DOING BUSINESS IN SOUTH EAST EUROPE

CROATIA SERBIA BOSNIA AND HERZEGOVINA MONTENEGRO MACEDONIA

Piartis is PR & Event Agency based in Zagreb, Croatia. We are also specialized in networking and lobby services, trough excellent relations in region and also worldwide. Contact us: Phone/Fax: + 385 1 33 84 766 Address: 10 437 Bestovje, Zdenci 3/1, Croatia E mail: info@piartis.com Web: www.piartis.com Gordana Popovic General Manager +385 91 1233346 +39 3284933670 gordana.popovic@piartis.com Copyright PIARTIS 2012.

DOING BUSINESS IN SOUTH EAST EUROPE

CROATIA SERBIA BOSNIA AND HERZEGOVINA MONTENEGRO MACEDONIA

Table of Contents
Introduction Croatia Serbia Bosnia and Herzegovina Montenegro Macedonia 7 9 17 25 33 41

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Introduction
We have compiled this brochure after numerous inquiries that have come to our company Piartis from foreign partners and potential clients from all over the world.
How to operate in the countries of former Yugoslavia: Croatia, Bosnia and Herzegovina, Serbia, Macedonia and Montenegro, is a question that intrigues many businessmen interested in those prosperous markets. Although European countries, it seems that they still remain mainly unknown and mysterious for international entrepreneurs. Cultural and historical differences are getting less and less important, thus making those re-emerging, traditionally associated markets, with over 20 million people who basically speak the same language; very attractive to foreign investors.

Introduction

There is no single best way to do business in the former Yugoslavia. It is advisable to enter the market through local partners, since traditional business communication is based on trust, friendship, political and personal influences. Who do you know is crucial for any kind of business. Laws and policies are unstable and the justice system is very slow and sometimes not logical to foreigners. Business processes are very slow and very relaxed, as well. Delays and postponements are a normal part of business culture, so patience is a must. Deals are made more in restaurants, over food and wine, than in offices. Modern forms of communication through electronic media are in the initial development stage and the communication achieved through them ultimately ends up with direct personal contact. Do not expect quick answers to your emails, even in large Western companies. Personal meetings are necessary in those parts of the business cooperation that deviates slightly outside of the normal business legislative. However, all of these obstacles are worth overcoming in those interesting, emerging markets. It is essential to find the right contacts and to have the right local people who can use their knowledge and connections to get the job done for you.

Gordana Popovic, Mr.Sc. Marketing General Manager Piartis

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Croatia

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Croatia
GENERAL INFO
Official name: Republic of Croatia Geography: Croatia is located in Central and Southeast Europe, bordering the Adriatic Sea to the south-west, Slovenia to the northwest, Bosnia and Herzegovina to the south-east, Hungary to the northeast, Serbia to the east and Montenegro to the south-east. Area: 56,594 km2 Costal line: 5835 km Capital: Zagreb Climate: Mediterranean and continental; continental climate predominant with hot summers and cold winters; mild winters, dry summers along coast. Population: 4,290,612 Ethnic Make-up: Croat 89.6%, Serb 4.5%, other 5.9% (including Bosniak, Hungarian, Slovene, Czech, and Roma) (2001 census) Religions: Roman Catholic 87.8%, Orthodox 4.4%, other Christian 0.4%, Muslim 1.3%, other and unspecified 0.9%, none 5.2% (2001 census) Language: Croatian, a South Slavic language which is used primarily by the inhabitants of Croatia as well as Croats in Bosnia and Herzegovina. German and English are the most common second languages. Main Cities: Zagreb is capital of Croatia with population of around 800,000. Other larger cities are: Split, Rijeka, Osijek, Zadar, Dubrovnik.
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CROATIA

Source: www.citypictures.org

Source: guide2croatia.net

MAJOR FAIRS
Zagreb Fair is the most important fair in Croatia. With total exhibition area of 560,000 m2 the Zagreb Fair has an excellent infrastructure ideal for organizing different fair activities as well as for the construction of exhibition spaces and advertising surfaces. Every year the Zagreb Fair hosts more than 25 specialized events gathering over 6,000 exhibitors from 50 countries. Its exhibition spaces are visited by almost 600,000 experts and businessmen annually. Along with the fair events the Zagreb Fair also hosts international congresses, conventions and symposia. Croatia Boat Show held in Split is an exhibit for the local and international nautical industry, from yacht builders to engines and equipment producers, as well as companies offering various complementary goods and services to lovers of the sea and sailing. It is the largest regional event of this kind.

