Addendum 7a(2)Seminar on the Promotion of
Foreign Direct Investment toSoutheastern Europe

Bosnia and Herzegovina (2)Mirza HAJRIC,
Director General,
Foreign Investment Promotion Agency

8 November 2002, Tokyo, JIIA
Ministry of Foreign Affairs of JapanThe Japan Institute of International Affairs

BOSNIA AND HERZEGOVINA (JICA)
1. Transition to market economy
Indicators

1999
2000
2001
9.0
5.9
6.0
1,054 1,230 1,240
15.0
10.0
N/A
3.8
N/A
1.6•
10.6°
10.8
7.9°
6.5°
2.0°
1.7°
Annual inflation rate, %
6.
1.0•
8.0•
45.0
35.0
31.0
40.0
38.0
Annual unemployment rate%-193-748 -1060
-790
-971
-878
-700
Current account (in mil. USD)
44
92
176
182
164
172
186
Average monthly net salary, USD
3.6
3.7
4.2
3.4
3.2
2.6
2.8
External debt, USD bln
0.2
0.3
0.6
0.7
0.8
1.0
1.1
Exports, USD bln
1.1
1.9
2.4
2.5
2.8
2.9
3.0
Imports, USD bln
Sources: EBRD, WB, The Economist Intelligence Unit, Ministry of Foreign Trade and Economic
Relations

GDP (% change)
GDP per capita, USD
Economic growth rate, %Industrial production growth rate, %

1995
20.8
540
-

1996
86.0
730
69.0

1997
40.0
865
30.0

1998
13.0
1,089
18.0
35.0

During recent years Bosnia and Herzegovina (BiH) has achieved significant
macroeconomic stabilization.
The basic achievement was the introduction of a new currency, the Convertible Mark(KM), directly pegged to the Euro through a currency board system. The Central
Bank of BiH is the sole authority for issuing currency and for monetary policy
throughout BiH. At the end of 2000, BiH was the first country in the South East
Europe region to close the Payment Bureaus that exercised a monopoly overdomestic financial transactions. The functions of the Payment Bureaus weretransferred to commercial banks as in other market economies worldwide.
That is why BiH has benefited from a permanent growth of foreign exchange
reserves and price stability. Significantly, inflation is the lowest in South East Europe.
BiH has also established regulatory agencies for banking and insurance, a factor that
additionally stabilized the financial market together with increased inflows of foreignbanks. At present, 60% of the total bank equity in BiH is in foreign hands: RaiffeisenBank (Austria), Volksbank (Austria), Bank Austria, Turkish Ziraat Bank, Zagrebačka
Banka (Croatia, Unicredito-(Italy), Bosnia Bank International (UAE, Saudi Arabia) andothers.
Some business trends show stagnation. Industrial production and GDP last year
declined due to the weak production base of BiH and the lack of domestic financial
capital. Also, there is a permanent trade deficit. The State government does nothave direct income. Entities are responsible for collecting taxes, customs and otherdirect budget sources. Problems in this area result from tax evasion, the grey
economy and corruption.
It is obvious that BiH has to undertake serious reforms in order to create an efficient
market economy. There is widespread confidence that comprehensive economic
reforms will lead BH to the development of a competitive, market based and self-sustainable economy.
objectives.

Foreign capital, however, is crucial for fulfilling thoseIn the last two years BiH has made some important steps in facilitating this. In March
this year the Council of Ministers finally adopted the Action plan for the
implementation of the FIAS (Foreign Investment Advisory Service) study on
administrative barriers for FDI in BiH. Some recommendations of the FIAS study
have already been implemented. Other barriers will be removed before the end of
next year with the support of the international community in BiH (WB, USAID, GTZ
and DfiD).
BiH has also moved towards the creation of a single economic space. Harmonizationof tax and customs procedures and legislation is nearing completion. In addition, its
location at the very heart of Southeast Europe, its membership of the Southeast
European Free-Trade Area agreement as well as its free-exports agreement with the
EU provide Bosnia and Herzegovina with valuable assets that should lead toincreased foreign direct investment in the near future.

