The European Times - Kosovo

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KOSOVO

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Content

INTRODUCTIONInstitutions of the Republic of Kosovo 4• President Welcomes Investors to High Potential • Economy 5A Melting Pot of Cultures: Kosovo’s Rich Past • Points to a Bright Future 6Kosovo’s Fact File 8•

BUSINESS & INVESTMENTS OPPORTUNITIESIncreasing Competition and Efficiency, the Increasing Competition and Efficiency, the • Privatisation Process Is Going into Overdrive 12Forward-Thinking Chamber Promoting Kosovo • as Gateway 14Central Bank of the Republic of Kosovo 16• On the Road to the Union, Kosovo has Already • Made Big Strides 18Improved Stability and Measured Growth Point • to a Maturing Economy 20

FINANCE & BANKINGMinistry of Economy and Finance 24• NLB Prishtina 26• Raiffeissen Bank 27• ProCredit Bank Kosovo 28• Dukagjini Group 29•

TRADE & INDUSTRYMinistry of Trade and Industry 31• Sharrcem 33• Xella Group 34•

TRANSPORT & COMMUNICATIONSMinistry 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 42IPKO 44•

AGRICULTURE & FOOD INDUSTRYMinistry of Agriculture, Forestry and Rural • Development 46Development 46Lay of the Land: The Government Is• Overseeing the Commercialisation of the Country’s Farms 48Peja Brewery 49• Meridian Corporation 50•

ENERGY & MININGMinistry of Energy and Mining 52• A New Power Plant and Untapped Coal • Reserves Are Set to Electrify the Industry 55Mine Games: A Growth in Exploration and • Mining Licenses Should Usher in Explosive Growth 56Lydian International 59•

ENVIRONMENT & SPATIAL PLANNINGRegional Water Company-Prishtina 61• Ministry of Environment and Spatial Planning 62• Infrastructure and Housing Requirements • Are Driving the Sector Forward 64Dukagjini Group 66•

TOURISMThe Industry Has Several Strings to Its Bow • Pointing the Way to an Effervescent Future 68Eurokoha 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: World’s Newest Country

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Institutions of the Republic of Kosovo

Offi ce of the President Tel.: +381 38 213 222/333Fax: +381 38 211 651www.president-ksgov.netwww.president-ksgov.net

Assembly of the Republic of Kosovo Offi ce for Media and PublicationsTel.: +381 38 211 186/189/949Fax: +381 38 211 188Fax: +381 38 211 188www.kuvendikosoves.org

Offi ce of the Prime MinisterFax: +381 38 211 [email protected]/pm

Ministry of Education, Science and TechnologyTel.: +381 38 542 715Fax: +381 38 542 757www.masht-gov.net

Ministry of Justicewww.md-ks.org

Ministry of Energy and MiningTel.: +381 38 200 213 [email protected]/mem

Ministry of Finance and EconomyTel.: +381 38 200 34 101Fax: +381 38 213 [email protected]

Ministry of Environment and Spatial PlanningTel.: +381 38 517 800 Fax: +381 38 517 845 [email protected]/mmph

Ministry of Local Government AdministrationMinistry of Local Government AdministrationTel: +381 38 544 377www.ks-gov.net/map

Ministry of Internal AffairsTel.: +381 38 213 307 [email protected]

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Ministry of Foreign AffairsTel: +381 38 213 963Fax: +381 38 213 [email protected]/mpjwww.ks-gov.net/mpj

Ministry of HealthTel.: +381 38 211 192www.mshgov-ks.orgwww.mshgov-ks.org

Ministry of Labour and Social WelfareTel.: +381 38 213 814Fax: +381 38 213 [email protected]

Ministry of Community and ReturnTel.: +381 38 212 754 Tel./Fax: +381 38 212 [email protected]/mkk

Ministry of Public ServicesTel.: +381 38 200 30 020/942/660 [email protected]/mshp

Ministry of Culture, Youth and SportsTel.: +381 38 211 064, +381 38 211 557 Fax: +381 38 211 [email protected]

Ministry of Transport and [email protected]

Ministry of Agriculture, Forestry and Rural DevelopmentDevelopmentTel.: +381 38 211 375Fax: +381 38 212 598www.mbpzhr-ks.org

Ministry of Trade and IndustryTel.: +381 38 200 36010Fax: +381 38 212 807www.mti-ks.org

Introduction

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President Welcomes Investors to High Potential EconomyFatmir 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 (1) countries have already recognised Kosovo as an (1)

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 signifi cant growth potential, particularly in the energy sector, according to the President. He adds that the government has proven its commitment to trans-parency 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 fi nancial 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

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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 confi dent to come,” President Fatmir Sejdiu says.