STRENGHTS OF THE MARKET

Croatia is ecologically well preserved which provides many interesting business opportunities from tourism to agriculture. There are natural resources for renewable energy, a well educated and skillful workforce in certain industries which can overcome the advantages of cheap workforces in some other parts of the world. Main advantages of Croatian economy are: Well educated workforce 49% of Croats speaks English Geographical position Regional transportation hub (important Pan-European corridors are passing through the country) Most developed country in the region Natural resources

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Source: www.citypictures.org

Source: www.stareslike.com

Quality telecommunication infrastructure Developed financial services Developed motorway network Upcoming EU accession Equal position of foreign investors and domestic companies, under conditions of reciprocity This treatment applies to all forms of foreign investment, which means that foreign investors in their domestic operations are considered legal entities with all rights and obligations applied to domestic investors Foreign investors have the right to purchase property in Croatia only if there is an option for Croatian citizens to do the same in their country. A foreign investor who establishes a company in Croatia has the right to acquire the property without restrictions as a resident legal entity. Croatian Constitution guarantees that investors rights can not subsequently canceled or reduced Free repatriation of profits after the fulfillment of obligations and free repatriation of capital investment for withdrawing are also guaranteed by the Croatian Constitution Lack of business services market offers great opportunities for investors in this area and good returns on investment.

MARKET OPPORTUNITIES
With an unspoiled natural environment, a celebrated cultural and historical heritage, and so much emphasis on it as a tourism destination, the country certainly offers great possibilities for anyone looking to carve out a niche market. Croatia is perfect for nautical tourism, and it also offers great opportunities in diving, cruising on small boats, and fishing tourism. Inland, you could start up agencies and businesses around equestrian tourism, biking and adventure tourism, ecotourism, or hunting tourism. If you are interested in medical tourism, many natural spas are the perfect place to start. Croatia offers unpolluted sea and nature reflected through numerous nature reserves and 116 Blue Flag beaches, it is ranked as the 18th most popular tourist destination in the world.

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CROATIA

Source: Veer

Source: www.app.hr

Aside from tourism, Croatian constantly growing market is opened for investment in many other fields such as infrastructure, building & construction, heat and energy saving materials and technologies, innovative materials and know-how for highways and road structures, different consumer goods (cosmetics, clothing, jewelry), environment (waste management, water treatment, sewerage), etc.

POLITICAL AND ECONOMIC ENVIRONMENT

In the war for independence (1991-1995) Croatian economic infrastructure sustained massive damage, particularly the revenue-rich tourism industry. In the period from 1989 to 1993, the GDP fell 40.5%. Significant part of the Croatian economy is still state-owned, with government expenditures accounting for as much as 40% of GDP. Croatia has a high-income market economy and was one of the fastest growing transitional economies in the region prior to global financial crisis. According to Croatian National Bank (HNB), Croatian nominal GDP was at 45.379 billion euros and 10.245 euros per capita in 2009. Eurostat data show that GDP per capita stood at 61% of the EU average in 2010. Economic output is dominated by the service sector which accounts for 73.6% of GDP, followed by the industrial sector with 20.5% and agriculture accounting for 5.9% of GDP. Agriculture employs 3% of overall workforce, industrial sector 30% and services 65%. The industrial sector is dominated by shipbuilding, food processing, pharmaceuticals, IT and timber industry. In 2010, Croatian exports amounted to 64.9 billion kuna (8.65 billion) with 110.3 billion HRK (14.7 billion) worth of imports. The largest Croatian trading partner is the EU. Tourism is one of the most important sectors of Croatian economy and it accounts for up to 20% of countrys GDP. Its positive effects are felt throughout the economy of Croatia, and because it significantly reduces the countrys external trade imbalance it is considered an export business. The tourist industry has grown rapidly in recent years, recording a dramatic rise in tourist numbers, with more than 10 million visitors each year. Governments priorities in economic policy are tax reductions, increasing employment and the reduction of state spending. Inefficient judiciary system, combined with corruption and inefficiency in public

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Source: Veer

Source: www.hotelzora-adriatiq.com

administration, especially on issues of land ownership, are particular concerns for foreign investors. Besides widespread corruption, another major Croatian problem is large and growing national debt, which has reached over 34 billion or 89.1% of the national GDP.

BUSINESS ETIQUETTE
The family is still the basis of the social structure. The extended family is the norm and relatives remain quite close with both the mother and the fathers sides. The family provides its members with a social network and assistance in times of need. Even though it is becoming increasingly common for the nuclear family to have its own house, Croatians will take in elderly parents rather than send them to a nursing home. Weekends are considered family time. Few Croatians will allow business concerns to interfere with this important part of their lives. If invited to someones house, bring flowers for the hostess. The host may be given a box of chocolates or a bottle of good wine. Do not give chrysanthemums as they are used at funerals and for gravestones. When giving flowers, make sure there are an odd number of stems. Gifts are generally opened when received. Table manners are relatively casual as people like to eat and chat at meal times. There are however standards of good behavior that should be adhered to. Wait to be shown where to sit. At formal meals the napkin is unfolded and placed on the lap. Do not begin eating until the host signals to begin. Business in Croatia is formal and reserved. Once a relationship develops, this will change. Initially at least: Use the handshake with eye contact and a smile. Greet the person with the appropriate salutation for the time of day. Use professional business titles. Business cards are exchanged without formal ritual. Include titles and professional qualifications on business cards.
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CROATIA

Source: www.citypictures.org

Source: www.wikipedia.org

Although not a absolutely necessary having one side of your business card translated into Croatian shows some thought. Meeting schedules are not very rigid in Croatia. There may be an agenda but it serves more as a guideline for the discussion than anything else. Be prepared for lengthy meetings There may be some small talk at the beginning of meetings. This would become more important as the relationship develops. Never jump straight into business as this may come across as rude.