2. Industrial structure
Industry sectors that have comparative advantage over those in other countries andcould be attractive for Japanese companies:
Wood production
There is a long track record of wood production in BiH for export. BiH has almost
300 mln cubic meters of wood (53 % of the total area is covered by forests), of which
about one third is deciduous (beech and oak) and the rest is coniferous. Capacities
for furniture production exceed domestic demand, and thus a significant amount isexported. The most important advantages of this sector are low-cost labor and theavailability of raw materials. It is one of the sectors with a long-term future, provided
that attention is paid to quality management, design and marketing. BiH also has
capacities for the production of raw materials and products in the cellulose industry(pulp, craft paper, tissue paper, paper confectionery, cellophane).
TextilesA traditional industry with a wide product range (cotton yarn, fabrics, textiles, woven,garments, raw and processed leather, and leather products) and employing about
35,000 people. The sector is very diversified with a large number of small producers
in almost every municipality. The relatively low labor costs and the country's
proximity to the most important world textile markets, combined with certain
investments in modern equipment could create the conditions for the dynamic
development and transformation of the sector into one of the leading exporters.

Food and beverages (including tobacco production)

There is high potential for fruit (plum, apple, berry-like fruit, wine grape) andvegetable growing in Herzegovina and wheat, corn and sugarcane in Bijeljina in thenorth and along the river Sava. Due to the equitable climate and fertile soils of BiH, it
is possible to harvest crops and fruits up to three times each year. The tobacco
industry is significant, explaining the strong interest in the privatization of its big
factories. Additionally, there is potential for organic produce and pure water supplies
it is easy to understand why international food and drink distributors are starting toinvest in this sector. The brewing industry has been one of the first manufacturingsectors to be privatized. It has attracted some large foreign investors – Interbrew(Belgium) has acquired 51% of the Grude brewery and Union (Slovenia) has bought
12% of the Sarajevo brewery.
Construction materials (cement)
In March 2001, Heidelberg Zement won an international tender for a 51% stake in
Kakanj Cement, a BiH company producing 35% of the cement consumed on thedomestic market. The demand for its products in the domestic market is high due tothe extensive reconstruction work that continues apace. Kakanj and another BiH
company, Lukavac, of which Atlas International of Austria has recently acquired 51%,
are the major players amongst BiH’s 22 construction material manufacturers.
Metal processing
The most valuable nonferrous resource in BiH is bauxite with estimated reserves of
41 mln tones. The Zvornik-based plant, "Birac", was producing 600,000 tons ofaluminum in the eighties but has currently reduced its production to 300,000 tons.
The other major aluminum plant in BiH is "Aluminijum Mostar". The company has
benefited from the design and engineering assistance of Aluminum Pechiney –France. It has an annual capacity of 275,000 tons of hydrated aluminum. BiH also
has rich deposits of iron ore, estimated at about 750 mln tons. The steelworks in
Zenica, which has an annual capacity of 1.85 mln tons of steel, has now reduced its
production to around 100,000 tons per year. A joint venture (BiH Steel Company)
has been established with the Kuwaiti Investment Authority (KIA), which has provided
working capital and investment.
After the war, the BiH company ‘Unis’ set up a joint venture with Germany’s
Volkswagen-Audi Group (VAG) to finish Skoda cars in Sarajevo, and, starting in July
2002, the latest model of the Volkswagen Golf.
Tourism
The private sector is developing rapidly in the post war period. The most important
tourist attractions include mineral resorts (spas), mountain centers, and nationalparks, such as Kozara and Sutjeska in the RS. BiH, unlike any other SE European
country, has world-class ski slopes on which it hosted the Winter Olympic Games in
1984. BiH is well suited to specialist tourism and can provide largely unexplored andunexploited destinations for more adventurous tourists. Small groups with tailormade itineraries can have a thrill-packed time in the remote mountains, white waterrafting, kayaking, skiing, paragliding, and mountain biking or more leisurely, justhiking and enjoying the unspoilt countryside. BiH is a safe place to visit and is being
included as an all year round destination by more and more foreign tour operators.

