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KOSOVO
1

Content
Kosovo: World’s Newest Country
INTRODUCTION
• Institutions of the Republic of Kosovo 4
• President Welcomes Investors to High Potential
Economy 5
• A Melting Pot of Cultures: Kosovo’s Rich Past
Points to a Bright Future 6
• Kosovo’s Fact File 8
BUSINESS & INVESTMENTS OPPORTUNITIES
• Increasing Competition and Efficiency, the
Privatisation Process Is Going into Overdrive 12
• Forward-Thinking Chamber Promoting Kosovo
as Gateway 14
• Central Bank of the Republic of Kosovo 16
• On the Road to the Union, Kosovo has Already
Made Big Strides 18
• Improved Stability and Measured Growth Point
to a Maturing Economy 20
FINANCE & BANKING
• Ministry of Economy and Finance 24
• NLB Prishtina 26
• Raiffeissen Bank 27
• ProCredit Bank Kosovo 28
• Dukagjini Group 29
TRADE & INDUSTRY
• Ministry of Trade and Industry 31
• Sharrcem 33
• Xella Group 34
TRANSPORT & COMMUNICATIONS
• Ministry of Transport and Telecommunication 36
• All Roads Lead to Kosovo: the Government’s
Main Target Is Upgrading the Road and Rail
Infrastructure 38
• Kosovo Railways 40
• Kosova Airlines 41
• Calling the Shots: Competition Is Bringing
Increased Quality to the Sector 42
• IPKO 44
AGRICULTURE & FOOD INDUSTRY
• Ministry of Agriculture, Forestry and Rural
Development 46
• Lay of the Land: The Government Is
Overseeing the Commercialisation of the
Country’s Farms 48
• Peja Brewery 49
• Meridian Corporation 50
ENERGY & MINING
• Ministry of Energy and Mining 52
• A New Power Plant and Untapped Coal
Reserves Are Set to Electrify the Industry 55
• Mine Games: A Growth in Exploration and
Mining Licenses Should Usher in Explosive
Growth 56
• Lydian International 59
ENVIRONMENT & SPATIAL PLANNING
• Regional Water Company-Prishtina 61
• Ministry of Environment and Spatial Planning 62
• Infrastructure and Housing Requirements
Are Driving the Sector Forward 64
• Dukagjini Group 66
TOURISM
• The Industry Has Several Strings to Its Bow
Pointing the Way to an Effervescent Future 68
• Eurokoha Reisen 70
Regional Manager:
Tudor Stamatian
Country Director:
Rutger de Groot
Editorial:
Patrick Wrigley
Production Coordinator:
Katrien Delamotte
Design:
Martine Vandervoort, Carine
Thaens, Johny Verstegen,
Walter Vranken, Dirk Van Bun
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KOSOVO
Introduction
Institutions of the Republic of Kosovo
Office of the President
Tel.: +381 38 213 222/333
Fax: +381 38 211 651
www.president-ksgov.net
Assembly of the Republic of Kosovo
Office for Media and Publications
Tel.: +381 38 211 186/189/949
Fax: +381 38 211 188
www.kuvendikosoves.org
Office of the Prime Minister
Fax: +381 38 211 202
info_pmo@ks-gov.net
www.ks-gov.net/pm
Ministry of Education, Science and Technology
Tel.: +381 38 542 715
Fax: +381 38 542 757
www.masht-gov.net
Ministry of Justice
www.md-ks.org
Ministry of Energy and Mining
Tel.: +381 38 200 213 05
mem.informimi@gmail.com
www.ks-gov.net/mem
Ministry of Finance and Economy
Tel.: +381 38 200 34 101
Fax: +381 38 213 113
abeiqi@mfe-ks.org
www.mfe-ks.org
Ministry of Environment and Spatial Planning
Tel.: +381 38 517 800
Fax: +381 38 517 845
webmaster.mmph@ks-gov.net
www.ks-gov.net/mmph
Ministry of Local Government Administration
Tel: +381 38 544 377
www.ks-gov.net/map
Ministry of Internal Affairs
Tel.: +381 38 213 307
merita.vidishiqi@ks-gov.net
www.mpb-ks.org
Ministry of Foreign Affairs
Tel: +381 38 213 963
Fax: +381 38 213 985
mfa@ks-gov.net
www.ks-gov.net/mpj
Ministry of Health
Tel.: +381 38 211 192
www.mshgov-ks.org
Ministry of Labour and Social Welfare
Tel.: +381 38 213 814
Fax: +381 38 213 022
info_mpms@yahoo.com
www.mpms-ks.org
Ministry of Community and Return
Tel.: +381 38 212 754
Tel./Fax: +381 38 212 755
sasa.rasic@ks-gov.net
www.ks-gov.net/mkk
Ministry of Public Services
Tel.: +381 38 200 30 020/942/660
Info-mshp@ks-gov.net
www.ks-gov.net/mshp
Ministry of Culture, Youth and Sports
Tel.: +381 38 211 064, +381 38 211 557
Fax: +381 38 211 440
info@mkrs-ks.org
www.mkrs-ks.org
Ministry of Transport and Telecommunication
info.mtpt@ks-gov.net
www.mtpt.org
Ministry of Agriculture, Forestry and Rural
Development
Tel.: +381 38 211 375
Fax: +381 38 212 598
www.mbpzhr-ks.org
Ministry of Trade and Industry
Tel.: +381 38 200 36010
Fax: +381 38 212 807
www.mti-ks.org
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KOSOVO
Introduction
President Welcomes Investors to
High Potential Economy
Fatmir Sejdiu, President of Kosovo, says that the
country’s declaration of independence in February 2008
is “the beginning of a new chapter for Kosovo, and a
reassuring guarantee of a prosperous future.” Around
45 (1)
countries have already recognised Kosovo as an
independent nation, and the country is swiftly moving
away from its war torn past to become a productive
contributor to the European and global economy.
The President welcomes foreign investors, and
points out that Kosovo has focused on providing
stability and security for foreign investment through
implementing European and international laws and
regulations. Kosovo is particularly well placed to
attract European investment. “Almost three-quarters
of all the countries that have recognised Kosovo are
from the European Union, including seven of the
world’s biggest countries. As of today, over 60% of the
nations that lead the global economy have recognised
Kosovo as well as around 80% of the members of the
United Nations. This demonstrates the world’s faith
in Kosovo’s future,” he says.
Energy sector offers strong potential
As it rebuilds its economy, Kosovo offers significant
growth potential, particularly in the energy sector,
according to the President. He adds that the
government has proven its commitment to transparency
and that it has targeted energy, agriculture,
industry, education, health and security as priorities
for development.
The ongoing privatisation campaign is creating new
opportunities for investment, and substantial financial
assistance totalling some €1.2 billion (pledged at
July’s Donor’s Conference) has provided a strong
foundation for future growth. The EU’s Community
Assistance for Reconstruction, Development and
Stabilisation (CARDS) programme, for example,
provided over €1 billion in aid to Kosovo between 1999
Fatmir Sejdiu, President of Kosovo
© Bashkim Hasani
and 2005 alone, and is continuing to support projects
that offer outstanding investment potential. “We are
committed to an open market with equal opportunities
for foreign investors. We want high quality companies
to succeed here, which will make others confident to
come,” President Fatmir Sejdiu says.
As for the future, Kosovo will move beyond reconstruction
to be more creative in developing its economy,
the President says, noting that the government still
needs to come to a decision about the possible privatisation
of the Trepca mines. Boosting GDP from the
current 4% on average and reducing unemployment
and corruption are key challenges for Kosovo today.
“There will be zero tolerance of corruption,” the
President vows. He concludes, “Kosovo aims to become
fully integrated with Europe, it has excellent human
resources, and it offers great growth potential.”
(1)
The number has reached 51 as of today
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KOSOVO
Introduction
Kosovo’s Fact File
Diversity and Ambition: The Twin Pillars of
Kosovo’s Appeal
Kosovo has hit the international headlines in recent
months as the country has shed the skin of its troubled
past and declared a new beginning with independence.
However, despite wide press coverage, most international
readers know very little about this diverse and
ambitious country nestled in the south western corner
of the Balkans. With a rich cultural legacy, enchanting
natural beauty, and abundant natural and human
resources, it is unlikely that Kosovo will remain a secret
to Europe and the wider world for too much longer.
Population
Perhaps what is best about Prishtina, and indeed
the country as a whole, is the young, fun-loving
and ambitious people. Kosovo has a population of
approximately 2.2 million with 42% of them living
in the country’s cities and towns. However, what
makes Kosovo so appealing is that the country has
the youngest population in Europe with 70% of
the population under the age of 35. This gives an
impressive sense of urgency, ambition and positivity to
Kosovar encounters. Ninety per cent of the population
is Albanian, 5% is Serb, 2% is Muslim Slav (Bosniaks
and Goranis) while the remainder is Roma and Turks.
Languages
This diversity of origin brings a multi-lingual
environment to Kosovo with a number of languages
overheard on the nation’s streets. The most prominent
languages are Albanian and Serbian; however,
Turkish and a number of other Balkan languages can
be heard. Moreover, with such an exposure to donor
organisations, multinationals and NGOs, English has
almost become a semi-official language. It certainly
has become the preferred language of business in the
country and in the urban areas, at the very least, it is
easily understood.
Geography
The land of Kosovo, which reclines upon almost
11,000 sq km, lies in a horse shoe shaped bowl, with
mountains enclosing the country in the north, west
and south. The most impressive of these are the
somnolent Sharr in the South and the famous and
rugged ‘Accursed Mountains’ in the west forming
a border with both Albania and Montenegro.
Central Kosovo lies on a low flood plain stretching
out unbounded and allowing unhindered views of
mountain ranges in three directions. Fifty three per
cent of the country is fertile agricultural land while
39% is forest which plays a vital role in Kosovo’s
burgeoning wood processing industry.
The most prominent cities in terms of size, strategic
importance, economic clout and historical resonance
form a skewed diamond with Mitrovica in the north,
Prizren in the south, Peja in the west and Prishtina,
the capital, in the east. Prishtina has truly grown into
its own skin emerging as a modern, vibrant capital
city which manages to retain a distinct local flavour.
Indeed, the old and the modern, the foreign and the
local all jostle for attention in an easy unaffected way.
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The EU and the Flag
Kosovo’s commitment to a future in the EU was writ large on the country’s new flag. Although there was some
debate, and even a design competition, over the future look of the newly independent country’s flag, a decisive
body of opinion fell behind six yellow stars on a blue background embossed by the outline of the country stencilled
below. The international design competition organised by the UN backed provisional government received just
under 1,000 entries but the blue flag with yellow stars won out in vote in the National Assembly requiring a
two-thirds majority. The six stars are meant to represent the six ethnicities of Kosovo, Albanian, Serbian, Bosniak,
Gorani, Turk and Roma. However, the overwhelming symbolism of the new flag will not be lost on anyone, echoing
as it does the EU’s very own standard, a blue flag with a circle of yellow stars. Indeed, Kosovo hopes that sooner
rather than later the two flags will be flying next to each other over the parliament building in Prishtina.
7

Currency
Kosovo’s close relationship with the European Union
is also borne out by their currency which is the Euro.
The country switched to this from the German mark
after that country also adopted the Euro. Beyond the
symbolism of the country and the government using
the Euro as their main currency, the adoption has
added practical benefits. Indeed, the use of the Euro,
gives Kosovo’s infant economy a sense of stability and
a strong currency.
Education
The poly-lingualism
of Kosovo is not only
testament to a diversity
of cultures but also
to the education
standards of the
country. With such
a young population,
the government has
recognised that this
is a crucial pillar for
development. The
reform process is well under way and Kosovo’s two
public universities have over 30,000 students with a
further 10,000 at the various private universities and
colleges dotted around the country. At the primary
and secondary level, Kosovo has almost 1,200 schools
serving approximately 420,000 students.
Business Environment
This may well help the country to attract more investors; however,
it is certainly not the only incentive. The country has low taxes
and a transparent tax system. Kosovo has also been working hard
to harmonise and bring into line its laws with those of European
countries and the European Union. The country has a transparent
and open investment climate with the Investment Promotion Agency
of Kosovo (IPAK) working hard to attract more foreign direct
investment (FDI). IPAK offers a number of free services including
information on investment opportunities in Kosovo, information on
the business and legal environment, market analysis, assistance with
local authorities and after-care-services.
The country’s VAT stands at 15% with a reduced rate of 0% for agricultural
inputs. Exporters also receive a full VAT rebate. For import taxes, the tariff stands at 10% with an exemption
for certain capital and intermediary goods. Income tax is in the range of 0-20%. These figures compare extremely
well with the region and mark Kosovo out as the least taxed country in South Eastern Europe.
Business procedures and the investment regime are also simple. On average, business registration is completed
within 3 days. Moreover, the investment regime is the same for both Kosovo’s citizens and foreign investors
including national treatment, guarantees for unrestricted use of income, protection against expropriations and
the outlawing of discrimination. However, the country is not resting on its laurels with the government and UNMIK
constantly refining and monitoring investment procedures.
The practical business environment is comparable to that of the rest of the Western world. Working hours for
businesses and shops tend to be from 9am to 5 or 6pm. For business meetings and offices, a suit is usually worn.
Combined with its strategic position and youthful population, Kosovo’s business environment provides an attractive
proposition for foreign investors. Indeed, beyond the economy, the country has a lot to offer visitors and long term
guests. From its rich historical and cultural legacy to the country’s natural beauty, Kosovo is a unique proposition.
While independence was gained less than a year ago, the country has been working a lot longer to take its place as
a key player in Europe’s future. While many Europeans may still have a hazy knowledge of the country, it is clear
that this will change sooner rather than later.
8

• Increasing Competition and Efficiency, the Privatisation Process Is Going into Overdrive
• On the Road to the Union, Kosovo Has Already Made Big Strides
• Improved Stability and Measured Growth Point to a Maturing Economy
Business & Investment
Opportunities
9

