Republika Srpska. Zvornik Municipality

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1 Invest in Zvornik

2 General information The Municipality of Zvornik is situated on the left bank of the Drina River, in the northeast part of Republika Srpska and Bosnia and Herzegovina. Republika Srpska VCurrency GDP GDP per capita Average net wage Wage contributions Personal Income Tax Profit Tax VAT Investment opportunities Convertible mark (KM) 1 = KM 8,6 billion KM (2012) 6.006,00 KM (2012) 808 KM (2013) 33% 10% 10% 17% Položaj Bosne i Hercegovine u Evropi Zvornik Municipality Položaj opštine Zvornik u Bosni i Hercegovini Entity Surface area Population Mayor Address Telephone Fax Web Republika Srpska 371,95 km Zoran Stevanović Svetog Save 124, Zvornik zvornik@teol.net investirajuzvornik@opstina-zvornik.org Why invest in Zvornik? Zvornik is a developed municipality seeking to revive a long industrial manufacturing tradition and promote development of other entrepreneurial activities by offering both domestic and foreign investors an exceptional location and favorable conditions for a wide range of activities: Established The Jadar Business Zone close to the border crossing to the Republic of Serbia, which operates as a customs terminal. Simplified procedures, reduced waiting times and cut costs for starting and operating businesses. Strategically expressed its commitment to sustainable exploitation of natural resources and use of cultural and historical heritage in development purposes. Geostrategic position Zvornik is situated at the intersection of the roads leading to major urban centers in BiH and the region. Zvornik is connected to the road and railway networks of the neighboring Republic of Serbia via four bridges on the Drina River, which constitute border crossings: Karakaj I category international border crossing for road traffic Šepak international border crossing for passenger road traffic Zvornik international railway traffic border crossing Zvornik Stari most frontier traffic border crossing Source: Decree on Selection of the Border Crossings in BiH, BiH Official Gazette no. 39/12 Road network in the Zvornik Municipality (km) Railway transport BiH-Serbia (Tuzla-Zvornik-Loznica-Ruma railway) Road transport: Arterial roads (M19 Bijeljina-Zvornik-Sarajevo and M4 Zvornik-Tuzla-Doboj) Regional roads (R456 Karakaj-Šetići and R454a Bratunac-Drinjača) Local roads

3 Distance to major cities in the country and the region (km) Distance to European cities (km) Tuzla Bijeljina Banja Luka Sarajevo Beograd Novi Sad Šabac Loznica Zagreb Podgorica SRB SRB SRB SRB CRO MNE Ljubljana Beč Budimpešta Bukurešt Sofija Minhen SVN AUT HUN ROU BGR DEU Human resources In the Zvornik Municipality, workers with experience in manufacturing, as well as with knowledge and skills acquired in the local, national or regional educational institutions, may be hired at competitive wage levels Number of employees Number of registered unemployed Average net wage (in KM) Source: Republika Srpska Employment Bureau Zvornik Branch Office. The Republic s Statistics Institute, Republika Srpska Tax Administration Ratio of average wage in RS and Zvornik Age structure of registered unemployed Republika Srpska Zvornik 18% 17% 5% 27% 33% godina godina godina godina godina Source: The Republic s Statistics Institute Education structure of registered unemployed Level of education Unskilled Semi-skilled Skilled Highly skilled Secondary school qualifications Two-year post-secondary qualifications University qualifications 180 ETC University qualifications 240 ETC Master 300 ETC Master PhD Number of unemployed Source: Republika Srpska Employment Bureau Zvornik Branch Office Occupation Mechanical engineering technician Auto mechanic Graduate economist Locksmith Electrical engineering technician Road traffic technician Number of unemployed Vocational specialties in local educational institutions Education level Number of educational institutions Vocational specialties Secondary education 1. Technical School Center 2. High and Vocational Secondary School Petar Kočić Mechanical engineering and metal working Traffic Electric engineering Chemistry, non-metals and printmaking Economics, law and commerce Catering and tourism Health care Higher education 1. Faculty of Technology of the Sarajevo University Chemical process engineering Food engineering Environmental engineering Electrochemical engineering Technology management Source: Department for Economy, Agriculture and Social Affairs of the Zvornik Municipality,