Hydro-energy
BiH is blessed with fast-flowing mountain streams and large rivers that are conducive
to hydro-electricity production. Thirteen hydroelectric power stations already exist
with a generating capacity of 2,034 megawatts. These are supplemented by four
thermal power stations that are being upgraded through an EU grant, which in itself ispart of a wider scheme aimed at restoring the national electricity distribution system
and reconnecting the country to the international electricity supply grid that was
damaged in the war. There is great potential for international investors inconstruction projects on the Drina and Neretva rivers and in the development of up to
100 small hydroelectric power stations on other sites.

3. Socio-economic infrastructurea.) Infrastructure
The total length of roads is 21,677 km, out of which 3,722 km are main highways,
4,104 km regional roads and 13,851 km local roads. There has been, and willcontinue to be, much investment from the international community to upgrade BiH’s
roads and railways. Projects underway included an EBRD approved € 21 million loan
for the modernization of the road and rail networks leading to ports and other pointsof access. This will form part of the Pan European Corridor 5, running from the
Croatian port of Ploce, via Sarajevo and Brcko in BiH to Budapest in Hungary. The
length of the railway network is 1,031 km, out of which 94-km is double track, and777 km is electrified.
There are four airports in BiH. The International Airport in Sarajevo has been
completely reconstructed by the international community and the runway resurfaced.
Mostar has also been upgraded and there are two other airports, at Banja Luka andTuzla, giving good airport infrastructure.
The river Sava is the only navigable river in BiH with the only harbour being in Brcko.
It provides a connection to Europe through the Sava and Danube rivers. The
Croatian Ploce harbour on the Adriatic Sea is the natural sea transport entrance andexit for BiH's economy and its use is regulated by a special bilateral agreement. It isconnected to Sarajevo and other regions of BiH by rail and road links via the city of
Mostar.
b.) Energy
The adoption of the Law on Electricity Transmission, Regulator and System Operator(21 March 2002) is a further step towards the creation of a single electricity market in
BiH. It provides the legal basis for the establishment of an institutional structure at
the state level, comprising a state regulatory commission for electricity transmission,an Independent System Operator, and the Transmission Company.
BiH is blessed with fast-flowing mountain streams and large rivers that are conducive
to hydro-electricity production. Thirteen hydroelectric power stations already exist

with a generating capacity of 2,034 megawatts. These are supplemented by four
thermal power stations that are being upgraded through an EU grant, which in itself ispart of a wider scheme aimed at restoring the national electricity distribution system
and in reconnecting the country to the international electric supply grid, damaged in
the war. There is great potential for international investors in construction projects on
the Drina and Neretva rivers and in the development of up to 100 small hydroelectric
power stations on other sites.
The Bosanski Brod Oil Refinery has a capacity of 4 million tonnes, which exceeds thedemands of BiH’s domestic market. Oil-based products are therefore available forexport. These include liquid fuels, gases and oil distillates. The Modrica Oil Refinery
exports motor oils and industrial lubricants of the highest quality and hydro-cracked
base oils. This refinery is current undergoing privatization.