KOSOVO
Business & Investment Opportunities
When the UN Mission in Kosovo
(UNMIK) first arrived in Kosovo,
the legacies of the Yugoslavian
legal system and governance model
persisted. However, since the turn
of the century, the government and
UNMIK have come a long way in
bringing the country into line with
economic best practice. Perhaps
the best illustration of this is the
ambitious privatisation drive, which
has created thousands of jobs and
boosted company revenues.
Increasing Competition
Process Is Going into
In 2002, when the Kosovo Trust
Agency was founded there were
500 Socially Owned Enterprises
(SOEs) awaiting privatisation.
However, the level of productivity
was low with only 30% of these
companies operational. The
turnaround in these fortunes has
been dramatic. As of December
2007, 310 SOEs had been
privatised accounting for more
than 90% by value of all these
companies. This swift transfer
of social assets to the private
sector has been the catalyst for
a significant increase in Kosovar
exports and a swelling investor
confidence.
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KOSOVO
Business & Investment Opportunities
and Efficiency, the Privatisation
Overdrive
However, the process is by no means
over. Obstacles remain including
the need to pay creditors of some
of the SOEs and the need to sell
the remaining non core assets of
these businesses. Furthermore,
the privatisation process has
enshrined the notion of distributing
proceeds from the programme
to the workers of these SOEs.
Indeed, under this scheme, 20%
of the proceeds from tenders are
to be paid to the workers. This distribution
is still being carried out.
Yet it is clear that the privatisation
process has already had a dramatic
impact upon the economy of
Kosovo. Under the thirty waves of
privatisation, 545 new companies
have been tendered with 343 sales
contracts signed. This has raised
significant capital with total privatisation
proceeds exceeding €353.5
million of which €70.7million has
been earmarked for employee
entitlements. Most privatisations
will be in the agriculture and trade
sectors which account for almost
34% of all SOEs. In addition to
this the Kosovo Trust Agency
board has sanctioned 106 liquidations
with consequent proceeds of
€8.3 million.
While the privatisations have not
been breathtaking in number, they
have been critical for the future
strategic growth of the country.
Some estimates suggest that the
SOEs account for 90% of Kosovo’s
industrial assets and as much as
20% of its prime agricultural real
estate and 60% of its forests. It
was therefore crucial that these
companies were overhauled to
align themselves with efficient and
competitive international business
practices.
The privatisation programme
has been two-pronged with
regular and special spin-offs.
The latter, which account for 20
of the sales contracts hitherto
signed, are designed to protect
the character and value of the
tendered company. Under this
scheme, the bidder has to make
certain assurances to the Kosovo
Trust Agency that the original
character of the business will be
maintained, that a certain level
of investment will be injected
into the company and that a
certain number of people will be
employed. The biggest special
spin-offs thus far have been the
Hotel Grand in Prishtina and
the Ferronikeli Nickel Mine.
Under the latter tender, it was
stipulated that there must be a
minimum investment size of €20
million and that 1,000 workers
be hired within a year of the sale
finalisation. Other significant
sell-offs include the Peja Brewery,
Kosovo’s only major beer
producer, the Rahoveci Winery,
the country’s largest winery, and
IDGJ Tobacco.
Under the regular spin-offs, the
purchasing company has no
further obligations to the Kosovo
Trust Agency upon signing a sales
contract. However, the spin-off
itself is a two- stepped process with
the assets initially being transferred
to a joint stock company 100%
owned by the SOE. Therefore,
a new company is formed for
privatisation.
The privatisation process had
already generated 4,200 investor
contacts in the Kosovo Trust
Agency by June 2006. Moreover,
further high profile privatisations
are expected over the coming
years. While the government has
thus far held on to its utility and
infrastructure providers, they may
well be lined up for privatisation
in the future. Hitherto, these
publicly owned enterprises (POEs)
have been incorporated, which
has allowed for the review and
valuation of all assets and liabilities
as well as an overview of operating
procedures and efficiencies. This
has paved the way for modern
competitive service providers,
which could be handed over to
the private sector. Indeed, perhaps
the most attractive company being
lined up for a potential sell-off is
the incumbent mobile operator,
Vala.
While much has already been
achieved, the future, therefore,
looks extremely positive for
Kosovo’s former SOEs and POEs.
This will not only create instant
revenue but will help to grow the
country’s economy in a number of
ways from increasing freight traffic
to boosting exports. The private
sector is therefore becoming
an equal partner in the future
economic success story of Kosovo.
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KOSOVO
Business & Investment Opportunities
Forward-Thinking Chamber
Promoting Kosovo as Gateway
The Kosovo Chamber of Commerce
is an international, non-profit,
independent organisation which
unites foreign and domestic
companies and is focused on
enhancing business opportunities in
Kosovo. It has formed links with other
chambers of commerce throughout the
world and welcomes new members.
Besim Beqaj, President, discusses the
chamber’s activities and the services
it can provide to foreign investors.
ET: Kosovo officially became
independent earlier this year. What
has been the impact on the business
sector and how has the chamber
been involved in new initiatives?
B. Beqaj: Many international
companies were waiting for Kosovo’s
official status as an independent
country. From a business point of
view, independence has increased
international interest in Kosovo and
a number of fact finding missions
have been launched to help
potential investors better understand
the country. The Chamber of
Commerce has hosted these missions
and organised visits with many
companies here in Kosovo. Another
recent achievement since independence
has been Kosovo’s significant
reform of its fiscal policy, something
for which the Chamber has been
lobbying strongly for the past few
years. With the new government, we
have achieved the new fiscal policy
Besim Beqaj, President Kosovo Chamber of
Commerce
and have lowered taxes, which will
make Kosovo more business-friendly
and competitive.
ET: Many Europeans have mistaken
ideas about current conditions in
Kosovo, associating the country with
the war years. How is the Chamber of
Commerce working to better inform
potential investors about Kosovo?
B. Beqaj: It’s very important to dispel
misunderstandings about Kosovo in
Europe and around the world. We
welcome the opportunity to show
people the real Kosovo. This country
is already well on the way to catching
up with the rest of Europe. We are
witnessing increasing interest in
Kosovo and our experience is that
once people come here and see
what the country is really like, they
discover that it is a very open, business-friendly
environment. This is the
time and place to take advantage of a
developing economy’s potential.
ET: What makes Kosovo business
friendly?
B. Beqaj: In addition to its sound
fiscal policy and tax advantages,
Kosovo has a very clear and strong
legal system, especially compared
to other countries in the region,
and this has reassured and helped
many companies. The Chamber
recognises that a country’s regulatory
environment and legal system are
crucial factors for business, so we
are strongly promoting the fact that
Kosovo’s legal system was started
from scratch to achieve compliance
with EU standards. The chamber
is working to show the world what
Kosovo has accomplished concerning
its regulatory environment and how
advantageous this is for the business
sector. Other advantages include
Kosovo’s membership in CEFTA and
its attractive customs agreement with
the EU, which make Kosovo an ideal
base for trade.
ET: What is the Chamber of
Commerce doing to promote
Kosovo as a better choice than
competing countries, for example
Croatia?
B. Beqaj: The Chamber is actively
involved in correcting misconceptions
about Kosovo. Three years ago I read
an article in an Austrian publication
that contained many errors about
Kosovo and presented the country
in a very negative light. I contacted
the editor of the publication and the
Austrian Embassy in Belgrade and
12

KOSOVO
Business & Investment Opportunities
invited Austrian media representatives
to visit Kosovo and see it with
their own eyes. This one initiative
resulted in very positive articles
about Kosovo in 14 different publications.
Our goal is to show people
that any negative ideas they might
have about Kosovo are not justified.
We also want to show people that
Kosovo offers definite advantages
over its neighbours, including a
central location and the legal system
I have already mentioned. We also
have a youthful population and a
skilled and low-cost labour force. In
addition, new highways being built
will link Kosovo even more closely
with Albania, Serbia and other destinations.
Enhancing connectivity with
the rest of the region is a high priority
in the government’s development
plans. Both the government and
international organisations,
including the World Bank
and the EIB, will
be making
major investments in Kosovo’s infrastructure
next year and beyond. This
will include road networks, telecom
infrastructure and such projects as
the new Drenas business park, which
is set to open in 2015.
ET: What are some of the chamber’s
current initiatives?
B. Beqaj: We plan to invest even
more in communications efforts, to
strengthen our partnership with the
government, to work more closely with
other chambers of commerce
throughout the region,
and in general
to boost our
networking
activities.
As the
president of the Kosovo Chamber of
Commerce, I have worked very hard
to improve the image of the chamber
within Kosovo’s business community
and government, and now we are
going into the next phase, which is
to increase our regional and international
presence. We would like to
have strong partners in the European
Union. We aim to show international
companies that Kosovo can be
their best gateway to South-Eastern
Europe.
13

KOSOVO
Business & Investment Opportunities
Central Bank of the Republic of Kosovo
Central Bank Committed to Best
Kosovo built its financial sector from scratch beginning
in 1999, employing the highest international standards
to build a strong foundation for future growth. With
the support of the International Monetary Fund and
other international organisations, the government
has succeeded in establishing a world-class regulatory
environment and a strong Central Bank of the Republic
of Kosovo (the CBK).
Hashim Rexhepi, the CBK’s Governor, says, “We
have implemented international best practices with
regards to regulation and supervision of all financial
institutions in Kosovo. In only a short time, the
CBK has built a strong management team, a solid
legal framework and excellent cooperation with the
regional and international financial community, the
above will continue to constitute an important part of
the CBK’s activities.
The CBK’s main goals are to foster a sound, solvent,
efficiently functioning, stable, market-based financial
system; to encourage the emergence of safe financial
instruments on the Kosovo market; to provide services
to the financial community by fostering an efficient
and safe payment system; and to contribute to
Kosovo’s economic development through its analysis
related to general policies in Kosovo.
Adoption of euro boosted investors’
confidence
Along with applying international standards, Kosovo
adopted the euro as its currency beginning in 2002,
which has enhanced the financial sector performance
and created more confidence in the Kosovar economy.
“Having the euro also means no exchange risks, and
our monetary policy is built on that of the European
Central Bank. All this reassures foreign investors,”
Hashim Rexhepi explains.
Hashim Rexhepi, Governor
In fact, the CBK has played a major role in attracting
more foreign investors to Kosovo’s financial services
sector. “Over 90% of financial sector assets are
under foreign ownership, around 67% of insurance
sector assets are with foreign ownership, whereas
the banking sector now includes strong banks from
Kosovo, elsewhere in the region and from the EU.
This foreign presence has brought investments in
capital, experience, good corporate governance
and stability to Kosovo’s financial sector,” Hashim
Rexhepi points out.
Increasing transparency
The CBK has performed its tasks step by step. First, it
focused on simply establishing a new payments and
14

KOSOVO
Business & Investment Opportunities
Practices
financial system for Kosovo. Then,
it concentrated on opening up
Kosovo’s financial sector to foreign
participation, on strengthening the
sector overall, and on establishing
strong regulatory systems for both the
banking and the insurance sectors.
Next, the CBK fine-tuned the sector
by finding solutions for any problems
that had appeared. “Today, now that
we have a very strong, sound and
stable financial sector, our objective
for the future is to increase transparency
and advance market conduct,”
Hashim Rexhepi says.
The CBK is currently focusing
on implementing Basel II criteria
concerning disclosure and transparency.
“We have continuously
received technical assistance from
the EU, the United States Agency
for International Development
(USAID), the IMF and the World
Bank concerning revising our legal
framework and capacity building
of our staff. We can confidently say
that our legal framework is very
much in line with all EU directives.
Moreover, our procedures are
competitive with procedures in
other EU countries concerning
licensing and supervision,” Hashim
Rexhepi explains.
Hashim Rexhepi adds that the CBK
not only consults EU directives
when devising new policies, but
also adopts best practices both
regionally and internationally
recognised and accepted. “We try
to harmonise and balance the two
elements: EU directives and the
environment in which we operate,”
he says.
Boosting financial sector’s
GDP contribution
The CBK serves not only to bring
stability and transparency to the
financial sector and foster efficient
payment systems, but also to
advise the government concerning
Kosovo’s economic development.
A guiding principle for the CBK is
to enhance Kosovo’s economy, and
thanks to the financial institution’s
efforts the financial sector has
become a significant contributor to
Kosovo’s GDP.
The CBK is also working to
alleviate unemployment in Kosovo,
which Hashim Rexhepi singles out
as one of the main problems the
country currently faces. “Certainly
the financial sector has played a
key role in the reduction of unemployment,
since all financial institutions
in Kosovo hire local staff,”
he says.
Three new banking licenses
last year
Kosovo’s financial sector had new
entries last year. Hashim Rexhepi
points out that two local banks were
acquired by NLB Bank (Slovenian
Bank) in order to increase
competition in the banking sector,
and the CBK issued three more
banking licenses. “More foreign
investors are looking for ways to
invest in Kosovo’s financial sector
because confidence in the sector is
increasing,” he says.
Foreign investors in Kosovo should
know that the local financial sector
is sound and can fulfil their needs.
As Hashim Rexhepi points out,
“The return on assets is very high
in Kosovo; in fact, it is the highest
in South East Europe. In addition,
our legal framework ensures equal
opportunities for foreign investors,
efficient payment systems and the
use of euro provides an added
value, and our laws on terrorism
funding and money laundering
are based on EU directives. At
the CBK, we are committed to
best practices and have ensured
a very transparent and profitable
financial sector. The sector’s
steady growth over the past eight
years shows the inherent strength
of Kosovo’s financial system.”
Throughout, CBK will devote all
efforts to carrying out its tasks in
the most independent and professional
manner, and assist further
in the integration of Kosovo’s
financial sector in regional and
European initiatives.
Central Bank
of the Republic of Kosovo
Garibaldi str. 33
10000 Prishtina - Kosovo
Tel.: +381 38 243 766
Fax: +381 38 243 763
www.cbak-kos.org
15

KOSOVO
Business & Investment Opportunities
On the Road to the Union, Kosovo
Has Already Made Big Strides
With the seminal step of independence
achieved relatively smoothly,
Kosovo now has its sights firmly set
on European integration and EU
succession. The country already has
an established history of working
with European institutions to aid
economic development and institution
building. It is now moving on from
this solid base to meet the criteria
necessary for entry to the top table of
EU membership.
This is no distant ambition but a
driving force in the first post-independent
steps of Europe’s newest
country. It is also writ large in the
country’s founding document, the
Kosovar constitution. According
to Agim Ceku, Prime Minister of
Kosovo, “The government of Kosovo
embraces the values of the European
Union: peace, economic development
and freedom of movement for all.
EU membership is not a dream. Our
experience in accomplishing the
goals established in the Standards
process will help us in achieving our
accession obligations.”
The EU has played a crucial role in
supporting these ambitions. Indeed,
Europe has been the biggest donor to
Kosovo over the past decade providing
€1.6 billion in financial support
since 1999. The main EU vehicle
for helping Kosovar development is
the European Commission Liaison
Office (ECLO) which implements
assistance under the Instrument of
16

Pre-Accession Assistance (IPA). In 2008, the ECLO has
taken over the Community Assistance for Reconstruction,
Development and Stability (CARDS) programmes
from the European Agency for Reconstruction (EAR).
Since the year 2000, the CARDS programme has run
more than 1,600 contracts ranging in value from €5,000
to €50 million. Currently, in 2008, 150 contracts are still
open and now being run by the ECLO.
The CARDS programme, whose aim was democratic
stabilisation, social and economic development,
institution building and good governance, is now
being replaced with the IPA. Kosovo will benefit from
two components of this EU initiative: the ‘Institution
Building and Transition Support’ and the ‘Cross-Border
Cooperation’. For the funding period 2007-2011,
the EU has earmarked more than €400 million under
these components and will offer more aid per capita to
Kosovo than any other place in the world over the next
three years.
This targeted assistance falls under the wider EU
framework for the Western Balkans called the Stabilisation
and Association Process (SAP). SAP has been
established to confirm the EU belief that the whole
Western Balkans has a European perspective and to
create a mechanism under which all participants to the
process can pass through a transparent and standardised
set of benchmarks at their own rate of progress.
This process also monitors and encourages convergence
with EU practices, standards and norms on a range of
issues both political and economic. It also aims to have
a specific influence on critical areas of reform such as
transport, the environment and agriculture.
However, Kosovo is at the beginning of this journey.
Although the Thessaloniki Summit of June 2003 formally
recognised that Kosovo has a European perspective, the
country still has to embark on a process of political,
legal and institutional transformation to achieve this
end goal. According to Renzo Daviddi, Head of the
ECLO, “I guess the main challenge Kosovo now faces
is how to build up institutions and how to make the
transformation from the embryonic stage to a more
adult stage.” However, the country has also made great
strides. “I think the legal framework for a number of
reasons, including the fact that there has been a large
international community presence, perhaps is more
advanced than other countries in the region. This is an
area where Kosovo has a large advantage compared to
other countries looking for EU accession,” adds Renzo
Daviddi.
Renzo Daviddi, Head of European Commission Liaison Office
Kosovo is now working in partnership with the
EU to take the necessary steps to enact these
transformations. Under the Stabilisation and
Association Process Tracking Mechanism (STM),
enshrined in the Thessaloniki Summit, the EU
can monitor and help Kosovo progress within
SAP at its own pace. Likewise, Kosovo itself has
also set up mechanisms to make sure domestic
reform is aligned with the goals of EU accession.
Indeed, the Kosovo authorities established the
European Partnership Action Plan (EPAP) which
creates a framework and concrete policies for the
creation and prosecution of legislation and the
establishment of institutional structures in line
with European requirements. In practical terms,
these partnerships and associations will help track
and implement measures on a number of issues
including human and minority rights, freedom
of movement and goods, public procurement,
intellectual property law, customs and taxation,
education and research and agriculture and
fisheries policy.
Therefore, although there is some way to go,
Kosovo has already made giant strides towards
convergence with European norms and EU
accession. Indeed, as the EU has offered a
guiding hand at the very conception of the
country, Kosovo is well placed to establish itself as
a leading protagonist and advocate of European
values and governance.
17

Improved Stability and Measured
Growth Point to a Maturing Economy
While independence was only achieved in February 2008,
Kosovo has been pursuing a stable and fruitful economic
policy for some time now. This has been borne out by
the increasingly impressive figures for both GDP growth
and the budget. Indeed, the country is creeping towards
Southeast European (SEE) levels of growth while still
managing to balance the books. Under the stewardship
of the European Union, the country has been able to
resist the temptation to overreach itself while ensuring
that many sectors have been liberalised and export-orientated
industries have been unshackled. However, this
is still a work in progress and the government has set
ambitious targets to further stimulate the economy over
the coming five years.
In 2007, the country recorded GDP growth of 3.5%
slightly below the SEE average of 5.9% but a clear
increase on growth in 2005 which stood at 0.3%. This
translated into a GDP figure of €2.4 billion and an
ever improving GDP per capita of €1,400. This was
achieved despite a decline in the donor sector. More
importantly, this growth was not boosted by public
expenditure but by the expanding role of the private
sector in economic life. In 2006, non-housing private
investment increased by 61% while banks loans to
the private sector also increased markedly.
Indeed, the economy has become less reliant on
government and donor sector expenditure. Donor
sector expenditures, in terms of consumption and
investments fell 1.7% in 2007 amounting to €355
million or 14.4% of GDP. Government spending on
goods and services fell 8.3% in 2007 although after a
18

