investing in kosovo 2010

This conference is supported by

Foreword

2010 | INVESTING IN KOSOVO 1

Atlantic and regional integrations, through implementing the highest standards and criteria of good governance, responsibility and transparency.

Kosovo is a fledgling democracy with a wide spectrum of developmental requirements, which has perhaps been reflected in recent events. It will continue to transit through the growing pains common to many young nations but will not be detracted from its core aims, central to which is to develop its economy through encouraging private sector growth.

Our government has identified its top priorities to accelerate the economic and social development of Kosovo on the way to economic growth and prosperity and I warmly invite you to become a part of this development.

Sincerely Hashim Thaçi

Friends, allow me to share with you my personal conviction, that in these uncertain times, investing in a young country such as Kosovo, with a functioning

democratic system bolstered by healthy economic indicators presents a positive alternative for your business.

The declaration of independence from the Parliament of Kosovo on 17 February 2008 was a historical date and created a new stage for the people of Kosovo.

The recognition of the independence of Kosovo from 70 nations, among them the most powerful economies in the world, reflects the support the new country has within the international community and the legitimate right of the people of Kosovo for self-governance.

we call upon the remaining members of the international community to follow the lead set by the United States and the UK, amongst many others, by embracing our country and recognising our independence.

our vision for the further development of Kosovo is for a nation developed in accordance with democratic principles, a sustainable economy, a multi-ethnic environment, and a full commitment towards Euro-

ForewordHasHim THaçi Prime minisTer OF THe rePUBLiC OF KOsOVO

2 INVESTING IN KOSOVO | 2010

INTRODUCTION

fifth largest proven reserves of lignite, where mining is the country’s largest industry, followed by textiles, agriculture, whilst there is also huge potential in tourism. Allow me to assure you that Kosovo ought to be your next destination.

I believe this first US-Kosovo Trade and Investment Forum will provide first hand information on the investment climate in Kosovo. It will also provide evidence of our commitment to supporting your business interests.

Investing in Kosovo will add to the recipe for building a brighter future for the youngest europeans. Hoping to see you all in Kosovo!

HE Avni Spahiu, Ambassador of the Republic of Kosovo to the United States of America

It was October, two years ago, when the government of the newly independent Republic of Kosovo established its first Embassy in Washington DC. Today, we are here

together in our third year of independence launching the First US-Kosovo Trade and Investment Forum.

Kosovo will never forget the support it received from the United States in the days when it was fighting for freedom and during the difficult road to independence. We are now working closely in building a new democratic country sharing common values and ideals which lay the foundations of present and future relations.

Apart from international recognition of its independence, Kosovo is eager to force a pace for economic development. we are dedicated to further deepening and strengthening US-Kosovo trade and commercial connections. Therefore, welcoming the American business community will remain a priority commitment.

Kosovo has the youngest population in europe; an excellent geographic position; a favourable investment environment; low taxes; and a sound banking system. We are a land rich in minerals, possessing the world’s

IntroductionH.e. aVni sPaHiU, amBassadOr OF THe rePUBLiC OF KOsOVO TO THe UniTed sTaTes OF ameriCa

CONTENTS


Publisher: Chris GerrardContributors: Jonathan Capal, Justine Doody, Sarah Hugo, Robyn Kingston and Moin SiddiqiArt Director: Steven JonesConference team: deanne Lintorn, Jennie wengroviusJoint CEOs: Leon Isaacs, Atam Sandhu

Correspondence Developing Markets Associates Ltd (DMA), 150 Tooley Street, London, SE1 2TUemail: [email protected] | web: www.developingmarkets.com | www.moneymove.org | www.sendmoneypacific.org

DMA acknowledge the assistance of all the individuals and organisations who have contributed to his publication. The views expressed herein are the opinions of the authors, and do not necessarily represent the Embassy of Kosovo, the Government of Kosovo or DMA. All rights reserved. No part of this publication may be reproduced or transmitted in any form without the written permission of the publisher.

Published by Developing Markets Associates Ltd (DMA) Printed by Gap Printing Picture credits: istockphoto.com

© Developing Markets Associates Ltd

Economic ovErviEw 4Political history 12natUral rEsoUrcEs 15infrastrUctUrE 18toUrism 20EnErgy 22vEnUE 25sPonsors 26ProgrammE 29

Contents

From the mid-2000s, Kosovo has staged an impressive recovery, helped by official aid and remittances. Europe’s youngest nation received EUR2.7bn from the international donor community over 1999-2007 and with an estimated 700,000 Kosovans living abroad, remittance flows are crucial to sustain growth in consumption. Resource inflows were managed prudently, reflecting investments in public infrastructure and services – both hards (roads, housing and utilities) and softs (education, healthcare and markets) as well as improving the investment climate. Over 50,000 houses have been rebuilt and 1,600km of roads rehabilitated. Agricultural production now exceeds pre-conflict levels.

Consequently, real GDP growth has averaged a highly respectable 6% during the past decade. In fact, since 2002, gross national output has surged by nearly five-fold; representing a compounded annual growth rate (CAGR) of over 21%. Ahmet Shala, Kosovo’s Minister of Economy and Finance, explains “if you look at the GDP, in 2002 it was just EUR800mn and now it’s EUR3.9bn, so Kosovo is moving

A decade into its post-conflict transition, Kosovo, a fledgling democracy in the heart of the Balkan Peninsula, finds itself at a crucial juncture; moving

steadily from its reconstruction process to one of sustainable economic development. while there are positive trends, notably progress in nation building (from scratch) and improving macroeconomic fundamentals, significant challenges remain. With the active support from international partners, this decade should witness the rise of Kosovo as a small but dynamic marketplace in southeast europe.

The government of Kosovo has made great strides towards integration into the global and European communities after decades of isolation as a province of the former Yugoslavia. Significantly, the country has embarked on an ambitious programme to improve the business climate by undertaking fiscal and legislative reforms and by improving basic infrastructure. Promoting inward investment is a top priority, as foreign aid will start to decline in coming years.

Economic OverviewTransFOrming THe reCOVery inTO LOng-Term PrOsPeriTy By mOin siddiQi, eCOnOmisT

ECONOMIC OvERvIEW


Public investment spending is rising, mainly due to the start of the mega project ‘Route 7 corridor’ – the construction of Kosovo’s first highway. The World Bank estimates its cost at EUR987mn (24% of GDP) over a four-year period. Given the country’s infrastructure needs, capital expenditure accounts for about one-third of government spending. The IMF projects economic growth at 4.6% this year, edging up to 5.9% in 2011.

The largely foreign-owned banking sector was relatively unscathed by the credit crunch and remained both healthy and well capitalised, although financial strength varies across individual banks. The three biggest lenders (ProCredit, Raiffeisen Bank and Nova Ljubljanska Banka) held about 90% of total deposits as of March 2010.

The Central Bank of Kosovo (CBK) strengthened its supervisory capacity and instructed banks to lower the ratio of loan to deposits to a prudent level in order to prevent sudden liquidity shortages. The IMF stressed the importance of strong risk and liquidity management, effective supervision, and an appropriate bank resolution framework to mitigate future risks. In March 2010, non-performing loans at 4.6% of total lending, plus a loan-to-deposit ratio of 78% compared favourably with other Southeast European countries.

An FDI-friendly economy

It is worth exploring the hidden natural and mineral wealth of Kosovo. Zinc, lead, nickel, gold, silver, chrome, bauxite, and cadmium are deposited in the Trepca mineral-belt (in the north of Kosovo). Over 60% of arable land is productive, while the southern mountains offer potential for winter tourism in the Balkans. The young nation is eager to form links with the investment community. Higher foreign direct investment (FDI) inflows bringing technical and managerial inputs will help improve connectivity, whilst expanding long-term output potential.

Encouragingly, inward investment continues to rise steadily despite aggressive regional competition and tough market conditions. Since 2001, Kosovo has received over EUR2bn (USD3.1bn) worth of net FDI. This year and next, investors are expected to pour EUR351mn and EUR701mn respectively into various sectors, according to the IMF (see Chart 2). Currently, the top five investing countries are Germany, followed by Slovenia, Italy, Switzerland and the UK. Sizeable volumes from Austria, Belgium, France, Holland, Norway and Sweden were also reported.

Major foreign companies operating in Kosovo include Raiffeisen Bank, BNP Paribas, ProCredit Bank Group, Nova Ljubljanska Banka, vienna Insurance Group, Uniqa, Xella L.L.C., Holcim, Strabag, Telekom Slovenia, Trofta, StoneCastle, Ferronickel, UNIQA, NewkoBalkan L.L.C., Gorenje, CISCO and Microsoft. The Business Registry data for 2009 put the number of foreign and mixed-

ahead quite quickly. Of course, there are big challenges, but we are taking measures on key areas such as privatisation, electricity, education, infrastructure and legislation. I believe the energy we have put into making a business-friendly environment here will move the country ahead.”

The International Monetary Fund (IMF), which in July 2010 approved EUR108.9mn 18-month Stand-By Arrangement for its 186th member, issued the following statement: “Kosovo’s economic performance has strengthened considerably over the past decade, but large imbalances persist. The external imbalances reflect infrastructure bottlenecks, especially in the transport system and energy sector, that continue to stifle productivity and competitiveness.” Against this background, the authorities are taking concrete steps to reduce the budget deficit, improve public financial management, and enhance tax administration, thereby restoring fiscal sustainability. These structural reforms will be supported by measures – aimed at improving the nation’s efficiency through privatisations and bolstering the performance of the energy sector.

Weathering the storm

The global financial crisis only had a moderate impact as Kosovo registered positive growth rates throughout the eurozone recession (see Table 1), despite a fall in Diaspora remittances (estimated at EUR498mn in 2009), along with waning demand for exports. Currently, exports only account for around 4.0% of national GDP in Kosovo, and as such the impact of the latter has been limited.

To safeguard against regional contagion risk, Kosovo formed a multi-agency committee, led by the Central Bank of Kosovo (CBK), the Ministry of Finance and Economy and the Commission for Budget and Finance.

The authorities also created a EUR200mn fund for any sector needing liquidity, intensified on-and off-side supervision of banks and ensured closer policy coordination with other European regulators (mainly Austria and Germany). Tax cuts and other policy stimuli were implemented to sustain consumer/business spending during the downturn. In addition, as opposed to its neighbours, Kosovo has unilaterally adopted the euro and ensuring the stability of its currency has not been under threat.

