Introduction – Legislative Structure of Bosnia & Herzegovina

Bosnia and Herzegovina (BiH) has a rather complicated political system and institutional structure. The system’s four levels of government (one state, two entities, ten cantons and one district) have a significant impact on the legal system, requiring familiarity not only with multiple constitutions, laws, and regulations but also with the varying practices of courts and administrative bodies across the country.

Under the provisions of the Dayton Peace Agreement, the entities have competencies in areas such as taxation, except indirect taxation, business development, and general legislation.

Foreign investment in Bosnia and Herzegovina and its entities is governed by the Law on the Policy of Foreign Direct Investment of Bosnia and Herzegovina, the Law on Foreign Investment of RS and the Law on Foreign Investment of FBH and a set of entity laws and by-laws related to foreign investments, registration of business entities, labour and employment, taxes, customs, free zones and other areas related to the conditions of business.

The Law on the Policy of Foreign Direct Investment of Bosnia and Herzegovina regulates the basic policies and principles of participation of foreign investors in the economy of Bosnia and Herzegovina. The Law on the Policy of Foreign Direct Investment ensures national treatment of foreign investors – ie, foreign investors have the same rights and obligations as defined for domestic investors. Furthermore, the rights and benefits granted to foreign investors, as well as the obligations imposed by this law, cannot be revoked or overridden by subsequently enacted laws and regulations. If any subsequently passed laws and regulations are more favourable for the foreign investors, the investors have the right to choose under which regime the respective foreign investment is to be governed.

In general, the purpose of legislation in this area is to establish simple, transparent, predictable, and stable foreign investment policy, and to protect the rights and interests of the investors.

Trends in Direct Investments

Direct investment flows in 2023 were BAM378,000,000 higher than in the previous year, 2022, when they amounted to BAM1,520,000,000. According to the latest official data, foreign direct investments (FDI) in Bosnia and Herzegovina in the first nine months of last year, 2024, amounted to BAM1,477.400,000 (EUR755,400,000), which is 3.4% less compared to the same period in 2023. While noting that preliminary data is subject to subsequent revisions, foreign investments from January to September 2024 decreased by 3.4% compared to the same period the previous year (according to revised data, FDI from January to September 2023 amounted to BAM1,528,000,000). With a slight decrease, it can be concluded that the amount in the first three quarters of 2024 is close to that of the previous year.

In the first nine months of 2024, the countries with the highest registered capital amounts in Bosnia and Herzegovina were Croatia (BAM252,500,000), Germany (BAM240,200,000), and Slovenia (BAM193,400,000), according to the Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA). Significant capital increases (over BAM100,000,000) were also recorded from Austria (BAM178,800,000), the United Kingdom (BAM135,600,000), Serbia (BAM110,800,000), and the Netherlands (BAM105,500,000). The sectors with the highest registered FDI in Bosnia and Herzegovina in the first nine months of 2024 were financial services, excluding insurance and pension funds (BAM388,700,000), followed by retail trade, excluding motor vehicles and motorcycles (BAM218,900,000), electricity, gas, steam, and air conditioning supply (BAM139,500,000), and wholesale trade, excluding motor vehicles and motorcycles (BAM132,600,000).

From 2007 to 2023, foreign investors withdrew BAM17,000,000,000 from Bosnia and Herzegovina through profit repatriation.

In the following sections we will outline recent notable developments in various sectors of Bosnia and Herzegovina’s economy.

Automotive Industry

The confidence of foreign investors in investing in Bosnia and Herzegovina is slowly returning. One of the key indicators is the newly built manufacturing plants and business facilities. In the municipality of Laktaši, the company Mahle Electric Drives Bosnia has opened a modern production facility, positioning Bosnia and Herzegovina as a relevant manufacturer of components for the automotive sector with its investment.

The company GS-RAMA has opened a new production facility in Prozor-Rama. In Blažuj, the most advanced and largest facility of the Porsche Holding Group in Europe and the world has been opened, covering more than five thousand square metres.

Porsche BH from Sarajevo led the market with the highest revenue of BAM286,204,345 and a total profit of BAM12,088,726, followed by Autolijanović and Auto Centar Tomić from Mostar, and STARline from Sarajevo.

Automobile manufacturers are increasingly shifting towards hybrid and electric vehicles, with a growing number of such vehicles on European roads. This trend is also becoming noticeable in Bosnia and Herzegovina, though the numbers still remain relatively low. As the demand for sustainable transportation continues to rise, there are significant investment opportunities in the country, particularly in the production of electric vehicle components, the establishment of charging infrastructure, and the development of services for the maintenance and repair of electric vehicles.

