Bosnia and Herzegovina faces stumbling blocks
in its bid for future EU membership, with corruption being among the most significant factors
. The country was recently swept by some of the worst unrest in years following anti-corruption protests directed at politicians, according to a February 2014
BBC News
article. To overcome these challenges, t
he government has aimed at containing corruption by enacting laws and increasing transparency
. One example of this is the
digitisation
of files at the Land Registry in Sarajevo, which has sped up the property
registration process and made records more transparent.
The country has made significant efforts to attract foreign investors by passing a liberal foreign investment law and uniform trade, corporate tax and customs policies. W
ork is still u
nderway to produce a uniform registration system for the whole country and to establish other single regulatory institutions and frameworks at the state level to replace entity-level equivalences which have prevented cross-entity business development and foreign investment. However, progress in that area remains slow,
according to the latest
Bosnia and Herzegovina 2013 Progress Report
. C
ompanies are
required to register in both national entities before being allowed to do business in the whole country.
However, one of the two entities,
Republika
Srpska
, has introduced ambitious reforms including a one-stop shop business registration system, cutting procedures and registration times. Overall, private-sector development still encounters significant barriers.
Corruption is reportedly pervasive in the judiciary, police and other law enforcement agencies, business licensing, customs and public procurement.
Observers agree that the insufficiently defined power-sharing agreements in Bosnia and Herzegovina produce complex legal and regulatory frameworks, partly due to laws and regulations at state and entity levels often being duplicative and contradictory and resulting in unclear responsibilities. These foster inconsistent procedures that encourage corruption.
Facilitation payments
are seen as pervasive throughout the Bosnian business landscape, although licenses and permits are said to be one of the most affected areas.
Forming a general view of all laws and rules that apply to a certain activity can be extremely difficult, and foreign investors are therefore advised to obtain local assistance and advice, as well as conduct
due diligence
when working with local agents.