Bosnia and Herzegovina (BiH) is located on the western side of the Balkan peninsula and shares borders with Croatia, Serbia and Montenegro. It is a country of 51,129 square kilometres which is almost landlocked except for a 20 kilometres coastline surrounding the town of Neum on the Adriatic Sea. In the central and eastern interior of the country the topography is mountainous, in the northwest it is moderately hilly and the northeast is predominantely flatland. The inland Bosnia is a geographically larger region with a moderate continental climate which changes moving to its southern tip while Herzegovina has a Mediterranean climate and a plain topography. BiH has a population of 3.5 million and its capital Sarajevo, is the largest city in the country and has a population of 696,700.
BiH comprises two entities – the Bosniak/Croat Federation of Bosnia and Herzegovina and the Serb-led Republika Srpska (RS) each with its own president, government, parliament, police and other statutory bodies. A third and smaller region, the Brčko District, operates under a separate administration. Overarching these entities is a central Bosnian government and rotating presidency. The Federation is further divided into ten cantons, each with its own government and responsibilities. Both entities and the Brčko District also comprise a total of 143 municipalities. As a result, Bosnia and Herzegovina has a complex multi-tiered legal and regulatory framework that has to be navigated.
Membership of the EU is being pursued by Bosnia and Herzegovina and the Stabilisation and Association Agreement (SAA) with the EU was ratified and entered into force on 1 June 2015. In February 2016, BiH formally submitted its application to join the EU, however the country is yet to receive an official candidate status. Major political, social and economic changes have been accomplished, particularly in banking, foreign direct investment and tourism but further structural reforms are required. Economic growth was estimated to have reached 3.2 per cent in 2018 (from 3 per cent the previous year), and is forecast to strengthen to 3.4 per cent in 2019 (WB estimate) supported primarily by consumption and public investment.
As the reform agenda deepens, a moderate rise in exports is expected but will be accompanied by a strong demand for imported goods and equipment. Remittances are likely to remain high and stable above 8 per cent of GDP and together with progress on reforms, will underpin a gradual pick-up in consumption. Investments in energy, infrastructure and tourism will also support job creation in those sectors. A stronger push on the capital investment program and streamlining spending remain high priorities on the authorities’ medium-term economic agenda.
Economic Indicators – 2018[supsystic-tables id=11]
Foreign Direct Investment (FDI) in Bosnia Herzegovina
BiH is actively pursuing FDI and has established the Foreign Investment Promotion Agency (FIPA) which is a State- level organisation mandated by the Council of Ministers to:
- Attract and maximize the flow of foreign direct investment into Bosnia and Herzegovina, and encourage existing foreign investors to further expand and develop their businesses in BiH;
- Facilitate the interaction between public and private sectors, and have an active role in policy advocacy in order to contribute to continually improving environment for business investment and economic development; and
- Promote a positive image of Bosnia and Herzegovina as a country that is attractive to foreign investors.
In accordance with the Law on Foreign Direct Investment Policy in BiH (“Official Gazette of BiH” Nos. 17/98, 13/03, 48/10 and 22/15), foreign investors are guaranteed the following:
- National treatment for foreign investors, that is foreign investors have the same rights and obligations as the residents of Bosnia and Herzegovina;
- Foreign investors have the right to open accounts at any business bank in domestic or freely convertible currencies for their investments in the territory of Bosnia and Herzegovina;
- Foreign investors will have the right to freely hire foreign nationals unless otherwise provided for in Bosnia and Herzegovina’s labour and immigration laws;
- Foreign investors are protected from nationalisation, expropriation, requisition and measures with equal effect; such measures may be taken solely in the public interest, in accordance with applicable laws and bylaws, with the payment of appropriate remuneration;
- Foreign investors have the same property rights as real BiH legal entities;
- Foreign investors have the right to transfer abroad freely and without delay to the freely convertible currency the profits generated as a result of their investment in Bosnia and Herzegovina;
- Corporate income tax rate is low 10 per cent and various tax concessions apply is certain circumstances; and
- BiH has free trade agreements and avoidance of dual taxation agreements with a number of countries.
The rights and privileges granted to foreign investors and obligations arising from the FDI Act cannot be repealed or repealed with the entry into force of subsequent acts and subordinate legislation. If such subsequent laws and subordinate legislation are more favourable to foreign investors, they have the right to choose the regime that will be relevant to their investment. Further information on benefits applying to foreign investors that are offered at a state level can be found on the FIPA website or by contacting them direct.
