 INVESTMENT OPPORTUNITIES |
According to the Bosnian agency for promoting foreign investments, the most attractive sectors for foreign investment are wood production (production of furnitures); production of raw materials for the cellulose industry; textiles; food and beverages (incl. tobacco production); tourism, particularly hotel business; cement industry; metal processing; and software development.
 Wood production |
This industry has a long tradition in Bosnia, and is known for its export orientation. Bosnia and Herzegovina has almost 300 million cubic meters of forest (53% of the total area). There are many companies that produce various kind of furniture. Capacities exceed domestic demand, so the country exports a significant amount of its production. The most important advantages of this sector are low-cost labor and raw materials. It is one of the sectors with long-term perspectives, provided that attention is paid to quality management, design and marketing. Bosnia and Herzegovina has also capacities for production of raw materials and products in the cellulose industry (pulp, craft paper, tissue paper, paper confectionary, cellophane).
| Textile |
Before the war, Bosnian manufacturers and footwear producers used to sell their products to all continents. They used to sell cotton yarn, fabric textile, woven, confection, row and processed leather products. As usual, this sector is very diversified, with a large number of small producers in almost every municipality. With investment in equipment, this business field in Bosnia provides an extraordinary chance for dynamic development. There is a long tradition in this field; the labour costs are low, and the country is close to the most important world textile markets. Textile industry employs about 35.000 workers in Bosnia. Companies working in this field are ready for cooperation with foreign partners, through joint venture operations.
| Food industry and tobacco production |
Food production has also a great potential for growth. Although basic configuration of the land in Bosnia and Herzegovina is mountainous, it has important agricultural resources. There are solid potentials for fruit (plumb, apple, berrylike fruit) and vegetable growing in Herzegovina (grape-wine), Bijeljina and along river Sava (wheat, corn, sugarcane).
As far as tobacco is concerned, the privatizations of Sarajevo, Mostar and Banja Luka tobacco factories offer wide opportunities.
Brewing industry has been one of the first manufacturing sectors to be privatized. It included some of the foreign investors: Interbrew (Belgium) acquired 51% in Grude brewery and Union (Slovenia) bought 12% of Sarajevo brewery. This process will probably continue with other Bosnian breweries.
| Construction materials |
Bosnia and Herzegovina has 22 construction material manufacturers, out of which the largest are Kakanj and Lukavac cement plants. In November 1999, a privatization plan was agreed for 51% stake in the Kakanj cement plant. Following an international tender, in March 2000 the winning purchaser was Heidelberger Zement (Germany), which paid KM 55 million (US$ 27.2 million). It covers 35% of the country's cement consumption and produces composite cements.
| Metal production |
The most valuable nonferrous resource in B&H is bauxite, with estimated reserves of 41 million tons. The Zvornik-based plant, "Birac", produced 600,000 tons of alumina before the war, which has fallen to 300,000 tons. Now, "Birac" is the largest exporter in Republika Srpska, and is going to be privatized soon. The other big aluminium plant in B&H is "Aluminijum Mostar". It benefited from the design and engineering assistance of Aluminium Pechiney "France"; it has an annual capacity of 275 000 tons of hydrated alumina. Bosnia and Herzegovina also has rich deposits of iron ore, estimated at about 750 million tons. There is steelworks at Zenica, which formerly had an annual capacity of 1,85 million tons of steal, but which now produces around 100,000 tons per year. A joint venture (BH Steel Company) exists with the Kuwaiti Investment Authority (KIA), which has provided working capital and investment. Before the war, in B&H also existed large industrial conglomerates in metal industry. After the war, UNIS started recovery mainly by joint venture with Volkswagen (Germany) in Sarajevo. That plant produces Skoda cars. "Energoinvest", which is the country's leading producer of electrical power equipment, won in January 2001 a US$ 21 million contract to build transformer stations in northern Iraq under a UN-funded program, and is expecting to sign another US$ 30 million contract with Libya. One of the assets of the metal processing industry is its well-trained labour force.
| Tourism |
Bosnia has fantastic opportunities for developing winter tourism. It is a mountainous country and has already solid winter-tourism infrastructures. This country very successfully organized the XIV Winter Olympic Games in Sarajevo in 1984. It has formally submitted its application for the Winter Olympic Games in 2010. Because of recent wars in the Balkans, Bosnia has been unable to attract many foreign tourists for winter tourism yet.