KOSOVO
Business & Investment Opportunities
two year decrease of 11.6%, total government expenditures
actually increased by 6.2% in 2007 to €426
million or 17.3% of GDP.
Moreover, the country bucked the regional trend
and recorded a budgetary surplus of €233.7
million which represents approximately 9.8% of
GDP. This was largely the result of an increase in
non-tax revenues. While the country has a current
account deficit of 22.5% of GDP driven by a trade
deficit of 9%, exports have been increasing steadily.
Indeed, Kosovo’s exports grew by a staggering 54%
in 2006. In 2007, exports reached €146.6 million
mainly consisting of minerals, base metals, vegetable
products and foodstuffs. Government estimates
suggest that exports could climb as high as €350
than €1 billion invested since the year 2000. This
impressive growth is expected to increase rapidly
with the government estimating that the FDI level
will touch €700 million in 2008.
Kosovo’s liberal trade regime has also stimulated
imports into the country. Kosovo is a member of the
Central European Free Trade Agreement (CEFTA)
which allows for free trade between the members of
the bloc and enables producers to access a regional
market of 28 million consumers free of customs
duties. Indeed, the largest number of exports came
from CEFTA countries in 2007. Overall imports have
been increasing steadily since 2002 and had touched
almost €1.6 billion in 2007. This is a significant
increase in a two year period for imports were below
Kosovo real GDP by sector, in million euro
Private Sector
Government Sector
Donor Sector
3.5
3.0
2.5
-
-
-
2.33
Net Exports (right axis)
2.45
Real GDP Growth (right axis)
2.65
3.1
2.04
3.5
-
-
-
5
4
2.0
-
2.0
-
3
1.5
1.0
0.5
-
-
-
0.51 0.43
0.45
0.38
0.40 0.36
0.43
0.35
-
-
-
2
1
0.0
-0.5
-1.0
-1.5
-
-
-
-
-0.95
-1.0
-0.98
-1.01
-1.11
- 0
-
-1
-
- -2
2004 2005 2006 2007
Source: 2007 annual report of the Central Banking Authority of Kosovo
million in 2008 as the country’s productive capabilities
increase dramatically. The largest export
market for Kosovo is the EU closely followed by the
Central European Free Trade Agreement (CEFTA)
countries.
Likewise, the country has had considerable success
in attracting foreign direct investment (FDI). High
profile European banks, Raiffeisen and Pro-Credit
moved into the market during the transition phase.
However, they are just the most visible tip of the
iceberg. According to Business Registry data for
2007, Kosovo has 2,012 companies of foreign or
mixed ownership. Such investment has translated
into an FDI figure of €300 million for 2007 with more
€1 billion in 2005. These imports have not only been
stimulated by CEFTA but also by Kosovo’s non-reciprocal
customs free access to the EU market through
the EU Autonomous Trade Preference (ATP) regime.
The main imports of commodity goods are centred
on minerals and prepared foodstuffs.
The economy is therefore becoming increasingly
robust with trade, construction and the financial
services sector being the mainstay of growth.
Indeed, driven by the banking industry, the financial
sector has been expanding rapidly. According to
the Central Bank of Kosovo, financial sector assets
reached 58.5% of GDP in 2007 up from 49% in 2006.
The banking sector makes up the lion’s share of this
19

KOSOVO
Business & Investment Opportunities
accounting for 90% of financial sector assets in 2007.
The sector is undoubtedly buoyant with significant
investment in 2007 leading to the establishment of
new operators and increased foreign ownership.
The real economy is also progressing well. Overall
consumption in 2007 rose by 3.8% to €2.8 billion.
This represents 114.3% of GDP and has been
growing steadily over the last 4 years from a figure
of €2.57 billion in 2004. Much of this was fuelled
by the private sector which was responsible for €2.2
billion of consumption in 2007, an increase of 5.2%
on 2006. Investments as a share of GDP have also
been increasing significantly rising by 15.2% in 2007
to reach 33% of GDP. This is a marked increase on
2006 when they stood at 29.9% of GDP. The private
particularly from non-tax sources which increased as
a share of total revenues to 17.3% in 2007 from 8%
in 2006.
The budget surplus has given the country some leeway
and goes against the grain of the region where most
regional countries, with the exception of Montenegro
having a deficit in 2007 and a four year average well
below the Kosovar surplus of 1.2% of GDP. Given
this surplus, the Central Bank of Kosovo predicts that
expenditure in the country will rise substantially in
2008. Indeed, it predicts that expenditure will reach
€1.1 billion in 2008 which is a 68.9% increase on
2007. The three areas of particular spending focus
will be capital expenditure, subsidies and transfers
and the purchase of goods and services.
Imports and Exports by commodity groups as share to total, as of 2007
Live animals,
3.9%
Stone, Plaster,
Ceramic,
4.4%
Textiles,
3.3%
Imports
Other,
9.8%
Mineral products,
20.2%
Prep.
foodstuffs,
5.1%
Plastics and
articles,
4.1%
Exports
Other,
10.9%
Plastics and
articles,
4.6%
Transport
means,
5.2%
Vegetable
products,
5.3%
Prod. of
chemical
industry,
7.5%
Base metals,
9.2%
Machinery,
12.5%
Prep.
foodstuffs,
14.1%
Vegetable
products,
5.7%
Machinery,
13.1%
Mineral
products,
15.4%
Base metals,
45.7%
Source: 2007 annual report of the Central Banking Authority of Kosovo
sector once again plays a vital role here reaching
€647 million or 26.3% of GDP in 2007. Indeed,
private sector investment growth stood at 14.6% in
2007.
Consumer Price Index (CPI) inflation rose to 4.5%
in 2007 from 0.62% the previous year. However, this
is largely attributable to the global increase in oil
and food prices. Indeed, despite this, the country’s
fiscal planning is on a sure footing. Kosovo’s consolidated
budget revenues showed an annual increase
of 25.9% in 2007 hitting €896.4 million for the year.
This accounts for 37.7% of GDP and is an impressive
31.3% higher than the government’s planned targets.
This was a result of higher than expected revenues
The country is therefore well placed to consolidate
and build on its recent economic successes. With
both domestic production and the trade regime
becoming ever more healthy, the prospects for
future growth look rosy. This is confirmed by the
country’s attractive tax regime and impressive
investment climate that should see FDI exceed the
already upward trends that have been set. Indeed,
Kosovo’s economy is taking on an increasingly
diversified hue with productive sectors such as
industry and agriculture sitting alongside financial
services and other service sectors in recording good
growth. This should ensure that the improving
economic outlook can be sustained for the long
term.
20

• Now Is the Time to Invest in Kosovo
Finance & Banking
“Kosovo’s market is open and
ready for investment. If you
look at other Baltic countries
that are now EU members, you
can see the potential.”
Ahmet Shala, Minister of Economy and Finance

KOSOVO
Finance & Banking
Ministry of Economy and Finance
Now Is the Time to Invest
Ahmet Shala, Kosovo’s Minister of Economy and
Finance, discusses recent developments in Kosovo’s
financial sector and the country’s investment
potential.
Ahmet Shala, Minister of Economy and Finance
ET: How important are the banking and insurance sectors
for Kosovo’s economic development?
A. Shala: They are extremely important. Over the past eight
years, for post-conflict structural reasons, the government has
emphasized public sector institutional development, but now
we must shift towards the private sector since this is where both
growth and new jobs will be generated. A credible financial
sector is essential for Kosovo’s economic development, and our
financial sector, although young and emerging, has performed
well and demonstrated a capacity for stability.
ET: What are your priorities for the financial sector?
A. Shala: A key task is to ensure that the financial sector can
fulfill the needs of the private sector. So far, the availability of
liquidity and loans has been adequate, but for a relatively low
level of economic development. The financial sector must work
with private business to develop good credible business plans
from which private investment can be generated.
22

KOSOVO
Finance & Banking
in Kosovo
ET: What is Kosovo doing to achieve EU integration?
A. Shala: The government’s Medium Term Expenditure
Framework was very well received at a Kosovo donors’
conference hosted by the European Commission in
Brussels in July, and Kosovo has been accepted into
the pre-accession process and is receiving EU support
through Instrument of Pre-Accession funding. Kosovo
has also joined the Central European Free Trade
Association. European investors should know that
the EU integration process is now in place, and that
there is considerable scope for helping local institutions
establish well-backed credit lines, develop leasing
activities, and so on.
ET: What incentives does Kosovo offer foreign investors?
A. Shala: The fundamental approach to economic
development in Kosovo has been to put in place an institutional
structure that encourages development within
a liberal market framework. Tax rates are relatively
low and the corporate tax rate was recently reduced to
10%. The tax base is wide and the structure is simple,
the labour market is liberal as is the environment for
foreign trade, it is relatively easy to set up a business,
and the public sector has an excellent good-practice
financial management process. In other words, Kosovo
is fundamentally investor friendly.
ET: For many people, Kosovo is associated with its war
torn past. How are you countering this international image?
A. Shala: People should be aware that international
financial institutions are very active in Kosovo and
support our efforts, which is an excellent reflection of
Kosovo’s stability and growth potential. Kosovo recently
applied to join the International Monetary Fund and
the World Bank, a further guarantee of stability. In
addition, Kosovo has adopted the euro, which has had
a highly beneficial effect on controlling inflation and
promoting financial stability. Deposit insurance is now
under discussion and we are working to ensure credit
and liquidity for small and medium sized enterprises.
All this gives the country credibility.
ET: Why should European investors choose Kosovo as
an investment destination?
A. Shala: The government’s approach is clear: to put
Kosovo solidly on the path to EU integration. Kosovo is
already within the European Stability Pact framework, it
is receiving official financial support from the EU, and
it is making sure it is EU compliant in every area. Our
laws respect the EU Acquis Communautaire. The EU
integration process has worked very well in other small
countries, such as Ireland, Estonia, Latvia and Lithuania.
There is no reason why it should not succeed equally well
here in Kosovo.
Kosovo’s specific advantages include its young population,
massive reserves of lignite and other minerals, and
enormous potential for tourism, such as skiing and hiking
in the mountains. Our privatisation programme has
proved to be a success and we are now focusing on our
investment and export promotion. The important thing is
to create the right market environment, and Kosovo is well
on the way to achieving this.
ET: What is your personal message to potential investors?
A. Shala: There is a simple but powerful paradigm that
has applied to virtually all Central European and Balkan
countries: in the immediate post-Soviet and post-Yugoslavia
transition, the sequence in very simple terms has been to
liberalise markets, privatise the financial sector and public
utilities (which attracts foreign direct investment and
creates new jobs), and stimulate the growth of smaller and
medium sized enterprises to create more jobs. This process
takes time, but a lot of this has already been put into place
in Kosovo.
My message to investors, therefore, is that Kosovo’s
market is open and ready for investment. If you look at
other Baltic countries that are now EU members, you
can see the potential. Who would have expected this 20
years ago? Come and visit Kosovo and discover all the
many unexplored investment opportunities the country
offers. Just make sure you come here ahead of your
competitors!
23

KOSOVO
Finance & Banking
NLB Prishtina
Leading Commercial Bank Positioned
to Partner Foreign Investors
NLB Prishtina, with a 16%
share of the local market, is one of
Kosovo’s top commercial banks. It
offers highly trained professionals,
flexibility, innovation, efficiency,
and a wide range of services to its
local and international clientele,
and has the largest network of any
bank in Kosovo.
Albert Lumezi, General Manager,
explains that NLB Prishtina is
the product of a merger of two
local banks, NBK and KasaBank.
The new bank began operating
on January 1, 2008 with some
€200 million in assets, making it
Kosovo’s third largest bank. NLB
Prishtina has positioned itself as
the partner of choice for international
investors. “We are absolutely
ready to support businesses coming
to Kosovo by providing them with
sound financial services,” Albert
Lumezi says.
Albert Lumezi, General Manager
NLB’s competitive edge is that
it provides diverse products and
services, it has the backing of regional
leader the NLB Group, and it has
developed a strategy of sustainable
growth. “We aim to make NLB one
of the best banks in Kosovo. We
are focused on both the retail and
corporate segments. Our primary
intention is to serve the business
community by fulfilling companies’
objectives and development goals,”
Albert Lumezi says. The bank’s local
reputation is so strong that 95% of
its clientele is from Kosovo.
supporting the country’s continued
economic development.” He adds
that Kosovo’s investment appeal also
includes low taxes, an EU compatible
regulatory framework, political
stability, a young and multilingual
population, competitive labour
prices, and strong growth potential.
Banking dominates the local financial
sector, accounting for 85% of total
assets. The banking sector has been
growing by 15% per year on average
for the past three years, Albert Lumezi
explains. He adds, “It is also worth
mentioning that the average return
on investments in Kosovo’s banking
sector is higher than the regional
average. In addition, financial sector
regulations meet EU standards, and
the use of the euro has contributed
to controlling inflation. Kosovo’s
financial sector is far ahead of those
of its neighbours.”
Urging international investors to
investigate opportunities in Kosovo,
Albert Lumezi concludes, “Now is
the right time to invest here, and you
will have a strong partner in NLB
Prishtina.”
Financial sector a success
story
Kosovo offers significant investment
opportunities, and the progress the
country has made in upgrading
its financial sector reflects its long
term potential. As Albert Lumezi
says, “Kosovo’s financial sector has
achieved real progress in providing
sound services and thereby
NLB Bank Prishtina
Rr. Rexhep Luci Nr.5
Tel. +381 38234 111
Fax: +381 38246 189
info@nlbprishtina-kos.com
www.nlbprishtina-kos.com
24

KOSOVO
Finance & Banking
Raiffeisen Bank
Raiffeisen Bank Kosovo Named
Bank of the Year 2007
Raiffeisen Bank, with the strongest
capitalisation of any bank in
Kosovo, had a record year in 2007.
The bank’s assets grew by more than
27% over the year to reach €477
million and its profits totalled
€14.9 million. “Raiffeisen Bank
has recorded a significant growth
every year since it started to operate
in Kosovo,” says CEO Bogdan
Merfea. The Banker, a magazine of
the Financial Times Group, named
Raiffeisen Bank Kosovo ‘Bank of
the Year’ in 2007.
The bank was acquired by the
Raiffeisen International group in
2003 and now offers international
reach and expertise as well as in-depth
local knowledge. Raiffeisen International,
its parent company, is known
for its success in emerging markets
and has activities in 17 Central and
Eastern European countries with
banking and leasing subsidiaries, as
well as a number of other financial
service providers.
Bogdan Merfea, CEO
Raiffeisen Bank Kosovo is a
commercial bank serving both retail
and corporate customers. “Currently
we are in the sustainable growth stage
with our individual and corporate
clients contributing equally to our
growth in Kosovo. In the future,
however, I believe the retail sector
will offer the biggest opportunities,”
Bogdan Merfea says.
Ideal partner for foreign
investors
Raiffeisen Bank is the ideal local
partner for foreign investors in Kosovo.
Bogdan Merfea points out, “Our professional
skills, expertise, and tradition
help us to be a very attractive bank
for foreign investors, as does our welldeveloped
network in more advanced
economies. We have very good people
in Kosovo and we can also tap into the
knowledge of the group.” Raiffeisen
Bank is particularly well known in
Kosovo for its involvement in privatisation
projects.
Since it started to operate, Raiffeisen
Bank Kosovo has recorded sustainable
continuous growth in Kosovo’s
emerging financial services sector
in all three segments: assets, loans
and deposits. “We are a universal
bank offering banking products and
services to all customers. We continue
to be focused on offering comprehensive
financial solutions to both local
and international customers,” Bogdan
Merfea says.
Raiffeisen Bank Kosovo’s growth
strategy focuses on distribution
development and product innovation.
Bogdan Merfea says, “There is a lot of
room to create innovative products
tailored to the local market. Our
slogan is ‘Live better!’ Our brand is
closely linked to the aspirations of
the Kosovar people. Our slogan also
means that Raiffeisen Bank is not here
just to make money in the short term.
We are in Kosovo for the long haul.”
Raiffeisen Bank Kosovo J.S.C
UCK Street 51, Prishtina 10000,
Kosovo
Tel: +381 38 222 222
www.raiffeisen-kosovo.com
25

