BH INVESTMENT OPPORTUNITIES Invest in Bosnia and Herzegovina

B&H INVESTMENT OPPORTUNITIES Invest in Bosnia and Herzegovina Your New Opportunity

Macroeconomic indicators Indicators Nominal GDP (billion EUR) GDP per capita (EUR) Real GDP growth rate (%) Industrial production growth rate (%) Average net wages (EUR) www. fipa. gov. ba Annual inflation rate (%) Annual unemployment rate (%) Foreign currency reserves (mill EUR) Trade balance (billion EUR) Net FDI inflow (mill EUR) FDI contribution to GDP (%) Deposits of households in Commercial Banks, (mill EUR) Population (in million) 2004 2005 2006 2007 2008 2009 2010 2011 2012 8. 2 2, 122 8. 8 2, 283 9. 9 2, 564 11. 1 2, 898 12. 6 3, 289 12. 3 3, 194 12. 7 3, 296 13. 1 3, 419 6. 3 9. 0 258 0. 4 3. 9 10. 0 275 3. 8 6. 0 11. 0 300 6. 1 6. 2 10. 0 322 1. 5 5. 7 9. 2 385 7. 4 - 2. 9 - 3. 3 404 - 0. 4 1. 3 1. 6 408 2. 1 1. 0 5. 6 417 3. 7 43. 2 1, 779 - 3. 68 412 43. 0 2, 160 - 3. 96 282 31. 0 2, 787 - 3. 41 442 29. 0 3, 425 - 4. 14 1, 329 23. 4 3, 219 - 4. 82 684 27. 2 3, 301 - 3. 33 220 27. 6 3, 284 - 3. 73 290 5. 0 1, 273 3. 2 1, 629 4. 5 2, 097 12. 0 2, 641 5. 4 2, 662 24. 1 3, 176 - 3. 48 180 1. 4 2, 895 - 1. 1 -5. 2 422 2. 1 28. 0 3, 327 -3. 78 346* 1. 7 3, 318 2. 2 3, 605 n/a 3, 913 3. 84 3. 84

Macroeconomic indicators www. fipa. gov. ba Real GDP growth rate, (%) Volume index of industrial production Annual unemployment rate, %

FDI in Bosnia and Herzegovina www. fipa. gov. ba Total FDI inflow, mill € FDI by sectors, % Top investors countries

www. fipa. gov. ba Reasons to invest in Bosnia and Herzegovina Strategic location Favourable tax and customs system Stable financial sector Competitively priced and qualified human capital Favourable trade and other agreements Favourable legal environment Low operating costs Natural resources and attractive investment locations and industrial zones

Reasons to invest in Bosnia and Herzegovina www. fipa. gov. ba Strategic location Favourable tax and customs system Competitively priced and to qualified human capital “. . The second point that contributed to our decision invest in Bosnia and Herzegovina was the proximity to Western European markets, the proximity to the European highway system. . ” Favourable trade and other Mr. Edin Dacic, Director, Daccomet AG (Switzerland) agreements Favourable legal environment Natural resources and attractive investment locations and industrial zones

www. fipa. gov. ba Strategic location – close to all major European capitals Sarajevo - Belgrade 206 km Sarajevo - Brussels 1310 km Sarajevo – Budapest 407 km Sarajevo – Frankfurt 1013 km Sarajevo – Istanbul 930 km Sarajevo – Ljubljana 389 km Sarajevo – London 1620 km Sarajevo – Munich 708 km Sarajevo – Paris 1349 km Sarajevo – Prague 755 km Sarajevo – Rome 516 km Sarajevo – Vienna 511 km Sarajevo – Zurich 859 km Sarajevo – Zagreb 288 km

www. fipa. gov. ba Reasons to invest in Bosnia and Herzegovina Stable financial sector Favourable tax and customs system Stable financial sector Competitively priced and qualified human capital “Despite the global economic crisis, the BIH banking was remained stable. The interest rates in our country are also more favourable than those ones in the region. ” Favourable trade andother agreements Kemal Kozarić, Governor of the Bi. H Central Bank Favourable legal environment Long tradition in industrial production Natural resources and attractive investment locations and industrial zones

www. fipa. gov. ba Stable financial sector-The lowest inflation in SEE • Stable currency (1 KM =0. 51 EUR) • Constant growth of foreign currency reserves • The lowest inflation in Region • “B 3” credit rating with stable outlook by Moody’s Agency • “B” credit rating with stable outook by Standard & Poor’s • Foreign ownership in private banking sector in Bi. H is 86% Annual inflation rate, %

www. fipa. gov. ba Reasons to invest in Bosnia and Herzegovina Favourable trade and other agreements Favourable tax and customs system Stable financial sector Competitively priced and qualified human capital “. . . It is very important to emphasize that Bosnia and Herzegovina has a very liberal foreign trade regime with a major number of countries. . . Also, B&H has signed Agreements Favourableon Promotion and tradewith and many countries. ” Protection of Investment other agreements Mr. Vladan Nastic, Marketing Director, Alpro doo Vlasenica-Alumil Group (Greece) Natural resources and attractive investment locations and industrial zones

