Issue 19

AmCham Kosovo

Biannual magazine published by the American Chamber of Commerce in Kosovo Issue 19 / July 2013

tH the new Business Horizon

Moving ahead with the reforms

Franchising Industry: Opportunities and Challenges EU-US Trade Talks to strengthen transatlantic partnership

Issue number The Horizon is the official magazine of the American Chamber of Commerce in Kosovo. Every publication contains a different theme focus on economic perspective in Kosovo. The Horizon is distributed to a broad audience including AmCham members, decision makers, diplomatic representation, donor community, US Chamber of Commerce in Washington D.C., European Council of American Chambers of Commerce based in Brussels, and other relevant stakeholders.

Disclaimer: The content of this publication does not necessarily present the opinions and positions of the American Chamber of Commerce in Kosovo.

Theme photographs presented in this magazine are not property of AmCham Kosovo.

Contents Moving The EBR Franchis

Financia Coping

Published by: American Chamber of Commerce in Kosovo; Perandori Justinian No. 16; Prishtina, 10000; Republic of Kosovo Tel: +381 (0) 38 609 012

D in Kos

ing Indu

l Transp

with Ko

Simplify

Heavy In New US

Kosovo

stry: Opp

sovo’s g

dustry S

rowing

ork

nomic ti

hip

ly Childre

ective s and Ch

labor fo

rms

ve the ru

es with

le of law

Iowa

invest in

n’s Mara thon innovato rs Stregthe ning tra nsatlanti c partne rship Policy a nd legis lative h ighlights

Kosovo’s

rce

cedures

tion refo

rested to

allenges

Growth

nce pro

to impro

sses inte

sponsors

4th of Ju

Way to

ector

ning eco

n busine

w Persp

construc

gramme

forms

ortunitie

er cleara

CSR Netw

Stregthe Slovenia

ovo - Ne

ational

AID Pro

ith the re

arency,

ing bord

Transform

Law on

Info

ahead w

Kosovo

08 Mimoza Kus 10 Anton Koba ari Lila 12 Visar Hapçiukov 14 Lekë Musa 16 Nenad Rašić 18 Petrit Gashi 20 Terence Slywka 22 Ioannis Moutaf 23 David Greer is 24 Robert Wright 26 AmCham 27 AmCham 28 AmCham 29 AmCham 30 AmCham 32 Hon. William E 33 AmCham . Kennard

Web: www.amchamksv.org Email: info@amchamksv.org Editor in Chief: Arian Zeka Executive Editor: Rina Abazi

the new Business Horizon

3

AmCham members Corporate Members • AGANI Ltd. • Alcatel Lucent • Ask Foods • Banka Ekonomike • Banka për Biznes • Birra Peja • Dardania • Devolli Group • Hotel Sirius • IPKO Telecommunication L.L.C. • Jens Automotive Haus • Kosova Petrol • Llamkos GalvaSteel• Microsoft • Philip Morris Albania Sh.p.k. • PricewaterhouseCoopers • ProCredit Bank • Raiffeisen Bank • Smart World TV L.L.C • Sole Kosova • Trepharm • Actavis International • Medium Members • 3CIS J.S.C • ACDC-KOS L.L.C • Adea Group • American School of Kosova • ARFA • ASGETO Asseco • Booz Allen Hamilton Inc, Kosovo Branch • Buçaj L.L.C • Checchi and Company Consulting • Cisco Systems Macedonia dooel Skopje • Delfin LTD • Deloitte • Elkos Group • ELTING • HIB Petrol • Gorenje Niki Tiki • Grant Thornton • Head Hunters Kosovo Branch • Holland Tech • Nartel • Hotel Prishtina • Hotel Victory • Ilir Kosova • Kolegji Universitar Victory • KPMG • M & Sillosi • Marigona Residence • MDA • Mercom Company • Patroni • Pestova • RIMA Eng. • Rrota • Scampa • SIGAL UNIQA Group Austria • Universal Food • Vi-Print • Vila Gërmia • Viva Fresh sh.p.k. • RailTrans • Fortesa • AS Travel • Art-Com • DM Consulting • Small Members • ADAS Counsel Kosovo LLC • ARS Travel • Arta-VM L.L.C • Asha L.L.C • AVC • Baker Tilly Kosovo • Banja e Kllokotit • BOGA&ASSOCIATES • Butterfly Consulting LLC • CEED Kosovo • CONIN • Crimson Finance Fund LLC • EcoTrade • English Centre • Exclusive Group • Fundway L.L.C • Haxhijaha • INFORMATIKA Computers L.L.C • Interlex Associates L.L.C. • Intermarket • IRON Consulting • Kalo & Associates LLC • Kosova Motors • Kreatoda • KWE • Omi Impex • Link Software • Marketing Mix • Melita and Partners • Metal Group • Metton Reklama • NPG/New Promotion Group • Pallaska&Associates L.L.C • PharmaSwiss SA, Sh.p.k • PR Solutions • Proton Cable L.L.C • Recura Financials • Red Consulting LLC • SCLR Partners • Sport In • Stone Castle Vineyards and Wines L.L.C • Technology Transfer Associates EOOD • Triangle Branch Kosova • Trokit • UniProject • Universiteti Iliria • Universum College • USAID Business Enabling Environment Program in Kosovo • VEV Group • VIP Travel • Vitaminka • Xhad Studios • New Europe Corporate Advisory • Aero-Com • NGOs • American University in Kosovo • Centar Za Mir Ekonomski i Ruralni Razvoj-Cmer • Kosovo American Education Fund • Society of Certified Accountants and Auditors • Individual Members • Betim Osmani • Faton Kaqanolli • Linda Shala • Mimoza Kusari-Lila • Rinor Hajdini • Stephen Leeds

Patron members

4

AmCham Kosovo

AmCham Board of Governors

Erolld Belegu

Jerry Rexha

Dastid Pallaska

Agon Gashi

Marigona Residence President of the Board of Governors

Devolli Corporation Vice President of the Board of Governors

Pallaska & Associates Secretary General of the Board of Governors

Meridian Corporation Treasurer of the Board of Governors

Maury Wray Bridges

Chris Jennions

Vesa Mullaademi

Michael Gold

Booz Allen Hamilton

Bechtel & Enka

Llamkos GalvaSteel

Crimson Finance Fund

Dejan Stojanovic

Aferdita Saracini Kelmendi

Islam Pacolli

Arian Zeka

Smart World TV

Mabetex Project Engineering

Executive Director

CISCO

the new Business Horizon

5

The New Business Horizon Dear readers, I feel privileged for having the opportunity of getting together with you in this new issue of our magazine, which this time comes in a newly designed concept that is not focused so much on the events of the Chamber but rather on business-related articles that we believe are of interest to our readers.

The New Business Horizon aims at featuring contributions from various influential business actors of different sectors of economy. Also, every issue of the Horizon will cover a success story of our Patron members.

This new edition of our magazine contains analysis on economic issues, achievements and long-term plans and initiatives for further growth and progress. You will also have the chance to read the latest news on investments, trade, legislation, finances and other economy related articles by top businesses actors and government officials. Thus we want the Horizon to serve also as a forum for addressing and conveying these issues to the policymakers.

Our Policy and Government Relations Manager Visar Hapรงiu elaborates on the opportunities and challenges of franchising, a concept known to Kosovo, but yet undeveloped, and which I would identify as a very innovative approach for doing business. Our former Executive Director, currently Deputy Prime Minister and Minister of Trade and Industry Mimoza Kusari Lila highlights the Government continuous plans for moving ahead with reforms that would help bring Kosovo on the map of foreign investors, whereas the US Ambassador to EU focuses on the impact that the TTIP talks will have on strengthening the EU-US partnership.

I would sincerely thank the authors for their contribution and also AmCham members for their continuous support. We definitely remain committed to improving the content of the Horizon, and therefore we are open to your feedback at any time.

Regards, Rina Abazi Executive Editor

6

AmCham Kosovo

Making change possible through dialogue Arian Zeka

Executive Director, American Chamber of Commerce in Kosovo

'Change happens by listening and then starting a dialogue with the people who are doing something you don't believe is right'. I came across this quote by Jane Goodall, a world renowned conservationist, as I was googling on the importance of bringing change through dialogue.

In my experience with the American Chamber of Commerce in Kosovo, I found this quote to be more than applicable in case of Kosovo's efforts of improving its doing business environment. During the fourteen years of post-war period, many experts and consultants have introduced and experimented different policies, rules and regulations, which in some occasions were successful and yielded desirable results, while in other occasions they failed to create the necessary outcomes, the impacts of which are hugely present in various areas in Kosovo even today.

The current doing business environment in Kosovo is a reflection of these policies which instead of serving the goal of strengthening the private sector and attracting foreign direct investments, they are sometimes deemed as obstacles to the sustainable economic growth of the country. These policies shaped Kosovo businesses be more focused on trade rather than on manufacturing, given that the fiscal regulatory policies were unable to provide for competitive advantage of Kosovo's manufacturing companies compared to those in the region. As a result, Kosovo faces huge negative foreign trade balance, which will take many years to improve.

While it might be difficult to generalize the causes that led to this challenging business environment that companies in Kosovo face, a better coordination and communication with stakeholders would have led to more suitable policies that would stimulate the development of the private sector in Kosovo.

The importance of a proper and constructive dialogue between the Government and the representatives of the private sector and civil society in general cannot be overstated. The development of policies that would enable a private-sector-led economic growth is only possible through public-private dialogue, which fortunately has developed to a satisfactory extent in Kosovo. This dialogue paved the way to tailored policies in accordance with the needs and the reality of Kosovo.

It is this dialogue which enabled the change. Despite the fact that there remains a lot to be done, particularly in building a comprehensive National Economic Development Strategy, it is difficult to question the significant progress that Kosovo has made in its doing business environment as well as the overall efforts of Kosovars for a slow but continuous positive economic growth. This is noted in the 2013 World Bank Doing Business Report, but also on the latest International Monetary Fund published staff reports and selected issues papers for Kosovo.

It is through private-public dialogue, that AmCham managed to launch several initiatives aiming to further improve the ease of doing business in Kosovo. It is through dialogue that both government sector and private sector began seeing each other as partners with common goals of bringing progress and improvement, rather than as opponents and enemies, undermining each others' efforts and initiatives.

Looking forward to continued dialogue, which would make the change and development even more dynamic and possible.

the new Business Horizon

7

Moving ahead with the reforms Mimoza Kusari Lila Deputy Prime Minister/ Minister of Trade and Industry

F

irst of all, let me congratulate the AmCham Kosovo on the new concept of the Horizon, which will now serve as a business information package to the AmCham members and others businesses while being focused on business and economic articles and which provides at the same time an opportunity to the people of these fields to express their insights and thoughts on important economic issues.

Sustainable economic growth and social development of Kosova is the main objective and strategic priority of the Republic of Kosova. During the last two years serving as Deputy Prime Minister & Minister of Trade and Industry, we have been able to implement a wide range of reforms which ensure and enhance the economic growth of the country in the medium term. We have put a lot of efforts in strengthening the existing market system that enhances a small open economy and which ensure that Kosovo is a fully integrated and recognized partner in the region and the world. We have worked tirelessly with numerous stakeholders, including USAID and EU projects which I would like to thank, to improved business and investment environment, support the private sector, and increase investments as the only fundamental basis for sustainable economic growth and development. We have changed and amended many laws which have create conditions to attract investment in Kosova, and remove the administrative barriers, hence enabling the private sector to operate more efficiently and freely.