As for the future, Kosovo will move beyond reconstruc-tion 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 priva-tisation 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.”

© Bashkim Hasani

(1)The number has reached 51 as of today

Introduction

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Introduction

Kosovo’s Fact File

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 interna-tional 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.

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GeographyThe 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 fl ood 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 fl avour. Indeed, the old and the modern, the foreign and the local all jostle for attention in an easy unaffected way.

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-offi cial 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.

Diversity and Ambition: The Twin Pillars of Kosovo’s Appeal

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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 fl ag. Although there was some debate, and even a design competition, over the future look of the newly independent country’s fl ag, 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 fl ag 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 fl ag will not be lost on anyone, echoing as it does the EU’s very own standard, a blue fl ag with a circle of yellow stars. Indeed, Kosovo hopes that sooner rather than later the two fl ags will be fl ying next to each other over the parliament building in Prishtina.

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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.

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 benefi ts. Indeed, the use of the Euro, gives Kosovo’s infant economy a sense of stability and a strong currency.

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 agricul-tural 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 fi gures 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 refi ning 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 offi ces, 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.

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Business & Investment Opportunities

• Increasing Competition and Effi ciency, 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

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Business & Investment OpportunitiesBusiness & Investment Opportunities

When the UN Mission in Kosovo

(UNMIK) fi rst 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.

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In 2002, when the Kosovo Trust Agency was founded there were 500 Socially Owned Enterprises (SOEs) awaiting privatisation. However, the level of productiv-However, the level of productiv-ity 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 of social assets to the private sector has been the catalyst for a significant increase in Kosovar exports and a swelling investor confidence.

Increasing Competition and Effi ciency, the Privatisation Process Is Going into Overdrive

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Increasing Competition and Effi ciency, the Privatisation Process Is Going into 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 distribut-ing 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 dis-tribution 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 privati-sation 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 liquida-tions 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

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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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Business & Investment OpportunitiesBusiness & Investment Opportunities

Forward-Thinking Chamber Promoting Kosovo as Gateway The Kosovo Chamber of Commerce is an international, non-profi t, 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.

Besim Beqaj, President Kosovo Chamber of Commerce

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ET: Kosovo offi cially 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 offi cial status as an independent country. From a business point of view, independence has increased international interest in Kosovo and a number of fact fi nding 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 independ-ence has been Kosovo’s signifi cant reform of its fi scal policy, something for which the Chamber has been lobbying strongly for the past few years. With the new government, we have achieved the new fi scal policy

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, busi-ness-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 fi scal 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

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invited Austrian media representa-tives to visit Kosovo and see it with their own eyes. This one initiative resulted in very positive articles about Kosovo in 14 different publi-cations. Our goal is to show people that any negative ideas they might have about Kosovo are not justifi ed. We also want to show people that Kosovo offers defi nite advantages over its neighbours, including a central location and the legal system 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 desti-nations. 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 infra-structure 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 inter-national presence. We would like to have strong partners in the European Union. We aim to show interna-tional companies that Kosovo can be their best gateway to South-Eastern their best gateway to South-Eastern Europe.

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Central Bank of the Republic of Kosovo

Central Bank Committed to Best PracticesKosovo built its fi nancial 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, Governor

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Hashim Rexhepi, the CBK’s Governor, says, “We have implemented international best practices with regards to regulation and supervision of all fi nancial 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 fi nancial 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, effi ciently functioning, stable, market-based fi nancial system; to encourage the emergence of safe fi nancial instruments on the Kosovo market; to provide services to the fi nancial community by fostering an effi cient 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’ confi dence

Along with applying international standards, Kosovo adopted the euro as its currency beginning in 2002, which has enhanced the fi nancial sector performance and created more confi dence 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.

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

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Central Bank Committed to Best Practices


Garibaldi str. 3310000 Prishtina - Kosovo

Tel.: +381 38 243 766Fax: +381 38 243 763

www.cbak-kos.org


KOSOVO

fi nancial system for Kosovo. Then, it concentrated on opening up Kosovo’s fi nancial 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 fi ne-tuned the sector by fi nding solutions for any problems that had appeared. “Today, now that we have a very strong, sound and stable fi nancial sector, our objective for the future is to increase transpar-ency and advance market conduct,” Hashim Rexhepi says.

