Thursday, 2 February 2012The Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS) should unify their markets and simplify rules to allow companies to invest in both entities in order to improve the local economies, experts and retailers say.
Companies that want to do business in both FBiH and RS must register separately with each, increasing administrative costs. The entities also have different regulations that make operating businesses in both more difficult than it should be, some retailers say. Permits typically take months to receive.
"The main problem is lack of communication among entities and ten cantons within the FBiH. It can happen that for the same product we end up having 12 different regulations, which makes it difficult to do business," Anel Music, the director of the Sarajevo-based Planika-Flex shoe retailer told SETimes.
The creation of a single economic space remains a top priority of the international community and a necessity for BiH's EU integration. While some progress was made under international pressure, such as the introduction of VAT in 2006, movement has not been consistent.
When BiH signed the Stabilization and Association Agreement in 2008, it obligated itself to prepare the country to join the EU single market.
"Without a single economic area the country cannot expect to attract foreign investment and create a positive economic environment. If only the politicians remove the obstacles, the country can expect economic growth, new foreign investment and the creation of new jobs," Sanela Dzevlan, public relations manager of the Sarajevo Economic Regional Development Agency (SERDA), told SETimes.
According to Dzevlan, SERDA's cross-entity projects have given it direct experience in how complicated procedures and regulatory disunity are slowing economic development. As long as the BiH market remains fragmented, Dzevlan says, the free flow of capital within its borders cannot be realised.
"One country without its own market cannot expect to be integrated into the EU market," he adds.
Boris Divjak, a founder of the BiH branch of Transparency International and currently an advisor at the World Bank, in his study Bosnia and Herzegovina: Doing Business to Cement Peace, published by the UK-based NGO International Alert, says that banks trying to operate in both entities face major obstacles, particularly with employment regulations.
"It is easier to employ a foreigner in the RS than an employee from the FBiH. Workers' employment regulations, pension and health insurance from FBiH are almost impossible to replicate under the RS law, and vice versa," writes Divjak.
Enesa Hodzic, a Sarajevo-based co-owner of a dental lab, says trade with the RS is vital to her business.
"We buy a high percentage of our materials from the RS, where prices are generally 10% lower than in the FBiH. Everything in the RS is cheaper," Hodzic told SETimes.
RS businesses are actively seeking clients in the FBiH because there are more potential clients in the Federation with money, according to Hodzic. |
Thursday, 2 February 2012
Setimes
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