4 Business environment Small and medium enterprises are predominant in the economy of the Zvornik Municipality. Zvornik Municipality strives to revive manufacturing and thereby restore its status from the second half of 20th century, when the town ranked as the third-largest industrial center in BiH: at that time, between and workers from Zvornik and neighboring municipalities worked in the plants for wood processing, manufacturing of construction materials, exploitation of mineral waters, production of alumina and rubber, as well as in the metal, textile and food factories concentrated in the suburban settlement of Karakaj. The number of registered businesses in Zvornik Municipality has been raising as of Number of businesses per the organizational form Organizational form Public companies Stakeholders companies Limited liability companies Partnerships companies General cooperatives Specialized cooperatives Institutions Legislative and executive bodies Court and judiciary bodies Associations Fondations Religious organisations/ communities Branch offices of foreign companies Other organizational forms No Source: RS Statistics Institute, 2013 Statistics Annual Report Number of registered businesses Source: RS Statistics Institute, 2013 Statistics Annual Report Number of businesses per the standard business classification Activity Agriculture, forestry and fishing Mining and quarrying Processing industry Construction Trade, wholesale and retail Transportation and storage Accommodation and catering Information and communications Expertise, scientific and technical activities Public administration Education Health protection and social work Art, entertainment and recreational activities Other services Number of enterpreneurs Activity Crafts Trade Restaurants, catering Other Source, RS Statistics Institute, 2013 Statistics Annual Report Source: Department for Economy, Agriculture and Community Activities of Zvornik Municipality. No Regular businesses Jadar Business Zone Jointly owned by RS Government and Zvornik Municipality, the latter has management rights, Covers 17,58 hectares of developed land in the Karakaj industrial zone, purchased from a company in bankruptcy, 4 km from downtown Zvornik, Adjacent to the border crossing serving as a customs terminal, Connected with M19 and M4 arterial roads and the loading station on the international railway line Republic of Serbia Zvornik Tuzla, Available common infrastructure:

5 Road Water supply Sewage system Natural gas installation Power grid Telecommunications network To the zone Within the zone Technical characteristics Access and internal roads Pipeline with two wells, a water tower and hydrants for each structure Two manholes and a main collector Natural gas station Substation with two kw transformers Pre-existing connection with 10 outlets The procedure and conditions for investors to access the services of the Jadar Business Zone have been set by the Rule Book on the Terms and Conditions for Leasing the Land and Facilities to Investors: Land and facilities may be leased for a period of 5 years, which may be extended to 10 years after the end of the first year since the production started. The lease amount is proportional to the surface area of the leased property. The lease amount is lower during the pre-production period, not to exceed 6 months. An investor may be exempted from up to 60% of the total lease amount if he invests own funds into construction and other works for adaptation of the facility for its general purpose (electricity, water, sewer system. Priority is given to investors who create more jobs (at least one employee per 1.000m² of leased space (land), i. e. at least three employees per 1,000 m² of leased operational facilities and whose production is export-oriented. Companies operating within the Jadar Business Zone: Company EnWo DOO HEMOS Country of origin Serbia Serbia Sector/activity Wood/pellet manufacturing Wood/manufacturing of railway crossties Permanent jobs Exports as share of total output 99% 99% The business zone offers investors the following benefits: Faster and simpler issuance of construction permits issued by the municipal administration, Lower starting and operating costs, Opportunities for linkages with other companies in the business zone, Access to incentives and other support instruments, Free promotion of the company as part of the promotional activities of the business zone. The Physical Plan of the Zvornik Municipality envisages construction of a commodity logistics center adjacent to the Jadar Business Zone Costs of charges, fees and approvals The costs charges, fees and approvals were calculated on the example of an investor in the metal- or wood-processing industry. It is assumed that the size of the planned plot for purchase is 5.000m² with the construction ratio of 20%, i.e. with the facilities of 1.000m² of total surface area, as well as that the plant would employ 30 workers in a machine park requiring 100kW of power. Costs of charges, fees and approvals until issuance of the zoning approval for construction of a production facility Administrative fee for the Decision Costs of verification of urban and technical conditions Costs of charges, fees and approvals until issuance of the construction permit Development of the construction land and rent Administrative fee for the construction permit Real estate cadaster fee Utilities fee Fee for preparation of urban documentation Re-zoning of agricultural land as construction land Fire and other approvals Environmental permit Power grid connection approval Costs of charges, fees and approvals until issuance of the inspection certificate Administrative fee for the inspection certificate Technical inspection commission (1+2+3) New facility 30 KM 80 KM 110 KM New facility KM 385 KM KM 770 KM KM 0 KM 500 KM 50 KM KM* KM New facility 385 KM 900 KM KM KM New structure in place of an old on 30 KM 80 KM 110 KM New structure in place of an old on 0 KM 385 KM KM 770 KM KM 0 KM 500 KM 50 KM 0 KM KM New structure in place of an old on 385 KM 900 KM KM KM Note: For building new structures in place of old ones, no fees are levied for the preparation of urban documentation, rent and development of construction land, because these fees had been paid for the existing structures. If new structures are larger than the existing ones, these fees are payable only for the difference in the surface. * Approval for the power grid connection for the two existing transformers has been paid, so this only concerns the installation of a new transformer (80 KM + VAT per 1kW).

