Survey_ Pluzine and Foca

Open Regional Fund Foreign Trade Promotion

Cross-border Economic Development Montenegro/Bosnia and Herzegovina

SURVEY ON SMALL AND MEDIUM-SIZED

ENTREPRISES AND ENTREPRENEURS IN

CROSS-BORDER AREA OF MUNICIPALITIES

PLUŽINE AND FOČA

A P R I L 2 0 1 0 .

Survey on Business Climate in Cross-border Area of Municipalities Foča and Plužine

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CONTENT:

1. METHODOLOGY OF THE RESEARCH ....................................................................................................... 3

2. DESK REVIEW .................................................................................................................................................. 4

2.1 Municipality of Plužine ................................................................................................................................. 4

2.2 Municipality of Foča ....................................................................................................................................... 6

3. ANALYSIS OF THE RESULTS ..................................................................................................................... 10

3.1 Basic information on representatives of enterprises/entrepreneurs ................................ 10

3.2 Exports of Goods and Products .......................................................................................................... 12

3.3 Business Environment .......................................................................................................................... 15

3.4 Business Barriers .................................................................................................................................... 19

3.5 Entreprise Capacity Building .............................................................................................................. 22

3.6 Cross-border Cooperation ................................................................................................................... 24

ANNEX 1: Interviewed enterprises by municipalities ............................................................................. 26


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1. METHODOLOGY OF THE RESEARCH By signing the Agreement between municipalities Foča and Plužine, at the end of November 2009, GTZ has started the implementation of the project “Cross-border Economic Development Montenegro/Bosnia and Herzegovina“aimed at economic development of these municipalities. The aim of the project is establishing the cross-border platform at local level with more participants that will coordinate economic development in project region, linking representatives of public and private sector as well as civil society representatives from both national and local level. With the purpose of implementing the project “Cross-border economic development Montenegro/Bosnia and Herzegovina”, the research on small and medium-sized enterprises and entrepreneurs from cross-border area of municipalities Foča and Plužine has been carried out in order to identify common needs and limitations in business activities in this cross-border area.

The implementation of the research on small and medium-sized enterprises and entrepreneurs in cross-border area of Plužine and Foča started in March 2010 when the final design and content of the questionnaire was defined. The questionnaire was designed in such way to provide the basic information on enterprises, product/service exports and business environment, as well as to identify key problems of cross-border area and the ways of their overcoming. Basen on data obtained from municipalities Foča and Plužine, with Client’s approval, the sample included 54 entreprises/entrepreneurs. The sample structure is presented in the following table:

Table 1. Sample structure by municipalities Foča and Plužine

Number of interviewed people

Foča 26 Plužine 28 Total: 54

For data collection the method of direct (face-to-face) interviews was used with the representatives of micro, small amd medium-sized enterprises. In order to perform the project task the interviews were conducted in the period from March 16-18 in Foča and from March 19-23 in Plužine. Data entry with necessary logical controls is done in SPSS program. SPSS (Statistical Package for the Social Sciences) is a software system for managing data and their analysis. SPSS may be used for statistic analysis with one or more variables, and has possibility to sort and connect files and process data. Having regard to the way the sample was designed, as well as applied methodology, we believe that the presented findings can be taken as valid and representative attitudes of SME sector representatives in municipalities Foča and Plužine on topics covered by the questionnaire.


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2. DESK REVIEW

2.1 Municipality of Plužine

Municipality of Plužine covers 854 km2, with population of 4.272 at 650m height above sea level. Town

Plužine (administrative centre of the municipality) has 1.494 inhabitants. The municipality covers the area from Javorak to Schepan Polje (border crossing), from Piva Mountain towards municipality of Žabljak (Dobri Do) and Avtovac towards Golija. The distinctive characteristic of this area is mountain massifs of Durmitor, Maglić and Volujak as well as plain area of Brezna. Geographic coordinates: 43° 09’ 06’’ of Northern geographic latitude and 18° 50’ 13’’ of Eastern geographical longitude. Climate: The climate at this territory is moderate continental climate characterized by relatively hot summers and very cold winters. The major part of municipality has average annual temperature from 2 – 8 °C.

Road network and infrastructure: Plužine is connected with Nikšić (55km) by the main road Plužine - Stabna – Gacko and with Žabljak by the local road. The connection of the territory of the municipality with other territories is mainly provided through the road traffic. The framework of road network makes the international main road Nikšić-Plužine-Foča, which, in addition to direct connection to town, all existing traffic services rely on. The indirect connection with Adriatic main road is achieved through the regional road Plužine-Trsa-Žabljak. Natural potential (resources): The territory of municipality of Plužine is very attractive for tourism development. A special hydrographic and landscape value of this area make the canyons of Tara, Piva, Komarnica and Sušica. In addition, its natural values include the following natural lakes: Trnovačko, Stabanjska Lakes and Skrčka Lakes. Tara River Canyon is certainly the greatest tourist and natural attraction. It is the longest canyon in Montenegro. It is 68 kilometers long and at some places 1,300 meters deep. According to estimations of known American geomorphologist Mr. Davis, the Tara Canyon, given its length, depth and other characteristics, is placed right behind the well-known the Grand Canyon of Colorado (Arizona, USA). There are many ways to get acquainted with the canyon and its sights, but special place takes is going down by raft or boat, which is the unforgettable experience for every sportsmen or tourist.