MEETINGS AND PRESENTATION

Greetings on initial meetings are formal and reserved. Appropriate greeting for the time of day are standard, as well as handshake and the direct eye contact. Dobro jutro (good morning), dobar dan (good day), and dobro vecer (good evening) are everyday greeting phrases. Address people with their honorific titles plus surname. If you are unsure of titles then use Gospodin for Mr, Gospoda for Mrs and Gospodice for Miss). Never jump to first names terms without being invited to. Only close friends and family members tend to use first names. Close friends may greet each other with an embrace and a kiss on each cheek. Again, wait until the Croatian initiates this form of greeting. At social gatherings hosts introduce guests, usually starting with the women and then moving on to the men in a rough approximation of age order, oldest to youngest.

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Serbia

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Serbia
GENERAL INFO
Official name: Republic of Serbia Geography: Serbia is located in southeastern Europe in the central part of the Balkan Peninsula. Serbia borders Romania and Bulgaria to the east, the Republic of Macedonia to the south, Hungary to the north and Croatia, Bosnia and Herzegovina, and Montenegro to the west. Costal line: None Area: 88,361 km2 Time zone: Central European Time (GMT+1 - standard; GMT+2 - summer time) Climate: Temperate continental climate with gradual transition between the four seasons of the year, and the average annual temperature of around 12 degrees. Population: 7,120,666 Religions: Christian Orthodox (religion is practiced freely and many different religions and their institutions exist in Serbia) Languages: Serbian (ethnic minorities are entitled to use their own languages) Main Cities: The capital of Serbia is Belgrade (greater urban area: app. 2,000,000) Other large cities are: Novi Sad, Ni, Kragujevac, Subotica, Zrenjanin.

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SERBIA

Source: www.stareslike.com

Source: www.saitours.hr

MAJOR FAIRS
The largest fairs in Serbia are Belgrade Fair and Novi Sad Fair. Belgrade Fair is made up of 14 halls with 100 000 square meters of exhibition space. Annually, more than 30 regular international fair events are held in Belgrade, of which the most important are: Technology and Technical Advances Fair, Fashion Fair, Furniture and Interior Decoration Fair, Book Fair, and Construction Fair. More than five thousand companies a year exhibit their products at the Belgrade Fair, and more than a million and half people visit it. Since 2001 The Belgrade Fair is a member of CEFA. In addition to regular events, many exhibitions, concerts, scientific conferences, seminars and symposia take place at the Belgrade Fair. The biggest event of the Novi Sad Fair is the International Agricultural Fair, with about two thousand exhibitors from Serbia, Montenegro and 60 countries worldwide. The Novi Sad Fair is attended by more than five and a half thousand exhibitors, and around one million visitors per year. Foreign participants account for 40 percent of the total number of exhibitors.

POLITICAL AND ECONOMIC ENVIRONMENT

Since the Second World War, Serbia transformed from essentially agrarian country into an industrial country where agriculture and mining maintained an important role. During Yugoslavia, Serbia was moderately developed country, but with large regional differences. Serbian economy was severely weakened after the collapse of Yugoslavia due to sanctions imposed by Security Council, and further destroyed by NATO bombings in 1999. Agriculture makes 16.6% of national GDP, industry 25.5% and services 57.9%. Main agricultural cultures are wheat, corn, sunflower and soya, and to a lesser extent

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Source: www.novisad.cc

Source: www.travelskyline.net

vegetable crops. Serbia has a working-age population of about 3 million people and unemployment rate of 14%. The inflation rate is over 6.5%. Agricultural sector employs 30% of overall workers, industry 46% and services sector around 24%. The main import partners of Serbia are European Union countries (Germany, Austria, Italy), U.S. and Peoples Republic of China. Serbia exports its products mostly to countries of the former USSR, the Republic of Srpska and Macedonia. The Import deficit was about $ 6 billion (2005). The Government of Serbia adopted the National Strategy for Economic Development 20062012, which defines the basic goals and directions towards a modern society, developed economy and a better quality of living for the citizens. The main priorities of economic policy are macroeconomic stability, safety of business and sustainable economic growth. Additional efforts have been made in building a modern market economy, primarily through the modernization of economic legislation, the establishment of market institutions that are consistent with the standards of international markets, establishing the rule of law and institutions that guarantee business safety, as well as further market liberalization.

STRENGTHS OF THE MARKET

Key Competitive Advantages: Geographic position makes Serbia transport hub for SEE, EU and Middle Eastern customers. Since 2001 Serbia has transformed its economy into a leading investment location in Central and Eastern Europe. Economic reforms resulted with over $20 billion of capital investments attracted in the last 5 years.

