell us about that?
It is a project that gave us much trouble and negative image. First, I must say that the project was generated by the OHR and the tender was announced in England. We did not even know about it in Sarajevo. As far as I know, the tender appeared some times, because the whole project was very complicated. Siemens prepared the first offer for this project, about 13 million euros. From this, 3 million goes to Siemens. For 10 million we had to buy the goods from the dealers, the producers, the trip, special machines, etc. The problem is that our customers here, wanted from us a credit line and they do not have money to pay. We would be paid through another credit line, but our subcontractors wanted cash. After so much trouble we have lost our interest in this project. The other issue is, that at the end we will get so much negative reaction that can endanger our plans in the energy sector.
Could you provide us with figures about your company such as your annual turnover, number of employees?
We have about 93 employees, about 20 of them in Banja Luka, 12 in Mostar and the rest is in Sarajevo. The turnover is about 60 million USD in the country. For B&H it places us among the most important companies of the country.
Do you have any production lines here?
We have two or three very serious plans. The first one is a factory near Banja Luka, in Laktasi, for the production of wheels for cars. Since we are the biggest suppliers for the car industry we are analysing even this sector.
Just to tell you one case: there is a factory here and they have 2 or 3 times more workers that needed. We said OK, we will help them to get new contracts. We got an offer for 6 million pieces of some car part and the factory gave us a price of 60DM for a piece. The same job in Vienna we got an offer of 20DM. I asked them, explain me how did they do their calculation and they explained me that in the price they had to cover the expenses of 2 or 300 workers that are at home with no job.
We are also looking for producers of mini voltage cabinets for Sarajevo. It goes very difficult. Also, the government has still high taxes, which is a serious obstacle.
This is the reason why we are waiting for the privatisation. After that, everything will be clear. It is hard for the locals, but people have to understand that at first bad times come and only after then the good times. I think that an additional 30 to 40% of workers will loose their job. For now in this country there is about 40% of unemployment already!
What would be your final message to our readers?
We came here as one of the first and we reached these results. In the European level it might not look too much, but in this country it is big results. And all this only because we believe in the future of this country. We still believe in it but we know that the country first has to go down to go up.
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