Private sector activity in recent months has strengthened, with remittances and exports recovering (see Table 2).

ECONOMIC OvERvIEW


If you look at the GDP, in 2002 it was just EUR800mn and now it’s EUR3.9bn, so Kosovo is moving ahead

Potentials for dedicated investors exist in mining, base metal processing, textiles, agro-business, construction/associated infrastructure, wood processing, tourism, outsourcing, and information and communication technologies (ICT). Privatisations of the state-owned mobile operator vALA and PTK, the post/ telecom operator are expected soon (check). Also a relatively inexpensive, skilled labour force with knowledge of major European languages is ideal for setting up call centres or other consulting services targeting EU markets. English is widely spoken due to years of the UN-led administration that ruled after the conflict.

The government aims to mobilise increased private capital through cutting transactional and regulatory costs and encouraging competition. Recently, a law on concessions was passed to facilitate public-private partnerships (PPPs) in infrastructure. The construction of a thermo-power station with the capacity of 1,000MW and new highways to Albania, Macedonia and Serbia (costing about EUR1.3bn) are either already well under way or in the planning stage. The opening of a new highway linking Kosovo with the Albanian port of

owned firms at 2,700, steeply up from 593 in 2004. Small and medium-sized enterprises (SMEs) form the bedrock of Kosovo’s private sector and a large chunk of foreign investment goes into these – the engine of job creation and poverty alleviation.

Kosovo offers fiscal incentives such as low corporate profit tax of 10%, zero value-added tax (vAT) or export duty, simplified registration procedure, a cost-productive (flexible) workforce and most importantly, the Euro as ‘sole tender’ provides Kosovo with a competitive edge over its Balkan peers due to low transaction costs and the elimination of currency risk. This should promote more trade-investment. Moreover, UNMIK-Regulation 3/2001 guarantees (unlimited) repatriation of interest, profits and dividends (IPDs), prohibits favouritism and discrimination, and provides protection against expropriations.

Kosovo is strategically located in the Balkans to attract ‘vertical’ or asset-seeking FDI, which is usually export-oriented and involves relocating parts of the production chains to low-cost locations. The output is mainly exported to the investor’s home country and/or regional markets. Hence, FDI is unaffected by the host country’s market size. Investors enjoy customs-free access to Western and Central European markets via the EU Autonomous Trade Preference (ATP) Regime and Central European Free Trade Area (CEFTA) of 30mn customers. Quantitative and qualitative restrictions apply on very few products.


ECONOMIC OvERvIEW

Investors enjoy customs-free access to Western and Central European markets … of 30mn customers

Tangible progress is evident in the construction of the country’s legal framework for private enterprise, following the enactment of the mortgage, bankruptcy, and immovable property rights and registry laws. The capacity to enforce new legislation still needs to be strengthened and some municipal regulations are still viewed as costly to businesses. A 2009 World Bank survey, comparing Southeast Europe’s 23 cities, ranked Prishtina 12th overall in terms of ease of doing business, ahead of major regional capitals such as Belgrade (13th) and Zagreb (19th). Early efforts in Kosovo have led to the adoption of key commercial legislations, chiefly in high-priority areas: business organisations, contracts, pledges and inward FDI.

Although Kosovo has instilled the appropriate institutions for economic governance, it needs fiscal sustainability and better delivery of public services. That said, Kosovo has had a limited experience of a functioning government of any kind. As a province of Serbia it never decided its own capital budget or current budgetary expenditure, collected revenues of any significance or ran a formal system of government. It relied heavily on annual federal transfers equivalent to 40% of GDP during the 1980’s, which dried-up in the 1990’s due to ethnic strife and the subsequent disintegration of former Yugoslavia.

Moreover, years of exclusion from the job market and poor education under the tragic ‘Milosevic’ era deliberately eroded human capital, with many citizens lacking the necessary skills and training. But new investments in schools, health clinics and industrial restructuring are alleviating these problems. despite the oppression and virtual non-entry to higher education, the Kosovans ran quite a sophisticated underground education network.

Generating new exports

Kosovo boasts one of the world’s most liberal trading regimes. Exporters receive a full vAT rebate and zero tariff rates apply to imports of selective capital and intermediary goods. No trade protectionism measures are in place. Exports to the EU are subject to a zero tariff. Furthermore, the new Customs Code offers a number of investor friendly trade-facilitating incentives.

despite its favourable trading regime, Kosovo is currently not an export-oriented economy with only modest production capacity. In 2009, merchandise exports accounted for only 9% of imports (see Table 2). As the economy grew between 2005 and 2009, imports almost doubled. The Eurozone is Kosovo’s largest trading partner. Exports are based almost exclusively on low value base metals and scrap. The World Bank advised Kosovo to develop export-oriented policies to foster export of final products and improve the trade balance.

The structure of imports is, however, dominated by machinery and raw materials and provides the basis

Durres will reduce the over-reliance on importing goods from Serbia. This highway forms a part of the ‘Trans European Corridor X’ – connecting the Adriatic Sea with western europe.

Prishtina’s rapid accession to the World Bank and IMF should reduce country-risk. The membership of these international financial institutions (IFIs) will provide a source of external capital (in the form of grants, emergency financing and project funding) and policy advice to tackle developmental challenges.

Prioritising structural reforms

Kosovo is committed to deepening its market reforms to protect its hard-won gains, notably its single-digit inflation and trade liberalisation, as well as mobilising private capital in energy, transport and telecommunications. Unbundling its large parastatals and installing them with new management is seen as a conduit to unleashing the commercial potential and attracting private capital in would-be subsidiaries.


ECONOMIC OvERvIEW

Kosovo is committed to deepening its market reforms to protect its hard-won gains, notably its single-digit inflation

ECONOMIC OvERvIEW


(iii) improve the state’s capacity to channel resources to priority areas;

(iv) trade expansion;

(v) promote social development (including skilled labour).

Achieving such objectives will underpin higher total factor productivity, superior returns on investment and rapid growth, which over time can provide new production capacities. As for the donors, their pledges to support Kosovo until its economy fully develops, and governance and market institutions reach maturity, are equally vital for the broader society.

The government is resolved to enhance the well being of citizens through sustainable development and inward FDI. Fostering a skill-based economy, diversification and closing the ‘infrastructure gap’ are crucial to greater prosperity. Skilled labour and technical capacities are important for diversifying exports towards production of ‘value-added’ tradable goods. An OECD report, Business for Development: Fostering the Private Sector highlighted a correlation between a country’s export variety and its level of productivity.

Kosovo has achieved an enormous amount since the ending of the 1998-99 conflicts. The future is promising; it has the youngest population in southeast europe with one-third of Kosovans younger than 15. With an improved educational system and vocational training, human resources are fundamental to future growth.

In sum, Europe’s new nation is ripe for development. Mobilising private capital is critical. As multi-donor money decreases, inward FDI will become the most important factor to support economic activity over the medium-term. The advice from the UN Development Programme (UNDP) is simple “Sustainable post-conflict economic recovery requires an environment that assures citizen security, supports inclusive development, provides an adequate infrastructure, protects property and investment from predation, ensures predictable and fair taxes and incentives and reduces the cost of doing business.” On these criteria, and in many others, Kosovo is making steady progress in moving forward.

for import substitution. This should enable Kosovo to produce export-oriented products in coming years. About 40% of construction and agro processing materials are now being produced locally and therefore play an import substitution role.

The mining and energy sectors are potential key sources of future exports. Mineral exploitation from the Trepca mines – including zinc, lead, gold and silver – offer plentiful scope, and a strong upturn in global industrial activity will improve the commercial viability of existing and new projects. Similarly, utilising vast ‘untapped’ brown coal or lignite resources of 15bn tonnes (the world’s fifth largest) can provide cheap feedstock for building new power stations. This would transform the energy sector into an engine of growth by boosting domestic electricity supply and exporting surpluses to neighbouring countries. Kosovo has the potential for energy export, if planned investments take-off over this decade. The government is also developing projects for producing 400 Mvh renewable hydropower energy.

The pillars of a stronger economy

With most rehabilitation work nearly completed and a basis for macro-stability in place, the most pressing goal for Kosovo is to achieve output growth that is sufficiently robust to reduce unemployment and be regionally and socially inclusive to foster national reconciliation. According to the IMF, policymakers are to target GDP per capita growth of at least 5% per year – a prerequisite for increased job creation.

An estimated 40,000 Kosovans enter the workforce every year. Ranjit Nayak, Kosovo’s World Bank representative, states: “Generating sustainable employment is key to reducing poverty and encouraging growth and requires a multi-sector approach since creating more and better jobs is a cross-sectoral challenge affecting a range of issues.” The Bank is supporting a three-year Sustainable Employment Development Policy Programme with grant funds of EUR60mn.

Attaining robust expansion demands boosting fixed investment to 35-40% of GDP/year, which, combined with more jobs and solid gains in total factor productivity, should sustain output growth at about 6-7%. But given relatively low domestic savings, Kosovo’s own resources to undertake huge capital investments will need to be underpinned by continuous external support (including foreign investment) to fill the annual funding gap.

