Direct foreign investments in Bosnia and Herzegovina are in decline for the third year in a row. We are becoming less and less a desirable destination for foreign investors. The main reason is reduced industrial activity in Europe, which is the largest investor in Bosnia and Herzegovina. Attracting foreign investments is made even more difficult by political instability, lack of labor and the departure of young people. The forecasts for the next period are not optimistic either.
After 2023, direct foreign investments are in free fall. The forecasts are not optimistic for the next year either.
In 2023, foreign investments were two billion KM, in 2024 they were 1.76 MLD, and last year they were 1.41 MLD KM. The largest inflow of investments was from Germany. Serbia and Austria follow. Almost 60 percent of investments refer to these three countries. By sector, the most investments were realized in the field of financial services and retail and wholesale trade.
Despite the many advantages we have, such as a good geographical position, quality workforce, good tax policy, foreign investors bypass us. Mainly because of our politicians who put us on the gray list of Moneyvala, who did not implement the necessary conditions for withdrawing funds from the Growth Plan, who cannot appoint a chief negotiator with the European Union and the like.
ZORAN PAVLOVIĆ, economic analyst
“We are a very good location, if only there would be at least some harmony among the political parties that are in power. And they would not deal with their political battles for positions, chairs and affiliations, but if they would deal with opening conditions or creating conditions for new investors”.
A special problem, which also deters foreign investors from any desire to invest in Bosnia and Herzegovina, is the unpredictability of business costs, with regard to entity governments.
IGOR GAVRAN, economic analyst
“We had a situation where the government, especially in the Federation of Bosnia and Herzegovina, behaved completely neurotically when it came to determining business costs, i.e. the minimum wage, wage contributions, in such a way that employers literally did not know until the eve of the New Year how they would calculate wages next year, how much the minimum wage would be, how much dorinos would be calculated”.
Due to the negative birth rate and the departure of young people, we are becoming an increasingly older society, in which we can only expect an increase in allocations for pension and health insurance, which is also not a good signal for potential investors.
ALEKSANDAR ČAVIĆ, demographer
“As long as we have negative demographic indicators, it is simply not to be expected, and I do not see in the years and decades ahead of us, bearing in mind that nothing is happening on a strategic plan in this field, I do not see in the coming years and decades any room to make our area more attractive for domestic and foreign investors”.
Due to the absence of foreign investors in recent years, the role of domestic businessmen has become increasingly important. Their investments and reinvestment in business development are becoming increasingly important for future economic growth.
MIRSAD JAŠARSPAHIĆ, president of the FBiH Chamber of Commerce
“In some of our contacts with potential foreign investors, we always say that the best way is to connect with a domestic company, well-established, which already functions well in global supply chains. That together with that company we can create a joint project, a new story, a new company, which will not look back on such statements about Bosnia and Herzegovina as a country over which a crisis is constantly hovering.”
Direct foreign investments, ending in 2025, amounted to 22.16 billion KM. The record year was 2007, now long ago, when, thanks to the privatization of large state-owned enterprises, foreign investments amounted to 2.6 billion KM.
