• Contact Us
• Sitemap
• Links
• Success Stories
• Events
• News
• About IPAK
• Home

Why invest in Kosovo?

For companies looking to invest in a low cost location with easy access to the EU, Central European and Balkan markets, Kosovo represents a highly attractive option:

• Free access to a 520 million consumer market
• A good strategic location
• Lowest costs within the euro currency zone
• Youngest population in Europe
• A readily available and motivated workforce
• Very low taxes
• A Government highly supportive of foreign direct investment
• Modern EU-compatible legislative system
• Sound banking system
• Good investment opportunities

In short, it possesses all of the ingredients to give potential investors the confidence that Kosovo makes an excellent choice for their investment.

Free Access to a 520 Million Consumer Market

Kosovo has a liberal free market trade regime. It enjoys duty-free access to the EU market based on the EU Preference (ATP) Regime. Under this agreement, quantitative and qualitative restrictions remain in force only for a very limited number of goods. Further, Kosovo also has a free trade agreement with the Central European countries under CEFTA providing duty-free access to a regional market of 28 million consumers. These free trade agreements give Kosovo duty-free access to more than 520 million consumers.

A good strategic location

Kosovo is located in the heart of the Balkans and is an ideal location from which to supply products and services to the EU, Central and Eastern European markets. The international airport in the capital Pristina caters for over 1 million passengers per year and is ranked as one of the most frequented airports in the region. It offers connections from Kosovo to the most important European centres. The road network has been largely rebuilt in recent years and the rail network covers the entire territory with connections in the north and south of Kosovo to the international rail network.

Lowest costs within the euro currency zone

Kosovo is one of the few countries outside the Euro-zone that has introduced the Euro as its official currency. Before its introduction in 2002, Kosovo was already among the lower cost countries in the region – for example, monthly average labour cost at the time was €200. Since its introduction, Kosovo now has the lowest costs within the euro currency zone with a monthly average labour cost of €262.

The introduction of the Euro lowered transaction costs, facilitated financial discipline and contributed to Kosovo's very low inflation. All of this has strongly underpinned the promotion of trade and investment and enhanced Kosovo's attraction as a location for foreign investment.

A further factor that differentiates Kosovo from other countries in the region is the fact that wages and salaries unburdened by costly social contributions. The only mandatory contributions are those for individual savings accounts, financed at a rate of 5% by the employer and 5% by the employee – substantially lower than rates pensions required by most ountries in the region.

Kosovo is one of the easiest places in the world in which to hire labour. According to the Business Condition Index of the World Bank, Kosovo outperforms many highly developed countries as well as other countries in the region when it comes to the simplicity of hiring employees. Its 'Difficulty of Hiring Index' shows:

Youngest population in Europe

With 70% of the population being under the age of 35 and 50% below the age of 25, Kosovo is considered to have the youngest population in Europe. Because of the multi-ethnicity of Kosovar society, this young population has a high rate of literacy in foreign languages. Albanian and Serbian are both official languages. In addition, because of the presence of a very large international community in Kosovo, English has been established as a de-facto third language.

Kosovars speaking German and other European languages are also numerous due to a very large Kosovar diaspora of some 500,000 people most of whom would readily return to Kosovo if new jobs were created due to foreign direct investment.

A readily available and motivated workforce

Kosovo's strong work ethic, excellent industrial relations record and abundant labour supply combined with low costs makes a productive and highly cost effective workforce. Although Kosovo is blessed with a young and motivated workforce imbued with a strong entrepreneurial spirit, due to a severe shortage of job opportunities, it suffers from a persistently high unemployment rate.

While the majority of the labour market supply consists of basic semi-skilled labour, there is also an excess supply of highly educated labour. Kosovo has two state universities with about 30,000 students and 30 private universities with about 10,000 students. The graduate output from these universities guarantees a more than adequate supply of highly educated labour for the foreseeable future.

Very low taxes

In 2009, in an effort to stimulate higher levels of investment, Kosovo halved its corporate tax rate from 20% to 10%, giving it one of the lowest corporate tax rates in the region. Personal income tax rates are also very low – ranging from 0% to 10% with income taxes on average gross salaries being around 5%. While customs duties on imports generally stand at 10%, there is no import duty on the importation of capital goods and agricultural inputs. The standard VAT rate is 16%.

A Government highly supportive of foreign direct investment

The attraction of foreign direct investment (FDI) is one of the top priorities of the Government of Kosovo. Driving this effort is IPAK – the Investment Promotion Agency of Kosovo – the primary government agency responsible for winning new investment projects for Kosovo.

IPAK is committed to providing a professional service and a timely response to current and prospective foreign investors in Kosovo. The Agency assists investors to objectively evaluate Kosovo as a location for their investment project. It works with National and Local Governmental authorities to expedite approvals, where necessary, to enable a fast start-up of operations.

Modern EU-compatible legislative system

Kosovo has a modern and EU-compatible legal framework including foreign investment legislation, which maintains the same legal regime for both foreign and domestic investments. It provides for measures such as national treatment guarantees for unrestricted use of income, prohibition of favouritism and discrimination as well as protection against expropriations.

Sound banking system

Kosovo operates a two-tier banking system comprising the government's Central Bank of Kosovo and a number of commercial banks. There is a strong presence of major foreign banks including Raiffeisen (Austria), ProCredit (Germany), NLB-Prishtina (Slovenia), TEB (Turkey/France), and BKT (Albania/France). It is generally acknowledged that the Kosovo banking sector registers very positive and competitive performance across the main financial indicators such as return on equity, capital/equity ratio, liquidity ratio, loan portfolio versus GDP.