Food and Beverage

In October 2024, the US-based fast-food chain Taco Bell opened its first restaurant in Bosnia and Herzegovina in Sarajevo, Ilidža, marking a significant milestone in Taco Bell’s international expansion and its first appearance in the Balkans. Elsewhere in Southeast Europe, Taco Bell is only present in Romania. In December 2024, Taco Bell opened another restaurant in the capital area, within the Sarajevo City Center shopping mall. The arrival of Taco Bell in Sarajevo is a key step in its international growth trajectory.

KFC opened its first location in Sarajevo in 2022 and a restaurant, followed by other branches in cities such as Banja Luka and Mostar. This marked the company’s initial expansion into the Bosnian market, joining its broader strategy in the Balkans.

Burger King made its debut in Bosnia and Herzegovina in 2023 with a restaurant opening in Sarajevo, located in the Sarajevo City Center shopping mall.

These openings highlight the increasing interest of major global food and beverage chains in Bosnia and Herzegovina, driven by rising consumer demand for international brands and a dynamic retail environment.

Fast-Moving Consumer Goods (FMCG)

The company Lidl BH from Germany has increased its share capital to BAM421,481,365.00 in February 2025, placing it among the largest companies in Bosnia and Herzegovina by capital, even though it has not yet opened any stores in the country. The company is progressing well with preparations to enter the market, with several facilities under construction, and hiring is already in full swing. The opening of its first stores is anticipated in 2026 or 2027. Lidl is also investing BAM100,000,000 in a large distribution centre in Lepenica, near Sarajevo, to support its supply chain for FMCG and other retail products. Alongside this, multiple retail facilities are being developed in several cities.

In addition, other major FMCG brands are also expected to explore investment opportunities in the coming years. Companies like Aldi, which focus on affordable grocery and household products, could potentially enter the market as consumer demand for quality goods at competitive prices grows. Other key FMCG players such as Kaufland are also likely to consider expansion into Bosnia and Herzegovina, given the rising demand for diverse consumer goods.

Healthcare

ASA Hospital, the first private general hospital in Bosnia and Herzegovina, officially opened its doors to patients in April 2024. Sarajevo, and the entire country, has gained a modern healthcare institution that spans 36,000 square metres, offering 180 hospital beds across seven floors, 10 operating rooms, 12 specialised departments, as well as numerous sections and clinics. Patients now have access to nearly all medical services, including modern radiological diagnostics, a laboratory, emergency care, a maternity ward, as well as routine and complex surgeries.

This presents a landmark event in the healthcare sector, in contrast to the previous dominance of the government sector, where private healthcare providers were limited to private clinics and practices. The investment amounts to approximately BAM250,000,000 and has provided a state-of-the-art alternative to the existing healthcare system, which underscores the commitment to elevating healthcare standards in Bosnia and Herzegovina and to the recruitment of medical talent. The hospital’s opening not only fills a critical need for modern healthcare infrastructure but also reflects the long-standing mission of its founders to invest in the country’s human and societal development.

Medikol Salinea introduced the most advanced oncology diagnostics and radiotherapy in the Tuzla Canton. After three years of planning and constructing the centre, on 26 September 2024, a contract was signed for the purchase of two state-of-the-art radiation machines for oncology patients, the “TrueBeam” linear accelerators from the American manufacturer Varian. These radiation machines will be installed this year, and they will enable the application of all radiotherapy techniques, including radiosurgery. These radiation techniques have never before been available to oncology patients in Tuzla Canton (TK) and beyond, and they represent the gold standard in radiotherapy.

In addition to the most advanced radiation machines, a new “Vereos” PET/CT device from Philips, primarily used for the precise diagnosis of cancer, metastases, and the assessment of therapy response in oncology patients, will also be installed in the centre. PET/CT diagnostics have also never before been available to patients in Tuzla Canton. The Medikol Polyclinic from Croatia is a centre of excellence in Philips PET/CT diagnostics and brings quality, knowledge, and 17 years of experience in modern radiology, PET/CT diagnostics, and radiotherapy to the Medikol Salinea healthcare facility. The Medikol Salinea healthcare facility will be located in Živinice.

In the field of hematology and oncology, citizens of Bosnia and Herzegovina now have access to new immunotherapy treatments, as well as targeted therapy drugs and checkpoint inhibitors: Nivolumab, manufactured by Bristol Myers Squibb (USA); Brigatinib, manufactured by Takeda Pharmaceuticals (Japan); and Asciminib, manufactured by Novartis (Switzerland). Additionally, investing in training programmes for healthcare professionals to properly administer these new treatments could further enhance the country’s healthcare capacity and attract international medical collaborations.

Industrial Machinery and Equipment

The defence industry in Bosnia and Herzegovina is perhaps the only sector of the economy that has drastically increased exports in 2024 and achieved success. In the first ten months of this year, arms exports from Bosnia and Herzegovina amounted to BAM292,573,958, compared to BAM190,785,069 during the same period last year. This represents an increase of more than BAM100,000,000 in value in arms exports over the course of one year.

