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Bosnia Means Business When it Comes to Intensifying Trade With Hungary

Hungary is the tenth most important trading partner of the Republic of Bosnia and Herzegovina, but there are vast untapped opportunities in bilateral economic relations, particularly regarding Bosnia’s efforts towards EU accession, Minister of Foreign Trade and Economic Relations Mirko Sarovic tells the Budapest Business Journal. A new air route between the two capitals and a recently established joint working group in agriculture should further intensify cooperation.

Minister of Foreign Trade and Economic Relations Mirko Sarovic of the Republic of Bosnia and Herzegovina.

You were in Budapest for a high-level meeting with Hungarian Minister of Agriculture, Sándor Fazekas. What were the main issues on the agenda? 

Agriculture is the most crucial area of cooperation for the two countries, it accounts for at least one-third of the bilateral trade volume of some EUR 300 million. We firmly believe that Hungarian expertise could be well used in Bosnia in that sector by sharing not only hands-on industrial experience, but also best practices about how to call off and use EU agriculture funds effectively. In fact, some major projects have already been implemented with the heavy involvement of Hungarian experts. A joint working group in agriculture has also been formed that will be charged with specifying issues to be dealt with together.

How can Bosnia be helped on its way to EU accession? 

We are getting official support from Hungary in our efforts to join the European Union. Fortunately, most of our products are no longer subject to any tariffs, but we strive for more, namely to reach and maintain EU standards for them in order to be competitive. Free trade and market access are only two of the aspects in this respect, though, since border security often emphasized by Hungary, is also an important factor here. Countries in the Balkans are now more vulnerable to migration pressure than those inside the EU, and physical protection should be extended to our borders as well which, I believe, Hungary would welcome too.

Bosnia is executing a comprehensive reform agenda agreed with leading international organizations such as the EBRD and the World Bank with the aim of restructuring the whole economy and making it more competitive. How can bilateral trade with Hungary boost economic growth that is now at 4.6%? 

First of all, infrastructure needs to be improved greatly, establishing a direct freeway connection can add a lot and the launch of passenger flights between the two capitals will have the same multiplying effect. Sixty percent of our area is covered by woods, so we have a lot to offer in terms of furniture and wood, which sector of ours has a turnover of EUR 600 mln per year. Opportunities exist in the metal industry as well. Other sectors present similarly strong perspectives, but it is true that agriculture still remains the number one priority in our bilateral trade relations.

Eximbank, a Hungarian government credit institution, has provided a credit line of EUR 61.5 mln for Hungarian businesses to make their move to Bosnia more easily. Where do you think they can prosper most? 

Our tax regime is very business friendly, which by itself can be really attractive for foreign enterprises to set up their operations in our country. Another excellent incentive is our free trade agreement with Turkey, thanks to which goods produced in Bosnia can find their way duty-free to the large Turkish market. Or, again, take wood, from which valuable pellets can be made that are exported in large numbers to Austria or Germany. For ambitious Hungarian businesses, it might well be the ultimate opportunity to supply their whole home country with that type of energy source at competitive prices. On the other hand, due to the great number of fast-flowing rivers, the green energy sector provides additional investment targets.

Bosnia has a lot to offer in tourism as well with its Adriatic coast, the mountains that hosted the winter Olympics in 1984 and picturesque historic cities like Mostar. The air route launched from Budapest to Sarajevo in April should surely further intensify the influx of visitors? 

I am absolutely convinced that this will bring enormous benefits for both countries since it is bound to boost tourism and businessmen will eventually start using the air route more frequently too. After all, what used to take an eight-hour drive is now covered by a one-hour flight.

What does the schedule for deepening bilateral relations look like? 

There will be a trade fair in Mostar in April where Hungarian companies will have the chance to make the case for their wines for Chinese buyers. Next in line is a high-profile business meeting in Sarajevo scheduled for May where high-ranking trade diplomats and a select group representing the Bosnian and Hungarian business communities will attend. Later on, at some point in Budapest there should be another similar meeting we will be attending with our full delegation. And I am looking forward to the intensive work of our joint working group in agriculture that is expected not only to identify, but also start working on the most pressing matters of potential cooperation as soon as possible. We simply do not want to waste time, we are determined to move ahead for mutual success.