Foreign investment boost to Bosnia

Analysis

Foreign investment in Bosnia increased by nearly one-fifth last year, the country’s Central Bank said in a statement on Wednesday.

According to the latest figures, foreign direct investment, FDI, in Bosnia and Herzegovina in 2006 amounted to 1.1 billion Convertible Marks, KM, (€564 million, about $800 million), an 18% increase over the previous year and matching the post-war record inflow for 2004. The figures relate only to completed transactions, and do not include large privatization contracts agreed in 2006 and implemented in 2006 and 2007. This means that FDI in 2007 is expected to be even higher. “Data on the inflow of foreign investments are showing that during recent years the BiH economy has been constantly attracting significant foreign investment, and that this trend will speed up as we approach closer to the EU, along with an accelerated transition process”, the press release said.

As in previous years, the largest share of investment in 2006 came from Austria 45%, followed by Croatia 15% and Slovenia 14%. The largest inflow was recorded in the financial sector, followed by processing industry and trade. A significant part of investments (17,7%) is related to reinvested profit, as investments from previous years become profitable and companies decide to build up their presence in Bosnia.

Total accumulated FDI at the end of 2006 stood at KM5.89 billion (€3,02 billion, $4,28 billion), which means that the level of the foreign investments has more than doubled compared to three years ago. The Central Bank press release quoted governor Kemal Kozarić as stressing that foreign investments were important as they created new jobs, increased the technological level in industry and improved Bosnia’s balance of payments. (birn)

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