Kosovo Taps Investment from Emigrants

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Crimson Capital managing director Michael Gold, who came to Central and Eastern Europe in the early 1990s to work on the Czechoslovak government's privatization initiative and has been here ever since, confirmed this information vacuum. Leadership remains largely unengaged with foreign money in the diaspora, he said. To light the pilot, Gold's company plans to spend the next year reaching out to émigrés through road shows and Web bulletins highlighting Kosovo's attributes: an available, inexpensive work force, ease of starting a business, and a friendly tax regime.

"We’re going to start going around, shaking people, telling people about Kosovo. And if they're interested in coming, we're going to help them," Gold said, adding that Crimson Capital has already started working with an IT company from the diaspora in Germany that wants to produce software and hardware in Kosovo. He would not name the company.

Forum 2015 has endorsed a similar, though governmental, policy agenda of reconnection. It includes using Kosovo's Investment Promotion Agency to communicate directly with the diaspora on investment opportunities through the Web, conferences, and fairs, and creating special funds to channel and organize money from emigrants.

THE BASICS

Efforts such as these would certainly help build good will and information channels, but they won't be enough to win over the many skeptical investors who believe Kosovo isn't business friendly. New Fruit Co.’s Kalanderi said he was concerned about poor infrastructure and the immature economy.

His concern is legitimate. Kosovo is among the poorest countries in Europe. Its infrastructure is abysmal. Corruption is endemic, with Transparency International ranking Kosovo the world's fourth most corrupt economy. The health and education systems are poor, unemployment is off the charts, and imports exceed exports by around a factor of 10.

Clearly, there's much room for improvement. Where to begin? Reducing poverty, unemployment, and corruption will come slowly, with enough political will and aid. International leaders are expected to pledge more than $1 billion at a European Union donors' conference this week.

The immediate priority—the one that could make the most difference to foreign investors now—is improving infrastructure, particularly for electricity. Blackouts are common throughout Kosovo, and more than 75 percent of businesses say poor electricity supply hinders operations, according to the World Bank. Fixing this problem will require both money and policy and regulatory reforms.

For its part, the government has committed to upgrading the current electricity infrastructure, and Economy and Finance Minister Ahmet Shala has said he's hoping for significant progress by the end of summer. Furthermore, four international energy giants, including Germany's RWE and CEZ of the Czech Republic, are bidding in a 3-billion-euro project to build a 2,000-megawatt facility (the current infrastructure's capacity is 800 megawatts) that could start generating by 2014.

Though to a lesser degree, leaders also seem interested in connecting with Kosovars abroad. A new office promoting diaspora investment in Kosovo has been established, and the Investment Promotion Agency has organized several relevant conferences, according to Alban Zogaj, research director at the Riinvest Institute, which conducted Forum 2015's study.

Zogaj described overall progress at strengthening ties with the diaspora as "little" at the moment. Nevertheless, however nascent, the government appears aware that its role in the courtship is pivotal, and private concerns such as Crimson Capital are trying to nudge things along.

Here's hoping the diaspora is paying attention.

Provided by Transitions Online—Intelligent Eastern Europe