Minister of MTI Kosovo: Capacity Building, Legislative Reforms and Job Creation

Kosovo’s Minister of Trade & Industry: Mrs. Hykmete Bajrami

Kosovo’s Minister of Trade & Industry, Mrs. Hykmete Bajrami, establishes the baseline of her country’s economic development plan for our US readers. It is most certainly never rational to offer positive blanket statements when it comes to government announcements for “economic development” and “job creation”. Honestly though, Mrs. Bajrami speaks in a tone subjected to no constraint, but contrarily, through an impassioned discourse regarding what foundational actions must be taken in order to realize such statement as “economic development”.

So delve into the specificities of that conversation below and keep faith, although much needs to be done, opportunity always exists at the building phase. Rest assured they are not alone in this process of development and by extension, neither will the investor upon entering Kosovo.     

 

 

The Ministry of Trade and Industry (MTI) in Kosovo is the most important business ministry with many agencies and department under its umbrella. Please offer our readers a brief on the intricacies of the ministry.

Your assertion that we are one of the most important in the government of Kosovo is true. The broad portfolio consists of six independent agencies with numerous departments. Due to this range of responsibility I am having many meetings with the various bodies in order to create cross agency and cross departmental fluency. The purpose here is to develop a basis of information on all bodies concerning areas of development and how that relates to donor support.

Donors are significant and we are very appreciative of the support we receive; however, we must make sure that their assistance fits within our overall agenda for development. There are cases, for example, where there is a lack of capacity in certain local institutions and donors are sort of pushing through their own projects which often times does not fit with the local agenda. So, we have a program that the government is working on. Through that program we are deriving a strategic local agenda that we want to be the starting point of all future donor projects to gear towards. Ultimately, they are supportive of our agenda and helping fill the voids where we lack capacities.

What are some of these voids that donors can help with?

Each agency and department has its specific needs. For instance, the Trade Department has a solid foundation to operate, naturally, as one of the most important departments considering they handle all the FTAs. However, there are agencies that lack capacities such as Standardization, Accreditation and Metrology. We need to have different labs; we need to have physical capacities in order to make analyses available to the business community for free in order to offer them the support they require to produce goods of high standards, especially for export.

To this end we have asked some of the donors to reorient their support towards these capacities which provides the prerequisite framework required of many businesses and foreign investors. We need to develop this before we can truly promote our assets as a country. What we are also working on is scanning the business environment of regional countries in order to compare their offerings to ours as it relates to foreign investor incentives and capacities. We endeavor to learn from their strengths and arm ourselves with a competitive marketplace that is uniquely attractive to investors. There is no doubt that we must be more active in pursuing and attracting FDI. We really need investments.

You mentioned scanning the regional market to learn what they are doing right. We’ve done some work in Macedonia where their primary promotional agenda centers around their economic zones. Clearly, they had those zones in place prior to doing their widespread promotional campaign on CNN. What would you like to see in place before you move forward with the investment tour that Minister Hoti [finance] said will take place later in the year?

Kosovo Investment and Enterprise Support Agency (KIESA), which is under MTI, has done quite a lot in trying to promote Kosovo in the last years. But the results are not there as we’ve have seen a negative trend of FDI inflows during that same time. We’ve had many intensive meetings with them and with international experts to work on potential solutions by identifying weaknesses and business community demands. It has come to the point where we need some strong success stories that will act as a precedent to other investors who are looking for confidence markers.

We do have economic zones and are working on the physical infrastructure within them to maintain a business microcosm. It’s important for investors to know that the will to improve our business environment is strong and if they invest here they will have a strong partnership with the government. Kosovo should be considered as a potential regional market rather than just Kosovo’s territory. We are not a market that possesses large purchasing power with our 2 million inhabitants, but we are a great place to export from; especially, when considering our CEFTA agreement and the upcoming MSA and bilateral FTAs.

Beyond this our long term goal is accession into the WTO which will augment our current regional integration. What we want to do is improve our fiscal policies and harmonize legislation within different institutions. The latter is very important because there are barriers to business that arise outside MTIs mandate. It is the motive of the new government to address these issues and many ministries are beginning to coordinate in a more synergistic manner.

What are some other obstacles that businesses face here in Kosovo?

Much pertains to investor protection in regards to dispute resolution, contract enforcement as well as perception of corruption within institutions. In order to address the latter we need companies that experience corruption to approach us. We are not a government that will shy away from these accusations; we need to fight corruption with concrete action not just with declarations.

Importantly, the previous government did some good work in removing bureaucracy from the business registration process but we fully recognize that the business registration obstacle fails in importance when compared to investor protection issues. To improve the business environment further we are working to re-establish the National Council for Economic Development. This council would be the place where one would head when permeating and cross-ministerial action must be taken on major issues. In order to show the seriousness of this Council, the Prime Minister himself will chair with MTI acting as co-chair. Our ministry has the closest pulse on the business community’s needs and concerns as well as acting in close conjunction with the Ministry of Finance (MoF) due to the importance of fiscal reforms.

This relationship with MoF is critical in reducing the tax burdens experienced at the border by domestic producers. We are aware of this fact because we listen to businesses on a daily basis. Today it is more expensive to produce in Kosovo than to import. This is not the way it should be. They have talked about paying taxes and VAT at the border; to this end MoF is diligently seeking alternative ways to tax instead of at the border.

Most importantly is the fact that ministries related to economic development are working closely together to move forward our broad economic agenda. We need to work continuously as partners with the business community; they are our greatest source of information, the ear on the ground. Attracting FDI is one thing, maintaining support throughout the entire life of an investment is another and we recognize that, KIESA is aware of that.