The CBK is currently focusing on implementing Basel II criteria concerning disclosure and trans-parency. “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 contributionThe CBK serves not only to bring stability and transparency to the fi nancial sector and foster effi cient 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 fi nancial institution’s efforts the fi nancial sector has become a signifi cant 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 unem-ployment, since all financial insti-tutions 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 profes-sional manner, and assist further in the integration of Kosovo’s financial sector in regional and European initiatives.

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On the Road to the Union, Kosovo Has Already Made Big Strides

With the seminal step of independ-ence achieved relatively smoothly, Kosovo now has its sights fi rmly 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.

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This is no distant ambition but a driving force in the fi rst post-inde-pendent 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 fi nancial support since 1999. The main EU vehicle for helping Kosovar development is the European Commission Liaison Offi ce (ECLO) which implements assistance under the Instrument of

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Pre-Accession Assistance (IPA). In 2008, the ECLO has taken over the Community Assistance for Reconstruc-tion, 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 benefi t from two components of this EU initiative: the ‘Institution Building and Transition Support’ and the ‘Cross-Bor-der 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 Stabi-lisation and Association Process (SAP). SAP has been established to confi rm 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 standard-ised 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 specifi c infl uence 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 Offi ce

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.

1818

Improved Stability and Measured Growth Point to a Maturing EconomyWhile 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 fi gures 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-ori-entated 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 fi ve 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

19


KOSOVO

two year decrease of 11.6%, total government expen-ditures 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

million in 2008 as the country’s productive capa-bilities 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

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

€1 billion in 2005. These imports have not only been stimulated by CEFTA but also by Kosovo’s non-recip-rocal 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

-

-

-

-

-

-

-

-

-

-

-

5

4

3

2

1

0

-1

-2-1.11

0.35

3.5

Source: 2007 annual report of the Central Banking Authority of Kosovo

Kosovo real GDP by sector, in million euro

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

-1.0

-1.5

-

-

-

-

-

-

-

-

-

-

-

Donor SectorGovernment SectorReal GDP Growth (right axis)

2.653.1

2.04

0.38

-1.0

-0.98

2004 2005 2006 2007

-1.01

0.360.40 0.430.450.45

2.45

Private SectorNet Exports (right axis)

-0.95

0.510.51 0.43

2.33

2.0

20


KOSOVO

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

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 consoli-dated 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

Source: 2007 annual report of the Central Banking Authority of Kosovo

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.

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.

Imports and Exports by commodity groups as share to total, as of 2007

Imports ExportsLive animals,

3.9%

Stone, Plaster, Ceramic,

4.4%

Prep. foodstuffs,

14.1%

Mineral products,20.2%

Machinery,12.5%

Textiles,3.3%

Other,9.8%

Plastics and articles,

4.6%

Transport means,5.2%

Vegetable products,

5.3%Prod. of chemical industry,

7.5%

Base metals,9.2%

Plastics and articles,

4.1%

Prep. foodstuffs,

5.1%

Machinery,13.1%

Mineral products,

15.4%

Other,10.9%

Vegetable products,

5.7%

Base metals,45.7%

Finance & Banking

• Now Is the Time to Invest in Kosovo

“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

2222

Finance & Banking

Ministry of Economy and Finance

Now Is the Time to Invest in KosovoAhmet Shala, Kosovo’s Minister of Economy and Finance, discusses recent developments in Kosovo’s fi nancial sector and the country’s investment potential.

Ahmet Shala, Minister of Economy and Finance

KOSOVO

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-confl ict 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 fi nancial sector is essential for Kosovo’s economic development, and our fi nancial sector, although young and emerging, has performed well and demonstrated a capacity for stability.

ET: What are your priorities for the fi nancial sector?

A. Shala: A key task is to ensure that the fi nancial sector can fulfi ll 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 fi nancial sector must work with private business to develop good credible business plans from which private investment can be generated.

23

Ministry of Economy and Finance

Now Is the Time to Invest in Kosovo

Finance & Banking

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 institu-tions 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 insti-tutional 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 fi nancial 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 fi nancial institutions are very active in Kosovo and support our efforts, which is an excellent refl ection 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 benefi cial effect on controlling infl ation and promoting fi nancial 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 offi cial fi nancial 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 specifi c 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 fi nancial 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!

2424

Finance & Banking

NLB Prishtina

Leading Commercial Bank Positioned to Partner Foreign InvestorsNLB Prishtina, with a 16% share of the local market, is one of Kosovo’s top commercial banks. It offers highly trained professionals, fl exibility, innovation, effi ciency, 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 interna-tional investors. “We are absolutely ready to support businesses coming to Kosovo by providing them with sound fi nancial services,” Albert Lumezi says.