6 Investor support and incentives The Municipality of Zvornik continuously implements reforms to create favorable business environment: Spatial planning documentation of the Municipality has been completed or its completion is under way. The municipal administration simplified procedures, reduced waiting times and cut costs for starting and operating businesses: real estate tax was cut to 0,15%; procedure to issue construction-related approvals (location requirements, construction permit and inspection certificate) were reduced to three steps; waiting times for issuance of construction-related approvals are shorter than average in Republika Srpska (up to 5 days for location requirements, up to 3 days for the construction permit and up to 10 days for the inspection certificate, depending on completeness of submitted documentation); the rent per 1 m 2 of useful area of production and ancillary facilities ranges from 0,5% (Zone 6) to 5% (Zone 1) of the average construction price per 1 m 2 ; the documents and actions of legal persons related to labor and labor relations are exempt from the administrative fee; working hours of the Counter Service Hall of the Administrative Service of the Zvornik Municipality has been extended to help businesses access its services in a more efficient manner; certain special concessions for operations out of the Jadar Business Zone, whose initial surface area was augmented by 9.4 hectares through purchase of land from a bankrupt company. Zvornik Municipality offers investors other services as well: it provides information about the procedures and costs of starting a business in Republika Srpska, i.e. assists new investors in acquiring necessary approvals and permits within jurisdiction of higher levels of government; provides information and logistical services to businesses when applying for incentive funds allocated by responsible institutions of Republika Srpska and BiH; organizes presentations of the programs of the RS Investment-Development Bank and approves projects submitted to that institution; provides aftercare services to businesses through the Collaborative Network jointly with the Republika Srpska Ministry of Economic Relations and Regional Cooperation. Registration of legal entities is conducted in the one-stop-shop of the branch office of the Business Information and Finance Services Agency in Zvornik, Svetog Save (no house number), within three days, link Electronic registries with detailed overview of permits and licenses the investors in Republika Srpska and Bosnia and Herzegovina could be faced with including costs: Republika Srpska Government: BiH Ministry of Foreign Trade and Economic Relations: Fiscal and non-fiscal investment incentives are available to investors at all government levels in BiH. The lists of fiscal and non-fiscal investment incentives at the level of Republika Srpska and BiH are available at the following links: Republika Srpska Government/ Invest Srpska: BiH Ministry of Foreign Trade and Economic Relations: Investor contact persons Mr. Danijel Dragičević Tel: danijel.dragicevic@opstina-zvornik.org Ms. Dušica Savić Tel: dusica.savic@opstina-zvornik.org Ms. Biljana Milić Tel: biljana.milic@opstina-zvornik.org Costs of doing business Average fuel price is lowest in the region at 2,78 KM/l. The territory of the Zvornik Municipality is served by power transmission facilities of 400kV, 110kV, 35kV, 10kV and 0,4kV voltage levels. The average price of electricity is 0,085 KM/kWh. Distribution and sales of natural gas used for generation of heat is conducted through the measurement and regulation station in the center of the town, with one branch connected to the natural gas network of the Republic of Serbia. Natural gas Price (KM) 942,00 Unit Sm 3 Length of existing gas network (m) 6.956, , ,31 Pressure 500 mbar 200 mbar 3 bar Cost of heating (KM) with VAT 7,90 Unit 1 m 2 of heated business premises Telecommunication services Landline telephony Mobile telephony - Postpaid Internet ADSL Flat (8192/512 Kb/s) Monthly subscription (KM) 16,40 15,00 60,00 Connection cost (KM) 29,00 0,85 1,00 Cost of utilities Type of service Water Sewage system Waste disposal Town 2,66/m 3 0,89/m 3 0,67/m 3 Source: AD Vodovod i komunalije Zvornik Price (KM) excl. of VAT per unit Industrial zone 2,66/m 3 0,89/m 3 25,60/ container 1,1 m 3 89,00/ container 5 m 3 10,00/ bin 0,1 m 3