Demographic characteristic: On the territory of municipality of Plužine that spreads on 854 km2, live

4.272 inhabitants. Out of that number 1500 inhabitants live in urban, while the rest of them live in rural areas. The table below contains the review of the most important demographic characteristics.

Table 2. Demographic characteristics of population in municipality of Plužine

Population

Number of inhabitants 4.272

Number of households 1.347

Number of household members (average) 3,2


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Number of inhabitants living abroad 1350

Natural Increase rate -6,01

Birthrate 6,01

Death rate 12,03

Population growth rate (Census 1990/2003) -18,18

Source: Census 2003

Ethnical structure: Montenegrins and Serbs are ethnical groups with the greatest share in this municipality. Montenegrins account for 32.61% of population, with 29.79% in urban and 34.13% in rural areas, while Serbs are making 60.61% of population, with 63.92% in urban and 58.68% in rural areas. Age and gender population structure: Male and female population ratio is almost the same. According to the Census 2003, number of male population was 2.137 and female 2.135. Migrations: In the last 15 years, due to aggravated socio-economic living conditions, a certain migrations of population were noticed from rural to urban areas. This was the case with settlements in municipality of Plužine. During last few years, many young people moved away from this region in the search for work. Generally, percentage of the population inhabited in certain areas of these municipalities is not so high. In urban areas this percentage is 25.7% while in rural it goes to 20.9%. The reason for such low percentage lies in overall economic situation. This particularly refers to rural areas. The interest for living in rural settlements is getting lower each year.

Table 3. Review of the number of immigrants in urban and rural areas of Plužine

Area Total number of inhabitants

Number of immigrants from 1991-2003

%

Urban 1494 228 25.7

Rural 2778 199 20.9

Source: MONSTAT –from publication Migration characteristics, 2003

Economy: According to the data from the Central Register of Commercial Court of Montenegro, on the territory of municipality of Plužine there were 54 registered commercial entities, out of which 27 are enterprises and the same number of entrepreneurs. The municipality data in the middle of 2009 show that there were 16 active companies, out of which 11 were small and five of them medium-sized. The dominant activity was trade, while the tourism was second rated.

Table 4. The review of the companies by legal form

Legal form Plužine

Joint Stock Company (A.D.) 2

Limited Liability Company (D.O.O.) 25

Limited Partnership (K.D.) /


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General Partnership (O.D.) /

Entrepreneur 27

Cooperative /

TOTAL: 54

Source: Data taken from the web page of Central Register of Commercial Court of Montenegro accessed on

February 09, 2010

Traditional occupations of this area are cattle-breeding and agriculture and wood industry is also developed. The Joint Stock Company 'Šumarsko preduzeće' Plužine deals with forest farming and protection. The companies dealing with primary wood processing also operate in this area, such as Saw-mill Brezna. Tourism: Besides trade, tourism is one of the strategic industries in terms of further development of Plužine. The territory of municipality is very attractive for tourism development. According to the data of Tourist Organization in Plužine, during 2009 there were about 4.000 foreign guest overnights or 1.750 more than the previous year. One of the major goals is designing the Tourism Development Strategy in Piva 2020. Several actions for town arrangement and cleaning Piva Lake will be organized as well as the initiative for registration of rural households that could provide tourism services. The following table contains the trends in the number of guests and overnights in the period 200.-2008.

Table 5. Tourism from 2004-2008 in municipality of Plužine

Year Domestic tourists

Foreign tourists Overnights- domestic tourists

Overnights- foreign tourists

2004 2005 2006 2007 2008

391 396 262 248 232

240 221 504 864 907

714 735 396

1314 387

341 361 679

1173 1140

Source: Statistical Yearbook 2009 - MONSTAT

2.2 Municipality of Foča

Municipality of Foča covers the large area of about 1115 km2, organized around upper flow of the

Drina River. It is situated in the southeastern part of the Republic of Srpska, and both the east and south border of the municipality are actually the border with Montenegro,; on southeast is borders with municipality Čajniče, on the north with Federation of Bosnia and Herzegovina (municipalities Foča/Ustikolina and Goražde), on the west with municipality Kalinovik and on the southwest with municipality of Gacko. This area includes parts of the mountains Zelengora, Maglić and Ljubišnje,


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valleys of the rivers Drina, Ćehotina, Bistrica and Sutjeska and almost entire area of the National park 'Sutjeska'. Geographic coordinates: 44° 30’ of northern geographical latitude and 18°47’ of eastern georaphical longitude. Climate: Mountain climate, with characteristics of moderate-continental climate. Road network and infrstructure: Foča has such location that it makes a natural settlement, which connects the northern parts of the country with the southern and eastern ones. Such characteristics had affected the development of main roads. Foča in its wider area is connected with the following main roads: M20 (Gacko - Foča - Ustiprača), M18 (Sarajevo - Foča - Nikšić) i R457 (Foča - Pljevlja). Due to the importance of these roads, Foča has a favorable geo-traffic position. Natural potential (resoures): Foča has a significant natural potential and by that huge possibilities in tourism area. This in the first line refers to the National park ‘Sutjeska’ with virgin forest Perućica,

hotels, sports fileds, 16.000 m2 swimming pool, then mountains Zelengora and Maglić, rich in game, as

well as attractive lakes with large fish stock. Rafting down Tara and Drina is a famous attraction and significant tourist amenity. Also, rivers Drina and Ćehotina are rich in fish, which makes them favorable for fishing. Demographic characteristics: There are 27.000 inhabitants living on the territory of municipality of