The Kosovan authorities and donors are agreed that the former must preserve enabling policies aimed at

(i) good governance that fosters business facilitation and economic diversification, while maintaining fiscal discipline;

(ii) expedite reform of the public sector;

Europe’s new nation is ripe for development. Mobilising private capital is critical

ECONOMIC OvERvIEW


-4.0

-2.0

0.0

6.0

2.0

8.0

4.0

10.0

12.0

14.0

16.0

18.0

chart 1: PAST AND FUTURE TRENDS IN REAL GROWTH RATES (ANNUAL PERCENT CHG)

sources: Kosovo authorities and imf projections

4.0 3.9

11.7

15.5

2007 2008 2009 2010 2011 2012 2013

gD

P

inve

stm

ent

Expo

rts

gD

P

inve

stm

ent

Expo

rts

gD

P

inve

stm

ent

Expo

rts

gD

P

inve

stm

ent

Expo

rts

gD

P

inve

stm

ent

Expo

rts

gD

P

inve

stm

ent

Expo

rts

gD

P

inve

stm

ent

Expo

rts

13.1

14.916.0

12.711.6 11.3 12.1

-1.8

5.4

4.2 4.04.6

5.95.2

8.9

5.24.9

0

100

200

500

300

600

700

400

800

chart 2: FOREIGN DIRECT INvESTMENT (NET) IN KOSOvO (MILLIONS OF EUROS)

sources: imf

640

579

341301

351

701

401

453

553

617

2007 2008 2009 2010 2011 2012 2013 2014 20152001-2006

ECONOMIC OvERvIEW


Est. Proj. Proj. Proj.2008 2009 2010 2011 2012 2013

nominal gross Domestic Product (gDP)(in millions of euros)(1) 3,849 3,868 4,113 4,480 4,803 5,110Nominal GDP growth 12.8 0.5 6.3 8.9 7.2 6.4Real GDP growth (annual % chg) 5.4 4.0 4.6 5.9 5.2 4.9Consumption 3.7 2.5 3.1 2.7 2.9 3.0Investment 15.5 13.1 14.9 12.7 8.9 5.2Merchandise exports 4.2 -1.8 16.0 11.6 11.3 12.1Merchandise imports 6.0 3.5 10.8 5.1 4.8 3.8Contribution of foreign aid to GDP growth 1.0 0.5 -0.4 -0.7 -0.7GDP per capita (annual % chg) 3.8 2.5 3.0 4.3 3.7 3.3

Consumer price index (CPI), period avg 9.4 -2.4 1.7 3.2 2.2 1.9GDP deflator 7.0 -3.4 1.7 2.9 1.9 1.4Gross capital formation (%) of GDP 28.9 29.8 32.5 33.3 32.9 32.0National Savings (%) of GDP 5.4 4.8 6.3 8.9 10.6 12.5gEnEral govErnmEnt bUDgEt (%) of gDPrevenues(2) 24.5 29.7 28.9 27.5 27.9 26.5Primary expenditures 24.7 30.3 32.0 32.8 31.7 30.8Of which: Capital and net lending 7.6 11.7 13.3 14.3 13.2 12.2Overall fiscal balance(3) -0.2 -0.6 -3.1 -5.3 -3.8 -4.3Total public debt (in millions of euros) 690.0 729.0 789.0 929.0 1190.0Of which: domestic debt 0 0 0 100 266

tablE 1: KEY MACRO-ECONOMIC AND FINANCIAL INDICATORS (IN PERCENT, UNLESS OTHERWISE INDICATED)

(1)the economy is currently service-based; with services comprising roughly 60% of gDP, while agriculture and manufacturing account for 20% each. (2)assume budget grants of EUr75mn per year in 2010-12; (3)incl. national interest payments.sources: Kosovo authorities; and imf estimates and projections.

Est Proj. Proj. Proj. Proj. Proj.2009 2010 2011 2012 2013 2014 2015

Exports (f.o.b) 163 220 280 326 393 502 622Imports (f.o.b) 1,807 2,052 2,197 2,341 2,476 2,586 2,740Merchandise trade balance -1,644 -1,832 -1,917 -2,015 -2,083 -2,084 -2,118Goods and services balance -1,558 -1,727 -1,809 -1,867 -1,867 -1,838 -1,849

Merchandise imports (%) of GDP 49.2 50.0 49.0 42.0 40.7 39.0 37.4

Transfers 744 850 865 884 863 916 977Of which: official transfers 247 316 278 250 185 208 228Inflows of workers' remittances 498 522 564 598 634 672 712

Remittance (%) of GDP 13.0 12.7 12.6 12.4 12.4 12.5 12.6

Current account balance -720 -760 -815 -821 -809 -717 -653As (%) of GDP, incl. grants -18.6 -18.5 -18.2 -17.1 -15.8 -13.4 -11.5

Foreign direct investment (net) 301 351 701 401 452 553 617FDI inflows (%) of external deficit 41.8 46.2 86.0 49.0 55.8 77.1 94.5Net foreign assets of CBK(1) 1,088 1,104 1,288 1,303 1,334 1,367 1,417Gross international reserves 663 584 668 581 577 574 586

Public external debt 690 729 789 829 924 1,020 1,115Total debt stock (%) of GDP 17.8 17.7 17.6 17.2 18.1 19.0 19.7

tablE 2: BALANCE OF PAYMENTS, 2009-13 (MILLIONS OF EUROS, UNLESS OTHERWISE INDICATED)

(1)the central bank of Kosovo; (2)scheduled interest & amortisation payments as % of total exports. source: imf staff estimates and projections.

source: the ministry of trade and industry.

EU

cEfta

other Europe

non-European countries

MAIN DESTINATION OF EXPORTS (PERCENT OF TOTAL 2007) EU: EUROPEAN UNION; CEFTA: CENTRAL EUROPEAN FREE TrAde AreA.

43%

42%

13%

2%

source : the ministry of trade and industry.

cEfta

EU

other Europe

non-European countries

MAIN SOURCE OF IMPORTS (PERCENT OF TOTAL 2007)EU: EUROPEAN UNION; CEFTA: CENTRAL EUROPEAN FREE TrAde AreA.

36%

35%

16%

13%

ECONOMIC OvERvIEW


2009 2010 2011gross financing rEqUirEmEnts -853 -846 -901Current account deficit, excl. grants 720 835 890Amortisation of medium & long-term public debt 133 11 11availablE financing 853 803 838Official current transfers from EC & IDA 0 75 75Capital transfers 87 16 5FDI net 301 351 701Net bank financing -118 -12 -14Government loans 0 4 8Other financing 561 385 247Net foreign assets of the CBK 23 -16 -184financing gaP 0 43 63Financing:International Monetary Fund - 43 63 Percent of quota - 64 93

tablE 3: EXTERNAL FINANCING REQUIREMENTS, (IN MILLIONS OF EUROS UNLESS OTHERWISE INDICATED)

source: imf.Ec - the European community; iDa - the international Development association.

POLITICAL HISTORY


dogged by tragedy and injustice. The Kosovo Albanians, were looked upon from the start with suspicion and were deprived of basic rights. Books and school education in Albanian remained illegal as they had been under Ottoman rule, and very few Albanians ever gained positions in government administration.

The 1920s saw the rise of official Yugoslav government campaigns, to depopulate Kosovo of its original inhabitants and to colonise it with Serb settlers. By 1925, the government colonisation programme, had brought some 70,000 Serbs to Kosovo, and in 1933, the Yugoslav government began negotiations with the Turkish government for the deportation of the Muslim population to Turkey. By 1935, an orchestrated wave of confiscation of land from Albanians was well underway.

In 1941, in World War Two, Kosovo was invaded by the Axis powers. By the end of November 1944, all of Kosovo had fallen into the hands of the victorious Yugoslav partisans, and had been returned to Yugoslav administration.

Tito’s communists originally promised to let the people of Kosovo decide democratically as to whether they wished

T he Republic of Kosovo, about the size of the U.S. state of Connecticut, is situated in the southern interior of the Balkan peninsula in south eastern

Europe. With a population of just over two million people, it is inhabited primarily (over 90%) by Albanians, with minority groups of Serbs, Bosniacs, Turks, Gorani, and roma.

The Republic has fixed and recognised borders, although historically never constituted an independent state. It had been a separate administrative unit under foreign rule – Roman, Byzantine, Ottoman, Yugoslav respectively.

As the Ottoman Empire crumbled, Kosovo briefly liberated itself, but was eventually occupied by Serbia in 1912. The Conference of Ambassadors, which met in London between December 1912 to August 1913 to discuss events in the Balkans, confirmed the independence of Albania, but agreed to recognise Serb rule over Kosovo, thus excluding 50% of the Albanian population from Albania. It was a terrible mistake that haunted the Balkans right to the end of the twentieth century.

The history of the Kosovo Albanians from the beginning of Serb rule in 1913 to its very end in June 1999 is one

Political history

POLITICAL HISTORY


On 28 March 1989, the parliament in Belgrade illegally rescinded the autonomy/federal entity status of Kosovo. In June of that year, Slobodan Miloševic fuelled the nationalist sentiments of the Serb minority with his speech at Gazimestan near Prishtina to commemorate the six hundredth anniversary of the Battle of Kosovo.

The events of 1990 made it evident to everyone that there was no turning back from the brink. In May 1990, an amendment to the Serb law on universities made the use of “minority languages,” i.e. Albanian, illegal at institutions of higher education in Kosovo

Finally, in July 1990, Serb forces intervened physically by breaking up and abolishing the Parliament and the Government of Kosovo. They also shut down all Albanian-language media. There was no more semblance of representative government, no more radio, no more television, not even a daily newspaper. In the autumn of that year, the Serbian occupation authorities then closed down virtually all Albanian-language schools and educational institutions, firing teachers and professors. Some 1,835 doctors and nurses were also expelled from hospitals and medical facilities, many of them forcefully.

The Kosovo Albanians were aware that they were outnumbered, and outgunned. There could be no course of action but peaceful political resistance, a strategy propagated from the start by their leader, Dr Ibrahim Rugova, a prominent writer. With time, under the Democratic League of Kosova (LDK), they created their own parallel state structures (the Republic of Kosovo, unrecognised internationally), including a government (in exile), a state president, a parliament, schools and a modicum of social assistance for the population, supported primarily by the 3% tax paid by Kosovo Albanians.

on 2 July 1990, 114 of the 123 members of the Parliament of Kosovo, meeting in the street outside their locked assembly building, declared Kosovo to be an “equal and independent entity within the framework of the Yugoslav federation,” i.e. a Yugoslav ‘Republic of Kosovo’. On 7 September of that year, at a secret assembly in Kaçanik, they promulgated a new constitution for the Republic of Kosovo. A year later, on 22 September 1991, this parliament proclaimed the independence of the ‘Republic of Kosovo’. In a national referendum held on the issue on 26-30 September 1991, 99.86% of voters (with an 87.01% turnout) approved the move. An official government in exile was set up in Germany under Prime Minister Bujar Bukoshi and in May 1992 Ibrahim Rugova, still living in Prishtina, was elected President of the internationally-unrecognised state.

