Foreign Direct Investments

Taking into consideration the favourable business climate, stable macroeconomic environment and the excellent opportunities across different business sectors, Kosovo is increasingly becoming a very attractive place for doing business. As result, the interest of foreign investors has been increasing steadily during the past years and together with it also the inflow of FDI. Kosovo has so far attracted over 1 billion Euro of FDI. Apart from investment pioneers such as the Raiffeisen Bank and Procredit, which entered the Kosovar market at the beginning of the transition phase, there are many other foreign companies engaged in a wide range of business sectors. According to the Business Registry data there are over 2,000 companies of foreign and mixed ownership that have already used the opportunity to invest in Kosovo. The large amount of foreign companies operating in Kosovo is a living proof of the opportunities and benefits that the country offers, and also represents a base of quality products and a sufficient service-providing community.

 

Some foreign companies in Kosovo

Textiles

With over 200 years of tradition, textiles were the second largest industrial sector in Kosovo, after mining. In the past, products from Kosovar manufacturers targeted the local market, as well as other markets throughout the former Yugoslavia, Western and Eastern Europe and the United States. At its peak around 1990, each of the 15 SOEs engaged in textile production employed more than 1,000 people and sales totalled some 35 million Euro.

Recent developments in the region have frozen the primary trading links of the textile industry, causing lower production rates and resulting in a lack of competitiveness with foreign products. As a result, a major share of former SOE workers has become redundant. A minor part has, however, established private textile companies. Currently there are some 451 private companies engaged in textile production, out of which 90 percent are final product manufacturers. Although the textile industry has experienced a significant recovery during the past years, the majority of businesses are still small and take the form of micro enterprises. Consequently, they cater solely for the Kosovo market and are primarily geared towards a niche market.

Analysis indicates that some 55 to 65 million Euro in exports could be reached, assuming that trading links with former partners can be re-established. There is considerable scope in this sector for investors to recreate a vertically integrated manufacturing cluster so that Kosovo would once again produce finished clothing from thread and cloth made in the region.

In particular, Kosovo offers three major benefits for investors wishing to revamp one of the existing SOEs or found a new textile manufacturing company. These are:

• A cheap, well skilled and experienced work force
• A solid base of technology that can be acquired through the ongoing privatization process
• Numerous subcontracting and outsourcing possibilities

With the existing know-how, cheap labour force and other comparative advantages that the country offers, including the friendly business and investment environment, the textile industry in Kosovo has therefore the potential to become highly competitive internationally.

Declaration of the Government on attracting foreign investment

Through its declaration of independence on 17 February 2008 and the subsequent international recognition by world’s leading democracies and economies, Kosovo has removed the last political obstacle for foreign investors. By setting economic growth as its first priority, the Government of Kosovo has also committed to continue economic reforms in order to make the country more attractive for foreign investors.

Kosovo has low taxes and a simple tax system. It further offers macroeconomic stability, simple and quick business registration procedures, the Euro as its official currency, and a young, dynamic and well educated work force.  Through its membership in CEFTA, investors entering Kosovo will in fact enter a market of 28 million people. In addition, Kosovo enjoys customs-free access to the EU market based on the EU Autonomous Trade Preference (ATP) Regime as well as the customs-free access to the US market.

I strongly believe that Kosovo will benefit from foreign investments. I am convinced that Kosovo has great potential to become a favoured destination for foreign investments.

The last two years have shown the first signs of sustainable economic development with an average GDP growth standing at 4.5 %. At least 357,4 million Euro on FDI were invested in 2008 in different sectors of the Kosovar economy. However, key challenges, such as the big trade imbalance, the still existent informal economy and the high unemployment rate remain.

We think that the best way to successfully tackle these challenges is by continuing to facilitate FDI. It is bringing fresh capital, know-how and is creating new jobs in our country. It has started to help Kosovo to reactivate and mobilise its huge resources. At the same time, it is strengthening efforts for a sustainable long-term economic development of the country.

We assure you that the Government of Kosovo will remain focused in further improving the business climate and in speeding up the regional and European integration of Kosovo. We guarantee you the support of the Government for your business and investment activities in our country and we sincerely welcome you in the new Kosovo.