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Business EnvironmentBusiness Environment
in Kosovoin KosovoPrishtinaPrishtina 05.11.200905.11.2009
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22
General DataGeneral Data
GeographyGeographyLand area:Land area: 10,908 km210,908 km2
Terrain:Terrain: Low flood plains throughout central Kosovo, surrounded by mountainsLow flood plains throughout central Kosovo, surrounded by mountainsto the north, west and south.to the north, west and south.
Land Use:Land Use: 53% agriculture, 39% forests53% agriculture, 39% forests
Largest City:Largest City: PrishtinaPrishtina -- est. pop. 500,000est. pop. 500,000
PopulationPopulationPopulation Description:Population Description: approximately 2.2 million people composed of aboutapproximately 2.2 million people composed of about
90% Albanian, 5% Serbs, 2% Muslim Slavs (90% Albanian, 5% Serbs, 2% Muslim Slavs (BosniaksBosniaks,, GoraniGorani), 2% Roma and), 2% Roma and1% Turks1% Turks
Distribution:Distribution: 42% urban, 58% rural42% urban, 58% rural
Diaspora:Diaspora: app. 500,000 people living abroad.app. 500,000 people living abroad.
Languages:Languages:Albanian, Serbian, EnglishAlbanian, Serbian, English
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Main Business SectorsMain Business Sectors
Mining and EnergyMining and Energy
Kosova possesses the worlds fifthKosova possesses the worlds fifth--largest proven reserves oflargest proven reserves oflignite (at 14.7 million tons);lignite (at 14.7 million tons);
The lead and zinc reserves of Kosova are estimated to aroundThe lead and zinc reserves of Kosova are estimated to around
48 million tons, those of nickel to 16 million tons.48 million tons, those of nickel to 16 million tons.
Chrome reserves amount to 89 million tons and bauxiteChrome reserves amount to 89 million tons and bauxite
reserves to 13.2 million tons.reserves to 13.2 million tons.
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Main Business SectorsMain Business Sectors
AgricultureAgriculture
Kosovo is well endowed with agricultural land (1.1 million ha).Kosovo is well endowed with agricultural land (1.1 million ha).
App. 588,000 ha or 53 % is cultivable landApp. 588,000 ha or 53 % is cultivable land
Currently, the sector of agriculture contributes 25 % to the GDPCurrently, the sector of agriculture contributes 25 % to the GDP
and is the main source of income for the majority of theand is the main source of income for the majority of the
population.population. It is one of the most important employment providers in KosovoIt is one of the most important employment providers in Kosovo
and it accounts for 18 % of the value of exports.and it accounts for 18 % of the value of exports.
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Main Business SectorsMain Business Sectors
Food ProcessingFood Processing
There are numerous agroThere are numerous agro--industries in Kosovo with high market potential,industries in Kosovo with high market potential,
offering potential investor immediate access to suppliers of raw materials,offering potential investor immediate access to suppliers of raw materials,
substantial inherited capital, technical capability and promising marketsubstantial inherited capital, technical capability and promising market
prospects.prospects.
The cheap workforce and the custom and tax incentives offered forThe cheap workforce and the custom and tax incentives offered for
agricultural inputs and capital goods, furthermore affirm the opportunitiesagricultural inputs and capital goods, furthermore affirm the opportunitiesavailable in this business field in Kosovo.available in this business field in Kosovo.
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Main Business SectorsMain Business SectorsLivestock and poultryLivestock and poultry
66
Kosovo Livestock (Number)
Buffalo 716Goat 14,331
Pig 60,475
Sheep 107,060
Cattle 289,795
Chicken 1,541,374
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Main Business SectorsMain Business Sectors
VineyardsVineyards
The viniculture still represents one of the most important sectors of theThe viniculture still represents one of the most important sectors of the KosovarKosovar
agriculture, with a good potential to attract foreign investments.agriculture, with a good potential to attract foreign investments.
The wine industry in Kosovo currently consists of some 5,000 ha. of vineyards.The wine industry in Kosovo currently consists of some 5,000 ha. of vineyards.
Only theOnly the RahovecRahovec facility that held app. 36 percent of the total vineyard areafacility that held app. 36 percent of the total vineyard area
had the capacity of around 50 million liters annually.had the capacity of around 50 million liters annually.77
Enterprise Processing Capacities in
Million Litres
Notes
NBI Rahoveci Rahovec 50 The private sector hasa processing capa-
city of about20-30 litres.
NBI Suhareka-Therande 21
NBI Ereniku- Gjakova 28
Kosova Vine 13
Total 112
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Main Business SectorsMain Business Sectors
TourismTourism
The mountainous south of Kosovo has great potential for winter tourism.The mountainous south of Kosovo has great potential for winter tourism.One of the most interesting opportunities for foreign investors in thisOne of the most interesting opportunities for foreign investors in this
region is the skiing resortregion is the skiing resort BrezovicaBrezovica in thein the SharrSharr Mountains.Mountains.
The wellnessThe wellness--tourism in Kosovo also offers great potential fortourism in Kosovo also offers great potential for
development.development.