The “World Bank Doing Business Report” published at the end of last year noted that Kosovo had accomplished significant improvement in overall ranking and within specific indicators. In fact, Kosovo had the highest total country improvement (+28) moving from 126 place to 98th on the doing business rank of all 185 countries and the highest net improvement (+170) across all indicators.

Starting a Business and Protecting Investors reforms showed the greatest improvement, with Protecting Investors for Kosovo being one of the biggest improvements across all indicators in the world. Actually, on protecting investors' indicator, Kosovo moved 76 places up while in registering a business 44. Of course, there are many reforms in progress that remain to be captured in the coming years as implementation occurs.

This report illustrates the progress that Kosovo has

8

achieved down a path of recognized reform, but much more work remains to be done ahead of us.

I am deeply sad to see that the central and the local levels are not “always at the same wavelength, and neither are “singing on harmony.” Many municipalities around Kosovo do not fully understand the importance of the business enabling reforms and the benefits that the municipalities will reap from a better business and investment environment. We are spending a lot of energy in convincing the municipalities that by improving their business environments and by reducing bureaucracy and streamlining their licensing and permitting procedures, they will be able to benefit in the longer term and will ensure a better economic future for their respective municipalities and for Kosovo as a whole.

The Law on Internal Trade which was amended in 2011 abolishes the work permit. With the amendment to the Law on Internal Trade, municipalities no longer have the authority to issue work permits, and their budgets should not reflect any expectation to collect MOSR from work permits. However, several municipalities are requiring some kind of “business licenses” under the Law on Local Government Finance.

Under current practice, the business licenses are more or less identical to work permits – they are required of all businesses, irrespective of the nature of the business involved, i.e., irrespective of whether the business's activity poses a threat to public health and safety. This is a very bad regulatory practice which increases the cost to business start-up and operation, and is a source of revenue that can be collected more efficiently, for municipalities, through, for example, property tax. I am hopeful that with the Amendment of the Law on Local Government Finance, which will happen this year, we will be able to tackle this problem and work closely with all the municipalities in ensuring that they understand the regulatory burden of their legislation onto the business community and not see licenses and permits as a source of revenue, but rather see it from the perspective of protecting public health, environment and the interests of their citizens.

AmCham Kosovo

credit to the private sector in Kosovo is low compared with other countries. In order to address this issue, in cooperation with ADA & SDC, we will be starting soon with the implementation of the Partial Risk Guarantee Scheme which will enable small and medium enterprises, which are the building blocks of any economy, to have a better access to finance and be able to get loans with much more favorable conditions.

On this note, we have greatly enhanced the public private dialogue with the business community and the municipalities. For the first time, we have been able to create and make running at the beginning of 2012 the National Council on Economic Development which comprises of 11 ministries, 3 chambers of commerce, the President's Office, Assembly of Kosovo Commission on Economic Development, Infrastructure, Trade and Industry, Association of the Municipalities of Kosovo, and International Projects that are assisting ministries with the implementation of economic reforms. The NCED is a mechanism that coordinates and facilitates improvement in policy and implementation of reforms which are aimed at improving the business and investment climate in the Republic of Kosovo and achieving sustainable economic growth by improving the conditions for the functioning of a free and open economic system, strengthening private sector, supporting employment generation, improving the image of Kosovo for investment, and creating a more secure and stable environment for business.

In transformational economies such as Kosovo where the process of transformation to a private sector-led market economy is a bumpy one with numerous challenges, business associations & chambers of commerce such as AmCham can and should play a pivotal role in not only defending and representing respective business interests and industries, but also be the champions of reforms in promoting a favorable environment for business, ease of regulations, and increase in public sector efficiency.

We are pursuing further initiatives to strengthen competitiveness, attract investment from abroad, and promote the development of a tradable sector. We are simultaneously working on several fronts to achieve these objectives.

Very soon, the Innovation Center in Gjakova will be open and functional, and along the other four business incubators around Kosovo, it will support the development of start-ups and existing operating businesses while offering technical and advisory services.

With the aim to stimulate and encourage investments in Kosovo by providing the investors with suitable infrastructure for the development of business activities, attracting private investments in production activities, creating job opportunities, speeding up regional development and enhance economic connections of Kosovo market with the international one, and ultimately assisting the overall economic development in Kosovo, specifically of the private sector in Kosovo, The Assembly of the Republic of Kosovo adapted the Law No. 04/L-159 on Economic Zones sponsored by the Ministry of Trade and Industry on February 14, 2013. We are in the process of taking several steps foreseen by Law prior to the establishment of economic zones. In consultation with the municipalities, Kosovo Customs and groups of interest, we will soon start preparing the national plan for the development of economic zones in Kosovo, which includes all municipal and central economic zones which are planned to be built within five (5) years from the approval of this plan. The National Council for Economic Zones will also be established in due time, which will serve as an advisory body on economic zones policies, and several other administrative instructions will be drafted in order to ensure the proper implementation of the law.

Although a lot has been achieved, we face many challenges ahead of us. In face of new developments, the ultimate task for our government is to work together with the business community to open up the market, create flexible labor regulations, increase efficiency and competitiveness in order to attract investments.

I must emphasize the fact that in order to achieve results with the economic reforms, we have to ensure that all institutions starting from the Assembly, the government, municipalities, business chambers as well as NGOs understand the importance and the benefits of structural economic reforms.

Perseverance is the hard work you do after you get tired of doing the hard work you already did. So let's continue working hard together to make this country a better place to live and invest. This is our only road toward economic development and social prosperity!

Several studies indicate that access to finance is one of the three biggest binding constraints for private investment growth in Kosovo. Data suggests that

the new Business Horizon

9

The EBRD in Kosovo: New perspectives Anton Kobakov

Head of Office, European Bank for Reconstruction and Development

A

lmost four months after Kosovo became the 66th and newest member of the EBRD, most people in Kosovo have become familiar with the Bank's presence in the country and now we are back to business as usual – looking to fund projects that will take the country's economy forward. The dust has settled after excited TV discussions, press interviews as well as visits by senior officials, including the EBRD's President Sir Suma Chakrabarti himself in February. Perhaps some people thought this was a bit of unnecessary fuss and saw the EBRD as just one more among the numerous donors that have worked steadily over the past 12 years in Kosovo to address critical administrative and infrastructural gaps and helped bring stability to this young state. But let there be no illusions about what the EBRD intends to do in Kosovo.

Our goal is no less than introducing a whole new approach by the key players in Kosovo's economy to finance and commerce, and to bring corporations and the framework in which they function to completely new levels of excellence. This is a critical part in the drive to increase local competitiveness: a major next step for the country.

Greater competitiveness will depend on important investment in modern infrastructure and pave the way for a stable and predictable development of the private sector, more qualified jobs and the evolution of an economic middle class.

10

Ambitious? We are patient people pursuing a longterm goal over many years. The transition from a lowoutput to a high-output economy is often random, rarely perceivable in less than a decade or two and is never totally guaranteed. Initial expectations from the Bank were therefore (and sometimes still are) somewhat exaggerated. In general, large capital inflows were anticipated as a result of the Membership and in particular the EBRD was expected to enter the economy with a massive package of cheap subsidized finance to small and big businesses, addressing the painful issue of the high-interest rate environment in Kosovo.

But that is not the way we work. To be clear from the very start, the EBRD is a pro-market institution and not an authority that hands out grants. We support the investment projects of small, mid-sized and large existing companies that have a credible trackrecord by providing loans, equity or hybrid finance.

Our financial packages range from a couple of million euros to very large syndicated facilities with volumes of a few hundred million. The EBRD's role is to complement the existing financial market in our countries of operations with instruments to which the companies there have no access and on a scale which has not been previously available. Our aim is to raise the quality of the financial environment within which the market economy can flourish and to prepare it for a sustainable, long-term future.

AmCham Kosovo

While we work on commercial terms, we do often blend this commercial finance with technical assistance, funded by a large number of bilateral and multilateral donors with whom we work. International expertise is provided free of charge by external consultants in the fields of operational efficiency, marketing, processes, expansion strategy. Their target is to provide the technical input to the transition of companies to modern and competitive mid-sized enterprises. This kind of co-operation between the EBRD and the companies can be on a long-term basis, and many of EBRD's clients have relationship with the Bank for many years.

The EBRD is focused primarily on the private sector but, in order to accelerate a country's transition, we also apply a multi-faceted approach that includes support for the development of critical infrastructure (electricity, transport, environmental services) and to develop a diversified and sophisticated financial market. Both initiatives represent important components for the sustainable operation of the local private sector and for the attraction of external private capital to the country.

The EBRD does not and cannot work in a vacuum. It is of crucial importance that the authorities in the countries where we invest work towards improvements in the local business environment. Ordinary people in any country can also play a role in this respect. They should make clear that they are not prepared to put up with non-market practices of the sort that have become well known also in Kosovo. The EBRD stands ready to support the administration as it puts in place policies that make the economy an attractive destination for investment.

The authorities also need to develop a national strategy to support the development and growth of local private manufacturing and services across all possible sectors and production scales and in particular to expand the routes for exports beyond the small market of Kosovo. The implementation of such strategy will require an alignment of administrative effort and national policy for the wider private sector with the existing priorities in the fields of infrastructure and agriculture to include the few large and mid-sized manufacturing and processing enterprises. They are critical showcases that will help attract external capital and their expansion will create strong local companies that reach out to a skilled young workforce.

It is important to expand the focus now to this sector. Private sector companies are already having difficulties maintaining their levels of output in what has become a very challenging economic environment. And sitting back and waiting for the necessary infrastructure to be built up first may result in a gradual but irreversible loss of the existing small asset base and the entrepreneurial initiative that has grown up on the back of the post-independence optimism.

The EBRD's entrance into the financial market of Kosovo will ensure the implementation of much-needed infrastructure projects and financing for larger corporate investments. But the shift from a poor, imperfect market economy to a promising emerging market will also require the leadership of the local administration with carefully designed and decisively implemented strategies and policies. Only then will the transition have the chance to materialise.

the new Business Horizon

11

Franchising Industry: Opportunities and Challenges Visar Hapรงiu

Policy and Government Relations Manager

T

he importance that innovation plays in the development of new enterprises is unquestionable, making it possible for billions of people to enjoy and make use of different products and services which were far from the human imagination several years ago. It would be safe to say that technological advancement has exceeded the expectations of majority of people throughout the world, and all this thanks to the courage and innovation of some individuals who dared to immerse themselves into the unknown and dedicate their life to inventing something unthinkable for the majority. Yet, while this courage has paid dividends to many entrepreneurs and business people worldwide, there are also others who did not manage to capitalize on their ideas and innovation. For those business people who are looking for a 'safer' route, one that involves making use of an established business model, the idea of franchising comes to mind.

While the concept of franchising originated in Europe as far back as the mid19th century, it is in the US where this model achieved its greatest potential, especially after the World War II. Nowadays, in the US and many other countries, the franchising industry accounts for a significant portion of overall employment and for roughly 3.4 % of the US GDP in nominal USD, and forecasts reveal that the sector is continuing its impressive growth. Chain

12

restaurants seem to be a popular choice among entrepreneurs seeking to buy a franchise, thus leading the way in the f r a n c h i s e i n d u s t r y. B u t w h a t m a k e s franchising so trendy and attractive?

