As a part of the BH Business Site initiative, the Institute for Youth Development KULT completed the reseach including data from 133 governmental institutions and over 600 million BAM of allocated funds for economic incentives in BiH.


In the end of April of this year a Questionnaire was delivered to the addresses of 260 governmental institutions in BiH: to all municipalities in BiH, to cantonal, entity and national ministries that have economy in their jurisdiction, to employment services, developmental banks, certain agencies, etc. Over 50% of institutions delivered their replies.


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Although there was no drastic decrease in the total sum of planned budgets for the institutions that participated in the 2014 research, in comparison to 2013, the planned and implemented economic incentives were decreased significantly. There was a plummet of the total allocations for economic incentives of 19.47% in 2014 in comparison to 2013, or 63,369,530 BAM less. Total amount planned for economic incentives, including irrevocable credit funds, was 390,892,989.18 BAM in 2013, in comparison to 330,040,331.93 BAM in 2014, while the implemented incentives amounted to 325,606,866.42 BAM in 2013, or 262,237,336.36 BAM in 2014. Besides the evidently lesser allocations in 2014, the data indicate a great incongruence between planned and implemented funds.


The research indicated that there is a plummet in total allocations for economic incentives of 19.47% (63,369,530 BAM) in 2014, in comparison to 2013. Also, in that same period, there was no significant decrease in the sum of total budgets of institutions that participated in the research.


Results of research will be used as one of the sources for developing analysis of states in the area of distributing budget incentives to perspective parts of BiH economy. Analysis of states with the identified perspective parts of economy, will serve as a platform for creating precise directions to improve the process for all institutions that financially incite and stimulate economic development.


The complete results of the public research will be presented to the public on Wednesday, 10 June 2015.


" "BH Business Site" initiative is conducted as a part of the Civil Society Sustainability Project in BiH (CSSP), realised by the Centers of Civil Initiatives (CCI) and the Centre for Promoting Civil Society (CPCD) and supported by the US Agency for International Development." 


BH Business Site promotional video - "It  Can Be Better"


 

As the political stumbling over questions that are of practically no use for the BiH citizens continues, BiH economy loses its required support and possibility to open new jobs.


Lack of job vacancies is acknowledged as number one question in the field of employment in Bosnia and Herzegovina. The public sector is overburdened, and weak domestic economy in the current business ambience lacks capacity to significantly expand and employ new workforce. Direct foreign investments have not recorded any serious growth in years. Enterpreneurship and self-employment are underdeveloped.


There is five times less medium and small enterpreneurships (MSE) in BiH per capita than is the European average. In FBiH, for example, for every 10,000 citizens, according to the official reports, there is 90 subject of MSE, while in Slovenia there are 568, in Hungary there are 750, and in the EU 500 on average. BiH records an extremely small number of  newly founded enterpreneurships (start-ups) in comparison to the neighbouring countries. The latest research from 2014 (Bisnode BH) suggests that the number of such enterpreneurships decreased significantly in our country – for 70% in comparison to 2013, from 8446 to 2536. Plummeting of newly founded enterpreneurships is recorded in general. According to data by the FBiH Tax Department published by ekapija.ba portal, the total number of newly founded enterpreneurships in 2014 in FBiH was 2,209 in comparison to 2,385 firms that were founded in 2013, which is a drop of 176. For the same period, the number of open businesses dropped from 4,671 to 4,344 (for 327), while the number of closed businesses increased from 1,451 to 1,637 (for 186). Simultaneously, there is ten times less budget funds allocated from the FBiH budget than is recommened by legislature for developing small enterpreneurships.


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BiH economists are burdened by inadequate tax payment system and high levies for employees' work, even for the newly employed, who step out of the educational system unprepared and whose additional education also falls on the employer's shoulders. A worsening economic liquidity is evident, there is a lack of economic funds, and an increasing indebtness of the BiH firms while at the same time the highest debts in agriculture are made by the governmental institutions. It is even more absurd that today's VAT system is conducted by invoice and not by charge for goods or services, economists credit the state apparatus, pay it in advance even when a public institution owes them for a delivered service.


The number of blocked accounts of the economic subjects is increasing year after year. In the end of 2014 in BiH 67,253 business subject accounts were blocked, and 41,474 firms had at least one blocked account. In November 2012, as the Central Bank of BiH issued its first report on blocked accounts, the number of blocked accounts was 58,038 in relation to 35,694 business subjects. For comparison, according to the research prepared by Bisnode BH, in BiH every fourth enterpreneurship recorded a blockage, in Croatia it was every seventh, in Serbia eveny eighth and every thirteenth in Slovenia. Economic experts point out that a current number of blocked accounts of law persons indicates lack of liquidity and insolvency disrupting the financial flow, causes a plummet in production, expenditure and employment.