Albert Lumezi, General Manager

KOSOVO

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 fulfi lling companies’ objectives and development goals,” Albert Lumezi says. The bank’s local reputation is so strong that 95% of its clientele is from Kosovo.

Financial sector a success story

Kosovo offers signifi cant investment opportunities, and the progress the country has made in upgrading its fi nancial sector refl ects its long term potential. As Albert Lumezi says, “Kosovo’s fi nancial sector has achieved real progress in providing sound services and thereby

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 fi nancial 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, fi nancial sector regulations meet EU standards, and the use of the euro has contributed to controlling infl ation. Kosovo’s fi nancial 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.”

NLB Bank PrishtinaRr. Rexhep Luci Nr.5Tel. +381 38234 111Fax: +381 38246 189

[email protected]

25

Finance & Banking

Raiffeisen Bank

Raiffeisen Bank Kosovo Named Bank of the Year 2007Raiffeisen 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 profi ts totalled €14.9 million. “Raiffeisen Bank has recorded a signifi cant 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 Interna-tional, 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 fi nancial service providers.

Bogdan Merfea, CEO

KOSOVO

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 pro-fessional skills, expertise, and tradition help us to be a very attractive bank for foreign investors, as does our well-developed 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 privatisa-tion projects.

Since it started to operate, Raiffeisen Bank Kosovo has recorded sustainable continuous growth in Kosovo’s emerging fi nancial 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 comprehen-sive fi nancial 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

2626

Finance & Banking

ProCredit Bank Kosovo

Kosovo’s First Bank Supporting Economic GrowthProCredit Bank Kosovo achieved very strong results last year, boosting its profi ts by an impressive 107%. Philip Sigwart, CEO, explains that the bank also increased its assets by 27% to reach €549 million, and that €549 million, and that €

customer deposits also grew, totalling some €550 million at present. €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 profi t, 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 fi nance 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 fi nancial crisis since local banks are fi nanced fully by local deposits, and deposits exceed loans.

ProCredit is ready to serve inter-national companies and investors

KOSOVO

seeking opportunities in Kosovo. The bank offers fi nancing 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 fi rst 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, KosovoNena Tereze str. 16

10000 Prishtina, KosovoTel.: +381 38 555777 Fax: +381 38 248777

www.procreditbank-kos.com

27

Finance & Banking

KOSOVO

Dukagjini Group

Insurance Leader Expanding Product PortfolioThe 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 Interna-tional 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 fi rm 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 profi ts of €418,000 in 2007 and anticipates that these profi ts will more than double to around €1 million this year. The company welcomes partnerships with EU insurance fi rms. As Mr. Fatmir Gashi explains, “Through our association with Sava Re, we have already shown our strategy of co-operat-ing 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 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.

DukagjiniSquare Nëna Terezë 3310000 Prishtina, Kosovo

Tel: +381 38 225 385Fax: +381 38 225 384

[email protected]

Trade & Industry

• Ideal Base for Trade-Oriented Activities

“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

2929

Trade & Industry

Ministry of Trade and Industry

Ideal Base for Trade-Oriented Activities

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.

Lutfi Zharku, Minister of Trade and Industry

KOSOVO

30

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 benefi ts 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 signifi cantly, 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 fi nancial 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 Offi ce 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 opportuni-ties. What is the status of the process?

L. Zharku: The privatisation effort is now being handled by the Kosovo Privatisation Agency, a transformed

KOSOVO

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 telecommu-nications, a competitive and fl exible 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.

31

Trade & Industry

Sharrcem

Building Kosovo’s futureSharrcem, 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 construc-tion sector over that period. “The Kosovo construction market will continue to grow at these rates in the future. Up to now, it has

KOSOVO

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 unem-ployment 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

Sharr Beteiligungs GmbHLagja e punëtorëve p.n.

71510 Hani i Elezit -KosovoTel.: +381 290 385 511Fax: +381 290 385 510

www.sharrcem.com

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 fi nd jobs, and costs are low compared to other Eastern European countries, par-ticularly 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.”

Mario Grassl, CEO

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Trade & Industry

Xella Group

Brick Producer Combines German Technology and Local Raw MaterialsWorld-renowned construction material 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 fi eld in which we operate,” stated its General Director, Samir Krasniqi.

Samir Krasniqi, General Director

KOSOVO

Xella International, with headquar-ters in Duisburg of Germany is a world market leading enterprise in the production of construction materials and raw materials of con-struction 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

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 infl ammable material and in contact with fi re, 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 dis-tinguishable from all other construc-tion 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

Xella Kosova L.L.C.Rr. e Martirëve, p.n.

