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FOREIGN DIRECT INVESTMENTS IN KOSOVO

Foreign Direct Investments in Kosovo, is a really valuable indicator which plays an important role in economy and it expresses a serious issue in the state. Unfortunately, this element has not taken place properly, due to many factors, like small contribution from other countries.Foreign Investors in Kosovo are not high,but they are average.These Investors consist of Germany,Turkey,Albania,Croatia,Macedonia etc.Foreign Investments are spread in almost all the cities of Kosovo,but seem more dominant in Prishtina,The fields that are invested the most are Banking System,construction companies and transport.

Importance of investments in Kosovo
Although there are foreign investments in Kosovo, unfortunately the current amount does not help the increase of the economy, considering Foreign Direct Investment have a specific importance to Kosovo, taking into account the conditions in which the economical should be properly developed.

Some of the examples below, express perfectly the reasons behind the fact that why the Economy of Kosovo is in a desperate need for the support from other significant countries and also its major importance.


 * The undefined political status has created difficulties at borrowing from international financial institutions.
 * Foreign financial assistance, known as donation for capital investment submitted to decrease in a slow pace after 2003.
 * Banking system in Kosovo still does not possess the ability of loans long terms and large volume to support serious investment.
 * Lack of financial market and securities market.
 * The implementation of the privatization process aims to attract foreign investors.
 * Financial remittances - remittances from Kosovo immigrants in Western Europe and the U.S. is expected to decline at a time when many are                     attracting their families in places where they are located.
 * Major need for investment in public infrastructure and other sectors to create jobs and facing the problem of unemployment.
 * High rate of unemployment.

According to these facts, it is clear that Kosovo faces with resource reduction for the financing of investments, while facing with the pressure and permanent need to solve the unemployment(estimated 45-50% unemployment rate) and improve public infrastructure. The current situation in the energy sector, telecommunications and transport can be considered as limited factors in development right now. Investment activity of private businesses in the postwar period has generated significant economic growth and employment, but so far there are signs of recessions in terms of declining average traffic volume for an enterprise and employment growth. Under these conditions, economic policy makers are challenged with the need to promote new investments. It is understood that only Foreign Direct Investments can not accelerate ,over appropriate activities. The goal should be to become an important resource and complementary to other funding sources. Experience of economic development in recent decades, particularly when it comes to developing countries pointed out that FDI (private), considered important because of their effects positive multilateral.

Investments in Kosovo
• During the nineties global trends foreign direct the flow of investments have had a steadily increasing. Their growth has been significantly more stable and sustainable as compared to all instruments of financing (capital flows) in developing countries (the international financial market, intergovernmental loans, bank loans, government funds and investment portfolios).FDI in developing countries increased from about $ 1 billion in 1990 to about 12 billion U.S. $ in 1998.

From the table above it is clear that the biggest beneficiaries of the net flow of FDI are: Latin America, Asia Pacific, North America, Central and Eastern Europe, Africa, Balance while negative FDI flows only Western Europe, which invests more in regions other than accepting the investment. Generally it can be concluded that 92% of investment originating from developed countries and 72% of them come back again in these countries.

Impact of Foreign Investments in Kosovo
One the other hand, taking into consideration the favorable business climate, stable macroeconomic environment and the excellent opportunities across different business sectors, Kosovo even in a very slow pace, is increasingly becoming a very attractive place for doing business. As result, the interest of foreign investors has been increasing steadily during the past years and together with it also the inflow of FDI. Kosovo has so far attracted over 1 billion Euro of FDI. Apart from investment pioneers such as the Raiffeisen Bank and Procredit, which entered the Kosovar market at the beginning of the transition phase, there are many other foreign companies engaged in a wide range of business sectors. According to the Business Registry data there are over 2,000 companies of foreign and mixed ownership that have already used the opportunity to invest in Kosovo. The large amount of foreign companies operating in Kosovo is a living proof of the opportunities and benefits that the country offers, and also represents a base of quality products and a sufficient service-providing community.

Even though being a country still towards its development, it seems that Kosovo surprisingly does have investors and foreign businessmen and the number actually seems to be pretty high. According to Investment Promotion Agency which operates under the Ministry of Trade and Industry, shows that in Kosovo are registered 3 thousand and 906 foreign investors. The majority of these investors are individuals who have their own companies in the respective countries, while in Kosovo, have started their representations.

From Switzerland come only 112 investors, who are focused mostly in the regions of Prishtina, Peja, Gjakova, Suhareka, Ferizaj etc. Although the number of investors is surprising, the number of employment is even more surprising, due to the fact that except for some investors who hold a number of 4 digits number of employers, others have declared an even lower amount of employers. From foreign companies that have invested in Kosovo, the number of employers has been expressed the most from Feronikel in Drenas with 1000 persons.

After Feronikel, the company of smoke production in Gjilan, appears to have a higher amount of employers containing 400, following by Turkey with 370 persons. The fields that have been invested by foreign investors start with the Banking sector and ends with the Transport one, while the ones in the middle contain tourism, education, telecommunication, or market.

According to the statistics, the elementary total sum of the capital of all foreign direct investments in Kosovo, covering all the fields they invested in, is 3 billion and 648 million and 949 thousand and 859 euro. The places where the foreign investors in Kosovo come from, are different, but the Investors map does not continue further than Turkey. Except for regions like Albania, Turkey, Croatia, or Macedonia, Kosovo is supported the most by West Europe. The number of Investors from West Europe, who have chosen Kosovo as a place to invest in, is relatively high and they mostly are from Switzerland, Germany, France, Great Britain, even the United States.

These foreign Investors take place almost in all the cities of Kosovo, but they are more noticeable in the capital, Prishtina. Investors from Germany contribute in construction companies, Serbia in market, while other businesses that investors like France and Bosnia & Herzegovina lead, contain milk preparation and market. According to Kosovo Central Bank’s official data, it is shown that Germany holds the highest number of Investors in Kosovo. Right after Germany, with Direct Foreign Investment comes Albania with 23.32 %, then Switzerland with 22.71 % and Austria with 15.50 %. However, the level of unemployment and poverty in Kosovo, still stands high.

Advantages such as excellent tax system, abundant natural resources, quick and easy business registration, transparent law on foreign investments etc, make Kosovo an attractive and friendly environment for foreign investors.

The Republic of Kosovo enjoys greatest opportunities in the region and this is a reason why investors should be looking at Kosovo as a final destination for their investments.