KOSOVO
Finance & Banking
ProCredit Bank Kosovo
Kosovo’s First Bank Supporting
Economic Growth
ProCredit Bank Kosovo achieved
very strong results last year, boosting
its profits by an impressive 107%.
Philip Sigwart, CEO, explains that
the bank also increased its assets by
27% to reach €549 million, and that
customer deposits also grew, totalling
some €550 million at present.
The bank’s return on equity is
around 50%, and 2008 should be
another good year. “Our results
show that business can be done
successfully in Kosovo. It’s all
about commitment. Of course our
business is about making a profit,
but most importantly it is about
contributing to Kosovo’s economic
development,” Philip Sigwart says.
ProCredit has a 40% share of the
local banking market.
ProCredit was established in 2000
as Micro Enterprise Bank to finance
Kosovo’s expanding economy. It
was re-branded to ProCredit Bank
in 2003 and is now majority owned
by ProCredit Holding based in
Frankfurt, Germany. “Many people
told us we were crazy to set up a
bank immediately after the war, but
we worked hard to make the bank a
success and now we are reaping the
fruits,” Philip Sigwart says. He adds
that Kosovo’s banking sector should
fare well in the current global
financial crisis since local banks are
financed fully by local deposits, and
deposits exceed loans.
ProCredit is ready to serve international
companies and investors
seeking opportunities in Kosovo.
The bank offers financing as well
as Kosovo’s most extensive branch
network (60 branches by the end
of 2008), and the country’s biggest
ATM network. “Our infrastructure is
top notch, especially for the Balkan
region,” Philip Sigwart says.
The bank, which already serves some
300,000 retail customers, anticipates
continued strong growth driven by
Kosovo’s expanding private sector.
ProCredit’s competitive edge is that,
as the country’s first bank, it is known
for its commitment to the local
economy. “That is the reason why
our main focus is on retail customers
and on small and medium sized
enterprises, which are the drivers
of economic growth. We focus very
much on responsible banking, which
is one of our core principles,” Philip
Sigwart explains.
Philip Sigwart urges foreign investors
to look into opportunities in Kosovo.
He says, “Doing business here is
more straightforward than in many
other countries in the region because
Kosovo’s regulatory environment was
created with the help of European
and international advisors. Secondly,
many Kosovars worked abroad during
the war years and learned skills they
have brought home. Finally, Kosovo
is in the heart of Europe. Hop on a
plane and come have a look!”
ProCredit Bank, Kosovo
Nena Tereze str. 16
10000 Prishtina, Kosovo
Tel.: +381 38 555777
Fax: +381 38 248777
www.procreditbank-kos.com
26

KOSOVO
Finance & Banking
Dukagjini Group
Insurance Leader Expanding
Product Portfolio
The Dukagjini Group demonstrates the growth potential
of Kosovo’s private sector. Ever since it was founded by
Mr. Ekrem Lluka in 1987 as a printing house and trade
enterprise, the group has evolved along with the Kosovar
economy and is now active in a wide range of sectors.
It has won a number of awards, including the International
Award for Quality and Business Prestige 2004.
Dukagjini Insurance, the group’s insurance division, was
licensed in February 2002 to provide compulsory third
party liability (TPL) coverage for motor vehicles and
has steadily expanded its offerings. It now has around
30 non TPL insurance products in its portfolio and has
earned a 19% share of the local market becoming the
market leader.
In 2006, Slovenian based reinsurance firm Sava Reinsurance,
which has an A- rating from Standard and Poor’s, acquired
a 51% stake in Dukagjini, which demonstrates the Kosovo
company’s growth potential. “Our long term strategy is to
further develop non TPL products like health, property,
engineering, liability and other forms of insurance,” says
Fatmir Gashi, General Director of Dukagjini Insurance. He
adds, “We already have a private pension fund operating
and are waiting for the government to pass laws opening
the market for investment funds.”
Dukagjini Insurance achieved profits of €418,000 in
2007 and anticipates that these profits will more than
double to around €1 million this year. The company
welcomes partnerships with EU insurance firms. As Mr.
Fatmir Gashi explains, “Through our association with
Sava Re, we have already shown our strategy of co-operating
and working with EU companies. We can provide EU
companies with world class insurance services for their
investments in Kosovo, and the Dukagjini Group can
also provide logistics support, advice for new investors
in Kosovo and in the same time we are open to possible
partnership opportunities as well. Dukagjini Insurance
has established branches throughout Kosovo and has
earned a very strong reputation in the market.
Dukagjini
Square Nëna Terezë 33
10000 Prishtina, Kosovo
Tel: +381 38 225 385
Fax: +381 38 225 384
info@insurancedukagjini.com
www.insurancedukagjini.com
Dukagjini Insurance and other companies in the
Dukagjini Group are also known for their exemplary
corporate citizenship. In July this year, Dukagjini
Group made a commitment to provide €160,000 over
two years to the American Councils for International
Education’s program in Kosovo, the Kosovo American
Education Fund (KAEF), which will offer scholarships to
promising Kosovars to get a master’s level education at
select American universities. Projects like these illustrate
Dukagjini’s commitment to Kosovo’s future.
27

• Ideal Base for Trade-Oriented Activities
Trade & Industry
“We are very proud of the fact
that although we achieved our
independence just this year, Kosovo
has already been recognised by other
countries worldwide.”
Lutfi Zharku, Minister of Trade and Industry

KOSOVO
Trade & Industry
Ministry of Trade and Industry
Ideal Base for Trade-Oriented
Activities
Lutfi Zharku, Minister of Trade and Industry
Thanks to its outstanding development potential, Kosovo
has already attracted more than €1 billion in foreign
direct investment and is home to more than 2,000 foreign
or partially foreign owned companies, many of which are
engaged in trade. Kosovo offers a number of attractions
for trade-oriented companies, including a liberal trade
regime, a supportive government, stable relations with
neighbouring countries, and a central location.
29

KOSOVO
Trade & Industry
Free trade agreements enhance Kosovo’s investment
appeal. The country is a member of the Central
European Free Trade Agreement (CEFTA), giving it
customs-free access to a regional market of around 28
million consumers. In addition, Kosovo benefits from
nonreciprocal, customs-free access to the EU market
based on the EU Autonomous Trade Preference (ATP)
Regime. Quantitative and qualitative restrictions remain
in force for only a very limited number of goods.
Kosovo is still an import-based economy, with total
imports reaching around €1.6 billion in 2007. The main
imports were minerals, prepared foods, machinery
and base metals. Kosovo is in the process of boosting
its exports significantly, however, and achieved €146.6
million in exports last year, mainly in minerals and
base metals, vegetables and food products. This year,
the country should reach €350 million in exports.
Its main trade partners are other CEFTA countries,
followed by the EU. There is enormous potential as
the local and regional market continues to grow and
as Kosovo strengthens its EU ties.
Kosovo’s Minister of Trade, Lutfi Zharku, discusses the
country’s key advantages as a base for trade-oriented
activities.
ET: What are some recent developments in Kosovo’s
trade sector?
L. Zharku: We are very proud of the fact that although
we achieved our independence just this year, Kosovo has
already been recognised by other countries worldwide.
A major event this year was the Kosovo Donors’
Conference held in Brussels in July, during which
Kosovo received €1.2 billion in financial support. This
reassures investors that Kosovo has a bright future.
ET: What are some of the government’s current
initiatives to attract foreign direct investment?
L. Zharku: The Investment Promotion Office within
the Ministry of Trade and Industy has been mandated
to attract investors and support them by providing
whatever they need, for example by obtaining licenses,
business registrations and so on. FDI will be the key
to Kosovo’s successful economic development and will
create needed new jobs.
ET: Privatisation is creating new investment opportunities.
What is the status of the process?
L. Zharku: The privatisation effort is now being handled
by the Kosovo Privatisation Agency, a transformed
version of the Kosovo Trust Agency. Around 500
companies have already been privatised and around
200 more are set for privatisation. I am not very happy
with the speed of the process so far. I hope that the
new agency will make things happen more quickly.
On the positive side, we now have a new law on public
enterprises, which will be monitored by the government
but not directly run by the government. We hope to
offer private investors more access to publicly owned
companies.
ET: Why should foreign investors choose Kosovo?
L. Zharku: There are many reasons. We have an
abundance of resources, a young population, a
central location in the Balkans, modern telecommunications,
a competitive and flexible labour force,
up-to-date policies and laws, and a tax system that is
very competitive for the region. In addition, Kosovo is
a member of CEFTA and has direct access to the EU,
and there are few barriers for future EU accession.
ET: What are the main challenges Kosovo faces
concerning the development of its trade and industry?
L. Zharku: We need to improve Kosovo’s international
image. We need to make more potential investors
aware that our legal framework is EU-compliant
and that we provide the same level of protection to
foreign investors as we do to domestic investors.
Everybody should know that the war era is over. Even
the problems with recognition by Serbia have not led
to an economic embargo. This is just one example of
the fact that Kosovo has achieved stability and is a safe
place to invest in.
ET: Can you single out some especially promising
sectors?
L. Zharku: Energy and mining are the key sectors
for Kosovo’s economic growth. We still have a lot
of problems with energy, but there are a number of
programmes and projects that will stabilise and develop
the energy supply. For mining, the development of the
Trepca mining complex, which will soon be privatised,
will have a huge impact on Kosovo’s economy. Other
sectors with excellent potential for the coming years
include wood and metal processing, information
technology, banking, tourism, and infrastructure
development. These sectors taken together provide
enormous opportunities for European investors. I invite
potential investors to visit Kosovo to see for themselves
its EU standards of doing business, its stability, its
attractive quality of life, and its great potential.
30

KOSOVO
Trade & Industry
Sharrcem
Building Kosovo’s future
Sharrcem, Kosovo’s only cement
producer, is helping to build the
Kosovo of the future. The company
is operated by the Holcim Group,
which is listed on the Swiss Stock
Exchange and has operations in
70 countries. Holcim signed a
10 year lease, manage, operate
contract for Kosovo’s Sharr
Cement Plant in 2000.
Mario Grassl, CEO, explains that
Sharrcem is Kosovo’s top supplier
of cement and that the company
has been growing steadily since its
inception eight years ago, keeping
pace with the 3% to 5% annual
growth of Kosovo’s construction
sector over that period. “The
Kosovo construction market will
continue to grow at these rates
in the future. Up to now, it has
been driven by demand for private
housing and for new construction
for private businesses. If public sector
construction spending increases,
this will mean a tremendous boost
for Sharrcem’s sales in Kosovo,” he
explains. He adds that high unemployment
and the need for foreign
direct investment are hampering
the government’s ability to invest in
infrastructure projects.
Long-term commitment
Sharrcem’s strategy is to aim for
long-term growth in Kosovo, and the
company welcomes partnerships with
European companies and investors.
“We would like to work with serious
business partners who do not come
to Kosovo for a quick buck but who
are, like us, committed to Kosovo
over the long term. Pivotal in our
long-term focus is of course the
extension of our 10 year agreement,”
Mario Grassl explains.
Challenges the company faces
include the plant’s need for around
€50-60 million in investments to
continue improvement of the
production facilities in order to
expand, and Kosovo’s need for a
reliable and adequate supply of
electrical power. Mario Grassl notes
that he has seen improvements in
the electricity network over the past
three years.
Sharrcem aims to expand beyond
Kosovo to bring its products to
regional markets. “We are looking
to widen our scope,” Mario Grassl
Mario Grassl, CEO
says. He adds that being part of the
Holcim Group gives Sharrcem a
competitive edge.
Mario Grassl urges European
investors to target Kosovo. He says,
“The negative media image of
Kosovo is inaccurate. Kosovo has a
large educated workforce of young
people who are eager to find jobs,
and costs are low compared to other
Eastern European countries, particularly
concerning manufacturing
of products for export. I would also
say that creativity is quite high. I have
had only positive experiences with
the people here in Kosovo.”
Sharr Beteiligungs GmbH
Lagja e punëtorëve p.n.
71510 Hani i Elezit -Kosovo
Tel.: +381 290 385 511
Fax: +381 290 385 510
www.sharrcem.com
31

KOSOVO
Trade & Industry
Xella Group
Brick Producer Combines German
Technology and Local Raw Materials
World-renowned construction mate-
rial Company Xella International
invested 11.5 million in Kosovo and
plans to continue with investments.
“Our objective is to expeditiously
enter the regional market and become
a leader in the field in which we
operate,” stated its General Director,
Samir Krasniqi.
Xella International, with headquarters
in Duisburg of Germany is a
world market leading enterprise
in the production of construction
materials and raw materials of construction
materials. This enterprise
actively operates in more than 30
world countries and has a total of
over 7,600 employees. The sales
plan accomplished by Xella in 2007
stands at €1.3 billion.
Samir Krasniqi stated that Xella
International took the decision to
invest in Kosovo in 2003, whereas
in 2007 the factory had started
its production with the sale of
two categories of construction
materials that meet the highest
standards: blocks for construction
and decorative bricks. The initial
capacity of the factory is 30,000
m³ per year, with sales of €1.8
million.
SILKA, high quality products
Xella produces blocks and bricks
with an entirely natural composition
of calcium-silicates, meaning
gravel, lime and water; this is why
Samir Krasniqi, General Director
the products obtained the name of
SILKA.
“SILKA products are very strong
and have a long life, are healthy and
ecological to the indoor and external
environment as they regulate the
water humidity within the living
environment and do not allow the
creation of various mosses. Moreover
it is an inflammable material and in
contact with fire, it does not discharge
toxic gases. It is resistant against
changes in climatic conditions,
etc. In particular, it provides very
good isolation and precise size of
block moulds – up to ± 2mm, their
denticulate shaping allows for very
stable block to block connection
without additional materials. These
characteristics make this product distinguishable
from all other construction
materials in the region,” stated
Samir Krasniqi.
Samir Krasniqi also presented the
plans of Xella enterprise in Kosovo.
In the medium term, it plans to
produce other construction products
that Xella Enterprises can produce
everywhere. This will be conducted
by means of an investment such
as the one of the Xella factory in
Lipjan in the “Green Field” or by
means of acquisition of a factory in
the region.
“Our name is synonymous with
quality, whereas our cooperation with
local and foreign companies is based
on trust, honesty and dedication
toward clients and the development
of our society in general,” added
Samir Krasniqi.
Xella Kosova also welcomes partners
and investors of foreign companies,
by offering blocks and bricks of a
high quality for modern construction
in the country and in the region.
Xella Kosova L.L.C.
Rr. e Martirëve, p.n.
14000 Lipjan
Tel.: +381 38 580161
Fax: +381 38 580164
info.kosova@xella.com
www.kosova.xella.com
32

• It’s Good to Talk: Discussing the Challenges for Telecommunication and Transport
• All Roads Lead to Kosovo: the Government’s Main Target Is Upgrading the Road and
Rail Infrastructure
• Calling the Shots: Competition Is Bringing Increased Quality to the Sector
Transport & Communications
“Kosovo’s geographical location is
very important but this
importance can only play a role if
the infrastructure is in place.”
Fatmir Limaj, Minister of Transport and Telecommunication

KOSOVO
Transport & Communications
Ministry of Transport and Telecommunication
Discussing the Challenges for
Transport
Infrastructure will set the foundation for Kosovo’s
economic growth with the Ministry of Transport and
Telecommunication leading the charge. Fatmir Limaj,
Minister of Transport and Telecommunications, knows
this only too well and here he talks to ET about the
challenges of rolling out infrastructure that will connect
Kosovo to the wider world. From PPPs to lobbying for
a country telephone code, the Ministry is meeting these
challenges head on.
Fatmir Limaj, Minister of Transport and Telecommunication
ET: How important are the transport and telecommunication
sectors for the development of Kosovo’s
economy?
F. Limaj: They are very important fields. As you
know, in the field of transport, we have inherited
poor infrastructure which has been compounded by
the destruction caused during the war. Therefore,
Kosovo’s government has given a high priority to
34

