Bosnia and Herzegovina Market Entry

Bosnia and Herzegovina Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

According to cheeroutdoor.com, Bosnia and Herzegovina’s market is largely fragmented. Local business partners often operate only in a certain part of the country (a company based in Sarajevo may have a weaker position in the Republika Srpska entity market and vice versa). Some regulations differ in both entities, business in some areas may be affected by regulations issued at the level of cantons or municipalities. The legal system is thus quite complicated.

When entering the market, it is necessary to expect a greater administrative burden. For a successful market entry, it is so good to have a clear business plan (e.g. which market segments and which part of the country the company wants to focus on initially, so that suitable business partners can be identified). Knowledge of the local environment and personal contacts are key to successful business in BA. It is therefore advisable to find a reliable local sales representative.

There are a number of import companies in BA, but not all of them act professionally, so it’s a good idea to get references for the company, sign a contract for a trial period first, and have the terms of representation clearly defined in the contract. It happens that the local sales representative charges a flat fee without providing adequate service for it, or that he represents several competing companies. Local sales representatives often demand exclusive representation, which may not be advantageous due to the fragmentation of the market (sales representatives are often concentrated in a certain part of the country). Some sales representatives have ties to specific political groups.

We recommend having the services of a lawyer with local knowledge available. Professional legal assistance will help to anticipate legal conditions and procedures for a given business case in advance (these can be based on national, entity, but sometimes also cantonal law or municipal regulations) and effectively solve any problems. In Bosnia and Herzegovina, it is possible to use legal and consulting services from the PROPEA program.

Forms and conditions of operation on the market

A foreign entity can establish a representative office in BA for the purpose of conducting market research, information and promotional activities and for the purpose of self-representation. The representative office does not have the status of a legal entity, i.e. the representative office cannot conclude agreements on behalf of its founder, with the exception of airline representative offices.

The representative office can start operating immediately after being registered in the register maintained by the Ministry of Foreign Trade and Economic Relations (MOFTER). MOFTER must decide on the application for entry in the register within 10 days from the date of its submission. More detailed information can be found on the website of the Foreign Investment Promotion Agency (FIPA).

The procedure for setting up a local trading company is regulated differently in both BA entities. The most common form of business company is a limited liability company (doo) and a joint-stock company (dd). All forms of business companies and the currently valid procedure for establishing them in both entities are published on the FIPA website.

Before starting the steps to establish a local trading company, we recommend consulting the current situation with the local legal office (in Bosnia and Herzegovina it is possible to use legal and consulting services from the PROPEA program ). It should be taken into account that the registration process can be lengthy, especially in the Federation of Bosnia and Herzegovina.

Marketing and communication

Advertising in print and online media is widespread. Outdoor advertising on billboards and citylights is widely used in large cities. Promotion can be placed on television, there is a wide range of public (including regional) and private television channels. A specific feature of the local market is the frequent use of a presentation on Facebook (often connected with the possibility of purchasing over the phone) and the use of the Viber application.

The largest PR agencies in BA include:

  • Via Media
  • Aquarius
  • Info Media Group
  • Ascanius Media

It is possible to use support from the PROPEA program to develop a marketing strategy for BA.

Issues of intellectual property protection

In the field of intellectual property rights, BA is bound by all basic international conventions (Revised Bern Convention, Paris Convention, Stockholm Final Act, Patent Cooperation Treaty – PCT, Madrid Convention on Trade Marks, Locarno Convention on Industrial Designs, Lisbon Convention on Designations of Origin), which it joined immediately after its creation in 1992 or in the following years (until 1997).

National legislation in these areas (it originates from 2002-2004 and was prepared either directly by seconded experts from EU states or with their significant participation) is already adapted to these internationally contractual obligations, as well as approximated to the relevant EU legislation. Internet domains (extension.ba) are registered for a one- or two-year period with the possibility of extension, even repeated, always for the same period.

The responsible body is the BA Institute of Intellectual Property, which has an agenda of industrial and intellectual property rights in its portfolio, including the granting of patents, trademarks, industrial designs, etc. Complaints by Czech entities about violations of their intellectual property rights by local entities are rare.

Public procurement market

BA has a strict Public Procurement Act that is close to EU standards. Public institutions and state-owned companies are obliged by law to carry out one of the variants of the open procurement procedure if the value of the contract exceeds 50,000. BAM (about EUR 26,000) for the purchase of goods and services, or EUR 80,000 BAM (about EUR 41,000) for the work order. If the value of the contract is lower, the contracting authority must contact three or more suppliers, or can proceed to the direct award of the contract, if its value does not exceed 6 thousand. BAM (about EUR 3,000).

Public contracts are published on the central Public Contracts Portal, where it is possible to track them. Individual state institutions are preparing a public procurement plan for the following year.

The Public Procurement Agency oversees the implementation of the Public Procurement Act. An appeal against the result of the selection procedure can be submitted to the Complaints Review Office or subsequently challenge the result of the appeal through court.

The functioning of the public procurement process in BA is not satisfactory at the moment. The problem is the quality of the processing of public contracts, the complexity of the law and the large space it gives unsuccessful bidders to block tenders. It is common to present frivolous complaints that are intended to block the procurement procedure or help reverse its outcome. This creates non-transparent situations that reduce the credibility of procurement procedures.

