Today was held the discussion table organized by the Kosovo Manufacturing  Club which aimed to discuss the effects of the 100% customs tariff on imports from Serbia and Bosnia and Herzegovina into our country’s economy. At the end of 2018, the government approved a decision by the Ministry of Trade and Industry to initially impose a 10% and then 100% measure on the two states, Serbia and Bosnia and Herzegovina, a fee that came in response to the aggression of Serbia towards Kosovo.

The Executive Director of the Manufacturing Club- Astrit Panxha stated that the Club has been analyzing the effects of the tariff from the real data obtained from the Kosovo Customs, the Kosovo Agency of Statistics and the Central Bank of Kosovo, over a period of one year, as the three-month studies so far have not yielded the right results.

‘We have not analyzed the political but only the economic aspects throughout our analysis. What we can say is that it has a positive impact on tariffs, and what we can conclude is that Kosovo can survive without Serbia, and it can rely on its own products and trade with its allied countries, ”said Panxha.

Fejzulla Mustafa, owner of the Fluidi company, said the tariff has had a positive effect on the manufacturers in general, but also on their companies. ‘We have had an increase in the sale of Floil oil, which has been very competitive with oils coming from Serbia.‘ said Mr Mustafa. He also required to continue to raise consumer awareness of consumption of local products even after the tariff. ‘We as manufacturers from Kosovo are boycotted by Serbian consumers, and not only by the Serbian state. So we also ask our customers to have the same awareness.’- said Mr.Mustafa.

Meanwhile, Gojart Kelmendi from Flutra company, showed that according to data paper processing sector has increased by 25% since the tariff. And this increase has had a direct impact on employment growth. ‘The tariff has shown that in addition to covering the domestic market, we have increased competitiveness for export,’ Kelmendi said.

Mr. Kelmendi also urged the next government to take care of the manufacturing sector, which carries the major burden of employment and economic well-being of citizens.

Muhamet Mustafa, however, said that the country’s sustainable economic growth depends only on the growth of domestic products. He said the tax has had positive effects, benefiting the state budget and with low inflation rate. He also urged that political problems should not affect the development of economic policies.

‘The effects are significant and show that with active policies in support of local manufacturers we can move towards sustainable economic development. Kosovo needs to develop active policies for local manufacturers. Today the manufacturing sector is in unequal competition with imports.’

Mr. Mustafa also demanded that in the future our state should have more dignity, if we have barriers from any state that violate international agreements we must respond immediately.

Also during the discussion the citizens’ survey on consumption of local products was also presented.

Below is a summary of the report presented.

  • Kosovo continues to have a negative trade balance with its partners, however after the 100% tariff, data shows that in 2019 imports have declined. Expressed in numbers, annual growth from 2017 to 2018 was 11%, while in 2019 annual import growth was only 4%. Meanwhile, exports increased by 6% during 2019. (Source: Kosovo Customs)
  • For the first time since the post war period, the volume of imports has declined. During this period, the volume of imports decreased by 50 million tons. This decline can be interpreted as an increase in domestic production and a decrease in demand for imports. (Source: Kosovo Customs)
  • The effect of the tariff is also observed in the context of import of raw materials, so far Kosovo was heavily dependent on raw materials from Serbia, where 26 million euros out of a total of 111 million euros of raw materials imports came from Serbia. This dependency has been avoided, where most of it has been replaced by local production and its partners. (Source: Kosovo Customs)
  • Even in terms of capital investment in production, more precisely in the purchase of new machinery for production there is a significant increase compared to previous years. While in 2017 and 2018 there were only 45 million euros and 46 million euros respectively, in 2019 the value of machinery investments amounted to 56 million euros. (Source: Kosovo Customs)
  • Furthermore, in terms of financing the manufacturing sector, there is a noticeable increase in manufacture sector lending, the largest for this year and which, according to the CBK, reached 260 million euros in November 2019, against 208 million in 2018. Such growth is also seen in the agricultural sector, where growth was 13.2% more than last year. Lending to the manufacturing sector has also contributed to increased manufacturers confidence and increased investment in the manufacturing sector. For the first time, after many years, there has been a decline in lending to the trade sector by 0.4%. (Source: Central Bank of Kosovo)
  • In addition to beneficiaries of the internal market, Kosovo has succeeded in replacing imports of products from Serbia with other trading partners. The beneficiaries of this change were countries like Turkey, which has the largest market growth followed by Greece, Bulgaria and Germany. Kosovo has shown that it has no dependence on Serbia in terms of supply of products and since the imposition of the tariff the main trading partners are the allied states that recognize Kosovo’s independence.
  • In the sample of the top 20 most imported products from Serbia and Bosnia and Herzegovina, the value replaced with domestic products equals 40.6 Million euros. And the industries that have benefited the most are the metal and milk industries, confectionery, and pharmaceuticals. (Source: Kosovo Customs)
  • Another indicator of the positive effect of the tariff is the increase in the number of employees in the manufacturing sector. According to data from the Kosovo Agency of Statistics, in the third quarter of 2018 were employed 36.7 thousand employees, while in the same period of 2019, the number of employees increased to 48.2 thousand. This is due to the increase in demand for domestic products which has resulted in increased demand for labor. As the number of employees increases, purchasing power increases, taxes increase, and state spending on social assistance decreases. (Source: Kosovo Agency of Statistics)
  • However, due to the imposition of a 100% tariff on Serbia and Bosnia and Herzegovina, the Serbian state has imposed blocking measures on Kosovo exports. These blocking measures have been applied in the form of non-tariff barriers and have reduced Kosovo’s exports to Serbia by about 50%.
  • From January to May, there was a slight increase in inflation, due to traders’ speculation to capitalize on prices and the high cost of signing short-term supply contracts. After May there was a moderate decrease in inflation, and in the last three months of 2019 inflation marked an average of 1.7%.