4. Goods marketa.) Access to large consumer markets- EU Export Policy for Bosnia and Herzegovina.
According to the new preferential regime all goods from BiH that fulfill EU technicaltechnological standards and conditions can be imported into all 15 EU countries until
the end of 2005 without quota restrictions or duties. There are only a few exemptions
to this rule: live cattle and beef, certain types of fish and wine, for which there are
special quotas and duty-free export to the EU.
- Preferential export regimes with many developed countries
BiH goods have specific preferential regimes for exporting to a wide range ofdeveloped countries such as: USA, Japan, Russia, Canada, Australia, New Zealand,
Norway, Switzerland, Hungary and Slovakia. Actually, in a many cases it is related toan approved status of BiH as an undeveloped or developing country.
- Free trade agreements
In June 2001, seven Southeast European states signed an agreement to create afree trade area covering Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR of
Macedonia, Romania, and Yugoslavia (Serbia and Montenegro). The primary
purposes of the agreement are to increase the volume of regional and international
trade, to improve the overall capacity of the region’s market and to attract Foreign
Direct Investment (FDI). It is also the aim to enhance the integration of the region
into European structures and the global economy. The Memorandum is a clear
message by these countries to the rest of the world that they are ready to co-operate,
to rebuild their economies and to reconstruct their trade relations, thus creating asecure and attractive investment environment.
This year BiH signed a free trade agreement with Turkey that provides restriction freeexports to a consumer market of 70 million people.
b.) Transport

A number of large international road-haulage (transport / freight forwarder)
companies operate throughout BiH bringing in materials and taking out finishedproducts on a regular basis. BiH companies, such as Intersped, Dusanic andIntereuropa can provide a complete door-to-door service. Air-conditioned andrefrigerated lorries and containers are available, together with specialized goods
transportation equipment such as containers with rails for garments.
BiH road haulers have the necessary quality of lorries to carry out this service, but
continue to be hampered by the legacy of the past. BiH manufacturers however,
have not let this problem hamper them in meeting tight deadlines. As an alternative,
they have used Croatian registered companies to undertake this service.
International parcel carriers and courier companies operating in BH include UPS,
DHL, TNT and FedEx.

5. Labor marketa.) Labor availability
Employees by sector in Federation BH,
Employees by sector in RS% of total number of employees
SectorManufacturing
Wholesale and retail trade
Transport, storage andcommunication
Construction
MiningCatering
Electricity, gas and water supply
Public administration
Others

2001
24
12
7
6
4
4
4
32
11

SectorIndustry and mining
Trade
Transport andcommunication
Construction
Arts and crafts andpersonal services
Non-economic
activities
OthersSept. 2000
36
9
6
5
5
24
15

b.) Labour force supply
The unemployment rate for 2001 is estimated at 40% of the labour force with little
hope for an improvement prior to 2004 given the current rate of job creation. Future
privatisation, downsizing of armies and the rationalization of public spending will also
contribute to keeping the unemployment rate high. However, the registered
unemployment figures may overstate the position, since a large part of the workforce
is engaged in grey market activities.
In Federation of BiH there are 269,904 unemployed people (2001); 46% of
unemployed people are females and 54% males. In Republic Srpska there are
147,749 unemployed (end 2001).

Unemployed persons by qualification; % of total number of unemployed
Federation BH (2001)
Unqualified workers
Skilled workers
Secondary education
Semi-skilled and highly-skilledworkers
University degree, two-year
diploma, etc.