Kosovo has the potential to develop cultural tourism with numerousKosovo has the potential to develop cultural tourism with numerousreligious and other sites with extraordinary culturalreligious and other sites with extraordinary cultural--historical value.historical value.
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Main Business SectorsMain Business SectorsTextileTextile
Analysis indicates that some 55 to 65 million Euro in exports could be reached.Analysis indicates that some 55 to 65 million Euro in exports could be reached.
In particular, Kosova offers three major benefits for investors wishing to revamp one ofIn particular, Kosova offers three major benefits for investors wishing to revamp one of
the existing SOEs or found a new textile manufacturing company. These are:the existing SOEs or found a new textile manufacturing company. These are:
A cheap, well skilled and experienced work force;A cheap, well skilled and experienced work force;
A solid base of technology that can be acquired through the ongoing privatizationA solid base of technology that can be acquired through the ongoing privatization
process;process;
Numerous subcontracting and outsourcing possibilities.Numerous subcontracting and outsourcing possibilities.
With the existing knowWith the existing know--how, cheaphow, cheap labourlabour force and other comparative advantagesforce and other comparative advantagesthat the country offers, including the friendly business and investment environment,that the country offers, including the friendly business and investment environment,
the textile industry in Kosovo has therefore the potential to become highly competitivethe textile industry in Kosovo has therefore the potential to become highly competitive
internationallyinternationally99
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Main Business SectorsMain Business SectorsConstructionConstruction
The construction industry remains a sector with highly promising economicThe construction industry remains a sector with highly promising economic
potential for Kosova.potential for Kosova. According to estimations in the next five years Kosova will need some 60,000According to estimations in the next five years Kosova will need some 60,000
new apartments, including the associated infrastructure, such as roads,new apartments, including the associated infrastructure, such as roads,
kindergartens, schools, leisure facilities, restaurants etc.kindergartens, schools, leisure facilities, restaurants etc.
The construction of a highway, which will connect the northern and central partsThe construction of a highway, which will connect the northern and central parts
of Kosova with Skopje, is a midof Kosova with Skopje, is a mid--term goal of the Government.term goal of the Government.
A much more important project represents the building of a highway betweenA much more important project represents the building of a highway betweenMerdareMerdare--KuksKuks--DurrsDurrs, which will connect Kosovo with the sea port of, which will connect Kosovo with the sea port of DurrsDurrs,,
Albania. This highway will become a part of the Trans European Corridor X thatAlbania. This highway will become a part of the Trans European Corridor X that
will connect the Adriatic Sea with the Western Europe.will connect the Adriatic Sea with the Western Europe.
1010
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Main Business SectorsMain Business Sectors
Information Technology and TelecommunicationsInformation Technology and Telecommunications
Kosovo has two mobile telephony operators, with over 200 millionKosovo has two mobile telephony operators, with over 200 millionEuro investment by the Slovenian Telecom for one of them. TheEuro investment by the Slovenian Telecom for one of them. The
statestate--owned mobile telephony operator VALA with over 900,000owned mobile telephony operator VALA with over 900,000
users will be available for privatization soon.users will be available for privatization soon.
In addition, great opportunities for foreign investors are also availableIn addition, great opportunities for foreign investors are also available
in fixed telephony, VoIP, cable TV, etc.in fixed telephony, VoIP, cable TV, etc.
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Main Business SectorsMain Business Sectors
Wood ProcessingWood Processing
The annual value of wooden products and other benefits arising fromThe annual value of wooden products and other benefits arising fromforests reaches 50forests reaches 50 75 million Euro, this sector assures a livelihood for75 million Euro, this sector assures a livelihood for
10 percent of the10 percent of the KosovarKosovar population.population.
Due to the sufficient availability of inputs, Kosovo offers greatDue to the sufficient availability of inputs, Kosovo offers great
investment possibilities in every single wood processing cycle. Theinvestment possibilities in every single wood processing cycle. The
annual allowable amount of felling is currently slightly below 1 million mannual allowable amount of felling is currently slightly below 1 million mwith Beech and Oak being the main species.with Beech and Oak being the main species.
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Foreign Direct InvestmentsForeign Direct Investments
Kosovo has so far attracted over 1 billion Euro of FDI.Kosovo has so far attracted over 1 billion Euro of FDI.
According to the Business Registry data there are over 2,000According to the Business Registry data there are over 2,000
companies of foreign and mixed ownership that have alreadycompanies of foreign and mixed ownership that have already
used the opportunity to invest in Kosovo.used the opportunity to invest in Kosovo.
Registration process is simple, quick and veryRegistration process is simple, quick and very unbureaucraticunbureaucratic..
