Automotive ? BOSNIA AND HERZEGOVINA Sector Report Automotive BOSNIA AND HERZEGOVINA Produced by: Dzemal Klepic, Trade and Investment Officer, British Embassy Sarajevo Last revised May 09 Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published May 2009 by UK Trade & Investment. Crown Copyright © www.uktradeinvest.gov.uk Automotive ? BOSNIA AND HERZEGOVINA Table of Contents OVERVIEW 3 OPPORTUNITIES CHARACTERISTICS OF MARKET KEY METHODS OF DOING BUSINESS 4 MORE DETAILED SECTOR REPORTS 5 PUBLICATIONS 6 EVENTS 6 CONTACT LISTS 7 www.uktradeinvest.gov.uk Page 2 Automotive ? BOSNIA AND HERZEGOVINA OVERVIEW Bosnia and Herzegovina (BIH) is faced with a multiple challenges of transition: from planned to market economy; from socialism to political pluralism and constitutional liberal democracy; from being one of six Yugoslav Republics to an independent country; from war to post-conflict status; and then to an enduring peace, reconstruction and reconciliation. Despite various difficulties, BIH has made substantial progress in economic reconstruction, which culminated in June 2008 with the signing of BiH?s Stabilisation and Association Agreement (SAA) with the EU. That was a historical step forward on this country's road to Euro- Atlantic integration which will ultimately bring increased stability and prosperity. As of 2009, BIH is a member the regional free trade network of Central Europe (CEFTA). Full membership of the WTO is the next milestone which BiH is working hard to achieve. With GDP in 2008 of US$ 4,940 per capita (source: Moody's), BiH falls into the category of lower to middle income countries. Over the last decade the economy has grown at a rate of 5- 6% a year, a trend that is expected to be maintained in the future. The sustained economic growth, rapidly increasing production levels with domestic demand fuelled by increased private consumption, supported by strong credit growth, healthy wage increases and a sizeable fiscal impulse clearly send out a positive message. BiH is very open to foreign investment, offering not only the WTO-recommended 'national treatment' but also other attractive incentives and a number of investment insurance instruments. In 2007 the FDI reached a record value of Euro 4.6 billion. OPPORTUNITIES The opportunities for UK companies that exist in this market are: ? Manufacturing under licence ? Transfer of knowledge and technology ? Joint venture ? Supply of goods: textile for car seats, raw leather, paper for filters, inox wire and other materials, PVC and other plastic granules, raw tyre, chemical products ? Supply of equipment: metal processing and plastic processing machinery UKTI publishes international business opportunities gathered by our network of British Embassies, High Commissions and Consulates Worldwide. These opportunities appear in the Opportunities portlet on the relevant sector and country pages on the UKTI website. The registration to UKTI website, which is straightforward and free, will also give you the possibility to receive alerts when relevant new opportunities are published. CHARACTERISTICS OF MARKET Historically, the automotive industry has been a backbone of the metal processing industry and a production base for several large industry names such as Volkswagen, Mercedes and MAN. Regrettably the 1992-1995 war caused significant damage to the industry. Just after the peace was restored in 1995, significant progress has been made in reconstructing the infrastructure as well as production facilities throughout the country. Skilled and relatively cheap labour force, proximity of the EU market and a growing foreign demand for good quality car components attracted several significant local but also foreign www.uktradeinvest.gov.uk Page 3 Automotive ? BOSNIA AND HERZEGOVINA direct investment mainly from Slovenia and Germany. The leading investor in Volkswagen who operates SKD assembly lines for various Skoda, VW and Audi passenger cars. In 2008, the sector attracted an estimated Euro 40 million of investment of which Euro 31 million was foreign direct investment. The range of car components manufactured in the country is diverse and includes: brake components and systems, diesel engines, gearboxes, clutches, turbo-compressors, steering systems, bearings, wheels (aluminium and steel), seat covers (textile an leather), flexible tubes, pumps, springs, filters, drive shafts, axle, gearing, screws, bolts, nuts, some pools, batteries, suction lines, thread lugs and silencers, starters, measuring equipment, lights and signal equipment, windshield wipers, electric switchers, spark plugs, reservoirs, motor oil, castings, and others. (90% of car textile seat covers and 50% of leather textile seat covers used in VW production are made in BIH). The