business environment in kosovo-1

8/6/2019 Business Environment in Kosovo-1

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Business EnvironmentBusiness Environment

in Kosovoin KosovoPrishtinaPrishtina 05.11.200905.11.2009


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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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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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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

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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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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



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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.

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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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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)



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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)



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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 )



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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 )



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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)



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0

0

100

1 0

200

2 0

2003 2004 200 2006 2007 2008

Ex orts from Kosova - y year (Million Euro)



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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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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)



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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



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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)



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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.)



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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

business environment in kosovo-1

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