Doing business in Bosnia and Herzegovina: Bosnia and Herzegovina trade and export guide
Updated 2 August 2016
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This publication is available at https://www.gov.uk/government/publications/exporting-to-bosnia-and-herzegovina/doing-business-in-bosnia-and-herzegovina-bosnia-and-herzegovina-trade-and-export-guide
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Learn about changes for UK exporters to Bosnia and Herzegovina if the UK leaves the EU without a deal.
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Find out how UK companies can control risks when doing business in Bosnia and Herzegovina.
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1. Bosnia and Herzegovina export overview
Bosnia and Herzegovina is located in south east Europe at the heart of the Balkan peninsula.
Contact a Department for International Trade (DIT) Bosnia and Herzegovina export adviser for a free consultation if you’re interested in exporting to Bosnia and Herzegovina.
Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Bosnia and Herzegovina.
The Dayton Peace Agreement ended the war in Bosnia and Herzegovina in 1995. Since then the country has prioritised reconstruction, social integration and state building.
Bosnia and Herzegovina is a potential candidate for European Union (EU) membership. It signed a Stabilisation and Accession Agreement with the EU which came into force on 1 June 2015 and submitted the EU membership application on 15 February 2016.
Around 120 UK companies operate in Bosnia and Herzegovina, mostly through agents and distributors. Leading UK companies in Bosnia and Herzegovina include GlaxoSmithKline, Unilever, Aecom, Roughton International, KPMG, PwC, Ernst & Young, RPC Superfos, University of Buckingham, WYG, JCB and Joy Global.
Benefits for UK businesses include:
- Bosnia and Herzegovina’s access to EU pre-accession funds (IPA) and funding from international financial institutions
- import tariffs eliminated for most EU products
- English widely used as business language
- import-dependent economy with £6.3 billion spent imports in 2015
- few competitors in certain sectors
- £1.8 billion spent on public procurement
Strengths of the Bosnia and Herzegovina market:
- stable currency arrangement fixing local currency to euro
- reformed banking sector dominated by foreign banks
- skilled workforce
- abundance of natural resources
- low operating costs
2. Challenges
It is administratively divided into 2 entities: the Federation of Bosnia and Herzegovina and Republika Srpska and 1 self-governing unit, Brcko District:
There is limited economic integration between the 2 entities. This can create difficulties for UK companies wishing to do business throughout the country.
Other challenges for UK companies include:
- bureaucracy
- high taxation
- complex legal and regulatory framework and weak judicial structures
- lack of transparency in business procedures
- enforcing contracts can take 595 days, according to the World Bank’s Doing Business report for Bosnia and Herzegovina
- corruption - ranks 76 out of 168 in the Corruption Perception Index
- inadequate transport network
- frequent policy changes
- risk of natural disasters (flooding, earthquake)
You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.
3. Growth potential
3.1 Economic growth
Bosnia and Herzegovina is now showing signs of a sustained economic recovery. 3% Gross Domestic Product (GDP) growth is expected in 2016. GDP per capita of USD 4,088 is forecast for 2016. The national currency konvertibilna marka (BAM) is linked to the euro giving a stable monetary system.
Bosnia and Herzegovina was hit hard by the 2009 global economic and financial crisis. The subsequent fall in Gross Domestic Product (GDP) and a budget deficit resulted in the need for a Stand-by Arrangement (SBA) with the International Monetary Fund (IMF). A second loan was agreed in April 2016.
Economic growth is expected in the next few years as the reform agenda is implemented and the country progresses on its path to EU membership. Growth is expected to come from:
- public investment in transport infrastructure
- exports
- use of EU funds
- private, mainly local investment
Bosnia and Herzegovina’s GDP is made up of:
- services sector (66%)
- industrial sector (27%)
- agricultural sector (7%)
In recent years, the country has benefitted from increased software development and other services such as offshoring.
Bosnia and Herzegovina’s standard of living is well below other western European countries. The net salary is around Euro 415 with income levels varying considerably between towns, cities and rural areas.