main export markets are: Germany, Italy, Slovenia, Serbia, Sweden, Iran, Egypt and Croatia. The sector-specific import was valued at Euro 71.6 million in 2008. The top imports are: textile for car seats, raw leather, paper for filters, inox wire and other materials, PVC and other plastic granules, raw tyre, chemical products. The main import markets are Croatia, Germany, Serbia, Italy, Slovenia, Austria and Hungary. Most of the companies involved in this sector hold ISO and other sector specific accreditations. There are 6,000 people employed in the country's automotive industry. KEY METHODS OF DOING BUSINESS BiH is an open market that offers rewards to prepared and persistent exporters and investors. Like in many other countries there is no single best way to do business here - sales agents, representatives and distributors all have important roles to play. Regardless of which channel is selected, sales support and after-sales service are critical. Financing is a key factor for a Bosnian company making a decision to take on new product line. Other background information on doing business in Bosnia and Herzegovina can be found on UKTI?s website. Simply go to the Bosnia and Herzegovina country page where you will find information on: ? Economic background and geography ? Customs & regulations ? Selling & communications ? Contacts & setting up ? Visiting and social hints and tips Business practice Business customs in BIH are a mixture of socialist-style habits (typical of state-managed companies and government bodies) and newly acquired business practices. Most private-sector managers are fluent in English and use IT equipment. Personal contact, email, fax or letter are all common way of communication. As is the case in many other countries, local companies prefer to do business with people they know well. While www.uktradeinvest.gov.uk Page 4 Automotive ? BOSNIA AND HERZEGOVINA most business meetings take place in a formal setting, it is not unusual to discuss business over coffee of lunch. The exchange of business cards is a common practice. Unless there is an interest large enough to justify opening an office, the most effective way of selling into the market is through a reliable and qualified local importer or distributor working on a commission basis. Establishing local presence signals long-term commitment to the country and is well received. The UK Trade and Investment Team in Sarajevo is happy to provide recommendations. Setting up in Business The Law on the Foreign Direct Investment Policy and the Law on Companies regulate the establishment of joint ventures, investment companies with mixed ownership as well as other types of foreign or domestic investment. The laws provide for basic forms of business: joint stock company, limited liability company, general partnership and partnership limited by shares. The most common types of corporations/companies in BiH are limited liability companies and joint stock companies. Foreign investors can carry out business under the same conditions as domestic legal entities in accordance with company law and business registration law. No approvals are required and no special screening is envisaged for their investment. Foreign investors are required to register with the Ministry of Foreign Trade and Economic Relations to attain the status and the government incentives. More detailed information on the incentives to foreign investor is available on www.fipa.gov.ba. Under the UK-BIH Investment Promotion and Protection Agreement (IPPA) that entered into force on 25 July 2003, UK companies investing in BIH enjoy full protection by the Government and non-discriminatory treatment. The UK-BIH IPPA is available at http://www.fco.gov.uk/resources/en/pdf/pdf7/fco_ref_tr_ippa_bosniaherzegovin MORE DETAILED SECTOR REPORTS Research is critical when considering new markets. UKTI provides market research services which can helps UK companies doing business overseas including: ? Overseas Market Introduction Service (OMIS). Bespoke research into potential markets, and support during your visit overseas. ? Export Market Research Scheme. In-depth and subsidised services administered by the British Chambers of Commerce on behalf of UKTI For new and inexperienced exporters our Passport of Export process will take you through the mechanics of exporting. An International Trade Adviser will provide professional advice on a range of services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, translating material, e-commerce, subsidised export training and market research. Contact your local International Trade Advisor if you are interested in accessing these services, or for general advice in developing your export strategy. For their contact details please visit