14000 LipjanTel.: +381 38 580161Fax: +381 38 580164

[email protected] www.kosova.xella.com

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.

Transport & Communications

• 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

“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

3434


Ministry of Transport and Telecommunication

Discussing the Challenges for Telecommunication and TransportInfrastructure 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

KOSOVO

ET: How important are the transport and telecom-munication 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

35

Ministry of Transport and Telecommunication

Discussing the Challenges for Telecommunication and Transport


investing in and developing the road infrastructure because we believe that stable and sustainable infrastructure will be a precon-dition 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 con-struction 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 con-struction 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 Interna-tional Telecommunications Union

KOSOVO

(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 oppor-tunities 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 telecommunica-tions, it still is sort of untouchable because of the ITU membership issue.

ET: What are the main challenges ahead for the transport and tel-ecommunications 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 connota-tions associated with confl ict 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 telecommu-nications 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.

36

All Roads Lead to Kosovo: the Government’s Main Target Is Upgrading the Road and Rail Infrastructure

36

Transport & CommunicationsTransport & Communications

Since the end of the war in 1999, the transport sector has become one of the most critical areas for the rehabilita-tion of the Kosovar economy. As the arteries of the country, the roads and rail networks have been earmarked for signifi cant 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 fi gures 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

KOSOVO

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 signifi cant geo-graphical position for European transport routes lying on two South East Europe Transport Observatory (SEETO) core road network routes and one SEETO core rail network

37

All Roads Lead to Kosovo: the Government’s Main Target Is Upgrading the Road and Rail 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 signifi cant

KOSOVO

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 signifi cant 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 motorisa-tion 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-electrifi ed 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 traffi c 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 unifi ed strategy for regional transport policy in South East Europe.

The future of Kosovo is therefore fi rmly 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.

3838


Kosovo Railways

Railway Network Offers Signifi cant Investment PotentialKosovo Railways, which administers the country’s rail network, has been achieving improved fi nancial results but requires signifi cant 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 fi rst, in both passenger service and freight transport.

The company achieved profi ts 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 fi bre cables throughout the railway network.

Xhevat Ramosaj, Managing Director

KOSOVO

Kosovo’s rail system, heavily damaged during the war years, needs signifi cant 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.

Signifi cant 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 Fer-ronickeli, 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 traffi c 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 traffi c.

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 signifi cant 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.CStr. Sheshi i Lirise,

12000 Fushe KosoveRepublic of Kosovo

Tel.: +381 38 536 307Fax: +381 38 536 355

www.kosovorailway.com

39


Kosova Airlines

Kosova Airlines Seeking Partners to Achieve Ambitious Growth PlansKosova 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 Dis-tribution Partner Eurokoha Reisen GmbH. Most fl ights 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 fl ight between Prishtina and Basel, Switzerland.

Remzi Ejupi, President

KOSOVO

In its role as an airline, Kosova Airlines offers fl ights 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 signifi cant potential for routes between Kosovo and neighbouring countries, including Albania. Currently we offer fl ights to Turkey only during the summer season so we see growth there as well, particularly for year-round fl ights for business customers.” Kosova Airlines offers fl ights between Germany and

Macedonia during the high tourist season and would like to extend its Macedonia service by offering fl ights between Macedonia and Switzerland. It would also like to increase the number of fl ights to its established destinations.

The airline welcomes partner-ships 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 fl ights between Kosovo and key European destina-tions 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 AirlinesVellusha e Poshtme 17

10000 PrishtinaKosovo

Tel.: +381 38 24 44 44Fax: +381 38 24 91 86

www.kosovaairlines.com www.fl yksa.com

4040

Calling the Shots: Competition Is Bringing Increased Quality to the Sector

As a crucial component of Kosovo’s infrastructure roll out, the tel-ecommunications 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 Telecom-munication 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 fi nal 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 signifi cant

41


fi gure 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 interna-tional network. On the fi xed line segment, Ipko Net, the country’s largest internet provider has rolled out an extensive broadband network which has far-reaching population coverage.

KOSOVO

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 commu-nications 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, technologi-cally 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 suc-cessfully employed by Bulgaria. Currently, public and private insti-tutions 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 Telecom-munication 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.

