Doing Business in Kosovo - US Department of State

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Chapter 1: Doing Business In Kosovo
Market Overview
Market Challenges
Market Opportunities
Market Entry Strategy
Market Overview Return to top
Four years after declaring independence from Serbia, Kosovo has made important but
incomplete progress on creating the business and legislative environment required to reach its
full economic potential. The government dedicated itself in 2011 to supporting the principles of
a free market economy with its “Economic Action Plan,” which commits Kosovo to five pillars of
economic growth: maintaining macro-fiscal sustainability, improving the investment
environment, developing public infrastructure, revitalizing the agriculture sector, and enhancing
human capital. Under the watchful eye of the international community, the government has
received good marks on several pillars, including macro-fiscal status, development of public
infrastructure, and the revitalization of the agricultural sector. However, the government has
not achieved positive results in the World Bank’s “Doing Business” indices, lags behind other
countries in the region in economic surveys, and has not established a simplified, unified
business licensing and registration process. Despite good intentions, the government has not
yet made meaningful judicial reforms, strengthened contract enforcements, or completed land
registration and titling procedures. Its effort to privatize the national telecom carrier PTK failed
in 2011, and progress in privatizing portions of the state-owned energy sector has been slow.
Both processes are moving forward again in 2012. Stubborn bureaucratic bottlenecks, a culture
of tolerating corruption, and a lack of follow-through on implementing strategic goals, however,
inhibit the full realization of the GoK’s Economic Action Plan.
On February 17, 2008, the Kosovo Assembly declared independence from Serbia. The United
States was among the first countries to recognize the newly independent state. As of February
2012, 86 countries recognized Kosovo while the International Court of Justice ruled in 2010 that
Kosovo’s unilateral declaration of independence did not violate international law. Nevertheless,
major powers, including Russia, India, and China, have not recognized Kosovo’s independence,
blocking the latter’s entry into the United Nations and other international bodies. Kosovo’s
relations with the European Union, while generally positive, are complicated by five EU member
states that do not recognize Kosovo’s independence.
After experiencing several changes in democratic leadership in early 2011, the political situation
in Kosovo is currently stable. An ongoing dialogue process between Kosovo and neighboring
Serbia have resulted in numerous agreements that have made trade, commerce, and travel
between the two countries simpler; however, there are still major disagreements left to resolve.
Deficiencies in bureaucratic and technical capacities at the local and central government levels
remain a challenge to economic development. Backlogs in court cases continue, however the