Over the past years, Kosovo has embarked upon major social and economic developments that shape the future of the country. One of the processes that progressed in Kosovo is the privatization of the previously socially – owned companies. With international assistance, the privatization of Kosovo's socially-owned enterprises (SOEs) has generated around USD 515 million since 2004. According to the Privatization Agency of Kosovo, more than 9,000 local and foreign investors have expressed interest in the privatization process. Kosovo's two largest exporters are privatized companies: Ferronikeli (nickel) and M & Sillosi LLC (flour). Foreign investors are continuously encouraged to take part in the privatization process due to the friendly business environment and the privatization of major companies and sectors that will take in place in 2011.

Business environment

The Government of Kosovo is committed to protecting foreign investors in Kosovo and the recent law on foreign investments has reinforced the commitment. According to the Law on Foreign Investments in Kosovo, foreign investors have the same rights and obligations as residents of Kosovo and are treated equally. In addition, foreign investors are protected against expropriation and nationalization and have the rights of compensations. Finally, foreign investors have the right to execute employment and other contracts with physical persons who are citizens or permanent residents of a foreign state and may own real estate in Kosovo and enjoy the same property rights in respect to real estate as Kosovo citizens and legal entities.

Areas that make Kosovo a competitive country for foreign investments are:

  • Low tax regime: Customs duty on imports 10% - a reduced rate of 0% applies to imports of capital goods and agricultural production inputs. VAT rate is 16%, 0% taxes on exports. Personal income tax rates vary from 0-10%. 0% VAT and customs duty on exports. Corporate income tax rate is 10%.

  • Stimulating business environment: Free access to the market of the European Union and the markets of neighboring countries; Simple and quick business registration procedure; EURO is the official currency.

  • Population: 2.2 million young and motivated population; 70% under the age of 35.

  • Abundant resources: Abundant natural resources: lignite, lead, zinc, ferronickel and fertile agricultural land. Lignite reserves amount to about 14 billion tons. A new power plant will add 1,000MW capacity and result in a GDP increase of 17%. In addition there is high demand for investments in new coalmines. Kosovo has huge deposits of lead and zinc (Trepça mines), gold and silver, ferronickel and magnesium.

  • Sound banking system: The Central Bank Authority of Kosovo regulates the banking and insurance sectors. All banks are private and there is a total of 6 banks and 9 insurance companies

Privatization during 2010 and the plan for 2011

The Kosovo Privatization Agency has so far privatized 625 enterprises, of which 600 have been privatized through 'regular spin-off' while 25 of them have been privatized through the method of 'special spin-off'.

Some of the major recent events in the privatization process are:

  • Privatization of the Prishtina International Airpot through concession for 20 years. The investment will be carried out by the Turkish – French Consortium 'Limak-Airport de Lyon'

  • Express of interest for the New Power Plant called "Kosova e Re (New Kosova)" whose construction is expected to begin in 2011. The power plant is expected to produce 500 megawatts of energy with the possibility of additional 500 megawatts. Construction costs are estimated to amount to one billion Euros, and will be co-financed by the Government of Kosovo and the winning company. Currently 6 international consortiums, including Adani Power from India have expressed their interest. The winner of the project will also have the rights for coal exploitation in Kosovo.

  • Privatization of the electricity distribution network in Kosovo. This process is expected to be completed by the end of 2011. Three companies have already expressed interest in privatization.

  • Privatization of 75% of the Post – Telecom of Kosova which is expected to be carried out in 2011.

  • New project for Prishtina-Skopje highway. The construction of the 55-kilometers highway is planned to be carried out through public-private partnership during 2011.

Kosovo has created a friendly business environment and legislation in the last years trying to attract foreign direct investments. Kosovo has low taxes and a simple tax system. In addition, it offers macroeconomic stability, simple and quick business registration procedures, and a young and well-educated work force. Finally, the on-going privatization process in Kosovo offers new opportunities to invest at a time when the private sector in Kosovo is becoming the main factor for the sustainable economic development of the country.

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