4242


IPKO

Dynamic Telecom Provider Aims to Offer One-Stop Integrated ServicesIPKO 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, fi xed 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 fi nancial 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

KOSOVO

Prior to mobile, IPKO has heavily invested in the fi xed network. Now it operates a fi xed 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-of-the-art solutions, the latest tech-nologies, 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 tele-communications services,” Akan Ismaili explains, adding that IPKO also plans to invest in the fi bre optic connections with very high capacities to regional and inter-national 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 StreetRTK Building, 5th fl oor

PrishtinaKOSOVO

Tel.: +381 38 700 010Fax: +381 38 700 001

www.ipko.com

Agriculture & Food Industry

• 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

“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

4444


Ministry of Agriculture, Forestry and Rural Development

Talking Shop: The Ministry Talks About Producing More Goods for MarketThe 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 coor-dinating its efforts with the European Union to ensure that legislation and regulations governing the sector are harmonised with the EU’s standards.

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

Idriz Vehapi, Minister of Agriculture, Forestry and Rural Development

KOSOVO

45

Ministry of Agriculture, Forestry and Rural Development

Talking Shop: The Ministry Talks About Producing More Goods for Market

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


KOSOVO

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 agri-cultural 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 con-solidation and irrigation are our priorities, we increased our budget regarding these two areas. The investments in these sectors will create oppor-tunities 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 neighbour-ing countries. However, at the same time, we have an educated workforce, a signifi cant 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.

46


Lay of the Land: The Government Is Overseeing the Commercialisation of the Country’s FarmsAgriculture 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 privatisa-tion process, Kosovo’s larger farms, under the stewardship of the Kosovo Trust Agency, present particularly good opportunities for investment.

KOSOVO

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 agricul-tural 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-suffi cient 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 dramati-cally allowing the country to become a signifi cant agricultural exporter.

This is no pipe dream. Kosovo has a series of competitive advantages in the agricultural fi eld 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.

47


KOSOVO

Peja Brewery

Market-Leading Local Brewery Expanding RegionallyPeja 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, technolo-gies 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 dis-tributors in Montenegro, Serbia

Sebastjan Gergeta, acting General Manager

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

Peja Brewery30000 Peje, Kosovo

Tel.: +381 39 432 661Fax: +381 39 433 989

have basically taken over the distri-bution system,” Sebastjan Gergeta explains. He adds, “Investors interested in Kosovo should work with a strong local partner.”

4848


Meridian Corporation

Dynamic Group Welcomes Joint Venture PartnersThe 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 signifi cant 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 Energoin-vest (energy activities). “Montazhi is known for its construction of both residential and commercial buildings as well as electrical instal-lations, heating and cooling systems, and water and waste treatment facilities. Energoinvest produces electrical equipment, transformer

Hakif Gashi, CEO

KOSOVO

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 distribu-tion beyond Kosovo, to Macedonia, Montenegro, Albania and Serbia.

Signifi cant potential in energy sector

Both Montazhi and Energoinvest offer strong growth potential as well. Hakif Gashi points out, “Ener-goinvest has the most potential because Kosovo’s energy sector is very undeveloped. We anticipate

signifi cant 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 fi nancing.” Ener-goinvest 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, effi cient 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 industriale10000 Prishtina, Kosovo Tel.: + 381 38 541 521Fax: + 381 38 541 524

[email protected]

Energy & Mining

• 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

“Looking at the mining sector specifi cally, 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

5050

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.

Justina Shiroka-Pula, Minister of Energy and Mining

51

Ministry of Energy and Mining

Infrastructure Development: The Minister Has Ambitious Plans to Improve the Country’s Infrastructure

Energy & Mining

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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 effi cient, 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 fi rst 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 opportuni-ties 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 qualifi ed 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 fi ve 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 defi nitely very welcomed in Kosovo. I am certain that they will encounter here friendly social and business environment. I am sure too that they will fi nd 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 communica-tion skills, particularly with English speaking people. Looking at the mining sector specifi cally, 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.

5353

A New Power Plant and Untapped Coal Reserves Are Set to Electrify the IndustryAs 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 fi fth 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 require-ments with the government importing up to 400MW of electricity during the winter months. Kosovo, however,

is working hard to bridge this defi cit. 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 defi cits. 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 metaphori-cally and literally.

Energy & Mining

KOSOVO

5454

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.

Mine Games: An Increase in Exploration and Mining Licenses Should Usher in Explosive Growth

55

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 fi fth 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 benefi ts 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 signifi cant 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 signifi cant 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 fi ve exploitable sites globally where such high grade clay, with a value of €112-360 per tonne, has been discovered. Moreover, current world production only

KOSOVO

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 signifi cant 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 fi rst 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 effi cient 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

56

Energy & Mining

more generally. During 2007, a total of 70 exploration and more generally. During 2007, a total of 70 exploration and mining licenses were issued with the country’s explosive mining licenses were issued with the country’s explosive security system (ESS) fully up to NATO standards and security system (ESS) fully up to NATO standards and under the control of the ICMM’s mining inspectorate. under the control of the ICMM’s mining inspectorate. The revenue generated from these licenses is crucial The revenue generated from these licenses is crucial to the country’s budget. In 2007, mining royalties and to the country’s budget. In 2007, mining royalties and other fees amounted to an estimated other fees amounted to an estimated €2 million.