KOSOVO
Transport & Communications
Telecommunication and
investing in and developing the
road infrastructure because we
believe that stable and sustainable
infrastructure will be a precondition
for development and
integration. Kosovo’s geographical
location is very important but this
importance can only play a role if
the infrastructure is in place.
Within the country, we have
placed an emphasis on paving the
roads whether they be rural or
urban. Looking abroad, Kosovo is
a member of CETO through which
we are involved in route 6, which
will link Prishtina to Skopje in
Macedonia and then Montenegro
and route 7, which will link
Prishtina with Tirana in Albania
and Belgrade in Serbia. For route
7, one month ago, we published
an expression of interest for construction
from our western border
to Prishtina. For route 6, ten days
ago we selected a French company
to execute the project. Within the
next year, we believe that both
projects will be ready and construction
on the roads will begin.
In telecommunications, it is a
different situation. Until recently,
Kosovo was not recognised as a
country so we could not get our
own country code and internet
domain. Currently our two mobile
operators work through a Monaco
country code and a Slovenian
code. Now we are independent,
we believe it is time for us to get
our own code. However, to obtain
a code, we have to be an International
Telecommunications Union
(ITU) member which needs the
approval of two thirds of members.
We have not received this yet.
ET: When will this process be
completed?
F. Limaj: We don’t have a lot
of influence on this but we are
certainly working in this direction.
In November 2008, the ITU will
have its annual conference and we
hope that we can then achieve the
necessary result. It is important
to say that without this country
code, Kosovo will not be able to
develop.
ET: What incentives have been put
in place in order to attract foreign
investors?
F. Limaj: In transport, the
railroads connecting Prishtina
and Seranik provide some opportunities
for foreign investors. We
are also ready through PPPs to go
into concessions for the roads and
the aviation sector. In the region,
Prishtina Airport is quite an
attractive investment opportunity
and interest is high. Unfortunately,
when it comes to telecommunications,
it still is sort of untouchable
because of the ITU membership
issue.
ET: What are the main challenges
ahead for the transport and telecommunications
sectors?
F. Limaj: The main challenge for us
is our limited budget. We have to
overcome this by finding partners
to co-finance projects particularly
for the transportation sector. For
the telecommunications sector, I
would still say obtaining a country
code. I believe that the EU can
help a lot with this. Beyond these
challenges, it is important to
know that we are creating a legal
framework that is EU compliant.
ET: Given the negative connotations
associated with conflict in
the region, why should European
investors choose Kosovo as an
investment destination?
F. Limaj: Firstly, I believe that we
will serve their interests better
than other countries. European
investors do not need to check
the local laws because the laws
here are already up to European
standards. Kosovo also has its good
location, human resources and a
young population.
ET: What is your personal message
about the transport and telecommunications
sectors?
F. Limaj: Kosovo has entered the
second chapter of its development.
Until now, we have seen many
investments in Kosovo and a lot
of help and aid but if you want to
help the economy of Kosovo, it
is needed in infrastructure. This
is the link between Kosovo, the
region and the EU. Kosovo can
be very successful, and can be an
example to many countries that
are still in the transitional phase
to becoming a democratic and
free society.
35

KOSOVO
Transport & Communications
All Roads Lead to Kosovo:
Upgrading the Road and Rail
Since the end of the war in 1999, the
transport sector has become one of the
most critical areas for the rehabilitation
of the Kosovar economy. As the
arteries of the country, the roads and
rail networks have been earmarked
for significant investment by the
government. However, the country is
not simply taking a short term view
and is proactively following a policy
of aligning itself with EU transport
policy and integrating itself into the
wider European transport network.
Indeed,
infrastructural
development is key to connecting
Kosovo to the European
community. To this end, the
government has settled upon
the Public Private Partnership
(PPP) model to develop the
transport sector. Over the coming
years, the government will be
offering concessions for the
roads and aviation sectors. One
such project is Prishtina Airport
which has already received
€15.2 million in completed and
ongoing investments. The airport
is running well and recorded
estimated operating revenues
of €15.6 million in 2007 against
operating costs of €10.9 million.
These figures are projected to rise
for 2008 with estimated revenues
of €21.9 million against expenses
of €13.6 million.
Beyond the aviation sector, the
country has also received interest
from the European Bank for
Reconstruction and Development
(EBRD) for investment in the
country’s road network. Speaking
to the local press in May 2008,
Ahmet Shala, Minister of Economy
and Finance said that the EBRD
had expressed their interest. “Of
interest for them are two highways,
one that leads towards Albania
(Merdare-Morinë) and the other
one toward Macedonia (Prishtina-
Skopje). Very soon, a delegation
from the EBRD will arrive in Kosovo
and conduct a feasibility report for
these two projects,” he added.
Kosovo has a significant geographical
position for European
transport routes lying on two South
East Europe Transport Observatory
(SEETO) core road network routes
and one SEETO core rail network
36

KOSOVO
Transport & Communications
the Government’s Main Target Is
Infrastructure
route. For roads the routes in
question span 310 km and are
route 6 (Ribarevina in Montenegro
to Skopje in Macedonia) and route
7 (Lezhe in Albania to Doljevac
in Serbia) while for rail it lies on
route 10 (from Kraljevo in Serbia
to Gorce Petrov in Macedonia).
Consequently, the government has
made the development of route 6
and 7 a high priority as significant
transport arteries for the country
and the region connecting with
neighbouring capital cities.
While a recent Department of Road
Infrastructure (DRI) survey found
that 88% of primary roads and 74%
of the regional roads are in good
condition, there is still a significant
amount of investment needed to
upgrade the 8,000 km road network
in Kosovo. This includes the urban
transport network and infrastructure
which needs to meet the needs of a
growing population. In the period
2000-2005, €136 million was spent
on road infrastructure investments
and this looks set to increase in the
coming years. Indeed, in 2006 alone,
the government estimated that there
was a need for €70 million investment
in the road network. As the economy
grows, this is likely to become ever
more necessary with the motorisation
levels in the country rising from
their current levels of 105 passenger
cars per 1,000 persons towards the
EU average of 418 passenger cars per
1,000 persons.
However, the government is also
keen to ensure that the rail network
can meet the country’s passenger
and freight requirements. Kosovo
currently has a 333 km single
track non-electrified rail system
with standard gauge, which is in
good condition. The country will
be looking to expand its rolling
stock, however, which currently
consists of nine locomotives, four
Diesel Multiple Units (DMUs), ten
passenger carriages and 70 freight
wagons. As GDP continues to take
an upward turn, freight traffic in the
country has increased. Indeed, freight
carried by rail rose from 345,000
tonnes in 2006 to 588,000 tonnes
in 2007. Passenger numbers have
also risen in recent years climbing
by 4.25% between 2006 and 2007 to
417,000 passengers. Kosovo Railways
(KR) is also looking to expand their
services with a line opened between
Prishtina and Skopje and another
in the pipeline for commercial
passenger services to Peja. KR is also
considering an express train service
to Prishtina Airport.
Beyond investment and network
expansions, the government has
tried to bind itself to the European
regulatory environment. In June
2006, the UN Mission in Kosovo
(UNMIK) on behalf of Kosovo signed
the European Common Aviation
Area (ECAA) Agreement. The ECAA
provides the framework for a single
market for aviation covering 35
countries and 500 million people.
The agreement will gradually
extend complete European aviation
legislation to all its members. In
June 2004, UNMIK also signed an
MOU on the Development of the
South East Europe Core Regional
Transport Network (SEECRTN)
which will provide a unified strategy
for regional transport policy in South
East Europe.
The future of Kosovo is therefore
firmly embedded within regional
policies on transport. To achieve
this, however, the country will need
to upgrade its transport network
through a series of PPP investments.
Indeed, future growth in the sector
will be fuelled by the private sector.
37

KOSOVO
Transport & Communications
Kosovo Railways
Railway Network Offers
Significant Investment Potential
Kosovo Railways, which administers
the country’s rail network, has been
achieving improved financial results
but requires significant additional
investment. Xhevat Ramosaj,
Managing Director since 2006,
explains that Kosovo Railways has been
a joint stock company since 2005 and
that it has developed a new strategy of
putting clients first, in both passenger
service and freight transport.
The company achieved profits of
€500,000 in 2006 and €1.6 million
in 2007. It transported 401,487
passengers and 345,287 net tonnes
of goods in 2006, and 417,193
passengers and 588,680 net tonnes
of goods last year. Kosovo Railways
is also developing more ties with
the private sector and earlier this
year signed a concession agreement
with Konet to install commercial
optical fibre cables throughout the
railway network.
Xhevat Ramosaj, Managing Director
Kosovo’s rail system, heavily damaged
during the war years, needs significant
investment in order to meet the
country’s growing needs. Xhevat
Ramosaj points out that investment
is required in railway infrastructure,
railway operations, and rolling stock.
“There is still a lot of work to be done,
but we are surviving as a transport
company,” he says.
Significant growth predicted
Xhevat Ramosaj is very positive
about the future of Kosovo Railways.
He says, “The privatisation process
is ongoing and is resulting in new
companies that will most likely use
our transport services. One example
is the Trepca mining complex.
Kosovo Railways has already signed
a transport contract with Newco Ferronickeli,
a nickle plant. Another
issue with regards to our future
growth is the political issue with
Serbia. We expect this to be solved in
the near future.”
Because of political problems with
Serbia, all Kosovo’s EU-bound
freight rail traffic must pass through
Macedonia. Resolving problems
with Serbia would lead to great
growth opportunities for Kosovo
Railways. The company has placed
a high priority on developing its
north-south line connecting Serbia
and Macedonia via Kosovo, and is
also developing its passenger traffic.
Kosovo Railways welcomes foreign
investment. Xhevat Ramosaj cites
freight transport, a potential rail
link with Prishtina’s international
airport, additional connections in
South Eastern Kosovo, and rail links
between private companies and main
rail lines as projects with significant
potential for foreign investors.
Kosovo’s new transport policy will
be launched at the end of 2008,
which is expected to spur on the
development of Kosovo Railways.
The new policy will set development
targets, create new incentives for
investors, and focus on linking
Kosovo’s rail network with the EU.
Kosovo Railways J.S.C
Str. Sheshi i Lirise,
12000 Fushe Kosove
Republic of Kosovo
Tel.: +381 38 536 307
Fax: +381 38 536 355
www.kosovorailway.com
38

KOSOVO
Transport & Communications
Kosova Airlines
Kosova Airlines Seeking Partners to
Achieve Ambitious Growth Plans
Kosova Airlines, established in 2003
and headquartered in Prishtina,
is seeing steady growth in turnover
and has ambitious plans to expand
its route network and services,
according to Remzi Ejupi, CEO,
who founded the airline to provide
services in Kosovo.
The airline, which works through
partner airlines and also serves
as Kosovo’s top travel agency, has
boosted its turnover by an average
3% to 5% per year since 2006 and
anticipates around €60 million in
turnover this year. Kosova Airlines
owns a 20% share of Hamburg
International via its German Distribution
Partner Eurokoha Reisen
GmbH. Most flights go to Germany
and Switzerland and the airline has
established hubs in Dusseldorf,
Stuttgart, Munich and Zurich for
connections throughout the region
and beyond. This year it launched a
new direct flight between Prishtina
and Basel, Switzerland.
Remzi Ejupi, President
In its role as an airline, Kosova
Airlines offers flights via partner
carriers between Prishtina and New
York; Zurich, Basel and Geneva
(Hello and Edelweiss Air); Stuttgart
(Germanwings and Air Berlin);
Dusseldorf (Air Berlin); Cologne/
Bonn and Hamburg (Germanwings);
Munich (Hamburg International);
Frankfurt and Hanover (Air Berlin);
and Antalya (Atlasjet and Sun
Express).
Expanding route network
Albania, Italy, Vienna, London and
Brussels are all destinations Remzi
Ejupi would like to add to Kosova
Airlines’ route network. Remzi Ejupi
says, “There is significant potential
for routes between Kosovo and
neighbouring countries, including
Albania. Currently we offer flights
to Turkey only during the summer
season so we see growth there as well,
particularly for year-round flights for
business customers.” Kosova Airlines
offers flights between Germany and
Macedonia during the high tourist
season and would like to extend its
Macedonia service by offering flights
between Macedonia and Switzerland.
It would also like to increase the
number of flights to its established
destinations.
The airline welcomes partnerships
with international companies
and investors to help it achieve its
growth plans. “We are experienced
enough to know that we cannot do
everything on our own, so we are
looking for partnerships, and I have
already made some contacts. We have
a great deal to offer, including more
long-haul passengers for a partner
company,” Remzi Ejupi says.
Kosova Airlines also aims to help
jump-start Kosovo’s tourism industry
by providing more flights between
Kosovo and key European destinations
and by forming partnerships
with major European tour operators,
including in Albania, which Remzi
Ejupi sees as a growth market. He
concludes, “We aim to focus on
our core activities and to become
a leading airline in Kosovo and
throughout the region.”
Kosova Airlines
Vellusha e Poshtme 17
10000 Prishtina
Kosovo
Tel.: +381 38 24 44 44
Fax: +381 38 24 91 86
www.kosovaairlines.com
www.flyksa.com
39

Calling the Shots: Competition Is
Bringing Increased Quality to the Sector
As a crucial component of Kosovo’s
infrastructure roll out, the telecommunications
and IT sector
has already seen unprecedented
investment which is set to increase
yet further. Internet and mobile
penetration are growing rapidly
in the nascent country with a
highly qualified and youthful
demographic providing both a
receptive consumer base and a
potential high skilled workforce
for outsourcing operations.
The telecommunications sector
is home to the country’s largest
company by capital and to some of
the most prominent investments.
The incumbent operator in
Kosovo is the Post and Telecommunication
Kosovo (PTK) which is
responsible for Post of Kosovo, the
fixed line operator, Telecoms of
Kosovo, and the mobile operator,
Vala. PTK, which is a public
enterprise under the aegis of the
Kosovo Trust Agency has 107,000
landline users and, through its
subsidiary Vala, 830,000 mobile
users. Furthermore, the company
is Kosovo’s most profitable with an
estimated value of approximately
€1.3 billion.
If more evidence were needed for
the great strides forward that the
country has made, one only need to
look at the penetration levels in the
telecommunications sector. Internet
penetration in Kosovo had hit 15%
by the final quarter of 2005 putting
it on a par with Turkey and above
more established regional players
such as Romania and Albania. In
2007, this was given a further boost
with the launch of PTK’s broadband
package, ‘PTK ADSL’. The service
had approximately 10,000 customers
or a 25-30% market share by 2008
with Ipko Net and Kujtesa being the
other market players. The country
also had a mobile penetration rate
of 35% in June 2007, a significant
40

KOSOVO
Transport & Communications
figure considering the brevity of the
industry in Kosovo. Nevertheless, this
provides extremely good potential
for rapid growth.
From a network point of view, PTK
is already well placed to absorb this
growth. Vala’s mobile network has
been rolled out over approximately
90% of the country. The company
also has 127 roaming agreements
for post-paid customers showing
its intent to expand its international
network. On the fixed line
segment, Ipko Net, the country’s
largest internet provider has rolled
out an extensive broadband network
which has far-reaching population
coverage.
However, the country is not resting
on its laurels. 2007 saw PTK’s
monopoly of the mobile segment
come to an end when Ipkonet
Telekom Slovijne/Mobitel won the
second operator mobile license
for €75 million. The consortium
announced their intention
immediately with investment in
its network which is expected to
reach €120 million by the time
roll out is complete. One of the
first contracts for the GSM network
went to Ericsson Nikola Tesla
which won a €37 million contract
for the supply, implementation
and operation of the GSM communications
and transmission system.
While Ipkonet Telekom Slovijne/
Mobitel will initially concentrate
on achieving coverage in Kosovo’s
dense urban areas, labelled the
Kosovo city ring, it expects to
achieve full network coverage
within three years. Indeed, the
consortium has ambitious plans
hoping to capture a 50% market
share by 2012 and approximately 1
million GSM customers by 2015.
However, competition is likely to
be stiff with the state planning to
privatise the incumbent operator
Vala in the near future. Indeed,
with a young, educated, technologically
savvy population, penetration
rates on both voice and data should
shoot up over the coming years.
This young work force, which has
a competitive cost advantage over
many neighbouring countries, will
also allow Kosovo to position itself
as an outsourcing hub following
a model similar to the one so successfully
employed by Bulgaria.
Currently, public and private institutions
in the field of information
technology, supported by leading
multinational firms such as CISCO
and Microsoft, are being rolled
out across the country supporting
the development of a knowledge
and high-tech economy. Initially,
Kosovo is certainly well placed
to develop the full spectrum of
outsourcing operations including
software development, data
management, call and support
centres and other consulting
services.
The government realises that to
achieve these aims the regulatory
and legal framework has to be in
place. To this end, the Telecommunication
Regulatory Authority
(TRA) has been working on
licensing, encouraging private
sector participation and ensuring
fair competition. While the country
is still in the process of receiving
recognition from the International
Telecommunications Union (ITU)
which will allow the country to
register a telephone country code
and internet domain name, much
of the ground work has been done
to provide fertile soil for further
investment.
Indeed, the telecommunications
sector should provide unbounded
opportunities for investment in
the coming years. Indeed, once the
country reaches market saturation
on voice and data, the country
should be in a good position to
offer fixed-mobile convergence
and bring the next generation of
services to a hungry market.
41