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SERBIA

Source: www.tob.rs

Source: www.citypictures.org

Serbia is one of the leading regional centers for international investors and worldclass companies such as Siemens, FIAT, FIAT, Intesa Sanpaolo, US Steel, Michelin, and Gazprom. Serbia has the potential to become a manufacturing, duty-free export center for over 1 billion customers, including the markets of South East Europe, EU, USA, the Russian Federation, Turkey and the EFTA members. Serbia has second lowest corporate income tax rate in Europe (10%) Serbia has one of the most competitive value added tax rates in Europe (18%).

MARKET OPPORTUNITIES
The Government of the Republic of Serbia adopted The Strategy of Economic Development of Serbia 2006-2012 in early November 2006. That plan includes the reforms which aim to raise the level of economic development and integration of domestic market in the European and world processes. In the long term, Serbia is counting on the growth in the sector of services based on knowledge (software). Comparative advantages are opening in the production of biologically safe food of high quality and known geographical origin, produced in the traditional way, especially early fruits (raspberries, strawberries) and vegetables, products of continental fruits (juices and jams), meat and meat products, alcoholic beverages (wine and fruit spirits), vegetable fats and oils, sugar, etc. In total trade with the EU, agricultural products make up half of the export and show a tendency to grow even more. Agricultural sector is one of the rare economic branches in Serbia achieving trading surplus with the world. Opportunities for cooperation are also opening in the expanding sectors of mechanical engineering, metallurgy, chemical, timber, tobacco and pharmaceutical industries. The realization of the Serbian export ambitions will depend in the first place on the inflow

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Source: www.wikipedia.org

Source: www.wikipedia.org

of foreign direct investment (FDI) in the country, and also on possible out-migration of certain plants and factories from the EU to Serbia. In addition to high requirements dictated by the EU market, other limitations affecting the wider performance of Serbia in this market are related to the modernization and organization of the entire service sector, transport systems and services based on knowledge.

BUSINESS ETIQUETTE
In general, the code of business conduct in Serbia is similar to that in the in Westernized countries. A handshake at the beginning and the end of a meeting is the accepted custom. If women are present it is considered polite to shake their hand first. Try to maintain eye contact during the conversation, this is perceived as sincere and respectful. Always stand up when greeting somebody, not doing so is perceived as disrespectful. The accepted dress code in Serbia is a formal suit, with shirt and tie, for men, and women are recommended to dress fashionably but not loudly. The proper way to address your Serbian coworker is by using his formal title in front of his surname. It is not polite to use your colleagues first name until you establish a friendly relationship. If you are invited to your colleagues home in Serbia bring a small gift from your country, such as a selected wine or a box of chocolates. Most business people in Serbia have a good command of English. Avoid talking about politics, especially Kosovo, war with Croatia and Bosnia, and NATO bombings because it could seriously hurt your business relations.

MEETINGS AND PRESENTATION

In addition to standard business practices (handshake, dress code, business cards), relatively traditionalistic mentality prevails.

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SERBIA

Source: www.wikipedia.org

Source: www.cityphotos.info

The business is conducted through well established channels and in traditional way. Business and negotiations are based mostly on personal contacts, and they often occur in places other than offices and business premises, often over food and drink. Part of the younger generation, educated abroad, who returned after political changes in 2000, is trying to make changes and modernize business relations but often faces a lack of understanding.

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Bosnia and Herzegovina

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BiH
GENERAL INFO
Official name: Bosnia and Herzegovina, abbreviated as BiH Geography: Bosnia and Herzegovina is located at the western part of Balkan Peninsula. It borders with Croatia on the Northwest (932 km), Serbia on the East (312 km) and Montenegro on the South (215 km). Area: 52 280 square km Costal line: 21,2 km Time zone: CET (GMT + 1 hour) Climate: Mostly continental climate, with Mediterranean climate on the South. Winters can be very cold with a lot of snow, especially in the hills and mountains. Summers are generally warm and comfortable, occasionally hot. Population: approx 4 million Religions: Muslim (40%), Orthodox (31%), Catholic (15%), Protestant (4%),other(10%). Languages: Bosnian, Serbian, Croatian (formerly Serbo-Croatian). Also, two scripts are used, Latin and Cyrillic. Main Cities: The capital of Bosnia and Herzegovina is Sarajevo (400.000 inhabitants). Other large cities are: Banja Luka, Mostar, Zenica, Tuzla, Bihac, Brcko, Trebinje.

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BiH

Source: www.moddb.com/groups/slavic/images/sarajevo

Source: www.panoramio.com

MAJOR FAIRS
The most relevant fairs are held in Sarajevo, but significant are also fairs is Zenica and Mostar. Sarajevo Fair is organized by Skenderija Center. It has about 27 000 m2 of exhibition space. During the year there take place 10 specialized fairs.