First, franchisors are the ones who benefit the most, as they collect the franchising fee, thus being able to increase their business in a fast and effective way. In addition, they collect extra revenue in the form of royalties, which are paid by franchisees periodically, allowing the franchisors to use the revenues to increase and built upon their brand at a very low risk.

Secondly, besides benefiting from making use of a tested business model, franchisees benefit from the selling power of an already recognized brand. In addition, some franchisors offer additional training and ongoing support to their franchisees, which further increases the probability of success for both parties.

On the other hand, it should be noted that franchising also has its disadvantages as compared to traditional business ventures, such as the lack of independence and decision-making.

AmCham Kosovo

AmCham members discussing franchising opportunities at International Franchise Expo 2013 in New York

Franchising Prospects in Kosovo As we know, major US and European franchises are yet to establish a presence in Kosovo market. In this aspect, Kosovo lags behind other countries in the region, whose businesses have been able to strike a deal with franchise owners for expanding in the market of their respective countries.

However, it must be noted that some companies and business people from Kosovo in the past have voiced their interest and have tried to buy some i n t e r n a t i o n a l f r a n c h i s e s f o r Ko s o v o , without any concrete results.

This year, also thanks to the support of the Investment Promotion Agency of Kosovo, a number of AmCham member companies were able to participate in the largest International Franchise Expo in New York, where they had the chance to meet and discuss with some of the largest franchises in the US about the prospects of opening franchises in Kosovo. While attracting franchises might not seem as being very beneficial to the country in terms of economic growth, they can serve as a good tool to convince foreign investors about the good doing-business conditions that the country offers. Of course, there is more to be done in order to increase the interest of foreign investors in a country (improved rule of law, suitable investment incentives, well functioning market economy etc.), but

outlining some of the challenges that Kosovo faces in order to convince franchises that our country presents a very good business opportunity is also important. Perhaps the most important element that would be of interest to Franchise owners would be the protection of Intellectual Property Rights, which is in turn closely related to the rule of law.

Having considered the advantages and disadvantages of the franchising industry, it is clear that it could become a very smart choice of route for Kosovo, its businesses, and its economy. Even though franchising might not allow great autonomy and decision making to the franchisees, it will facilitate the diversification of Kosovo market and convey positive messages to potential foreign investors by indicating that the doing business environment in our country is safe and welcoming for them.

Therefore, Kosovo businesses should definitely consider involvement in the franchising industry, given the positive outcomes that are expected to come as a result.

the new Business Horizon

13

Financial Transparency, Way to Growth LekĂŤ Musa

Managing Partner, Baker Tilly Kosovo

L

ack of working capital, late payments, bad debts, bartering and liquidity are issues that every business in Kosovo is facing. This is especially the case for trading companies who have difficult time finding the right balance between purchasing power i.e. demand and their capacity for growth. The larger the business is, the more present these problems are. Most of these large trading companies have had their opportunity to grow and move to the next level, to expand their business beyond borders.

Unfortunately, very small number seized the moment and manage to transform into a business that can communicate transparently in an international business context.

Financial transparency for many business owners is still a personal secret.

Financial transparency, where businesses can rely on financial statements of potential partners is a key to avoiding the problems of bad debts, or late payments, which today has impacted many local businesses.

Many small enterprises with manufacturing operations, which in a better business environment can become driving engine of growth, today are facing problems in getting paid for the service or the products which they have contracted. On many occasions these deals are concluded in a barter exchange due to lack of liquidity.

14

AmCham Kosovo

It is apparent that the lack of financial transparency has its grassroots to the issue of non-compliance, which is something deeply rooted and takes time and deep reforms in a society.

On the other hand, it is the role of the government to ensure that that the public money is spent correctly and that everyone is treated equally when it comes to paying its share of the tax burden. As Adam Smith put it in Wealth of Nations that the free markets, the protection of private property rights, and a minimal government presence in the economy lead to prosperity. In other words, economic freedom leads to economic growth. The government must also ensure even level playing field, thus sending the signal that everyone is equal in the society and has to pay a fair share. So many studies have revealed that foreign investors are not adhered so much to the level of the tax, rather than to a perception of being equal and fairly treated when it comes to law.

The vast majority of Kosovo's 90,000 businesses are microenterprises with limited access to external financing. In cases when external financing is extended to a business, the decision is ordinarily not based on the assessment of financial statements and repayment capacity, but, rather, on the quality and value of the collateral provided by the borrower.

Sound, reliable financial information is fundamental for moving away from the collateral-based lending model, towards a cash-flow lending or creditscoring, both of which depend on the lender's ability to obtain transparent and accurate financial data.

The quality of accounting and auditing practices in an economy like Kosovo is important for both the private and public sectors, with both playing an important role in driving the country's growth.

It is still true that small private enterprises are typically funded by retained earnings and informal, family-generated funding sources, and until these enterprises are able to produce reliable financial statements, it will be hard for them to grow and expand to a more sustainable business.

Financials experts of Kosovo discuss on importance of financial transparency in a conference organized by AmCham and Baker Tilly in November, 2012

the new Business Horizon

15

Coping with Kosovo's growing labor force Nenad Rasic,

Minister of Labor and Social Welfare

K

osovo's economy continues to be characterized with a high rate of unemployment which represents the main challenge toward an economic and social stability in the country.

Growth economic rates are failing to absorb the workforce in the country which is constantly increasing as a result of the young structure of the population. The increasing of the workforce in Kosovo comes as a result of population structure considering that young people constitute a substantial part of the population. The structure of the population in Kosovo is dominated largely by working age groups.

According to the recent population census, Kosovo has a total population of 1,739,825 inhabitants, 40% evaluated as population living in urban areas and 60% living in rural areas. While according to the census, the number of people above 15 years is 1,252,248, 35.1% of the economically active people are considered to be unemployed. This is the official unemployment rate for Kosovo for 2012 according to the Workforce Survey, while 63.2% of those of working age are economically inactive. Over 30,000 people enter the job market every year, and nearly 7,000 of them retire reaching the age of 65.

Ministry of Labor and Social Welfare manages the labor market in Kosovo through the Department of Labor and Employment. This department plays an important role in promoting employment and enhancing the skills of young people for the labor market. The drafting and designing of employment policies and professional training is done by the Division of Labor and Employment or the Division of Professional Training whereas the implementation is done by the Office for E m p l o y m e n t a n d P r o f e s s i o n a l Tr a i n i n g Centers. Within the DLE, there are seven centers and 23 Regional Municipal Employment Offices and eight Professional Training Centers.

Ministry of Labor and Social Welfare conducts various annual employment programs. These employment programs are addressed to the employment of job seekers, with the aim of reducing the unemployment rate. Many different projects with employment and training character were implemented in 2012.

During this year we have started drafting and designing employment sector strategy, welfare and social inclusion 2014-2020, which will be completed at the end of this year.

Strategic objectives in employment field include the reform of the Public Employment Services and the expansion of employment policies and training.

jobs 16

AmCham Kosovo

Alternative Dispute Resolution Center Arbitration, Commercial Mediation and Labor Mediation Services

Efficiency Speedier Resolution Less Costly Closed Hearings and Confidentiality Less Adversarial Process Professional Arbitrators International Enforcement of Awards

www.adr-ks.org

American Chamber of Commerce / St. Perandori Justinian No 16 / Tel +381 38 609 013

Simplifying border to achieve savings The IFC Western Balkans Trade Logistics Project

S

everal years after political turmoil, countries in the Western Balkans have finally embarked on all encompassing systematic reforms towards a fully fledged market economy. Sharing the common vision of accessing the European Union (EU) - where capital, labor, services and goods flow seamlessly without restrictions - governments in Western Balkans countries have been implementing policies that foster regional integration in trade and investment.

Reducing transaction times has a direct impact on trade.

According to a study conducted by WBG in 2011, a 10% reduction in export time can increase exports in the Eastern Europe and Central Asia Region by 5%.

The International Finance Corporation's (IFC) Western Balkans Trade Logistics Project focuses on the removal of regulatory obstacles to trade in seven countries in the region, thereby facilitating intraregional trade and improving the region's connectivity with the EU market as well as with global supply chains.

The Project, funded by the European Commission through the Instrument for Pre-Accession (IPA) MultiBeneficiary Program aims at the Elimination of redundant or duplicative documentation requirements to trade, thus reducing time and cost for businesses Simplification of processes and procedures to trade both at major border crossing posts (BCPs) and main trade gateways (ports and airports) thus allowing for a seamless flow of cargo.

Specifically, project priority actions include the reduction of the number of documents required for import and export; promoting wider use of simplified procedures; realizing a wider use of risk management systems and systematic post clearance audits, including for noncustoms border agencies; more data exchange between border agencies, the development of joint risk profiles; the simplification of bank guarantee procedures; synchronization of hours of operation) according to commercial needs and operational requirements; simplification of testing and sampling requirements and procedures; promoting transparency by making trade information more readily available to the public (or businesses), and promoting closer cooperation between the public and the private sector.

According to the World Bank Group's Doing Business Report for 2013, traders in the Western Balkan region need on average 8 documents to import. The average in

18

OECD countries is just 5 documents. The obligatory collection and completion of this higher number of documents increases the cost of doing business, both in terms of fees paid for obtaining additional permits and licenses, but also in terms of disproportionate preparation as well as processing time.

At the same time, despite significant progress achieved in recent years, complex and at times onerous practices still prevail at major regional BCPs. Although provisions for simplified procedures are included into national regulations, practical implementation often lags behind.

Document inspections are still very high – in many cases 100% - while the percentage of physical examinations is still in the double digits in most countries. Risk management techniques are not applied systematically.

The use of pre-arrival information is limited. Countries require product certification by national agencies, in addition to the certificates provided by the exporter.

These are only a few examples of inefficient border clearance procedures in the region.

The Project presents reform proposals to relevant government agencies, and collaboratively seek to implement improvements to existing procedures, either through direct technical advisory work, or through the framework of a national working group in which both private and public sector representatives convene to discuss and seek to tangible solutions to be implemented by the government.

Working hand-in-hand with governmental agencies – in the case of Kosovo with Kosovo Customs and Kosovo Food and Veterinary Agency – the Project provides assistance and technical expertise to further improve control processes and allow a more seamless flow of legitimate trade. This is accomplished via a wide range or tools and instruments including – but not limited to - the utilization of pre-arrival clearance methods, the application of simplified procedures and the operational improvement of risk management practices and techniques. In addition, as pointed out, the Project consults with private sector companies and representative bodies in the trade and transport community to identify such bottlenecks to efficient border clearance. In the case of Kosovo, a close cooperation has been established with Kosovo Chamber of Commerce, AMCHAM, and Customs Brokers Association.

AmCham Kosovo

clearance procedures for the private sector Further, it encourages the establishment of trade logistics committees where such groups do not yet exist, or works with chambers, freight forwarders and other associations to formulate recommendations for reform. The project is seeking ways to support the Sub-group on Trade Facilitation, a technical level group represented by government and private sector, established within the Ministry of Trade and Industry, Government of Kosovo.

