Ambassador Dell’s Remarks at the American Chamber of Commerce: Kosovo in the Eyes of Foreign Investors

Ambassador Christopher Dell

As the American Ambassador in Kosovo, the issue of foreign investment is especially significant.  I have a responsibility to ensure that Kosovo offers fair markets for U.S. investors, and American foreign policy is, of course, committed to Kosovo’s development.  We want Kosovo to develop into a vibrant democracy with a strong economy that becomes a model of stability throughout the region.

I know that I share this vision with everyone in this room, and at the end of my remarks today, I hope that I will have convinced all of you that we have a shared responsibility to develop both Kosovo’s economy and its democracy.

 First, let’s talk about business and investment in Kosovo.

The investors in this room care about their returns, and you are looking for growth.  Each of you has made a decision that the rewards of working in Kosovo are worth the risks.  This risk-reward calculation is one that investors make all over the world.  I also know that all of you are equally committed to creating jobs and thereby helping Kosovo as a whole to grow and to prosper.

There are several primary characteristics that investors consider before deciding to come to a foreign country.  These include:

·         a cost-competitive and educated workforce with a strong work ethic and willingness to learn new skills -- and we saw from the survey results just how important that is to potential investors, and the perception that Kosovo is indeed attractive in this sense.

·         reliable, trustworthy local partners who provide quality services and who can navigate local legal and regulatory customs;

·         opportunities to make a profit, with the freedom to enter the local market;

·         minimal political risk, with low levels of corruption, that frees business leaders to get on with the business of doing business with a minimum of  hassles;

·         trust in the court system to enforce contracts and settle disputes equitably;

·         and a strong, growing, vibrant economy.   

Kosovo does pretty well on some of these indicators.  To be sure, there are hiccups among these categories, but Kosovo has the potential to become the center of growth in the Western Balkans.  Yet, the record of foreign direct investment has been disappointing over the past three years.

In fact, FDI has been declining.  In 2007, foreign direct investment stood at €440.7 million.  It declined in 2008 to €366.5 million and again in 2009, to €291.5 million.  That’s about a one-third decline in only three years. Certainly, greater worldwide financial uncertainty has made investors wary of sinking money into new enterprises, but I contend that, as the world’s economies emerge from their doldrums, Kosovo should become a very attractive destination for investment. 

The growth opportunities are myriad, with numerous underdeveloped sectors that are screaming out for investment.  Consider the options:

·         construction – with its expected high demand for years to come;

·         tourism – where the ski resort in Brezovica and the wine region in Rahovec remain underdeveloped;

·         education – where the needs are great to develop Kosovo’s large youth population into a vibrant workforce;

·         agriculture – where an abundance of arable land, a young and energetic population, a favorable climate, and a proximity to regional markets, make Kosovo an attractive place to invest;

·         information and communication technology – where Kosovo’s young, multilingual, well-educated workforce could play a role in developing call centers or business process outsourcing companies for European countries;

·         and, consumer goods – where the growing middle class will have increasing demand for high quality products.   

We all recognize that there are many wonderful opportunities for investment in this country, but Kosovo is competing for a limited pool of international investment resources.  Other countries throughout the region—and indeed throughout the world—have their own stories to tell, and Kosovo has a burden to show that it is worthy of investor resources, in short, that the rewards outweigh the risks.

For too many years Kosovo found its way into international headlines for all the wrong reasons.  And again, I think that the research that was just presented to us confirms this.  Years of discord left Kosovo with a perception – image -- that the risks are simply too great for investors.  And these perceptions breed uncertainty, and uncertainty scares away money.

My embassy has worked hard over the past couple of years to mitigate some of this uncertainty.  We have invested in the development of the rule of law in order to give investors the confidence that the legal system can fairly and expeditiously enforce contracts.  This year has seen important progress in this area, as the government adopted and Parliament passed -- approved a package of laws that put in place the foundations of a modern legal system.  At long last, the process of vetting prosecutors and judges has been completed.  And those who passed the vigorous ethic standards are now taking up their responsibilities. Through USAID, the United States has been developing modern courts throughout the country, to provide citizens access -- transparent, easy, fair access to justice.  But as we all know, much more needs to be done.    

Kosovo is putting in place the building blocks that will offer investors the confidence that Kosovo is a safe place to do business, and these efforts will reverse the negative trend that we have seen in declining rates of foreign direct investment.  But challenges remain.

Investors must believe that their rights will be protected, and they crave the comforts of consistency.  They want to know that the legal and regulatory systems survive intact, without changes, regardless of who is in government.   