POLITICAL AND ECONOMIC ENVIRONMENT

Bosnia and Herzegovina was one of the poorer states of the former Yugoslavia and still remains one of the poorer countries in Europe. Most of the agriculture remains in private hands, but privately owned farms have proven to bee small and inefficient, and as a result net food imports increased dramatically after the war. As the legacy of the centrally-planned economy, many industries are still overstaffed, though limited privatization has improved efficiency in certain sectors. War damaged or destroyed much of the economy and infrastructure in Bosnia, caused the death of about 100,000 people, and displaced half of the population. Considerable progress has been made since peace was reestablished following the Dayton Accords. Still regarded as a transition economy, Bosnia and Herzegovina sees the long-term goal of EU membership as a driver to further economic growth and development. Due to BiHs strict currency board regime, which links the Convertible Mark (BAM or KM) to the Euro, inflation has remained relatively low. As a result of such policy, the BAM is one of the most stable currencies in Southeast Europe. The banking sector is almost fully reformed, with a significant inflow of foreign banks (foreign ownership currently stands at 85% of the banking sector) providing businesses with easier access to capital and a better range of banking services. Lending has slowed significantly since the start of global financial crisis. Per capita GDP in 2009 was U.S. $4,700, with a total nominal GDP of approximately U.S. $17.1 billion according to World Bank. Unofficial estimates of unemployment, that include the large gray economy, are approximately 18%-22%. BiHs priority remains economic revitalization. The country needs structural reforms to strengthen the private sector. In order

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Source: www.pippins.me.uk

Source: www.pippins.me.uk

to improve the business climate, private sector needs foreign direct investment acceleration to increase economic growth and job creation. Bosnia and Herzegovina has one of the highest income equality rankings in the world and countrys GDP per capita stood at 31 per cent of the EU average in 2010. BiHs economic priorities are acceleration of EU accession processes, consolidation of the fiscal system, public administration reform, WTO membership, and securing economic growth through competitive private sector. Work on these priorities has been inconsistent although country has received a substantial amount of foreign assistance. Bosnia and Herzegovina undertook an IMF standby arrangement in 2009, necessitated by increased state spending and global economic crisis. The main goal of the program is to reduce government spending and to strengthen revenue collection. Bosnia and Herzegovina rewards persistent and well-prepared exporters and investors. The country is open to foreign investment with national treatment for exporters, and a liberal trade regime. BiH has a skilled and well educated workforce, and relatively low labor costs with average gross salary of 640 Euros. Due to such conditions manufacturing is a more realistic investment opportunity than services and high-value industries. The countrys main trading partners are the neighboring Serbia and Croatia, followed by Germany, Italy, Austria and Turkey.

STRENGTHS OF THE MARKET

Transitional economy with strong import needs. Successful and stable currency board arrangement that fixes the local currency, the convertible Bosnian Mark (BAM) to the Euro at a rate of 2 Marks to 1 Euro. As a result of this policy, BAM is one of the most stable currencies in Southeast Europe. Reformed banking sector dominated by mostly Austrian and Italian banks (foreign ownership currently stands at 85%). BiH has low inflation rate (up to 2%). Skilled and well educated workforce. Good internet coverage. Guaranteed free transfer of capital and free profit repatriation to foreign investors.

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BiH

Source: www.skyscrapercity.com

Source: www.travelskyline.net

Access to a market of more than 60 million people through CEFTA. Preferential export regimes with USA, Australia, New Zealand, Switzerland, Norway, Russia, Japan, Canada and Free Trade Agreement with Turkey.

MARKET OPPORTUNITIES
Although BiH is a relatively small market, it offers good opportunities in the following sectors: Considerable financial resources deployed by the EU and other International Financial Institutions to support reform priorities. Up-coming privatization Energy sector plans include construction and upgrade of hydro plants, thermal power plants and electrical power distribution projects. New developments, upgrades and privatization are also planned. Telecommunications are in process of further privatization. The telecom sector and existing networks mobile, fixed line and broadband are being expanded. Transportation is undergoing a comprehensive restoration of infrastructure such as corridor 5C highway construction and upgrade of the existing local road infrastructure. Substantial railroad infrastructure upgrades are underway as well as the expansion of the primary airport infrastructure and machinery upgrades. Construction is modernizing and expanding capacity due to the increase in commercial construction needs from the activities listed above. Tourism is developing at all levels. Opportunities also exist in health and social welfare, textiles, wood and furniture, financial services and business regulatory reform.

MARKET CHALLENGES
Bosnia and Herzegovina is divided into two main entities with significant autonomy

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Source: www.laurasabraw.com

Source: abstract.desktopnexus.com

the Federation of Bosnia and Herzegovina and the Republika Srpska. A smaller third jurisdiction the Brcko District is administered separately. The Federation is further divided into ten cantons, which also have significant autonomy. Complicated state structure creates a confusing array of regulations, fees, tax systems and standards requirements. According to World Bank estimates there is an average of 12 procedures taking a total of 54 days to complete registration for a new business. Heavily bureaucratized system of state, entities and municipal administrations lacks transparency and opens opportunities for corruption. Government and public procurement tenders are especially susceptible to corruption. The judiciary of BiH provides no means for quick resolution of commercial disputes since commercial courts do not exist and there are few non-judicial dispute resolution mechanisms.

