Basic indicators and possibilities of economic cooperation
Sarajevo is a Capital of Bosnia and Herzegovina and political, administrative, economic, medical, sports’, scientific and university center of the country. According to the Protocol on organization, Sarajevo town is administered as a local self-govern unit in Sarajevo Canton. Sarajevo is located in Sarajevo-Zenica valley, placed between Panonia dale on the North and Mediterranean on the South, and which is connected with transversal road, with two high-ways of highest importance in the widest surrounding (high-way Zagreb-Belgrade and Adriatic regional road), what gives favourable macro-geo-traffic position. Sarajevo town is consisted of 4 municipalities of 142 km2 of total area and about 300.000 inhabitants.
1. Economy of Sarajevo town
Up to day Sarajevo town has 7.366 legal persons, out of them, by the ownership 63,5% are private, 6,3% state and 30,2% composite , cooperative and other types of ownership.
In the total structure of legal persons by their businesses with 47,0% participates trade, 15,0% processing industry, 14,0% providing of business services and traffic of real estate and 24,0% other activities.
Total capital is biggest in the state firms and is 78%, while the efficiency of business and the best results are made in the private firms, then composite and other firms.
In the total gained income the highest participation has trade with 47%, then industry 15%, traffic and communications 14%, finance services and construction 30%, while in the structure of gained profit with 55% participates traffic and communication, 16% industry, 16% trade and 13% finance services, construction and other activities.
In the structure of economy of Sarajevo town important place has trade (biggest number of firms, first by the gained income and 20% of totally employed persons), then industry which employs 19% of employees in Sarajevo town economy and realizes the biggest export, traffic and communication, tourism and catering, finance services and other activities.
In the area of industry important place has: production and processing of food and beverages, tobacco products, chemical products, electric machines, metal-processing industry, sector of wood production, textile production, production of shoes and accessories, construction material and construction itself.
Foreign trade exchange of subjects in Sarajevo town records negative balance of accounts, the best illustration is data that the import of goods is 5 times higher then exports of goods. Most of the imports are made by firms from area of wood complex production, different machines, motor vehicles, paper products, while the biggest import of goods is registered in the area of food and beverages, machines, chemical products and chemicals, motor vehicles and trailers, RTV and other communication devices and equipment.
Employment in Sarajevo town is far under pre-war situation and it presents highly exposed problem in Sarajevo town and surrounding areas.
Out of total number of unemployed over 50% has minimum high school education, i.e. qualifications for work in the industry.
Summarizing aforementioned it is necessary to point out that existing economic structures in Sarajevo town realize only about 30% of physical dimension of industrial production, 30% of employed and 20% of total exchange of goods with abroad in comparison with pre-war situation, i.e. in 1991.
2. Possibilities of economic cooperation with partners from abroad are actuated improvement of general environment, especially by adoptions of relevant laws for business activities with abroad.
Foreign trade exchange and long term production cooperation are regulated with Law on foreign trade policy (“Official Gazette BH” no. 7/98), Law on custom policy of BH (“Official Gazette BH” no. 21/78) and Law on custom tariff of BH (“Official Gazette BH” no. 1/98). Mentioned laws are made in accordance with laws in the countries of market economy.
Common investments are regulated with Law on policy of direct foreign investments in BH (“Official Gazette BH” no. 17/98). In question of rights, privileges and obligations of foreign investors, it is necessary to emphasize that foreign investor has the same rights and obligations as residents of BH have.
• Taxation of foreign investors is done in accordance with tax legislation of the entity with the following relieves: profit tax, which is 30%, is decreased for the first year of business for 100%, for the second 70% and for the third 30% off. If the company businesses in the free zone, the investor is totally relived from profit tax in term of 5 years. In case of common investment with domestic firm the profit tax will not be paid for 5 years proportionally with participation of the foreign capital,
• Foreign investments are exempted from paying custom expenses and custom obligations, including custom registry,
• Foreign investor has the same right on real estate as citizens of BH have,
• Foreign investments can not be nationalized, and the rights and obligations given to the foreign investors can not be abolished or eliminated with additional adoption of other law.
With a beginning of the process of privatization, possibilities for common investments in the existing companies through the program of privatization are extended, as well as possibilities for repurchase of the company or parts of the company. The process of privatization is regulated with Law on company privatization (“Official Gazette of BH Federation” 27/97) and Law on changes and amendments of Law on company privatization (“Official Gazette of BH Federation” 8/99) (www.apf.com.ba).
The Law allows that all domestic and foreign physical and legal persons can participate in the privatization transactions in accordance with mentioned Laws.
Establishing of company
Foreign investor can establish economic association – company in accordance with regulations of Law on economic associations (“Official Gazette of FBH”, no. 23/99). Foreign legal and physical persons are equal with domestic in regard to establishing company.
Foreign partner in BH can business over their representation. Opening of the representation is regulated with Decree on conditions for opening and work of representations of foreign persons in Bosnia and Herzegovina (“Official Gazette of BH Federation” 7/95).
3. Cooperation areas
Favourable businesses for establishing economic cooperation between companies from area of Sarajevo town and partners from abroad are the following:
In the area of industry:
• Production of food and beverages
• Production of clothes
• Processing of wood and wood products
• Production of furniture
• Production of automobile
• Production of chemical and pharmaceutics’ products
• Metal processing industry
In the other areas:
• Construction and projecting
• Traffic and communication
In the Chamber of Economy of Sarajevo Canton exists the registry of more developed projects of companies which are seeking for partners for common investments, especially in the food industry, production of construction material and elements, completing of equipment for construction and furniture production, production of thermo-energetic equipment, production of electronic equipment, establishing of custom zone and other projects.
More information on web site of Chamber of Economy of Sarajevo Canton: www.pksa.com.ba