According to the estimates of the farmers, BiH has only a quarter of its fertile land, acres, pastures and non-cultivated land in use. As they state, from the farmers' association, a better legislative is necessary, along with safety of farmers in case of natural disasters, modern technology that the farmers cannot acquire on their own, a better infrastructure and good water management, a corresponding repurchase, significantly greater and more directed budget allocations for agricultural incentives, etc. Event he minimal incentives are often not directed to strategic branches of economy, the requirements of consumers according to the assortment and the quality of the produce, so that the manufacturers would know for a longer time period what they should produce for the requirements of the market. Agricultural developement is being presented as a strategic decision of the governement and there is currently a vast foreign trade deficit in food products. According to the UNDP research, BiH imports more than 65% of food required to fulfil its own needs, and what the domestic force could manufacture on its own. According to the data by the Foreign Trade Chamber, BiH imports almost two and a half billion BAM in food products. Fruit and vegetables production in BiH was 35% smaller in 2014 than in 2013, according to the dana from the Annual Report made by the Foreign Trade Chamber of BiH. The ambience is such that the domestic production is plummeting, making way for certain import lobbies, as BH agricultural workers state, adding that there are people interested in practicing agriculture if the state would provide them with quality conditions.  


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BiH is abundant in tourism potential and as such should not be behind other regional countries that are touristically much more developed. However, tourism in BiH economy is seven times less represented than in the competitive regional countries. In the regional countries, tourism comprises nearly 14% of the GDP, while the percentage in BiH is a little over 2%, according to the data of the Foreign Trade Chamber of BiH. In comparison to Croatia only, our position is 7 times worse in relation to allotment in overall economy, and 25 times worse regarding the amount of money gathered through tourism. There is a great disproportion between potential and the achieved result.


The difficult position of the economy and underdeveloped enterpreneurship have their causes. According to the conditions for staring business, we are at the bottom of the world list. Data from the GEM research (Global Enterpreneurship Monitoring), BiH has the lowest overall result of the Global Enterpreneurship Index (0.18) in comparison to the countries of the neighbouring region and the amount of failing businesses is the greatest in the world. In the reports of prominent international institutions, BiH is listed as a negative example of business startup motivation, because most of the enterpreneurs start businesses for necessity.


Starter firms require support, eduction, seed capital, space, councelling, new technologies, monitoring and directions. According to the research by the National Business Incubation Association (NBIA), the percentage of firms that endured during and after the incubator is 87%, while the percentage of those that never encountered the incubator is 35%. That means that business incubation provides three times greater opportunity for the firms to survive. Business incubators in BiH are few and so far left to the mercy of budget funds and are not included in the current enterpreneurship support programmes. According to the published analysis of the situation, only twelve business incubators are active today in BiH. An evidence of their significance is the fact that since 1998 they generated more than 160 firms, created 1304 workplaces, are regularly filling up BiH budgets and contributing to the socio-economic stabilisation of BiH citizens. Business incubators should be a part of the national strategy, however, it is obvious that there is no developed conscience in BiH on Business Incubation as a significant instrument of the economic development.


BiH businessmen require financial incentives. Two out of three employers, according to a reseach conducted by the Federal Employment Bureau on a sample of over 2500 employers state that they require incentives to hire new workers. The existing system of awarding incentives to businesses is inadequate. In comparison to the neihbouring countries, BiH invests significantly lower funds in agriculture, the incentives are late and are often not paid for the year in which the businessmen planned their expenditure, their planning is also questionable, since the funds are mostly not directed to perspective branches of economy that record growth and have the potential to open new workplaces, the effectiveness of their expenditure is ot evaluated, etc. Intransparency while awarding and numerous recorded affairs additionally illustrate the defects of this field.


Industry of wood, that is one of the leading exporting branches of the BiH economy that records the greatest foreign trade surplus – it exports three times as much as it imports – and a constant growth, hiring over 30 thousand workers, is almost left on its own, with barely any incentives. Due to an incomplete legislative that has been waiting to be passed for years, even the raw material is not readily available for them.


The promotional video in attachment, that was made as a part of the "BH Business Site" initiative is a contribution to required solutions in the field of economic support and enterpreneurship development in BiH. The initiative aims at significantly improved and budget strengthened entity support programmes for small and medium enterpreneurships and an organised distribution of different financial economic incentives at all governmental levels.


The Institute for Youth Developemnt KULT, is close to completing the research on distributing budget incentives for economic development in BiH and it will present the results to the public in the beginning of June 2015. The results of the research will be used as one of the sources to develop an analysis of states in the area od distributing budget incentives to perspective economic branches in BiH. The analysis of states, along with the identified perspective agricultural branches, will serve as a platform for creating precise guidelines to improve the process for all the institutions that financially encourage and stimulate economic development.