Emphasis is also placed on the identification of regulatory obstacles in product-specific supply chains with significant economic importance for the region. IFC has developed a unique methodology for the identification of cross-country non-tariff barriers to trade (NTBT) via a systematic mapping of agriculture chains recording in detail the individual steps a truck crossing a border has to go through, including document submission, document and physical checks, amount and number of fees paid, duration of clearance process and others. In the summer and spring of 2012, the Project conducted such an analysis for processed agricultural products among major trading corridors, including Kosovo and Albania through the Vermica BCP, given the high importance of agriculture in the region. Some of the pressing issues in the regional cross-border cooperation have been tackled on a bilateral basis. One such example is a Framework Transit Agreement proposed by the Project between border agencies of Kosovo and Albania. The Agreement aims at facilitating the transit of goods between Albania and Kosovo, particularly, goods destined for Kosovo that enter though the Port of Durres. A series of bilateral meetings have been concluded. The draft Agreement is still being consulted by the parties involved, with the support of WBTL team. It should be concluded soon.

In addition to the work conducted on a country and on bilateral levels, the project is working closely with other donors and international financial institutions in order to generate synergies and improve the effectiveness of planned interventions. The Central European Free Trade Agreement (CEFTA) Secretariat is a key partner in this effort since and a paramount player in moving forward the overall regional trade agenda. The Project has reported out to CEFTA's subcommittees on Customs and will provide advisory to its recently established Working Group on Risk Management. In April, WBTL jointly with the CEFTA Subcommittee on Customs, is organizing a Workshop in Budva on Sanitary and Phytosanitary

(S&PS), Food Safety and Veterinary (FS&V) Controls during Trade.

It is expected that regulatory interventions within the Project's activity plan will help the Western Balkans countries and achieve significant benefits ranging from reduced administrative and transaction costs and increased revenue collection to higher compliance rates as well as enhanced regional integration and increased competitiveness for their firms. The International Finance Corporation, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries who collectively determine the IFC's policies. IFC operates in more than a 100 developing countries, allowing companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. 'IFCs vision is that people should have the opportunity to escape poverty and improve their lives.

The IFC's Trade Logistics Group, headquartered in Washington DC, implements trade logistics projects in 52 countries, including Central America, the Caribbean, Africa, Europe and Central Asia, and South and East Asia.

Trade logistics reforms are designed to boost trade flows and improve the performance of the economy. Benefits are reaped at the firm level. IFC has developed a model to capture the benefits accrued to importers and exporters through trade logistics interventions. This model allows the estimation of private sector savings for trading firms expressed in (a) reduced carrying capital for shipments while in transit; (b) reduced inventory cost; (c) reduced cargo loss and damage from pilferage or spoilage; and (d) lower fees or charges as reflected in savings in documentation costs, terminal handling charges, border clearance fees and inland transport charges.

Western Balkans Regional Trade Logistics Project Contacts: Violane Konar-Leacy, Project Manager, vkonar@ifc.org Petrit Gashi, Project Consultant in Kosovo, pgashi@ifc.org

the new Business Horizon

19

Transformational construction reforms: Laying the foundation to build the future Terence Slywka

Chief of Party, USAID Business Enabling Environment Program in Kosovo

I

n Kosovo today, significant reforms are making it easier for businesses and citizens to access and use land. Land use reform is a key pillar of comprehensive and transformational economic reform. The free, transparent and predictable use of real estate, with strong protections for individual property rights, is essential for private economic activity and the pursuit of a better life. Enforceable and predictable rights in land and buildings encourage investment that can use economies of scale to increase wealth.

The Ministry of Environment and Spatial Planning (MESP), with the support of other partners such as the USAID Business Enabling Environment Program, is taking a three-pronged approach to land use reform that encompasses three, closely-interlinked functional areas: (1) construction permitting; (2) spatial planning; and (3) currently-illegal constructions.

To address the first of these areas, MESP sponsored a new Law on Construction that took a transformational approach to streamline construction permitting and focus on the protection of public health and safety. In June 2012 the Kosovo President signed the new law, representing the first of many important steps to reform land use in Kosovo and initiating a range of activities throughout the government to implement the new law and advance further reforms. This law can be accessed at the Official Gazette's website at http://gazetazyrtare.rksgov.net.

to develop this code. Covering functional topics like electrical, plumbing, structural and fire safety, the construction code establishes the baseline for reviewing construction permit applications and follow-on inspections.

Equally important for reforming construction permitting is the requirement imposed by the Law on Construction that fees for construction permits may not exceed the amount necessary to cover the cost of administering them. In November 2012, MESP issued an Administrative Instruction that sets out clear procedures, and provides detailed worksheets, for municipalities to establish their construction permit fees on a cost recovery-basis. To date, with assistance from regional workshops around the country, 18 municipalities have already established their construction permit fees in a manner consistent with the new requirements. The Administrative Instruction can be accessed at http://mmph.rksgov.net/?cid=2,68&date=2012.

MESP is working diligently with counterparts to develop and adopt additional Administrative Instructions required under the new Law on Construction, including those on the categories of construction works (applying a risk-based approach to construction permitting);on the procedures for applying for and issuing construction permits; on construction works that do not require a permit; and on establishing the procedures for construction inspections.

In order to establish in law the minimum technical requirements necessary for safe constructions, the new Law on Construction calls for the development of a comprehensive construction code. MESP has established a working group comprised of representatives of both the public and private sectors

20

AmCham Kosovo

These land use reforms are already having a palpable impact on businesses and citizens. The World Bank's Doing Business 2013 report shows Kosovo as the world leader in improvements in its overall ranking and its cumulative rank improvements.

Among the report's indicators showing Kosovo's considerable improvement was “Dealing with Construction Permits”. Owing to these land use reforms described above, along with and the MESPsponsored new Law on Cadastre and Amendment to the Law on the Immovable Property Rights Register, Kosovo has reduced by 131 days the time it takes to register a cadastral unit after its construction; and has reduced the cost of registering that same unit by 82.5%! The Doing Business 2013 Kosovo country information can be accessed at http://www.doingbusiness.org/data/exploreeconomie s/kosovo. (It should be noted that many significant reforms emanating from the new Law on Construction are expected to be captured in the World Bank Doing Business Report for 2014.)

Building on the momentum generated by the Law on Construction, MESP turned its attention to the second functional area, spatial planning. MESP has developed a new draft Law on Spatial Planning that is based on the evolving European approach and applies internationally recognized principles to establish predictability in land use. This draft law can b e a c c e s s e d a t http://www.kuvendikosoves.org/?cid=1,194,769.

Under the proposed draft, land uses will be defined on an individual, parcel-by-parcel basis so that citizens can easily understand any use limitations. Additionally, the draft Law calls for the development of a “National Spatial Plan and Zoning Map” that will provide sufficient information for the issuance of construction

Meeting with construction companies to discuss on the new Law on Construction

permits where municipalities lack their own local plans.

The draft Law was approved by Parliament in the first reading on February 1, 2013 and is now being reviewed by the Parliamentary Committee on Agriculture, Forestry, Rural Development, Environment and Spatial Planning.

The third area of land use reform focuses on building that have been built without a permit. This has been an area of concern across Kosovo and can be attributed to a number of factors, such as the difficult administrative processes and uncertainties associated with construction permitting and land use heretofore. Now that the administrative procedures have been streamlined and fee-setting put on a rational basis as required by the new Law on Construction, it is important to address the constructions that have been built without a permit.

In this connection, MESP has developed a draft Law on the Treatment of Constructions Without Permit that, if adopted, will establish a transparent, fair and predictable program for legalizing currentlyunpermitted constructions. Connecting the three functional areas together, the draft Law envisions both a spatial planning review and a review for construction code compliance to formalize these constructions and harmonize the system for land use. The draft Law can b e a c c e s s e d a t http://www.kuvendikosoves.org/?cid=1,194&filter=2 7.

The reform process should be open and inclusive, and MESP is encouraging all citizens to get involved. The Ministry has provided a link on its website to direct citizens to information and legal acts related to construction-related reforms in order to facilitate public review and comment and engage citizens in the reform process.

Heavy Industry Sector in Kosovo: Opportunities and Threats Ioannis Moutafis,

CEO, NewCo Ferronikel / Chairman of the Heavy Industry Cluster

S

ince February 2008, when Kosovo declared its independence, the economy's share in the political agenda has remarkably increased each year, given that nowadays more people understand and realize that a strong economy and sustained business environment are pre-requisites for a well built and developed country. AmCham's contribution towards enhancing the sustainability of enterprises in private business sector has been outstanding and more than well known, without specifically referring to any of its proposals or actions.

It was our pleasure to be part of the Heavy Industry Cluster, established in 2012 within the framework of AmCham and Kosovo Chamber of Commerce, where numerous public and private companies, such as KEK, NewCo Ferronikeli, Trepça, SharrCem, Llamkos Glava Steel, M&Sillosi and so forth, participated in order to call attention to some of the key issues which are considered critical for the development of the Heavy Industry Sector.

However, many people might think that there are other alternative sectors which can increase the economic development of the country, while still being able to meet people's needs. Thus, many might question if the development of the heavy industry sector is in line with the best interests of the people of Kosovo. Let's take a more in-depth look at the issue.

Kosovo is a newborn country with a very low GDP rate, compared to other European countries, and a very high unemployment rate. Therefore, large heavy industry establishments and production can create advantages in the form of economies of scale and eventually lead to a significant increase of employment. Consequently, it would also give rise to the country's GDP more significantly than any other sectors such as trade or agriculture, which has a lower added value to the final products. Even though a balanced economy should be diversified in all business sectors, it is to be noted that heavy industry is a supplement to all other sectors.

Furthermore, the development of heavy industry creates favorable conditions for the development of other business sectors, correlated directly or indirectly to bigger productive units, such as transportation industry, service industry, financial institutions and so forth.

sector, mining and metallurgy, including companies like Trepça, Ferronikeli and Llamkos, have had a great share in Kosovo's economy. Today this sector holds more than 60% of Kosovo's total exports, and as such the continuity and sustainability of such companies have a major impact on the GDP of the country. For instance, the increase of Trepça's turnover and the recommencement of all of its operations can create significant advantages, not only to the region of Mitrovica, but to all of Kosovo. Thus, it is very crucial for the Government to take all necessary measures to allow Trepça to achieve its maximum potential, and the steps that are already taken towards this direction indicate that the process will be completed successfully.

Heavy industry is one of the sectors which faces great challenges in contributing to the economic growth of Kosovo, especially during the current global financial crisis. Thus, there is much that the government, and the sector itself, can accomplish to improve the working conditions for it. For instance, throughout this sensitive period, enforcement of some safeguard or protective measures in accordance with the provisions of Laws for local and big manufacturers which utilize the industrial products, would be extremely useful in terms of enhancing local industries. Moreover, the facilitation of the good and friendly transportation system of raw materials – which is exclusively linked to manufacturing industries, would alleviate the additional disadvantage of a landlocked country, which by definition faces higher transportation costs for any import of materials. Also, for instance, alleviation from taxes for first initial period of investment, for those who are engaged in capital expenditure for enhancing or expanding their production capacities, would be a remarkable incentive for new investors and existing heavy industry companies.

Taking into account all of the above, it is quite clear that there is great room for improvement and strengthening of the heavy industry sector. However, I would like to highlight that during the past years in Kosovo the dynamics of this sector has been quite positive. All the companies of the sector should take advantage of them and the support given by the Government and the chambers, in order to have a larger share in the economic development of the country.