The population grew increasingly impatient with the long years of peaceful political resistance under Ibrahim Rugova. In April 1996, the then virtually unknown Kosovo Liberation Army (KLA, Ushtria Çlirimtare e Kosovës), established in the first half of the 1990s, began carrying

to be part of Albania or Yugoslavia. Tito, however, soon reneged on his promise. Kosovo was thus incorporated into Socialist Yugoslavia in 1945. It was, nonetheless, recognised as an “autonomous region.” The border between Albania and Kosovo was closed and became as impervious as any communist border could be. even in the mid-1990s, long after the fall of communism in both countries, Kosovo Albanians still required special exit visas to visit Albania, which were usually denied. While Yugoslav communism brought the Kosovo Albanians a modicum of rights as citizens, they were still deprived full equality.

The founding of the University of Prishtina in February 1970 gave the Kosovo Albanians something essential that they had always been denied: access to higher education in their own language. Within one short decade, a new elite of professors, doctors, lawyers and educated political figures rose to give leadership and direction to the country for the first time.

In February 1974, the new constitutions of Yugoslavia and Kosovo accorded Kosovo a status virtually equal to that of the fellow republics in the Yugoslav federation. Kosovo could now manage most of its own affairs. It had its own

The founding of the University of Prishtina in February 1970 gave the Kosovo Albanians something essential that they had always been denied

parliament, its own police force and its own national bank. Kosovo was equally represented, with the other six republics, in the federal presidency.

1981 marked the beginning of the gradual Serb takeover of Kosovo and the situation for the Kosovo Albanians worsened throughout the 1980s.

Belgrade showed no intention or interest in settling Kosovar grievances. The Serb leadership decided to resolve the Kosovo question by openly depriving the Albanians of their economic existence, i.e. by starving them out and forcing them to emigrate. A process of “differentiation” was introduced, by which tens of thousands of Albanians lost their jobs and livelihood. virtually all Albanians were fired from management and government positions for being disloyal to the Serb state. Deprived of their jobs, many of them had no choice but to flee abroad in search of work in Western Europe. Belgrade had reverted to the strategy it had used successfully in the 1930s: ethnic cleansing, though in the 1980s still in a discreet form. With hundreds of thousands of Kosovo Albanians seeking refuge abroad, the international community now began to take note of the Kosovo question for the first time.

POLITICAL HISTORY


By early October 2010, the newest nation in the world the republic of Kosovo, had been recognised by 70 countries, which amount to over 70 percent of world GDP. Kosovo has been recognised by 22 out of 27 EU countries, seven out of the G-8 countries and all of its neighbours bar Serbia.

Kosovo became a member of the World Bank and the International Monetary Fund in June 2009. And, in July 2010, The International Court of Justice ruled that Kosovo’s 2008 deceleration of independence from Serbia did not break international law, cementing the country’s nation status.

On September 27, 2010, Kosovo’s President Fatmir Sejdu resigned from office. Mr Jakup Krasniqi was appointed acting President. In the middle of October, LKD Party left the ruling coalition government. early elections are set to take place on 13 February 2011. The new government with a fresh mandate will continue with the young nation’s vital agenda of EU integration and a path towards economic development and prosperity.

out coordinated attacks on persons representing and collaborating with the Serb regime.

The Kosovo War broke out in the early months of 1998, when Serb troops began a major offensive in the Drenica region, attacking whole villages, and killing the resistance leader Adem Jashari and his enire family.

The country first received major international attention in January 1999 with the discovery, by a delegation of the Organisation for Security and Cooperation in Europe under William Walker, of the bodies of forty-five Albanian civilians in Reçak, massacred by the Serb paramilitary police. Last-minute internationally-brokered peace talks were held in France in February and March, but to no avail. The Serb side refused to sign the peace accord, thus making NATO intervention inevitable.

NATO forces began their bombing campaign over Serbian military targets in Serbia and inside Kosovo on 24 March 1999. The Belgrade authorities launched a well-prepared and well-orchestrated campaign to cleanse Kosovo of all of its Albanian population. over half of Kosovo’s population were deported, or else put to flight, most of them being expelled or taking refuge in Albania and Macedonia. The bombing campaign lasted until mid-June 1999, when Belgrade finally agreed to withdraw Serbian military, paramilitary, and police forces from Kosovo. The war was over. The Serbian occupation had come to an end. Kosovo had won its freedom.

The UN set up a mission in Kosovo to be known as the United Nations Interim Administrative Mission in Kosovo (UNMIK), and French politician Bernard Kouchner was appointed as Special Representative of the UN Secretary-General to oversee the new administration. By August, 850,000 Albanian refugees had returned to Kosovo. On 28 October 2000, local elections were held, the first free elections in Kosovo’s history. The majority of the population voted for the Democratic League of Kosova (LDK) under Ibrahim Rugova. Parliamentary elections followed a year later, on 17 November 2001, with the LDK once again the leading party, but without an absolute majority.

Parliamentary life thus resumed on 10 december 2001 with the first session of the new Kosovo Assembly. On 28 February 2002, Bajram Rexhepi was elected Prime Minister, and Ibrahim Rugova subsequently assumed the title of Head of State. Thereafter, most administrative competences in Kosovo gradually transferred from UNMIK to the elected government authorities.

After almost a decade as a United Nations administered territory (1999-2008), at the conclusion of a long international process to determine the final status of Kosovo, chaired by Former Finnish President Martti Ahtisaari as the Kosovo Status Envoy for the UN, Kosovo finally declared its formal independence on 17 February 2008.

By early October 2010, the newest nation in the world the Republic of Kosovo, had been recognised by 70 countries

NATURAL RESOURCES


provide good returns. A ready workforce of experienced and qualified mine workers in situ provides a further incentive. Opportunities also include new exploration work to uncover new deposits. In total there are 470 quarries operating in Kosovo whereby 24 are fairly large, i.e. companies seeking international cooperation.

In addition, natural stones, including onyx marble, white, gray and black marble, marble gray granite, from Kosovo have been used in cathedrals, gardens and palaces throughout the Mediterranean and Balkans for centuries. other decorative stones include gneiss, andesite, magnesite, serpentite, quarzite, trachyte, and porphyry. Kosovo is well connected to its European neighbours with highways linking it directly to Albania, Macedonia and Serbia.

Capital investment in mineral exploitation is a high priority for Kosovo’s economic development and the legislative and regulatory framework has been specifically designed to be business friendly. The Independent Commission for Mines and Minerals (ICMM) regulates Kosovo’s minerals sector, issues exploration and mining licenses, and ensures legislative compliance with international mining, environment and safety standards. ICMM

N estled in the heart of South East Europe, Kosovo is landlocked with mountains to the north, west and south and low flood plains in the centre. It is

rich in natural resources both above and below ground.

Mining

Kosovo’s mineral reserves of coal, lead, zinc, lignite, bauxite and nickel are virtually unexploited. It has an estimated 15mn tonnes of coal of which just 2% has been mined. Trade corridors are already well established, with demand for Kosovo’s mineral exports coming from all over the world, including China, Belgium and Spain. Mining offers a strong investment opportunity for companies looking to invest in Kosovo’s young economy. A geophysical survey completed in 2006-2007 revealed higher than expected deposits of gold, chrome and nickel, as well as aluminum, copper, iron metals and lead-zinc deposits.

The government’s ongoing privatisation programme provides an opportune time for investors to enter the market either privately or via joint venture. Investing in existing mines can be an attractive prospect as they come complete with production history. With updated machinery and equipment they have the potential to

Natural resources


NATURAL RESOURCES

for this, but it failed to realise full capacity. In recent years there has been renewed interest from the private sector. With financial input and better management techniques, it is thought that this sector will be very profitable. With attractive incentives on tax and customs from the Government and a domestic market providing low cost raw materials, there is a real opportunity for Kosovo to develop this sector and export products abroad.

Wine making

wine production in Kosovo has a long tradition dating back to at least the thirteenth century; yet it is only since the 1970s that it started to develop into a large-scale industry when the bulk was produced for export – largely to Germany. In 1989, at its peak, 40mn litres were exported from the Rahovec wine factory alone, one of four state owned vineyards. However, this momentum

also provides key technical information to prospective bidders. Regulations are in compliance with the latest best practices for international mineral mining, environmental protection and business. Mining licences are issued for an initial term of twenty five years.

Agriculture

Kosovo’s climate and environmental conditions are well suited to both livestock farming and crop cultivation. Thus, Kosovo should be able to meet domestic demand as well as produce surplus for export.

Over half (53%) of the country’s 10,900sqKm (Kosovo is approximately one third the area of Belgium) is agricultural land and more than a third (41%) is forest and forestry land. Of the agricultural land, 51% is currently used for grains such as corn, wheat, barley, 45% for meadows and pastures supporting the country’s 100,000 sheep and 250,000 cattle, and 3% of the land for vineyards and groves.

domestic consumption currently far outstrips production, thus the potential for growth across the whole of the agricultural sector is significant. It is estimated that only 15%-20% of meat eaten in Kosovo is locally produced. Similarly, demand outstrips supply in dairy farming and products are being imported despite the fact that Kosovo’s dairy industry has the potential to not only provide for domestic market but to export surpluses.

At present, much of Kosovo’s land is used for subsistence farming. The tradition of dividing land into small family units has hindered the development of this sector. Landowners are currently being encouraged to lease or sell land to commercial farmers to help develop agriculture as a profitable industry. With limited mechanisation in this market there are numerous options for investment.

To assist the sector, the government has introduced specific incentives for farmers and processors to encourage them to increase production and ultimately enter foreign markets. These incentives include free access to a market consisting of 28mn consumers through the Central European Free Trade Agreement (CEFTA); a zero percent tariff rate for most agricultural and capital inputs; and a vAT exemption on a range of agricultural inputs. To support the sector, Kosovo has a young, energetic and comparatively cost effective workforce.

In sum, there is real potential to turn Kosovo’s agricultural sector into a large, profitable industry supplying both the domestic and foreign markets.

Food Processing

To maximize value-added from the agricultural sector, Kosovo is keen to develop its food processing industry. In the past a state owned enterprise had been responsible

Domestic consumption currently far outstrips production, thus the potential for growth across the whole of the agricultural sector is significant


Kosovo’s forests and wood processing

Forestry and wood processing provides another opportunity for investors. With 41% of Kosovo’s terrain made up of forests, this sector plays a crucial role in Kosovo’s economic make up constituting to 1.8-2.6% of GDP and employing 8-10% of the population. Over half of harvested wood is used for domestic heating purposes while a large proportion of the remaining is used to produce products such as doors, window frames and furniture etc. The manufacturing of other wood products such as fencing, pallets and prefabricated products is still underexploited. Equally, wood chopped for firewood is simply that – sawmills are not taking advantage of the bi-products of the process such as the sale of sawdust and woodchips.

