Business environment

This component's goal is to strengthen governance, enhance transparency, and facilitate operation of enterprises across the country.

State-owned/public enterprises ("POEs") account for a large part of the total economy and number of employed persons, but they operate with a low level of productivity - which significantly affects the competitiveness of the economy. Accordingly, the focus of this reform will be on fortifying governance structures and bolstering their efficiency and transparency.

Steps

2.1.1.1. POEs registers at entity level is regularly updated and publicly available Making the register of Publicly Owned Enterprises ("POEs") publicly available enhances transparency. Adoption of a rulebook in this regard is hence necessary.

2.1.1.2. Legislation related to POEs management to address climate considerations by providing guidelines for business planning and reporting of PoEs is aligned Integrating climate considerations into POEs management through aligned legislation ensures that these enterprises contribute to national and global sustainability.

2.1.1.3. Regulation related to POEs governance and transparency aligned with best practice (OECD guidelines) including state ownership strategy, monitoring market disruptions, providing guidelines for business planning, procurement and reporting, addressing climate considerations The legislative amendments foreseen under this Step would emphasize accountability, transparency, and professionalism, as well as clearly define the POE boards, and management while safeguarding decision-making processes from undue political influence.

2.1.1.4. POEs Oversight Units published annual report on POEs impact on economy including fiscal risk assessment stemming from direct and contingent POEs liabilities and state guarantees. Publishing annual reports on the economic impact of POEs by oversight coordination units and reports on fiscal risk assessment of POEs by ministries of finance is crucial for transparency, accountability, informed decision-making, and risk management.

2.1.1.5. State aid legislation fully harmonized with European standards (consistent enforcement of state aid rules throughout the country, strengthen the operational capacities of the State Aid Council, align existing aid schemes with SAA obligations, establish benchmarks to transparency of aid allocation and increase quality of reporting) In addition to the need to align the Law on State Aid with the most recent EU acquis, it will be important to enhance the efficient operation of the State Aid Council. BiH will bolster its administrative capabilities as well as intensify initiatives to promote transparency of aid allocation.

2.1.1.6. POEs arrears reduced by 30% in comparison to baseline 2023 This Step is crucial for enhancing financial stability, building creditor confidence, improving operational efficiency, and fostering economic growth. Achieving this reduction involves, among others, conducting a comprehensive financial assessment and implementing financial restructuring.

2.1.1.7. At least one public private partnership in effect for the management of airport infrastructure Establishing a Public-Private Partnership for the management of airport infrastructure is important for improving efficiency, leveraging private sector expertise, sharing risks, and fostering economic development.

This reform will standardize processes and make it much easier for entrepreneurs by simplifying processes thus encourage entrepreneurship.

Steps

2.1.2.1. Entities adopt and implement the necessary harmonized regulation allowing mutual recognition of licenses and certificates between them Adopting and implementing harmonized regulation for mutual recognition of licenses and certificates is crucial for facilitating trade, enhancing labor mobility, promoting economic growth, or ensuring consumer protection.

2.1.2.2. E-registration enabled and functional across all respective levels of authority, including all preconditions related to e- signature/e stamps, enabling insight into companies' registration data Enabling and implementing e-registration systems across all levels of authority enhances efficiency, transparency, and accessibility in business registration processes. This transformation not only improves government service delivery but also contributes to a more competitive and attractive business environment. This requires the adoption of a Framework Law on e-Signature.

2.1.2.3. Accession to the Common Transit Convention Accession to the Common Transit Convention will allow BiH to streamline customs procedures, ensure security and compliance, support trade facilitation agreements, and improve data exchange and visibility in transit operations.

Aligning rules and regulations with the core principles governing the EU Internal Market based on the four freedoms approach (free movement of goods, services, capital, and people) is essential for deeper integration with the EU.

Steps

2.1.3.1. Country wide strategy for the quality infrastructure adopted, Law on Accreditation, Law on Market Surveillance and BiH Consumer Protection legislation in line with the most recent EU acquis adopted and implemented Strengthening laws on accreditation, market surveillance, and consumer protection ensures that products are safe, reliable, and meet consumer expectations. Aligning BiH legislation with EU quality standards facilitates easier market access for domestic products in the EU and other international markets.

