Revitalised And Forward-looking Economy 
BiH’s accelerated economic reform process has greatly improved the business climate and the country has the fastest growing economy in South Eastern Europe. The economy has grown at a steady pace of 5% per year since 2000. A sustained annual increase of GDF? combined with rapidly rising production levels and export volumes, provides a clear indicator that the economy is in full expansion.

The stability of the konvertibilna marka (KM) — BiH’s currency — further contributes to the country’s favourable business climate in the country. It is pegged to the Euro with a fixed exchange rate of 1 KM = 0,51 EUR. The underlying inflation rate is the lowest in the region. VAT was introduced in 2006 and inflationary pressures are well under control.

The privatisation process for companies has been accelerated to increase economic growth and encourage foreign investment. Additionally, powerful modern bankruptcy laws provide a flexible system for maximising the economic value of companies in financial distress to create potentially valuable opportunities for foreign investors. BiH has signed a number of free trade agreements with neighbouring countries and is negotiating its entry into CEFTA and the WTO. Additionally, investors will benefit from its preferential trade regime with the Europe Union. BiH also has preferential export agreements with Canada, Japan, Russia, Turkey and the USA.

Agriculture & Food Processing 
With over 1.5 million hectares of agricultural land for crop growing and livestock rearing, BiH offers ideal conditions for growing wheat, maize and vegetables, and industrial crops such as flax and hemp.

There is great market potential for BiH fruit and vegetable producers, as well as opportunities in wine production, tobacco farming and the cultivation of lavender and other aromatic herbs. BiH is also known for its high-quality medicinal herbs which are used in pharmaceutical and cosmetic industries. Fish farms thrive in the clear, unpolluted rivers that criss-cross the country. Foreign companies have already taken advantage of investment opportunities in the sector, but still more remain to be seized.

Automotive Industry 
BiH companies are renowned suppliers of quality components. Major brands have long relied on the skilled BiH workforce to assemble cars for western markets. For example, BiH is well under way to be the Volkswagen Group’s supply-base in South Eastern Europe with a market of 120 million consumers. BiH’s strength in the automotive components industry lies in the availability of skilled labour in engineering and other technical areas including R&D. Companies in the automotive cluster are always looking for investment partners to expand production into international markets.

Banking & Financial Services 
BiH is the first country in South Eastern Europe to completely reform its banking system. Foreign banks have invested significantly. Foreign banks own 73% of the banking sector, ensuring employment for almost 9,000 people. Leading international credit rating agency, Moody’s Investor Service upgraded BiH’s rating from a positive outlook’ to a stable’ outlook in just 2 years. The country’s stock exchanges are enjoying a period of impressive growth. The challenge for the future is to diversify the range of financial services and other key segments of the market, and ultimately create even more business opportunities.

Energy 
The basic sources of primary energy in BiH are coal and hydro-power. The potential for investors is in the construction of over 200 small hydroelectric power plants. There are also opportunities in renewable sources of energy, such as wind energy, solar energy and geo-thermal energy. BiH also has considerable reserves of brown coal, lignite and peat which provide opportunities to investors via the construction of new coal mines and other related infrastructure. With respect to long-term projected gas demand, the investment potential of the gas sector in BiH is enormous.

Forestry & Wood Products 
50% of the country is covered in forests. Beech, oak, ash, pine and fir as well as more specialised woods such as walnut, apple and cherry, are exported as raw material, half fabricates and finished products. The abundance of both hard and softwood as well as the low-cost, skilled labour force combined with manufacturing facilities exceed domestic demand to make this sector export-oriented. Currently, the largest markets for these products are Germany and Italy but the potential to export to other countries is vast.

Tourism 
Tourism is a booming sector and investment opportunities abound. BiH has world-class ski slopes and was host country of the 1984 Winter Olympic Games. The national parks and nature reserves are also simply breathtaking. Moreover, BiH has tremendous potential for specialised branches of tourism since it has a lot of unexplored and unexploited destinations. With its rich and uniquely complex historical, cultural, culinary and religious heritage, BiH is not only a very interesting destination but also a lucrative place to invest.

Privatisation Opportunities 
Privatisation in BiH provides an array of opportunities to foreign investors to participate in the purchase of the state capital, including enterprises, banks and apartments with existing tenancy rights. An estimated 60% of small companies and more than 30% of the large ones are now privately owned or publicly traded. Nevertheless, a number of these strategic enterprises’, which includes large enterprises, telecommunications and power utilities sectors, public utilities, mines, etc, are still not privatised, presenting a choice of opportunities for potential foreign and local investors.

INCENTIVES FOR FOREIGN INVESTORS

• Foreign Investors Support Fund
• The Law on the Policy of Foreign Direct Investments of BiH ensures foreign investors have the same rights and obligations as BiH residents
• Foreign investors are entitled to open accounts in any commercial bank
• Foreign investors are entitled to freely employ foreign nationals Foreign investors are protected against nationalisation, expropriation, requisition, etc
• Investment capital is exempt from import customs and customs duties with the exception of passenger cars, slot and gambling machines (Subject to application approval)
• The rights of foreign investors granted by the Law on the Policy of Foreign Direct Investment cannot be overruled by subsequent laws and regulations. However, should a subsequent law or regulation be more favourable to foreign investors, the investor has the right to choose the regime by which the investment will be regulated
• Foreign investors may own real estate in BiH and enjoy the same property rights as BiH citizens and legal
entities
• Foreign investors are entitled to transfer abroad, freely and without delay, in convertible currency, proceeds resulting from their investment in BiH
• Free trade zones
• Tax exemptions

MALAYSIA INVESTOR IN BOSNIA AND HERZEGOVINA