Before 1989, Kosovo exported wood products to EU (then EEC) and US markets. In more recent years it has tended to focus on the domestic market, whilst exporting to a limited number of EU countries –Netherlands, Germany and Switzerland – primarily in the hotel furniture business.

Development of the forestry and wood processing industry is supported by the government and incentives, such as the zero tax on the import of equipment and capital goods, applies as for the agricultural industry. There are a number of organisations promoting growth within the industry, such as Kosovo’s Forest Agency (part of the Ministry of Agriculture, Forestry and Rural Development) who are responsible for ensuring the biodiversity of the forests is maintained as well as producing good yields. Also, aiding the development of the wood processing industry is the Association of wood Processors of Kosovo, introducing new technologies and looking for new markets to export to. Opportunities exist in every aspect of the Kosovo wood industry. Given Kosovo’s long tradition in the wood processing sector, there are many skilled craftsmen available and many private/ family owned companies who would make excellent outsourcing partners to foreign investors.

Conclusion

Kosovo is a country rich in natural resources. However, resources are currently underexploited. The government’s ongoing privatisation programme provides a real opportunity to develop Kosovo’s natural resources into profitable and competitive industries. Investment is required to bring the market sectors up to date in terms of equipment, management and best practices. Investors will find the environment supportive and accepting, with the government offering specific tax incentives to help boost the agricultural industry and forthcoming measures on alcohol tariffs to help rebuild the vineyards. due to the historical significance of these industries, Kosovo’s population is already well trained and experienced workers who have learned their skills from generations of trades and craftsmen.

was lost due to management changes in the factories and the disruption commerce suffered during the war years. Paradoxically, these factors came at a time when there was a huge boom in the wine industry with the whole world seemingly opening up to alternative wine producing countries such as new world.

Kosovo’s climate and high altitude of 200-300m above sea level makes it an ideal setting for wine production. The introduction of the Wine Law in 2005 and the creation of the Wine Institute at Rahovec in 2007 have helped install international best practices and the overseeing of quality controls, while privatisation has brought modernisation. There is now the hope and desire for Kosovo’s wine producing industry to flourish again. Attention to quality rather than quantity is important in the rebuilding of the wine industry due to the metaphorical ‘wine lake’ in the present market with many producers looking to cut back production.

NATURAL RESOURCES

Kosovo’s climate and high altitude of 200-300m above sea level makes it an ideal setting for wine production


INFRASTRUCTURE

of the journey. Kosovo has a road network of 8,522km. MTC is responsible for 1,951km, of which 647km are main roads and 1,304km are regional roads, while municipalities have responsibility for 6,571km, where 571km are urban roads and around 6,000km are local roads.

Road construction projects in recent years conducted with the support of the European Union have improved the condition of roads significantly – 88% of main roads and 74% of regional roads are now classified as in good condition, while 12% of main roads and 26% of regional roads are in satisfactory condition. Local roads remain in need of some rehabilitation. Given the importance of roads to Kosovo’s overall transport strategy, improvement of the road system is a major priority in the government’s Transport Plan, and in 2008, the Kosovan government invested EUR130mn in road infrastructure.

In 2007, feasibility studies were completed on Route 6, a road system linking Niš in Serbia with Prishtina and Albania, and Route 7, to link Prishtina with Montenegro and Macedonia. When complete, both projects will form part of SEETO’s Core Regional Transport Network. The two projects are to be funded by the government in cooperation with donors and/or PPPs, and are listed as priorities in the government’s Medium Term Expenditure Framework (MTEF) for Kosovo 2009-2011.

The World Bank is supporting the construction of the Morinë – Merdare motorway, a 120km road that will link Kosovo with Serbia and Albania, giving it access to Albania’s ports on the Adriatic. The road is the largest investment project that the Kosovan government has undertaken in the past 20 years and it will create up to 3,000 jobs in Kosovo.

Getting railways back on track

Kosovo has a rail network of 433km, of which 333km is used for passenger and freight traffic and 100km is for industrial use. The railway links most major centres within Kosovo and connects with the rail lines of Serbia and Macedonia at the borders; rail lines run North-South and East-West from Prishtina. Kosovo Railways, a government-owned company, owns and maintains the rail infrastructure and operates passenger and freight services. The government plans to split the entity into two separate organisations, one in charge of infrastructure and

K osovo’s infrastructure suffered from underfunding from the 1970s until the end of the 1990s, and the 1999 conflict took a heavy toll on the country’s

transport networks. But since then Kosovo has made great strides in rebuilding and upgrading its infrastructure to encourage economic development and increase regional linkages.

Government strategy and partners

The Ministry of Transport and Telecommunication (MTC) is responsible for transport infrastructure as well as the telecoms and postal sectors. In 2005, the Ministry laid out its Draft Kosovo Transport Policy and Plan as a framework for development in the transport sector. The Plan provides for the construction of a multimodal transport network to interlink Kosovo’s transport routes with regional and trans-European networks.

MTC is cooperating with the South East Europe Transport Observatory (SEETO), a regional transport organisation created in 2004 by the European Commission, the United Nations Mission in Kosovo and the governments of Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro and Serbia. SEETO coordinates progress on the multimodal South East Europe Core Regional Transport Network, a proposed comprehensive network covering all modes of transport in the region and taking account of present and future capacity needs.

Alongside regional and international cooperation on development, Kosovo is actively seeking to involve the private sector in the enhancement of the transport network. The government declared the formation of Public Private Partnerships (PPPs) to be a national priority in June 2008, and set up the centralised PPP Unit, Partnerships Kosovo, to promote and implement PPPs in the country. Current projects include the privatisation of Kosovo Railways and the construction of Route 7, a road system linking Kosovo’s capital, Prishtina, with Montenegro and Skopje in Macedonia, at an expected project cost of EUR1.15bn.

Roads to prosperity

Over 95% of Kosovo’s transport is either carried out by road or involves road movement at the beginning or end

Infrastructure


INFRASTRUCTURE

turned into a civilian facility in the future, for now, PIA has a monopoly on civilian air traffic into Kosovo. The airport is situated 15km southwest of Prishtina and acts as a regional hub, serving 1.2mn passengers and 14,000 flights in 2008, from international airlines like British Airways, Malev and Austrian Airlines. Passenger traffic grew by 11% between 2007 and 2008, and is projected to increase by a further 10% by the end of 2009. PIA received certification from the International Civil Aviation Organisation (ICAO) in december 2008. The airport has seen considerable infrastructure improvements in the last two years, with EUR50mn put into runway repaving, new lighting, new baggage control systems and a vIP terminal.

Partnerships Kosovo has recently concluded the process of concessions for Prishtina International Airport, with the Limaks – Aéroports de Lyon consortium confirmed as the successful bidder in June 2010. Under the terms of the PPP, the concession for the airport is for the duration of 20 years on a design-build-finance-operate-transfer (DBFOT) basis. A minimum investment of EUR85mn will be required for an infrastructure development programme that will involve the construction of a new terminal, a new apron, taxiways, air traffic control facilities, a water treatment facility and parking spaces. This year, PIA is expected to see a net profit of EUR10mn, and the Ministry of Transport thinks that the airport should generate EUR400mn in profits over the 20-year concession period.

Communications and connectivity

Kosovo’s telecoms industry has been liberalised and the sector has an independent regulator, the Telecommunications Regulatory Authority (TRA) established in 2003. The national fixed-line operator, PTK, completed the transfer of its fixed-line network to digital infrastructure in 2007. Fixed-line penetration, however, lags behind mobile telephony, which is growing fast – increasing competition in the mobile market saw mobile subscriber numbers rise by 60% in 2008. Mobile penetration is at 60%; the mobile operators in the market are national fixed-line operator PTK’s mobile arm, vala, Albania Mobile Communications (AMC), which is a subsidiary of Greece’s OTE, UK company vodafone and Turkish-owned Eagle Mobile. Two mobile virtual network operators are licensed to operate in the country, but only one, d3, is in operation.

Internet penetration was 20.9% at the end of September 2009. Broadband uptake is increasing as operators build out infrastructure – it had reached 6% by the end of 2008 and is expected to rise to 9% by the end of 2009. Ten ISPs are licensed to provide Internet access. To improve rural broadband access, the regulator has drawn up a draft strategy for rolling out national wireless broadband, under which up to four operators will be given licences to offer wireless broadband services across Kosovo.

one responsible for maintenance and operation, leading up to the privatisation of Kosovo Railways in 2010. The government also intends to establish a separate regulatory authority with responsibility for the rail sub-sector.

Much of Kosovo’s rolling stock has been lost and the condition of the rail infrastructure and rolling stock still remains poor. Only 40% of the network is in service, causing pressure on the road network which must carry freight that would more naturally be handled by the rail system. Kosovo’s Transport Plan envisages a need for EUR500mn investment in rail infrastructure over the next 20 years, with a further EUR230mn required for rolling stock. In the government’s MTEF for 2009-11, it has allocated EUR19.5mn for rail improvements. To fund the rehabilitation of the rail system in the long term, the government hopes to attract private sector investment through the concessioning of Kosovo Railways.

Airport concession taking off

Kosovo has two airports, a military facility at Gjakova and the civilian airport, Prishtina International Airport (PIA). Although it is suggested that Gjakova Airport may be

The World Bank is supporting the construction of the Morinë – Merdare motorway, a 120km road that will link Kosovo with Albania


TOURISM

Private Enterprise Programme. Over 70 exhibitors presented their in-bound tourism and two new initiatives were launched – a new tourism focused website, www.KosovoGuide.com, and a catalogue of about 30 new local tourism offers.

To support developments in the sector, Kosovo boasts a young, skilled and energetic workforce. With many of the population having studied or lived abroad, tourists and investors will find locals hospitable and eager to leave a good impression of their country.

Kosovo does not have any visa requirements for EU or US citizens and is only a short journey time from most of Western Europe. It uses the Euro as its official currency and English and German are understood in most parts, making it an appealing destination for Europeans.

