The main challenge: Competitiveness and Regional Integration

Panel “European Perspective: Prospects for SEE Modernization and Harmonization with the EU” offered highly interesting insights and discussions which were moderated by the Dean of the Faculty of Economics of the SSST and a renowned Bosnian-Herzegovinian economic expert Dr. Vjekoslav Domljan,  with the participation of Martin Gaber, Deputy Director of the Delegation of German Economy in BiH, Snježana Kopruner, CEO of GS-TMT company from Travnik, Mirjana Čagalj, Vice President of the Croatian Chamber of Commerce (HGK), Dr. Alois Waldburg-Zeil, Director of ZEOCHEM company from Switzerland, Ćazim Hamzić, Member of the Prevent Group Management Board, and Dr. Matthias Schmidt-Rosen, Director of the KfW Office in Bosnia Herzegovina.

Moderator:  Prof. Dr. Vjekoslav Domljan:

- Political stability that my colleagues mentioned is clearly important for the investments. This is a primary requirement if one is to have long term investments. Next, we have regional integration. Economy of scale is needed in this region which includes small countries and small markets, including electricity. One needs infrastructure for electricity transmission because economy of scale offers great potential. You can match supply and demand. I invite you to think at the regional level, clearly in terms of joining the EU as a part of the region. As you know, our region is rather small. Our total GDP is less than USD 200 billion if we include Slovenia and all regional countries. This is really a small proportion and a small market. All in all, participation of BiH in the global market stands at 0.3 percent.

Martin Gaber, Deputy Director of the Delegation of German Economy in BiH

- I wish to say more about sourcing initiative launched by the BME i.e. the Association for Supply Chain Management, Procurement and Logistics, with the participation of the German Federal Ministry of Economy and Energy (BMWi).

The German Chamber of Commerce (AHK) is working together with the partners from the Western Balkan countries. The first initiative was launched in Munich and continued in Dortmund, and it is set to continue in Belgrade on 31 May this year. For the first time, it brings together initiatives within the region. Interest in the initiative has increased from 200 participants in 2015 to 500 of those who we expect to see in Belgrade.

This is a special initiative and it should act as a bridge between German buyers and domestic suppliers from Bosnia and Herzegovina, Albania, Montenegro, Kosovo, Croatia, Macedonia, Serbia and Slovenia. The focus is on the automotive industry and engineering, including metal processing, which is one of strong points of BiH industry. For the first time, this applies to the IT sector as well.

For this Initiative, local companies need to apply by submitting the questionnaire. This questionnaire is sent to the German companies that evaluate suppliers from the Western Balkans and decide whether a company from that region can deliver what German companies need. This guarantees that every meeting can become a place where buyers and suppliers can reach an agreement. Of their total number, one third of BiH companies has applied for the Initiative.

This means that only selected, qualified and capable companies can participate in this meeting. During the meeting, about 700 business meetings are to take place. I am proud that BiH is the most successful in this Initiative.

Snježana Kopruner, CEO of GS-TMT from Travnik:

- Our main problem is competitiveness. That is something we need to work on. As for education, we need sufficient workforce that will help us implement the agreements and become competitive on the demanding European market. Various projects which are being implemented by Germany are supposed to help us acquire qualified workforce that we need. Ignorance is the consequence of war and emigration. Former Yugoslavia, for example, had businesses all over the world for 20 years following the Second World War and it built hydroelectric power plants and produced airplanes, automobiles and machine tools despite the fact that it emerged from the Second World War as a country with semi-literate population. We entered the last war with a large number of engineers and highly educated people, yet, 20 years after the war we still export logs and raw materials, and we are unable to manufacture a finished product that we could offer to the market. Inability to create new jobs forces young people across the region to leave it. Therefore, we should extend the hand of economic cooperation to each other throughout the region, and initiate joint development of slightly larger projects. Borders are non-existent for the majority of citizens. We should, at least, use the EU to remove what is left of them and work together in more active manner.

 

Mirjana Čagalj, Vice President of the Croatian Chamber of Commerce (HGK):

- Europe 2020 is oriented towards development and it includes social economy. It is mostly aimed at innovation, education and the development of innovative entrepreneurship and social inclusion. Private companies are provided with the incentive to move in the direction of innovation and entrepreneurship. The obstacle that we encountered upon joining the EU are the human resources that must be competent enough to receive these funds and submit applications.

In fact, for everything that you will go through, you need to educate the staff in advance as they will receive EU funding; otherwise you will need to spend four years to train them to apply for these funds, and it is only then that you will be able to get them and this covers several government terms. This was the problem that we faced. Another problem is elimination of administrative barriers to investments.

Dr. Alois Waldburg-Zeil, Director of ZEOCHEM from Switzerland:

- I represent a family business from Switzerland which is 200 years old. We started our activities here three years ago when we launched production of chemical products for the gas industry since we manufacture fillets for gas at the global level. When I came here three years ago and met with our supplier "Alumina" company, we have seen that the quality and timing have always been consistent with what we were looking for. In only 17 months, we had a newly established company here which can deliver a finished product and we are most pleased with the support we receive from entire BiH, from the administration to all other partners. Everyone accepts us as a highly interesting project. Political stability is of high importance for the economy. That is what I plead with this country: "Please, do much more to attract the investors by having a unified policy that will be stable and oriented towards the future".

Ćazim Hamzić, Member of the Prevent Group Management Board, Bosnia and Herzegovina:

- I come from the Prevent Group. It is the largest private business system in Bosnia and Herzegovina. It is a leading contractor and employer. We employ more than 7,000 workers in 15 towns in Bosnia and Herzegovina. The Prevent Group is the region's leading investor, and one of the top 100 companies in Europe as well as one of the top 100 manufacturers in Europe. Basic strategy that we employ in our business is ensuring its stability. Our profits are always re-invested in continued support of business and development. Today we can say that we hold a strategic position in the region of Southeast Europe and maintain industrial culture and tradition for more than 20 years in the region. Today, we are suppliers of many well-known brands such as Ford, WV, Nissan, PSA…

At the same time, we are suppliers of Pierre Cardin, Mittal, IKEA, SKF and other industries, and well-known brands. The Group is mainly oriented towards Europe, to which we export a large share of our products, yet our other segments such as cable and medical equipment manufacturing make us rather well-represented in America, Asia and North Africa, too. From this perspective, it may seems that we had it easy when it comes to doing business, but we have had a large number of employees and we have been active for 20 years, so with the positive practices that we developed, this can serve as a great model for the entire region.

Dr. Matthias Schmidt-Rosen, Director of the KfW Office in Bosnia Herzegovina:

It is important to focus on the sector that is one of the more competitive ones in this country and which contributes the most to the export, perhaps even at the European level, and that is electricity generation.

Bosnia and Herzegovina and the region have the most suitable areas for electricity generation. I am referring to the hydroelectric power plants and wind farms at the European and possibly global level. You have a market that is increasingly integrated into the Southeast Europe and the Europe in general.

This allows your local hydroelectric power plants and wind farms to establish stronger ties with the rest of the region and Europe. What are the opportunities for local and regional companies? Hydroelectric power plants are already in place but they need investments in reconstruction.

As for wind power, the challenges are different. We are introducing a new technology in BiH and the region. We need the legislation that would regulate this field and the segment of environmental protection.

Information on required permits need to be more readily available and more transparent. To summarize, I really am a believer when it comes to renewable energy technologies in the region. We have their availability, proximity to the EU and we are working to improve the regional framework. Do not be discouraged by negative things, examples and bureaucracy. There is still great potential and it is growing, not decreasing. Make an effort and evaluate the opportunities. It is definitely worth it.