7 Natural resources and cultural and historical heritage in the service of sustainable development The Integrated Development Strategy of the Zvornik Municipality elaborated in detail the potential of exploitation of natural resources and cultural and historical heritage for the purposes of development promotion. The Drina River flows along the whole length of the territory of the Zvornik Municipality (49 km).together with its reservoir and its tributaries, it offers a considerable power generation and tourism potential. Drina Drinjača Surface area of the basin km km 2 Median annual flow 387 m 3 /s 6,54 m 3 /s Specific flow 21,64 m 3 /s 15,03 m 3 /s Installed power of the planned hydro power plant 93,4 MW 25,4 MW Average annual power generation of the planned hydro power plant 396,5 GWh 97,8 GWh Zvornik Measurement Station Jaroslav Černi Institute, Elektroprivreda of Republika Srpska The Physical Plan of Republika Srpska envisages a possibility of opening of the waterway from the Zvornik Municipality to the confluence with the Sava River, along with construction of hydro power plants. Investment opportunities: The Zvornik Lake, which was created by building a dam and which is currently featuring small beaches, numerous weekend cottages and a number of tourist facilities in its coastal area, offers opportunities for development of fishing and sport-recreational activities on water (swimming, boating, kayaking and canoeing, rafting, log-rafting, water skiing). The architectural complex Old Town Zvornik (Đurđev grad) was declared a national monument of BiH. Its restoration and construction of ancillary facilities would create a tourist complex that would meet the demands of the modern tourism at the country level (transit and culture tourism, city vacationing etc.) The Roman quarry in Dardagani is an exceptionally valuable archeological site. It is the largest and best-preserved Roman stone monument of a pit type in the Balkans, and likely in all of Europe. The inside pit consists of hundreds of meters of galleries and corridors bearing traces of Roman stonework and stone masonry. The goal of the Zvornik Municipality is to develop the site as a venue for culture and scientific tourism. Vitinički Kiseljak is the location with nine mineral springs of varying quality, capacity, medicinal properties and taste, whose beneficial effects on human health had been recognized in late 18th and early 19th century and later substantiated through chemical and biological tests. The Zvornik Municipality invested considerable resources into the refurbishment of the springs, but accommodation capacities that would permit development of curative and/or spa tourism are still missing Tourist visits Overnight stays Number of recorded tourist visits and overnights, 2013 Statistics Annual Report

8 Most prominent companies in the Zvornik Municipality Food production and processing The alumina producing plant exporting 100% of its output (methalurgic alumina of the SANDY type, zeolite, hydrate and water glass/sodium silicate) to the EU market. It employs over 1000 workers and is linked with many small firms in Zvornik and neighboring municipalities. SMRČAK STUDEN-PROM DAŽ doo "Aleksandrija" Smrčak Company for Harvesting, Processing and Trade in Mushrooms, Medicinal Herbs, Forest Fruits, Fruit and Vegetables exports 98% of its products. The Studen-prom is a company for processing of snails and production of snail meat, as well as for processing of assorted berries, which possessec necessary certificates and meets the conditions for exports to the EU market. The Daž Company, with its Alexandria brand, is among the leaders in the confectionnery sector in BiH and it is dedicated to production of high-quality, safe and biologically valuable foods. The «Vitinka» Company encompasses two plants for bottlling of mineral and spring waters, and for production of non-alcoholic beverages and concentrates with installed capacities and product qualities that place it among the best in BiH. Textile and footwear industry Obuća doo for manufacturing of footwear employs 360 workers and exports 90% of its products (LOHN jobs). TISA-MOD The basic activity of the Tisa Mod Company, which employs 56 workers, is garment manufacturing for export markets (100%). Wood industry The Global enterijeri is a company that employs 20 and manufactures and sells furniture on its 3,800 m 2 of display area. The Wood Center Mega sistem for production, trade and services has considerable turnover and 32 employees. Construction AD Zvornik putevi is a leading company in road and road facilities construction and maintenance in BiH. ENIKON-MONT "ZO-ŽI" doo Enikon-mont Company designs, produces and installs equipment for industrial, chemical and power plants and employs 45. Zo-Ži is among the leading manufacturers of wire mesh binor girders in BiH. Transport AD Drina trans is the most successful public road transport company in Republika Srpska, with 219 employees. Trade Zvorničanka retail company with retail stores in Zvornik, Bratunac, Vlasenica and Srebrenica with over 170 employees.