Kosovo is marking decline in foreign investment

He also speaks of legal shortcomings that are causing problems for some companies in the country.

Radio Free Europe: Mr. Balija, how appropriate is the economic climate for foreign investment in Kosovo?

Shpend Balija: Kosovo is a country that has a lot of potential for foreign investment, for business, but that potential is not developing and used overall. And as such, I don't think we've reached even 50 percent of the potential Kosovo has.

Hence, we cannot say that it is not good or bad because it is a problem to counter the term, good or bad. But I can say that we haven't achieved our potential and there's extraordinary space to do much more than we're doing right now.

Radio Free Europe: What specifically needs to be done, or what are the problems that have highlighted potential investors interested in extending their capital to Kosovo

Shpend Balija: If we look at foreign direct investments in Kosovo, we see a trend in decline, and about 300m euros have been the peak point of foreign direct investment.

This means that it is not a certain amount that we are satisfied with, and also the sectors in which these investments are, are not sectors that represent stability or economic stability for the future and, however, this 300m-euro base grow much more or double within the coming years. We have an economic growth of four percent that is a greater performance than the countries of the region, but because of the high unemployment rate in Kosovo, this rate of growth is not enough. There's more to be done than we're doing right now.

Radio Free Europe: You are mentioning that Kosovo has sufficient potential. But what sectors are foreign investors most interested in?

Shpend Balija: The service sector, for example, is a very successful sector. Kosovo, given that we have a new population who recognise foreign languages, European languages, know information technology, are starting to develop many good companies in the service market and, as such, we have a positive balance in this sector, in terms of export and import.

But there are other markets that could be much more attractive to investors, starting with the agriculture sector, the IT sector that we mentioned, then the mining and mining sector, the insurance company sector, the insurance companies are only 3 percent of the entire financial sector, which is very low if we look at other countries, this percentage is much higher.

If we had handled these companies right from the beginning and had literally supervised them, this market would have developed much better today. Companies operating in Kosovo have no opportunity to provide new services or products because they lack legal grounds.

Still today, security companies continue to be discriminated against in terms of taxes. They have paid 5 percent of their income instead of paying 10 percent in profit, which is discrimination because no other sector does. But now, with the corporate tax Law, we've managed to get it in as the point that it's going to be eliminated from the new bill, it's not going to get involved.

For the first time, this regulates this sector in order to get better and bigger benefits because if companies have more benefits, we create more jobs, we pay more state taxes and we develop as a whole.

These points that we're appointing as the Council of European Investors, we have a lot of sector and we have a lot of things that we're discussing, which we're going to also launch at the end of September in a document, where we sum up all these points and we're also showing our partners, the Government in this case, that from the private sector that we're on the ground every day, we see these shortcomings, these barriers, and we recommend the ways that they should be eliminated. After all, this is good for the country, it's good for citizens, the more private firms gain, the more employment there will be, the more there will be income generation for the state budget.

Radio Free Europe: Mr. Are all local and international companies treated equal in the market?

Shpend Balija: Local and foreign companies are equally treated, legislation treats them equally, and here we have neither a problem nor an obstacle. We actually have very good partnerships with foreign investors and local partners who create very stable investments and create employment countries.

The problem that exists is in some laws. Legislation as such in some cases is discriminated against companies indiscriminately, local or international. But to a certain sector there are huge shortcomings, to imagine in the oil sector there are obstacles, in the sector of insurance companies as well, in Telekom we have different obstacles, where the legislative aspect is flawed, there are no relevant illegal acts often implemented by law and there is no law enforcement. Or, in certain cases, the law is unfairly designed to the private sector.

Radio Free Europe: Can you mention any of the specific laws that present these problems?

Shpend Balija: I can recently take the Red Cross Law as an example, which is a very important institution, a humanitarian organization. But during the draft of this Law in 2010, practice has been taken on a basis in Croatia, and one of the points is for financing of this institution to be done by insurance companies. Article 14 points 1.7 says “Forced vehicle security, one percent gross primary of vehicle safety value”

But never have these sums been paid because there were no sub-law acts specifying who should be paid, how should these be paid, should this be carried to the citizen, should the Central Bank of the Republic of Kosovo take over these payments. A legal uncertainty has been created here that has never been implemented and for the first time has already begun the first indictments against private companies and started winning in court. The main problem is, if we set such a precedent, then really it's very problematic.

Whether an arbitrary company or sector is imposed more legally or with the interpretation of the court so that private capital can be paid to an institution like the Red Cross, then this is a violation of fundamental property rights. It means even though it is financial capital it is private property and no one has the right to take a property or, much less, seize a private capital without proper grounds of expropriation or compensation:

Radio Free Europe: Have you asked for a change in this Law, Mr. Balija?

Shpend Balija: We've started talking with relevant parties to change the Law on the Red Cross. All sides agree, all relevant ministries and institutions agree with us. But there is no willingness to take the step of making the change. And as has the Red Cross, they have placed it in a non-volved position, because since 2010, this very important institution is in poor financial condition and is not well-funded and has many problems.

So, we should aim to create a stability in this case as well for the Red Cross, but also create a equality and a harmonisation of local legislation with European Union practices. Because this practice exists nowhere in the region, nowhere in Europe, but the less there is neither in Kosovo at other times, there is no kind of example that the private company is forced to pay private capital for a certain, arbitrary case.