However, this is not a short-term revenue stream. However, this is not a short-term revenue stream. “According to the law a company gets an exploration “According to the law a company gets an exploration license for the fi rst 2 years, and then they can apply license for the fi rst 2 years, and then they can apply for an extension for another two years. However, then for an extension for another two years. However, then the licensed area will be reduced by 50%. They [the the licensed area will be reduced by 50%. They [the company] have the possibility to extend the license company] have the possibility to extend the license three times,” explains Azem Rexhaj. “Within these six three times,” explains Azem Rexhaj. “Within these six years they will have to get the mining license and start years they will have to get the mining license and start mining or they will lose the license. This is so nobody mining or they will lose the license. This is so nobody loses their money because exploration costs are very loses their money because exploration costs are very high. Because of these rules we think that in the next high. Because of these rules we think that in the next fi ve years we will have a minimum of three new mines in fi ve years we will have a minimum of three new mines in the beginning stages of operation and this will for sure the beginning stages of operation and this will for sure continue,” he adds.continue,” he adds.

There has already been a signifi cant level of interest There has already been a signifi cant level of interest in licenses. A series of international companies have in licenses. A series of international companies have entered the Kosovo market on an exploratory basis. entered the Kosovo market on an exploratory basis. For example, Lydian Resources of the UK has three For example, Lydian Resources of the UK has three exploration licenses for projects in Drazne amongst exploration licenses for projects in Drazne amongst other places. North American companies have also other places. North American companies have also received exploration licenses with the initial exploration received exploration licenses with the initial exploration being so promising that many international companies being so promising that many international companies have applied for the full mining licenses.have applied for the full mining licenses.

Beyond this, the government has worked on a number Beyond this, the government has worked on a number of privatisations. The mining sector has seven Socially of privatisations. The mining sector has seven Socially Owned Enterprises (SOEs) that will be presented for Owned Enterprises (SOEs) that will be presented for privatisation. The Ferronikel Company, which stopped privatisation. The Ferronikel Company, which stopped mining as a consequence of confl ict in the area, mining as a consequence of confl ict in the area, provides a highly profi table opportunity for investment. provides a highly profi table opportunity for investment. The ferronickel reserves are signifi cant and the mine is The ferronickel reserves are signifi cant and the mine is connected to the railway giving good access to import connected to the railway giving good access to import additional ore concentrates through Thessaloniki port additional ore concentrates through Thessaloniki port and Albania. It also provides good opportunities for and Albania. It also provides good opportunities for export and employment generation. export and employment generation.

The country is therefore well placed to position itself as The country is therefore well placed to position itself as a leading producer and exporter of minerals and metals a leading producer and exporter of minerals and metals for the whole region. Beyond lignite, which will play a for the whole region. Beyond lignite, which will play a vital role in powering the local energy market, Kosovo can vital role in powering the local energy market, Kosovo can draw on its substantial reserves of base metals which are draw on its substantial reserves of base metals which are continuing to command signifi cant prices on the interna-continuing to command signifi cant prices on the interna-tional market. Therefore, the government is confi dent of tional market. Therefore, the government is confi dent of building effective synergies with the private sector which building effective synergies with the private sector which will benefi t the country and investors alike. will benefi t the country and investors alike.

KOSOVO

57

Energy & Mining

Lydian International

Mineral Exploration and Development Group Confi dent About KosovoLydian International is a British Exploration and Development Company listed on the Toronto Stock Exchange. Lydian is confi dent 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 fi nancing and construc-tion can begin. All our projects in Kosovo are relatively early stage yet

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 signifi cant regulatory emphasis on protecting the environment and engaging local communities. In this sense our operations benefi t 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 inter-national exploration company currently developing resources in Kosovo. We are benefi tting 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 “fi rst mover” in emerging and tran-sitional 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 KosovoTel.: +381 38 249 990Fax: +381 38 248 518

www.lydianinternational.co.ukTim Coughlin, CEO

Workers from Lydian’s local mining contractor Stone International underground at Drazhnje.

