The Supreme Office for the Republic of Srpska Public Sector Auditing has conducted a performance audit titled “Establishment of Business Zones in the Republika Srpska”.

The purpose of this performance audit was to examine the causes that affect the success of the process of establishing business zones in the Republic of Srpska, as well as the consequences of that situation, and based on the conducted examination to offer recommendations which implementation by competent institutions can improve the success of this process in the Republic of Srpska.
The findings of the audit have shown that the establishment of business zones in the Republic of Srpska is influenced by various factors of organizational-institutional, managerial, administrative and financial nature.

The existing legal framework governing the area of entrepreneurial infrastructure and business zones is not complete, it is not fully harmonized, and some regulations have not been consistently applied in practice. Institutions and bodies responsible for the establishment of business zones do not have sufficient and adequate capacity to fulfill the assigned roles, which, with insufficient effective coordination, affects the success of this process. A unique database on business zones in the Republic of Srpska has not been established.

The Republic of Srpska is committed to support and assist the establishment and development of business zones, and through the institutions of the Republic provided local self-government units with direct financial support of 5.5 million KM and non-financial support in the form of transfer of property rights, professional and advisory assistance, and business zone promotion. However, the stated support of the Republic was not fully implemented in a planned and coordinated manner.

In the Republic of Srpska, 75 business zones in 38 local self-government units are in the process of being established. Out of the total number, 20 business zones can offer their capacities to interested investors.

Local self-government units entered into the process of establishing business zones unprepared, not knowing and not applying the prescribed procedures for establishing business zones, without an appropriate basis in strategic, developing, spatial planning and legal acts, and without adequate resources and capacities.

About 50 million KM were invested in the establishment of business zones from 2009 to 2019, of which local self-government units 33.5 million KM, international donors 8 million KM, the The Republic of Srpska Government 5.5 million KM and the Republic of Serbia Government of 2 million KM. Of the financial resources invested in the establishment of business zones, 22.2 million KM was invested in the construction of infrastructure, 14.5 million KM for the purchase of real estate, 6.2 million for the construction of business facilities KM and 6.1 million KM for other activities. No assessment has been made of the value of real estate transferred for the purpose of establishing business zones.

The functional establishment of business zones was not achieved according to the planned dynamics. There was no organized promotion of business zones and not all opportunities were used to offer the capacity of business zones and attract interested investors. At the end of 2019, according to available data, 250 business entities with about 2,800 employees operated in business zones.
The audit concluded that the establishment of business zones in the Republic of Srpska is not a sufficiently successful process, which shows the number of established business zones and the level of business activities in them.

Based on the findings and conclusions based on relevant, reliable and sufficient audit evidence, audit recommendations were created. The recommendations were sent to the institutions that have competencies for the establishment of business zones in the Republic of Srpska: The Republic of Srpska Government, The Ministry of Economy and Entrepreneurship and local self-government units.
The complete performance audit report is available on the website of The Supreme Office for the Republic of Srpska Public Sector Auditing.