30 April 2016
Bosnia and Herzegovina: Market Profile
Major Economic Indicators
- Sharing borders with Croatia, Serbia and Montenegro in Southern Europe, Bosnia and Herzegovina (B&H) declared independence from the former Federal Socialist Republic of Yugoslavia and was internationally recognised in 1992. Along with other countries in the Western Balkans, B&H was identified as a potential candidate for EU membership during the Thessaloniki European Council summit in June 2003. Since then, a number of agreements between the EU and B&H have been concluded, including the Stabilisation and Association Agreement (SAA), which became effective on 1 June 2015.
- Aside from the SAA, B&H has signed the Central European Free Trade Agreement (CEFTA) with Albania, Kosovo, Macedonia, Moldova, Montenegro and Serbia. It has also signed free trade accords with Turkey, effective since July 2003, and joined the European Free Trade Association (EFTA) – a common market consisting of Switzerland, Norway, Iceland and Liechtenstein – since January 2015.
- Industry sectors with long tradition, huge potential and opportunities for further development and foreign investment include: energy, automobile, forestry and wood, mining and metal processing, construction, textiles, clothing and footwear industries. On the services front, B&H is a leader in Southeast Europe in banking reforms. The introduction of a deposit insurance agency and competition between international banks in B&H has significantly influenced the growth of savings and loans, as well as the country’s stock exchange.
- With its natural scenery, rich heritage and gastronomic offerings, B&H has developed a successful tourism industry. According to the World Tourism Organization, B&H is projected to be one of only three tourism destinations in the world with overall tourism market growth potential in excess of 10% annually through 2020.
- To facilitate foreign investment, the B&H government has put in place various investment incentives including tax credit, customs benefits for imported equipment and rights to open accounts in any commercial bank and repatriate profits. More information can be found at the Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA).
- The inflows of foreign direct investment (FDI) to B&H amounted to US$564 million in 2014. As of the end of 2014, China’s total stock of FDI to B&H topped US$6 million, up from US$0.3 million in 2005. Hong Kong’s investment, though, is far from significant.
Hong Kong’s Trade with Bosnia and Herzegovina
More information on the Belt and Road countries’ economic and investment environment, tax and other subjects that are important in considering investment and doing business are available in The Belt and Road Initiative: Country Business Guides.