2.1.3.2. The three CRM mobility agreements signed by WB6 leaders on 3 Nov. 2022 in Berlin: on Freedom of Movement with Identity Cards, on Recognition of Higher Education Qualifications, and on Recognition of Professional Qualifications for Doctors of Medicine, Dentists and Architects; as well as the Agreement on Mutual Recognition of Professional Qualifications for Nurses, Veterinary Surgeons, Pharmacists and Midwives signed in Tirana on 17 Oct. 2023 adopted and ratified The adoption and ratification of all these agreements by BiH will foster regional integration, facilitate mobility, and enhance professional opportunities within the Western Balkans.

2.1.3.3. New Approach Directives in selected minimum three industrial fields annually transposed and framework for recognition of professional qualifications for 7 professions based on the EU system of automatic recognition adopted and implemented by the competent authorities. This facilitates smoother trade within the EU single market and reduces barriers to market entry for manufacturers, as well as ensures that qualified professionals can practice their professions across borders without undergoing lengthy and burdensome recognition procedures.

2.1.3.4. Mutual Recognition Programmes (MRPs) for industrial products in line with the EU acquis (electromagnetic compatibility, machinery and construction) adopted and implemented Here it will be necessary that BiH participates in CEFTA working groups on Free Trade in Goods in the area of Mutual Recognition Programmes as well as harmonized legislation.

2.1.3.5. Full Transposition of the EU Directive on services in the internal market into legislation in BiH, including the establishment of Contact Points for the provision of services at every level of government in BiH, which will be interconnected. This Step requires a process which includes legislative changes, the establishment of Contact Points, and ensuring interconnectivity at every level of government.

This reform underscores the importance of simplifying processes, enhancing dispute resolution mechanisms, and deploying advanced technologies while improving the business environment, and reduce administrative obstacles that business entities in BiH have to overcome.

Steps

2.1.4.1. Registers of beneficial ownership established and fully functional across all respective level of authority, in line with the EU acquis Establishing and ensuring the functionality of a Register of Beneficial Ownership across all levels of authority, in line with the EU acquis is crucial, as investors and consumers are more likely to engage with businesses operating in a transparent environment.

2.1.4.2. The domestic legislation that conflicts with EU legislation, including ex-Yu standards that conflict with those aligned with European standards mapped and repealed countrywide Mapping of technical regulation that conflicts with EU legislation, including ex-Yu standards, will be needed under this Step.

2.1.4.3. Dispute resolution framework improved and harmonised by adopting set of Laws for alternative dispute resolution across all respective levels of authority and implemented (i.e. Law on Mediation Procedure, Law on Arbitration, Law on Alternative Dispute Resolution) Improving and harmonizing the dispute resolution framework is essential for enhancing judicial efficiency, reducing costs, preserving relationships, and ensuring legal certainty.

2.1.4.4. Anti-money laundering and combating the financing of terrorism (AML/CFT) Law and bylaws implemented and a good level of compliance with EU AML/CFT standards and international Financial Action Task Force (FATF) standards is achieved The establishment of a permanent coordination body or adopting the rulebook on determining the manner of forming, updating and publishing the list of public functions are important elements of this Step.

This is pivotal for transforming the freight and logistics sector. These technologies enhance operational efficiency, reduce environmental impacts, and improve stakeholder collaboration.

Steps

2.1.5.1. Adopt legislative framework for alignment with Regulation (EU) 2020/1056 on electronic freight transport information (eFTI) The transposition of this Regulation will allow for the replacement of traditional paper-based systems with electronic formats. This enhances efficiency by reducing administrative burdens, paperwork, and processing times associated with logistics and transport operations.

2.1.5.2. Ratify Road international convention (eCMR) needed to deploy eFTI Once ratified by BiH, this Convention will help to replace traditional paper-based documents with digital formats. This promotes efficiency by streamlining administrative processes, reducing paperwork, and minimizing errors associated with manual data handling.

2.1.5.3. ITS frameworks and standards for road and rail implemented The adoption of a BiH Strategy on ITS ("Intelligence Transport Systems") will contribute to optimize traffic flow, reduce congestion and lead to faster travel times, lower fuel consumption, and reduced emissions. Moreover, it can enhance road and rail safety through systems like collision avoidance, automated warning systems, and real-time monitoring of infrastructure conditions as well as the provision of real-time information to travelers about traffic conditions, alternative routes, public transport schedules, and parking availability.

2.1.5.4. ITS on 50 Kms of the TEN-T road network is operational The introduction of Intelligence Transport Systems in the newly built Trans-European Transport Network road network will enhance traffic management, improve road safety and promote environmental sustainability.