Doing Business in Kosovo - US Department of State

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Return to table of contents 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
Kosovo Judicial Council in 2010 adopted a “National Backlog Reduction Strategy,” which, though, has not yet significantly reduced the backlog. Corruption is widespread and reflects a “cost of doing business” mentality prevalent in many parts of the region. Anti-corruption efforts suffer from a lack of cohesion, forceful action and follow-through measures. The Anti- Corruption Agency began operations in 2006 but lacks political support and funding. In February 2012, the President of Kosovo launched a new Anti-Corruption Council to increase interagency cooperation, promote public awareness and improve transparency in government activities. Public administration is inefficient and subject to political interference. The civil service and public finance management functions lack complete transparency and accountability, despite there being a legal framework in place. With the notable exception of the Central Bank of Kosovo, data collection has been generally inconsistent and is often not subject to rigorous methodology. At best, this has resulted in a partial view of how Kosovo's economy is performing. Statistical uncertainty aside, strong anecdotal evidence suggests that Kosovo's parallel economy could be anywhere from 30-40% of GDP, which in 2011 totaled €4.7 billion. Remittances from the Diaspora community account for more than 10% of GDP. While Kosovo reported 5% GDP growth in 2011, the country’s narrow export base has resulted in a significant trade deficit. Kosovo’s largest exports are scrap metals, nickel and lead, which have suffered significantly in the wake of the global financial crisis. The Investment Promotion Agency of Kosovo (IPAK) listed the UK as the largest investor in Kosovo in 2010, followed by Turkey, the Netherlands, Germany, Austria and Slovenia. Other major investors include Albania, Macedonia, Switzerland, and Bulgaria. Data for 2011 are below: Sector No. of Companies Share (%) Initial Capitalization (in €) Transportation and Hotel Services 477 11.00 1,443,751,641.00 Trade 1713 39.50 266,378,921.88 Financial 126 2.91 221,313,499.45 Construction 519 11.97 1,202,185,721.16 Processing 648 14.94 553,313,656.44 Consulting 393 9.06 4,167,937.00 Other Services 425 9.80 35,101,873.05 Education 36 0.83 832,600.00 Total 4337 100 3,727,045,849.98 The privatization of more than 600 socially owned enterprises (SOEs) continues under the authority of the Privatization Agency of Kosovo (PAK), an independent government institution. Responsibility for the privatizations transferred from the Kosovo Trust Agency (KTA), a former UNMIK entity, in 2009. In 2011, the Kosovo Assembly passed three important laws pertaining to streamlining privatization, facilitating swifter resolution of creditor, ownership and property claims against SOE’s arising from the privatization and liquidation.
Page 1: Doing Business in Kosovo: 2012 Coun
Page 5 and 6: Infrastructure Development: Kosovo
Page 7 and 8: Chapter 3: Selling U.S. Products an
Page 9 and 10: Many local importers are also whole
Page 11 and 12: imports of IP-infringing products)
Page 13 and 14: FedEx Eqrem Cabej St. 147, 10000 Pr
Page 15 and 16: esponsibility of the individual who
Page 17 and 18: Chapter 4: Leading Sectors for U.S.
Page 19 and 20: Network management Telecommunicatio
Page 21 and 22: capacity, starting with an initial
Page 23 and 24: Many of the existing mines have bee
Page 25 and 26: Provision of medical equipment and
Page 27 and 28: Agricultural Sectors Return to top
Page 29 and 30: Chapter 5: Trade Regulations, Custo
Page 31 and 32: Labeling and Marking Requirements R
Page 33 and 34: Accreditation Return to top The Acc
Page 35 and 36: Chapter 6: Investment Climate Openn
Page 37 and 38: is mainly aimed at raising local re
Page 39 and 40: Kosovo's commercial court has juris
Page 41 and 42: transactions, regardless of form, i
Page 43 and 44: Political Violence Return to top In
Page 45 and 46: international cooperation, and asse
Page 47 and 48: Department of Commerce Office of th
Page 49 and 50: Web Resources Return to top U.S. De
Page 51 and 52: U.S. Banks and Local Correspondent
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Qyteza Pejton, 10000 Pristina Telep
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Persons who wish to prolong their s
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Chapter 9: Contacts, Market Researc
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Chapter 10: Guide to Our Services T
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Doing Business in Kosovo - US Department of State

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