KOSOVO

Environment & Spatial Planning

• Going Green: The Ministry Talks About How the Environment Can Help Business

• Infrastructure and Housing Requirements Are Driving the Sector Forward

“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, effi ciency and excellence.”Mahir Yagcilar, Minister of Environment and Spatial Planning

59


Regional Water Company-Prishtina

Water Company Offers Outstanding Investment PotentialThe Regional Water Company-Prish-tina (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 dis-tribution fi eld, 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 distribu-tion is now allowed by law but the government has not yet announced

Skender Bublaku, CEO

KOSOVO

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 distribu-tion 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 fi nd signifi cant oppor-tunities 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

Regional Water Company J.S.C.rr Tahir Zajmi p.n.

PrishtinaKOSOVO

Tel.: +381 38 541 211/129Fax: +381 38 541 437

www.kur-prishtina.com

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 partner-ships 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 fi nancial 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 profi t!”

6060


Ministry of Environment and Spatial Planning

Going Green: The Ministry Talks About How the Environment Can Help BusinessThe 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

KOSOVO

ET: How important is the development of the con-struction 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 infra-structure can also assist economic development in other aspects.

ET: Which particular developments have been signifi cant 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.

61

Ministry of Environment and Spatial Planning

Going Green: The Ministry Talks About How the Environment Can Help Business


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 environmen-tal 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 infl uence 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 con-struction 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 effi cient while working within these guidelines?

M. Yagcilar: Well, they have the technology which we need here and which would provide opportuni-ties for Kosovar subcontractors. At the same time,

KOSOVO

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.

6262


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 opportuni-ties in the construction of infrastructure and associated social, retail and commercial units.

Beyond this contractors and developers alike will be able to benefi t 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 Tel-ecommunications 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 signifi cant 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 fi nanced 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 con-struction industry in other respects. According to the Director of Kosovo’s Construction Department, Naim

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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 signifi cant number of wood and plastic producers that cover domestic demand with a nascent export business starting in the fi elds of wood products and thermo-insu-lation products. With Kosovo’s signifi cant wealth in forests, the wood processingindustry in particular is set to become valuable for the con-struction industry. The country currently allows

Infrastructure and Housing Requirements Are Driving the Sector Forward

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Infrastructure and Housing Requirements Are Driving the Sector Forward


KOSOVO

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 certi-fi cation, testing and inspection of materials. “The testing laboratories as well as the inspection and certifi cation 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 opportuni-ties 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.

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Dukagjini Group

Building Tomorrow’s KosovoDukagjini 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 develop-ments, 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 signifi cant profi ts 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 profes-sionals as well as an ambitious management team. The company also benefi ts 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 univer-sities. “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 signifi cant 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 benefi t from the opportunities here. I say to potential investors, Kosovo is developing very rapidly. Do you want to be part of it?”

Agron Sallova – architectCEO / Design

Construction & Engineering Division Dukagjini Group “Ismajl Qemajli”Str., No.2 – Pejë / Republic of Kosova

Tel: +381 39 432 025, mob.: + 386 49 750 302Fax: +381 39 432 025

[email protected]

Tourism

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

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Tourism

The Industry Has Several Strings to Its Bow Pointing the Way to an 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 inde-pendence 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.

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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

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

Tourism

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 infrastruc-ture 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 infra-structure 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

Kosovo can take heart. Initial steps have already been taken to improve the country’s tourism infrastruc-ture. 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 accommoda-tion, 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.

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Tourism

Eurokoha Reisen

Top Quality Travel ServicesEurokoha 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 offi ces in Prishtina and branches in Stuttgart, Munich, Dusseldorf, Hamburg, Hanover, Zurich and Geneva in addition to its main offi ce in Frankfurt. Eurokoha has 41 highly trained employees in Kosovo.

Eurokoha operates according to the highest interna-tional standards and is a member of the International Air Transport Association. Its certifi ed 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 fi nding 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 organi-sations. 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 fi rst national airline, Kosova Airlines, in 2003. The airline, working in partnership with leading airlines in the US and Europe, now fl ies 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.

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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 fl ights 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 ReisenVellusha e Poshtme 17 - 10 000 Prishtina, Kosovo

Tel.: +381 38 245 998 - +381 38 243 482Fax.: +381 38 249186 - www.eurokoha.net

With special thanks to:

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TaTaT kaka ikik ng Minerarar lala ExExE pxpx lolol rarar tata ion

anana d Deveve evev lolol pmpmp emem nttotot Newewe Froror ntiersrsr

Lydian International is listed on the Toronto Stock Exchange (TSX) under the symbol LYD.

LyLyL dian International through its local subsidiary, Kosovo Resource

Company, is a proud partner in the economic redevelopment of Kosovo.

LyLyL 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.

The European Times - Kosovo

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Transcript of The European Times - Kosovo