3.2 Free Trade Agreements (FTA)
Bosnia and Herzegovina is part of the Central European Free Trade Agreement (CEFTA)
It also has FTAs with:
- Turkey
- European Free Trade Association (EFTA)
Bosnia and Herzegovina has established preferential export regimes with USA, New Zealand, Switzerland, Norway, Japan, Russia, Kazakhstan, Belarus, Iran, Canada and Australia.
3.3 Emerging Europe
The Central and Eastern European (CEE) region offers considerable potential for British businesses. UK exports are worth over £16 billion, with goods exports doubling over the past decade, and services exports - over £4 billion - trebling.
The region offers numerous opportunities, particularly in 6 main sectors:
- energy
- infrastructure
- advanced manufacturing
- services
- security and defence
- life sciences
High Growth Europe: Grow your business close to home
Watch our other videos on growing your business in CEE markets
4. UK and Bosnia and Herzegovina trade
UK exports to Bosnia and Herzegovina were worth £59 million in 2015, an increase of 63% on 2014.
Top UK exports are:
- mineral fuels, industrial lubrication and motor oil
- plastic products and components of plastic materials
- pharmaceutical products
- machines and mechanical components for machinery
- electrical machinery and equipment
Export of services increased by more than 200% in 2012. This increase was the result of provision of consultancy services as part of international donor funded projects.
5. Opportunities for UK businesses in Bosnia and Herzegovina
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
Read our publication ‘Emerging Europe - Central and Eastern Europe 2015/2016: The top 50 commercial opportunities’.
5.1 Aid funded business
Bosnia and Herzegovina receives between 150 and 200 million euros per year in the form of loans and grants by governments, and through multilateral development projects. Much of the implementation of these aid funded projects is contracted out to the private sector.
The aid sector offers significant opportunities across many sectors for:
- consultants
- works contractors
- suppliers of goods and services
Identify opportunities to supply products and services to the international aid agencies. Contact DIT’s Aid Funded Business Service for more information.
Contact CommercialEnquiries.Sarajevo@fco.gov.uk for more information on aid funded business opportunities in Bosnia and Herzegovina.
5.2 Infrastructure
Bosnia and Herzegovina has committed to several large and high profile rail and highway projects. These are part of the European highway corridor 5C, which connects central Europe to the Croatian coastline.
There are potential opportunities for UK companies in the on-going construction of the corridor 5C highway, and also in the upgrading of existing local road and railway infrastructure.
Opportunities also exist in water and wastewater projects funded by international finance organisations.
Potential opportunities include supply of:
- consultancy (design and supervision)
- road signalisation and communication equipment
- road safety equipment
- water treatment services and equipment
Contact CommercialEnquiries.Sarajevo@fco.gov.uk for more information on infrastructure opportunities.
5.3 Energy
The current installed capacity in the country’s power sector is around 4,000 Megawatts. It’s made up of thermal (56%) and hydro (44%).
Another 20 projects, valued at more than EUR 2 billion are under development. The estimated value of investment in the development and rehabilitation of the transmission network is expected to reach EUR 279 million by 2020. Projects worth more than EUR 1.5 billion for new coal power generation plants were signed in May 2016.
Opportunities lie mainly in the supply:
- of equipment for coal-fired plants and the transmission grid
- of coal
- services (design, supervision, environment, desulfurisation, etc.)
Contact CommercialEnquiries.Sarajevo@fco.gov.uk for more information on energy opportunities.
5.4 Mining
Bosnia and Herzegovina’s major coal mining companies and the biggest power generating utility have formed a consortium. This is aimed at modernising and expanding production capacity. There will be investment of more than EUR 100 million until 2018, primarily in coal mining equipment.
Opportunities include:
- excavation
- analysis and communications
- supply of mining machinery such as long-walls, road headers, coal transportation systems, crushing and conveyor plants, locomotives, excavators, dumpers, drilling machinery
- gas detection equipment
- engineering services
Contact CommercialEnquiries.Sarajevo@fco.gov.uk for more information on mining opportunities.
6. Start-up considerations
New to market companies should find a local partner which could be a sales agent, representative or distributor. UK exporters should insist on advance payment, or have a confirmed letter-of-credit when doing business with a new local partner.
Financing is an important factor for a Bosnian company making a decision to take on a new UK product line.
