What are the competencies of the Ministry?
The Ministry of Trade has a few sectors it is in charge of, first of which is trade, including issuance of different import's permissions, legal assistance to all subjects involved, within this sector there is the Cost Institute following up the movement of the prices in the market and determining them, and the Republic Directorate for Goods Reserves; the second sector we are covering is market inspection that controls the legality of sale in Republika Srpska and is in charge of the consumer protection; and the third sector is tourism.
These are the three sectors that are within the Ministry's competencies.
How is trade being liberalized in Republika Srpska?
We support the liberalization to a great extent, and it has been completed here, implying that over 95% of imported products sold in Republika Srpska are liberalized; the only products that still require to go through a process of licensing are drugs and weapons..
What is the situation with the exports from Republika Srpska towards the European Union?
The European Union has opened itself for Republika Srpska, meaning that there is this preferential quota for most of the exported goods. This means that Republika Srpska and Bosnia and Herzegovina have preferred status compared to other countries. However, there are certain obstacles, one of them being that our production rate is not as high as it should be to have enough surplus for export; on the other side, there is the legal aspect, as our products still do not meet the criteria and standards required in Europe. So, on one side we have Europe, completely liberalized for us to export anything we want, but on the other, we have European regulations and standards we have to meet in order to export, and the requirement to establish a state level institution that would monitor the origin and quality of goods. We still do not have such standards, neither have we had an institution that would be in charge of monitoring them.
Is their any work being done regarding these issues?
The by-laws have been prepared. They are now undergoing procedures at the councils of ministries. We hope they will be passed within few months. That is one of the conditions for admission of Bosnia and Herzegovina into the European Union. We will do our best to meet all these requirements as soon as possible.
Southeastern Europe has a market of 230 million consumers. Do you see a possibility of Republika Srpska playing a role as a sort of center for trade for this market in the future?
Certainly; at least to become one of the centers. It would be very important to take a leading role. I can not say it will be the center, as there are Croatia and Yugoslavia in the neighborhood, but I think that we are a step ahead for certain goods, for example: organic food production, wood processing industry, cattle breeding, etc. the nature is still very preserved, and that should be used.
What opportunities does the privatization process offer to foreign investors?
It is very important to point out that we created opportunities for foreign investors equal to those for domestic investors. I think that Republika Srpska, investment-wise, is one of the most attractive countries, having in mind the legal framework we anticipated. This means that establishment of companies will be uncomplicated, no matter if the ownership is 100% foreign, or mixed. These are the reasons why I think we are one of the most attractive: because it is possible to transfer the profit to financial institutions abroad; because import of equipment is free of taxes and custom fees; then because labor is cheep here; because we are undergoing transition and privatization and there are a lot of tender competitions announced, and we can say that our companies can be bought under favorable conditions; because there is infrastructure, that should only be a little bit modernized. With little investment in this equipment and with cheap labor, I think that is very attractive. What is also interesting is the possibility for opening free custom zones; it is practically organizing the production with a very low level of costs.
Are there any projects now in place for free custom zones?
Yes. There is a zone planned in Banja Luka by Incel Company.
Republika Srpska decided to subsidize the process of certain products. In other parts of Bosnia and Herzegovina, in the Federation, there are no subsidies for e.g. gasoline, oil and oil derivatives. Why did Republika Srpska make such a decision to subsidize these products?
There is a plan to construct a gas pipeline from Bijeljina and Banja Luka, and I think that our highest ranking officials from both Republika Srpska and the Federation of Bosnia and Herzegovina were in Moscow recently, to, among other things, negotiate procurement of gas from Russia, as there is the need to increase the use of gas, especially in Republika Srpska, as it is cheaper than electricity. Republika Srpska exports electric power, and that is practically our primary export, so we do not have any problems with the electric power, only it is more expensive than gas. We have great hydropower potential.
To what countries do you export electrical power?
To all neighboring countries: Yugoslavia, Croatia, and through these countries all over Europe, as it is connected.
Are there any signs of improvements in the trade deficit of Republika Srpska, looking into the next year?
That is a great problem for us; as we were in the war, most of the production capacities were destroyed. At this moment, only one third of the production capacities are active, compared with the situation before the war. So, our first goal is to complete the privatization process, to have private persons as owners of the companies, as no one is interested in investments if the ownership is not clarified. Our interest is to attract foreign investors, and only then when we increase the production, we will create the surplus to increase export and decrease the trade deficit. In the same time, we are fighting for growth of production and for growth of export. This will take time, as it is a slow process, going only one step at a time.
Are there any key sectors that could be interesting for foreign investors in Republika Srpska?
I think that there are a few, e.g.: agriculture and food processing industry, wood processing industry, hide and textile industry, as before the war Republika Srpska was exporting textile to the West through a lot of loan contracts. There is the tradition and there is cheap labor. It is attractive as it is a part of Europe, and transportation costs do not influence the final prices a lot. Certain production branches could be organized here.
| The EU Stability Pact is preparing the countries in this part of Europe to integrate the EU. What are the steps made in Republika Srpska in this sense?
