The Republic of Srpska is an attractive destination for foreign investments. Creating a stimulating investment environment, implementing economic reforms, increasing the knowledge and innovation, and increasing the volume of public-private partnerships, can contribute to rise of the foreign investors interest. Investor protection is a significant factor that can influence the decisions of the potential foreign investors, and this area is regulated by the Law on Foreign Investments.

Some of the benefits that foreign investors have in the Republic of Srpska: they can own a real estate in the Republic of Srpska and practice the same property rights as the citizens and legal entities of the Republic of Srpska, foreign capital invested in equipment is exempt from import duties and customs, foreign investors are protected from the process of nationalization, expropriation, requisition or similar measures, and these measures can only be taken in the public interest in accordance with the laws of the Republic of Srpska.

The Law on Corporate Income Tax allows foreign investors to reduce the tax base for investment in facilities and real estate when they are used for the purpose of production and processing. The reduction of the tax base is also foreseen in the case of employment of 30 workers during the calendar year.

Forms of foreign investments in accordance with the Law on Foreign Investments are: establishment of a business entity that is completely owned by foreign investor, establishment of a joint venture owned by a domestic and foreign investor, investing in an existing business entity, and special forms of investment.

In accordance with the laws of the Republic of Srpska and BiH, foreign investors have the same rights and obligations as domestic investors and may establish a business entity in the Republic of Srpska under the same conditions as domestic investors. If there is a particularly justified interest, the Government of the Republic of Srpska may decide that the investment of a foreign investor in certain business entities is not subject to the restriction, if that is permitted by the regulations governing those areas.

The foreign investor has the right to freely employ workers from abroad, unless otherwise is specified by the labor legislation of the Republic of Srpska. Foreign investors can freely transfer their profits abroad, as a result of their investment in the Republic of Srpska.

117 locations for building business zones
57 perspective locations for investment
39 municipalities with potential investment locations
2 laws provide national treatment for the foreign investors

Investor protection

National treatment of foreign investors

The rights of foreign investors in the Republic of Srpska are defined and protected by the Constitution of the Republic of Srpska: “The property and other rights of a foreign investor, acquired on the basis of invested capital, cannot be restricted or taken away by a law or other regulation.

The right to perform business or other type of activity is guranteed to a foreign entity, as well as the right based on business activity, under conditions that cannot be altered to its detriment. The foreign investor is guaranteed the free transfer of profits and invested capital from the Republic of Srpska.

The law may exceptionally, when required by the general public interest, determine in which activities or areas a foreign entity cannot establish its own enterprise.”

The Law on Foreign Investments of the Republic of Srpska (“Official Gazette of the Republic of Srpska”, No. 21/18) and the Law on Direct Foreign Investment Policy in BiH (“Official Gazette of BiH”, No. 17/98, 13/03, 48/10, 22/15) provide national treatment for the foreign investors, ie. foreign investors have the same rights and obligations as the RS and BiH residents.

The State and its entities may not discriminate against foreign investors in any form, including but not limited to the nationality, residence or religion of the foreign investor, or country of origin of the investment.

Foreign investors’ property cannot be nationalized, expropriated or requisitioned. However, if the existence of a public interest is established, the assets of foreign investors may be nationalized or expropriated, and foreign investors are guaranteed the right to adequate compensation. The compensation will be considered appropriate if it is adequate, effective and swift.

The rights and privileges provided to the investors under the law cannot be abolished or annulled upon the entry into force of subsequently enacted laws and by-laws. If the new laws are more favorable, foreign investors have the right to choose which law will be relevant for their investment.

Risk protection and management

Foreign investors that express worries regarding the restrictions on profit transfers, expropriation, war and civil unrest, or a possible denial of the right to justice, can be insured against these risks by the Multilateral Investment Guarantee Agency (MIGA, part of the World Bank Group).

When investing in the RS, a political risk insurance is also provided for the foreign investors, by the Overseas Private Investment Corporation (OPIC) from the USA.