Foča on the surface of 1115 km2. According to the Cenzus 1991, municipality of Foča had 40.513

inhabitants. The population ratio between urban and rural areas was 35:65, while data from 2007 showed that this ratio changed significantly – 72% was inhabited in urban and 28% in rural areas. This change is a consequence of the war, when people in rural areas migrated in the town. Return to rural areas has been made difficult due to damages roads and electrical installations. The following table contains the review of the most significant dempographic data.

Table 6. Demographic characteristics of population in Foča:

Population

Number of inhabitants 27.000

Number of households 8.709

Number of household members (average) 3,1

Number of inhbitants living abroad

Natural Increase rate – 2,39‰

Birthrate -

Deathrate -

Population growth rate (Cenzus 1981/1991)

Source: Data from municipal administrative service for 2007

Ethnical structure: By the Cenzus 1991 Muslims and Serbs were ethnical groups with the largest share in overall population. Muslims made 51.6% (20.790 inhabitants), while Serbs had percentage of 45.3% (18.315 inhabitants). However, due to the wartimes ethnical structure of pupulation in municipality of Foča changed drastically. According to the municipal data, currently Bosnians (Muslims) make 13.5% and Serbs 86.2% of total population.


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Age and gender population structure: Male and female population ratio is practically the same. Based on available data, the shae of female population in total population in 2007 was 52%. The current population structure is characterized by a significant percentage of active labor force (66%). Migrations: As a result of wartimes during the 90s, it came to mass population displacement and ethnical structure change. The process of return of displaced people is underway. By the end of the war in municipality of Foča there were 3.650 registered Bosinian (Muslims) returners, but the real number of returnes is growing smaller, considering that returnes often either sell or change their property and move permanently from Foča. This is particularly noted in urban area. On the territory of municipality in 2007 there were about 2.500 registered displaced persons whose residence since 1991 was in Sarajevo, Upper Drina region and villages in Foča municipality.

Table 7. Population cross-section in municipality of Foča

1991 1996 2001 2005 2007

Number of inhabitants in municipality

40.513 23.000 25.039 25.641 27.000

Source: Based on the dada from municipal administration

Economy: On the territory of Foča the largest number of pre-war companies exists no more. The main reasons for such situation lie in inefficient privatization process and poor mamagement structure in the companies. The companies that were the most significant factor of pre-war development of the municipality were Brown Coal Mine „Miljevina“ amd Joint Stock Company „Maglić“. Today, these companies went into bamcruptcy. Cattle-breeding and fruit growing are agricultural branches that have a substantial basis for municipality development. Due to its untapped nature, Foča has excellent pre-conditions for organized collection, processing and final processing of curative herbs and forest products. According to municipal data, on the territory of Foča in 2009 there were 78 legal entities and 415 independent activities registered. The largest number of registered legal entities (58) was registered as limited liability Company, while 20 companies were registered as joint stock companies. Out of the total number of registered independent activities, the largest number dealt with trade, craft and catering services. The key problems are unused natural resourses for energy development, processing industry, agriculture and tourism.


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Table 8. Legal entities by activity in municipaliy of Foča

Agriculture 5

Forestry 7 Mining 2 Food industry 1 Wood industry 9 Utility 2 Construction industry 7 Catering 2 Traffic 11 Trade 21 Other 11 TOTAL: 78

Table 9. Independent shops by activity in municipality of Foča

Trade stores 144

Catering facilities 79 Craft shops 115 Other 77 TOTAL: 415

Tourism: The most important tourist resourse of Foča is the National park „Sutjeska“ with virgin forest Perućica, mountains Zelengora and Maglić, Volujak and Vučevo rich in game, as well as in attractive lakes suitable for hunting and fishing. NP „Sutjeska“is the oldest and the largest national park in Bosnia and Herzegovina. Municipality of Foča is known for its attractive rafting down Tara and Drina. The river Tara is protected zone with long-year tradition of extreme water sports. The rafting experience itself completes the enjoyment in the richness of nature. Near town on the road to Sarajevo there are a famous phenomenon sand pyramides, which represent a real wonder of nature. One of the strategic goals is creation of eco-region Foča, as well as the developement of rural and eco-toursim. It is necessary to encourage rural households towards providing tourist- hospitality services, which could enable them to sell their food products or to sell those products through services of other entrepreneurs - rafting club and eco-mountain resort owners.