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"The "BH Business Site" initiative is being implemented within the Civil Society Sustainability Project in BiH, implemented by the Centres for Civil Initiatives (CCI) and the Civil Society Promotion Center (CPCD). The project is funded by the United States Agency for International Developmentand the Government of Great Britain."


The promotional video for BH Business Site – "It Can Be Better" is available HERE.


 

As a part of the initiative "BH Business Site", the Institute for Youth Development KULT began a research on distributing budget incentives for developing the economy in Bosnia and Herzegovine. The aim is to analyse the state in the area of financial support to the economy by the governmental institutions and to create indicators for intended support for the perspective branches of the economy.


The research relates to the budget support for the economy that were provided by the governmental institutions at all levels in 2013 and 2014 in form of irreversable (grant) and reversable (credit) assets. A survey on incentives for economic development was delivered in the end of April of the current year to addresses of more than 250 (two hundred and fifty) governmental institutions in BiH: to all the municipalities in BiH, all cantonal, entity nad states ministries that have economy in their jurisdiction, to employment services, banks for development, certain agencies, etc. 


The survey contains questions about the annual institutional budget and the amount of planned and imployed assets to support the economy, the form of support, economic sectors for which the assets were intended and the manner of their distribution. The issues are primarely related to assigning assets to the private (economic) sector, but data on the total assignments were also requested for the public economic sector (public firms and firms with states capital participation), with the aim of comparing assignments. In the final part of the Survey there was an open possibility of delivering the proposition of improvement in the area and exchanging experiences of good practice amongst the institutions.


The results of the research will be used as one of the sources for developing the analysis of states in the area of distributing the budget incitements to perspective economic branches in BiH. The analysis of states, with identified perspective branches of economy, will serve as a platform for creating precise indicators for improving processes for all the institutions that financially incite and stimulate the economic development.


"BH Business Site" is an initiative of the Institute for Youth Development KULT, started with the aim of contributing to resolving the system issues in the emloyment sector, with involving the wider number of actors from the business, public and civil sector, as well as the media, joined in an active, functional and regionally represented Network. The intention is to use ground and directed legislative-advocating activities to create a better business environment, along with using significantly improved and budgetary strengthened support programmes for small and medium enterpreneurships, managing distribution of different budget incitements for the economy and introducing legal notes in charging benefits for the newly employed. 


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„“BH Business Site“ initiative is conducted as a part of the Project for Sustainability of the civil society in Bosnia and Herzegovina (CSSP), that is realised by the Centres for Civil Initiatives (CCI) and the Centre for Promoting Civil Society (CPCD), supported by the American Agency for International Development (USAID) and Government of Great Britain.“


 

Author: Rusmir Pobri?


The greatest problem in BiH is unemployment. It is no news for anyone, but it is necessary to be repeated for several reasons. One of them is that, regardless of being "old news", adequate reactions of the responsible institutions that would bring a visible benefit to the citizens have not been presented yet. The second reason is the fact that for the first time we have official choices of the new entity government, stated in the prime ministers' commentaries, that the political priority of the mandate will be economy – but also the practice that the previous BiH governments used to shift their priorities precariously, in accordance with the daily political needs and budget gaps.


The official statistics confirms the problem. According to the data of the Federal Employment Institute, in December 2002, the number of the unemployed in FBiH was 277,281 and the number of the employed was 404,690. In January 2015, the number of the unemployed in FBiH was 395,133 while the number of the employed was 445,788. The difference between the number of the employed and the unemployed in 2002 was 127,409 and today it is 50,655. The ratio between the employed and the retired is currently 1.14/1.


However, instead of using the statistics, particularly the official type, as a warning and direction for a more efficient action in the BiH public political communication, the statistics is often relativised and denied. So, lately, one can often hear that the official statistics does not reflect the actual number of the unemployed, or that over 100,000 workers in FBiH are employed on the black market. It is highly likely that the estimates are fairly accurate, but, on the other hand, we would have to consider and take into consideration all the employees working for a minimal wage that cannot cover their consumer price index, and especially those who are employed but receive no wages – their numbers might be even greater than those of illegal workers, and they can hardly be considered properly employed.


The lack of workplaces, or the lack of jobs, was identified as the main issue in the employment sector. Recently it was stated by the Association of the Unemployed in BiH that, as long as there is no convenient surrounding for new workplaces, the unemployed do not stand a chance. What does the term "convenient surrounding" refer to? The forementioned commentaries of the entity prime ministers contain fairly detailed responses to the question of "convenient surrounding". As a recent example, the commentary of the new Prime Minister of FBiH Fadil Novali? is a novelty in the political retorics in BiH. His address was not general, was based on numbers, exact indicators, official reports and it opened great economic and political topics and announced serious interventions.