BUSINESS ETIQUETTE
Bosnia and Herzegovina is home to three main ethnic groups Bosniaks, Croats and Serbs as well as three official languages, Bosnian, Serbian and Croatian which are for the most part the same and mutually understandable. If necessary in a conversation, it is best to refer to the language as the local language. Addressing and business correspondence in any of these languages is acceptable. English is usually well spoken among BiH businessmen. Nevertheless, it is advisable to speak clearly, slowly and without idiomatic expressions which may be difficult to understand for a non-native speaker.

MEETINGS AND PRESENTATIONS

Business customs in BiH are a mix of traditional habits and modern business practices. However, the business culture is rapidly changing. This change is most obvious in the largest business and industrial centers. It has introduced new management, language, and IT skills, as well as Westernized business practices. The exchange of business cards is a common practice. While most business meetings take place in a formal setting, it is not
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BiH

Source: www.pticica.com

Source: www.citypictures.org

unusual to discuss business over coffee or lunch. Local companies prefer to do business with people they know well. It is important to keep in mind the sensitivities between the different ethnic communities within Bosnia and Herzegovina although this is becoming less of an issue as time passes.

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Montenegro

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Montenegro
GENERAL INFO
Official name: Montenegro (Crna Gora) Geography: Montenegro is a country located in Southeastern Europe. It has a coast on the Adriatic Sea to the south-west and is bordered by Bosnia and Herzegovina to the northwest, Croatia to the west, Albania to the southeast, Serbia to the northeast, and Kosovo to the east. The capital and largest city of Montenegro is Podgorica. City of Cetinje is designated as the Prijestonica, meaning the former Royal Capital City. Costal line: 293 km Area: 13,812 km2 Time zone: Central European Time (GMT+1 - standard; GMT+2 - summer time) Climate: Mediterranean in the lower areas of the country, with hot and dry summers and cool, rainy winters. Temperature varies greatly with elevation. Population: 672,000 Religions: Christian Orthodox (72%), Muslim (19%), Catholic (3.5%) Languages: Montenegrin (variant of Serbo-Croatian) Main Cities: The capital of Montenegro is Podgorica with population of 156,169 Other larger cities are: Nikic, Bijelo Polje, Pljevlja, Herceg Novi.

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MONTENEGRO

Source: www.wikipedia.org

Source: www.montenegroguide.com

MAJOR FAIRS
In Montenegro, all relevant fairs are held as a part of the Adriatic Fair located in Budva, the tourist and business center of Montenegro. Its location, close to the Slovenian coast, the most famous beach on the Montenegrin coast, in the city center, under the palm trees, offers a unique atmosphere for conducting business and fair activities. Adriatic Fair was established more than 40 years ago, and today it hosts more than 15 specialized fair events. It has about 11 000 m2 of exhibition space, 3000 m2 of indoor exhibition area, but for events that require more space (such as tourism, furniture and construction fairs), additional 8000 m2 of closed exhibition space can be set up. During the year Adriatic Fair organizes a series of specialized fairs and events and each of them represents a good business opportunity.

POLITICAL AND ECONOMIC ENVIRONMENT

Montenegro is constitutionally established as an ecological state, and although that provision remains on declarative level for now, it is clearly indicating the path of future development of the country. Montenegrin economy is mostly service-based, in late transition to a market economy, with nominal GDP of $4.114 billion in 2009, or $10,527 per capita. The service sector made up for 72.4% of GDP in 2007, industrial sector 17.6% and agriculture 10%. According to Eurostat data, the Montenegrin GDP per capita stood at 41% of the EU average in 2010 due to an impressive growth of 10.7% in 2007 and 7.5% in 2008. The countrys GDP contracted to 4% in 2008 when it entered a recession as a part of the global economic crisis. Nevertheless, Montenegro remained a target for foreign investment as the only country in the Balkans region to increase its amount of direct foreign investment. Unlike

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Source: www.montenegroguide.com

Source: www.montenegroguide.com

2004 when the inflow was mainly from privatization, following years had a large share of green field investments, especially from Russian investors, as well as continued investment in the previous privatization. Foreign investors came from as many as 77 countries, and the biggest investors were companies from Russia, Hungary, Great Britain and Slovenia. In 2009 foreign investments amounted to almost one billion euros. It is estimated that the majority of capital has been invested in real estate on the sea coast. The downside of the Montenegrin economy is its significant dependence on foreign direct investment, which leaves it susceptible to external shocks and a high export/import trade deficit. Tourism is one of the most important contributors to the economy of Montenegro. According to the World Tourism and Trade Council 2004 report, Montenegro was the fastest growing tourist destination in the world. Approximately one million tourists visited Montenegro in 2007, resulting in 480 million of tourism revenue. The accommodation capacity is around 130,000 beds, of which about 37,000 is in the basic form (hotels, motels, guesthouses, tourist villages). Montenegro is ideal for developing all types of coastal, mountainous, health, religious, rural and congress tourism. That is why tourism is considered the backbone of future economic growth, and government expenditures on infrastructure improvements are largely targeted towards that goal. Aluminum and steel production together with agricultural procession make up for most of the industrial output. Other significant industrial sectors are forestry and wood products, construction and maritime affairs.