In most developed countries, mining and metallurgical industries are the backbone and the major contributor of the economy. Traditionally, as part of heavy industry

22

AmCham Kosovo

New USAID Program to improve the rule of law structures David Greer

Chief of Party, USAID Commercial Law Enforcement Program in Kosovo

U

SAID's new Commercial Law Enforcement (CLE) Program commenced operations in May of this year. The threeyear Program, implemented by Checchi and Company Consulting, Inc. will focus on improving rule of law structures that will lead to a better environment for economic growth, increased investment, and Rule of Law. The program consists of two major components.

First, it will assist Kosovo institutions to improve the enforcement of civil judgments while dramatically reducing the backlog of enforcement cases in the Kosovo court system. Second, it will assist Kosovo to develop and strengthen its contract and commercial law framework and systems, including ADR mechanisms.

To achieve the first goal CLE will work with the courts and other local institutions to develop a new system of judgment enforcement based on the recently enacted Law on Enforcement Procedures.

This will include a new system of private enforcement agents; the project will support the Ministry of Justice to develop oversight and training systems for these agents.

enforcement, improving and developing contract enforcement systems, and developing the private enforcement system. The reduction of this backlog will increase the courts' ability to effectively deliver justice, and will also free considerable amounts of capital into the economy, resulting in broader access to credit at lower interest rates.

The second goal will involve both legal reform and technical assistance. The current commercial law framework in Kosovo is in many respects a hodgepodge of subject specific laws. A weak legislative framework that is difficult for businesses to implement is exacerbated by a cultural tradition of relying on a handshake deal. CLE will work both to improve and harmonize the different laws, and to help demonstrate the value of creating a “culture of contract� that characterizes modern transactional commercial practice.

CLE will also work with Kosovo's new mediation system, including training new mediators. The CLE project offices are in the Pejton neighborhood of Pristina. The project will continue through May of 2016.

The project will also work closely with the Kosovo Judicial Council to reduce the court system's large backlog of enforcement judgments. Currently the court system has more than 100,000 unenforced judgments on the books. The inability to effectively enforce court judgments undermines the rule of law and inhibits the robust economic growth necessary to create jobs. This will be done by a combination of improving the courts' efficiency in conducting

the new Business Horizon

23

Corporate Social Responsibility in Kosovo Robert Wright

CEO, Raiffeisen Bank Kosovo / Chairman of the CSR Network Kosovo

Respectable readers of the Horizon magazine, In July 2012, I received the post of the Chairman of the Board of Kosovo CSR Network, and I would like to inform you in more detail about the operations of this network and demonstrate the importance of including the concept of Corporate Social Responsibility in your business agenda.

What is Kosovo CSR Network and why does Kosovo need it?

The Kosovo CSR Network was founded on April 21, 2011 by the initiative of the American Chamber of Commerce in Kosovo and the leaders of the most distinguished Kosovar and international businesses who were dedicated to increase the awareness of the business community for corporate social responsibility and to include the best practices in their companies.

As we are all aware, through its activities, CSR encourages a positive impact on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. It is important to mention that, according to international institutions United Nations, Organization for Economic Co-operation and Development, World Business Council for Sustainable Development, and

24

European Commission, CSR is essentially a concept whereby companies voluntarily engage to contribute to a better society and a cleaner environment.

In the business environment in Kosovo, the concept of CSR is a new practice, but in international terms all prestigious businesses have embraced this concept. The United Nations Foundation through the Global Compact Foundation has asked companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment and anticorruption. In addition, the European Union through its Enterprise 2020 initiative has set EU goals for building a smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion by 2020.

For Kosovo, as a country heading toward a European Union future, it is important for each of us to play a key role in fulfilling the obligations required, and we must embrace the concept of CSR and contribute to the community where we operate. It is not only a moral obligation but it is also a human obligation, and a responsibility of every business to bring Kosovo closer to European standards.

AmCham Kosovo

Environmentally friendly bags

Traffic man in action

Current situation of Kosovo CSR Network

and textile.

Currently, the Kosovo CSR Network has an organizational structure consisting of a Board of Directors from the following companies and organizations: American Chamber of Commerce in Kosovo, SharrCem, Baker Tilly International, Raiffeisen Bank, Meridian Corporation, RED Consulting, KOSTT and PR Solutions, and has a staff of two people: Lindita Daija and ErĂŤza Vela Berisha, both of whom have a strong background in the area of Management and CSR.

Throughout 2013, the network has plans to implement more projects with impact on various communities and to expand the membership base, therefore, I urge you to join us on the path to contribute as much as we can for the benefit of Kosovo citizens and for a secure Kosovo, with clean air, no corruption and with equal rights for all.

One of the projects for which the network has become recognized and which has been implemented for two years now, is the Traffic Safety Project, which enables children of 10 schools in different municipalities, to circulate freely in traffic, by using retired people as assistance officers, or "traffic men" a name that, they have set for themselves.

The other very successful project, with a potentially enormous impact on the environment, is the Plastic Bags Project which educates people about the negative impact of using plastic bags and encourages the use of other alternative bags made of paper

Finally, I would like to give you 5 practical reasons, for joining the Kosovo CSR Network: CSR can play a role in building customer loyalty based on distinctive ethical values; Organizations can benefit from building a reputation for integrity and best practice; There are great networking opportunities with Kosovar and European high level representatives; Membership will create business to business opportunities; By becoming a member your company will increase its reputation and credibility at National and European level.

Kosovo needs CSR, and we need YOU!

the new Business Horizon

25

Kosovo and Iowa Strengthen Economic Ties Kosovo businesses visit Iowa At an invitation of the regional business association “Greater Des Moines Partnership”, a delegation of Kosovo businesses visited the federal state of Iowa, with which Kosovo has state partnership agreements in several areas.

Kosovo delegation comprised of the President of the Board of Governors of the American Chamber of Commerce in Kosovo, Erolld Belegu, Member of the Board of Directors of AmCham, Islam Pacolli, AmCham Executive Director Arian Zeka, and the Head of Investment Promotion Agency of Kosovo, Valdrin Lluka. The visit was part of the efforts to strengthen the economic partnership between both countries, which have initiated with visits from representatives of the business community of Iowa, in Kosovo Kosovo business delegation were hosted by some of the largest companies of Iowa state, including Principal Financial Group, John Deere, and the innovation center of the Des Moines City.

The Head of Investment Promotion Agency of Kosovo (IPAK) Valdrin Lluka, urged the American companies from the state of Iowa to invest in Kosovo, taking into consideration the great improvements that have occurred to the doing business environment in Kosovo, but also to take advantage of different incentives offered to foreign investors.

Also, Iowa National Guard had also organized a warm reception for the Kosovar businessmen, whereby the importance of strengthening interstate relations, with a special emphasis on the field of economy, was once again highlighted. A senior delegation of the U.S. federal state of Iowa, led by the Governor of the State and other senior military and economic officials will visit Kosovo in the second week of July, whereby throughout their stay in Kosovo they will also meet with AmCham's member companies.

Governor Branstad and Iowa’s delegation for their continuous support and commitment to further strengthen the relations with Kosovo in all areas, particularly the economic ones. On behalf of AmCham he voiced his readiness to facilitate further connections between Kosovo and Iowan businesses.

On the other hand, Iowa’s State Governor, Terry Branstad, pointed out that Kosovo has real opportunities for growth and he assured all the participants that the cooperation between the two sister states will yield real results and benefits for both countries. He also said that the partnership agreements are a way forward of increasing economic and trading activities between the two countries.

US Ambassador in Kosovo, Tracey Ann Jacobson voiced her confidence that the cooperation between Kosovo and Iowa will result fruitful thanks to the energy of the American people and the readiness and commitment of the people of Kosovo, adding that it is her pleasure to see an interaction between the business representatives of both countries.

Kosovo's Ambassador in US Akan Ismaili said that he is excited to see the potentials that the state partnership between Kosovo and Iowa offers, adding that despite the fact that the sister states agreement was reached by the institutions of both countries, it is the private sector should take the lead in further strengthening this relation.

During their visit in Kosovo, business representatives from the State of Iowa had a series of meetings with Kosovo businesses from the sectors of agriculture, farming, transportation and distribution, with first business deals waiting to be reached with the Kosovo companies from the meat processing industry.

Iowa's Governor meets AmCham Kosovo members The economic ties between Kosovo and Iowa will be further strengthened in the near future with first business deals expected to be signed between Kosovo and American companies from Iowa. This was the main message of a meeting of the Governors of Iowa, Mr. Terry Branstad with the members of the American Chamber of Commerce in Kosovo. In his opening remarks, the President of the Board of Governors of AmCham Kosovo, Erolld Belegu thanked

26

AmCham Kosovo

Slovenia to serve as a bridge to EU for Kosovo products

O

n the occasion of the first anniversary of the cooperation agreement signed by AmCham Alternative Dispute Resolution Center and the Permanent Arbitration Tribunal of Slovenia, the American Chamber of Commerce in Kosovo in cooperation with Slovenia Chamber of Commerce and Industry organized the first Business and Arbitration Forum in Ljubljana, Slovenia, where a large number of Kosovar and Slovenian businesses were present. Naim Dedushaj, director of the department for the Support of Diaspora Investments within the Ministry of Diaspora, which supported this trade mission, was also among participants at the conference.

In his opening speech, the President of Slovenia Chamber of Commerce and Industry, Samo Hribar Miliq, said that is very important for countries like Kosovo and Slovenia, which share many things, to organize such meetings more often. He added that meetings like this one are especially important for Kosovar businesses to use the opportunity to visit Slovenia and promote their exports, considering the already low volume of exports from Kosovo to Slovenia, emphasizing that the latter could serve as a bridge to export Kosovar products to different EU countries.

He added that business meetings like the one organized by AmCham Kosovo and Slovenia Chamber of Commerce and Industry serve as a good networking tool for businesses of both countries. He also expressed his satisfaction for the development of a strong partnership between the Slovenian Chamber and AmCham Kosovo.

Arian Zeka, AmCham Executive Director, said that Kosovo has always relied on the support of Slovenian people and country, and this reliance will continue as Kosovo paves its way to EU integration.

He said that Kosovo provides a suitable environment for Slovenian investors who already are present in Kosovo. In the meantime, Mr. Zeka invited Kosovo businesses to respond positively to the call of the Slovenian Chamber President to consider the possibilities of placing their products in the EU market through Slovenia.

Berat Rukiqi, Secretary General of the Kosovo Chamber of Commerce, spoke about recent improvements in the doing business environment in Kosovo, highlighting the importance of increasing Kosovo exports to Slovenia, which would help in decreasing the trade deficit which Kosovo currently faces.

On the other hand, Ardi Shita, Secretary General of AmCham Alternative Dispute Resolution, spoke about the importance of the cooperation agreement between Kosovo and Slovenia in the field of commercial arbitration, as a good opportunity to strengthen the business relations between two countries, as well as to serve as a guarantee to investors of both countries. He also presented Kosovo's Economic data and investments opportunities in Kosovo. After the conference, Kosovar businesses had the opportunity to meet Slovenian businesses and to discuss mutual cooperation opportunities.

the new Business Horizon

27

New law on sponsorship should contain more fiscal incentives

T

he American Chamber of Commerce in Kosovo in cooperation with Forum for Civil Initiatives organized a Roundtable on July 17, 2013, to discuss the Sponsorship and Donation draft law and donations initiated from the Ministry of Culture, Youth, and Sport. The participants were from civil society, businesses, and companies that operate in Kosovo and representatives of relevant state institutions.

