Republika Srpska Spurns Non-Serb Investors

Red tape is said to be discouraging wealthy potential returnees to the capital of Republika Srpska, RS, from investing in their former home.

Case studies suggest apparent ineptitude and corruption are frustrating attempts by increasing numbers of prospective returnees to invest in Banja Luka - especially if they are of the “wrong” nationality.

Some 80,000 Bosnian Muslims and Croats were driven out of the city during the war that raged through Bosnia and Hercegovina from 1992-1995.

Research conducted by Banja Luka Citizens Association, an NGO, shows around 20 per cent of those who were forced to leave are now contemplating a return to their hometown.

What marks out Banja Luka returnees from the rest in Bosnia is the fact that some are prepared to invest in the RS.

One is Adem Bajagilovic who fled to Sweden in 1992. Bajagilovic started a business producing mechanical spare parts for tractors in Sweden five years ago and now has six employees.

But when he tried to open a spare parts factory in Banja Luka, he experienced nothing but grief.

“I decided to open an auxiliary plant in Banja Luka after consultations with my Swedish partners,” he said.

But problems soon multiplied. Since his original application to the RS ministry of economy and to the Banja Luka local authority to register a company, Bajagilovic has had to make four trips from Sweden.

“They asked for a new document, certificate or more tax every time I showed up,” he said. “I don’t understand why there isn’t an application form stating all the requirements for registering a company, including the registration fee, so the issue can be settled within a reasonable deadline of a month or so.”

Bajagilovic claimed that corruption was as big a problem as the red tape.

“They shamelessly demand money for what they are obliged to do under the law,” he said. “This is unimaginable in Sweden, and I wasn’t prepared to pay off anyone. I now realise I have lost a year and more money than I would have done if I’d just bribed a few people.”

Slobodan Gavranovic, head of Banja Luka City Council, denies the corruption charges but admits the local administration “is relatively slow”.

“Banja Luka is the largest administrative municipality in Bosnia, and our clerks just can’t keep up with all demands,” he said.

The official added that entrepreneurs’ requests could not be granted special priority when it came to issuing import and export licences or permits to start up businesses.

Bajagilovic is not impressed. “Unemployment is soaring in the RS and pensions are so shamefully low, so I am stunned that the authorities have shown no interest in stimulating individuals prepared to invest capital and employ people,” he said.

The Prlja family from Banja Luka’s Vrbanja district has encountered a similar problem.

Father and son, expert car mechanics working for Sweden’s Volvo car company, recently decided to return home and open a Volvo repair shop. After several interviews with various local government offices they have yet to make progress.

“The local authorities won’t give us a working permit,” said Ramadam Prlja. “We realised that licences for profitable forms of business are hard to come by for non-Serbs in the RS. No one will tell you that openly but Bosnian Muslims and Croats have identical problems when they want to buy up state companies or start a good business.”

Prlja concluded, “It is a silent continuation of their wartime policy.”

Another returnee, Husein Avdicevic, agreed. “Neither my foreign-based friends nor I were able to buy shares at any privatisation tenders so far. There is no place for us here, even though we are prepared to invest money and start production,” he said.

In the meantime, the city’s obsolete state-run companies and facilities make an eerie sight with their ghostly, empty premises and local politicians seem content to wait for their value to hit rock bottom.

The Banja Luka Citizens Association said an increasing number of people come to see them every day complaining of difficulties investing in their homeland.

Muhamed Kulenovic, one of the members, said there are no current economic projects aimed at enticing the diaspora to invest – a problem he is trying to resolve by contacting the local authorities.

“In October we will organise an economic forum to rally exiled Banja Luka citizens, the local authorities and the RS administration,” he said.

“Our goal is to start a debate on improving the conditions for investing the capital of these people in Banja Luka.”

Gordana Katana is a regular BCR contributor.