Corruption in Bosnia and Herzegovina hurts the business climate and deters both local and foreign investment, officials say.
By Ana Lovakovic for Southeast European Times in Sarajevo -- 04/12/13
Many businesses paid bribes to police officers in BiH, according to the UN report. [AFP]
A recent report from the UN Office on Drugs and Crime highlights corruption as one of the major obstacles to doing business in Bosnia and Herzegovina (BiH).
The direct result is less investment because potential investors have a difficult time navigating the complex system of state, entity, cantonal and municipal administrations to obtain registration and licensing, the report said.
BiH officials have recognised that corruption is a significant issue.
Sead Lisak, director of the Agency for Prevention of Corruption and Co-ordination in the Fight Against Corruption in BiH, said there is a need for urgent action. It is necessary for all segments of society to be active in anti-corruption efforts in order to make the country more attractive for investment and economic development, he said.
"The lack of prosecution of corruption cases leads to a lack of confidence in the judiciary and in this field a lot of work needs to done. Better evidence on the extent and nature of corruption and crime in Bosnia and Herzegovina is fundamental to designing better strategies and targeted measures to tackle corruption," Lisak told SETimes.
To start a business in BiH, applicants must pass through 14 levels of administration and obtain 17 permits. Due to its complexity, the process is particularly vulnerable to corruption. According to the report, roughly 10 percent of businesses that had contact with a public official or a civil servant paid a bribe over the past year, while established companies paid bribes an average of seven times a year.
"The public officials with the highest risk of bribery in interactions with businesses are health authorities, police officers, customs officers and judges/prosecutors," the report said.
"This is the reality of doing business in BiH," Tomislav Grizelj, a businessman from Sarajevo, told SETimes. "It is difficult to stay on your feet. We are facing a systematic problem that has to be solved at the government level."
Grizelj, who owns consulting, building and trade companies in Austria and Croatia, as well as one in BiH, is among the few businesses that survived the last 18 years of transitional economy in BiH. He told SETimes that bribery is the only way to speed things up.
"I did not give money, but I was doing a 'favour for a favour' to speed up some administration," Grizelj said.
The Council of Foreign Investors, which employs more than 12,000 people, points to the difficulties in starting up businesses and recommends improving the business environment.
"Corruption increases the cost of doing business. BiH should adopt a policy of zero tolerance for corruption and provide on-going resources for investigation, criminal prosecution and conviction of corrupt officials at all levels who are trying to take bribes from businessmen," Branislav Muidža, council president, told SETimes.
Renzo Daviddi, the deputy head of the EU Delegation in BiH, said the country presents a very difficult atmosphere for businesses. However, he said, many things can be done to improve the business environment. Regulation is the way to solve most of the problems, he added.
"The EU recognises corruption to be a serious challenge and an obstacle to democratic and economic development of a country. We think it is high time that BiH recognises the extent to which corruption harms the functioning of institutions and the economy and makes the fight against corruption one of its utmost priorities at all levels of government," Renzo said during the presentation of the UN report in Sarajevo.
How can officials in BiH work to improve the country's anti-corruption efforts? Tell us in the comments.