PMR Research is a specialised custom market research unit of PMR Ltd., a British-American company based in Poland. We offer a wide range of research services in Central and Eastern Europe for companies interested in business over the countries in the region.

Research services provided by PMR Research in Bosnia and Herzegovina include:

• brand and company image studies
• research on customer preferences, their satisfaction and their purchasing habits
• product concept tests
• usage & attitude studies
• internet surveys
• quantitative surveys - telephone, CATI, face-to-face
• qualitative research - focus groups, IDIs
• industry analyses (comprehensive analyses of given market sectors performed using PMR's proprietary methodology PMR MarketInsight)
• preparation of databases
• fieldwork services

Why to invest?

Stable currency, for years pegged with EUR Lowest inflation in the region for years Accelerating privatisation programme Favourable legislative treatment of investors 10% corporate income tax Available pool of working force Established foreign investors support fund Tax exemptions Free trade zones

Business and economical environment

Next to Macedonia, Bosnia and Herzegovina was the poorest republic in the old Yugoslav Federation. For the most part, agriculture has been in private hands, but farms have been small and inefficient, and food has traditionally been a net import for the country. Industry still is greatly overstaffed, reflecting the legacy of the centrally-planned economy. However, considerable progress has been made since peace was re-established. Due to Bosnia and Herzegovina's strict currency board regime, which links the convertible mark (Konvertibilna Marka - BAM) to the Euro, inflation has remained low. Privatization has been slow, and unemployment remains on a very high level. The introduction of a value-added tax (VAT) in 2006 has increased the government's tax revenues and resulted in a budget surplus, but also caused a remarkable inflation surge. Bosnia and Herzegovina offers also a 10% corporate income tax rate, which is one of the lowest tax rates in CEE.
The country is a net importer and its trade balance for 2008 has reached -15% of the GDP and is forecasted to stay at similar lever for next four years but with growing international trade exchange turnover. It must be also emphasized that import into the country is growing much stronger than Bosnia export as growth values for 2008 has reached 17.5% and 6.7% respectively.

Export commodities are mostly metals, clothing, wood products while major import commodities include machinery and equipment, chemicals, fuels and foodstuffs. Bosnia and Herzegovina’s major trading partners are Italy, Croatia, Germany, Austria, Slovenia and Hungary.

The 2008 FDI level has reached approximately EUR 0.7bn corresponding to the 5.5% of GDP, with manufacturing and banking among most popular sectors to invest. Looking at Bosnia’s economy most attractive sectors are:

• Agriculture, especially the fruits and vegetable production
• Automotive components
• Financial services
• Construction – in terms of services and materials production
• Energy – especially hydropower
• Mining
• Forestry – 50% of the land is forested
• Tourism (country hosted Winter Olympiad in 1984)
• Metal processing

The Gross Domestic Product growth reached 5.8% in 2008, and is forecasted to contract by 3% in 2009. Main reasons are slowdown of the world economy and following shrinking of foreign direct investments while Bosnia and Herzegovina is exposed to greater risks than other CEE countries having a significant negative international balance account.

Another major economical problem of Bosnia remained inflation, which after a 2007 reduction to 1.5% from 6.1% the year before has again hiked to 7.4% in 2008. However, due to the expected slowdown in 2009 the price change this year is forecasted to be reduced to just a 1%.
Unemployment rate was recorded at almost 40.3% in 2008 what was a major success as it was reduced by nearly a tenth compared with 2007. However, in the coming years in it is forecasted to increase again to 44% in 2009 and 45% in 2010. It must be also emphasized that Bosnia has a significant shadow economy and in reality the amount of jobless people is much lower.

Bosnia and Herzegovina's top economic priorities are: acceleration of EU integration by concluding a Stabilization and Association Agreement (SAA); strengthening the fiscal system; public administration reform; World Trade Organization (WTO) membership; and securing economic growth by fostering a dynamic, competitive private sector.

Social environment

Bosnian’ variety of ethnic groups and strong religious beliefs results in many domestic tensions between three groups: Bosniaks (approximately 40%), Serbs (approx. 30%) and Croats (approx. 20%). These tensions also results in lack of any conducted census showing the number and structure of Bosnia’ inhabitants. Main estimates says it is about 4m, with almost ten% decrease compared to 1991 when last census was made. The country – as all post Yugoslavia ones – suffered a great population shifts which size is almost impossible to estimate. Many people emigrated from Bosnia to Western and Central Eastern Europe. Primary and secondary education take 13 years altogether, after which pupils can enrol to a university.