The Stabilization and Association Agreement (SAA) between the EU and BiH came into force on 01 June 2015, establishing a close partnership between the EU and BiH and deepening mutual political, economic and trade ties. The SAA is now the main framework for relations with the EU and will also contribute to the progressive alignment of BiH legislation with EU legislation.
Tourism in Bosnia and Herzegovina
A land where turquoise rivers run swift and sheep huddle on steep hillsides, BiH is one of Europe’s most visually stunning corners. With muezzins calling the faithful to prayer under a backdrop of church bells, it also provides a delightful fusion of East and West in the heart of the Balkans. Appropriately, the country now markets itself as the “heart-shaped land”, unintentionally revealing more perhaps than just the shape of its borders. BiH is busily, and deservedly, re-etching itself on the world travel map as a bona fide tourism magnet of some repute.
The tourism sector is becoming a substantial contributor to the BiH economy and was estimated to represent 10.2 per cent of GDP in 2018. Strong growth in tourist arrivals has continued over the past four years with 12.1 per cent growth in 2018 driving tourist arrival to a new high of 1.47 million of which 71.8 per cent were international or foreign tourists. Interestingly, tourists from the Middle East and Asia comprised 10.1 and 15.2 percent of international visitors respectively. The average stay for international visitors in 2018 was 2.17 days with Maltese tourist staying the longest at 5.2 days.
Tourist are attracted to the rugged and pristine wilderness of BiH with its three spectacular National Parks: Sutjeska, Nacionalni park Una, and Kozara, and forests that cover almost 50 per cent of the country. Sutjeska National park is home to BiH’s highest mountain peak Maglic (2,386 metres), the heart shaped glacier Tmovacko Lake, Europe’s last rainforest Perucica and the amazing canyon of River Tara. In addition to the exhilarating hiking and biking in the mountain regions and observing the wild animals, there’s much more to do including – horse riding, white-water rafting and kayaking, paragliding, hunting and excellent fly fishing.
BiH is an extraordinary blend of the old and new worlds. Over 10,000 years it has seen the likes of the indigenous pagan Illyrian and Thracian tribes, Romans, Byzantines, Slavs, and later Ottoman and Austro-Hungarian invaders. From ancient monasteries of the Franciscan and orthodox monks to the heralded bridges like Stari Most in Mostar and stone mosques of the Ottomans, the medieval character of BiH has been well-preserved. There are three UNESCO World Heritage Sites: the Mehmed Paša Sokolović Bridge in Višegrad, the Old Bridge Area of the Old City of Mostar and the Stećci Medieval Tombstones Graveyards. Scattered throughout the country are authentic Bosnian villages where the true culture, local gastronomical treats and friendliness of BiH can be experienced. The village Lukomir offers a unique experience sitting at an altitude of almost 1,500 metres on the Bjelašnica Mountain.
Health and wellbeing tourism are very popular with a plentiful supply high quality thermal springs. BiH is investing heavily in modernising its thermal spa facilities to offer guests superior spa services at prices lower than its European neighbours. Hotels have integrated spa facilities into their complexes with some hotel appealing to the MICE market with conference facilities combined with spa and ecotourism such as the Tarčin Forest Resort & Spa MGallery by Sofitel.
Sarajevo, BiH’s capital is the fastest changing city in Europe. Embracing both its eastern and western traditions, Sarajevo is charming with its oriental old town and bustling Austro-Hungarian centre. New hotels and a lively nightlife are complemented by some of the most cutting-edge festivals in Southeast Europe. Sarajevo is also well known for the 1984 Winter Olympic Games and the skiing on Mt. Bjelasnica and Jahorina has since been revived with a full range of new facilities and accommodation available.
Snowboarding, snow shoeing, cross country and tour skiing are gaining popularity and are great additions to a fun winter program on both mountains. Sarajevo is not however, the only ski resort in BiH. There are 13 ski resorts in all, including Vlasic Mountain near the ancient town of Travnik, the most established ski resort in central Bosnia.
Herzegovina, the southern region of BiH, enjoys the warm and sunny Mediterranean climate all year round at Neum. Located between the Dalmatian cities of Split and Dubrovnik just north of the Peljesac Peninsula, it offers the finest of Dalmatian cuisine and the crystal-clear waters of the Adriatic at reasonable rates. From Neum one can visit the Hutovo Blato Bird Reserve near Capljina, Vetrenjica Caves, the Kravica Waterfalls near the town of Ljubuski, the Catholic pilgrimage site of Medugorje or the lovely city of Mostar.
Tourist Arrivals and Overnight Stays over past 5 Years [supsystic-tables id=9]Source: BOSNIA AND HERZEGOVINA AGENCY FOR STATISTICS