British firm sells to Bosnia

A British company is playing a leading role in resurfacing the runway of Sarajevo airport, symbol of the country's struggle to recover from the devastating civil war.

Parker Plant International, a private company based in Leicester, has taken advantage of an export guarantee scheme inspired by the World Bank, the international development agency, to sell a mobile asphalt plant, which was used to resurface the airport's pitted runway (finished last month).

Stewart Higginson, Parker's sales manager for Eastern Europe and the former Soviet Union, said the plant had to be built, exported and made operational within a few months. "We had to make it and assemble it on the spot," he said. The plant began operating in August.

Since the end of the war two years ago, Bosnia has struggled to attract investment to rebuild its economy. With the help of donor countries, the World Bank set up an Investment Guarantee Agency that covers political risk in both Bosnia and the Serb-dominated entity Republika Srbska.

The agency, which is in Sarajevo, is a rare example of cooperation between the Bosnian government and the Serb entity. Onno Ruhl, a World Bank official heavily involved in setting up the IGA, said: "It's a genuine state-level institution with a remarkable level of cooperation."

The guarantees are backed by a fund of around DM40m (pounds 23.8m) deposited with ING Bank in the Netherlands. ING issues a letter of credit to the exporter to Bosnia, against which payment can be made if the guarantee is successfully called. IGA gives guarantees on a purely commercial basis, charging the exporter 3 per cent of the value of the guarantee.

This scheme to finance critical imports is part of a $5bn (pounds 3bn) international assistance package for Bosnia. Another international agency, the European Bank for Reconstruction and Development, paid for the resurfacing of Sarajevo airport's runway.

Parker, the winner of three Queen's Awards for Export, is no stranger to Bosnia. It sold its first asphalt plant to Bosnaputevi, the contractor that did the work on Sarajevo airport 18 years ago. This latest asphalt plant contract was in fact signed before Parker acquired the "extra comfort" of an IGA guarantee. The company heard about the guarantee scheme in Bosnia.

Parker, which employs 450 people and has a turnover of pounds 30m a year, has also sold an aggregate crushing plant to Bosnia this year, and is doing business in other republics of the former Yugoslavia. The company makes quarry equipment and sand and gravel mixing plants, as well as asphalt plants.

Other companies have also used IGA guarantees. Mr Ruhl said that since starting in July the IGA had signed seven guarantees worth a total of DM14m (pounds 4.7m) for British, Dutch, Austrian and Italian companies. Enough contracts were in the pipeline to ensure that the agency would earn the income to finance and promote its activities.

But many companies are steering clear of Bosnia because it is difficult to finance trade with the country. Mr Higginson said: "Banks are not putting funds forward for Bosnia, where it's desperately needed."

Although the IGA offers protection against political risks, it does not take the place of the banks and other providers of export finance.