Opportunities

Tourism opportunities cover a variety of categories in Kosovo including nature; culture; winter activities; adventure; and health – each one offering its own unique experience to the would-be tourist.

Kosovo has a rich and varied landscape, with mountains surrounding it on three sides, magnificent rivers, canyons and interesting wildlife and flora. This stunning landscape is the perfect setting for a number of sporting activities, including skiing, hiking, and mountain biking, and exploring the Rugova Canyon, its caves and the Mirusha Waterfalls. Further to this, Kosovo’s thermal springs are well known in the region for their health benefits.

Kosovo also has an ancient cultural background including relics believed to date back to neolithical times and remains of an ancient Roman city, Ulpiana, from the 2nd century. It is impressively home to four World Heritage medieval orthodox churches and monasteries which represent a fusion of Byzantine and western Romanesque ecclesiastical architecture.

Skiing in Eastern Europe has become increasingly fashionable as a more economical holiday choice to western europe’s resorts. Kosovo’s mountains provide great potential for growth in the ski industry. Currently, the main ski centre is in the Sharr mountains in the south at Brezovica, providing facilities for 50,000 skiers

G iven its strategic location between Europe and the Middle East, ease of access, wealth of natural beauty and multilayered cultural history,

the Western Balkans has been attracting a growing number of tourists over the past decade. In 2007 a total of 11.7 million people visited the region spending over USD12.3bn. Given Kosovo’s past its share in this market growth has been somewhat restrained. However, as the country’s economy and profile grow, this is changing and tourism in Kosovo now provides a real opportunity for investors to enter the market early and capture future growth in demand. Tourism currently accounts for 8-10% of national GDP.

Government

The government intrinsically recognises the importance of tourism to Kosovo’s future social and economic development and as such provides an accommodating regulatory environment attractive to the foreign investor.

The Kosovo Tourism Promotion Board has adopted a top-down approach to external and internal marketing, engaging support from the Prime Minister down to regional municipalities. Officials have recently launched a global marketing campaign aimed at promoting the country as a secure and welcoming place for tourists with a clean, safe environment. Led by Saatchi and Saatchi, the campaign focuses on the people of Kosovo; of youth and hope – ‘Kosovo – The Young Europeans’. The campaign aims to place Kosovo alongside other popular Balkan destinations such as Albania, Croatia, Bulgaria and Montenegro.

The Kosovo Tourism Association (KOTAS), a not for profit non-governmental organisation (NGO), also works to ‘support the development of mutually beneficial tourism [and related sectors] programmes and initiatives implemented at all levels’. In April 2009 Kosovo held its first Tourism Fair where the welcome speech was delivered by the Prime Minister, organisations present covered many aspects of Kosovan tourism from businesses promoting visits to cultural and religious sites to sporting activities. The message from the Fair was to encourage visitors to come and visit for a weekend, to come and get a feel for the new Kosovo.

April 2010 saw the second Travel Day Fair in Kosovo, with further support coming from USAID’s Kosovo

Tourism


TOURISM

Infrastructure

Infrastructure in Kosovo is undergoing investment and essential upgrading. This will benefit the tourist industry by enabling visitors to reach their destinations easily.

Prishtina Airport currently receives over a million passengers a year and in May 2010, the Turkish-French consortium Limak - Aeroport de Lyon, were successful in their bid to manage the airport for the next twenty years. The newly privatised airport expects passenger numbers to rise to 1.3 million during 2010.

The contract signed between the government and Limak – Aeroport de Lyon calls for an investment of EUR100mn. This will allow for the construction of a new terminal. Other projects may include the construction of a new tower.

Over the past three years more than EUR26mn has been invested including providing a new lighting system, repaving of the runway, a new baggage system, five new platform buses and a new vIP terminal building.

Kosovo has its own national airline, Kosovo Airlines – established in 2003 by Kosovo’s main travel company, Eurokoha. While Prishtina Airport serves most European countries and further afield, Kosovo Airlines operates through partner airlines primarily with flights to Germany and Switzerland and, in the summer months, to Turkey. Plans are currently afoot to expand with flights to Albania, Italy, vienna, London and Brussels, although a number of internationally recognised airlines currently cover these routes.

Kosovo Railways is also looking for investment, for both passenger routes and freight. During times of conflict, the railway system suffered heavy war damage and is now in need of repair and modernisation to open up routes connecting Kosovo with essential EU bound networks. Investment in the infrastructure of roads and public transport is required to provide improvement in opening up the country to visitors who want to experience its rural beauty.

Conclusion

Overall, Kosovo has a wealth of positives to draw upon to create a strong foundation for a profitable tourist industry. Much is already in place but requires investment and concentrated marketing to maximise the industry’s potential. The fact that the majority of the population is under 35 is ideal for investors looking for an energetic, enthusiastic workforce to serve the industry. equally, the people of Kosovo are friendly and polite and are proud to introduce their new country to the world. By welcoming in tourists this message will spread fast.

with 14 ski slopes stretching over 16km. The resort is calling for further development and expansion. Although delays have been encountered, privatisation of the resort is on the agenda. It is estimated that investment in the region of EUR60mn is required to bring the resort up to international standards. with all-year-round tourist attractions, developing the mountains for tourism is an attractive opportunity for foreign investors. Conditions in the region provide excellent weather and long ski seasons (from November to May). There is no reason why Brezovica cannot achieve the same success as the Bansko resort in Bulgaria. Investment in the resort will attract interest from a number of complementary sub-sectors including; sports and ski infrastructure; hotels and restaurants; entertainment and leisure facilities; and of course transport.

The rugged and dramatically beautiful ‘Accursed Mountains’ in the west, bordering Albania and Montenegro also provide a good investment opportunity. An area of land, currently owned by the socially owned enterprise ‘Sharrprodhimi’ in the municipality of Dragash, is in need of investment. The land will be of primary interest to bidders engaged in eco-tourism as it is home to a variety of Balkan plants and alpine flora. This beautiful land covers approximately 22,000 hectares and lends itself to adventure tourism with opportunities for mountain biking, skiing, paragliding, horse riding and rock climbing.


ENERGY

The two existing lignite mines at Mirash and Bardh are soon to run out. New investment is being sought to ensure a continuous supply to domestic power stations. The World Bank has awarded Kosovo a USD10.5mn grant to help attract private investors to develop its lignite mines and build new capacity for lignite thermal power generation. The financial support has helped to set up the proper regulations and laws to support inward private investment.

To help meet Kosovo’s energy demands, a new mine in Sibovc has been identified that will ensure a lifetime (40 years) supply of coal for the newly planned power plant. Sibovc has a surface area of 19.7 km², and geological reserves of lignite of 990mn tons out of which 830mn tons are exploitable. Costs for opening this new mine are estimated at EUR237.5mn over the period 2006-2012. Private investors will hold the majority of shares in the Sibovc mine although the Government of Kosovo will still

K osovo has an abundance of natural resources, especially in those used for energy production. In recent years, however, it has struggled to meet

its own domestic energy demands. To address this, the Ministry of Energy and Mining (MEM) has formulated comprehensive plans that will transform the country from a net importer of electricity to a net exporter over the forthcoming decade.

Mining

Most of Kosovo’s wealth lies underground. The country has rich deposits of natural resources offering huge potential. It is estimated that it has between 11.5bn and 14bn tonnes of lignite; 89mn tonnes of chrome; 48mn tonnes of lead and zinc; 16mn tonnes of nickel; 13.2mn of known bauxite; and enough magnesite, copper, gold and silver to last a hundred years. They also have a rare, high-grade, valuable deposit of halloysite clay, one of only five sites globally.

In 2005 the government established the Independent Commission for Mines and Minerals (ICMM) to issue permits and licences for exploitation and promote foreign direct investment (FDI). So far Kosovo’s minerals and natural resources have attracted much international attention. In 2007 a total of 70 licenses were issued by the ICMM for exploration. Global companies such as Lydian Resources (UK) have entered Kosovo in the exploration of zinc, lead and silver and hope to achieve first mover advantage by beginning commercial production in 2011.

According to Tim Coughlin, the CEO of Kosovo Resource Company (KRC), “mining laws are already international standard and there is significant regulatory emphasis on protecting the environment and engaging local communities”. With a strong history in mining, Kosovo has a labour force well-equipped to support any new initiatives.

Lignite plays perhaps the most vital role in Kosovo as the main supplier to the local energy market. Kosovo has the fifth largest lignite reserve in the world. Reserves are exploited in surface mines to provide a very cheap source of energy for thermo-electric power plants. At an exploitation cost of 1.1 EUR/GJ of energy, Kosovo’s coal is the most economical in the region. with such enviable reserves, this sector will play a huge part in Kosovo’s future economic development.

Fuelling future growth

Lignite plays perhaps the most vital role in Kosovo as the main supplier to the local energy market

have some ownership. The MEM expects that the tender for the development of a new power plant using Kosovo’s lignite resources will become the biggest investment project in Kosovo’s history, with an estimated EUR3.5mn in FDI.

Electricity supply and infrastructure

despite Kosovo’s reserves, the Kosovo energy Corporation (KEK), Kosovo’s state-owned, biggest and only power generating company, has been unable to meet its domestic peak demands and has been known to import up to 400MW of capacity during winter months.

Electricity in Kosovo is currently produced by two lignite-fired thermal power plants, known as Kosovo A and Kosovo B and a small hydropower plant. Although the power plants have a rated generating capacity of 1,478MW, the two facilities only have available capacity of 800MW at this time. The hydropower plant generates an additional 32MW. Although most transmission lines


ENERGY

these developments Kosovo aims to become a power exporter. The additional production capacities will be utilised to export electricity to other countries. According to the Kosovo Times, surplus energy is hoped to translate into as much as EUR15mn worth of exports after 2016.

1. New Thermal Power Plant: ‘Kosova e Re’

The construction of the new ‘Kosova e Re’ to be built between 2009 and 2020, and linked to the new Sibovc mine has a planned capacity of 1,000 MW with an installed capacity of 600MW in Phase 1. According to the Ministry of Energy and Mines, Kosova e Re will be built of two blocks of 300 megawatt-hours each, where the first unit is expected to start producing electricity by the end of 2015 and the second unit six months later. Construction costs are estimated to be up to EUR1.2bn, and will be co-financed by the Government of Kosovo and the winner of a tender, although the amount of public participation in this project has yet to be decided. The steering committee for the construction of the new power plant has selected four international consortia, which have met the criteria to participate in the tender. The Plant will apply best environmental practices and standards.