Republika Srpska (end 2001)
38
35
20
5

Skilled workers
Unqualified workers
University degree, two year
diploma

38
30
1

2

b.) Education
Universal access to education is available to all who live in BiH. Nearly 21% of BiH’s
population were at school, or involved in tertiary education in 2001. Over 60,000
students received tertiary education in 1999-2000. There are universities in Sarajevo,
Banja Luka, Tuzla, Bihac, Mostar and the University of Srpsko-Sarajevo that has
sixteen campuses in Republika Srpska and Brcko. Sarajevo University is by far thelargest in the country, with twenty-six faculties including those covering architecture,
economics, logistics (transportation and communications), veterinary and dental
medicine and a well-respected music academy. It has a state-of-the-art businesscentre, where students acquire business management and computer skills.
c.) Private Sector Associations and Trade unions
Private Sector Association development is still very much in the early stages in BiH
and will probably not really become established until most of the state-owned
industries are fully privatized. This does not mean, however, that entrepreneurial
private business owners are not getting together to discuss topics of mutual interestand to lobby government for better conditions for their particular trade.
As is to be expected in a former command economy, there is a formal structure oforganized labor. However, this body has grown weak, as it no longer works acrosswhole industries, but rather at the Entity or even at the local employer level, where it
seeks to maintain artificially high levels of manning. The Syndicates (Trade Unions)were essentially involved in wage and condition negotiations with government: thisrole has become irrelevant with the move to a free-trade economy. As privatization
increases, the Syndicates will either have to adapt to the realities of the world inwhich they now exist, or be replaced by more appropriate structures for
employer/employee negotiation in the future. Employees working for many local
private businesses are not members of any form of organized labor group.
6. Industrial policya.) Privatization
The privatization program in Bosnia and Herzegovina is being implemented at theentity level. Entities competences and responsibilities are defined both by therelevant laws on the entity level and by the state umbrella privatization law. These
Laws stipulate the establishment of a legal framework for the privatization process,based on the principles of non-discriminatory treatment and transparency,
recognizing the right of entities to conduct the privatization process of enterprises andbanks that are located in their territory, and providing equal opportunities to domestic
and foreign natural persons and legal entities.
The basic requirements of the laws are as follows:
Federation of Bosnia and Herzegovina

Republika Srpska

Priority is to be given to businesses, banks
and socially-owned accommodation where
there is a residual capital value that is not
owned by individuals and/or legal entities.
Banks with more than 50% state-owned
capital on the balance are being privatizedfirst.

The privatization process of businesses andbanks includes equal treatment of potential
investors, be they domestic or foreign
individuals or legal entities. The Law on
privatization in the RS was passed in June
1998.

The program recognizes a wide range ofclaims to process by FBH citizens, including
old foreign currency savings, earned but
unpaid military salaries, pension arrears andrestitution. Any or all of these can be used
under the scheme.

Privatization encompasses state-owned
businesses and those that have been partly
privatized under the ‘Markovic’s’ program.
Methods of payment are part in cash andpart in vouchers. Voucher payments include
those made against frozen foreign currency
exchange deposits, validated restitution
claims and unpaid salaries during the war. A
general fund is to be established for further
distribution of shares to all citizen of RS.

Large-scale privatization is to be achieved
through the sale of shares, or by tendering.
In the event that privatization can beachieved by these methods, the Law allows
for direct sales negotiation, leasing or joint
management with a potential buyer.

The method of privatization is defined in therules governing the program. In large
businesses with a state capital value of €150,000 or more, shares will be offeredaccording to the following formula: 55% asvouchers issued to RS citizens, 5% to therestitution fund, 10% to the retirement fundand the balance of 30%, for cash.

Small-scale privatization started in May 1999
and includes businesses with less than 50
employees and with assets valued at lessthan € 250,000. Businesses included arethose whose predominant activities are intrade, catering, services and transport.
Privatization is to be achieved by auction ortendering. Any potential buyer has to be able
to put down 35% of the agreed price, in cash.
Those offering more than 35% will be eligible
for an 8% discount on any amount above thisfigure.

Banks with a state capitalization of more than
50% must prepare an opening balance sheet
and a privatization plan. The bankprivatization program is primarily based on
obtaining fresh capital injections and knowhow, rather than looking for cash for theentity’s budget. There will be no voucher
offers in the bank privatization program.