KOSOVO
Transport & Communications
IPKO
Dynamic Telecom Provider Aims to
Offer One-Stop Integrated Services
IPKO won the €75 million tender
for the second mobile telecom services
license in Kosovo last year, one more
success story for this dynamic telecom
enterprise. IPKO offers a full range
of integrated services and content
for mobile communications, fixed
telephony and the Internet.
After only eight years of
operations, it already serves
around one million customers
in Kosovo and is the country’s
top telecom investor. IPKO has
already invested over €200 million
to date in building a cutting-edge
GSM network covering 80% of the
country, with financial support
from the European Investment
Bank. Telekom Slovenia has a
63.75% share in the company.
CEO Akan Ismaili explains that
IPKO earned a 35% share of the
mobile services market and was
providing mobile telecom services
to over 300,000 customers in less
than nine months after its launch of
mobile services last year. IPKO is not
only the biggest foreign investment
in Kosovo to date but also Slovenia’s
biggest investment abroad. “This
shows not only Telekom Slovenia’s
commitment to Kosovo but also its
faith in the potential of the Kosovar
market,” he says.
Mobile telecom penetration in
Kosovo is currently around 50%
and IPKO aims to boost that
percentage.
Akan Ismaili, CEO
Prior to mobile, IPKO has heavily
invested in the fixed network. Now
it operates a fixed network in the
main cities and towns of Kosovo,
reaching over 150,000 residences.
The company also has 52,000
broadband subscribers.
IPKO’s competitive edge is its
winning combination of state-ofthe-art
solutions, the latest technologies,
a wide range of packages,
added value services, quality,
reliability, security, and solid user
support 24/7.
Reliable telecom service in
Kosovo and beyond
Mobile services will be the main
driver of IPKO’s continued growth
in Kosovo, but that is not the whole
story. “We want IPKO to become a
one-stop shop for integrated telecommunications
services,” Akan
Ismaili explains, adding that IPKO
also plans to invest in the fibre
optic connections with very high
capacities to regional and international
hubs. He points out that
through Telekom Slovenia, IPKO
already offers reliable telecom
connections throughout Europe.
As for the future, Akan Ismaili
explains, “We are here to provide
services, but at the same time we
are open minded about any new
partnerships.”
He adds, “IPKO is an initiator
of development within Kosovo’s
telecom sector. We see ourselves
as setting the standard for doing
business successfully in this
market.”
Mother Theresa Street
RTK Building, 5th floor
Prishtina
KOSOVO
Tel.: +381 38 700 010
Fax: +381 38 700 001
www.ipko.com
42

• Talking Shop: The Ministry Talks About Producing More Goods for Market
• The Lie of the Land: The Government Is Overseeing the Commercialisation
of the Country’s Farms
Agriculture & Food Industry
“My opinion is that investors
should look at Kosovo because
we have a young population that
wants to work and for less money
than in other EU countries.”
Idriz Vehapi, Minister of Agriculture, Forestry and Rural Development

KOSOVO
Agriculture & Food Industry
Ministry of Agriculture, Forestry and Rural Development
Talking Shop: The Ministry
More Goods for Market
The Ministry of Agriculture, Forestry and Rural
Development is charged with overseeing the crucial
transition from largely subsistence rural farming to a
modern industrialised agricultural sector. The Ministry
has long been working with UNMIK to achieve these
goals and since independence has stepped up its efforts
to attract foreign investment to the potentially lucrative
sector. In parallel to such incentives, the Ministry is coordinating
its efforts with the European Union to ensure
that legislation and regulations governing the sector are
harmonised with the EU’s standards.
Idriz Vehapi, Minister of Agriculture, Forestry and Rural Development
Here, ET talks to Idriz Vehapi, the Minister of
Agriculture, Forestry and Rural Development, about
the future of agriculture in newly independent
Kosovo. From wine-making to land consolidation
and employment generation, Mr. Vehapi believes
that agriculture will play a vital and prominent role
in the future economic success of his country.
ET: How important is the agricultural sector for the
economy of Kosovo?
I. Vehapi: The agriculture sector is a very important
part of Kosovo’s economic development, not least
because of the fact that more than 50% of the
population of Kosovo lives in rural areas. Moreover,
the majority of this population is young, so this
means that agriculture can provide a firm basis for
economic growth. However, we recognise that in the
future other sectors will develop and that less people
44

KOSOVO
Agriculture & Food Industry
Talks About Producing
will be involved in agriculture. For example, in the
UK, a small percentage of the population is involved
in agriculture now and a similar trend will also take
place here in Kosovo.
ET: Tell me a little bit about the development that
has taken place in the sector since the declaration
of independence in 2008?
I. Vehapi: Before the declaration of independence
there was the new election, in which the future Prime
Minister made agriculture one of his campaign
priorities. Subsequently, after the declaration of
independence, we laid out our agricultural priorities
for our donors. Within this program, the new prime
minister has made agriculture an absolute priority
which was stressed at the Donors Conference in
Brussels. Of course, there are also private investors
from Switzerland, The Netherlands, Germany, Italy,
and other European countries interested in Kosovo’s
agricultural sector.
ET: What is the most important role that European
investors can play in Kosovo’s agriculture sector?
I. Vehapi: We need them to bring technology and
know-how but also the finance for new initiatives. On
top of this, we are looking to develop commercial
farms endowed with modern technology, higher
yields and higher efficiency so that labour can be put
to work in other sectors. Most importantly, Kosovo
wants to make it as easy as possible for outside
private investors to invest in the agriculture sector.
We already have some commitments to invest in the
agriculture sector, primarily from private investors,
because agriculture is one of the top five sectors of
Kosovo’s economy.
ET: What challenges do you see ahead for the
agriculture sector?
I. Vehapi: Firstly, the most important challenge is that
the farms are very small and thus less competitive
and profitable than those in neighbouring countries.
Therefore, the main challenge is land consolidation
which will create larger farms in the future. Beyond
this, Kosovo needs more capacity in processing agricultural
products. Also, food storage is an issue as
currently farming is determined by the seasons. This
is certainly one area where investors can get a high
return on investment.
ET: How do you plan to confront these challenges?
I. Vehapi: First of all, these challenges are certainly
a priority. Bigger farms are necessary to compete
and achieve the necessary productivity. To this end,
we always advise our farmers to unite in associations
and cooperatives to be stronger.
ET: How do European investors look at the
investment opportunities with regard to this
consolidation?
I. Vehapi: For land consolidation, one of the main
investors was the World Bank and EU which is also
investing in the irrigation system. Since the consolidation
and irrigation are our priorities, we
increased our budget regarding these two areas.
The investments in these sectors will create opportunities
for farms to be more competitive which will
attract foreign investors. We have a target of 70,000
hectares and so far 12,000 have been recovered.
ET: Why should Europeans invest in Kosovo rather
than neighbouring countries?
I. Vehapi: My opinion is that investors should look at
Kosovo because we have a young population that wants
to work and for less money than in other EU countries.
So it is a low-wage country compared to neighbouring
countries. However, at the same time, we have an
educated workforce, a significant percentage of which
has studied and lived abroad. Most of them would like
to work here, which is a great opportunity for foreign
companies wanting to set up business here.
45

KOSOVO
Agriculture & Food Industry
Lay of the Land: The Government Is
Overseeing the Commercialisation of
the Country’s Farms
Agriculture has always played a
prominent role in Kosovo’s economy.
With more than half a million
hectares of cultivable land and 60%
of the population living in rural
areas, the country is well set up for
further investment in this crucial
sector. With the ongoing privatisation
process, Kosovo’s larger farms,
under the stewardship of the Kosovo
Trust Agency, present particularly
good opportunities for investment.
The government has laid out
a detailed strategy to further
stimulate agricultural development
in the country. After assessing
the topographical and climate
conditions in the country, the
Ministry of Agriculture, Forestry and
Rural Development will be targeting
high value crops such as fruit and
vegetables. The government is
also keen to make the transition
from a largely subsistence base
to a commercial base with the
development of the land market
to increase the size of farms.
Moreover, the ministry hopes
to develop knowledge transfer
that will raise the productivity of
the land. In parallel with these
practical measures, the country will
be looking to bring its legal and
regulatory framework in line with
the highest EU standards.
With over 250,000 hectares of
meadow and grassland, Kosovo is
well placed to expand its agricultural
base. Currently, grains such
as wheat and maize account for the
largest share of the sector in terms of
land use. However, the government
is keen to re-align the focus to fruit
and vegetables which presently
account for just over 38,000 hectares
of arable land.
Kosovo’s viticulture industry is well
established. The public sector has
a wine processing capacity of 112
million litres while the private sector
processes approximately 30,000
litres. The government is also looking
to revitalise its livestock production
industry so that the country can
become increasingly self-sufficient
in meat and dairy production.
For all segments of the agricultural
sector, the government has provided
incentives to bring further investment
to the country. Most agricultural
inputs and capital goods are tariff free
which is supported by VAT exemption
for a wide range of agricultural
inputs. The government hopes that
this will increase production dramatically
allowing the country to become
a significant agricultural exporter.
This is no pipe dream. Kosovo has
a series of competitive advantages
in the agricultural field including
high yields and cheap labour. With
local production currently only
covering 30% of domestic demand,
the potential for growth is sizable.
The stimulation of the sector should
allow the government to both bring
down its reliance on imports as well
as create a liberal environment to
become a major agricultural exporter
to the EU.
46

KOSOVO
Agriculture & Food Industry
Peja Brewery
Market-Leading Local Brewery
Expanding Regionally
Peja Brewery has carved out a 70%
share of the local beer market thanks
to its high quality beers made with
cutting edge techniques.
As Sebastjan Gergeta, acting
General Manager, explains, the
brewery was founded in 1971
and acquired in 2006 by leading
Slovenian Pivovarna Laško Group
and local Kosovar investors,
mainly Dukagjini Group’s owner
Ekrem Lluka. “After the €11
million privatisation tender, we
invested around €12-13 million
in upgrading the brewery’s
facilities, equipment, technologies
and marketing. Now we are
a very well known brewery with a
very well known brand. Any new
product we introduce will most
likely be a success,” he says.
Thanks to its upgrades, the
brewery has increased the shelf
life of its beer from three weeks to
six months. It has been reinvesting
revenues but hopes to make a
profit next year and anticipates
an average 10% growth over the
coming five years.
Peja aims to expand to markets
beyond Kosovo, since it has not yet
reached full production capacity
and believes that the Kosovar
market will not be able to keep up
with the brewery’s growth. Peja
already has agreements with distributors
in Montenegro, Serbia
and Macedonia but its main focus
next year will be Albania, where it
aims to boost sales by 5% to 6%.
“We are welcome everywhere and
present in every market in the
region,” Sebastjan Gergeta says
proudly.
Signficant investment
potential
Peja Brewery offers very attractive
investment potential. “European
portfolio investors, including
smaller investors, and funding
organisations are very welcome.
We are a very transparent company
and we would repay the faith that
any European institution has in
us,” Sebastjan Gergeta says. He
adds that new investments will go
toward expanding the brewery’s
product lines and continuing to
upgrade its technologies. Around
€15 million over the next five
years will be needed to bring the
brewery fully up to EU standards.
Peja would also like to partner
with distributors, suppliers and
consultants in Western Europe.
The brewery’s successful
partnership with Slovenia’s top
breweries, Pivovarna Laško and
Pivovarna Union, gives it an edge.
“We have the necessary know-how,
financing and guarantees, as well
as people who know the business.
Our 70% market share, which we
aim to boost to 80%, gives us a
virtual monopoly in Kosovo and we
Sebastjan Gergeta, acting General Manager
have basically taken over the distribution
system,” Sebastjan Gergeta
explains. He adds, “Investors
interested in Kosovo should work
with a strong local partner.”
Peja Brewery
30000 Peje, Kosovo
Tel.: +381 39 432 661
Fax: +381 39 433 989
47

KOSOVO
Agriculture & Food Industry
Meridian Corporation
Dynamic Group Welcomes Joint
Venture Partners
The Meridian Corporation offers
outstanding potential for foreign
investors. The family-owned group
with 170 employees was relaunched
after the war in 1999 and has
since achieved significant growth.
Meridian has operations in 12
locations and is one of Kosovo’s
biggest distributors of beverages and
foods, including fresh and frozen
foods as well as organic products and
international brands of beverages.
Meridian works with over 4,000
vendors in Kosovo, including retail
chains, supermarkets, drug stores
and the HoReCa (hotel, restaurant
and catering) sector.
The Meridian group includes foods
and beverages divisions, Montazhi
(construction), and Energoinvest
(energy activities). “Montazhi
is known for its construction of
both residential and commercial
buildings as well as electrical installations,
heating and cooling systems,
and water and waste treatment
facilities. Energoinvest produces
electrical equipment, transformer
Hakif Gashi, CEO
stations and more. We acquired both
companies a couple of years ago and
now we are looking for partners and
joint ventures,” explains CEO Hakif
Gashi.
Meridian is especially interested in a
joint venture in the fast growing food
and beverages sector since the group
already has the necessary facilities,
resources and building land. “We are
looking for a partner who can start up
food and beverage production with
us,” Hakif Gashi explains. Meridian
eventually plans to expand its
thriving food and beverage distribution
beyond Kosovo, to Macedonia,
Montenegro, Albania and Serbia.
Significant potential in energy
sector
Both Montazhi and Energoinvest
offer strong growth potential as
well. Hakif Gashi points out, “Energoinvest
has the most potential
because Kosovo’s energy sector is
very undeveloped. We anticipate
significant growth in the near future.
We are looking for joint ventures
and partners that can help us take
Energoinvest and Montazhi to the
next level concerning technology,
know-how, experience, access to
new markets, and financing.” Energoinvest
has already served Kosovo
Electrical Corporation (KEK),
private companies, power plants and
several mines.
Kosovo has outstanding prospects,
Hakif Gashi believes, and Meridian
is the ideal local partner for
investors. He says, “Meridian offers
future partners a creative and
capable management, dedicated
and motivated employees, efficient
business processes and structure, a
well-established local presence with
expeditious and qualitative services,
17 hectares of building land, and
construction capacity. In addition,
doing business is not a problem in
Kosovo. We have the same standards
and values as in the EU and we hope
our ties with the EU will grow even
stronger in the future.”
Meridian Corporation LL.C
Bul. ‘ Bill Clinton’, p.n
Zona industriale
10000 Prishtina, Kosovo
Tel.: + 381 38 541 521
Fax: + 381 38 541 524
meridian@meridian-ks.com
www.meridian-ks.com
48

• Infrastructure Development: The Minister Has Ambitious Plans to Improve the
Country’s Infrastructure
• A New Power Plant and Untapped Coal Reserves Are Set to Electrify the Industry
• Mine Games: A Growth in Exploration and Mining Licenses Should Usher in
Explosive Growth
Energy & Mining
“Looking at the mining sector
specifically, there is great potential
to mine gold, copper and nickel
amongst other nitrate deposits. On
top of this, ongoing exploration
continues to unearth new deposits.”
Justina Shiroka-Pula, Minister of Energy and Mining

Justina Shiroka-Pula, Minister of Energy and Mining
The Ministry of Energy and Mining in Kosovo has been dealt a mixed hand.
On the one hand, the country has almost unlimited potential in this sector with
rich deposits especially in lignite and in variety of metal minerals such as Lead
and Zinc, Ferronickel, Bauxite, Magnesite, Chrome, Copper, Gold and Silver to
the rather rare and high value halloysite clay. On the other, much work needs to
be done to upgrade the country’s energy infrastructure. However, the Ministry
remains undaunted by this task and has ambitious plans to transform the country
from a net electricity importer to a net electricity exporter over the coming decade.
50

KOSOVO
Energy & Mining
Ministry of Energy and Mining
Infrastructure Development: The
Minister Has Ambitious Plans to
Improve the Country’s Infrastructure
Indeed, whether you look at the country’s mineral deposits
and mining capabilities or the requirements for power plant
roll out and an increase in capacity of many hundreds of
Mega Watt (MW), it is abundantly clear that the prospects
for investment in the country are strong. The government is
keen not to squander these opportunities and is offering a
variety of methods to get the most efficient, cost effective and
value added use out of these deposits and infrastructure.
In the mining sector, mines can either be acquired through
the ongoing privatisation process or re-energised and
re-modelled by entering joint ventures with private owners.
In the energy sector, Kosovo has embarked upon the path
to a new power plant called Power Plant New Kosovo, and
an associated lignite mine which when completed will be
the largest ever private investment in Kosovo’s history.
The government has set the ambitious target of starting
operations in the first unit of the new plant in the period
starting from 2013 to 2014. It becomes clear why this is such
a pressing concern when one contemplates that Kosovo
would increase its GDP by an estimated 17% or 220 million
with the addition of a further 1,000 MW to its capacity in this
short period.
The prospective growth for the country through this sector
is therefore clear. Here, ET, talks to Minister of Energy
and Mining, Justina Pula-Shiroka, about the opportunities
and challenges facing the sector. From the relative
values of established mines to untapped mineral deposits
and exploration, Justina Pula-Shiroka sees a central role
for mining in Kosovo’s future. The Minister also talks
about what makes Kosovo such an attractive proposition
which goes beyond resources beneath the earth to those
above it, namely human resources and the young dynamic
population.
ET: How important is the mining sector for Kosovo’s
economic development in general?
J. Pula-Shiroka: The mining sector is a key sector for the
development of Kosovo. Kosovo is very rich in minerals and
has a long experience in the mining industry which helps
to attract many investors. Moreover, we are offering to the
interested companies several incentives to enter the Kosovo
market. We have several old, pre-existing, functioning
mines with over a numerous qualified mine workers and
employees. One of these has already been privatised. The
mining sector has attracted considerable British and US
investors and is open to foreign investment.
ET: What are the major challenges facing the mining
industry?
J. Pula-Shiroka: Well, we had a problem with the older
mines where the licenses had passed their expiration date.
Some of these mines were also in need of restoration.
However, having said that, with regard to the older mines,
we expect the levels of interest to be higher because they are
more attractive for investment given that they are already
established and have an operating history. We believe the
time will come when these mines receive the necessary
investment. Some of them are very promising for investors
as they have higher returns.
ET: What are the planned investments for the next
five years?
J. Pula-Shiroka: The government is planning
development of several interest zones of metallic mines.
Actually, there are ongoing activities in preparing
feasibility studies for these interest zones, in order to
follow-up with respective bidding procedures.
ET: What would be your personal message to our
European investors?
J. Pula-Shiroka: The European investors are definitely
very welcomed in Kosovo. I am certain that they
will encounter here friendly social and business
environment. I am sure too that they will find here
more competitive prices than elsewhere in region,
and transparent procedures of bidding. I am glad to
remind the interested parties that we have here well
educated young population, skilled in communication
skills, particularly with English speaking people.
Looking at the mining sector specifically, there is
great potential to mine lead and zinc, gold, copper
and nickel amongst other nitrate deposits. On top of
this, ongoing exploration continues to unearth new
deposits.
51