In the opening of discussion the Executive Director of American Chamber of Commerce, Arian Zeka highlighted that the respective draft law which has been extremely delayed, is very crucial, especially taking into consideration the difficult conditions that culture, sports and youth have to face in our country.

Further, Erolld Belegu, President of the Board of Governors of AmCham, claimed that AmCham has been involved in the drafting process of the Draft Law for Sponsorships and Donations and that the fundamentals of the law are food, however it should be more comprehensive and include more fiscal facilities. Further, he added that the budged implications have not been as high as they were expected to be. Mr. Belegu added that the Draft Law as it is right now does not serve to any purpose, since it does not contain dispositions which would regulate fiscal facilities and encourage the businesses to contribute to the development of sport, culture, and youth in our country, through donations and sponsorships.

Dajana Berisha, Executive Director of the Forum for Civil Initiatives, explained that the importance of this law grows further when the interest of donators' community about Kosovo is decreasing, and businesses and citizens should be mobilized in order to contribute more in the development of different domains. She also emphasized that it is important to augment the scope of the law and allow it to pass further culture, youth, and sport, by adding that fiscal incentives need to also be included in the respective Draft Law. As from the representatives of Kosovar institutions, Jehona Shyti, Senior Political Advisor to the Minister of Culture,

28

Youth, and Sport emphasized that the Ministry has always been interested this law be further proceeded, but it stalled in other instances. Shyti added that despite the fact that the Ministry's budget has increased significantly recently, from 11 million to 20 million Euros, this amount is not sufficient to support all the activities in above mentioned scopes, and this draft law needs to be further elaborated in terms of provisions for tax facilities and determination of control measures for a proper law implementation.

On the other hand, Qerkin Berisha from the Ministry of Finance said that the main culprit for the delay of this draft law is the fact that this scope is compiled based on the tax laws in power, and there is a risk that the draft law conflicts with the existing laws. He further highlighted the importance of analyzing the costs of this law and its analyses in a micro financial aspect.

Regarding the Corporate Social Responsibilities (CSR) and their interconnection with the Draft Law for Sponsorships and donations, LekĂŤ Musa emphasized that the CSR concept is fairly different from the approach discussed in the round table, by clarifying the fact that CSR addresses the investments of companies with the good will for the community and society. He added that the fiscal stimuli are crucial to encourage the companies to increase their sponsorships and donations in the different fields.

Musa further added that the number of businesses that benefited from the legislation in power in terms of tax facilities is very small, despite the fact that there is a large number of businesses that are engaged in such activities.

Finally, other representatives from the civil society and business community had the chance to unfold their ideas and recommendations regarding this topic.

In the round table it was collaboratively concluded that it is important to draft a law of a higher quality which would increase sponsorships and donations, by including fiscal facilities in the law by regulating the control measures, and always considering and having in mind the current laws that are in power.

AmCham Kosovo

AmCham’s 4th of July Children’s Marathon Prishtine, July 4, 2013 – In honor of the 237th anniversary of the Independence of the United States of America, the American Chamber of Commerce in Kosovo in collaboration with Coca Cola Hellenic, organized the Children’s Marathon 2013, in “Mother Teresa” Boulevard. Apart from celebrating the national day of the American country that has vastly contributed in the liberation and independence of Kosovo, the marathon also aimed to spread a sportive spirit among Kosovo children.

In his opening speech, AmCham’s Executive Director, Mr. Arian Zeka, greeted the children and wished them success in the competition by also pointing out that AmCham, apart from all other 4th of July events, wanted to organize an event for children too. Further, he promised that this event will become traditional and continue in the future as well.

Veton Ferizi, Permanent Secretary at the Ministry of Culture, Youth, and Sport, congratulated AmCham and Coca Cola Hellenic for the initiative and on behalf of the Ministry of Culture, offered their support and willingness to become part of such events in the future. In his speech, he also used the occasion to extend his congratulations to the American people on their national day.

After the running competition in the four categories, in the ages of ten, eleven, twelve, and thirteen years old, the three first places from each category were announced, and they were awarded with medals and certificates by executive director - Arian Zeka, permanent secretary at the Ministry of Culture – Veton Ferizi, and AmCham Member - Erëza Vela Berisha.

As for the artistic part of this program, Children’s Group - “Xixëllonjat” and the Ballet group “Mjellmat” performed music and dance performances prepared exclusively for this event.

the new Business Horizon

29

Kosovo innovators I

nnovation Centre Kosovo is an organization which supports newly established businesses, startups, and companies with less than two years of presence in the market. The main condition to be part of the Innovation Centre Kosovo's incubator is to have a realistic business idea based on innovation and technology. Innovation Centre Kosovo (ICK) is open not only for interested individuals and start-ups but also it is keen to cooperate with larger companies with focus on technology and that would like to work with ICK and its incubator tenants. The Centre was founded by Athene Prosjektledelse, Norway and Kosovo Association of Information and Communication Technology (STIKK), Kosovo, whereas Crimson Capital LLC, Kosovo is the main cooperating partner. ICK is funded

by The Norwegian Ministry of Foreign Affairs. Characters of 3D games that are inspired by the Albanian history and mythology, a well-known card game played in the past with friends and relatives now adapted to be played in the virtual world, and learning math trough games supported by the latest technology, have been created after many sleepless nights in the five store building situated at the corner of Rexhep Mala Street in Prishtina. The five store building where Innovation Centre Kosovo (ICK) is located it is the place where the aforementioned ideas were sparked, developed and ultimately they were launched at the Kosovo market of business technology.

The Center offers young Kosovo entrepreneurs modern

30

office premises, programming tools, databases, contacts, and ability to save the final product designs “in the cloud�, the reference of 21st century innovators to the way of saving their technology-based business files in servers around the globe. ICK offers much more than just well-equipped offices of the latest fashion. To 55 members of the 17 tenant teams are offered advices on how to run their businesses, logistics support, media coverage and what is more important, ICK has a crucial role in the development of team's business ideas, making them ready for the Kosovo and international market.

Innovation Grant Fund In order to provide financial assistance to its beneficiaries, Innovation Centre Kosovo signed on June 25, 2012 a grant contract with USAID Regional Competitiveness Initiative (RCI). Innovation Grant Fund was offered as a sub-grant from the USAID Regional Competitiveness Initiative (RCI).

USAID RCI provided a grant amounting to $ 75,000 to the Innovation Centre Kosovo (ICK) as a centre of excellence.

The Innovation Grant Fund was allocated to support the further development of businesses present in the incubator and also to contribute to the economic growth and job c r e a t i o n i n K o s o v o .

Thanks to the support of the ICK, 14 out of 17 teams have been registered as new businesses during their stay at the incubator.

AmCham Kosovo

Creative businesses “Innovation Centre Kosovo is a place which provides support to all the creative individuals and teams that have ideas that can be potentially developed in the Kosovo market and abroad”, says Uranik Begu Executive Director of Innovation Centre Kosovo. Begu says that while at ICK various businesses are receive specifically tailored technical assistance. “Some need guidance, others need to be advised on how to develop their business, but there are also businesses that need office premises, and we are more than happy to help them. We also offer virtual incubation to companies that are not physically part of our centre”, says Begu, adding that ICK is open to any individual or a team that wants to generate more jobs. The mission of ICK according to Begu is to create new jobs through the businesses it supports and train young people for technology jobs in the broader marketplace.

“ICK is a hub for connecting new ideas and technology with human and financial resources to create or expand commercially viable companies that can successfully fill the needs in the market, generating sales, trade, local productive capacity and skilled employment”, says Uranik Begu. Begu adds that as from January 2013, Innovation Centre Kosovo is associate member of the European Business Network (EBN).

Business Incubator When accepted in the ICK incubator teams are initially offered an office that can be used for their meetings to discuss about their business ideas, products and services. “Currently in our incubator we have 17 teams with which we are working in the development of their business ideas for Kosovo market and abroad always depending on the focus of each company”, says Safet Rama, Manager of ICK incubator.

Rama explains that during this period tenants at ICK receive assistance regarding the drafting of business plans, marketing plan, public relations, and their presence in the media, all of these advices are given to them free of charge.

Success stories During their eight-month stay at the Innovation Centre Kosovo Eduapps team was registered as a company and at the same time it also launched a product and graduated with success from the incubator. Eduapps managed to employ many young people and to be the first team that graduated since the establishment of ICK in June 2012. Eduapps entered the ICK incubator with 'Math4Kids' that is an application dedicated to learning math for kids of elementary schools. Founders of Eduapps also created 3 other companies: Appsix, Netsix and Graphsix that employ 24

people, and which are expected to employ another 47 people in the near future.

“We decided to apply for a place at the ICK incubator where we were able to meet more often, to have our own office space 24/7 and to work as a team, and at the same time to use quality services offered by ICK”, says Blerta Thaçi CEO of Eduapps. Math4Kids is Eduapps's first application and currently they are working in other applications such as Chemistry and ABC. Currently two other incubator teams 'Puntoria' and 'Butikon' have launched their products while 'Solaborate' team is expected to launch its product by the end of April.

Gaming and online business catalogue 'Puntoria' team has launched its card game Pishpirik that can be played online. “Pishpirik card game can be found on Facebook, all those that have Facebook accounts can access Pishpirik, they just need to search for it”, says Floriment Klinaku from 'Puntoria' team which is now registered as a company.

The following teams are currently being hosted

by ICK incubator: ION Coders, SmartSquared, Butikon, Puntoria, Aranet, Learn Albanian, and EDI - online training, Xiiik,Pintron, FindYourBook, Mjeku.net, ZagApps, SafeHouse, Ideal Technologies, and MikroBiz. Support for new businesses Innovation Centre Kosovo organizes several activities that aim to enable individuals in transforming their ideas into lucrative businesses and to penetrate not only in the Kosovo market but also abroad. Three editions of Startup WeekendPrishtina, 7 editions of Business Tuesday, AppCamp and 25 different and useful trainings until now have been organized by the Innovation Centre Kosovo. In a few words the centre is helping Kosovo entrepreneurs to become global player with an address in Kosovo. Among the most interesting trainings, according to Çelik Nimani – Training and Events manager at ICK, are internet marketing, iOS training, and android training where the main focus is the creation of applications for the two most popularplatforms.

“Trainings that were held and organized at ICK seek to enable individuals in the field of technology so they can be also part of the international market”, says Nimani while adding that to the candidates that attend trainings at ICK often are offered jobs by the leading Kosovo IT companies.

The management of Innovation Centre Kosovo (ICK) says that the centre is open not only for interested individuals and start-ups but also its keen to cooperate with larger companies that have a focus on technology and that want to work with ICK and its incubator tenants.

the new Business Horizon

31

Trade talks will strengthen our transatlantic partnership The Hon. William E. Kennard

Ambassador of the United States to the European Union The article was originally prepared for the American Chamber of Commerce to the EU

L

ast month, President Obama joined European Commission President Barroso and European Council President Van Rompuy in announcing their intention to launch talks on a comprehensive Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union. The transatlantic economy is already the world's largest as it accounts for one-third of total trade in goods and services and nearly half of global economic output. It is a success story with potential for significant further growth.

that may unnecessarily impede trade, while continuing to meet legitimate regulatory objectives, will also be an important element in the negotiations. The United States and the EU will also have the opportunity to develop rules and principles on emerging global issues of common concern, such as standards for state-owned enterprises and enhancing the competitiveness of small- and medium-sized enterprises. This would strengthen the rules-based trading system from which all economies benefit.

