UN: Over Doing Business in Kosovo, Corruption Stumbles

The report says that although it is the youngest and poorest country in Europe, Kosovo has seen positive economic growth of 4 per cent on average over the past decade.

Realities are the biggest attractions of foreign direct investment, followed by financial services and construction. Food, information technology, infrastructure and energy sectors are on the rise and present greater opportunities for attracting foreign investment.

Although law enforcement remains weak, it says in the report, Kosovo's laws and regulations are in line with goals of supporting and protecting investments.

Kosovo has a flat tax of 10 percent for corporations”, the report says. In 2016, Kosovo ratified a strategic investment law aimed at facilitating market access to investors in key sectors, and the government worked in partnership with the American Agency for International Development, USAID, and other international donors to launch the Credit Guarantee Fund, which improves access to credit.

With the help of USAID, the Ministry of Trade and Industry is highlighted in the report, a programme to improve Kosovo's ranking in the World Bank's Doing Business Index. Kosovo rose for 20 countries ranking 40th in the World Bank's “Mbi Doing Business” report in 2018, then 44th in 2019. This was the result of Kosovo's high scores in the category of registering a business and transferring property.

Kosovo has a good legal framework for the protection of intellectual property, but implementation remains a challenge, mainly because of lack of resources.

The report notes that a host of factors challenge Kosovo's sustainable economic growth, including limited global economic integration, political instability, corruption and unstable energy supply, the informal economy and weak rule of law, including an apparent lack of contract enforcement.

Polls, reportedly in the report, testify to public perception that corruption is widespread in public procurements and local and international businesses see corruption as one of Kosovo's biggest obstacles to attracting investments.

Among other things, the report notes that the Kosovo Courts are considered politically influenced by the government and exercise particular treatment or “selective justice” for high profile and strong-connected individuals. For example, while courts' detention rates match regional averages, the rate falls considerably for high-profile corruption cases. Kosovo, said in the report, has adopted strong laws to fight corruption, but the government has so far been unsuccessful in efforts to investigate, prosecute, detain and seize the assets of corrupt individuals.

The country, said the report, continues to rely on considerable international financial support and diaspora remittances. The shipments are a significant source of income for Kosovo, and they represent over 12 per cent of GDP, or over $900m, in 2018. Most of them come from European countries, especially Germany and Switzerland. The report quoted the Kosovo Central Bank, under which remittances are largely not used for investment purposes.

The public, the report says, constantly ranks the high unemployment rate in Kosovo, which according to the official data of 2018, amounts to 29.6 percent, as one of the biggest concerns. Youth and women unemployment rates are markedly higher than official data.

However, the report says, despite challenges, Kosovo has attracted a number of important investors, including American companies. Some investors have withdrawn because of Kosovo's relatively new population, the low labour force price, proximity to the European Union market with which Kosovo has signed the Stabilisation and Association Agreement, as well as natural resources.

The report also cites the problems following the Kosovo government's decision to impose 100 per cent tariffs on goods from Serbia and Bosnia and Herzegovina in response to the Serbian campaign against Kosovo's citizenship.