STRENGTHS OF THE MARKET

In 2010 Montenegro introduced the Economic Citizenship Program, which allows foreign businesspeople to gain citizenship in the country in return for high-profile investments. One of the conditions for obtaining citizenship is to invest in Montenegro or make a payment to the government of 500,000 Euros.

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MONTENEGRO

Source: www.mojapljevlja.wordpress.com

Source: www.montenegroguide.com

Montenegrin ports hold significant competitive advantages in relation to the Northern Adriatic ports, shortening the transit-time and creating savings in the cost of maritime transport. In the hinterland of the biggest Montenegrin port, port of Bar, is a duty-free zone that provides opportunities for the development of production and service capacities. It is also suitable for building warehouses, from where goods can be easily transported by sea or rail to the north.

MARKET OPPORTUNITIES
In 2007 Montenegro, as the first country in the region, adopted the National Strategy for Sustainable Development which covers all economic sectors with special emphasis on tourism. Sustainable development in Montenegro is compliant with international practices. Significant reforms, legal harmonization, spatial planning process in accordance with international practices, and the implementation of environmental policy provide a secure legal framework for foreign investors who want to invest in Montenegrin tourism. Real estate investment in Montenegro is a good business opportunity although prices skyrocketed in recent years due to demand from Russian and UK investors. Waterside villas, residential and commercial properties are very attractive for international real estate buyers. Both reselling and renting of these objects can bring additional, quite substantial, profit. Investments in Montenegro have been growing during the last ten years although the best and most profitable objects and properties on the waterfront have been bought already. Nautical tourism is also a sector with great foreign investments potential. Project Porto Montenegro, 600 million Euros worth elite nautical-tourist center is the perfect example for this. It is one of the largest development plans in the Mediterranean led by Canadian

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DOING BUSINESS IN SOUTH EAST EUROPE

Source: www.montenegroguide.com

Source: www.montenegroguide.com

businessman Peter Munk, owner of Barrick Gold Corporation, one of the worlds biggest gold producers. Opened almost five years ago, this exclusive marina is constantly growing and has the potential to make Montengrin city of Tivat the new Monte Carlo. Montenegro is full of solid opportunities for foreign businesses ranging from port development, internal and regional distribution, banking, solid waste and wastewater treatment, infrastructure, and energy.

BUSINESS ETIQUETTE
Business cards are exchanged without formal ritual. If your company has been in business for more than 50 years, include the founding date on your business card. Montenegrians are impressed by stability. Include any advanced university degrees on your card. Have one side of your business card translated into Montenegrian. It is recommended to avoid making business appointments for the months of July and August as well as around the dates of national holidays in Montenegro.

MEETINGS AND PRESENTATIONS

Business practices in Montenegro still rely on traditional ways. Business processes are slow, relaxed and with many promises. Postponement of deadlines is an everyday occurrence. The business is conducted through well established channels and the traditionalist way, often relying on personal contacts and acquaintances. T he use of mobile phones is very common, it is almost impossible to function without a
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MONTENEGRO

Source: www.montenegroguide.com

Source: www.montenegroguide.com

cell phone. It is not uncommon even for the state-level meetings to be arranged over the mobile phone. Although modern forms of communication are present, personal contact still plays a crucial role.

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Macedonia

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Macedonia
GENERAL INFO
Official name: Republic of Macedonia Geography: Macedonia is a landlocked country located in Southeast Europe in the central Balkan. Macedonia is bordered by Serbia to the north, Bulgaria to the east, Greece to the south, Kosovo to the northwest and Albania to the west. Costal line: None Area: 25,713 km2 Time zone: CET (GMT+1 - standard; GMT+2 - summer time) Climate: Macedonia has a transitional climate from Mediterranean to continental. The summers are hot and dry and the winters are moderately cold. Population: 2,055,004 Religions: Christian Orthodox (65%), Muslim (34%) Languages: Macedonian Main Cities: Capital of Macedonia is Skopje with population of around 670,000 people. Other larger cities are: Bitola, Kumanovo, Prilep, Tetovo, Ohrid, Veles, tip, Kocani, Gostivar.

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MACEDONIA

Source: www.citypictures.org

Source: www.wikipedia.org

MAJOR FAIRS
The Skopje Fair is the most important fair in Macedonia. It is situated on a surface of 25,000 m2 out of which 16,000 m2 closed space in six exhibition halls. The open exhibition space is equipped to meet the requirements of modern exhibiting. Each year Skopje Fair hosts over 2,000 domestic and foreign companies, producers and traders who present their products and services to more than one million visitors. Annually, 19 international and 3 local fairs and specialized exhibitions are held at Skopje Fair, which is the member of UFI (Union of International Fairs) since 1995.