Republika Srpska is one of the signatories of the Stability Pact, and with some countries we have signed bilateral free trade contracts, e.g. Croatia and Slovenia, it was done on the state level. And this week we shall have the third round of negotiations with Yugoslavia, which I hope will be a success, as there are some trifles that need to be settled. From our part, there is a strong commitment to go through this process. Bosnia and Herzegovina is working under the principle of asymmetry in these negotiations. With Slovenia and Croatia we have had a great deficit, meaning that the export will be done freely, and from the other side taxes and custom fees are slowly decreasing for the imports. The condition for all these contracts is that the goods originate form these countries. We think that this is the way to stimulate export and to spread the market, what would eventually result in the reduction of the deficit. It will also bring to opening of new work places and to increase the production. Down side of this is that budget revenue will be reduced. However, the upside is to strong an argument and everybody is opening, and so do we.
That is the integration process that the whole Europe is going through.
That is one of the conditions for the admission into the European Union. The market of the population of 55 million is being created, and by the year 2005, the trade in the whole Europe will be free.
As far as taxes are concerned, is there a state level policy or, does each entity makes its own decisions on that issue?
We have unified custom fee rates in the whole Bosnia and Herzegovina. The taxes are constantly being harmonized between the two entities. There are still some differences, but we are working on harmonization to prevent overflowing of taxes from one entity into another, as there is now still some space for frauds. We have warned everybody on this, and we hope that it will be solved within the next few months.
Could you elaborate on the potential of the tourism industry?
When talking about the advantages of Republika Srpska, I forgot to mention the possibility to develop tourism. The nature was very generous to Republika Srpska, and ecologically speaking, we have wonderful flora and fauna, spa potential and overall nature. Bosnia and Herzegovina and Republika Srpska in particular have real opportunities to become a trend at least in this part of Europe within the next few years. You know that Bosnia and Herzegovina and Republika Srpska were the hosts of the Winter Olympics, so there is the chance to develop the winter tourism. A great possibility that we see, are the nine spas in Republika Srpska, with the abundance of thermal and thermo-mineral water with both healing and tourist potential. We have to be aware that the war was going on here, that a lot of facilities were destroyed, however, with small investments, funds invested in the tourism would very soon be repaid.
Are there any reconstruction programs?
Yes, there are programs, but at the beginning we would target just three or four segments, supporting those projects that have the greatest chance to succeed. We have two national parks in Republika Srpska that could be significant revenue sources in the future - there is the primeval forest, one of the two in Europe. There is the possibility for "adventure tourism", something new for Europe. We cannot offer what Spain or Italy offer, but we can offer rafting, hunting and fishing, etc. as we have all sorts of game here. The basic need is the construction of hunting houses and mountaineering facilities.
We actually have a lot of active hunters' associations - people trained to be guides for tourists interested in hunting. On the other side, a lot of rivers are even potable in their upper parts, it is so clear. There are fish that live there, that cannot be found in any river surrounded with only one house. So we do not have the chance for mass tourism, but we can offer something special to guests who like atypical kinds of entertainment and adventure.
For the past four years, a lot of facilities were rebuilt. Funds are being injected in the reconstruction of roads, because without good roads there is no chance for good tourism! In the following period we plan to allocate funds for this purpose. And there are a lot of hotels and motels built in the last four years. So we have things to offer in some parts of the country. We planned to complete the privatization of all state-owned hotels and other facilities, so we shall undergo an overall transformation.
What measures are being taken to improve the image of Republika Srpska?
Before the war, Bosnia and Herzegovina and Republika Srpska did not have the image of other countries with strong tourist image in Europe. We had these problems even before the war, when we could not compete with the countries that were tourism-wise the strongest in Europe. It is obvious that this image is even worse after the war, but I think that there is a commitment to change this image. Two months ago, Bosnia and Herzegovina participated at a tourist fair in Montreux in Switzerland, where we showed our offer to Europe. We can only go one step at a time, really slowly, and there are a large number of people interested in Republika Srpska. The country is gradually changing its negative image. One of the steps ahead is the commitment of Bosnia and Herzegovina, and Republika Srpska within it, to be admitted in the European Union, and to become a part of the European family as soon as possible. If we want to apply European standards, then we need to change a lot, as we are still far from Western Europe, when you take a look for instance in our infrastructure. However, there is a strong commitment, despite the lack of finances, so we hope that we shall catch pace of the rest of Europe.
I think that by introducing young people in our structures, cooperating with the other entities and neighboring countries, and offering opportunities to investors, a lot will be changed. You might not be aware, but we have hunters from Italy coming to Republika Srpska, who are very satisfied with the offer. We have a natural game preserve near Banja Luka, which is one of the two centers with the largest number of different species of birds.
As a final question, what are the words of encouragement that you would give our readers to come to Republika Srpska?
I would invite them to come and see; to see that our people are hospitable, and that future visitors will have an experience here that can not happen anywhere else. You know that Republika Srpska is a meeting point of the East and the West. There is no other message, but the warm invitation to come and see.
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