Total Foreign Investment in BH KM 3, 4 Billion

According to the first survey on foreign investment, which was carried out by the Central Bank of Bosnia and Herzegovina (CBBH), the total reported book value of foreign investment in BH at June 30, 2003 amounted to KM 3, 4 billion.

KM 2, 7 billion is FDI, which is about 40% higher than shown by other sources.

These statistics were produced for the first time from a survey of foreign direct and other investment in BH undertaken by the CBBH in accordance with the international standards of the IMF and OECD, and provided a sound basis for better understanding of the extent and structure of foreign investment in BH.

Existing BH statistics on foreign investment, based on limited administrative data and not following international standards, are not sufficiently reliable or comprehensive as the basis for balance of payments statistics.

The survey covered more than 720 enterprises, including all enterprises known to have foreign investment over KM 100.000, together all with other large enterprises in BH.

The response from all large businesses was very high, and adequate for smaller businesses. Assessments were used for businesses that did not respond and for enterprises below the threshold of KM 100.000 foreign investment.

Key features from the survey are highlighted below:

• At the end at June 30, 2003, 399 enterprises had foreign investment over KM 100.000;
• 382 of those 399 enterprises have foreign direct investment (where the foreign investor holds at least 10% of the equity (owner shares) in the enterprise in BH);
• 127 enterprises (including 23 banks) in BH account for 81% of the total foreign investment in BH.
• The total reported book value of foreign investment in BH at June 30, 2003 (excluding accumulated retained earnings prior to 2002) amounted to over KM 3, 4 billion, out of which KM 2, 7 billion is foreign direct investment, and KM 0, 7 billion portfolio and other foreign investment. This KM 0, 7 billion included KM 0, 3 billion of deposits of foreign direct investors abroad with their banks in BH.
• Total direct investment at end June 2003, as measured by the survey, was by KM 0, 8 billion higher than other official statistics show. In addition, the survey identified for the first time the portfolio mentioned above and other investment at end June 2003 amounting to KM 0, 7 billion, which is a total of KM 1, 5 billion additional foreign investment identified by the survey.
• Nearly two-thirds (65%) of the KM 2, 7 billion foreign direct investment in BH was in the form of owner shares, the rest in inter company loans and other forms of debt securities and retained earnings.
• The industries with the largest amounts of foreign investment were (as a proportion of the total KM 3, 4 billion of foreign investment at June 30, 2003): banks (38% of the total) and processing industry including processing of minerals (33%).
• One country (Croatia) accounted for 33% of total foreign investment at June 30, 2003; 3 countries (Croatia, Austria and Germany) accounted for 61%, while 10 countries provided 88%. Austria accounted for 59% of total foreign direct investment in banks.
• Businesses with foreign direct investment reported KM 17 million in dividends and remitted profits paid to their foreign direct investors, and retained earnings of KM 57 million in 2002. The foreign direct investors' share of these earnings is recorded in the balance of payments as internal investment.

Selected summary tables are attached to this press release. Detailed tables from the survey, including by industry and country, will be placed on the CBBH website (www.cbbh.ba) shortly as well as a summary of the sources and methods used.

This CBBH survey as undertaken with the support of the Ministry of Foreign Trade and Economic Relations and the entity Ministries of Finance, and the Governor of the CBBH Peter Nicholl thanked them for their cooperation in this task. Also, the Governor appreciated the cooperation of enterprises that responded to the survey.

The results of this survey would be used by the CBBH to improve balance of payments statistics. Also, reflecting the growth of foreign direct investment in BH, CBBH would commence shortly a quarterly survey of direct investment to ensure that quarterly flows of this very important investment in BH, bringing know-how, creating jobs and often leading to increased exports, were better measured in future.

Public Relations Section
Coordinator
Zijada Kulović