On 20 March, Acting United States Trade Representative Demetrios Marantis formally notified Congress of our intent to enter into TTIP negotiations with the EU. This notification starts a ninety-day consultation period with Congress and a public outreach process with stakeholders. At the same time, the European Council is debating the content of a negotiating mandate for the European Commission. We expect both processes to conclude in June and negotiations to begin in earnest early in the Summer.

As we engage in negotiations, our high ambitions must be accompanied by political decisiveness and constructive engagement with stakeholders. No one believes this will be easy. As Vice-President Biden has pointed out, the fact that we have not done this before is not because no one thought of it. It's because many of the issues that will be on the table when negotiations begin are difficult ones. Nevertheless, we all share a joint responsibility not to let this opportunity pass.

The decision to launch negotiations follows a year-long examination of options for increasing US-EU trade and investment by the High Level Working Group on Jobs and Growth (HLWG). After consulting closely with a broad range of public and private sector stakeholders, both sides concluded that an agreement that addresses a broad range of bilateral trade and investment policies, as well as global issues of common interest, could generate substantial economic benefits on both sides of the Atlantic. The plan to launch negotiations reflects the broadly shared conviction that transatlantic trade and investment can be an even stronger driver of mutual job creation, economic growth and competitiveness.

As the Final Report of the HLWG noted, an agreement between the United States and the EU, which already have substantially open economies, would need to break new ground to create additional bilateral market openings and establish new trade rules that are globally relevant. With the average US and EU tariffs already quite low, new and innovative approaches to reducing the adverse impact on transatlantic commerce of non-tariff barriers must be a significant focus of the negotiations.

Reducing costs associated with regulatory differences

32

The American Chamber of Commerce to the European Union (AmCham EU) has, for 50 years now, played a significant role in promoting the transatlantic economy.

AmCham EU's engagement on many of the most difficult and challenging issues has been invaluable by clarifying and articulating US business positions for policymakers on both sides of the Atlantic. Your role in providing timely information and sharing your perspective and analysis with AmChams throughout Europe underscores your members' involvement and desire to further the objectives of the transatlantic economy.

Since serving as the United States Ambassador to the EU the past three years, I have had the great pleasure of engaging first-hand with your membership and I applaud your efforts to bring together European and American business and political leaders. I have no doubt that you and your member companies will work effectively to make your voices heard as our governments on both sides of the Atlantic consult with stakeholders. I encourage your membership to continue to provide sound advice and constructive support at this historic time.

AmCham Kosovo

Legislative and policy highlights January - June 2013 Law No. 04/ L-139 on Enforcement Procedure The new law on Enforcement Procedure was approved by the assembly in late 2012, and ratified by the president on January 3, 2013. The new law regulates the work of private enforcement agents, defined as: “the natural person appointed by the Minister of Justice in accordance with the provisions of the present law, who in the performance of public authorizations entrusted to him/her as provided by the present law, decides on the actions arising from his/her competency in the enforcement of allowed enforcement, and undertakes enforcement actions”.

According to Article 3 of this law, Enforcement Authority and Decisions, these private enforcement agents shall be responsible for managing and deciding on enforcement procedures on the first instance, with the exception of cases when this law provides for the court to set and enforce the enforcement procedure. Otherwise, on the second instance, the decisions shall be made by the court.

Article 152, Compulsory Enforcement, and preceding articles, provide for the enforcement procedures in monetary disputes. Specifically, article 152 states that the enforcement will be made directly through debtor's bank account.

Establishment of the Working Group on Heavy Industry With the aim of improving the position of the heavy industry in Kosovo, the National Economic Development Council (NEDC) decided to establish the working group on Heavy Industry, whose task is to come up with specific proposals of policies that would empower the industrial output on one hand, and create a more attractive environment for industrial investment on the other. This group was officially established under the framework of the Ministry of Economic Development through Ministerial Decision No. 163, dated January 29, 2013. The working group which comprises of representatives of relevant ministries, AmCham and Kosovo Chamber of Commerce, started its work by establishing 5 sub-working groups with the aim of addressing specific

areas of concern for the industry, as follows: (1) Mines and Minerals, (2) Fiscal Issues, (3) Trade, (4) Alternative materials and waste, and (5) Trepça issues. Findings and the first recommendations of the working group will be discussed in the next meeting of NEDC. Draft Law on Amending the Law no.

03/L-163 on Mines and Minerals The Parliamentary Committee for Economic Development, Infrastructure, Trade and Industry has sent the Draft law on amending Law no. 03/L-163 on Mines and Minerals to Kosovo Assembly, after receiving feedback from business meetings and workshops with stakeholders. In addition, AmCham has also prepared its comments with regards to this draft law that emerged from meetings of the heavy industry cluster, which have been forwarded to the Committee.

The Draft law has been approved by the Kosovo Assembly during the last sessions.

Draft Law on Tobacco Control The new draft law on Tobacco Control was introduced in late 2012, due to difficulties faced by respective institutions in implementing certain provision of the previous law.

AmCham welcomed the initiative of creating a law that is more implementable in practice, while also giving its own proposals for specific provisions of the law. In this regard, on February 15, 2013, due to issues raised by members of the Trade and Supply Chains Task Force, AmCham organized a round table to discuss economic and commercial aspects of some of the provisions of this draft law, focusing on those that regulate the issue on banning the exposure of tobacco products. The new law on Tobacco Control will be voted on the assembly on the following days.

Draft Law on Amending And Supplementing Law No.04/L-101 on Pension Funds of Kosovo American Chamber of Commerce in Kosovo in cooperation with Society of Certified Accountants and Auditors of Ko s o v o , Ko s o v o C h a m b e r o f

Commerce and Kosovo Business Alliance last year reacted to Article 6 of t h e b a s i c l a w, C o l l e c t i o n o f Contributions to Finance Individual Savings Pensions, paragraph 12, which sets the obligatory amount to be paid by the self employed as pension contributions. The basic law did not set a maximum amount of obligatory pension contributions for selfemployed (individual businesses).

Based on the requests of upper mentioned organizations, the new draft law limits the maximum amount payable as pension contribution in a quarter to € 600 (six hundred euro) for self-employed.

The Draft law on Competition Protection According to the Explanatory Memorandum of draft law on Amending Law No. 03/L-229 on Competition Protection, this draft law determines the competences of the Kosovo Authority of Competition and Protection from illegal competition. In addition, the law defines the procedures for initiating and conducting investigations of illegal agreements in the form of cartels and the concentration of enterprises aiming the creation of dominant power and the abuse of this power. This draft law regulates group exceptions, responsibilities of the professional administration and punishments of responsible persons in the enterprise, if she/he is involved in serious violations or minor ones.

Preliminary List on Liberalization of Industrial Products in the Agreement for Free Trade with Turkey The American Chamber of Commerce in Kosovo has received the preliminary list of industrial products to be liberalized in the Free Trade Agreement with the Republic of Turkey. In the last meeting of Negotiating Groups for the Agreement on the free trade between Kosovo and Turkey, it was discussed

about initial positions regarding the industrial products. Until the next negotiating meeting, the parties have agreed to share the list of industrial products, the list of agriculture products for their protection.

the new Business Horizon

33

Law No. 04/L-159 on Economic Zones On February 14, 2013, Kosovo Assembly approved Law No. 04/L-159 on Economic Zones, which was ratified by the President of Kosovo Republic on March 4, 2013, and entered into force on March 17, 2013. This law aims the establishment of Economic Zones, free economic zones, the creation of the foundation for the development of a national plan for economic zones, the methods of using economic zones, the promotion of these zones, the drafting of a national plan for economic zones and the formation of the national council for economical zones. The Law on Economic Zones defines the rights and obligations of developers, users/operators and other entities that conduct activities related to economical areas, the type of activities performed in economical areas, the way of goods movement, and fiscal facilities provided within them. By enforcing this law, Law no. 03/L-129 for Economic Zones is no longer in power.

Draft Law on Amending the Law No.04/L078 on General Product Safety The Draft law on Amending the Law No. 04/L-078 on General Product Safety, determines general requirements which products should meet in order to ensure safety, the obligations of producers and distributors, the announcement about the products that are harmful to consumers, informing the public-RAPEX, the encouragement of voluntary measures, supervision of fulfilling general requirements and adoption of regulations by the relevant ministries ministers. The concept of this law is horizontal and it enables to incorporate other ministries of the Government as well in drafting bylaws for certain technical fields.

Draft Law on Special Excise Rates for Initial and Small Production of Alcoholic Products Manufactured in Kosovo The purpose of the draft Law on Special Excise Rates for Initial and Small Production of Alcoholic Products Manufactured in Kosovo is to stipulate the special rates of excise tax for small producers of alcoholic products, to establish a method of determination of quantities and strengths of alcoholic products. By entry into force of this law, the UNMIK Regulation 2006/8 for amendment of UNMIK Regulation 2005/32 over the Excise Code in Kosovo shall be abrogated. For enforcement of this law, the Minister of Finances shall issue a sublegal act.

34

Administrative Instruction no. 01-2013 on Renewable Energy Targets

paragraph are deleted, and paragraphs 4, 5, and 6 are conclusively eliminated.

The purpose of the Administrative Instruction No. 01/2013 on Renewable Energy Targets is to determine long-term and annual renewable energy targets.

Entry into force of this Administrative Instruction (from January 31, 2013) repeals the Administrative Instruction No. 6/2007 on Indicative Targets for Generation of Electrical and Thermal Energy from Renewable Energy and CoGeneration.

Law on Payment System no. 04/L-155

Draft Law on Petroleum and Petroleum Products Market in Kosovo Draft Law on Oil Trade and Petroleum Products in Kosovo was introduced in the Assembly on April 25 2013. The law determines the conditions for a safe and qualitative supply of petroleum and its products, market surveillance, and monitoring in accordance with European standards and directives. Further, it determines the basic conditions for establishing and maintaining compulsory stocks of petroleum products.

Law on Amending and Supplementing the Law No. 04/L-078 on General Product Safety On March 28 2013, the Law no. 04/L-078 on general product safety was adopted by the Assembly of Kosovo and promulgated by the Decree of the President of Republic of Kosovo on April 18, 2013. According to the reformulation made, this law is implemented on all products, regardless of the manner of (trading) sale, including electronic and distance sales. The provisions of this law will be implemented for products, whose general security is not regulated by a special act. Articles that have mostly undergone reformulations are: Article 2, Article 3, Article 4, Article 5, Article 8 and Article 9. After Article 8 of the Basic Law, new Article 8 A was added, with the aim of specifying the customs control of products entering the market of the Republic of Kosovo.

Law on Amending and Supplementing the Law no. 03/L-163 for Mines and Minerals Pursuant to Article 65 (1) of the Constitution of Kosovo Republic, the Kosovo Assembly adopted the Law on Amending the Law no. 03/L-163 for Mines and Minerals on March 28, 2013.

This law was promulgated by the President of the country on April 18 2013.

