US State Department: Kosovo has potential for foreign investment, but there are some serious problems

Kosovo has the potential to attract foreign direct investment, but this is limited by failure to address some serious structural problems, such as political instability, interference in the economy, corruption and informality.

“Kosovo has the potential to attract Foreign Direct Investment (IHD), but this potential is limited by failure to address some serious structural issues, including limited regional and global economic integration, political instability and interference in the economy, corruption, non-reliance of energy, informality, difficulty in creating property rights and unclear rule of law, including an apparent lack of implementation of contracts<2>, says the US State Department.

According to the report, the pandemic COVID-19 has not brought permanent changes to Kosovo investment policies.

“Pandemia COVID-19 has not brought permanent changes to Kosovo investment policies. The government adopted several relief measures, which are all temporary and focused on maintaining employment levels and helping businesses preserve liquidity. As such, the relief measures in Kosovo did not significantly impact its broader investment policy”, the report said.

The UN says the net influx of IHD to Kosovo was estimated at 323m euros, a significant increase over the 2019 amount of 255m euros.

In 2020, Kosovo's net inflow of FDI was estimated at $332m [32m euros] -- a significant increase in the 2019 amount, which was $302m [255m euros]. The portfolio's 2019 investment account amounted to $2.05 billion [1.75 billion euros], while capital-worth letters were $1.67 billion [1.40 billion euros] and debt-worth letters worth $325m [26m euros]. Real estate and rental activities are the biggest IHD beneficiaries, followed by financial services and energy. Food, IT, infrastructure and energy sectors marked growth and will likely attract new investments”, the UN reports.

Against challenges, Kosovo has attracted a number of important investors, including several international firms and French from the United States. World supply cuts brought by the pandemic COVID-19 have sparked greater interest from some businesses to use Kosovo as a basis for production for the EU market”, the UN report follows.

In the latest report, the wood processing sector has played a key role in the country's economy.

A key sector of the economy that has maintained a strong growth is that of wood processing. Companies producing kitchens, toilets, doors, and furniture have grown since 2017. The sector is growing and receiving support in business development services and access to finance”, the report reports show, submits Telegrafi.

And so, The UN says that despite the justice sector remains weak in law enforcement, the latter are in line with international standards.

Kosovo's “Laws and regulations are in line with international standards for support and protection of investments, although implementation of the justice sector remains weak. With the help of USAID, the Government of Kosovo continued a series of reforms in the business environment that contributed to improving the country's ranking in the World Bank's Doing Business report. In 2020, Kosovo ranked 57th of the 190 economies surveyed” in this report, the UN says.