POLITICAL AND ECONOMIC ENVIRONMENT

Macedonia was recently ranked as the fourth best reformatory state out of 178 countries ranked by the World Bank. It has undergone considerable economic reform since independence which resulted with steady, though slow, economic growth until the recent global recession. The country has developed an open economy with trade accounting for more than 90% of GDP in recent years. Despite these reforms Macedonia has high unemployment and poverty rate, corruption is widespread and legal system relatively ineffective. Grey market is estimated at 40-50% of GDP, and per capita GDP is among lowest in Europe at only 36% of EU average in 2010. Agriculture accounts for 9% of GDP, industry 29% and services 62%. From the thirty largest exporters in Macedonia, only five are producers, while others are exporters of raw materials and intermediate goods. The global economic and financial crisis has affected the Macedonian economy, but not in

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Source: www.blackdeadsea.blogspot.com

Source: www.app.hr

drastic measures. The reason for this lies in the fact that the Macedonian economy is small and adaptive, and its largest business systems do not generate more than 150 million euros in revenues. That is why overall economic decline of 0.7% in 2009 was lower than in some other countries in the region. At the same time foreign direct investment in Republic of Macedonia are in dramatic decline. Compared to other countries in the region in terms of foreign direct investment, Macedonia was at the very bottom in 2009 and 2010. Macedonian government expects gradual economic recovery and stabilization in the next year, with GDP growth of 2%, inflation rate of 2%, and the budget deficit up to 2.5%.

STRENGTHS OF THE MARKET

The current government introduced a flat tax system with the intention of making the country more attractive to foreign investment. The flat tax rate was 12% in 2007 and was further lowered to 10% in 2008. Foreign investors have the right to buy or lease land. Additionally, they can be completely exempt from paying income tax for a period of ten years if they invest in technology and industry development zones. Other comparative advantages of Macedonia are: A geographically central position in Eastern and Central Europe. Good access to all Eastern European markets. Good staffing capacities with a high standard of education, with wage cost advantages. It is only a short distance to support the emerging markets in Eastern Europe. Investment incentives offered by the Government (duty-free zones).

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MACEDONIA

Source: www.wikipedia.org

Source: www.wikipedia.org

MARKET OPPORTUNITIES
The software development outsourcing industry in Macedonia has emerged as one of the most dynamic sectors of the economy in the past decade, with a growth rate of 38% in 2008. Tourism is an important part of the economy of the Republic of Macedonia. The countrys large abundance of cultural heritage and natural beauty attracts around 700.000 tourists annually. This sector opens many business opportunities for foreign investors as it is expected to only grow further. The clothing industry is a great contributor to the Macedonian economy and one of the most important industries by number of companies and persons employed in this sector. The clothing industry is offering investors, producers and business partners from Western Europe a lot of advantages. General advantages of Macedonian economy are: Highly competitive overall cost structure. Labor availability, cost and quality. Strategic location and proximity. Improving fiscal and incentive regimes.

BUSINESS ETIQUETTE
Dress code: For Men - Suit and tie are appropriate in most situations and industries. For Women - Slacks and blouse or skirt and blouse. Avoid shorts, jeans, and less casual attire in business situations. When talking to your Macedonian coworkers it is best to address them with title followed by their last name.

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DOING BUSINESS IN SOUTH EAST EUROPE

Source: www.globusnis.com

Source: www.wikipedia.org

Greet people according to hierarchy, from higher to lower status. If there are women present, they are the first to be greeted. Direct eye contact is appropriate while talking, especially during the handshake. People are very eager to give out their business cards and presenting a business card shows that you have a good and stable job. It is appropriate to give out business cards as much as you like, and there is no right or wrong way to present it. When you are a guest in Macedonian home keep in mind that you are the most important person in the house, so dont bother to help to clean up or to wash the dishes. It might be seen as an offensive if you try to look for something yourself (like opening the cupboards or the fridge). Just ask for anything you need. In business situations, it is good to offer to pay for whatever is being served. You will probably not be allowed to, but it is important to offer.

MEETINGS AND PRESENTATIONS

Business communication in Macedonia functions on traditional basis, like in most parts of former Yugoslavia. Business processes are slow and relaxed. Patience is required because delays and postponements are a normal part of business culture. Most meetings usually end up in restaurants, over food and drink. Personal contact is crucial in establishing a business relationship. Modern forms of communication through electronic media are in initial development stage and the communication achieved through them ultimately ends up with direct personal contact. Personal meetings are necessary in those parts of the business cooperation that deviates slightly outside of the normal business legislative. In establishing a business relationship personal interest of individuals and their companies have absolute priority, so cultural and religious differences do not significantly affect the business relationship.

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Piartis is PR & Event Agency based in Zagreb, Croatia. We are also specialized in networking and lobby services, trough excellent relations in region and also worldwide. Contact us: Phone/Fax: + 385 1 33 84 766 Address: 10 437 Bestovje, Zdenci 3/1, Croatia E mail: info@piartis.com Web: www.piartis.com Gordana Popovic General Manager +385 91 1233346 +39 3284933670 gordana.popovic@piartis.com Copyright PIARTIS 2012.