KOSOVO
Energy & Mining
A New Power Plant and Untapped
Coal Reserves Are Set to Electrify
the Industry
As the country looks to move forward following the boon
of independence in February 2008, energy has been
earmarked as a key piece of Kosovo’s development jigsaw.
Indeed, since the turn of the century, the international
community through the UN Mission in Kosovo (UNMIK)
has been working with the Kosovo Energy Corporation
(KEK) to help the country meet its energy needs and
rebuild its utilities infrastructure. The state now wants
to build on this to exploit its abundant resources of
lignite to power the country’s future development.
As part of this process, the Ministry of Energy has
drafted a 10 year energy strategy that lays out the
supply and demand dynamics of the sector up until
2015. With estimated lignite reserves of between 11.5
billion and 14 billion tonnes, representing the fifth
largest reserves in the world, the government is well
placed to meet the residential and industrial energy
requirements over the coming decade.
Currently, KEK runs two power plants Kosovo A and
Kosovo B. The plants are not currently running at full
design capacity but provide approximately 7,000MW to
the country. This falls short of peak demand requirements
with the government importing up to 400MW of
electricity during the winter months. Kosovo, however,
is working hard to bridge this deficit. The government
is in the planning stage for Kosovo C and an associated
lignite mine, which will bring the phased introduction
of 2,000MW to both the local market and also to the
electricity grid of South East Europe. The ambitious
plan to move from being a net importer of electricity
to becoming a net exporter is expected to be launched
between 2012 and 2014.
With a projected GDP growth of 9% between 2009 and
2015 and investments worth €14.488 billion, the country
will desperately need this capacity expansion to fuel
this economic growth especially in the manufacturing
sector. Moreover, the extra capacity will give the country
an export capability of between 300-500MW helping to
ease current deficits. Indeed, this surplus energy may
translate into as much as €150 million worth of exports
after 2012. Indeed, even with the Ministry of Energy’s
high growth scenario of an annual increase in demand
of 5.5%, the country would still have surplus energy
upon the completion of Kosovo C.
Therefore, although much work needs to be done to
build on the pre-independence infrastructure, the
government is well placed to roll out extra capacity which
will position Kosovo as a major player in the South East
European energy market. As such, and with voluminous
lignite reserves, the future looks bright both metaphorically
and literally.
53

Mine Games: An Increase in
Exploration and Mining Licenses
Should Usher in Explosive Growth
Kosovo has rich potential in the
mining sector which has been the
mainstay of the country’s economy for
centuries. With bountiful untapped
reserves, the sector is positioned for a
dramatic increase in production and
revenues. Indeed, recognising the
potential, the government is actively
working to privatise the mining
sector and present opportunities for
foreign investment in exploration
and production.
54

KOSOVO
Energy & Mining
Kosovo’s mineral reserves speak for themselves. With
estimated lignite reserves of 14.7 billion tonnes, the
country has the second largest discovered coal deposits
on the European continent and the fifth largest
lignite reserves in the world. The quality of this coal
is also impressive with an exploitation cost of €1.1/
Gj. This marks it out as the most price competitive
in the region. Beyond coal, the country also benefits
from rich mineral and base metal deposits. Kosovo is
estimated to have lead and zinc reserves amounting
to 48 million tonnes as well as nickel deposits of
16 million tonnes. Chrome reserves are estimated
to number 89 million tonnes while known Bauxite
reserves are in the region of 13.2 million tonnes.
The country can also count on significant reserves of
gold, silver, copper and magnesium. The government
estimates that the last of these is found in enough
quantities to last 100 years.
This all bodes well for Kosovo’s future economic
success given the current price trends for these
metals and minerals. Although lead prices have fallen
in 2008, they had still maintained a price of well over
€800 in the second half of 2008. Likewise, Nickel
prices were still reasonably strong remaining above
the €8,400 mark in November 2008. This suggests
that Kosovo can garner significant revenue from these
base metals alone. On top of this, the government
recently discovered 3mt of high-grade halloysite at
Farbani Potok. The importance of this should not be
underestimated given the fact that this is only one of
five exploitable sites globally where such high grade
clay, with a value of €112-360 per tonne, has been
discovered. Moreover, current world production only
stands at 150,000 tonnes per year. This suggests that
Kosovo is well placed to exploit its mineral reserves.
However, the country is at the beginning of the process
of taking advantage of this latent wealth. In 2005, the
EU pillar established the Independent Commission for
Mines and Minerals (ICMM), a regulatory body which
is charged with monitoring and attracting investment
to the sector. ICMM has a broad remit which includes
the issuing and relocation of exploration and mining
licenses and special operation permits. It also issues
permits for commercial exploitation in the mining
industry as well as taking responsibility for the
expansion of the mining packages, the collection of
information, distributing information to investors,
and monitoring reserves through GIS surveys.
According to Azem Rexhaj, Director of the ICMM, “We
think that the mining sector is the key to Kosovo’s future
development. Kosovo is very rich with minerals. Also if
you look at it from an investment point of view, every
week we have three or four private investors coming
here to evaluate the possibilities to invest here. Kosovo
also has a long experience in the mining industry. The
Trepca Mining Complex has been here since Roman
times. What’s more, in 2006 we did a new geological
survey and the results showed that Kosovo has much
more to offer than the Trepca mines.”
Indeed, although the Trepca mines are Kosovo’s most
famous, the country has abundant reserves spread
throughout the country. However, the Trepca mines,
whose lead and zinc deposits are mainly located in the
east of the country, are among the initial priorities
of the government in the mining sector. The Trepca
metallurgical complexes, with significant deposits
of lead, zinc and silver, were the largest mining
operation in the former Yugoslavia and the Kosovo
government wants to re-establish their prominence.
It is believed that an investment of approximately
€200 million will be required to revitalise the mines.
Currently, production operations are only running at
a test level.
The Trepca management currently has plans, in the
first phase, to attract private investors to create new
investment opportunities for public private joint
ventures (JV). At a second stage, it is envisaged that
full scale privatisation will take place to provide
efficient company management and the market power
to pursue investment in value-added zinc products.
The ICMM is working hard to attract foreign
investment in this respect and in the mining industry
55

KOSOVO
Energy & Mining
more generally. During 2007, a total of 70 exploration and
mining licenses were issued with the country’s explosive
security system (ESS) fully up to NATO standards and
under the control of the ICMM’s mining inspectorate.
The revenue generated from these licenses is crucial
to the country’s budget. In 2007, mining royalties and
other fees amounted to an estimated €2 million.
However, this is not a short-term revenue stream.
“According to the law a company gets an exploration
license for the first 2 years, and then they can apply
for an extension for another two years. However, then
the licensed area will be reduced by 50%. They [the
company] have the possibility to extend the license
three times,” explains Azem Rexhaj. “Within these six
years they will have to get the mining license and start
mining or they will lose the license. This is so nobody
loses their money because exploration costs are very
high. Because of these rules we think that in the next
five years we will have a minimum of three new mines in
the beginning stages of operation and this will for sure
continue,” he adds.
There has already been a significant level of interest
in licenses. A series of international companies have
entered the Kosovo market on an exploratory basis.
For example, Lydian Resources of the UK has three
exploration licenses for projects in Drazne amongst
other places. North American companies have also
received exploration licenses with the initial exploration
being so promising that many international companies
have applied for the full mining licenses.
Beyond this, the government has worked on a number
of privatisations. The mining sector has seven Socially
Owned Enterprises (SOEs) that will be presented for
privatisation. The Ferronikel Company, which stopped
mining as a consequence of conflict in the area,
provides a highly profitable opportunity for investment.
The ferronickel reserves are significant and the mine is
connected to the railway giving good access to import
additional ore concentrates through Thessaloniki port
and Albania. It also provides good opportunities for
export and employment generation.
The country is therefore well placed to position itself as
a leading producer and exporter of minerals and metals
for the whole region. Beyond lignite, which will play a
vital role in powering the local energy market, Kosovo can
draw on its substantial reserves of base metals which are
continuing to command significant prices on the interna-
tional market. Therefore, the government is confident of
building effective synergies with the private sector which
will benefit the country and investors alike.
56

KOSOVO
Energy & Mining
Lydian International
Mineral Exploration and Development
Group Confident About Kosovo
Lydian International is a British
Exploration and Development
Company listed on the Toronto Stock
Exchange. Lydian is confident about
prospects in Kosovo, where it’s wholly
owned subsidiary Kosovo Resource
Company (KRC) has an advanced
zinc, lead, silver exploration project
in Drazhnje, as well as exploration
projects in Crepulje and Rahovec.
Tim Coughlin, CEO, says that
KRC now accounts for around
35% of Lydian’s project budget,
with the remainder devoted to
Lydian’s exploration initiative
in Armenia. KRC’s operation in
Drazhnje should begin commercial
production in 2011. “Once you
advance a project like this to the
point at which it is feasible and
bankable, which requires a lot of
exploration work, you then move
to debt financing and construction
can begin. All our projects in
Kosovo are relatively early stage yet
Tim Coughlin, CEO
Workers from Lydian’s local mining contractor
Stone International underground at Drazhnje.
interesting for our investors since
they show real potential for growth,”
he says.
Coughlin adds that while global metal
prices are always a major concern for
any mining company, Lydian has no
worries about operating in Kosovo.
“Kosovo’s mining laws are already
international standard and there is
significant regulatory emphasis on
protecting the environment and
engaging local communities. In this
sense our operations benefit from
constant review by specialists from the
International Finance Corporation
which is part of the World Bank
Group and one of Lydian’s largest
shareholders,” he explains.
“First mover” advantage
As a potential investment target,
Lydian offers a number of competitive
advantages. “Lydian is the only international
exploration company
currently developing resources in
Kosovo. We are benefitting from
our “early bird” exploration strategy
in developing the best projects and
securing the best people. We are
most proud of our team in Kosovo,”
Coughlin points out.
Branding Kosovo is an important
goal for Lydian, which has quickly
built up its own reputation as a
“first mover” in emerging and transitional
markets. “We try to sell
Kosovo everywhere we go in order
to attract investors and make clear
that this country is on the path to
European Union accession, that
it is a good place to live and work,
and that its mining laws are some of
the best investors can hope to work
under,” Coughlin says.
Urging European investors to explore
opportunities in Kosovo, Coughlin
concludes, “When we came here in
2006 there was some risk, but now
the government is very committed to
supporting foreign direct investment,
and the local workforce is well trained,
enthusiastic and committed. We took a
bet that in Kosovo everything would be
okay, and it has been. Now we are in a
great position. Lydian is here to stay.”
Lydian International Ltd.
Bajram Kelmendi 15 Prishtina,
10000 Kosovo
Tel.: +381 38 249 990
Fax: +381 38 248 518
www.lydianinternational.co.uk
57

• Going Green: The Ministry Talks About How the Environment Can Help Business
• Infrastructure and Housing Requirements Are Driving the Sector Forward
Environment & Spatial Planning
“All our companies do good work
regardless of their size. Each
company in every segment helps
to increase the development of the
sector because all companies work
in a timely manner striving for
quality, efficiency and excellence.”
Mahir Yagcilar, Minister of Environment and Spatial Planning

KOSOVO
Environment & Spatial Planning
Regional Water Company-Prishtina
Water Company Offers
Outstanding Investment Potential
The Regional Water Company-Prishtina
(KUR-Prishtina) is one of Kosovo’s
post war success stories. As CEO
Skender Bublaku explains, Kosovo
had around 30 water companies before
the war which served around 40%
of the population. Today, thanks to
a consolidation campaign between
2002 and 2007, seven regional
water companies handle distribution
of water throughout the country. In
addition, these water companies have
been upgraded to meet EU standards.
KUR-Prishtina is now valued at some
€80 million and covers its expenses
with its own revenues. It has doubled
the number of its customers since 1999
and now serves 550,000.
Kosovo’s successful model for
water distribution is now being
implemented by neighbouring
countries. “Even though we need a
lot of investments in the water distribution
field, what we have already
achieved is quite an impressive
result. We now serve around 75% of
the population,” Skender Bublaku
points out. Individual wells and
other private water resources supply
the remainder of the population,
but KUR-Prishtina aims to serve
the entire population in the near
future.
Privatisation of water distribution
is now allowed by law but the
government has not yet announced
Skender Bublaku, CEO
its plans for the sector. “Getting the
legislation to allow for privatisation
was the initial step in the process,”
Skender Bublaku says, noting that
the government is likely to retain a
majority share in the water distribution
sector but will allow for increased
participation by the private sector.
The waste treatment sector, on
the other hand, is likely to be fully
privatised. Foreign companies and
investors will find significant opportunities
in both sectors as Kosovo’s
economy expands. Skender Bublaku
explains that private investment
will be needed to build a new waste
treatment facility, and another
opportunity for foreign investors is
to provide drinking water through
operating the existing network and
collecting fees, following the system
currently employed in electricity
distribution.
Providing outsourced services
concerning water distribution and
waste treatment is another avenue for
foreign investors. Skender Bublaku
says, “Here at KUR-Prishtina, we
support the entry of the private
sector in all activities, and Kosovo’s
new law on public-private partnerships
creates an ideal opportunity
for foreign investors.”
KUR-Prishtina offers outstanding
investment potential not only
because of the opportunities in
Kosovo’s water sector but also
because of the company’s successful
reconstruction, sound financial
status and strong track record. To
potential investors, Skender Bublaku
says, “Do not hesitate to contact us!
Kosovo is a country where you can
make a profit!”
Regional Water Company J.S.C.
rr Tahir Zajmi p.n.
Prishtina
KOSOVO
Tel.: +381 38 541 211/129
Fax: +381 38 541 437
www.kur-prishtina.com
59

KOSOVO
Environment & Spatial Planning
Ministry of Environment and Spatial Planning
Going Green: The Ministry Talks
Help Business
The Ministry of Environment and Spatial
Planning is at the forefront of Kosovo’s ambition
to encourage sympathetic and sustainable
development. The work of the ministry touches on
several sectors such as energy and construction
ensuring modern transparent regulations. The
Minister of Environment and Spatial Planning,
Mahir Yagcilar, took time to speak to ET about
the synergies between environmental policy and
economic development.
Mahir Yagcilar, Minister of Environment and Spatial Planning
ET: How important is the development of the construction
sector for Kosovo’s economy?
M. Yagcilar: In every country it is important
especially in a post-conflict situation. In recovering
from the conflict, we need to be efficient in every
area. Therefore, quality in construction safety and
efficiency in terms of energy and proper insulation
is what helps economic development. Good infrastructure
can also assist economic development in
other aspects.
ET: Which particular developments have been
significant since the declaration of independence?
M. Yagcilar: Firstly, the legal infrastructure was put in
place and transparent competition in the tendering
process for foreign companies was established. In
the construction sector, government licenses were
issued more easily.
60

