Free Zones in FBiH to Attract Foreign Investments

SARAJEVO, (Patria) - The 11th regular session of the Council for Foreign Investors of the Federation of BiH was held today at the headquarters of the Government of the Federation of BiH, chaired by the president of this body and Federal Minister of Trade Zlatan Vujanović, and co-chaired by the deputy president and Federal Minister of Development, Entrepreneurship and Crafts Amir Zukić.

The main topic was free zones as a potentially significant instrument of economic policy for attracting foreign investments.

- A free zone is a part of the territory in the Federation of BiH that is specially fenced and marked, and in which activities are carried out under special conditions in accordance with the Law on Free Zones, customs and other regulations governing their work. The law itself stipulated that a free zone can be established in an area that has a highway, main road, river port, airport, or is adjacent to a main railway line, as well as in similar locations where conditions for its operation exist. – said Zlatan Vujanović in his introductory statement.

He added that, in line with the intention to promote and improve this instrument of economic policy, and considering that most of the incentives provided for free zones are subject to regulation at the BiH level, the Government of FBiH, at the proposal of the Federal Ministry of Trade, prepared in cooperation with the Ministry of Economy and Entrepreneurship of Republika Srpska, accepted the initiative to amend the Rulebook on the Application of the Value Added Tax Law. In this way, it was proposed to the Ministry of Foreign Trade and Economic Relations to ensure the implementation of this activity with the Indirect Taxation Authority. The goal is to create conditions for exemption from value added tax for goods (water, gas, electricity) necessary for the final production of goods in free zones.

Given that one of the main goals of free zones is to attract foreign investments and employ new workers, in accordance with the Law, all industrial, trade, and service activities can be carried out in a free zone.

He emphasized that the main characteristics of free zones, as an instrument of economic policy, are special tax and customs treatments prescribed by the Law on Customs Policy, the Law on Free Zones in BiH, and the Law on Value Added Tax of BiH. This law refers to the application of relevant regulations at the level of BiH and the Federation of BiH, and as a novelty, it provides that local self-government units and cantons can establish incentives for free zone users, within their competencies.

Within today's topic, a presentation was held dedicated to the experiences of free zones in our region, and the Free Zone Pirot in the Republic of Serbia was presented, especially via video link.

As stated, among other things, Serbia has 15 free zones covering a total of 2.6 thousand hectares. Their annual production is worth 2.2 billion euros, of which they export goods worth two billion euros. Incidentally, the Pirot Free Zone, its marketing director Vladan Stojanović pointed out, was declared the best in Europe and the third best in the world in 2008.

Members of the Council concluded today, based on the presented data, that at the next session they will invite the directors of four free zones in the Federation of BiH to present their experiences and the obstacles they face in their daily operations. This, it was assessed, will contribute to the efforts of the Government of FBiH to create conditions for their more successful work and, thus, enable further attraction of foreign investments.

Participants of today's meeting were also informed about the activities of the Council's leadership (president and deputy) in the period between the two sessions.

It was concluded today that all levels of government in FBiH should maximally engage in creating the most attractive economic conditions for the establishment of new free zones in FBiH. In this way, the free zone will be affirmed as a very important instrument of economic policy for the purpose of attracting direct foreign investments.