Central European Free Trade Agreement (CEFTA) - 30 mill Free Trade Agreement with Turkey - 70 mill Preferential Trade Agreement with EU, 28 countries - 500 mill Preferential export regimes with USA, Australia, New Zealand, Switzerland, Norway, Russia, Japan, Canada and Iran 3. Favourable trade and other agreements

www. fipa. gov. ba AGREEMENTS ON AVOIDANCE OF DOUBLE TAXATION (37) Favourable Albania Algeria China Croatia Denmark Egypt Germany Hungary Italy legal Belgium environment Austria Czech Republic Cyprus Stable France financial sector Finland Iran Ireland Jordan Kuwait Malaysia Moldova Montenegro Netherlan ds Norway Pakistan Poland Qatar Serbia Slovakia Sweden Sri Lanka United Arab United Kingdom Emirates and Northern Ireland Romania Favourable trade and Slovenia Spain other Turkey agreements Favourable legal environment AGREEMENTS ON PROMOTION Favourable tax AND PROTECTION OF INVESTMENTS (39) and customs system Albania Austria Belgium and Luxemburg Belarus Canada China Croatia Czech Republic Denmark Egypt Finland Greece Hungary Italy Jordan Kuwait Lithuania Macedonia Malaysia Moldova Netherlands OPEC Fund Pakistan Portugal Romania Serbia Spain Switzerland Ukraine United Kingdom USA – OPIC Competitively Germany priced and India qualified Iran human capital Long tradition Qatar in industrial Slovakia Slovenia production Sweden Turkey Natural resources and attractive investment locations and industrial zones

Reasons to invest in Bosnia and Herzegovina www. fipa. gov. ba Favourable legal environment Favourable tax and customs system Competitively Stable priced “. . . Investment climate in Bosnia forand financial sectoris in our view very attractive the investors. Obviously there is first of all natural resourcesqualified human capital here bought, coal and water available for hydro units, but not only that, you have natural environment here for investment in energy sector in terms. Favourable of resources but also regulatory tradeand satisfactory today, but further environment is improving Long tradition improving with supportother from the local government and wein industrial agreements production believe there is great potential in that. ” Mr. Vuk Hamović, EFT Group Chairman (United Kingdom)Natural resources Favourable legal environment and attractive investment locations and industrial zones

Favourable legislation-National treatment of foreign investors www. fipa. gov. ba FDI Law • National treatment of foreign investors • Repatriation of profits • Protection against nationalization, expropriation or similar measures • Right to freely employ foreign nationals, subject to the labour and immigration laws in Bi. H • No restrictions except for companies dealing with public information Corporation organization • There are no citizenship/nationality limitations for partners or the members of the menangment and supervisory boards

Reasons to invest in Bosnia and Herzegovina Favourable tax and customs system www. fipa. gov. ba Competitively Stablefinancial “. . . Moreover the favourable tax system provides a uniquepriced and sector advantage and a position to international investors and qualified human capital foreign direct investment and its one of the most significant advantages of Bosnia and Herzegovina in attracting foreign investments. ” Mr. Almir Jazvin, Managing Director (Germany) Favourable legal environment Long tradition in industrial production Natural resources and attractive investment locations and industrial zones

Favourable tax and custom system www. fipa. gov. ba PDV in Region Tax system Unique VAT rate of 17% Corporate Income tax is 10% Personal Income Tax is 10% Favorable incentives and tax exemptions Customs system Exemption from payment of customs duties foreign investors Customs rates 0 -15%

Reasons to invest in Bosnia and Herzegovina www. fipa. gov. ba Competitively priced and qualified human capital Favourable tax and customs system Competitively Stable “. . . I would like to emphasise that Natron head has been onepriced of theand financial sector qualified most successful privatisations in the country. That has happened not human capital only because it had a very strong, determined and resourceful group head group behind it, but also because of very sincere dedicated, technically strong, workforce in the mill and in the country which Favourable trade and guided properly. ” delivered the right results once Long tradition other agreements in industrial production Favorable legal environment Natural resources and attractive investment locations and industrial zones Mr. Avanash Taneja, Managing Director, Natron Hayat doo Maglaj (Turkey)