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0
10
20
30
40
50
60
70
80
90
Foreign Investments in Kosova by Country2000-2006 (Million Euro)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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0
50
100
150
200
250
300
350
400
450
2006 2007 2008
Foreign Investments in Kosova - By Year (Million Euro)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Some foreign companies in KosovaSome foreign companies in Kosova
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Trade RegimeTrade Regime
1818
0 00 1000 1 00 2000
2003
2004
200
2006
2007
2008
I p rts i s v - y y r ( illi E r )
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Trade RegimeTrade Regime
0 100 200 300 400
00 600 700 800
CEFTA
European Union (EU)
Other Non-European Countries
Other European Countries
I p rts i s v - y R gi ( illi E r )
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Trade RegimeTrade Regime
0
0 100 1
0 200 2
0
Processed foods beverage and tobacco
Mineral products
Machinery, appliances, electrical, etc.
Products of the hem. and or allied industry
Vegetable products
rtic. of stones, plastic,ceramic,glass
Top 6 I ports by Commodity -2008 ( illion E ro)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Trade RegimeTrade Regime
0
0
100
1 0
200
2 0
2003 2004 200 2006 2007 2008
Ex orts from Kosova - y year (Million Euro)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Trade RegimeTrade Regime
0
10
20
30
40
0
60
70
80
90
100
European Union (EU) EFT
Other Non-European ountries Other European ountries
Exports from osov by r gion - 2008 ( illion E ro)
Source : www.eciks.or Investors GuideSource : www.eciks.or Investors Guide
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Trade RegimeTrade Regime
0 2 4 6 8 10 12
Base metal and articles of base metal
Hices, skins, leat er articles
Processed food, beverages and tobacco
Mac inery appliances and electric materials
Plastics, rubber and t ereof
Vegetable products
To Ex orts y ommodity - (Million Euro)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Investment climate and key economic indicatorsInvestment climate and key economic indicators
3.6%
1.8%
1.1% 0.8%
0.6%
4.4%
9.3%
3.0%
0.0%
1.0%
2.0%
3.0%
4.0%
.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2002 2003 2004 200 2006 2007 2008 IV/ 2009
Infl tion R t s by r
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Investment climate and key economic indicatorsInvestment climate and key economic indicators
2,800
2,900
3,000
3,100
3,200
3,300
3,400
3, 003,600
3,700
3,800
3,900
2006 2007 2008
GDP - by y r ( illion E ro)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Investment climate and key economic indicatorsInvestment climate and key economic indicators
14.00%
14.57%
14.23%
13.55%
13.00%
13.20%
13.40%
13.60%
13.80%
14.00%
14.20%
14.40%
14.60%
14.80%
2005 2006 2007 2008
Interest Rates on loans - by year (Dec.)
Source : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Current incentives cover the following issues:
Carrying forward of losses;
Special allowances of new assets;
Avoiding double taxation;
Customs;
Investment guarantees:
Incentives RegimeIncentives Regime
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Banking System in KosovaBanking System in Kosova
0
20
40
60
80
00
20
Alb ni & H Croatia F RO osova Mont negro Serbia
Banking system in osova compared toSEE (in percent)
Assets/GDP Loans/GDPSource : www.eciks.org, Investors GuideSource : www.eciks.org, Investors Guide
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Customs RegimeCustoms Regime The Customs Code is based on the EU custom code and is fully compliant with
WCO agreed rules on customs procedures and the Harmonized CommodityDescription and Coding System. It additionally allows the use of a number ofbusiness friendly trade-facilitating instruments such as:
Bonded warehousing
Inward processing relief
Processing under customs control
Transit
Temporary admission
Outward processing
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Corporate Tax;
Value Added Tax;
Personal Income Tax;
TaxationTaxation
ComparisonofTax Systems in some countries
VAT CorporateTax IncomeTax
osova 16% 10% 0-10%
F ROM 18% 10% 10%
Serbia 18% 10% 12-20%
B & H 17% 10% -30%
Croatia 22% 20% 0-4 %
Germany 17,3% 17,3% 34,6%
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In particular the right vested to a foreign investor are:
Non-discrimainatory treatment ;
Constant protection and security;
Compensation in case of nationalization, expropriation, includingpayment of interest;
Compensation in case of violation of applicable law andinternational law attributable to Kosovo ;
Freely transferable and otherwise in an unrestricted manner used
income ; Protection against retroactive application of laws ;
Legal FrameworkLegal Framework
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Transportation
The road network consisting of 630 km of main roads has been
rebuilt to a high extent during the past years, but plenty of
completely new roads have also been built.
The railway network in Kosovo has a combined length of 330 km.
Besides the road and railway network, Kosovo has a modern
international airport. With over one million passengers per year,
Prishtina International Airport is ranked under the most frequented
airports of the region, serving several international airway lines and
offering flights to the most important European centers.
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Kosova Chamber of CommerceKosova Chamber of CommerceThank You very much for Your attention!Thank You very much for Your attention!
Kosova Chamber of CommerceKosova Chamber of Commerce
RrRr.. NnNn TerezaTereza Nr.20Nr.20
1000010000 PrishtinaPrishtina, Kosova, Kosova
www.oekwww.oek--kcc.orgkcc.orginfo@[email protected]
Tel & Fax : +381 38 224 299Tel & Fax : +381 38 224 2993333