Western Balkans – We Rely on Business!

By Majlinda Bregu, Secretary General of the Regional Cooperation Council (RCC)
 
"This region is at the crossroads between the eastern and western parts of the world and as such, can be a safe haven for investments, while simultaneously offering easy access to the global market."
 
The Western Balkans may have numerous problems, but the opinions of business people, 61 percent of them, remain extremely positive. However, to get the full picture of the region, you must consider another fact: namely, 63 percent of Western Balkan citizens are dissatisfied with the economic situation. It is easy to spot signs of disarray, to mention just a few: in the rule of law, the commitment of public officials to understand and solve the problems of the business sector, dispute resolution, the internationalization of the private sector in the region to attract a larger number of foreign and regional investments and to encourage more intensive trade; there is double-digit unemployment and an increasing outflow of highly qualified labor.
 
Nevertheless, between exaggeration and truth, we miss the essential. More than half of the citizens of the Western Balkans believe that the European perspective will improve their lives, that it will strengthen the economic ties of the six Western Balkan economies.
 
Looking through objective indicators, in the last few years, the region has achieved continuous economic growth (a trend of 3.5 percent in 2019 and 3.8 percent in 2020). However, the GDP per capita in the Western Balkans is less than a third of that of the wealthiest European Union member state, Germany, while the average stock of foreign direct investment per capita in the Western Balkans is less than half the stock of foreign direct investment per capita of EU member states from Eastern Europe and constitutes only one-seventh of the European average.
 
Despite this, the region offers a favorable environment for investment, with corporate tax rates ranging between 9 and 15 percent, the lowest in Europe. The monetary and financial systems in the region largely depend on the euro.
 
One of the region's greatest advantages is its human resources, given that in previous years we have added more than 1.6 million[1] highly qualified people to the total workforce. Furthermore, the Western Balkan region is a demanding domestic market whose free trade agreement allows open access to almost 20 million users.
 
The region needs to adopt a common proactive approach to improving the business climate and presenting itself to the global business community.
 
This region is at the crossroads between the eastern and western parts of the world and as such, along with a series of free trade agreements and preferential trade status with third economies (EU, USA, European Free Trade Association – EFTA, Turkey, Russia, and the Commonwealth of Independent States – CIS), can be a safe haven for investments, while simultaneously offering easy access to the global market. Foreign investors have recognized the existing opportunities in the Western Balkans, and as a result, the region recorded an inflow of one billion euros in foreign direct investment last year.
 
However, the prevailing opinion is clear and states that this is still modest and far below the actual potential of the Western Balkans. The magic word is connectivity. Connecting markets, people, integrating the six Western Balkan economies into a single European market. This is the reason behind the Western Balkan Regional Economic Area, which aims to bring together the goods, services, investments, business community, and skilled workers of these six economies.
 
Within these activities, the Regional Cooperation Council has brought together governments and business people from the region to work with us on enabling the free flow of investments, human capital, and communications, the results of which will have a direct impact on businesses and the quality of life of our citizens. Not to mention the horizontal implications of our work on the underutilized potential of the region, such as small and medium-sized enterprises, the industrial base, the development of regional value chains and their inclusion in global value chains, and increasing the employment rate of women and youth.
 
Business people from the region support us in this idea, with almost 70% saying that regional cooperation is important for their business.
 
Under the umbrella of the Regional Economic Area, together with the region and with the support of the European Union in this regard, we have so far:
 
• achieved a historic regional agreement on the abolition of roaming charges and paved the way for significant reductions in roaming charges between the Western Balkans and the European Union, which represents a turning point for our businesses and citizens in the development of an open regional market,
 
• initiated negotiations on a regional agreement that will enable the creation of a regional mobile expert group and allow for the free movement of human capital in the region, primarily through the mutual recognition of professional qualifications in the medical and construction sectors, as well as the recognition of academic qualifications obtained at recognized higher education institutions,

• for the first time, enabled a joint investment program in the region, which will lead to a common investment space and reforms in the areas of investment entry and protection, along with promoting the region as a good investment destination to the global business community, to which we are now contributing by launching reforms in the financial sector to enable access to various financing opportunities for economic activities.
 
This is an ambitious, though certainly not the only, undertaking in the work program of the Regional Cooperation Council, and we are very aware that the economic reconciliation of the region will contribute to the prosperity of us all.