According to data from the Indirect Taxation Authority of Bosnia and Herzegovina, the most exported items were bombs, grenades, torpedoes, mines, rockets, and similar military munitions, totalling BAM262,660,799. Military weapons, excluding revolvers and pistols, worth BAM20,750,444 were exported, while parts and accessories for products worth around BAM9,000,000 were exported. On the other hand, weapons worth BAM28,496,234 were imported, with the majority being bombs, grenades, torpedoes, mines, rockets, and similar military munitions.

The largest portion of exports went to the United States, valued at BAM71,912,170, followed by Saudi Arabia with BAM42,515,488, and the Czech Republic with BAM35,689,347. In the region, the largest amount of arms was exported to Serbia, totalling BAM20,757,916.

The Austrian company ASTA Energy Transmission Components GmbH, through its subsidiary ASTA Bosnia d.o.o., is investing in production in the city of Cazin. This company specialises in manufacturing coils for transformers, generators, and various types of motors, and collaborates with leading energy companies. They have already initiated partial production in a rented facility near the Ratkovac Business Zone, with plans to expand their operations for the automotive industry.

The investment, totalling BAM23,000,000, involves constructing a 50,000 m² production facility, including a 20,000 m² administrative area. This expansion is expected to create up to 200 jobs over the next three to five years.

The defence industry is currently a key driver in the country’s economic development. Demand for its products has surged, largely due to the ongoing war in Ukraine, while many other industries in the European market are experiencing a decline.

Information and Communications Technology (ICT)

The ICT sector in Bosnia and Herzegovina is experiencing significant growth, particularly in software development, IT outsourcing, and digital transformation services. The country has become a regional hub for outsourcing, with highly skilled IT professionals offering competitive services at lower costs compared to Western Europe. Foreign investors, especially from the EU and the USA, are increasingly targeting local tech firms for acquisition or strategic partnerships.

An Actis-led consortium acquired a portfolio of approximately 1,800 macro towers from Telekom Srbija, with around 700 towers located in Bosnia and Herzegovina. This marks a significant investment in digital infrastructure aimed at supporting the roll-out of new telecommunications technologies, including 5G.

The entity of Republika Srpska signed a EUR29,000,000 contract with China’s ELINC for digital security software, emphasising the region’s focus on enhancing its cybersecurity capabilities.

ABB, a Swiss company, has agreed to acquire a majority stake in Meshmind, a Bosnian software service provider. This move aims to strengthen ABB’s research and development in areas like AI and Industrial IoT.

The Government of the Federation of Bosnia and Herzegovina has launched an initiative to improve the digitalisation of the educational system, which includes the introduction of new technologies in classrooms and training for teaching staff. This initiative could significantly impact the development of future generations in the ICT sector.

Retail

TEMU, an international online marketplace known for its extensive selection of affordable products, recently expanded into the Bosnian market in September 2024, highlighting significant shifts in the retail sector, driven by a growing e-commerce trend in Bosnia and Herzegovina.

The popularity of TEMU and similar platforms shows how retail is increasingly shaped by the convenience and affordability of online shopping, which pressures traditional stores to adopt e-commerce models to stay competitive.

Shein, a global leader in online fast fashion retail, is available to customers in Bosnia and Herzegovina as of January 2025. This popular platform marks a significant step in the expansion of international brands into the Bosnian market, bringing new energy and challenges to the domestic e-commerce sector.

With the entry of Lidl into the BiH market and the intensification of highway construction, questions have once again arisen about when the Swedish giant company IKEA will open its stores in BiH. Although IKEA has not yet entered the BiH market, the company is expected to consider expanding into the country in the coming years.

Technology

In the 2024 local elections in Bosnia and Herzegovina, voters at 458 polling stations across 24 electoral units encountered new voting technological solutions. These innovations included biometric voter identification through fingerprint verification, as well as authentication and transmission of results. Optical scanners and automated ballot counting were also introduced, marking a significant advancement in the use of technology for voter authentication and the election process. This represents a major technological milestone for Bosnia and Herzegovina in 2024, enhancing both the security and efficiency of the electoral system.

Bosnia and Herzegovina is currently in the early stages of implementing the 5G network. The Regulatory Agency for Communications (RAK) is responsible for issuing licences for the provision of 5G services, and the timeline and costs necessary for launching the bidding process are currently being assessed. In 2023, BH Telecom successfully carried out trial launches of the 5G network in several city centres, demonstrating its technical readiness for this new generation of mobile internet.

Although these tests have shown promising results, it will take some time before the 5G network is widely available throughout Bosnia and Herzegovina. This project could attract investments from international telecommunications companies.

