特別会員寄稿

Kosovo, the Next Investment
Destination in Europe
Enis XHEMAILI
Former Chargé d'Affaires ad interim
Embassy of the Republic of Kosovo in Japan

Japan’s Gateway to Europe
The Republic of Kosovo is located in the heart of theBalkans, a geo-strategic location in Southeast Europe,with a population of 1.81 million. It is a safe, friendly
and attractive country for both investment and doing
business. The newest country and with the youngest
population in Europe. Well connected via air,motorways and railways, with free access to EU andCEFTA markets of 540+ million people, and mostimportantly with low taxes and operational costs.
Kosovo stands out as the country with the greatest
investment opportunities in the region. The WorldBank 2020 Doing Business Report recognises
Kosovo’s achievements as one of the 20 best upgradesin Doing Business, with the global ranking at the 57thplace. In 2018, Kosovo had the highest percentage ofhouseholds with home-based Internet access in theregion (93%). Hence, Kosovo appeals strongly atinternational investors as a primary place for theirinvestments.
Japan is Kosovo’s sole strategic partner in EastAsia. While Kosovo is Japan’s gateway to Europe as
the next tourist and investment destination. Japan
being one of the first countries that recognised theindependence, Kosovo immediately opened its
embassy in Tokyo in 2010. Japan opened its embassyin Prishtina in 2020.

Attractive Economic Overview
The business environment in the Republic of Kosovo
is becoming one of the most competitive in the region.
Competitive, well-educated and young workforce withstrong entrepreneurial skills, good spirit and generalknowledge of most European languages, an excellent
tax system, abundance of natural resources, quick andeasy business registration methods, a transparent law
on foreign investments, are just a few advantages
making this country an attractive and friendly
362021.3

environment for foreign investors. Kosovo’s economy
is heavily dependent on imports and this is the biggest
shortfall that is hurting the Kosovo economy.
In June 2009, Kosovo joined the World Bank andInternational Monetary Fund, the Central Europe Free
Trade Area (CEFTA) in 2006, the European Bank for
Reconstruction and Development in 2012, and theCouncil of Europe Development Bank in 2013. In
2016, Kosovo implemented the Stabilization andAssociation Agreement (SAA) negotiations with theEU, focused on trade liberalization. Generalised
System of Preferences (GSP) Program with US, Japanand Norway and Free Trade Agreement with Turkey.

The Lowest Taxes in the Region andBeyond
Tax policy in Kosovo is oriented towards simple rules
which provide a broad tax base and the lowest tax rates
in the region and beyond. Taxes vary based on theform of business and annual turnover. Tax
administration applies three main tax regimes:• Value Added Tax (VAT) is fixed at 18 % for mostgoods regardless of their origin, and 0% for goods
dedicated for export. Utilities and food basket are set at8%, and new production lines and raw material as wellas certain agricultural and capital goods are set at 0 %.
• Corporate Income Tax (CIT) for annual turnover
above € 50,000 is 10% and is paid every three months.
• Personal Income Tax (PIT) is based on the salaryearned: 0% for 960 euro/year; 4% over 960 up to3000 euro/year; 8% between 3001 and 5400 euro/year; and 10% over 5400 euro/year
In addition, Pension Contributions, a mandatorytax for employee and employer, is at a rate of 5 % ofsalary from each.

Economic Zones
Kosovo has established a number and various types ofEconomic Zones. Businesses located there areprovided with fiscal facilities such as physicalinfrastructure parcels (sewerage, water supply
network, electricity network, road access, sewage
treatment and maintenance of public spaces - waste)
for business development, in order to attract newinvestments within the economic zones.

Germany, Switzerland, Turkey and the US
are Top Investors in Kosovo
Foreign sovereign investors in Kosovo primarily
include regional European countries such Germany,Switzerland, Turkey, Austria, Slovenia and the US. A
majority of foreign investment is concentrated in
Prishtina, with particular focus in the areas of realestate, renting and business activities, wholesale, retailtrade, repair of motor vehicles etc., financial
intermediation and electricity, gas and water supply. In
2019, the total foreign direct investment was 271.8
million euros, where according to countries 72.9
million euros from Germany, 61.9 million Switzerlandand 21.3 million from the US.

The Biggest Japanese Shiitake Mushrooms
Factory in Europe
Hirano Mushroom LLC was established in 2013 inKosovo, as a diverse international company withexpertise coming from Japan, France, Netherlands,
Switzerland and Kosovo. It is the only producer of
exotic, shiitake mushrooms in the Eastern Europe,
devoted to bring high quality mushrooms to theEuropean, Asian and United States markets. Withproduction capacities of 8 tons a day and distribution
points in France and the Netherland, HiranoMushrooms makes sure to deliver the order with firstclass shiitake within 3 days anywhere in Europe. 100%of its production is for export mainly to the EU market.
There are other Japanese companies in Kosovo insectors like real estate, gastronomy, agriculture,fisheries, and technology.

