A Country That Focuses Its Economic Growth On Exports: Bosnia-Herzegovina
The participation finance sector in Bosnia and Herzegovina can be considered as an area to be explored
Hasan Topaloğlu, Chairman of DEİK/Türkiye-Bosnia- Herzegovina Business Council, talked about the economy of Bosnia and Herzegovina, relations with Türkiye, the potential of the participation finance sector in the country and the opportunities for Turkish business people for Katılım Finans.
How is the situation of the economy and bu- siness world in Bosnia and Herzegovina after COVID-19?
Bosnia and Herzegovina (BiH) is an important tourism destination visited by hundreds of thousands of people from all over the world every year. As with the rest of the world, the COVID-19 pandemic in Bosnia and Herzegovina impacted the country's economy. The tourism and service sectors were affected due to the closure of borders and the implementation of strict restrictions during the pandemic. As sanctions gradually eased towards the summer of 2021, the vitality
in these sectors started to show itself. An active and busy tourism season is expected this summer in Bosnia and Herzegovina, which has recently completely lifted the measures and returned to the pre-pandemic period. In addition, the economy of Bosnia and Herzegovina is primarily intertwined with European and Balkan countries. Opening the borders and removing the measures will contribute to the return of imports/exports to their old days.
What are the prominent sectors in Bosnia and Herze- govina?
Tourism, construction, animal farming, forest products, agriculture and service sectors are the leading sectors in Bosnia and Herzegovina. The capital city of Sarajevo and one of the most important cities, Mostar, is among the favourite addresses of local and foreign tourists. Con- sidering that it is a border neighbour to EU countries, exporting meat, milk, and vegetables/fruits also stands out as an important opportunity. In addition, considering the interest of foreigners coming from the Gulf countries, the construction sector is one of the recently emerged sectors.
Foreign dependency on drinking water in a country with rich water resources shows that this sector has the potential to develop within the country. In addition, transportation infrastructure and mini hydroelectric power plants also stand out. On the other hand, many foreign information technology companies prefer Bosnia and Herzegovina due to its cheap labour force. Bosnia and Herzegovina is a country, half of which is covered with forests. Thus, the furniture industry is one of the most important industries in the country.
Can you talk about Türkiye-Bosnia-Herzegovina trade and potential cooperation?
Despite the pandemic, the trade volume between Türkiye and Bosnia-Herzegovina did not suffer a severe loss. While the trade volume between the two countries was 70 million dollars, it has increased to 650 million dollars with the Free Trade Agreement (STA) signed in 2003. It is possible to say that the target of 1 billion dollars will be achieved in the short term, with the STA revised in 2021 and the elimination of the epidemic effect. There are many potentials in Türkiye's trade with Bosnia- Herzegovina. Firstly, Türkiye, one of the leading countries in the construction sector, can be effective in construction projects in Bosnia-Herzegovina with its knowledge, experience and financing. On the other hand, considering that Bosnia and Herzegovina is one of the countries that export meat to Türkiye, livestock and the agricultural sector also have significant potential. The energy sector also has serious potential. Turkish energy companies are expected to be more entrepreneurial at this point.
What is the potential of the participation finance sector in Türkiye-Bosnia-Herzegovina trade?
Participation finance sector operates under the name of Islamic banking by only the Bosnia Bank International (BBI), established in Bosnia and Herzegovina under the leadership of the Islamic Development Bank and started its operations in 2000. For this reason, the participation finance sector is considered an area that needs to be explored and is open to development. We see that currently there is the idea of Ziraat Participation Bank being established in Bosnia.
Anything you wish to add...
Since it is a small market on its own, it is necessary to evaluate and address not only Bosnia and Herzegovina itself but also its close position to the EU and its relations with the region's countries. Bosnia and Herzegovina is a country that has focused its economic growth on exports. Producing here and selling to Europe with cheap transportation costs should be the priority of our business people considering an investment. The Balkans should be seen as a whole market. Bosnia and Herzegovina has also recently become a country that has lost its workforce to European countries. Leaving the trained workforce will pose a significant problem for the country's economy and stability in the long run. Türkiye and Turkish business people, which is a friendly country and cares about the stability of Bosnia and Herzegovina, should also help Bosnia and Herzegovina to avoid losing its workforce to Western countries with their investments. I think the developed political relations between the two countries will be reflected in the economic ties soon.
Chairman of DEİK/Türkiye-Bosnia-Herzegovina Business Council -Hasan Topaloğlu