Due to the large role of the state in the economy, the imperfect functioning of the Public Procurement Act has a negative impact on entire sectors, such as energy and the mining industry.

Payment terms, payment ethics and resolution of commercial disputes

In the past, Czech companies repeatedly had problems with the payment morale of partners in BA. It is therefore important to always check the credibility of a local partner. We do not recommend delivering large volumes of goods without a bank guarantee or advance payment. Larger business operations should be secured by high-quality export insurance from the Czech side.

Claims can be enforced through court. Courts in BA operate independently, but it is necessary to take into account that, like many states in the region, BA has some problems with fulfilling the principle of the rule of law. Court proceedings can be lengthy and courts sometimes lack the capacity to expertly assess more complex cases. There are also cases where clientelistic ties also interfere with the functioning of the courts.

The Organization for Economic Cooperation and Development (OECD) ranks BA in the seventh (i.e. worst) group in terms of credit risk. This is also reflected in the price of loans or insurability of risks associated with business with BA.

Visas, fees, specific conditions for traveling to the territory

To travel to BA you need:

  • a valid travel document or a valid ID card
  • for travelers in their own vehicle, a green card for motor vehicles issued in the Czech Republic

Entry and stay in the territory of Bosnia and Herzegovina up to 90 days is visa-free. However, if the purpose of the stay is gainful employment, it is necessary to apply for a residence permit and a work permit at the local competent department of the BA Foreign Police upon arrival. If the stay exceeds 24 hours, all foreigners are required to register (within 24 hours at the latest) at the BA foreign police, whose branches are in all major cities. When staying in a hotel, the hotel administration takes care of registration, when staying in private accommodation, according to the law, the accommodation provider is responsible for it.

When entering BA, items of personal use and non-commercial nature, placed in personal luggage, up to a value of BAM 600 (about EUR 306) per person per day are not subject to customs duty. The amount of tobacco, cigarettes, alcohol and perfumes that can be imported duty-free is also limited. Import and export of currencies and local currency have no set restrictions. Proof of financial security is not required, nor is currency exchange mandatory. ČSOB exchanges convertible marks in some of its branches in Prague (Na příkopech, Senovážné nám.). In Sarajevo, Czech crowns are exchanged by, for example, Raiffeisenbank or UniCredit Bank. ATMs (for VISA, Master Card, American Express cards) are located in all major cities. In larger supermarkets, shopping centers and most gas stations, it is possible to pay by card directly.

The possibility of payment by payment card is still growing, but it still remains limited in smaller cities. For trips outside larger cities, we therefore recommend having a sufficient amount of cash with you, preferably in lower denominations of banknotes.

Of the foreign currencies, it is most practical to have EUR with you, which can be exchanged for BAM thanks to the fixed exchange rate at any bank and in places exposed to tourism (Sarajevo, Mostar) and at exchange offices for a fee. According to the “Foreign Exchange Trading Act” No. 01-02-433/10, payment in EUR is restricted in retail and restaurant services, except for tourist and hotel services, services at airports and highways, sales through consignment warehouses and tickets and air tickets sold through tourist offices.

However, in some places exposed to tourism, EUR is accepted practically without restrictions. American Express or Western Union branches operate in Sarajevo, Banja Luka and Mostar and guarantee an international money transfer within hours.

VAT payers must use cash registers in BA. Buyers are required by law to ask sellers for a tax receipt from the cash register (“fiskalni račun” in the local language). If the tax inspection finds that the buyer does not have a tax receipt for the purchase after leaving the store, he can be fined.

Employment of citizens from the Czech Republic

Citizens of the Czech Republic and other foreigners, if they come to BA for the purpose of employment, need a work permit. The conditions are set by the Law on Foreigners (Official Gazette No. 88/2015).

Selected groups of workers (listed in Article 77 of the Act) can work in BA for up to 90 days a year without a work permit, but they must report their work to the Service for Foreign Affairs on a prescribed form in advance, pay an administrative fee and receive a written confirmation. This procedure also applies to employees of Czech companies who come as fitters to install the supplied equipment.

Relations between the Czech Republic and the Czech Republic in the area of ​​social security and health care are covered by the Convention on Social Insurance from 1957. In the event of an acute illness or injury during a stay in the Czech Republic, a citizen of the Czech Republic who has health insurance in the Czech Republic is entitled to the provision of free immediate health care care in a public health facility (however, we recommend that you take out adequate travel health insurance before traveling to BA).

In the field of social security, citizens of the Czech Republic in BA have similar rights and obligations as citizens of BA. The contract also regulates the mutual calculation of the insurance period between the Czech Republic and BA, if the citizen was employed or socially insured in the other country.

Fairs and events

Important fairs and conferences held in Bosnia and Herzegovina:

  • Energa (Sarajevo – June) – traditional energy fair
  • Renexpo BiH (Sarajevo – October) – traditional conference on renewable energy sources
  • Sarajevo Unlimited (Sarajevo – autumn) – IT conference
  • Mostarski Sajam (Mostar – spring) – general fair
  • Sarajevo Business Forum (Sarajevo – April/May) – business conference focused on investments
  • SET (Trebinje – spring) – conference on energy with a focus on renewable sources
  • Forward (Banja Luka – winter) – IT conference

For information about planned events prepared by the Embassy of the Czech Republic in Sarajevo, write to [email protected]

Bosnia and Herzegovina Market Entry