Table 10. Tourism from 2006-2009 in municipality of Foča

Year Number of tourist overnights

2006 2007 2008 2009

10915 12298 19029 14143

Source: Data from Tourist Organization of municipality of Foča


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3. ANALYSIS OF THE RESULTS

3.1 Basic information on representatives of enterprises/entrepreneurs In order to get a detiled insight into business activities of small and medium-sized enterprises/entrepreneurs in cross-border area of municipalities Foča and Plužine, the research included 54 entreprises. The overview of interviewed enterprises is given on Annex 1. The interviewed representatives of enterprises were mostly men between 40 and 50, the owners of enterprises with secondary level of education. As presented in Table 11, the research included the same number of entrerpises in both municipalities that perform both seasonal and all-year around activity.

Table 11. Character of the Activity

Seasonal activity

All-year around activity

Foča 13 13 Plužine 14 14

The representatives of 10 entreprises from Foča assessed that seasonal activity lasted four months on average, while in municipality Plužine five representatives respectively stated that this activity lasted either three or five months, Chart 1.

Chart 1. Average duration of the activity

Out of the total number of interviewed enterprises, the largest number from both municipalities as their main activity stressed providing of tourist services – rafting, camps and etno villages. Beside this activity, forestry and wood processing, agriculture, catering and craft services were present as well, Chart 2.

0 2 4 6 8 10

2 months

3 months

4 months

5 months

6 months

1

2

10

0

0

0

5

1

5

3

Foča

Plužine


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Chart 2. Main activity of the enterprises in municipalities

What was characteristic for interviewed companies was that they most often engaged in rafting and camping activities, but they registered their activities in some other type. This is characteristic for both municiplaities, since there is no legal basis for registering the activity as rafting or camping. The following chart displays how the companies dealing with rafting and camping registered their activities:

Chart 3. Registration of rafters and campers

The enterprises were mainly established in the period 2001-2010 (15 entreprises from Foča and 12 from municipality of Pljevlja). Regarding the number of employees, the companies usually had 5 employees (16 entreprises in municipality Foča and 22 entreprises in municipality Plužine). Having regard to the gender structure of employees, in enterprises from municipality of Foča 73.3% of employees were men, while in Plužine the percentage in favor of men was 70.8%, Chart 4. On the other

0 2 4 6 8 10 12

Rafting and camp

Catering

Agriculture

Independent craft shop

Wood industry

Tourist services

Other sports activities

Wire products

Construction industry

Trade

12

4

3

3

2

1

0

0

0

1

10

2

7

3

1

2

1

1

1

0

Foča Plužine

0 1 2 3 4 5 6

LLC

Entrepreneurship

Independent shop

Rafting camp

Rafting club

independent craft shop

4

1

3

1

1

2

6

4

0

0

0

0

Foča Plužine


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side, a more detailed insight into employee structure by level of education showed that employees in most cases had secondary level of education. Regarding the ownership structure, almost all interviewed enterprises were privately owned with domestic capital. The exception was three enterprises in state ownership in municipality of Foča and two enterprises in Plužine. For the majority of companies in cross-border area of Plužine and Foča annual revenue in 2009 amounted up to €50 000, Chart 5.

Chart 4. Share of men in total number of employees

Chart 5. Achieved annual revenue of companies in 2009

3.2 Exports of Goods and Products

On question what their main product/service was, majority of respondents stated tourism activity services such as: rafting, camp, ethno village, hiking, lake cruising and tourism promotion. More detailed answers were presented in the Table 12. As additional services in tourism the following were present the most: camp, hunting tourism, hiking, jeep safari, lake cruising and canyoning.

Table 12. Main product/service

Plužine

Rafting 3

Food and drink 1

Production of agricultural products

7

Furniture and wood sediment production

2

Tourism promotion 1

Camp 4

Ethno village 4

Hiking 1

Lake cruising 1

Hairdresser services 2

Construction industry 1

Welding material 1

TOTAL: 28

Foča

Rafting 12

Food and drink 3

Production of agricultural products 3

Furniture and wood sediment production

2

Tourism promotion 1

Printing 3

IT services 1

Accommodation 1

TOTAL: 26

0 5 10 15

Up to 50 %

50%

From 51 to 80%

More than 81%

1

5

11

8

5

4

5

10

Foča

Plužine

0 10 20 30

Up to 50.000€

From 50.000 to 100.000€

From 100.000 to 200.000€

More than 1.000.000€

Don't want to answer

17

5

3

1

0

21

0

0

1

5

Foča

Plužine


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When exports of products and services are concerned, the company representatives were asked which products and services they export the most, what the share of exports in their total turnover was, as well as where the products were mostly exported. Out of the total number of interviewed companies, 21 from municipality of Foča and 18 from municipality of Plužine exported their products and services, Chart 6.

Chart 6. Do you export products/services?

Considering that the Tara Canyon is one of touristic attractions, recognized as the deepest canyon in Europe, rafting is the most common service exported in municipalities Foča and Plužine, Chart 7 and 8. In these municipalities rafting is an integral part of ethno village and camp services.

