Analysts: Arab investments that still won't come

BiH, (Patria) - Chairman of the Council of Ministers of BiH Denis Zvizdić led the BiH delegation on an official visit to Qatar on February 19 and 20.

During their stay in Doha, guests from BiH were received by some of the country's top leaders, including the Prime Minister of Qatar, Sheikh Abdullah bin Naser bin Khalifa Al Thani. The BiH delegation stated: "Bosnia and Herzegovina is a country interested and open to cooperation in the fields of energy, tourism, agriculture, wood and metal processing industries, infrastructure construction, as well as strengthening cultural ties through cooperation in sports and education."

Prime Minister Zvizdić welcomed the introduction of a regular air route between Sarajevo and Doha, "as it will facilitate the arrival of businessmen and tourists to Bosnia and Herzegovina."

Bad experiences in BiH

Economists, on the other hand, are not as optimistic as politicians. Bosnia and Herzegovina is among the less popular countries in Southeast Europe when it comes to foreign investors, and the government has done nothing to change this situation. BiH holds this position primarily due to tangled legal regulations and enormous corruption in the country, which is generated by the leading political parties. Brussels has also been warning about this for some time.

Some Gulf countries, such as Kuwait, did not have the right to purchase real estate in BiH for their embassies until recently, and some Arab countries have not acquired this right to this day. At the same time, it is said that businessmen from these countries are supposed to invest in BiH, which is a kind of paradox.

The media has recently reported on a case in the Centar Municipality of Sarajevo, which refuses to approve the construction of a luxury hotel in Marin Dvor, into which a wealthy investor from Bahrain planned to invest several tens of millions of KM. According to his representatives in BiH, the hotel construction was not approved even though all legal procedures were followed beforehand.

'Announcement of investments as an election bait'

Due to all of this, analysts see the BiH delegation's recent visit to Qatar solely through the prism of the election campaign in Bosnia and Herzegovina.

"Regarding the specific case of the BiH delegation's visit to Qatar, it seems to me that there is more fanfare and new empty promises, and fewer concrete contracts and solid investment projects. It's as if public attention is being diverted from the major failures of the Chairman of the Council of Ministers of BiH, Denis Zvizdić," says Professor Adisa Omerbegović-Arapović, an economist and vice-president of SBB, a party that is making enormous efforts to unblock major investment projects in BiH, but due to the tangled relations with other coalition partners in power, this is proving difficult for now, she told Patria.

Looking at the global ranking, Professor Omerbegović-Arapović warns, 75 percent of the world's countries are a better place for business and investment than Bosnia and Herzegovina, so it makes no sense for investors to come to BiH, at least not in a significant volume. Furthermore, BiH's credit rating, which is largely a reflection of the political and economic situation and the ability to service debt, is in the speculative zone, as out of 131 analyzed countries with a rating, only 18 countries are ranked worse than BiH, and these are mostly countries affected by wars or anarchy.

"Albania and Montenegro also have a better credit rating than us," says Professor Omerbegović-Arapović. Therefore, it is no wonder that small Montenegro attracts large investors. Omerbegović-Arapović adds that in a country where the judiciary only sporadically deals with large-scale economic crime and political corruption, where mechanisms of economic benefit are subordinate to a party octopus of siphoning money and defrauding the state, there are still not many reasons for investment optimism.

'Political stability first'

Omerbegović-Arapović further explains: "A country that is still unable to guarantee political stability, equality before the law, and legal certainty, such as Bosnia and Herzegovina, cannot achieve a significant inflow of foreign investment. At the same time, not enough is being done in the country to systematically promote foreign investments by making the country many times more attractive to investors."

IMF and World Bank economic growth projections for BiH have been reduced several times during Prime Minister Zvizdić's term, partly due to poor implementation of the Reform Agenda obligations, wasted time during the adoption of the Excise Law, which was a condition for financing infrastructure construction, and countless missed deadlines regarding the EU integration process. For many years, BiH has also had a rather poor position when it comes to the percentage of foreign investment relative to GDP, and during Zvizdić's term, net foreign investment inflow in 2015 and 2016 recorded a significant drop, so the existing values of foreign investment relative to GDP do not have the significant positive effect needed for economic growth and development in BiH.

"For the realization of foreign investments, the business climate is most important, which has not improved during the three years of this mandate, according to the rankings of the World Bank and the World Economic Forum," concludes Professor Adisa Omerbegović-Arapović.