Infrastructural and technological environment

The Bosnian communications market has been completely liberated two years ago. Since then both fixed-line operators as well as internet broadband services are covering rapidly the Bosnian territory area.

The telephone network needs modernization and expansion. In 2007 there were 950,000 internet users, however there were over a 1.9 million mobile phone users at the end of 2006. The internet penetration rate in mid 2008 has reached 23% and the same parameter for the mobile telephony was recorded the year earlier at 63.5%..
Many urban areas are below average as contrasted with services in other former Yugoslav republics. There are around 21,846 km of roadways in total (including 11,424km paved and 10,422 unpaved roads). Sava River located next to the northern border is open to shipping but use is still limited because of no agreement with neighbouring countries. Bosnia has also a network of 608 km of railways on which traffic is managed by the two separate companies – one for Bosnia and Herzegovina and one for Republika Srpska.
Bosnia has a significant resources of brown coal which is used mostly for electricity production. The other important source of energy is hydropower, which created 44% of the total output in 2006. What is also interesting is that Bosnia is an exporter of electricity – in 2006 the 15% of the total production was send to foreign customers.

Political environment

Bosnia and Herzegovina is a multiparty republic with a bicameral Parliamentary Assembly consisting of the National House of Representatives and the House of Peoples (Dom Naroda). The Chair of the Presidency of Bosnia and Herzegovina rotates among three members (Bosnian, Serb and Croat), each elected as the Chair for a 8-month term within their 4-year term as a member. The three members of the Presidency are elected directly by popular vote.

Bosnia consists of two entities, Republika Srpska and Federation of Bosnia and Herzegovina which are politically independent. Unfortunately for Bosnian efforts to become the EU member political tensions are still vivid between these two, for example in September Republika Srpska has withdrawn from state power transmitter agreement. Bosnia and Herzegovina is also a candidate to NATO membership and a founding member of Mediterranean Union (established in July, 2008).
 
Political structure consists of several levels, division in RS and FOBH being the top one. Next levels are cantons (Federation of Bosnia and Herzegovina only), municipalities, and four cities: Sarajevo, Mostar, Banja Luka and East Sarajevo. The cities has governmental power between municipalities and cantons. There is also District of Brcko in the north, officially governed by both main entities, unofficially being very autonomous.
The Chair of the Presidency of Bosnia and Herzegovina turns around within three members: Bosnian, Croat and Serb.

General data

Area: 51,129 sq km
Population: 3.981mn (2008)
Capital city: Sarajevo
Language: Bosnian, Croatian and Serbian
Ethnic groups: Bosniaks, Serbs and Croats (in order of quantity)
Land boundaries: Croatia (932 km), Montenegro (249 km), Serbia (357 km)

Major economic indicators

	2006	2007	2008	2009f	2010f
GDP (EUR bn)	9.8	11.1	12.5	12.3	12.5
Population (mn)	3.8	3.8	3.9	3.9	3.9
GDP per capita (EUR)	2,543	2,876	3,253	3,187	3,236
GDP (constant prices y-o-y %)	6.7	6.8	5.8	-3.0	-1.0
Exports, real, y-o-y (%)	-7.6	2.8	6.7	-10.0	9.0
Imports, real, y-o-y (%)	13.2	20.2	17.5	-26.0	3.2
CPI (average, y-o-y %)	6.1	1.5	7.4	1.0	2.6
Monthly wage, nominal (EUR)	444	488	568	570	578
Unemployment rate (%)	44.5	44.0	40.3	44.0	45.0
Net FDI (EUR bn)	0.6	1.5	0.7	0.2	0.4
FDI % GDP	5.8	13.8	5.5	1.7	3.3
FX reserves (EUR bn)	2.8	3.4	3.2	2.6	2.5
Exchange rate to USD AVG	1.56	1.43	1.33	1.51	1.49
Exchange rate to EUR AVG	1.96	1.96	1.96	1.96	1.96

Last update: Q2 2009 

Useful data

Currency: Euro-pegged Convertible Mark – BAM or KM (common use)
Time zone: UTC+1 (CET), in summer UTC+2(CEST)
Area code: +387


If you would like to find out more on the Bosnian market opportunities please do not hesitate to contact us directly:
phone: (48 12) 618 90 80
faks (48 12) 618 90 08
e-mail: [email protected]

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Bosnia and Herzegovina market reports
To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Bosnia and Herzegovina.

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Bosnia and Herzegovina market research
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