Bosnia-Herzegovina | Conexio Consulting

Bosnia-Herzegovina’s economy is still influenced by the interethnic war of the 90´s.

The country started its recovery between 1996-1999, and maintained growth levels above 5% from 2000-2008, although the 2008 crisis has affected its perspectives. The Government has focused its goals on decreasing the public deficit, to gain access to IMF founds. The privatization of public enterprises made slow progress up to 2006.

Today the Government is promoting the privatization of entities inherited from the former Republic of Yugoslavia, including telecom, energy and mining companies, representing a good opportunity for investment in the country. The Bosnian industry is focused 80% on the wood, metal, textile, construction and agriculture sectors. In the wood sector, Bosnia has the advantage of good quality raw material, beech and pine mainly. But the country has lacked the management skills to make the most of the advantage of low labor costs and its proximity to the EU. The same situation has occurred for the firms in the metal and agricultural sector. The construction sector is being supported by the Government, due to its importance in the reconstruction of the country. The sector includes engineering enterprises that are well positioned in international markets. There are 22 large construction materials manufacturers. As to the mining sector, Bosnia-Herzegovina is rich in coal (60% lignite), steel, zinc, bauxite, lead, salt and clay. Its refined petroleum enterprises are also important, producing 5 million tons per year. Heavy and military industry, which were the key to the pre-war economy, have initiated a process of association with foreign enterprises that support them with new technology. The goal is to reduce the weaknesses of the industry – obsolescence, lack of capital, destruction of assets, lack of distribution channels, and loss of position in foreign markets because of the war. The telecom sector is still active, having the support of the European Bank for Reconstruction and Development, which financed in part the reconstruction of the facilities damaged during the war. In 2007 Telekom Srpske was privatized and acquired by Telekom Srbije. The privatization of BH Telekom and HT is still pending. The efforts from the Bosnian authorities are focused on the pan-European highway, which will link Budapest with the Adriatic sea, crossing Bosnia from north to south. It is expected to be in operation in 2013. Apart from this project, others are trying to repair the damage to the road and rail networks. Big Italian and Austrian banks have taken over the financial sector, taking control of the existing banks and generating an unprecedented new confidence in the sector. International banks with interests in Bosnia are Unicredit, Raiffeisen Bank, Hypo Vereins Bank, Volksbank, Hypo Alpe Adria Bank, the Turkish Ziraat Bank and Privredna Banka. Turkey has always had great political and economic influence in the region due to its historic links. The current Turkish Government supports the entry of BH into NATO and other international organizations. Investment requirements and its close relationship makes Turkey a good platform from which to enter Bosnia-Herzegovina’s market.