www.uktradeinvest.gov.uk. www.uktradeinvest.gov.uk Page 5 Automotive ? BOSNIA AND HERZEGOVINA When considering doing business in BiH, it is essential to obtain legal, financial and taxation advice as well as contact lists of English-speaking lawyers, interpreters, PR agencies and accountancy firms as well as other relevant professional bodies. For further details please contact: Dzemal Klepic Trade and Investment Officer British Embassy Sarajevo Petrakijina 11 71000 Sarajevo Tel: +387 33 28 2212 Fax: +387 33 28 2265 Email: dzemal.klepic@fco.gov.uk Website: http://ukinbih.fco.gov.uk/en PUBLICATIONS Specialist publications featuring the Automotive sector in BiH can be found on the Foreign Investment Promotion Agency (FIPA) at www.fipa.gov.ba. Although there are no specialist magazines for the automotive industry in BIH, there are a number of business magazines (Poslove novine, BH Business magazine, InfoKom) where foreign and local companies advertise. For contact details please contact the UK Trade and Investment Team in Sarajevo. On behalf of the British Business Club, the UK Trade and Investment Team co-ordinates an in- house production and distribution of an eNewsletter. Please contact the Team if you wish to advertise in the newsletter. The latest edition is available for download from http://www.ukinbih.fco.gov.uk . EVENTS International Trade Fair Mostar 2009. Mostarski Sajam d.o.o. Rodo? bb 88 000 Mostar Tel/Fax: + 387 36 350 080 or 350 134 Email: info@mostarski-sajam.com Website: www.mostarski-sajam.com Promo, International Trade Fair PROMOEXPO? d.o.o. Tuzla Fra Grge Marti?a 8/1, (p.p. 94) 75 000 Tuzla Tel/Fax: + 387 35 278 610 or 278 611 Email: promo@bih.net.ba Website: www.promo.com.ba ZEPS Intermetal 2009, International Metal Fair DD Poslovni sistem RMK www.uktradeinvest.gov.uk Page 6 Automotive ? BOSNIA AND HERZEGOVINA Kamberovi?a polje, Zenica Tel/Fax: + 387 32 440 251 or247 773; Email: intermetal@zeps.com Website: www.zeps.com ZEPS 2009, General Trade Fair DD Poslovni sistem RMK Kamberovi?a polje, 72 0000 Zenica Tel/Fax: + 387 32 247 770 or 247 773; Email: marketing@zeps.com, info@zeps.com Website: www.zeps.com International Automotive Fair ?SAM 2009. BANJALU?KI VELESAJAM D.O.O. Pilanska bb 78 000 Banja Luka Tel/Fax: + 387 51 333 200 or 333 223 Email: office@banjalukafair.com Website: www.banjalukafair.com UK Trade & Investment?s Tradeshow Access Programme (TAP) can help eligible UK businesses take part in overseas exhibitions. Attendance at TAP events offers significant benefits: ? possibilities for business opportunities both at the show and in the future ? chance to assess new markets and develop useful contacts ? grants are available if you meet the criteria ? UKTI staff overseas will be available to assist delegates Find out if you are eligible to apply to attend this event and more about the support UKTI can offer. Details of TAP events can be found in the Events portlet on the Bosnia and Herzegovina page. Other Market Visit Support may be available via your local International Trade Advisor. CONTACT LISTS Ministry of Energy, Mining and Industry of Federation of BiH Alekse Santica bb 88 000 Mostar Tel: +387 36 513 800 Fax: +387 36 580 015 Email: fmeri-mo@bih.net.ba Ministry of Economy, Energy and Development of Republika Srpska Department for Chemical Industry Trg Republike Srpske 1 78 000 Banja Luka Tel: +387 51 338 375 Fax: +387 51 339 651; 338 868 Email: j.pilipovic@mper.vladars.net www.uktradeinvest.gov.uk Page 7 Automotive ? BOSNIA AND HERZEGOVINA Foreign Investment Promotion Agency (FIPA) Branilaca Sarajeva 21/III 71 000 Sarajevo Phone: +387 33 278 083 Fax: +387 33 278 081 Email: fipa@fipa.gov.ba Website: www.fipa.gov.ba Foreign Trade Chamber of Bosnia and Herzegovina Branislava Djurdjeva 10 71000 Sarajevo Tel: +387 33 667 942 Fax: +387 33 214 292 Email: eminb@komorabih.ba Website: www.komorabih.ba Automotive Cluster of Bosnia and Herzegovina Splitska 6 71000 Sarajevo Tel/ Fax: +387 33 668 433 Email: kruno.rasic@ac-bih.ba Website: www.ac-bih.ba UKTI?s International Trade Advisers can provide you with essential and impartial advice on all aspects of international trade. Every UK region also has dedicated sector specialists who can provide advice tailored to your industry. You can trace your nearest advisor by entering your postcode into the Local Office Database on the homepage of our website. For new and inexperienced exporters, our Passport to Export process will take you through the mechanics of exporting. An International Trade Adviser will provide professional advice on a range of services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, translating marketing material, e-commerce, subsidised export training and market research. www.uktradeinvest.gov.uk Page 8