State Secretary, Deputy Minister of Foreign Affairs Mr. Kim Traavik

Opportunities for trade with and investments in South East Europe

Opening Statement at SEE Investment Forum, Oslo 17 March 2005

I take great pleasure in welcoming, on behalf of the Norwegian Government, all of you to this conference on opportunities for trade and investment in South East Europe.

I am happy to see that authorities and companies from the region are so well represented. I am equally pleased that so many Norwegian companies have chosen to attend. And I welcome the presence of representatives of the European Commission, the OECD, the EBRD, and the Stability Pact for South East Europe.

Norway has actively supported efforts to promote democratic development, the rule of law, human rights, security and economic development, also in the context of the Stability Pact. As a former chairman of the Security Working Table, I have been involved in those efforts myself.

Given the region’s progress on democracy and security in recent years, increasing efforts should now be directed to economic development and employment, with the support of the international community.

The promotion of trade and investment is vital for creating employment opportunities. Trade and investment will also pave the way for further development of the rule of law and strengthening democracy. Hence, we are happy to support the efforts of theOECD Investment Compact to promote investment in the region.

The aspirations of the countries of South East Europa for integration in Euro-Atlantic structures have been a driving force for transition and reform in the region. Results are emerging fast.

Bulgaria and Romania are expected to become members of the EU in 2007. Croatia has been accepted as a candidate for EU membership and is ready to start membership negotiations. And Macedonia has applied for EU membership.

Other countries in the region are preparing for negotiations on stabilisation and association agreements with the EU – an important step in the further integration process towards EU membership.

At the June 2003 Thessaloniki meeting of the European Council, EU leaders confirmed that the countries of the region will be admitted into the Union as soon as they fulfil the political and economic criteria for membership.

The prospect of EU membership is a crucial incentive for reform in the region. As a participant in the internal market of the EU through the EEA Agreement, Norway has experience of integrating with the internal market and implementing EU legislation.

In co-operation with the EU, we are offering technical assistance to the countries in the region. We are supporting them in their efforts to meet EU standards as part of the preparations for negotiations for EU membership or for stabilisation and association agreements.

Through EFTA, Norway has established free trade relations with Romania, Bulgaria, Croatia and Macedonia. Free trade agreements with the other countries in the region will be considered in parallel with the EU stabilisation and association process.

Within the framework of the Stability Pact, the countries in the region have established a network of free trade agreements and are considering the establishment of a common free trade area.

These are positive developments, of which the business community in Norway may not be sufficiently aware.

New opportunities for trade and investment are emerging in South East Europe. And in the near future Bulgaria, Romania, and Croatia will be our EEA partners in an EU single market comprising close to five hundred million consumers.

The development in the energy sector offers immediate opportunities for Norwegian investors. A regional South East European energy market is now being established and will be linked to the EU internal energy market.

A key factor in this transition process is the revival of business and industry. Governments can provide framework conditions. But commercial co-operation cannot be decreed by governments. Only the business community itself can seize the opportunities.

We need more commercial co-operation, and we need to develop real partnerships. Transitional assistance is a necessary element in the overall assistance given to the region, but it is not sufficient for the development of a strong private sector. Only commercial co-operation will be sustainable in the longer term.

The potential for increased trade and investment in the Western Balkans is considerable. But in order to realize that potential, a transparent and predictable business environment is vital. It must be secure, and it must be free of corruption. In order to foster private sector development, the need to pursue sound macroeconomic policies also must be recognized.

Hence, a regulatory framework that is compatible with EU standards is of fundamental importance, both for attracting international capital and for channelling domestic resources into productive activity. And the region’s governments are in the process of transforming the regulatory frameworks for the business sector.

Less bureaucracy and greater emphasis on transparency and efficiency is essential for investment. Understanding what is needed to foster entrepreneurship and the development of smaller-sized businesses is particularly important. Small and medium-sized enterprises could become the driving force of economic prosperity in the region.