Telecommunications and Media

Two major telecom operators, BH Telecom and HT Mostar, are still majority owned by the state. Discussions about privatisation opportunities continue,  with interest focused on attracting strategic or PE investors capable of finalising a deal. BH Telecom recorded a significant gross profit increase of 37% in the first quarter of 2024. 

In January 2025, BH Telecom officially submitted a request to the Competition Council of Bosnia and Herzegovina for the acquisition of Telemach. This is a broader acquisition package, as BH Telecom will acquire not only Telemach in Bosnia and Herzegovina but also Telemach in Montenegro and North Macedonia. The transaction will also be reviewed by the relevant competition authority in Montenegro. This strategic move aims to strengthen BH Telecom’s leadership position in the telecommunications market of Bosnia and Herzegovina and marks a pivotal moment for both BH Telecom and Telemach, promising to transform the telecommunications landscape in Bosnia and Herzegovina, Montenegro and North Macedonia.

On the other hand, in 2023 Telekom Srpske was declared as the company with the highest profit in Bosnia and Herzegovina, and it has long been a pillar of the economy of that entity. It is also regarded as one of the best-implemented privatisations and the best foreign investment from Serbia. Last year, Telekom Srpske achieved a net profit of BAM332,390,000, an increase of BAM250,000,000, or 304% compared to the previous year.

Textile

The export value of Bosnia and Herzegovina’s textile, clothing, leather, and footwear industry reached nearly BAM1,865,000,000 in 2023, representing an increase of approximately BAM31,000,000 compared to the previous year, according to data from the Foreign Trade Chamber of BiH (VTKBiH).

Progress has been made in modernising production units and introducing new technologies, with the industry’s goal of becoming a recognisable part of the global market. Bosnia and Herzegovina has an experienced and educated workforce with academic knowledge and practical experience. The proximity to Western and Eastern European markets is Bosnia and Herzegovina’s main advantage.

In 2024, the globally recognised fashion brand Mango made a return to Bosnia and Herzegovina, reopening stores in key locations. This re-entry aligns with broader retail developments, as consumers seek more diverse, globally recognised brands to satisfy their demand.

The recent confirmation that H&M will soon open a store in Sarajevo – following successful launches in Banja Luka and Tuzla – further solidifies this trend. The arrival of globally recognised brands not only enhances market competitiveness but also drives improvements in retail infrastructure, supply chains, and consumer expectations.

Tourism

The tourism sector in Bosnia and Herzegovina is experiencing a resurgence, with investors keen on acquiring assets in the hospitality industry, particularly in established tourist destinations in Bosnia and Herzegovina. Hotels, resorts, and vacation properties are in demand, as investors look to capitalise on the country’s growing reputation as a travel destination. Adventure tourism and eco-tourism companies are also attracting interest, particularly from investors focused on sustainable tourism and niche markets like hiking, rafting, and cultural tours.

The boost in tourism is also facilitated by an expanding network of low-budget flights, which is particularly strong in Sarajevo. Ryanair and Wizz Air are receiving subsidies for operating from Sarajevo and they are drawing more visitors, especially from Western Europe. At the beginning of 2025, Ryanair introduced new destinations from Sarajevo, set to become active in April this year. The five new summer routes include Girona, Paris, Düsseldorf, Karlsruhe/Baden, and Stockholm. Since the country is becoming more accessible to international travellers, especially from Western Europe, this increased air connectivity presents opportunities for investment in tourism infrastructure, such as hotels and transportation services, to accommodate the rising number of visitors.

Transportation and Logistics

In 2024, Sarajevo marked a major advancement in its public transportation system with the introduction of a new tramline and the arrival of brand-new TANGO NF3 trams, built by the Swiss company Stadler. These next-generation trams feature state-of-the-art technology, adhering to European standards for quality, comfort, and safety. The low-floor trams, which can carry up to 180 passengers (including 79 seated), are equipped with modern amenities such as air conditioning, WiFi, USB ports, and video surveillance to ensure passenger safety. Notably, these trams can reach speeds of up to 70 km/h, improving overall transit efficiency in the city.

Kanton Sarajevo has also launched an app which tracks public transportation vehicles in Kanton Sarajevo and provides passengers with easier access to public transport services.

Sarajevo Airport is preparing for significant expansion to accommodate growing passenger traffic, with plans to extend the runway to 3,010 metres and build rapid-exit taxiways, a new fire department building, and a solar power plant. The airport is also considering constructing a new terminal with a capacity of up to 2.5 million passengers, expandable to five million. To finance these projects, a hybrid concession model is proposed, which would allow private investment while maintaining public ownership and control. The airport’s long-term development strategy aims to enhance both infrastructure and operational efficiency.