IBDE

FOLLOWING THE DECLARATION of its independence Kosovo has embarked on a major social and economic development program that will act as the foundation for a better future. Kosovo since then has passed its constitution in line with the European standards and in 2009 has been admitted to International Monetary Fund (IMF) and World Bank. In July 2010, the International Court of Justice ruled that Kosovo’s declaration of independence from Serbia did not break international law. To date, Kosovo’s independence is recognized by 75 countries including the US and the 22 EU countries. Kosovo has also joined Central European Free Trade Agreement (CEFTA). Kosovo has a population of approximately 2.2 million with 90% Albanians, 5% Serbian and 5% other minorities such as Bosnians, Montenegrins, Turkish, Roma and Egyptians.

Kosovo offers excellent investment opportunities in many fields such as; agriculture, food processing, textile, construction, automotive components, tourism, wood processing, ICT and shared services, energy and mining. Some of the advantages that Kosovo offers for foreign investors are:

·         strategic location,

·         young population,

·         cheap and flexible labour force,

·         a simple tax system, low-rates,

·         EU compatible legislation framework (including foreign investment legislation),

·         free access to EU markets,

·         modern telecommunication,

·         official currency – EURO

·         a sounding banking system.

Strategic Location 

Kosovo is located in the central part of the Western Balkans. It is a crossroad and provides a bridge for South Eastern European countries in the region such as Albania, Serbia, Montenegro and Macedonia. The driving distance from Prishtina (Kosovo’s capital) to the neighbouring countries, is approximately one hour. Bechtel and Enka is currently building Kosovo’s main Motorway offering the Central and Eastern European countries easy access to Adriatic Mediterranean Sea.

Young, dynamic and educated population 

Kosovo has the youngest population in Europe with more than 70% of the population under the age of 35. It is branded internationally as “The Young Europeans”. Therefore, Kosovo offers to foreign investments; high availability of work force,  flexible and low cost labour market (average monthly labour cost estimated at 262.5€) and highly educated and ambitious people. High availability of work force and the liberal market have made hiring employees in Kosovo simple and time saving. People in Kosovo speak Albanian and Serbian (both official languages). They also have a high literacy of foreign languages. English and German languages are widely spoken among young people in Kosovo. Every year thousands of students graduate from Kosovo universities. So with approximately 29,000 students at the two state universities, and at 19,000 students at the private universities, a sufficient stream of highly educated labour is guaranteed (ECIKS). 

Macroeconomic stability 

Since the end of the war Kosovo’s economy has increased slowly and continuously. The real economic growth in Kosovo is seen in 2008 estimated by the IMF to be over 5.4 percent. In 2009 when the world economies were hit hard by the world financial crisis, Kosovo experienced positive growth. And according to the 2010 progress report on Kosovo, Kosovo’s economy continued growing also during 2010. The report shows the macroeconomic policy mix has been effective in sustaining economic stability and that the banking sector continued to expand while remaining stable and profitable. According to the data released by the International Monetary Fund (IMF) Kosovo will have the highest economic growth in the region at 4.8% in 2010 and 5.8% in 2011. 

Having introduced the EURO as its official currency, Kosovo offers to foreign investors a stable macroeconomic environment. The use of EURO in Kosovo has resulted in low inflation rates, in elimination of exchange rate risk and monetary policy risk. The simple tax system and low-rates are other factors that make Kosovo an attractive country to invest.  Kosovo’s VAT stands at 16% on all goods and services and at 0% on agricultural, capital and intermediary goods.

Free Trade

Kosovo has a liberal trade regime. It enjoys customs-free access to the EU market based on the EU Autonomous Trade Preferences (ATP) Regime and customs - free access to the US market. Kosovo has signed bilateral free trade agreements with Albania, Bosnia and Herzegovina, Croatia and FRY Macedonia. It has also signed the Central European Free Trade Agreement (CEFTA) which allows exporters enjoy duty free access to the regional market.

The Law on Foreign Investments

Kosovo has taken significant measures to protect foreign investors by adopting the Law on Foreign Investment which grants foreign and domestic investors equal rights to ownership of local companies, following the principle of national treatment. According to the Law on Foreign Investment of Kosovo, foreign investors have the same rights and obligations as residents of Kosovo and are treated equally. It ensures “foreign investors that they and their investments will be protected and treated with fairness and respect in strict accordance with the rule of law and widely accepted international standards and practice” (Law No. 02/L-33)

Foreign Direct Investment

According to the 2010 EU report of progress on Kosovo, foreign direct investment increased in 2010 compared to its level in 2009 that was a year affected by the global economic crisis. To date over 2000 companies of foreign or mixed ownership have already successfully invested in Kosovo. Among foreign investors operating successfully and profitably in Kosovo are Telekom Slovenia (Slovenia),  Raiffeisen (Austria), Uniqa, Vienna Insurance Group, Xella, BNP Paribas, Holcim, Nova Ljubljanska Banka, Strabag, Kelag, Bechtel, Enka etc. that in 2008 alone some 357,4 million Euro were invested in Kosovo.