2. Kosovo A and B

The government aims to improve the production capacity of Kosovo A by repairing three of its power units. Once this is completed, it will then have a capacity of 600MW. Costs for rehabilitating Kosovo A are estimated at EUR154mn. The operational units of Kosovo A are to be decommissioned by 2017 to comply with the Large Combustion Plant Directive.

Furthermore, private sector participation is being called upon to modernise Kosova B (an existing lignite fired electric power generation plant). Shares will be sold in Kosova B.

The government is also offering a bill-operate-transfer (BOT) in the Pristina District Heating Combined Heat & Power from the Thermal Power Plant Kosovo B. Over 60,000 houses will be connected to the central heating scheme. Phase 1 is expected to require EUR24mn (2008-09) and Phase 2 EUR19mn in (2012-13). A private sector investor is required.

3. Hydro-Power Plants (HPPs)

Given the emissions caused by thermal power production, Kosovo is keen for foreign investments in renewable energy projects. The government, with financial assistance from the World Bank, has also engaged consultants to conduct preliminary assessments for the construction of the new hydro power plant at Zhur. The Zhur HPP is envisaged to take five years to complete and will have

are operational following post-conflict repairs, substations remain in poor technical condition. Poor management, severe capital under-investment, lack of preventative maintenance and problems of cash collection and commercial losses (customer debt amounts to around EUR400mn) have led to power shortages and outages.

According to MEM, demand for electricity in Kosovo has been increasing over recent years; annual demand has grown by 44% since 1998 and currently electricity usage peaks at approximately 1,200MW. GDP is expected to grow by 9% between 2009 and 2015 and investments are expected to reach EUR10.7bn. In order to support these trends, Kosovo will need considerable extra power capacity. Furthermore, with links to the electricity grid of South East Europe (through the Energy Community), Kosovo is in a strong position to utilise its resources and become a net exporter of energy.

To resolve Kosovo’s domestic energy supply problems, the government has put together a comprehensive strategy. A new power plant, investments in renewable energies, improvements to existing infrastructure and the restructuring of KeK through privatisation are aimed to increase production, improve efficiency and help bring down emissions.

Kosovo is planning 2,000 MW in new production capacities over the medium-term. Kosovo needs approximately EUR350mn for developing the Zhur hydropower plant, some EUR1.2bn for the first stage of TPP Kosova e Re (also known as New Kosova) and up to EUR100mn for developing small hydropower plants. With

region. There is a 400kv line that connects Kosovo with Serbia, a similar line connects Kosovo to Macedonia and Montenegro, and 220kv lines connect to Macedonia and Albania. Construction of a new 400kv line is underway between Kosovo and Albania.

Furthermore, Slovenia and Kosovo recently signed a Memorandum of Understanding on cooperation between the two countries in energy and mining. The two countries plan to intensify their cooperation in exchanging their experience in structural adjustments of the energy sector, market development, energy efficiency and the development of renewable energy sources.

a maximum capacity of 305MW and annual production of 398GWh. It is estimated that the total investment required is approximately EUR350mn.

The government has also identified 60 sites where small HPPs can be built with a total capacity of 680 GWh/year. The total investment needed is expected to be approximately EUR100mn. Private investors are to be selected and planned incentive schemes are to be adopted including feed-in tariffs, priority access to distribution networks and take-or-pay power purchase agreements (PPAs).

5. Privatisation of KEK

In 2006, Kosovo signed up to the ‘Energy Community Treaty’ when it was extended to cover the whole of the Balkan Peninsula. The Treaty aims to establish an integrated market in natural gas and electricity, a stable regulatory and market framework and a single regulatory space for trade. In order to meet with the requirements of the Treaty, significant work is being planned to bring the Kosovo energy sector into line. one of the requirements of the Treaty is for Kosovo to unbundle the functions of mining, power generation, network distribution and supply, and to prepare for the privatisation of the assets of KEK. The unbundling of KEK was initiated in 2005 with the establishment of KOSTT (Kosovo Electricity Transmission System and Market Operator) as a separate company, which today operates independently and is responsible for Transmission System Operations and Trade (TSO) throughout Kosovo.

In 2008, the government of Kosovo approved the unbundling of Kosovo’s electricity distribution network and supply to form a new company for privatisation. The total investment required is expected to amount to EUR400mn. Private sector participation in the distribution network and supply side of KEK is anticipated to improve and expand the distribution network, increase billing and collections, reduce electricity losses, and improve the security of supply and overall service quality.

In the past two years KEK has managed to achieve double-digit growth in its billing and collection figures, it has managed to decrease commercial and technical losses from its assets, and increase the production of coal and electricity generation. KeK has also decreased its overall expenditures, whilst improving continuously its services for the customers.

6. Connectivity

Improving connectivity with neighbouring countries is important to the stability of energy supply in the


ENERGY

Improving connectivity with neighbouring countries is important to the stability of energy supply in the region

Regulation

The government of Kosovo is committed to creating an attractive investment friendly environment. The PPP Law is investor-friendly and in accordance with international best practices (UNCTRAL, EBRD, EC guidelines etc). In addition, the Law on Publicly Owned Enterprises (POEs) provides a transparent and predictable process for private sector participation and is clearly articulated to assure private sector participation.

The Parliament of Kosovo has adopted and promulgated primary legislation for the energy sector which is in compliance with the appropriate EC Directives and other European Union laws. According to the Law on Energy Regulator the Energy Regulatory Office (ERO) has been established as an independent agency to exercise economic regulation in the energy sector (Electricity, District Heating and Natural Gas).

In general the ERO is responsible for : the establishment and enforcement of a regulatory framework for the energy sector in Kosovo, in order to achieve compliance with the obligations under the regional Treaty establishing the Energy Community; ensuring non-discriminatory access of all users to the energy networks at prices reflecting true economic costs; ensuring the effective unbundling of the vertically integrated utilities and the non cross-subsidisation of prices; promoting competition and the efficient functioning of the energy market; and, promoting economic efficiency by providing the appropriate long and short term pricing signals.


vENUE

Up the winding staircase on the second floor was a library which also functioned as a dining room and is now used by the Council as the Library.

The current Mansion Ballroom was the Pratt’s formal drawing room. At Mrs. Pratt’s insistence it was square, being modeled after a room she had seen in Ireland. It is decorated with pine paneling and beautiful chandeliers each of whose crystals are different.

It was also Mrs. Pratt’s wish to use the hand-painted venetian type doors for the entrance to the library and the drawing room, although the architect demurred that they did not fit with the English architecture.

Comfortable bedrooms on the third floor, many with fireplaces, housed Mr. and Mrs. Pratt, their son and two daughters. The fourth floor contained children’s playrooms and sewing rooms and the fifth floor house the majority of the seventeen servants employed to keep the house functioning.

The Pratt family gave three pictures of themselves seated with the original furnishings. These are located in the marble foyer between the meeting rooms and on the south wall of the large meeting room.

Contact us 58 E. 68th St. at Park Ave. New York, NY.10065 Tel: 212 434 9576

D uring the years 1919-1920 an elegant town house was erected at the Southwest corner of Park Avenue and 68th Street for Mr. and Mrs.

Harold Irving Pratt. Since this was the house which was officially opened as the Council of Foreign Relations’ new headquarters on April 16, 1945, it is interesting to trace the story of the house and its owners.

Mr. Pratt’s father had been connected with Pratt’s Astral Oil, and during the latter part of the 19th century, it merged with John D. Rockefeller’s Standard Oil of New Jersey.

For the major part of his working life Mr. Harold Irving Pratt, the youngest of Mr. Charles Pratt’s eight children, was the managing director of Charles Pratt and Co. He had been a Council member from 1923 until his death in 1939.

In 1944 when the Council was outgrowing its existing space, Mr. Hamilton Fish Armstrong telephoned Mrs. Pratt to see if she would donate her house which was then boarded up as no one was living in it. The next day Mrs. Pratt called to say that she would give the house to the Council.

The building was designed by an outstanding architect of the time, William Adams Delano, of the firm of Delano and Aldrich. Only the best materials available were used in constructing the house which is reputed to have cost over one million dollars in 1920.

The exterior is of limestone, custom made in the United States and the inside floors are mainly parquet, oak, or a self-polishing marble. As is typical of other houses of the period, a large kitchen and service area were installed in the basement. The Pratt’s dining room was on the main floor where the current Drawing Room now exists.

Harold Pratt House


SPONSORS

Our Partnersinfrastructure projects in the world, including major motorways, new links with major highways, reconstruction of existing systems under operating conditions, major tunnel sections and large interchanges. Bechtel has been involved in the construction of more than 17,000 miles (27,500 km) of highways and roads, on projects including the Albanian Motorway, the Autostrada Transilvania in Romania and the Gowanus Expressway which serves New York City. Most recently, Bechtel began work on a joint venture with Turkish company Enka for the construction of the Morine-Merdar Motorway in Kosovo.

The financial stability and strength of Enka are globally recognised, combining substantial revenues together with proven profitability over many decades.

Enka recognises and acknowledges the importance of achieving world-class performance with respect to protection of health, safety and the environment (HSE) throughout all phases of the project and utilizes its proven HSE policies, systems and procedures during the execution of its Projects. visit www.enka.com

to society and environment, integrated in european mechanisms. The company aims to ensure:

• qualitative services by implementing technical – technological achievements in developing transmission system

• transparency and non-discrimination in competitive electricity market

• advancement of position in a regional and European level supported by continuous improvement of human resources.

Bechtel

Bechtel is a global engineering, construction, and project management company with more than a century of experience on complex projects in challenging locations. Bechtel is a global leader in developing, managing, and constructing civil infrastructure. From airport, rail, and highway systems to regional development programmes, Bechtel builds the infrastructure necessary to improve the quality of life and sustain economic growth.

Since its foundation in 1898, Bechtel has successfully completed some of the largest and complex civil

Enka

Enka is the leading EPC company in Turkey. Since its founding in 1957, Enka has worked on more than 435 projects in 33 countries. Today, Enka’s 12,500 employees are working in 13 countries serving customers in a broad range of industries including power plants, industrial factories, petroleum and chemical facilities, airport terminals, high-rise “A class” offices, residential buildings, hotels, building development projects, new reclaimed islands, and motorways. In 2010, ENR named ENKA as 50th largest international contractor in the world and first among Turkish contractors. The Enka Group’s revenue in 2009 was USD5.2 billion.