Kosovo Welcomes various Japanese
Investors
Agriculture
Kosovo has 588,000 ha or 53% cultivable land.
Currently, only around 45% is used as agriculturalland while it contributes 14.5% to the GDP. The mostimportant fields of agriculture are the vegetable,grains, fodder crops and fruits. Kosovo is already wellknown as a producer of different types of grapes.
Cabernet Franc, Merlot, Prokupac and Gamey are allplanted here. The continental climate and the height of
300-400 meters above sea level provide ideal
conditions for vineyards and the development andgrowth of grapes for wine. There are two main factors
in favor of livestock investments in Kosovo. Firstly,
the country offers very good natural and climaticconditions for various types of livestock farming.
Secondly, market demand for livestock farming
products is currently much higher than domestic
production.

Wood Processing
The annual allowable amount of felling is currently
slightly below 1 million m³ with beech and oak being
the main species. Potential for foreign investors ranges
from doors and windows to a variety of furnitureproduction. A large amount of traditionally gained
experience, great knowledge in wood processing, anda cost effective labor force make the Kosovar woodindustry particularly well suited for the manufacturingof handmade luxury products. The Kosovar
Government has recently approved a zero customs rate
for the imports of selected machinery and capital
goods related to this sector, while further negotiations
for the exception of wood raw material from VAT andcustoms are currently underway.

Information and Communication Technology
Kosovo has the youngest population in Europe. It isboth skilled and multilingual, with English being only
just short of an official language to high internationalpresence.
Internet penetration based on users is 76.6%, andbased on households is 84.8%. This is the highest ratein the region and is comparable to the most development
countries in Europe. Kosovar companies in the IT
sector offer today high quality services and the latest
technologies to their customers both local as well as toforeign companies who want to outsource theirsoftware development and/or call and support centers.
According to STIKK (Kosovo Information and2021.3

37

Communication Technology Association), the ICT
Sector is currently considered one of the few sectors
with a positive trade balance in Kosovo. Three out offour companies operating in the sector, or 74% ofthem, export their services and products. The countries/regions with the highest export potential are Germany(44%), North America (42%) and Switzerland (24%).
This is because the majority of Kosovar professionals,
besides their professional training, speak the languagesof the aforementioned countries.

Construction
During past years, the construction industry became
one of the most important sectors contributing to
Kosovo’s economic growth. Construction sector in
Kosovo has so far utilized several hundred million
euro that were primarily used for the construction of
new homes, or for the rehabilitation and developmentof the road infrastructure respectively. A further factor
which is helping to boost the development of thissector is the demand for road and highway construction.
According to estimations in the next five years, Kosovo
will need some 60,000 new apartments, including theassociated infrastructure, such as roads, kindergartens,schools, leisure facilities, restaurants etc.

Mining and Energy
Kosovo has an enviable endowment of naturalresources. At 14.7 billion ton, Kosovo possesses theworld’s fifth proven reserves of lignite. It also has
reserves of other minerals such as aluminum, gold,lead, zinc, copper, bauxite, magnesium, asbestos,chromite, limestone, marble and quartz.
As estimated by the World Bank, while themajority of Kosovo’s natural resources remain unused,
its huge reserves are a great potential for future growth.
Trepca Mines: about 23,000 employees, at a time it
was one of the largest companies in Yugoslavia.
Kosovo’s government has adopted law and newstrategy for Trepca.

Textiles and Leather Processing
Currently there are over 450 private companies
engaged in textile production, out of which 90 percent
are final product manufacturers. Kosovo offers threemajor benefits for investors wishing to revamp one of38

2021.3the existing SOEs or found a new textile manufacturing
company. 1. A cost effective, well skilled andexperienced work force; 2. A solid base of technologythat can be acquired through the ongoing privatization
process; and 3. Numerous subcontracting andoutsourcing possibilities.

Tourism
The natural wealth of Kosovo represents high quality
tourism resources. Mountainous south of Kosovo has
great potential for winter tourism. One of the mostinteresting opportunities for foreign investors in this
sector is the ski resort Brezovica in the Sharr
Mountains. The resort, situated between 1,700 and
2,500 m above sea level. It offers excellent weather
and snow conditions, as well as long ski seasons fromNovember to May. Mountains in Kosovo offers
excellent tourism opportunities, such as skiing, ecotourism, paragliding, mountain biking, rock climbing,trekking, kayaking, horse riding, etc. Apart from theabove-mentioned tourism resorts, Kosovo is generallyrich with mountains, artificial lakes and rivers andtherefore offers prime possibilities for hunting.
The widespread production of rare artisan crafts inKosovo, such as Filigree (silver), represents anattraction for foreign tourism.
In addition, Kosovo has the potential to develop
cultural tourism with numerous religious and othersites of extraordinary cultural and historical value.
Kosovo’s numerous thermal springs are well known in
the region for their healing effects. Foreign investors
in the field will find high demand in the regional anddomestic markets.
お問い合わせJOI 事業企画部

E-mail: bd@joi.or.jp、TEL:03-5210-3311

駐日コソボ共和国大使館

E-mail: embassy.japan@rks-gov.net、TEL: 03-6809-2577

Kosovo Investment and Enterprise Support Agency
KIESA

KIESA is the state agency that promotes, provides
assistance and‘walks’with (potential) investors inevery step of their investment: before, during and after
the investment, to further support and facilitate theongoing processes. KIESA further focuses on SMEs,exports, tourism, and Special Economic Zones. https://kiesa.rks-gov.net/.