There are a number of hotels, restaurants, rafting clubs and tourist attractions, but there is still no developed tourism management that would be able to convert all this into marketable holiday packages. A large-scale tourism promotion campaign has recently started. Its aim is to promote Bosnia as a tourism destination, and it links up providers and consumers of tourism products by presenting countrywide tourism potentials at strategic international tourism fairs in 2002. The big obstacle is a widely spread conviction that Bosnia is still not safe to visit and invest. Bosnian authorities are trying to encourage world tour operators to include the country in their travel itineraries.
"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 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. We have two national parks in Republika Srpska that could create significant sources of revenue 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 is offering, but we can offer rafting, hunting and fishing, etc. | 
We 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, water 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," Zeljko Tadic, Minister for the Trade and Tourism of smaller Bosnian entity - Republika Srpska, says.
| Transport |
The transport sector was severely damaged during the recent military conflicts in the region. Yet the conditions of transport infrastructure have been significantly improved. In the road sector, half of the main road network has been reconstructed. Yet, the road maintenance needs to be improved in order to avoid further deterioration of transport infrastructures. The total length of roads is 21,677 km, out of which 3,722 km are highways, 4,104 km regional roads and 13,851 km local roads.
The main railway network has been restored to minimal standards, but further rehabilitation is needed before commercial trains can run regularly. The length of railway-tracks is 1,031 km, out of which 94 km double track, and 777 km electrified.
There are four airports in Bosnia and Herzegovina. The biggest one is the Sarajevo international airport. Other airports operate in Banja Luka, Mostar and Tuzla.
The only navigable river in Bosnia and Herzegovina is the river Sava, where the biggest harbour is in Brcko. It provides connection to Europe through the Sava and Danube rivers.
The Croatian Harbour on the Adriatic Sea is a natural gateway to Bosnia and Herzegovina's economy. Its usage is being regulated by a special bilateral agreement. It is connected with Sarajevo and other regions of Bosnia and Herzegovina by railway and road links via the city of Mostar.
| Telecommunications |
The telecommunication system has been seriously damaged during the military conflicts. In the post-war period, important efforts were made to repair it. There are three mobile telecommunications providers in the country: BH Telecom, RS Telecom and Eronet. According to the rules of the Regulatory agency each of them has to improve its services and to cover the whole territory of Bosnia by the end of 2003. None of them can manage to do that without the help of foreign partners and strategic investors. As in most countries, the number of mobile phone users has been rising constantly.
"We have announced two tender competitions for the selection of a partner for telecom assessment, one for the overall telecom and the other only for mobile network. We have two approaches. We think it would be better to find a partner for the overall telecom, and the interest is greater for the mobile communications, and from these two approaches we shall try to find the better version: to find a partner that would provide more funds, in the same time offering better guarantees for future investments in the development of the Telecom Srpska," says Branko Dokic, Minister of Transport and Communication of Republika Srpska.
While in Republika Srpska, authorities are thinking of finding strategic partners with special guarantees; at the country level of Bosnia, there are preparations for offering a third national licence to any provider capable of engaging in this lucrative business in Bosnia.
"I hope and I believe that foreign investors will be interested in that 3rd licence. But now it is not the best time to go to the market when major companies are consolidating. But yes, we have serious interest and this week I've had two operators asking about the possibility of the 3rd license," said David Betts, from the Communication Regulatory Agency.
| Energy |
There are a great number of rivers in Bosnia and Herzegovina suitable for the construction of hydropower plants. Two rivers with the strongest, but yet insufficiently exploited hydro-potential, are the rivers of Sava and Drina, which are situated at the northern and eastern borders of Bosnia. There are 13 hydropower plants in Bosnia and Herzegovina at rivers Neretva, Trebišnjica, Drina and Vrbas, with a total capacity of 2,034 MW. There are also 13 thermal power plants with 1,957 MW of installed capacity. This makes of Bosnia and Herzegovina an important producer and exporter of electric energy in the region.
There have been several municipal infrastructure projects in the reconstruction of the gas and heating system, water, sanitation and solid waste, and water system and electric power network. The main reconstruction works on gas and heating system have been implemented in Sarajevo and Banja Luka. Reconstruction works on water, sanitation and waste water system and electric power networks have been done all over the territory of Bosnia and Herzegovina. |