The strategic companies that are being privatised over the next year have been
allocated to different privatisation agencies of the EU, GTZ, WB and USAID. Thismeans potential investors will have professional support to help from the point when
they first express interest, right through to the end of the tender process.

b.) Anti-monopoly policy measures
BiH finally managed to bring in anti-monopoly policy measures at the State level in
2001. According to the Law on Competition, the anti-trust rules are:Anti-competition practices
1. Practices of Economic Agents which may affect the prevention, restriction or
distortion of competition are:a) Contracts, certain contractual clauses, explicit or implicit agreements, concerted
practices, decisions of associations of businessmen and other associations(hereinafter: agreements);b) Monopolistic practices;c) Concentration.
Agreements
1. All agreements between Economic Agents, associations and concerted practices
related to:a) Directly or indirectly fixing of purchase or selling prices of goods and services soldpublicly or any other trading conditions placing users of goods and services(hereinafter: consumers) at a disadvantage;b) Limiting and control of production, selling and purchase of goods, rendering or
using services, markets, technical development or investment;c) Share of markets or sources of supply of goods and services;d) Application of dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage by limiting theiraccess to the market or excluding them from the market;e) Concluding of contracts subject to acceptance by the other parties ofsupplementary obligations, which by their nature or according to commercial
usage have no direct connection with the subject of such contracts.
Monopolistic practices
1. Any abuse by one or more Economic Agents of a monopolistic or dominantposition in the market shall be prohibited, which consist in:a) Directly or indirectly imposing unfair purchase or selling prices of goods andservices or other unfair trading conditions;b) Limiting production, markets or technical development to the prejudice ofconsumers;c) Applying dissimilar conditions to equivalent transactions with other trading parties,
thereby placing them at a competitive disadvantage;d) Make the conclusion of contracts subject to acceptance by the other parties ofsupplementary obligations, which by their nature or according to commercial
usage have no direct connection with the subject of such contracts.
Concentration

1. Operations of concentration of Economic Agents are forbidden which create adominant position which might result in preventing, restricting or distorting
competition in the BiH territory or in a part of it, which exist when:a) Two or more Economic Agents, independent before, are merging or joining, orb) One or more Economic Agents that is already in control of one or more
Economic Agents are merging, thereby obtaining control of one or more
Economic Agents or of part of them.
c.) Policy measures to develop natural resources
In order to develop and to utilize the full potential of the abundant natural resourcesin BiH, concessions are given to attract foreign investors. For this reason BiH
governments have harmonized the concessions regulations between entities. Thereis also a state umbrella law.
According to the Law on Concessions in Republika Srpska, the decision to grant a
concession is made by the Government of RS based on a procedure that is public,
accessible to all and non-discriminatory. The Law specifies the public Republika
Srpska property sites for which concessions may be granted include: Construction
and usage or usage of roads, railways, navigable channels and ports, and airports;
exploitation of watercourses, construction of power plants and water accumulations,
except electricity transmission; exploration and/or exploitation of energy and othermineral raw materials, crude oil and natural gas; exploitation of forest and forest
areas; hunting and fishing; usage of healing, thermal and mineral waters; utilizationof arable land, etc. A concession may be granted for a maximum duration of 30
years, and for investment requiring a longer period – for up to 50 years. A
concession may be granted to local and foreign legal persons based on publictendering procedures or unsolicited proposals.
In the Federation of BiH the legal situation on concessions is more compound than in
the Republika Srpska. In accordance with the Constitution of the Federation of BiH,
concessions are in the competence of the Federation of BiH and the Cantons.
According to the Law on Concessions (Official Gazette Federation BiH 40/02) the
Government of the Federation of BiH grants concessions for: Construction and usage
or usage of roads, railways, navigable channels and ports, and airports; exploitationof watercourses on the territory of two or more Cantons; construction of power plants
with an installed capacity of more than 5 MW; construction and usage of water
accumulations on territory of two or more Cantons; construction, exploitation andmanagement of pipeline transport of oil and gas and storage in pipelines and tanks;
games of chance; exploitation of forest and forest areas; passenger and freightrailway transportation; and areas and buildings of natural and built heritage. The
granting of concessions for other situations shall be governed by Cantonal laws. A
concession may be granted for a maximum duration of 30 years, and for investment
requiring a longer period – for up to 50 years. A concession may be granted to local
and foreign legal persons based on public tendering procedures or unsolicited
proposals.
Cantons in the Federation of BiH have the legal authority to pass a proper law on
concessions, which must be harmonized with the Law on Concessions in theFederation of BiH. Some cantons in the Federation of BiH have a proper cantonal

Law on Concessions. Cantons in the Federation of BiH can give a concession for the
exploitation of natural resources that are situated exclusively in their territory.