Chart 7. Product/services exported – Foča

Chart 8. Product/services exported - Plužine

Municipality of Foča most often exported products and services to Serbia, Slovenia and EU countries, while municipality of Plužine exported in Russia, Poland and Ex Yu countries. The exports concerned mostly related to tourist services: in municipality of Foča foreign guests were from Serbia and other Ex Yu countries, while in municipality of Plužine the guests were from Russia, Poland and Ex Yu countries. When the share of exports in total turnover in 2009 is concerned, companies in municipality of Foča stated that the share was either up to 10% (seven companies) or more than 90% (six companies), while in municipality of Plužine share of exports ranged from 51 to 90% (six companies) or more than 90%(five companies), Chart 9.

0 5 10 15 20 25

Yes

No

21

5

18

10

Foča

Plužine

0 5 10 15

Hunting Tourism

Sale of Paintings

Photographing

Accommodation and food

Printing

IT services

Food and drink

Hiking

Rafting

1

1

1

1

1

1

2

1

12

0 5

Tourism services

Catering

Hiking

Welding material

Hairdresses services

Production of agricultural products

Ethno village

Camp

Rafting

1

1

1

1

1

2

3

3

5


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Chart 9. Share of exports in total turnover 2009

As it is shown in the Chart 10, companies from Foča engaged in rafting and camping stated that their share of exports in the total turnover was ranging from more than 90% or from 51 to 90%. Companies from Pluzine (Chart 11) whose main activity is rafting and camping most often stated that their share of exports was ranging from 51 to 90% or more than 90%. Chart 10. Export share in total turnover by

sectors - Foča

Chart 11. Export share in total turnover by sectors – Plužine

According to the opinion of nine company representatives from municipality of Foča and 12 representatives from municipality of Plužine, the exports of their products/services in 2010 would increase, Chart 12. Similarly, it is also important to mention that the companies from both municipalities pointed out that the exports would be at the same level as last year due to the economic crisis.

Chart 12. Expectations in exports trends

0 2 4 6 8

Up to 10%

From 11 to 50%

From 51 to 90%

More than 90%

7

5

3

6

3

4

6

5

Foča

Plužine

0 2 4 6

Wood industry

Rafting and camp


Trade

Tourist services

Catering

1

2

1

1

2

1

2

1

1

36

Up to 10% From 11 to 50% From 51 to 90% More than 90%0 1 2 3 4

Rafting and camp

Agriculture

Wire products


Tourist services

Catering


1

1

1

1

1

1

1

4

1

1

4

1

Up to 10% From 11 to 50% From 51 to 90% More than 90%

0

2

4

6

8

10

12

IncreasedDecreasedAt the same level

9

4

8

12

0

6 Foča

Plužine


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The expectations in the exports trends by sectors is similar in both municipalities. As it is shown in the charts 13 and 14, the company engaged in rafting and camping believed that exports would either increase or stay at the same level. It is possible to note that enterprises from both municipalities, which provide services in catering expected the increase export of services in the future.

Chart 13. Expectations in exports trends by

sectors - Foča

Chart 14. Expectations in exports trends by sectors - Plužine

In municipality of Foča company representatives expected the export increase upto 10%, while in municipality of Plužine companies thought this percentage would range from 10% to 30%, Chart 15.

Chart 15. Expected export increase percentage

A more detailed insight in the municipality of Foča showed that companies dealing with rafting and camping expected that the exports by activities would move either up to 10% or between 10 and 30%, (Chart 16). Representatives of this sector from Pluzine (Chart 17) are less optimistic on this issue and believe that the percentage increase would move up to 10%.

0 2 4 6

Wood industry

Rafting and camp


Trade

Tourist services

Catering

1

5

1

2

2

2

5

1

1

1

Increased Decreased At the same level0 2 4 6


Agriculture

Wire products

Rafting and camp


Tourist services

Catering

1

1

1

5

1

1

2

1

5

Increased Decreased At the same level

0 1 2 3 4 5

Up to 10%

From 10 to 30%

More than 30%

5

3

0

3

5

3

Foča Plužine


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Chart 16. Expected percentage of export increase by sectors - Foča

Chart 17. Expected percentage of export increase by sectors- Plužine

Data analysis in the municipality of Foča has shown that companies that expect to increase their exports up to 10%, achieve share of exports in the total turnover up to 10% and from 11 to 50%. It is important to emphasize that enterprises with expected increase in exports from 10 to 30% have a share of exports in total turnover of more than 90% (Chart 18). Companies from the municipality Plužine, (Chart 19), with the expected percentage increase from 10 to 30%, achieve the share of exports in the total turnover from 11 to 50%.

Chart 18. Expected export increase percentage by export share in total

turnover - Foča

Chart 19. Expected export increase percentage by export share in total

turnover - Plužine

On the Chart 20 can be noticed that enterprises from the municipality of Foča, which expected to increase exports or to keep it on the same level, achieve the share of exports in total turnover up to 10%. Companies from Plužine that expected to increase exports, stated that the share of exports in total turnover would range from 51 to 90%, (Chart 21).

0 1 2 3

Wood industry

Rafting and camp


Catering

1

2

1

1

3

Up to 10% From 10 to 30% More than 30%0 0,5 1 1,5 2


Agriculture

Wire products

Rafting and camp


Tourist services

Catering

2

1

1

1

1

1

1

1

1

1

Up to 10% From 10 to 30% More than 30%

0 0,5 1 1,5 2

Up to 10%

From 10 to 30%

More than 30%

22

1

12

Up to 10% From 11 to 50% From 51 to 90% More than 90%0 1 2 3

Up to 10%

From 10 to 30%

More than 30%

1

1

3

2

1

1

1

1



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Chart 20. Expectations in exports trends by share of exports in total turnover

– Foča

Chart 21. Expectations in exports trends by share of exports in total turnover

- Plužine

3.3 Business Environment

In order to get insight into business environment, the companies were asked whether they were members of any business association and what the level of their satisfaction with the membership was, as well as the level of cooperation with associations important for their regular business activity performance.

Regarding the membership in business associations in municipality of Foča we have the following structure:

• 10 companies were members of Rafter Association,

• 5 companies were members of Entrepreneurs Association,

• Three companies were members of local tourist association and chamber of commerce respectively.

Slight different situation was found in municipality of Plužine:

• 10 companies were members of local tourist organizations,

• one companies was member of chamber of commerce and

• one was member of Farmer Association. Business Associations that were present in both municipalities were tourist organizations and rafter associations. Local tourist associations have recently started to work and there was an initiative of establishing cooperation through organizing rafting-oriented events. In addition, the cooperation of existing rafter associations could be futher encourages in order to solve the common problems related to the performance of this activity.

0 1 2 3

Increased

Decreased

At the same level

3

1

3

2

1

2

2

1


0 1 2 3 4 5

Increased

Decreased

At the same level

2

1

3

1

5

1



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Chart 22. „Benefits“ from membership

A slight higher number of company representatives thought that they had no concrete benefit from membership in business associations, Chart 22.

Those who had benefits mostly stated that those benefits were in form of promotion at fairs and informing about coming events.

Data analysis by activities in municipality of Foča showed that companies engaged in rafting and camping have not felt any concrete benefits of membership in business associations, (Chart 23). On the other hand, enterprises engaged in rafting and camping in the municipality of Plužine stated that they had concrete benefits of membership in business associations (Chart 24).

Chart 23. Benefits from membership by sectors - Foča

Chart 24. Benefits from membership by sectors - Plužine

Company representatives from both municipalities were asked to rate on the scale from 1 – very unsatisfactory to 10 – very satisfactory the level of cooperation with organizations they had contact with in doing their business. The best rated cooperation in municipality of Foča was with the companies dealing with same or other activities (average rate 8.0 and 7.9 respectively), while in municipality of Plužine the best rated cooperation was with the companies dealing with the same activity and local tourist organizations (average rate 7.1 and 7.0 respectively), Chart 25.

0 5 10 15

Yes

No

6

11

7

8

Foča Plužine

0 2 4 6 8

Wood industry

Agriculture

Rafting and camp


Trade

Catering

3

1

1

1

1

1

7

1

1

Yes No0 2 4 6

Wood industry


Agriculture

Rafting and camp

Tourist services

1

5

1

1

3

4

Yes No


GTZ 19

Chart 25. Average rate of the level of cooperation with organizations concerned

3.4 Business Barriers

Interviewed representatives from municipality of Foča assessed business environment they operate in as satisfactory and bad, Chart 26. A more detailed insight into the reasons for “bad” business ambiencewas the following: insufficient engagement of municipal and public bodies, bad product marketing, current economic crisis, which hinders taking loans and the lack of legal regulations.

Chart 26. Description of business environment

Companies from Foča, whose main activity is rafting/camping and catering usually assessed the business environment as good and satisfactory, (Chart 27). However, the respondents involved in agriculture or who held an independent craft shop assessed the business environment as poor. Companies from Plužine that provide rafting/camping services as well as agricultural services assessed the business environment both as satisfactory and poor (Chart 28).

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0

Companies performing the same activites

Companies performing other activites

Farmer Association

Local Tourism Organization

National Tourism Organization

Municipality and municipal bodies

Ministries (of Tourism, Agriculture, etc.)

Other public institutions

Media

7,9

8,0

6,0

6,4

4,7

5,7

3,8

5,6

6,5

7,1

5,8

4,6

7,0

6,6

6,4

6,9

3,6

6,2

Foča Plužine

0 2 4 6 8 10 12 14

Good

Satisfactory

Bad

8

9

9

3

13

12

Foča Plužine


GTZ 20

Chart 27. Description of business environment by sectors – Foča

Chart 28. Description of business environment by sectors - Plužine

Company representatives from both municipalities pointed out that they had largest problems with unfair competition (nonregistered companies) and low prices, Chart 29. In addition to these problems, they also stated difficult collection of products and services (municipality of Foča) and procedures related to issuing permits by both local and public bodies (municipality of Plužine).

Chart 29. Companies most often had problems with the following in the last 12 months:

Company representatives from both municipalities were asked whether administrative and regulative measures limit or have no influence on their business. As presented in Chart 30, respondents from municipality of Foča thought that their business was limited by the state and municipal inspection and by fees at both local and national level. Municipality of Foča has introduced ISO Quality Standard since 2008, which standardized administrative procedures. Similarly, this municipality has established a one stop shop that significantly speeded up the process of obtaining necessary permits and certificates.

0 2 4 6

Wood industry

Agriculture

Rafting and camp


Trade

Tourist services

Catering

1

4

3

1

5

1

1

1

1

2

3

2

1

Good Satisfactory Bad0 2 4 6

Wood industry



Agriculture

Wire products

Rafting and camp


Tourist services

Catering

2

1

1

1

3

4

2

2

1

2

1

5

1

2

Good Satisfactory Bad

0 5 10 15

Product/service marketing

Permit issuing procedures

Registration of the activity

Unfair competition

Low prices

Product/service charging

Product/service payment

Work force employment

6

4

0

12

11

11

2

7

7

9

2

12

10

5

1

3

Foča Plužine


GTZ 21

Chart 30. Administrative and regulative measures that limit company operating in Foča

Respondents who stated that the administrative and regulative measures limited their business were asked to rate the limitation level of those measures on the scale from 1 to 3 (1 – high limitation, 2 – medium limitation, 3 – low limitation). As presented in the Table 13, highest limitation to companies caused lease/purchase or transfer of ownership (rate 2.09) and undefined ownership structure (rate 2.11). The obtained rates pointed to the problem of the lack of plan documentation in municipality of Foča and the need for their development.

Table 13. Average rate of influence of administrative and regulative measures in Foča Average rate

Obtaining permits at the national level 2.67

Obtaining permits at the local level 2.78

State inspection 2.50

Municipal inspection 2.70

Fees at the national level 2.60

Fees at the local level 2.70

Labor forse regulation 2.35

Lease/purchase or transfer of ownership 2.09

Construction permits 2.36

Other administrative measures 2.77

Undefined ownership rights over property 2.11

As far as the municipality of Plužine is concerned, respondents though that the limitations to their business was caused by obtaining permits on both local and national level and municipal inspection, Chart 31. Unlike Foča, municipality of Plužine has problems with time-consuming and complicated procedures of issuing permits, which points to the need of establishing a one stop shop. In this way, all necessary services would be provided to the citizens with minimal costs, in shortest time and in one place.

0 5 10 15 20

Obtaining permits at the national level

Obtaining permits at the local level

State inspection

Municipal inspection

Fees at the national level

Fees at the local level

Labor forse regulation

Lease/purchase or transfer of …

Construction permits

Other administrative measures

12

18

20

20

20

20

17

11

11

13

9


GTZ 22

Chart 31. Administrative and regulative measures that limit company operating in Plužine

Respondents who stated that administrative and regulative measures limited their business activity were asked to rate the limitation level of those measures on the scale from 1 to 3 (1 – high limitation, 2 – medium limitation, 3- low limitation). As presented in the Table 14, the highest limitation to the companies from Plužine caused state inspection (rate 2.09) and the process of obtaining permits on municipal level (rate 2.16). Similar to municipality of Foča, municipality Plužine too has problems with the lack of plan documentation and this problem needs to be solved in shortest term possible.

Table 14. Average rate of influence of administrative and regulatory measures in municipality of Plužine

Average rate

Obtaining permits at the national level 2.31

Obtaining permits at the local level 2.16

State inspection 2.09

Municipal inspection 2.47

Fees at the national level 2.33

Fees at the local level 2.73

Labor forse regulation 2.36

Lease/purchase or transfer of ownership 3.00

Construction permits 2.33

Other administrative measures 2.89

Undefined ownership rights over property 2.80

3.5 Entreprise Capacity Building

Companies from Foča in higher number of cases stated that they had a web site in comparison to those from Plužine (19 and 11 companies respectively). Similarly, the companies from Foča (12) in majority

0 5 10 15 20

Obtaining permits at the national level

Obtaining permits at the local level

State inspection

Municipal inspection

Fees at the national level

Fees at the local level

Labor forse regulation

Lease/purchase or transfer of …

Construction permits

Other administrative measures

16

19

11

15

12

11

11

5

6

9

5


GTZ 23

of cases linked their web sites to the web site of local/national tourist organization comparing to those in Plužine (5). Almost every second employee in these companies knew at least one foreign language. Respondents from Foča organized or attended trainings in order to either train or improve skills of their employees – 20 of them. On the other side, in Plužine only 10 companies opted for trainings. Most often the trainings were for skippers, writing applications for cross-border programs, tourism-oriented trainings – tourist guide training, foregn language courses, etc Company representatives from both municipalities stressed the interest for attending trainings and courses in the future period: foreign language courses, catering, skipper trainings, production of milk products and trainings for farmers. The best way to improve competitiveness of small and medium-sized enterprises respondents in both municipalities saw in loan approval, Chart 32. Similarly, they put a significant accent to the support in promotion (marketing)of products/services.

Chart 32. Best ways to improve company competitiveness (%)1

Respondents who were engaged in rafting and camping in Foča as the best way to improve the competitiveness of small and medium-sized companies saw the credits, as well as the assistance in promoting business and in the sale of products/services, (Chart 33). Companies from Plužine (Chart 34) engaged in the agricultural sector and rafting/camping as a means of improving the competitiveness stated the state loans and assistance in the sale of products/services.

1 Multiple answers possible, weighted values

0 5 10 15 20 25 30 35 40

Support in vocational training

Loans

Business promotion support

Product/service marketing support

16,7

31,7

23,3

28,3

15,3

39,0

22,0

23,7

Foča Plužine


GTZ 24

Chart 33. Best ways to improve company competitiveness by sectors – Foča

Chart 34. Best ways to improve company competitiveness by sectors – Plužine

3.6 Cross-border Cooperation

Almost all interviewed people from municipality of Foča (23 of them) and every second interviewed from municipality of Plužine (14 of them) have heard about Cross-border Cooperation Program. However, none of them had participated in this program. As the most important problems in Foča and Plužine cross-border cooperation (Chart 35) were emphasized the following: road infrastructure, the lack of coordination in tourist offer and the lack of cooperation among companies in these municipalities. Representatives of municipality of Plužine as one of the problems stated the lack of organization of joint spoirts and cultural events.

Chart 35. Common problems of cross border cooperation (%) 2

2 Multiple answers possible, weighted values

0 2 4 6 8 10 12

Wood industry

Agriculture

Rafting and camp


Trade

Tourist services

Catering

1

1

6

1

1

2

2

11

1

1

2

1

9

1

3

1

2

9

1

1

1

2


Loans


Product/services marketing support

0 2 4 6 8

Wood industry



Agriculture

Wire products

Rafting and camp


Tourist services

Catering

1

1

1

4

1

1

1

1

1

7

1

5

3

2

2

1

1

1

3

1

3

1

2

1

1

1

4

5

1

1


Loans


Product/services marketing support

0 5 10 15 20 25

Environmental protection

Road infrastructure

Lack of coordination in tourist offer

Poor cooperation among companies

No work force mobility from one municipality to another

No joint sports or cultural manifestations/events

Other

16,2

22,5

18,0

17,1

9,9

11,7

4,5

17,3

21,2

14,4

15,4

10,6

20,2

1,0

Foča Plužine


GTZ 25

Interviewed representatives gave their suggestions how these problems could be solved:

• Environmental protection: Foča: Action of cleaning Tara River, education of tourist agency owners and rafters Plužine: punitive measures for environment polluters, education of tourist agency owners and refters

• Road infrastructure: It is necessary to improve road infrastructure either by constructing the new or extending the existing road. Given the fact that municipalities Foča and Plužine are connected with the main road, this problem could not be solved at municipal level, since this issue goes under the jurisdiction of states of these two municipalities.

Foča: main road construction Plužine: main road construction, extention of the road

• Lack of coordination in tourist offer: For the purpose of tourism development in municipalities Foča and Plužine it is necessary to expand the accommodation capacities, build sports and catering facilities. However, what seems to be the problem is the lack of planning documents in both municipalities. In addition to construction of new capacities, it is necessary to standardize the accomodation in camps and bring the existing accomodation capacities to a higher level so that they could meet the tourist needs. The vicinity of National parks Sutjeska and Durmitor and Tara river should be better use in order to link the tourist offer of this cross-border area. The forming of clusters, which would be a great tool for cooperation among rafters, campers, farmer associations and tourist agencies, could greatly contribute to the linking of tourist offer.

Foča: Make unique tourist product with the National Park Durmitor, speed up the procedures of crossing border, and organize joint meetings more often Plužine: link tourist offers through rafting, link tourist organizations from both municipalities

• Poor cooperation among companies: Foča: enable easier flow of goods, reduce administrative barriers, establich more intensive cooperation Plužine: encourage cooperation and organize meeting more often

• No work force mobility from one municipality to another: Work forse mobility – regarding this issue it is necessary to adjust legal regulation for seasonal workers.

Foča: solving the problem of national level, facilitate work force mobility and the work permit process Plužine: facilitate the process of work permit obtaining, sign the agreement between municipalities

• No joint sports or cultural manifestations/events: Foča: organizing regatta on Tara, organizing joint festivals, rafting tours Plužine: joint cultural events.


GTZ 26

ANNEX 1: Interviewed enterprises by municipalities

Municipality Foča Municipality Plužine Bodo BAST

Brest Pilana Brezna

Caffe Cinema Ethno village Green Tara

Caffe Mocart Ethno village Izlazak

DMD Kamp Ethno village Milogora

Drina Tara Ethno village Montenegro

Encijan FEP

FOART Free in Green

Fotostudio M Goransko

Grabner Camp Brijeg

Ivona Camp Brštanovica

Kalista-R Camp Sastavci

Local Tourist Organization Miraft

Mata Monte Raft

Monting-S Local Tourist Organization

Pansion Odmor Mountainiring (hiking)

Beach Ošovac, Cehotina Tourist household Vukovic

Farmer Drakul Miodrag Hairdresser saloon Radmila Lazić

Farmer Vuković Hairdresser saloon Zagorka Doderović

Farmer UTP Piva Pluzine

Sigmaelektroniks Craft

Skiper Farmer - Luka Knežević

Stamparija KAB Savic Farmer - Tomislav Adžić

Forests of Republika Srpska Farmer - Radovan Todorović

Tara Raft Farmer- Goran Bajagić

Tomas Farmer- Stevan Jokanović

Farmer - Predrag Aprcović

Farmer - Mladen Golubović

Documents

Survey_ Pluzine and Foca