KOSOVO
Environment & Spatial Planning
About How the Environment Can
ET: What role specifically can foreign investors
play in the development of Kosovo’s construction
sector?
M. Yagcilar: They can play an important role because
we have not remained up to date with other European
construction developments especially in the energy
sector. Even now there is a need for experience,
technology and large projects such as power plant
construction and highways.
ET: Does the Ministry of Environment and Spatial
Planning issue tenders?
M. Yagcilar: We are not involved with any specific
project as much as we are involved with environmental
issues. For example, we are involved in issuing
environmental permits for construction. We do,
however, specifically invest in projects for social
housing but these are not large projects.
ET: So to what extent do environmental policies
influence the development of Kosovo’s construction
sector?
M. Yagcilar: It is similar to other countries. For
example, in terms of constructing a power plant, we
must do everything possible to keep pollution below
the allowed level. We must also look at how construction
can impact wildlife habitats. So rather than
just invest in construction and development, we try
to make things balanced, not to inhibit economic
development, but to keep both air and water
pollution in check. Of course, development must be
economic and cost effective. The environment can
help in this regard with energy savings for example.
ET: How can European investors help you achieve your
goals of being cost efficient while working within these
guidelines?
M. Yagcilar: Well, they have the technology which
we need here and which would provide opportunities
for Kosovar subcontractors. At the same time,
we know we have a very young population which is
capable and which should learn to develop and use
this technology.
ET: People may still have a negative image of Kosovo
with regard to corruption and instability. From the
perspective of your ministry, why should Europeans
choose Kosovo as a business destination?
M. Yagcilar: Well, corruption and associated
problems are not specific to Kosovo. They happen
in all post-conflict countries but our duty is to make
the government functional and attractive for the
investors. If we achieve this, it promises a good
future. There will be growth opportunities for
companies and sectors and we will see larger projects
and more competition. This will add quality to the
sector and will create the general impression that
corruption has dissipated. Obviously we are a small
country but we have our natural resources and also
our human resources. At the same time, it is also a
strategic place next to Montenegro and Albania and
we have easy access to all the surrounding countries.
If you combine these aspects, Kosovo could become
an attractive proposition.
ET: Who would you see as the most successful business
ambassadors within the construction sector?
M. Yagcilar: All our companies do good work
regardless of their size. Each company in every
segment helps to increase the development of the
sector because all companies work in a timely manner
striving for quality, efficiency and excellence.
.
ET: What is your personal message to our readers?
M. Yagcilar: I think that Kosovo, because of its natural
and human resources, can offer a lot to investors.
The establishment of stability also helps in this
regard. Kosovo is at the centre of the Balkans and
the surrounding countries need to have a balance of
economic, social and political development. So we
invite investors to come to Kosovo.
61

KOSOVO
Environment & Spatial Planning
Infrastructure and Housing
the Sector Forward
The construction sector has been a crucial component
of Kosovo’s rehabilitation with millions of Euros being
funnelled into this sector. According to the Kosovo
Chamber of Commerce and Industry, the sector accounted
for approximately 7% of the country’s economic output
in 2006. However, much remains to be done. The
Ministry of Trade and Industry predicts that 60,000
new apartments will be needed over the coming years.
This in itself will create extra investment opportunities
in the construction of infrastructure and associated
social, retail and commercial units.
Beyond this contractors and developers alike will be
able to benefit from Kosovo’s wider infrastructural
requirements. Indeed, the government has particularly
earmarked the country’s road and highway network for
a major upgrade. The Ministry of Transport and Telecommunications
predicted in 2006 that the country
would need an annual investment of €48 million for
the rehabilitation and maintenance of roads and
bridges which will provide significant opportunities
for private investors. The priorities lie in the transport
corridors that plug into the wider European network
with the most prominent being the Merdare – Kukes –
Durres highway that will become part of the European
transport corridor X connecting Western Europe to
the Adriatic. With the government also earmarking
the energy sector for investment, with power plant
construction and the associated infrastructure being a
particular focus, there will be plenty of opportunities
for contractors.
These projects will be financed through foreign
investment on a public private partnership (PPP) basis.
The government has been laying the legal foundations
for these agreements with a law on concessions being
drafted in 2008. The government is also working hard
to create the framework to professionalize the construction
industry in other respects. According to the
Director of Kosovo’s Construction Department, Naim
Mahmutaj, “From the beginning, the Department of
Construction which was established in June 2004, has
made efforts to begin with a legal base in conformity
with the European Union’s requests.” One aspect of this
is the plan to establish a conformity assessment body
that will make sure Kosovar construction materials and
products meet the guidelines set out by the EU.
However, the industry has already come along way. The
country already has a burgeoning building materials
industry. It is estimated that Kosovo has approximately
70 ready mix concrete plants ranging in size and product
delivery. The cement industry has also established an
umbrella organisation for cement related industries
called the Kosovo Association of Concrete Producers
(KACP). The Association will help raise the quality of
concrete-related materials and bring them into line with
EU standards as well as playing a role in overseeing the
design and building of bridges and buildings to
ensure international
standards.
The country also
has a significant
number of
wood and plastic
producers that
cover domestic
demand with a
nascent export
business starting
in the fields of
wood products
and thermo-insulation
products.
With Kosovo’s
significant wealth
in forests, the
wood processing
industry in
particular is
set to become
valuable for the construction
industry. The country currently allows
62

KOSOVO
Environment & Spatial Planning
Requirements Are Driving
almost 1 million m3 of felling and the annual value of
Kosovar wood products touches €50-75 million. The
industry is thus capable of providing employment for
10% of the population.
The government is also working in conjunction with the
private sector and non-governmental bodies through its
plans for a Construction Institute that will deal with certification,
testing and inspection of materials. “The testing
laboratories as well as the inspection and certification
bodies will be accredited.
The producers will
obey the requests
for conformity
assessment and a
large portion of
construction
products will enter the market with the conformity seal
(KC- Kosovo Conformity, identical to the EC- European
Conformity),” asserts Mahmutaj. It is estimated that
such a facility would cost approximately €2.1million to
establish.
The steel industry in the country is also being rebuilt.
In 2005, Kremikovtsi, Bulgaria’s largest steel mill paid
€4.15 million for Kosovo’s Llamkos steel galvanising
plant with plans to invest €15 million to upgrade the
plant. Llamkos, which has an annual capacity of 150,000
tonnes, had lain dormant since 2001. The Kosovo Trust
Agency also lined up the €2.3 million sale of the local
steel manufacturer, Fan, which has a production capacity
of 20,000 tonnes annually.
The construction industry is therefore well placed.
As the government concentrates on both the
residential demands of the country and the
infrastructural requirements running from
energy to roads, the investment opportunities
for the private sector are substantial.
Indeed, with a cheap labour force and
a burgeoning building materials
industry, the prospects for future
growth in the sector are strong.
63

KOSOVO
Environment & Spatial Planning
Dukagjini Group
Building Tomorrow’s Kosovo
Dukagjini Construction, a division of the dynamic
Dukagjini Group, is a recognized leader in Kosovo’s fast
growing construction sector. The company has already
completed major projects, including residential developments,
and it has been chosen to build Kosovo’s World
Trade Centre, which will cover 80,000 square meters and
is set to be completed over the next two to three years.
Mr. Gëzim Gjikolli, WTC Manager, says that the major
World Trade Centre project welcomes European
partners and investors. “Slovenian companies are
already involved in the project, but we are open to
other European investors. This is a unique project for
the Balkan region and will earn very significant profits
for investors,” he says.
Dukagjini seeks partners which can help the group
achieve its long term goals. Mr. Agron Sallova, Chief of
Construction Division in Dukagjini Group, explains, “We
are looking for partners that can complement our services
and products in every area of our operations with regards
to technology and know-how, and more importantly
partners who can provide access to new markets.”
Exceptional investment potential
Dukagjini Construction adheres to the highest
European and international standards in all its projects
and employs highly skilled engineers and other professionals
as well as an ambitious management team. The
company also benefits from its membership in the fast
growing Dukagjini Group, which is known for its high
quality services as well as for its corporate citizenship.
For example, Dukagjini is sponsoring a scholarship
programme with American Councils to allow promising
Kosovars to study for master’s diplomas in US universities.
“Dukagjini’s commitment to Kosovo’s future is
strong, and its generosity in supporting our scholarship
programme is a model of philanthropic leadership,
both in the US and in Kosovo,” says Dan E. Davidson,
president of American Councils.
Kosovo’s construction sector in general has outstanding
growth potential, according to Mr. Agron Sallova, who
says, “There will be significant construction of residential
buildings and highways during the next year and beyond.
In fact, the construction sector will be the target of more
investment than any other sector in Kosovo.” Dukagjini
Construction has positioned itself to grow rapidly along
with the country’s construction industry.
Mr. Gëzim Gjikolli points out that now is the time for
international investors to target Kosovo. He says, “The
business environment is favourable for foreign companies
and Kosovo is regulated properly. Foreign companies
should partner with a local company to best benefit from
the opportunities here. I say to potential investors, Kosovo
is developing very rapidly. Do you want to be part of it?”
Agron Sallova – architect
CEO / Design
Construction & Engineering Division Dukagjini Group
“Ismajl Qemajli”Str., No.2 – Pejë / Republic of Kosova
Tel: +381 39 432 025, mob.: + 386 49 750 302
Fax: +381 39 432 025
agron.sallova@dukagjinigroup.com
www.dukagjinigroup.com
64

• The Industry Has Several Strings to Its Bow Pointing the Way to an Effervescent Future
Tourism

KOSOVO
Tourism
The Industry Has Several Strings
Effervescent Future
Kosovo might not be the first name on the lips of
tourists and those with the travel bug but that might
all be about to change as the rewards of stability
brought about by the country’s declaration of independence
has given the authorities the chance to put
this impressive corner of the continent firmly on the
European tourist map. Indeed, with a diverse range
of sights of natural beauty and interesting activities,
Kosovo has much to recommend it.
Kosovo has inherited both a rich diversity of natural
beauty and a physical residue built up over time as
different cultures and traditions have come to settle
in this area. The cultural legacy of the land is indeed
impressive. From the Christian heritage of frescoed
monasteries which have been home to the Serbian
orthodox patriarchy to the imposing mosques of
Prizren, the country has something to sate the
appetite of even the most voracious cultural tourist.
The Republic of Kosovo also has a rich natural
heritage. The country can count on the Rugova
canyons near Peja in the west of the country, the
Mirusha waterfalls also in the west, the Gadime caves
in the central plateau, the White River spring, thermal
springs, and abundant flora and fauna to attract
casual nature lovers. Such a verdant landscape also
provides a fertile habitat for a wide range of wildlife.
Tourists in the country regularly come across boars,
deer, quails, pheasants, the fulvous (brown) bear,
wolves and foxes.
Newly independent Kosovo also sits in a bowl ringed
by a series of dramatic mountain ranges from the
sombre and melancholy Sharr in the South to the
66

KOSOVO
Tourism
to Its Bow Pointing the Way to an
forbidding ‘Accursed Mountains’
in the west. This dramatic landscape
has also presented the opportunity
for the Kosovar authorities to
further develop its activity-based
tourism. The country is a haven
for hikers and is working hard to
build up its nascent ski industry.
The centre of skiing in Kosovo
is currently situated at Brezovica
in the South of the country near
Prizren. The Department of
Tourism is not only planning to
expand the quality and infrastructure
of the Brezovica resort but
also roll out other winter resorts in
other parts of the country. While
Brezovica may need €50 million to
turn it into a thriving resort it can
take heart from the experience
of Bansko in Bulgaria which went
through a rapid transformation
and now attracts 150,000 British
tourists annually.
However, according to Bujar Kuqi,
the Director of the Department of
Tourism, the immediate concern
of the government is to improve
the general infrastructure for
tourists in the country. “We are
focused on repairing the infrastructure
needed for tourism,
which will allow the full utilisation
of our tourism potential which
until now has not been realised
because of the service level of
tourism development,” says Kuqi.
With three Balkan countries
ranking in the top ten countries
in the world for projected 10 year
tourist growth according to the
World Travel and Tourism Council,
Kosovo can take heart. Initial steps
have already been taken to improve
the country’s tourism infrastructure.
The ease of visiting Kosovo is
immediately apparent with short
travel times from Western Europe
and no visa requirements. The
government has also already been
working on improving the quality
and quantity of accommodation to
meet the expected increase in the
number of tourists. This will also
allow for niche tourist sectors such
as Meetings Incentives Conference
and Exhibition (MICE) tourists.
However, in order to achieve
this goal, the authorities have
recognised the need to implement
a set of standards and benchmarks
to maintain the quality of the
sector. This will require a rigorous
licensing system that assures the
highest standards of accommodation,
infrastructure and service.
The authorities are also
working hard to put together
a promotional strategy for the
country. According to Kuqi, “We
are in close cooperation with other
institutions in Kosovo in order to
create a greater image of Kosovo,
presenting it as a secure place for
tourism, as a new country, as a
place that has enough capacity for
visitors and to finally eliminate the
image that Kosovo has had until
now as a conflict area.”
The country is therefore moving
in the right direction and with
such latent potential the country
could soon be mentioned in the
same breath as more prominent
Balkan tourism destinations
such as Croatia, Montenegro
and Bulgaria. With clear and
transparent planning, the
government is well placed to lure
many more European tourists
looking for a change of scene and
a diverse range of activities and
sights over the coming years.
67

KOSOVO
Tourism
Eurokoha Reisen
Top Quality Travel Services
Eurokoha Reisen, founded in Prishtina in 1995, has
grown to become one of Kosovo’s leading companies and
a driving force behind the country’s efforts to build a
thriving tourism sector.
A shareholder of Hamburg International, Eurokoha
has opened two offices in Prishtina and branches in
Stuttgart, Munich, Dusseldorf, Hamburg, Hanover,
Zurich and Geneva in addition to its main office in
Frankfurt. Eurokoha has 41 highly trained employees
in Kosovo.
Eurokoha operates according to the highest international
standards and is a member of the International
Air Transport Association. Its certified travel agents
employ the Amadeus system and the Go Global Travel
international system to make travel arrangements,
including hotel and auto hire reservations, for its clients
all over the globe. Eurokoha’s on-line booking system
is used by more than 300 contracted travel agencies,
which enables Eurokoha to provide the best possible
travel options for its clients.
Prishtina Airport now welcomes around one million
passengers per year, and 30% of these travellers are
Eurokoha’s clients. The company is known for offering
tailored solutions and for finding the least expensive
and most convenient travel routes. Eurokoha regularly
provides travel arrangements for Kosovo’s President,
Prime Minister, members of parliament, cabinet
members and their staffs and other prominent organisations.
Eurokoha is also Kosovo’s leading company
in providing holiday packages to Turkey, Albania and
Egypt.
After many years of hard work and continuous
exploration of Kosovo’s travel market, Eurokoha
created Kosovo’s first national airline, Kosova Airlines,
in 2003. The airline, working in partnership with leading
airlines in the US and Europe, now flies to destinations
throughout Europe and beyond, and has been seeing a
steady rise in passenger numbers from 172,700 in 2003
to 317,711 last year.
Its partners include ATA Airlines (New York), Hello (Zurich,
Geneva), Edelweiss (Zurich,Geneva), LTU International
(Düsseldorf, Stuttgart), Germanwings (Cologne/Bonn,
Hamburg, Stuttgart), Hamburg International (Munich), Air
Berlin (Munich, Stuttgart, Düsseldorf, Hamburg, Frankfurt,
Hanover, EuroAirport Basel-Mulhouse-Freiburg), Atlasjet
(Antalya, Istanbul-Atatürk), and SunExpress (Antalya).
It also has co-operative agreements with Austrian Airlines,
Air Berlin, Lufthansa, Adria Airways, British Airways,
Malev, Turkish Airlines, Macedonian Airlines, MNG, Swiss
Air, United Airlines, American Airlines, Delta Airlines,
Continental Airlines, Al Italia and many more.
Eurokoha’s flights provide quick links to and from
Pristina and destinations throughout Europe, including
Hamburg, Hanover, Frankfurt, Stuttgart, Munich, Köln,
Düsseldorf, Zurich and Geneva. For EU investors and
travellers who wish to visit Kosovo, Eurokoha and Kosova
Airlines are the right choice.
Eurokoha Reisen
Vellusha e Poshtme 17 - 10 000 Prishtina, Kosovo
Tel.: +381 38 245 998 - +381 38 243 482
Fax.: +381 38 249186 - www.eurokoha.net
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With special
thanks to:

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Ly
dian International through its local subsidiary, Kosovo Resource
Company, is a proud partner in the economic redevelopment of Kosovo.
Ly
dian International is a diversified British based mineral exploration company with expertise employing “first mover”
strategies in emerging environments. The company is currently focused on Eastern Europe with 3 projects in Kosovo
including a flagship Lead-Zinc project, plus a flagship Gold project in Armenia.
For more information go to www.lydianinternational.co.uk.
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Lydian International is listed on the Toronto Stock Exchange (TSX) under the symbol LYD.