7. Trade and investment system
Bosnia and Herzegovina has tried to create favorable conditions for foreign
investment. It has implemented major reforms with the objective of developing amore attractive business environment conducive to foreign direct investment. As
previously mentioned, some of the recommendations of the FIAS study are already
implemented. One of the important achievements was the harmonization of entities
FDI laws in accordance with the state Law on the Policy of Foreign Direct Investment.
The Law provides several benefits for foreign investors, such as:
•
•
•
•
•
•

•

National treatment;
Exemption from the payment of customs duties and customs fees for investment;
Rights to open accounts in any commercial bank in domestic or any freely
convertible currency in the territory of BiH;
Right to transfer abroad, freely and without delay, in freely convertible
currency, any proceeds resulting from the investment;
Foreign investors in BiH have the same property rights with respect to realestate as the citizens and legal entities of BiH;
Protection against nationalization, expropriation, requisition or measures
having similar effects; such measures may take place only in the public
interest in accordance with the applicable laws and regulations and against thepayment of appropriate compensation, i.e. compensation that is adequate,
effective and prompt;
Right to freely employ foreign nationals, subject to the labour and immigration
laws in BiH.

Also, it should be noted that in the Federation of BiH, if foreign investment exceeds
20% of a company’s equity, that company is exempted from profit taxes for the first 5
years, proportional to the foreign stake in the total capital of the company.
Under the BiH Law on Foreign Investment, a foreign direct investment enterprise(whether wholly foreign-owned or a joint venture) is registered as a domestic legal
entity. As a result, under the principle of national treatment, such an enterprise has
the same rights as a domestic enterprise or natural person of BiH citizenship,including rights of and ownership of property in BiH.
One of the benefits for foreign investor is that there is no limitation on the purchasingof companies’ shares and special citizenship requirements regarding the members ofa company’s body.

8. Dispute Resolution System

According to the Law on the Policy of Foreign Direct Investment in BiH, foreign
investment disputes shall be settled by the relevant courts in BiH, unless the parties
concerned agree on another procedure for the settlement of disputes, including, but
not limited to, domestic or international conciliation or arbitration. BiH is a party to theInternational Convention for the Settlement of Investment Disputes. It has enteredinto a number of bilateral agreements for the promotion and protection of investments,
all of which include dispute resolution clauses within the scope of the agreements.

9. Institutions to promote foreign investment
The Foreign Investment Promotion Agency (FIPA) of Bosnia and Herzegovina is agovernment agency established in August 1988 by the Council of Ministers andaccountable to a Steering Board comprised of local and foreign investors. FIPA
offers a free and confidential service.
The main FIPA objectives are:
 Promoting BiH and the attraction of foreign investment to BiH,
 Creation of a more conducive business environment,
 Retain existing foreign investment,
 FDI policy advocacy and Institutional strenghtening of FIPA.
FIPA provides assistance with:-

Macroeconomic data
Links with all levels of government, industry and commerce
Legal advice regarding foreign investment laws, property laws, tax
regulations, employment regulation and other
Information on available investment projects
Information on companies offered for privatization
Assistance to potential investors in registering and establishing“green-field” operations, joint ventures, manufacturing under license,
and technology transfers.

FIPA – Foreign Investment Promotion Agency
Branilaca Sarajeva 21/3
71000 Sarajevo
Bosnia and Herzegovina
Tel: +387 (0)33 278 080
Fax: +387 (0)33 278 081
E-mail: fipa@fipa.gov.ba
Web: http//www.fipa.gov.ba