Public-private partnership and ban on land sale are the salvation for BiH

SARAJEVO, (Patria) - The biggest problem in one of the most beautiful countries in the world - Bosnia and Herzegovina - is that those who lead it are only concerned with loans, while their young and educated people are leaving for the West, says Mehmed Polimac, general director of the international consulting firm Polimac Company, for Patria.

"Loans are not an investment if they do not have a clearly prepared economic feasibility study. In Austria, one cannot borrow 500 million without a public debate and even a referendum. We are borrowing two billion for a thermal power plant, six billion for the Sarajevo - Belgrade highway, which is absolutely unnecessary for us," says Polimac.

He notes that we have about 600 million KM from excise taxes, and we continue to use loans while these funds remain unallocated.

"I am sure that those who lead this country love BiH. I will not say that they don't know how to work. But, not knowing, not being able, and not wanting to, there is a difference. The question is what have we done to attract foreign investment. We have 11 different agencies, some are state-owned, some are non-governmental, and they deal with promoting foreign investment. However, apart from shopping malls, I don't see that anything has been invested or done for a better situation in BiH," says Polimac in an interview regarding the promotion of public-private partnerships in BiH society.

Polimac points out that we have many resources, that we do not use them, and that we even import some, like water.

"We also have a problem in that the biggest debtors are those who hold the levers of power, and those are public companies, and let the responsible parties recognize themselves. I am often asked abroad if there is corruption in BiH. I tell them that there isn't, because corruption is highly sophisticated, but there is crime, even though our laws are good. We have 14 billion in capital in banks, which will soon start charging us negative interest, and that goes towards central banks. The European Bank for Reconstruction and Development (EBRD) is providing us with loans under conditions where the interest rate is 0.5 percent, while Euro Libor is 0.1 and can be up to four percent," believes Polimac.

He points out that European officials lobbied for excise taxes so that their commercial banks could place loans. These European banks, he adds, operate under domestic laws, offer us extremely high interest rates, and use the money of our businessmen and diaspora for their depositors.

As a solution, Polimac proposes that the Parliament of the Federation of BiH pass a decision to establish a development and commercial bank, as healthy competition for other banks, which will guarantee as a state, just as it guarantees to the World Bank and the IMF.

"If we form such a bank, we would have 5 to 6 billion KM. This is about utilizing our funds that others are using. I will offer experts with whom I cooperate to do this. I often sit with our diaspora and I can responsibly say that in two years we can attract more than 50 billion. We have extremely smart and capable Bosnians, ready to invest and earn in BiH," states Polimac.

He does not expect the world to easily accept the proposal to form a development and commercial bank, but such banks exist in the world, so he does not expect many problems.

The key, he adds, is the development of public-private partnerships, because investors are giving up due to bureaucratic problems. Another problem is that we are easily spending resources.

"You have Slovenia, which has banned the sale of water resources. We are fifth in the production of drinking water, and we import water. Who is to blame? And we are investing six billion in a highway, and not even 10 cows will pass there. Turks are not coming because they love us, they are collecting tribute here and taking it away. But, with six billion, we can be leaders in livestock and fruit farming and export all of it. We need to regulate the legal framework, educate the people who enter the Parliament of the Federation of BiH," emphasizes Polimac, who himself offers his company to send two young people for training on public-private partnerships.

"We now have lectures and seminars, someone watches a movie and now needs to train on public-private partnerships. Let's pull BiH out, because we might experience our entire working population leaving to seek a better life. Highly positioned people are leaving. We are an excellently organized country, we just need to implement it. People are now working on one thermal power plant, and they haven't even made a coffee grinder. They haven't even gone there, but they are stacking thermal power plants like Lego bricks. The Federation must pass a law on public-private partnerships," says Polimac.

He notes that around 20 billion is held by our diaspora.

"Our diaspora will not come just because they love BiH. We must have a law on public-private partnerships, without it, they won't be able to," says Polimac and adds: "Let's ban the sale of state land. Land is the only non-renewable resource and the land register must not be sold. Let's copy Egypt, which was flourishing. They never sold land, they gave it on concession. Because you will sell Tibra in Novi Grad, they will build buildings and that land will be gone. Egypt said we give land to investors for 99 years, all utility connections are free, and their interest is to collect taxes, to employ people, and so on. Cyprus did the same, they brought in a person who solved the American recession. In Cyprus, they solved the crisis by halving taxes to attract investors. They only taxed what was used," points out Polimac.

Polimac also cites two examples of public-private partnerships that were not realized and which best show that something must change.

The first is the example of solving traffic congestion. A public-private company would be formed to manage parking instead of KJKP Rad. Parking would cost 10 KM in the local community of residence, and 1 KM in other cities. Public transport would be free from 7 to 9 AM and from 3 to 5 PM, and parking in central zones would cost 5 to 10 KM.

The second example is the construction of 100 biomass heating plants (they would use waste wood chips). Polimac explains that if this project were realized, for example in Bihać, heating would be 70 percent cheaper. Exim Bank and Hungarian Elektroprivreda were ready to start the project, but the BiH system is not ready for public-private partnerships.

"It's all a matter of the desire to remove bureaucratic ideas. It takes investors two years to obtain permits. In Italy, Austria, Switzerland, it takes three days. You have the conditions written down, once you meet them, you submit them, and it's done. Let's copy good solutions, because we have the resources with which we can pull the country out of the crisis," concludes Polimac in an interview with Patria.