The private sector is by far the largest source of employment, income generation and investment in any country. It is also a significant source of tax revenue.

In addition to making tangible contributions, the private sector is an important arena for the cultivation and expression of less tangible, but critically important human and societal values and qualities, such as creativity, innovation, and openness.

Sustainable development depends on a stable and secure society where freedom of action is combined with a sense of responsibility. This applies to both the private and the public sector.

We need transformation and we need freedom: freedom to promote democracy, to create jobs and better living conditions for people, to take better care of the environment and to achieve many more of the ideals we are aiming for.

The Norwegian government attaches great importance to the participation of Norwegian companies in rebuilding trade and industry in the region, and thus helping to lay the foundation for economic development. Norwegian expertise could be of particular value in some key sectors.

First, there is the agricultural sector, which remains important in many countries in the region. However, both the national authorities and individual companies have to overcome significant challenges in order to comply with EU veterinary standards.

Norway has supported several projects aimed at meeting these standards. In Bosnia and Herzegovina, for example, we have helped with the preparations for new veterinary legislation and with adapting existing provisions to EU legislation.

And we have contributed to the development of private agricultural co-operatives in Bosnia and Herzegovina, Croatia, Macedonia and Serbia. There are also examples from the aquaculture sector. The important question now is whether Norwegian companies can see attractive opportunities for agro-industry investment.

Second, there is the energy sector. Norway is an important energy-producing country and a full participant in the internal EU energy market. Norwegian authorities, companies and research institutions have acquired a high level of expertise which could be used to establish a regional energy market linked to the broader European energy market.

Norwegian expertise is already contributing to the deregulation of energy markets and to the development of a legal energy framework. Energy efficiency, cleaner production and competence building are other examples of areas to which Norwegian expertise contributes.

There could also be opportunities for investment in energy production in this region. I hope the workshop on energy this afternoon will highlight the opportunities for Norwegian companies in the region.

Third, there is the information technologies sector. The introduction of modern Information and Communication Technology (ICT) is crucial for any society today, be it at the public sector or at the company level.

Unless ICT is successfully integrated, the public sector will not be able to provide necessary services to its citizens, and companies will have difficulties in operating in an integrated European market.

Norway has supported the preparation of a national ICT strategy in Bosnia and Herzegovina, and some perspectives on ICT and the provision of health services will be presented at the workshop this afternoon. We will also look at the prospects for establishing specialised ICT enterprises in the region.

ICT is likely to be one of the fastest growing industries and has special appeal for young entrepreneurs. Future prospects will be discussed in the working group this afternoon, with the presentation of a business incubator project in Bosnia and Herzegovina.

And fourth, there is definitely a major potential for tourism in the region. For example, the rediscovery of the attractions in Croatia and Montenegro after years of conflict has led to a considerable increase in Norwegian tourists. With regard to health tourism, Norwegian patients have had excellent experience for many years of treatment at the Igalo centre in Montenegro.

Again we see increasing Norwegian interest in the health services in the region. I am confident that the workshop this afternoon will reveal potential areas for greater co-operation in this field as well.

In short, ladies and gentlemen, there is a number of opportunities open to the Norwegian companies present here today. These include special public-sector projects that would qualify for support from the Ministry of Foreign Affairs.

However, at this forum we want to focus on commercial investment and to provide information on the financing opportunities offered by both Norwegian and international financing institutions such as the EBRD.

Let me conclude by stressing once more that commercial co-operation cannot be decided by governments alone. Our role is confined to providing a framework conducive to co-operation. We for our part remain committed to supporting the countries of South East Europe in their quest for European integration.

I firmly believe that commercial co-operation can make an important contribution to this process. I also believe that the benefits, both politically and commercially, can and should be mutually advantageous.

There are still many undiscovered business opportunities for Norwegian companies in South East Europe. This seminar provides a good meeting place for exploring this potential. Now is your chance.

Thank you for your attention.