I will briefly reflect on some of the significant points of the commentary. The new Prime Minister raised the issue of vast public spending and the neccesity of passing a moratorium on all employment in the public sector. He also mentioned modifying the educational system for the requirements of the labor market. He also spoke of a more responsible spending of public assets and a more realistic budget planning. By decreasing the pressure from the labor, he anticipated the decrease of the informal economic sector, clarifying in particular the mitigating measures for those employed for the first time. When it comes to VAT, and other taxes, he reflected on the need for a better method of charging for the public income. He mentioned the active role of the employment bureau, clearing the unemployment records, co-financing employment and self-employment, training and actively searching for employment, cancelling parafiscal levies, speeding up the procedure of registering companies, introducing the youth with the economy and the problem of insolvency of BiH companies. He spoke about managing concessions, forests and potential of the wood processing industry, public and private partnerships, agriculture, domestic products, tourism, sector for small and medium enterpreneurship, and the lack of favourable credit assets, fighting corruption and a more just distribution od the social fundings.


Therefore, the new Prime Minister explained in the language of the just what is recquired for a "convenient business surrounding" that is necessary for creating new workplaces. Finally, he did declare that we have to be patient. The improvement of the neglected "BiH business site" through all these necessary measures must be very time-consuming. However, the crisis is not only economic, but also spiritual – there is a general apathy involved; the youth, the very best, who are competitive on the world labor market, are leaving their homeland, which is an irrecupable loss. And managing crisis, as the economic experts explain it, demands, in its first stage, compulsive measures and quick benefits nad results, before the system reforms and stabilisation, returning normal and preventing a new crisis. The quick measures are necessary to reduce the hopelessness and retrieve the trust of the youth in the governmental institutions and in a better tomorrow.


Should we expect rapid measures? Unfortunately, the adopted FBiH Budget for 2015 – partly accepting the fact that it is "inherited" – is no promise of a reform. The assets from the Federal Ministry of Development, Enterpreneurship and Crafts for "subventions to private companies and enterpreneurs" were reduced from 4,291,000 to 3,700,000 and the amount of money – that has been reducing for years and should be increasing by law – through an appropriate programming approach, should be crucial for developing private enterpreneurship in BiH. According to certain analysis, 10 times more is allocated from the budget for the public than for the private companies. Significant assets will be allocated for agriculture during this year, as was the case in the previous years, but it is obvious, considering the poor condition in the agricultural sector, as is stated in the Strategy of Development the FBiH, that a better managing is necessary. The pre-elective and the post-elective optimistic announcements of VAT alleviations (VAT per charge and the extension of deadline for paying), are seemingly no longer an issue! On the contrary, there seems to be a greater number of those who advocate the increase of VAT, without providing detailed analysis and risk estimates of how much it would aggravate the weak purchasing power of the end consumer, of a common person, but also of the economic subjects.


Finally, it could be said that now we have good announcements and precise and measurable promises of the new government. The first indicators, from the unfavorable budget prognosis for the enterpreneurship to the changes of retorics in the key issues, such as the VAT reform, are not optimistic. However, this is just the beginning, and perhaps a new budget amending by this summer, or the first law that decreases the pressure from the small businessman and the newly employed, will prove that the politics can be different, can stand on the side of the unemployed and be of service to those in the economy.


The text was published in Dnevni Avaz on 6 April 2015.


 


A meeting of the Managing Board of the Network for Creating a Better Business Site in BiH was held on 31 March 2015 in the Institute for Youth Development KULT. Aida Zej?irovi? (Bolji posao Ltd.), Almedina Selimovi? (Association of the Unemployed Otium), Dragana Ĺ obot (Isto?na IlidĹľa Municipality), Dr. Asim Ibrahimagi? (Labour and Employment Agency of BiH) and representatives of the Business Site Initiative Lejla Brutus and Rusmir Pobri? were present in the meeting. During the meeting a proposal of the Action Plan of the Network for 2015 was established and actions were set regarding the research about the economic incentives in BiH. The Board emphasized that the situation in the economy and with the employment in BiH was awful and that it is necessary to take steps for its improvement. 




 

 


Today, the representatives of the project „BiH Business Site“ (PPBH), Lejla Brutus and Rusmir Pobri? met with the representatives of the Association of the Unemployed „Otium“, its president Indira Smajlovi? and the Association's coordinator Almedina Selimovi?. The cause of the meeting was the initiative to supplement and amend the Law on mediation in hiring and social security of the unemployed, that the Association „Otium“ sent to the FBiH government and then to the Parliamentary Assembly of BiH, and to which they have not received an official answer yet.



 

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