Investment protection agreements

BiH has signed investment promotion and protection agreements with the following countries:

Albania, Austria, Belgium, Luxembourg, Belarus, Montenegro, Czech Republic, Denmark, Egypt, Finland, France, Greece, Netherlands, Croatia, India, Iran, Italy, Canada, Qatar, China, Kuwait, Lithuania, Hungary, Macedonia, Malaysia, Moldova, Germany, Pakistan, Portugal, Romania, San Marino, Slovakia, Serbia, Slovenia, Spain, Switzerland, Sweden, Turkey, Ukraine, United Kingdom, Jordan, and OPEC countries.

Forms of foreign investments

Public – Private Partnership

Issues in the field of public-private partnerships, such as the subject, principles, methods, forms and conditions under which public-private partnerships can be realized as a form of pooling of resources, capital and expertise for the construction, rehabilitation and maintenance of infrastructure, are regulated by the Law on Public-Private Partnership in the Republic of Srpska.

The procedure for the implementation of public-private partnership projects is governed by the Regulation on the Procedure for the Implementation of Public-Private Partnership Projects in the Republic of Srpska.

In order to remove potential administrative barriers, and to revive the business environment as well as to provide incentives for attracting foreign and domestic investors, new amendments to the existing Law have been proposed.

The Law on Amendments to the Law on Public Partnership in the Republic of Srpska has been adopted. The proposed changes to the Law are simplifying and shortening the procedure for implementing public-private partnership projects.

The Government of the Republic of Srpska, at its session of 14 June 2012, adopted the New Regulation on the Procedure for the Implementation of Public-Private Partnership Projects in the Republic of Srpska.

Support for joint ventures with qualified foreign investors in BiH

Amendments to the Law on the Pension Reserve Fund of the Republic of Srpska were adopted in 2018, which prescribe that the Reserve Fund may, together with international financial organizations and multilateral development banks, invest in projects in Bosnia and Herzegovina, on the basis of contractual co-financing of projects or other financial agreements.


The conditions and procedure for the sale and transfer of state capital, in enterprises owned by the Republic of Srpska, into the property of domestic and foreign individuals or legal entities are governed by the Law on Privatization of State Capital in the Enterprises of the Republic of Srpska and other by-laws.

Authorized seller of the state-owned capital is the Republic of Srpska Investment-Development Bank (IRB RS) Banja Luka. Foreign legal entities may, under the same conditions as domestic individuals or companies, participate in the privatization of state-owned capital in enterprises.


Concessions in the Republic of Srpska are regulated by the Law on Concessions. This law created a public, accessible, non-discriminatory and clear legal framework that is setting out the conditions under which domestic and foreign legal entities are granted concession in the Republic of Srpska.

For the purpose of performing the function of concessions granting, the Republic of Srpska Concessions Commission was constituted as a permanent, independent regulatory legal entity.

Business zones

The Republic of Srpska has recognized the importance of business zones as an element of local economic development. Article 9 of the Law on Development of Small and Medium-Sized Enterprises defines a business zone:

“A business zone is a form of entrepreneurial infrastructure that represents a space equipped with a building and utility connections, intended to be used in a harmonized and planned manner by a large number of business entities engaged in economic activity.”

The strategic objective of the Republic of Srpska is given in the Action Plan to Support the Establishment and Development of Business Zones in the Republic of Srpska 2009-2013, and the Strategy for the Development of Small and Medium-Sized Enterprises and Entrepreneurship in the Republic of Srpska for the period 2011-2013. years.

In the Republic of Srpska, potential locations for business zones were mapped in previous years. Based on this mapping, it has been established that the municipalities and cities of the Republic of Srpska have expressed interest in building business zones in 117 locations.

Of these, 57 were rated as perspective, and they are located in 39 municipalities. Perspective criteria is determined by several factors, including the existence of a market, because the zone should be seen as a product for which potential investor or entrepreneur must be interested, as well as the existence of roads, railways, airports, colleges, etc.

Database of investment projects

The Investment Projects Database is a comprehensive overview of specific potential investment projects that are available to interested investors.

Local communities, as well as individuals, have the opportunity to apply with their investment projects, on a commercial basis, for grants from the RS Ministry of Economy and Entrepreneurship.

All laws that came into force in the Republic of Srpska can be found on the website of the RS National Assembly.