Montenegro: Higher imports than exports
Montenegro imports significantly more from the region than it manages to sell its products to neighboring countries, and this year the most important Montenegrin product is electricity. Imports from Serbia for the period January-July this year were worth 377 million euros, while exports were worth 106 million, of which 39,4 million related to electricity. Montenegro exported 54 million euros worth of products to Bosnia and Herzegovina, of which 44 million were electricity, and 100 million worth of products were imported from this country.
Former manufacturing giants have been destroyed in Montenegro over the past decades, so the remnants of domestic production have little to offer to foreign markets, and any interstate and regional activities can hardly affect the growth of Montenegrin exports.
After electricity, the most important products exported to BiH are meat products of 1,27 million, animal skins of 1,06 million, wine 896 thousand, beer 714 thousand, watermelons 698 thousand...
There are scraps and steel products for 790 thousand, but also some new products such as paper labels which were sold in BiH for 528 thousand, pharmaceutical products for 407 thousand... Montenegro used to sell significant amounts of agricultural products through the former Agrokombinat in BiH, and even now there are traces of it, so potatoes were exported to this country for 12 thousand euros, and cabbage for ten thousand.
One part of Montenegro's exports to BiH refers to re-exports, that is, the export of those products that were not produced in Montenegro but were imported into it and later transported to this neighboring country. Thus, Montenegro officially exported to BiH 671 thousand valuable machines, sugar for 420 thousand, vehicles for 142 thousand, televisions for 45 thousand, rubber for 21 thousand, pneumatic tires for 16,7 thousand...
The situation is similar with exports to Serbia. After electricity, which accounts for almost 40 percent of exports, sales of pharmaceutical products for 22 million, meat and meat products for 9,8 million, coal for 4,9 million, wood and wood products for 3,7 million, ore for 2,5 million, aluminum for 2,4 million, wine for 2,05 million, iron products for 1,3 million... Among the export products are paper labels for 925 thousand euros, stone products for 850 thousand, explosives for 832 thousand ... but also chocolates for 473 thousand euros.
Montenegro "exports" electric machines to Serbia worth 2,05 million euros, other machines for 1,15 million, vehicles for 1,87 million euros...
All these data indicate that the commodity scale, i.e. the export of Montenegro, depends more on the rain, which would increase the production of electricity, than on any measures and incentives of the state or regional initiatives to improve trade, because all domestic products and the remaining well-known brands of Montenegro I can count them on the fingers of one hand.
Serbia: Surplus in mutual business
Serbia mostly exports oil and oil derivatives and similar products to Bosnia and Herzegovina (BiH) in the value of more than 2021 million dollars in 259, and almost 2022 million dollars in 287. Behind that, on the list by value are the iron and steel that Serbia exported to BiH in 2021 in the value of about 153 million dollars, while in 2022 the export amounted to more than 187 million dollars. In terms of the value of exports from Serbia to Bosnia and Herzegovina, in third place are cereals and cereal-based products, which were exported in the value of 120 million dollars in 2021, while in 2022 this export was more than 165 million dollars. As for meat and meat products, in 2021, Serbia exported these products to BiH in the value of about 30 million dollars, and in 2022, slightly less, that is, over 29 million dollars.
What Serbia imports the most from Bosnia and Herzegovina is hard coal, coke and briquettes, worth almost 174 million dollars in 2021, and over 318 million in 2022. Behind that, in terms of import value, is electricity, which Serbia imported two years ago in the amount of about 132 million dollars, while last year the value of this amount was over 221 million.
On the other hand, Serbia mostly exports electricity to Montenegro, so in 2021, Serbia collected about 66 million dollars from the export of electricity to Montenegro, while in 2022 that amount was about 153 million. After that, the value of what Serbia exports to Montenegro is drinks, from which it earned almost 2021 million dollars in 57, while a year later that amount was around 63 million. Serbia, like BiH, also exports cereals and cereal-based products to Montenegro, from which it earned about 53 million dollars two years ago, and slightly more than 63 million last year.
What entered Serbia in the highest value from Montenegro is also electricity, for which around 42 million dollars were paid in 2021, and more than double last year, i.e. 89 million. Serbia imported meat and meat products from this neighbor in large quantities. So she paid more than 2021 million dollars for it in 12, while the following year she paid more than 19 million for these products. Also, for the import of drinks from Montenegro, Serbia allocated about seven and a half million dollars two years ago, while in 2022 it paid over eight million for it.
Full professor at the Faculty of Economics, University of Belgrade Predrag Bjelic he says for "Danas" that Serbia, Bosnia and Herzegovina and Montenegro are one of the most important foreign trade partners and export markets.
"Especially knowing that Serbia is more competitive than both countries, so it has a significant surplus in exchange with them. But most research shows that there is still significant untapped potential in the trade. The framework of their cooperation is the CEFTA 2006 agreement, which liberalizes various areas of their cooperation, industrial production, then agricultural products, and now services and the like," he explains.