Let us for a moment get back to the international donors. In what way does the US contribute to Kosovo’s economic development?

As you know we have several donors supporting MTI but USAID is certainly one of the largest. They have several ongoing projects in addition to G2G assistance where they provide us with expert guidance; notably on financial reforms in conjunction with MoF. An important initiative by USAID is a ‘guarantee scheme’ which will act as a fund of 15 million EUR to be allocated to local banks for the expressed purpose of providing 50% of the collateral required of businesses applying for loans. Once this mechanism is in place and functioning there are others that have verbally stated interest in contributing to the fund as well.

The Judiciary Branch in many transitional countries always seems to be the most ineffective. What cooperation do you have with them in regards to the investor’s protection and have you considered creating a separate court for business concerns?

Yes, definitely. We certainly want to propose something like that but we need to begin dialogue with them. Our court system has various bottlenecks which lead to extremely length case turnaround time. We must ensure that a company does not have to wait three years for a verdict. This can be something we would address certainly at the National Council for Economic Development.

What are some specific sectors of opportunity, currently, in Kosovo that are worthy of promoting to investors?

There are many opportunities in various sectors, especially, when considering that many of them cannot be addressed by local firms who may not have the level of capital required to invest. Specifically, I am speaking of mining and energy and yet another is food processing and packaging. A great asset we possess is our young people and many are eager to work in the IT sector, of which we have several investments here already.

Regarding energy and mining, you broadly mention the two. Do you have any specific plans or areas mapped out that are in some way established in terms of their potential output that we can offer to our readers?

Indeed, we have had foreign business delegations come here and ask something similar. KIESA is already working on a list of projects in this regard. As these pitch sheets (feasibility studies) for specific projects are created we will actively distribute them but they are still in the works. We have a database on the KIESA website that depicts some of the current studies already in place. Be certain that we are looking at making short-list fact sheets of top investment projects in all sectors.

 

As you know we have several donors supporting MTI but USAID is certainly one of the largest. They have several ongoing projects in addition to G2G assistance where they provide us with expert guidance; notably on financial reforms in conjunction with MoF. An important initiative by USAID is a ‘guarantee scheme’ which will act as a fund of 15 million EUR to be allocated to local banks for the expressed purpose of providing 50% of the collateral required of businesses applying for loans. Once this mechanism is in place and functioning there are others that have verbally stated interest in contributing to the fund as well.

 

What are some successful companies that represent Kosovo’s potential?

There are many and in various sectors: IPKO, 3CIS, Sharcem, TEB bank, Xella Construction, Kamila, Trofta Fish Farm, KosovaTex. We are looking forward to more and we are expressing this very publically; ‘we want to work with you, we are trying to create jobs through the private sector.’

It’s a new year, a new government. What do you hope to accomplish in 2015?

A timeframe in this sense is difficult, really though, our citizens do not have a positive opinion of government. So one of the biggest challenges I would like to start seeing is a change in perspective from the people that the government is starting to perform for them, that they begin having hope again. It is our duty. We have to create and maintain credible institutions and regain their trust. With this trust they can begin feeling that they are a more integral part of the country’s growth. They can contribute to sharing with us information and corrupt actions when they come across it without retribution. Trust is the key and it will take time but I think through execution of some of the efforts mentioned earlier we will have the substantial byproduct of trust.

Broadly speaking I’d simply like to not be talking about the same issues this time next year. Also, the effective re-establishment of the National Council for Economic Development I am quite eager to see come to fruition. This Council is a great mechanism to get various ministries to act upon certain issues by committing to change. I really hope that at least we double the FDI inflows to the country. This is one of the objectives.

What sector do you think will have the largest impact on reducing unemployment?

We really need to focus on agriculture and food processing. The budget in agriculture has been increased because we see this as a chain connecting foreign investor opportunity with local farming capacities; it serves both main items on the economic agenda, reducing unemployment and increasing export oriented FDI.

CEFTA has allowed for much inflow of imports and we need to see an increase in production of end products or at the very least general goods for export so we ultimately benefit from the agreement. In order to do this an increase in management skills and maximizing operational efficiencies will be required. For these reasons, western investments will be greatly welcomed and supported since they possess what is required to compete.

I understand there is an FTA with Turkey in the works. Care to elaborate on its potential implications to Kosovo, especially in terms of agriculture?

Yes, the FTA was signed in Ankara in 2013 but has yet to be ratified and it will require 80 votes or 2/3rd of MP support. There are components to the agreement which protects certain products and at this point all considerations are final and not subject to change.

We are also discussing services under CEFTA and asking businesses for their input as well. Unfortunately, Kosovar service providers: architects, lawyers and so forth, are at a handicap due to our visa regime. This makes cross collaboration very difficult. We have to protect our businesses because we are small but we also have to engage in trade agreements because we are small.

Paint a picture of the perfect foreign investment you’d like to see in Kosovo.

I’d really like to see some companies come in and build-out the ICT sector. The young people are eager to work in this sector.

Finally, please speak directly to our foreign investors about why they should consider Kosovo.

The new government is formed and functioning. We are very committed to economic growth as our number one agenda and we realize initially this will have to happen through desperately needed foreign investment. Understanding that job creation comes from the private sector and not the government; everyone gets this notion and we are exploiting it fully.

Investors should rest assured the government will be a partner in listening and acting on their issues. We are not interested in personal gain; our sole interest is in creating a sound framework of legislation and functioning institutions that will entice you to come here and create jobs while making a nice profit. Finally, see us not as a 2 million market but rather one that is actively entering agreements that expand well beyond our borders with protective measures skewed towards your benefit.

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