The Investment Development Bank of the Republic of Srpska, together with the Government of the Republic of Srpska and in partnership with Prointer ITSS, organized successfully the Second Investment Conference Invest Srpska 2022, held from 5 to 7 September 2022 in Prijedor under the slogan Invest in Srpska.

In one place, the conference gathered a large number of relevant participants from the business and academic community, the public sector, financial and other IDBRS partner institutions from the region and beyond.

The conference dealt with current global events and their impact on domestic socio-economic developments and investment attractiveness of the Republic of Srpska in the international setup.

In view of the goals and expectations of the Second Investment Conference, the most important conclusions and messages of the conference are given below, in order to contribute to further positioning of the Republic of Srpska on the list of desirable investment destinations:

The key comparative advantages of the Republic of Srpska in attracting foreign investments are good geostrategic position, proximity to the European market and available natural resources, which, if used rationally, can be the backbone of Srpska’s further economic growth and development.

The Government of the Republic of Srpska has worked continuously on improving the domestic investment environment, first of all by means of a stimulating tax policy and by providing incentives in the economy.

The large investment cycle of about four billion BAM initiated by the Republic of Srpska Government in the fields of road infrastructure and energy is a significant impetus also to the implementation of private investments of both domestic and foreign capital.

The reason for this is because it is a positive message to potential investors regarding the stability of our political, business and, ultimately, investment environment. However, further need has been recognized for the following:

• joining the Open Balkan initiative, which implies undertaking significant activities and efforts to align our procedures with the requirements arising from this initiative. It is estimated that these adjustments require a period of about 12 months;

• involvement in the operation of the Invest Open Balkan platform, whose establishment was announced within the Open Balkan initiative. The platform is intended to promote investment potential and attract foreign investors to the initiative member countries;

• greater efficiency in conducting administrative procedures at all levels;

• continuation and further intensification of the started activities on digitalization of public administration, which in itself contributes to the improvement of business efficiency and the overall attractiveness of the Republic of Srpska for new investments;

• further strengthening of the quality and competitiveness of the domestic labor force, by improving the education system, aligning it with the needs and preferences of the economy, and applying the ‘dual education’.

Development banks play a significant role in investment promotion. The role of development financial institutions is seen in providing promotional, logistical and financial support in the implementation of new investments which are aligned with national development priorities in terms of concept and strategy.

For success in these processes, cooperation with commercial banks is of great importance. According to the conclusions of the conference, the key directions of strengthening the role and responsibility of development banks in the area of investment promotion are recognized in the following:

• engage to identify investment opportunities and to prepare specific projects at the national, local and individual business level; and provide support in finding potential investors who would be willing to participate in their implementation (establish a base of projects available for funding).

• establish and continuously develop innovative instruments for mitigating all forms of commercial and non-commercial risks that accompany investments, which might contribute to improving the competitiveness of our exporters, especially in the context of current geostrategic disruptions. The introduction of these instruments is achievable through cooperation with specialized financial institutions or by integrating the insurance function into development banks’ own business models;

• strengthen public sector cooperation with the commercial financial sector on the implementation of projects that support new investments and further expansion of the current investments by domestic and foreign investors. The application of risk insurance instruments has the potential to contribute to mitigating the perception of political risk by investors. Unfavorable political perception is primarily related to the complex constitutional and political structure of BiH.

During the past period, IDBRS made a significant step forward regarding investment promotion of the Republic of Srpska, by applying the modality of direct and indirect promotion. In this connection, the key recommendations for intensifying the activities in this field are as follows:

• continue the started IDBRS activities on promoting investment profiles of the Republic of Srpska and its local communities; maintain and continuously expand the information content and coverage of the Database for investors;

• establish multi-sectoral instruments in cooperation with other relevant institutions of the Republic of Srpska, to provide support in receiving new investors. This may include administrative and logistical support throughout the entire implementation process of their investments;

• implement the projects connecting the domestic business sector with that of our diaspora.

The key role in establishing and implementing these projects can be played by the Investment Development Bank, together with the network of representative offices of the Republic of Srpska abroad.

The Republic of Srpska has significant natural potential, especially in the fields of energy and renewable energy generation, mining, wood processing industry and agriculture. The natural potentials create space for new investments, where it is imperative to use them for dynamic economic growth and development of the Republic of Srpska.

With the adoption of the Law on Electricity and the Law on Renewable Energy Sources, an efficient and competitive formal framework was built in the Republic of Srpska for attracting investment in the field of electricity generation from renewable sources.

Possibilities for improving the investment attractiveness of the agricultural sector are recognized through the following:

• increased sectoral productivity by implementing a stimulating policy for new investments in the modernization and technological equipping of agricultural production, and investments in the establishment of an irrigation system, which is especially important in the circumstances of evident climate changes and growingly extreme weather conditions;

• additional investments in increasing domestic processing capacities.

Local self-government units are places where investments reach their full potential and where their actual effects on improving the standard and living conditions of all our citizens are most visible.

Competition and rivalry among local communities in attracting investments has a positive effect on the attractiveness of the overall investment environment of the Republic of Srpska.

In this regard, the following is recommended:

• work on establishing and maintaining a favorable (local) business environment, friendly towards new investments by domestic and foreign investors, through available programs (such as the BFC SEE – business friendly municipalities certification South East Europe program);

• involve local administrations more in attracting, creating assumptions and providing support (administrative, professional, logistical) for the successful implementation of investments and other projects relevant for development;

• work further on building and strengthening local business infrastructure (establishing and equipping business and industrial zones, technological parks and innovation centers, free zones, etc.), in all instances where the potential of this infrastructure for attracting new investments has been recognized.

Funds for business infrastructure development are available through cooperation programs with the Government of the Republic of Srpska, and donor and other financial organizations. Using them requires appropriate local, administrative capacities for project preparation and project cycle management.

During the conference, the key obstacles to the investment process thus far were identified in the unfavorable perception of the political situation in Bosnia and Herzegovina and in legal uncertainty, i.e. the length of judicial and other administrative procedures.

Overcoming these obstacles requires reaching a broad consensus at all levels in Bosnia and Herzegovina. It is a long-term process whose outcome cannot wait, at least regarding the work on investment promotion and positioning of the Republic of Srpska on the global map of desirable investment destinations.

The Republic of Srpska faces global geostrategic disturbances and the crisis they inevitably bring about, as stable and open to all investors whose intentions match its long-term priorities and vision of future socio-economic growth and development.

The Republic of Srpska is a good place for investments.

So, welcome to the Republic of Srpska!

The Investment Development Bank of the Republic of Srpska will submit the conclusions of the conference to the Government of the Republic of Srpska for discussion, with the aim of jointly developing concrete measures and coordinating activities for the investment promotion of the Republic of Srpska.

Source: RTRS

Photo: Courtesy photo