The total exchange between Serbia and BiH was, as he adds, more than three billion dollars, and with Montenegro 1,3 billion dollars in 2022.
"The surplus is significant and persists from year to year. Services that have almost been liberalized in CEFTA have great potential," says Bjelic. He points out that in developed countries the economy influences and leads politics, while in our country it is the other way around. "Often political conflicts have a negative effect on trade. Nevertheless, many measures have been taken to facilitate trade, for example the green corridors of CEFTA, the added protocol on trade facilitation", explains our interlocutor.
Bjelic comments on the possibility of Montenegro and BiH joining the "Open Balkans".
"Both countries have objections to the 'Open Balkans'. Montenegro because it considers that it is slowing it down on its way to the EU, and in BiH because of political disagreement. "Serbia is the largest economy, so it dominates, but that also applies in CEFTA," he states.
As he explains, the CEFTA agreement is still the backbone of economic cooperation in the region.
"'Open Balkans' is a subregional integration that in some segments goes further, for example, measures to facilitate the crossing of goods at the border, free movement of people and workers... and these measures are taken from the EU initiative on the common market in the Western Balkans, which is not implemented . The reason for non-implementation is political conflicts in CEFTA, especially in the Serbia-Kosovo relationship. "Kosovo has on several occasions introduced illegitimate blockades of the import of goods from Serbia," Bjelic points out.
BiH: Croatia and Serbia are the most important partners
Political relations in BiH disrupt every segment of life, especially the economic one because it depends in the most direct way on political decisions and the general image of the country's stability. And our picture is not pretty at all. This is precisely why the position of Bosnia and Herzegovina on the economic scale of the region is not great. Although, from year to year, the indicators are growing, it could and can be much faster and better.
The Chamber of Foreign Trade of BiH (VTK BiH) states that cooperation with neighboring countries (Serbia, Croatia and Montenegro) has been growing for the past few years, which is reflected, first of all, in the increased volume of total exchange, but also in cooperation in appearances towards third markets and processes related to accession to the European Union.
Croatia and Serbia are among the five most important foreign trade partners, and we have a significant surplus with Montenegro. A large number of business entities from these countries operate in BiH and occupy a large part in the structure of foreign direct investments. Croatia is the largest foreign trade partner from the EU and accounts for 17 percent of BiH's total trade with the EU, points out Ahmet Egrlić, vice president of VTK BiH.
Egrlić also states that existing agreements, such as CEFTA, contribute to the removal of trade barriers and the improvement of business cooperation.
Reducing the foreign trade deficit is a priority in cooperation with neighboring countries, especially Croatia and Serbia. It is necessary to work on improving the competitiveness of economic entities. We see a chance in the branches of the economy that produce a wide range of products and participate in the export structure with the final product made of domestic materials. The best example is the wood industry, says Egrlić for "Oslobođenje".
Economic expert Draško Aćimović claims that BiH has good business cooperation in the field of import and export. However, it is not good enough in the area of investments by its neighbors in Bosnia and Herzegovina.
"We can point out the very weak cooperation in joint international projects, which can bring the necessary competitiveness for all the countries of the region and initiate large investments, and not only reduce unemployment, but also bring back experts who left their countries. The region can do much more in to use funds from the EU for cooperation," says Aćimović.
And there are regional economic initiatives, apart from CEFTA. Serbia, Albania and North Macedonia launched the Open Balkans, and the EU started a long time ago and recently activated the Berlin Process.
"Unfortunately, neither one nor the other was brought to the operational stage. The Berlin process brought certain recommendations, but they were not implemented in all countries. The "Open Balkans" started strongly, but it is currently stopped and it is not known how it will proceed. These are incalculable damage to the countries of the region, because such initiatives open up quick access to the EU and its investors," says Aćimović.
Both VTK and analysts have a clear assessment - politics is the key stumbling block.
"The main obstacle to the development of economic cooperation and progress is the image of the state. A negative image, as politically unstable, which does not ensure a single market, legal certainty or the stability of fiscal and other economic policies, is indisputably among the key causes of the absence of major foreign investments, and adversely affects and on the operations of Bosnian companies. It is necessary for BiH to be competitive for the inflow of foreign capital, says the vice president of VTK.
Aćimović also says that political relations in Bosnia and Herzegovina are perhaps the biggest problem for the development of the region.
"We can say that the politicians from BiH are the main culprits for stopping the process, because by raising tensions, threats of war and conflicts, they persistently and thoroughly alienate investors from BiH and the entire region".
Aćimović concludes that the absence of serious investments in Bosnia and Herzegovina suits the political actors, because this is how they keep the electorate dependent on work in the public administration, and by high collection of taxes and other levies, they ensure stable sources of financing and open up space for enormous crime and corruption. Egrlić concludes that the improvement of road infrastructure, the flexibility of obtaining construction permits, and favorable sources of financing and relieved taxation are the key elements for creating such competitiveness.
Bonus video:
