Challenges and opportunities
Requirements for Growth
The BiH wood sector has great potential for global competitiveness. Bosnia has abundant, high quality raw material, a long tradition in forestry and wood processing, and a knowledgeable, relatively low-cost workforce. It is geographically adjacent to the European market, retains a good reputation in the developing world established during the socialist era, and has ties to the U.S. market because of that country’s economic assistance.
However, there are major challenges the sector faces in realizing its competitive potential.
These include:
• A poor legal and regulatory system for economic governance of forestry. Supreme law governing forestry does not mandate best modern practices of sustainable forestry. Sawlog allocation to processors is not governed by market principles. The forestry management structure is complex and fragmented, and potentially competitive processors cannot rely on obtaining raw material.
• Weaknesses in company strategy and operations. Too few wood processing companies are obsessively customer-oriented, producing with innovative designs and reliable high quality, and operating with financial and administrative sophistication.
•Inadequate business finance. BiH is relatively unattractive to foreign investors due to the ongoing lack of internal political harmony and limited local demand. Its financial system is underdeveloped and poorly integrated into larger regional and European financial markets. Government has limited resources for development finance.
•Problems of infrastructure. Because of weak public expenditure resources and planning, the surface transportation system in the country is deeply inadequate, with virtually no modern highways and limited rail and terminal facilities. Physical facilities at borders are poor.
•Inadequate workforce development. While there is a tradition of skill in forestry and wood processing, the country’s educational system is not delivering enough training in modern management practices with skills directly targeted for the sector.
These are the challenges that BiH forestry and wood sector companies, acting jointly, can successfully attack. The USAID CCA aims to stimulate and support them in this effort to realize the country’s great potential as a world-class leader in wood products.
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Wood processing and forestry