Sales support and after-sales service are critical in this market. You should ensure that sole agents/distributors are appointed, either for the whole country or for specifically designated areas or types of business.
Establishing a business in Bosnia and Herzegovina can be a time consuming process. Registering a new business can take around 32 days to complete. A local lawyer should be the starting point when registering a company, and should be retained to follow up at each step of the process.
The most common types of corporations/companies in Bosnia and Herzegovina are:
- limited liability companies
- joint stock companies
The Foreign Investment Promotion Agency of Bosnia and Herzegovina provides information on setting up a company and business structure options.
Contact the DIT Team in Bosnia and Herzegovina for a list of lawyers experienced in setting up a company
7. Legal considerations
The legal and regulatory framework of Bosnia and Herzegovina reflects its complex administrative set-up.
Although regulations related to company registration are harmonised at state level, they are explained in more detail at the entity level.
Bosnia and Herzegovina is in the process of EU integration resulting in frequent changes in legislation. You must get professional legal advice to operate.
Contact the DIT team in Bosnia and Herzegovina to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
Bosnia and Herzegovina has its own set of standards known as the BAS Standard. However, all EU standards are recognised.
The Institute for Standardization is the main body responsible for standards.
Labels must contain:
- name of the product
- full address of the importer and the country of origin
- net quantity/weight/volume
- ingredients
- manner of storage (transport, use, or maintenance)
- pertinent consumer warnings
Technically complex products must be accompanied by instructions on usage, manufacturer specifications, a list of authorised maintenance persons/businesses, warranty information, warranty period, and other applicable data.
All information must be translated into the languages of Bosnia and Herzegovina and affixed to, or accompanying the product.
Product certification is required in order to make sure that the product has undergone appropriate testing and that it conforms to relevant regulations.
7.2 Intellectual property
The Institute for Intellectual Property of Bosnia and Herzegovina is the main body responsible for Intellectual Property Rights (IPR).
The government of Bosnia and Herzegovina is strengthening its intellectual property rights laws in preparation for membership in the EU and the World Trade Organization (WTO). Existing legislation provides a basic level of protection, but civil and criminal enforcement remains weak.
8. Tax and customs considerations
The UK and Yugoslavia signed a double taxation convention which continues to apply in Bosnia and Herzegovina.
8.1 Sales tax
Value Added Tax (VAT) is charged at a fixed rate of 17% for all goods and services.
Excise tax applies to:
- oil derivatives
- tobacco
- beverages including beer, wine and coffee
8.2 Corporate and income tax
Both the corporate and personal income tax rates are 10%.
The Foreign Investment Promotion Agency of Bosnia and Herzegovina provides information on corporate and income tax.
8.3 Customs
The Indirect Taxation Authority of Bosnia and Herzegovina has responsibility for customs.
Import tariffs have been eliminated for 23,000 products from the EU.
You can find more about import tariffs in the Market Access Database.
8.4 Documentation
All goods imported into the customs territory of Bosnia and Herzegovina are subject to customs procedures contained in the Law on Customs policy.
An EUR1 Movement Certificate must be used to support claims for preferential duty rates.
Bosnia and Herzegovina has signed the ATA Carnet Convention allowing temporary export of goods. Temporary exports may:
- be fully or partially free of customs duties
- not undergo any changes except for loss of value due to use
- only enter the country for a maximum of 12 months
9. Business behaviour
There are 3 official languages in Bosnia and Herzegovina, although all are mutually understandable:
- Bosnian
- Serbian
- Croatian
You should use the local language for introductory correspondence.
Business people generally speak reasonable English. Contact the DIT Team in Bosnia and Herzegovina for a list of translators and interpreters.
10. Entry requirements
You don’t need a visa for a visit of up to 90 days. You must ensure your passport is stamped when you enter the country.
You must register with the police within 24 hours of arrival. If you’re staying at a hotel, this will be done automatically by the hotel staff.
10.1 Travel advice
If you are travelling to Bosnia and Herzegovina for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.
11. Contacts
Contact the DIT Team in Bosnia and Herzegovina for more information and advice on your opportunities for doing business in Bosnia and Herzegovina.