Competitive labour force • Educated & skilled • Efficient, creative and innovative • Foreign language spoken • Price competative (in comparison to other EU countries) 3500 3000 2500 2000 1500 1000 500 on EU tia oa Cr te ne gr o H B& on ed ac M M ia a ni ba Al rb ia 0 Se www. fipa. gov. ba Average net wages (EUR) in Region for 2012 Education system in B&H Number of higher education institutions Number of universities Faculties Academies Religions faculties Graduates in 2011 Master of science and specialists in 2011 Doctors of science 19 25 117 10 4 17822 2016 186

Reasons to invest in Bosnia and Herzegovina Low operating costs Favourable tax and customs system Competitively priced and “. . . It is important to say here that Bi. H has been known for its qualified human capital low production costs and it provides a great opportunity for www. fipa. gov. ba Stable financial sector the clients who seek for a good and low cost, but still great quality product. “ Favourable Low operating trade and costs Mr. Jozo Miskic, Director, Bogner Edelstahl doo Vitez (Austria) other agreements Natural resources and attractive investment locations and industrial zones

Operating costs – significantly lower than in EU Electricity prices for industry in 2012 0. 9 0. 8 0. 7 0. 6 0. 5 0. 4 0. 3 www. fipa. gov. ba 0. 2 0. 1 0 Hungary Poland Romania Slovakia Operating costs in Bosnia and Herzegovina q. Mobile phone usage within own fixed network: 0. 11€ per minute q Electricity: low tariff 0. 03 €/k. Wh - high tariff 0. 07 €/k. Wh q Water costs: Average price 0. 43 €/m 3 q Natural gas: Average price 0. 46 €/m 3 Source: Agency for Statistics of Bi. H - Average price, June 2011 Croatia Turkey B&H q Renting production building: 2 €/m 2 – 10 €/m 2 q Buying production building: 20 €/m 2 – 1, 000 €/m 2 q Renting office space: 4 €/m 2 – 50 €/m 2 q Buying price of office space 400 €/m 2 – 3, 500 €/m 2 q Buying price of the land is 3 €/m 2 – 100 €/m 2 q Construction cost / Industrial facility - Turn Key: 200 - 550 €/m² Source: Real Estate Agencies

Reasons to invest in Bosnia and Herzegovina www. fipa. gov. ba Natural resources and attractive investment locations and industrial zones Favourable tax and customs system “. . . Here we found a very Stable good ambiance and very good Competitively financial sector relations. . also the municipality was very good with us, we priced have aand qualified very nice and profitable relation, we also have a nice relation with human capital FIPA and some other kinds of important offices that we need to make this kind of investment. All of them helped us improve the Favourable investment and to bring us to make the best and to have a good trade and Low operating feedback from each kind of relation. ” other agreements costs Mr. Luca Cobre, Director, Hotel&Spa Medjugorje (Italy) avourable legal environment Natural resources and attractive investment locations and industrial zones

Natural resources and attractive investment locations and industrial zones Mining resources-estimated reserves www. fipa. gov. ba Brown coal and lignite 10 x 109 mill tones Iron 653 mill tones Bauxite deposits 120 mill tones Zinc and Lead 56 mill tones Magnesite 2 mill tones • Greenfield location • Brownfield location • Privatisation process • Bankruptcy opportunities • Concessions • Joint ventures • Investment projects • Forests and forestlands cover about 53% of the territory • Bosnia and Herzegovina possesses significant water resources (average annual precipitation on the territory of Bosnia and Herzegovina is 1250 l/m 2, which is some 250 l/m 2 higher than the average in European countries).

www. fipa. gov. ba Foreign companies in B&H

www. fipa. gov. ba FIPA support • Providing of all information related to Bi. H business environment • Analysis and presentation of attractive sectors foreign investors • Servicing potential and existing investors, especially during the process of business registration • Legal advice foreign investors • Investor after-care • Policy advocacy • Good co-operation with all levels of Government in Bi. H OUR SERVICES ARE FREE AND CONFIDENTIAL!

FIPA contacts www. fipa. gov. ba Sarajevo Office Grbavička 4 Phone: +387 33 278 080 Fax: +387 33 278 081 E-mail: fipa@fipa. gov. ba Banja Luka Office Ðure Daničića 1/III Phone/ Fax: : +387 51 226 180 E-mail: banjaluka@fipa. gov. ba Mostar Office Rade Bitange 30 Phone /Fax: +387 36 558 815 E-mail: mostar@fipa. gov. ba