Kosovo must demonstrate its commitment to a transparent legal order that has no room for corruption or murky backroom deals.  This is an objective that we all confront together.  It requires commitment from the government, from the business community, from civil society, and from the international community.

Every poll I have seen, and every ordinary citizen with whom I’ve spoken, makes it clear, the weakness of the economy -- let’s speak clearly here -- the lack of jobs and the lack of good incomes, as well as corruption, are the principle worries of this country.  And whoever wins this next month’s elections will have to address these twin challenges.  If the next government fails to do this, Kosovo is going to be in a deep trouble.  So these next four years are going to be as critical to your future, as any of the past ten have been.      

As business leaders in Kosovo, the people in this room have an obligation to show that you support transparent political, legal, and regulatory systems that encourage growth and promote dynamism in the economy.   People will observe your actions.  They look to you for assurance that Kosovo is a good place to do business.

And as Kosovo prepares for its first post-independence elections, I submit to you that your obligation to the business environment has never been higher. 

The upcoming national elections will affect investors’ perception of the risks of doing business in Kosovo.  Investors are conservative by nature, and they will look for information that confirms their suspicions that Kosovo is a corrupt and lawless land.

I know that this is not the case.  You know that this is not the case.  We need to correct the record by working together to show the world that democracy is thriving in Kosovo -- that the rule of  law is taking root in Kosovo and that its people are determined to build, protect and enjoy their hard-won freedom.

Certainly, Kosovo has room to grow and develop, but the people of Kosovo have embraced democracy and have shown that they are committed to their institutions.

We have observed over the past several weeks a number of shocks throughout the political landscape, but the country’s institutional system has absorbed these shocks without disruption.  Government services remain in place; the constitution has provided a roadmap for the smooth transition of political authority; and the country is preparing for elections amid peace and according to universally respected rules.

Now, I come to the point where I want to ask each of you, each of you who are Kosovar, each of you indeed who is an international -- representative of the international community here, I would challenge everyone in this room to demonstrate to the public—and to the international investors—that you are committed to Kosovo’s institutions.  I want everyone in this room to take responsibility for assuring potential investors that Kosovo is a safe place to do business, where mature institutions guarantee the stable transition of power.

You can fulfill this responsibility by volunteering your time to observe the elections process on December 12.  Your presence at the polls will serve many purposes:

First, you are respected members of the community.  When you spend time at the polls, you give confidence to voters about the integrity of the electoral system.  Kosovars must learn to put their faith in their own country, their own system and their own leaders -- rather than depend on the international community for reassurance about these things.  This confidence will breed ever-greater confidence, and it erodes the negative perceptions that limit foreign direct investment.

Second, your presence helps to deter those nefarious elements that want to exploit the electoral process for their own narrow interests.  I’ve spent a lot of time observing elections over the past year, and I can tell you that I derive no small satisfaction in watching the ne’er-do-wells scatter whenever we enter a polling center.  I don’t think that they really do all that much, but their presence undermines the dignity of the polling place and creates an intimidating atmosphere, and casts a pall over a system that fundamentally works.  Help me—more importantly help Kosovo—in keeping this election clean.

How, you might ask, can I make a difference in the upcoming elections?  After all we’re business people, were not politicians.  Well, the answer to that is easy.  Democracy in Action, a well-respected NGO, is organizing a 4800-person observer mission that will be present at each and every polling station in Kosovo throughout the day on December 12.

They will be there when the polls open.  Their presence at the polls will provide confidence to voters all day long, and they will observe the counting and tabulation of ballots.  And you, the members of the Chamber should be among their number.

Democracy in Action is only as strong as the volunteers that it deploys.  I look around this room, and I see dozens of strong and respected leaders who can ensure that the upcoming elections are the best elections that Kosovo ever has seen. And as just as importantly, who can reassure the people of Kosovo that their leaders are as committed to the future as those who get out to vote.

In last year’s elections, most of the burden of observation for DIA fell on young people.  They’re to be applauded and for stepping up and for example they set.  But I urge you to follow their example by getting out and volunteering to protect the vote of the Kosovar people.  This is the kind of leadership Kosovo needs, and its citizens expect from you. 

If you lend your support to this process, I promise you that your efforts will lend credence to the story that Kosovo wants to tell the world—that it is a vibrant and strong democracy that deserves investment.  As this investment builds, your businesses, too, will prosper, and so will the people of this country.

Let’s show the world on December 12, that Kosovo is worth the risk.  This is your responsibility, and this is your opportunity to help you country take a great stride forward in winning the confidence of the world, and wining the confidence of its own people.

Thank you all very much indeed.

All ambassador Dell’s statements to public can be found HERE.