Sarajevo, Friday 201 September 2013

Ladies and Gentlemen,

Let
me begin by thanking the organizers for inviting the EU to speak at
this conference on an issue that deserves and indeed requires a lot of
attention from us all.

Bosnia and Herzegovina has over the past
years persistently scored low results on many economic cross-country
indicators. It continues to lag behind its neighbours in the annual
World Bank Report on “Doing Business”. This year Bosnia and Herzegovina
ranked 126th for how easy it is to do business (rivalled by Ethiopia,
Honduras and Bangladesh) For comparison, let me mention that the
regional average for Eastern Europe and Central Asia is 73.  

Let
me also mention that in the calculation of this rank, it was issues
under the responsibility of local government that pulled BiH's ranking
down. Just to mention a few:
1.    the time it takes to register a business (avg. 37 days),
2.    the time it takes to get building permits (avg. 180 days), and
3.    the time it takes to get connected to the local electricity grid (avg. 125 days).
Not
surprisingly this translates directly into the relative amount of new
businesses established in a year, where BiH also has a regional low
score with less than one new company registered per 1,000 people .

Of
course the business environment in Bosnia and Herzegovina – as is the
case anywhere else – is not only defined by the local administrative
side of establishing a new business, it also a function of a few other
factors:
1.    a general political and economic situation that is
marred by the absence of a common vision for the country, a factor which
in itself may deter foreign investments;
2.    a transport
infrastructure in much need of improvements and modernisation, which
makes it more difficult for businesses to reap the benefits of their
relatively close proximity to EU markets;
3.    a high level of
complexity and a lack of transparency in government practices;  The
perception of the BiH business community is that administrative burdens,
corruption and an over-sized public sector are posing the major
constraints for entrepreneurship development.
4.    and finally,
limited access of entrepreneurs to financial support and credits, that
will allow them to get their business prospects “off the ground”. Some
45 per cent of firms in Bosnia and Herzegovina see access to financing
as a major obstacle to the development of their business .
99 % of
businesses in BiH are Small and Medium Sized Companies and the vast
majority of these SMEs operate in local markets. Therefore,
Municipalities have a crucial role to play in helping to improve the
business climate and to encourage investment for the business sector.

Municipalities
need to take on the mission of being the champions of business. This
means providing efficient administration, speedy granting of permissions
and efficient provision of utilities and services. Basically, making it
easy to do business.

While we are talking about local
competitiveness – what we have seen many places in the EU is that when
municipalities cooperate with higher administrative institutions to
improve conditions in general, there is a real chance of lifting the
general economic outlook of regions. This generates investments, creates
jobs, and improves the living conditions of the populations of entire
regions.

When higher levels of government cooperate with
municipalities to get the legal frameworks in place – and when
municipalities focus on the quality of the services they need to
provide, there is a real economic perspective in these partnerships.

It is important that responsible politicians act with ambition and that they act with urgency!

The
European Union stands by your side in this effort. The EU is the single
largest source of financial assistance to Bosnia and Herzegovina. Over
the past twenty years, the EU has contributed more than 3 billion EUR
worth of assistance to BiH. The foremost vehicle for the assistance the
European Union provides is the multi-annual Instrument for Pre-Accession
for “Enlargement Countries”, abbreviated “IPA”. For 2013 alone we have
allocated some 108 MEUR.

•    This money covers the Rule of law
and Public administration reforms. Both are critical for a
corruption-free and business friendly environment.
•    We are also
planning to provide considerable funds for Infrastructure development,
mainly transport and energy networks and projects that provide direct
benefits to small businesses. Our support to SMEs will focus on transfer
of knowledge and new technologies, quality standards, infrastructure
and more.

•    Over the past few years, the EU support to local
economic development has been in the amount of approximately 20 million
EURO. Much of this support has been focused on provision of services to
the local entrepreneurs for better access to markets, skills training,
innovation and introduction of standards.

•    We have recently
launched a call for proposals worth 3 MEUR with the aim of supporting
local economic development in BiH through improvements to the business
infrastructure, introduction of quality standards and new technologies
etc.

•    And looking ahead, there is much more potential for local integrated development in Bosnia and Herzegovina;
• 
  In the draft Country Stategy Papers for the IPA II (2014-2020), the
EU has developed the concept of “integrated local development” for
possible support to BiH;
•    Integrated Local Development has as a
main objective to boost competitiveness and job creation at local level,
reflecting the EU economic priorities for local development, as well as
the EU 2020 Strategy and the SEE 2020 Strategy (currently under
preparation)

Clearly there is a very close relationship between
economic development and political stability and vice-versa. Therefore
practically all of the priorities and efforts of the European Union
vis-à-vis Bosnia and Herzegovina have an economic angle.

This
country has a real prospect of eventually becoming an equal member of
the European Union. But in order to get there, a sincere and persistent
commitment by the political leaders of this country is of paramount
importance. Political leaders need to focus on – and to find common
stances on – policies that will help the country as a whole to finally
begin catching up with its neighbours. This is what the people of Bosnia
and Herzegovina want and what they deserve.

Thank you.