Within the changes in the law, Article 3 has mostly undergone changes, given that several subparagraphs of the first

Kosovo Assembly adopted the Law on Payment System, which in accordance with the Law no. 03/L-209 on the Central Bank of the Republic of Kosovo says that the Central Bank is the only authority responsible for the regulation and supervision of payment systems of the Republic of Kosovo, with the aim of ensuring security, stability and its efficiency.

In order to regulate the payment system, this law sets the rules according to which payment institutions are authorized to provide payment services and licensed operators of payment systems, clearing, and settlement of securities by the Central Bank. The law also specifies requirements and standards, and the means by which such services can be offered.

Law on Tobacco Control 04/L-156 With the aim of protecting public health from social, economic, and environmental consequences of tobacco consumption and exposure to tobacco smoke, the Kosovo Assembly adopted the Law on tobacco control, no. 04/L-156 on April 4 2013, which was promulgated by the President of the country on April 24, 2013.

This Law determines measures for the prevention and restriction of the use of tobacco products and ingredients, prevention of the harmful effects of tobacco use and supervision of law enforcement.

AmCham gave its recommendations on certain provisions of this law. In this regard, on February 15, 2013, after the raised issues in the Task Force on Trade, AmCham organized a round table to discuss the economic and commercial aspects of some provisions of the law, focusing on those that regulate the banning of tobacco products exposure at the sale points. This law was approved despite the requirements of the business community represented by the American Chamber of Administrative Instruction on the Structure and Content of Annual Financial Reporting Minister of Finance issued the Administrative Guide on the Structure and Content of Annual Financial Reporting. This guidance intends to define the structure and content of annual financial reports in accordance with Article 3 and Article 9 paragraph 1 of the Law on Accounting, Financial Reporting and Auditing.

Commercial companies from paragraph 1 of Article 9 of the Law on Accounting, Auditing and Financial Reporting, are obliged to submit annual financial reports according to the structure and contents provided in this guide.

AmCham Kosovo

Law on Amending and Supplementing the Law no. 03/L-181 for Market Inspectorate and Supervision Pursuant to Article 65 (1) of the Constitution of the Republic of Kosovo, the Kosovo Assembly adopted the Law on Amendments to the Law no. 03/L-181 for Inspection and Supervision of Market on April 11, 2013. This law was promulgated by the Decree of the President of the Republic of Kosovo on April 29, 2013. According to Article 1 of this law, the basic law title will change to "Law on Market Inspection." The law regulates the inspection of implementation of laws and other acts in the field of trade and domestic services and market supervision, duties and responsibilities of inspectors during the process of supervision and other issues relevant to the market inspectorate.

Tax Decision Kosovo Financial Reporting Council in compliance with the Law No. 04/L-014 on Accounting, Financial Reporting and Auditing has taken a decision for determining the administrative fees which shall be paid upon submission of complaints and license request. All fees established by this decision will be paid on the account of the Kosovo's Consolidated Budget.

Law on Office Work Administration No.04/L-184

Republic of Kosovo, aiming to keep the debt at sustainable levels through consistency between budget balance, debt levels, and mid-term economic growth. Most of the alterations include reformulations on the definitions and terms used.

Draft Law on Trade of Strategic Goods The Draft Law on Trading of Strategic Goods was presented to the Assembly of Kosovo, on May 30th, 2013. This law aims to regulate the export, import, transit, trans-loading, re-export and retransfer of strategic goods, provision of related services, control, supervision, rights and obligations of stakeholders in business activities of the above mentioned fields. The aim of this Law is to enhance the national security and foreign policy interests of the Republic of Kosovo, towards meeting the obligations and international agreements concerning non-proliferation of mass destruction weapons and other strategic goods used for military purposes, and to contribute to regional and international efforts to regulate the strategic goods trading. This Law should restrict or ban the export, import, transit, trans-loading and re-export of strategic goods that enter, leave or pass through the territory of the Republic of Kosovo, including reexport outside the territory, re-transfer, and provision of related services and dealing with any goods subject to this Law.

Assembly of the Republic of Kosovo based on Article 65(1) of the Constitution of the Republic of Kosovo, has approved the Law on Office Work Administration.

The purpose of this Law is to administer office work and official documents from the initial recording to their final processing, within the institutions of the Republic of Kosovo and the Public Owned Enterprises. Matters specified in this Law include the unit for the administration of documents and its responsibilities, keeping protocol evidence on acts, archiving and destroying official documents, physical and electronic storage of archive material, official communication and so forth.

Financial Rule NO.03/2013/MF on Reporting of Arrears by Budget Organizations

Draft Law on Amending and Supplementing the Law No. 03/L-048 on Public Finance Management and Responsibilities, as amended by the Law No. 03/L-221 and Law No. 04/L-116

The aim of this financial rule is to establish the financial guidelines and rules for consolidated expenditure of public funds by Budget Institutions.

Rules apply to all budget institutions which receive funds/shares from the budget of the Republic of Kosovo. This financial rule introduces the essential components of the expenditure of public funds, including: appropriation,

The main objective of this Draft Law is to establish the principles of fiscal and legal framework policies for the drafting and implementation of the Budget of the

This Financial Rule establishes the requirements on reporting liabilities for budget institutions. Since the Ministry of Finance reports financial information for many and different users, including international financial institutions, the regular liability reporting of the Government of Kosovo is also required.

This document specifies the liabilities, committed funds, reporting periods, and reporting forms.

Financial Rule No. 01/2013/MF – Expenditure of Public Funds

allocation, obligations, procurement, liabilities, and payments. Each of these components is elaborated in details in the official document issued by the Ministry of Finance.

Administrative Instruction on Determining the Procedures and Requirements for Registration of Pledges, Taxes and Other Services Performed by the Pledge Registry Sector The aim of this Administrative Instruction is to establish the procedures and requirements for registration of pledges, tax levels and provision of all the services offered by the Pledge Registry Sector.

Some of the subjects specified by this Administrative Instruction include the deposits of the user accounts, registration requests and amendments to registrations, information for the pledger and the pledgee and so forth.

Administrative Instruction No. 07/2013 Amending the Administrative Instruction No. 04/2012 for Determining the Conditions and Criteria for Tobacco Trade Related Subjects The Ministry of Trade and Industry has issued the Administrative Instruction No. 07/2013 on June 20, 2013, amending the Administrative Instruction No. 04/2012 for Determining the Conditions and Criteria for Tobacco Trade Related Subjects. The instruction specifies and redefines several issues, among them licensing of companies working in this s e c t o r, i n c l u d i n g p r o c e d u r e s , regulations, licensing fees and licensing renewal fees.

Free Trade Agreement with the Republic of Turkey During the last quarter, the Ministry of Trade and Industry sent lists of products that are foreseen to be included in the Free Trade Agreement with Turkey to the business community for comments.

AmCham has sent its comments that were received from member companies, by maintaining the stance that the lists should include only those products that serve as raw materials in manufacturing, and products which are not produced and do not have potential for their production in Kosovo. In the following months the negotiation teams of the agreement of the two countries are expected to finalize the list of industrial and agricultural products which will be liberalized by the FTA. It is expected that the liberalization of these products will be made at a rate of 1 percent every year.

the new Business Horizon

35

Focus on AmCham Patron Members

A World of Luxury Swiss Diamond Hotel

E

nvisioned in imperial style with an area of more than 23,000 square meters, Swiss Diamond Hotel Prishtina offers you a world of sophisticated beauty and elegance. Nothing has been left to random at this truly finest deluxe Hotel.

Enjoying an outstanding location right in the heart of the city, within walking distance from all main business offices next to the Government office and National Theater, Swiss Diamond Hotel Prishtina invites you into a luxurious and refined environment and promises you a home away from home. Swiss Diamond Hotel Prishtina offers luxurious and comfortable accommodations, Fine Dining Restaurant Iliria, The Piano Lounge Bar, Venus Wellness Health & Spa Center, and complimentary Business Center for its guests and conference center with state-of-the-art facilities for events of all sizes.

32

Managers and Staff, paying special attention to all the guests, anticipate needs of its guests and ensure that each guest get the most out of their stay. The rich handmade furniture, marble design Venetian crystal chandeliers and mirrors, the painting's frames, authenticate the excellence of superiority and valence.

Swiss Diamond Hotel offers a diverse dining experience through its 5 star Iliria restaurant with an elegant design and a summer terrace, serving a variety of dishes ranging from International and Mediterranean cuisine. The menu at all the restaurants is carefully designed by our master chefs such that it can offer the best dining experience to our guests. Its lounge and cocktail bar, with a cozy yet elegant atmosphere, decorated in imperial modern style, elegant setting and a chair by the fireplace in winter offering a rare collection of wines, cognacs and cocktails makes it the pace to be seen in Prishtina.

AmCham Kosovo

Comfortable and stylish accommodation The Swiss Diamond Hotel Prishtina features 140 elegantly appointed guest rooms and suites that offer magnificent city views and impeccable 5 stars services.

Diamond Club Executive Floor offer majestic views of the city of Prishtina and surroundings. You can experience life's little luxuries, higher standard of accommodation, personalized service and enjoy special privileges and amenities at our Diamond Business Club located at the first floor which includes private Concierge services, Meeting Room, Dining Area, and Buffet with exquisite hors d'oeuvres, created especially by our Executive Chef. Spread on the whole 7th floor offering Deluxe & Premium rooms & Penthouse suites accommodation for the more discerning traveler. Diamond Club guests will receive private check-in & check-out at the executive floor, Beauty and Beyond Swiss Diamond Hotel believes in offering guest experiences that go beyond the expected. The first at this caliber in Kosovo, decorated in ancient roman style with more than 2500 square meters, Venus - Wellness health & SPA center is an oasis of tranquility offering a unique and luxurious ambient to relax your body and mind. Our holistic approach provide seamless beauty care, enabling you to draw on the international experience of our Spa therapists, hairstylists, dermatologists, cardiologists and dietary consultants.

Our spa facilities are available whether you want to relax after a tiring shopping day or have a fitness workout after a long day at work. Our guests can enjoy complimentary access to our wellness center consisting of thermal indoor swimming pool, jacuzzi, fitness center, five different type of saunas including steam bath, ice cave and Turkish bath. Fitness Center, health club where fitness meets medical know-how.

Here certified health and fitness staff using state-of-theart equipment, strive to help members become fit and stay healthy for a lifetime. Promoting exercise as

medicine, members will learn early detection and prevention methods along with ways to reduce risk factors by maintaining healthy lifestyles Venus offers an extensive menu of rejuvenating and restoring body and skin treatments including massage, facials, manicures, pedicures, hydrotherapy, fangotherapy, body scrubs, wraps, soaks and hot stone treatments. Everyone wants our skin to be healthy, in good shape, without folds. In today's active, outdoor lifestyle, it's not just time that is aging us anymore.

Using safe, state of the art compounds placed artistically under the skin surface, we are able to achieve impressive results. These special beauty treatments are also available for guests not staying at the hotel. Mesolift, anti-cellulite mesotherapy, hair loss mesotherapy, microdermabrasion, Botox, and fillers are just some of them.

Our beauty salon offers exclusive accommodation for hair care, make-up, and nail service. Whether you are coming in to the salon for a trim or a make-over, you will leave looking and feeling beautiful.

With Venus Wellness Health & Spa center we have created the perfect getaway spot for relaxation.

Tel: +381 (0) 38 / 220 - 000 Fax: +381 (0) 38 / 250 - 000 Email: info@sdhprishtina.com www.sdhprishtina.com

the new Business Horizon

33