Kostt J.S.C.

KOSTT J.S.C. is the Kosovo Electricity Transmission, System and Market Operator, an organisation which plays an important role in the energy sector in Kosovo.

As a transmission system operator, KOSTT J.S.C. manages and operates the electricity transmission system of Kosovo and is responsible for the bulk transmission of electric power on the main high voltage electric networks. As a market operator, it is responsible for the organisation and administration of trade in electricity and the management of the settlement process.

KOSTT J.S.C. aims to be a profitable company, to provide secure and stable transmission of electricity, responsible


SPONSORS

and has a market share of around 5%, with total assets of EUR 92 million and equity of EUR 9.5 million.

During the last 12 months, there have been major quality improvements and at the same time, significant growth deposits and loan portfolio, making our bank a serious actor in banking industry in Kosovo.

In addition very recently the Bank has signed a partnership agreement with (finance agreement) with the European Bank for Reconstruction and Development (“EBRD”) and very soon, the Bank will sign enter into similar arrangements with other IFIs too. The aim is to strengthen the institution and speed up the process of growth which, in the medium term, would make BpB a strong and sustainable partner for local and foreign institutions wishing to enter the market.

mining and petroleum concerns, non-profit organisations, embassies, public utilities, commercial companies, international and governmental agencies. The firm has also an outstanding litigation practice, representing clients at all levels of Albanian courts.

The firm offers its clients all the legal, tax and accounting services required to conduct business in Albania and Kosovo, effectively. Over the years the firm has advised in the areas of privatisation of national resources and enterprises, concessions, real estate transactions, setting up of businesses, credit facilities, custom and tax issues, all with a keen sensitivity to the rapid changes in the Albanian business environment.

We are currently working on a number of projects such as the construction of the section Rubik-Rreshen (Lot 3) of the motorway Durres-Kukes, the construction of the section Komoran-Arllat of the motorway Prishtine-Peje and on the construction and operation of two Hydropower Plants, namely HPP Mollas (21MW) and HPP Thane (3MW).

Since its creation Delia Group has significantly strengthened and expanded its position in the home and Kosovo market as demonstrated by the increase in the annual turnover during these years. when compared with the year 2005, the increase in the annual turnover of 2009 corresponds to the level of 252 per cent. The respective figure for the period January – September 2010 corresponds to 265 per cent.

Bank for Business (BpB)

Bank for Business (BpB) is one of the two locally owned banks out of the 8 banks operating in Kosovo. BpB was the third commercial bank to be licensed by the Central Bank of Kosovo in 2001 and since then, the Bank has successfully continued its activity. An Italian Bank (Banca Di Cividale) is also a shareholder in BpB since its inception.

BpB offers a wide range of services to retail (private individuals), Micro and SME’s and Corporate clients. BpB operates in all the main cities and towns, with a strong network of 7 branches, 21 sub-branches and 12 small offices. BpB currently has 339 full time employees and provides banking services to more than 120,000 business and private clients.

BpB recently has had a significant growth and now is well positioned to expand its market share. As of the end of August, 2010 BpB was ranked sixth in terms of asset size

Boga & Associates

Boga & Associates, established in 1994, has emerged as one of the premiere law firms in Albania, earning a reputation for providing the highest quality legal, tax and accounting services to its clients. Boga & Associates also operates in Kosovo (Pristina) offering a full range of services.

The firm maintains its commitment to quality through the skills and determination of a team of attorneys and other professionals with a wide range of skills and experience.

Boga & Associates represents a broad spectrum of high-profile clients, including telecommunication companies, financial institutions, airlines, industrial complexes, energy,

Delia Group

Delia Group is one of the oldest and leading companies in Albania and now also active and recognised in Kosovo.

The company has participated and it has been awarded national and international tenders on the construction of objects financed by the Albanian Government, World Bank, European Bank, EBRD and various private, domestic and foreign investors. Delia Group mainly concentrates on managing and construction of civil infrastructure; however, recently it has expanded its activities in the energy sector. The rich and diverse portfolio of the company includes construction of rural and national roads and motorways, road maintenance, construction of clinics, schools and apartment buildings, water supply and canalisation and the construction and operation of hydropower plants.


SPONSORS

KEK J.S.C. is an ethical company and provides secure, reliable and reasonably priced services while being an environmentally responsive, transparent and commercially orientated organisation that is responsive to customer needs.

KEK J.S.C. has approximately 372,000 customers most of which are household consumers and employs 7,500 employees.

office offers a full service of all core aspects of business law in all key sectors of the market to domestic, foreign and multinational companies. Kalo & Associates in Pristina is in an excellent position with an impressive capacity to manage representation of foreign investors in an efficient, responsive and conscientious manner in Kosovo.

IFLR1000 describes the firm as having “a practice that is consistent with what you would expect from a top Washington law firm”. Chambers & Partners quotes a client who has expressed confidence in the firm’s unshakeable integrity by stating that: “this thoroughly reputable group always leaves you completely satisfied”.

The firm has also had long standing experience in the region, being one of the 4 founding members of the reputable South East Europe Legal Group (SEE LEGAL), an alliance of premier national law firms from 12 jurisdictions in South East Europe that provides seamless legal services with a particular focus on cross-border commercial transactions (www.seelegal.org).

KEK J.S.C.

Kosovo Energy Corporation J.S.C (KEK J.S.C.) is the sole electricity provider in the republic of Kosova, legally incorporated at the end of 2005.

A vertically integrated company, business includes coal mining, generation, network and supply. The company at present includes two open-cast mines, the Mirash and Bardh mines, two power plants, Kosova A and Kosova B, 51,969km of distribution network covering the whole of Kosovo and the supply division handling customers and the energy sale functions.

Kalo & Associates

established in 1994 Kalo & Associates is recognised as a leading law firm in both albania and Kosovo. It is a full service law firm providing a broad range of legal services in all core areas of commercial and corporate law for domestic, foreign and multinational companies. It has a sophisticated practice dedicated to providing clients with high-quality, efficient and cost-effective legal services.

In the establishment of the office in Kosovo, Kalo & Associates brought on board two successful and reputable Kosovar lawyers, ahmet hasolli and gazmend nushi to lead the office. Both partners of this office are extremely well-established lawyers in Pristina with a wealth of local experience and expertise to offer foreign investors in the field of commercial and business law. This partnership represents our strong local identity, strategic vision and consistency in the provision of quality legal services. The excellent reputation of Kalo & Associates has seen the Pristina office instructed by various well-known international companies such as Bechtel Inc, Enka, Phillip Morris, Vodafone, Alcatel-Lucent Italia, Morgan Stanley. The

PTK J.S.C.

Founded in 1959 as the Post, Telephone and Telegraph of Kosovo, PTK today is comprised of three separate business units: Post of Kosovo, Telecom of Kosovo, and vala mobile network operator. These three business units are licensed by the Kosovo Telecommunications regulatory Authority and on 29 June 2005, PTK was transformed into an internationally recognised joint-stock-company.

PTK has a clear vision to be the driving force in creating prosperity for the nation and enriching the lives of all Kosovars, through the passion of their workforce and leveraging of proven cutting edge technologies. PTK J.S.C. has in the region of 2,500 full-time employees and a structured five year business plan with significant investment potential of EUR550mn.

PROGRAMME

07.45am – 08.15am

registration and refreshments

08.15am – 08.45am

opening of the forum

welcome and introduction from hon ahmet shala, minister of Economy and finance of Kosovo, hE avni spahiu, Kosovo ambassador to the Us, and hE rosemary a. Dicarlo, Deputy Permanent representative to the United nations U.s. mission

08.45am – 10.15am

session 1 – setting the scene: Kosovo – the world’s newest business partner

chair: rod morris, vice President, insurance, overseas Private investment corporation (oPic)• hon ahmet shala, Minister of Economy and Finance, Government of Kosovo• gani gërguri, Acting Governor, Central Bank of Kosovo• michael adams, President, Bechtel Civil• Vullnet Latifi, Director, BPB Bank

Q & A session

10.15am – 10.45am

session 2 – investing in agriculture and infrastructure/telecommunications development

chair: hE avni spahiu, Kosovo ambassador to the Us• Hon Fatmir Limaj, Minister of Transport and Telecommunication, Government of Kosovo• Hon Blerand Stavileci, Minister of Agriculture, Government of Kosovo• Jane Armitage, World Bank Director and Regional Coordinator for South East Europe• Dr Shyqyri Haxha, CEO, PTK – Directory of Post of Kosovo

Q & A session

12:00pm – 13.00pm

networking lunch

13.00pm – 14.15pm

session 3 – investing in the Energy and mining sector

chair – hon christopher hall, President of the american University in Kosovo and President of the american chamber of commerce, Kosovo• Hon Dr Justina Shiroka-Pula, Minister of Energy and Mining, Government of Kosovo• Dr ali hamiti, Chief Executive, Kosovo Energy Regulatory Office• ferat shala, Managing Director, Trepca Mining Complex• Fadil Ismajl, CEO, KOSTT• Arben Gjukaj, Managing Director, KEK JSC

Q & A Session

14.15pm – 14.45pm

refreshments break

14.45pm – 16.00pm

session 4 – investment opportunities in Kosovo – the time is now

chair: atam sandhu, chief Executive, Developing markets associates • Hon Besim Beqaj, Minister of European Integration, Government of Kosovo• Mustafë Hasani, Chief Executive, Kosovo Investment Promotion Agency• Lorik Fejzullahu, Head of the Public-Private Partnership Unit, Ministry of Economy, Government of Kosovo• Representative, Privatization Agency of Kosovo• Sokol Elmazi, Partner, Boga & Associates

Q & A Session

16.00pm – 16.30pm

closing remarks from hon ahmet shala, minister of Economy and finance, government of Kosovo, hE avni spahiu, Kosovo

ambassador to the Us and atam sandhu, chief Executive, Developing markets associates

16.30pm – 17.30pm

networking drinks reception

The US-Kosovo Trade and Investment Forum27 October 2010PROGRAMME FOR THE DAY

investing in kosovo 2010

Documents