The progress Bosnia and Herzegovina demonstrated in stabilising the country and its economy has stalled due to the prevalence of corruption in both the public and private sectors. A wide range of problems persist, many of which are legacies from the war, the most potent being the competitive nationalism displayed by the three ethnic groups (Serbs, Bosniaks and Croatians). The fragmented nature of Bosnian politics explains why, a year after the elections in October 2010, a government has yet to be formed. The lack of a government has put the goals of joining Euro-Atlantic structures and dealing with rampant corruption on hold. The country still struggles to win the confidence of its citizens, the international community and investors. Consequently, levels of foreign investment remain low.

Positive developments in relation to corruption and investment:

• Bosnia and Herzegovina has made significant efforts to attract foreign investors by passing a liberal foreign investment law and uniform trade, corporate tax and customs policies.
• Work is underway to produce a uniform registration system for the whole country as well as to establish other single regulatory institutions and frameworks at the state level to replace entity level equivalences, which have prevented cross-entity business development and foreign investment.
• The computerisation of files at the Land Registry in Sarajevo took place in 2008 and has substantially sped up and increased the transparency of the  property registration process in Sarajevo.
• The EU Police Mission has refocused its mandate to fight organised crime and corruption.

Risks of corruption:

• Corruption is pervasive within the country's institutions, particularly within the judiciary, the police and other law enforcement agencies, business licensing, public utilities, taxation, customs and procurement.
• Observers agree that the insufficiently defined power-sharing agreements in Bosnia and Herzegovina produce complex legal and regulatory frameworks, partly due to the fact that laws and regulations at state and entity levels are often duplicative and contradictory and result in unclear responsibilities. These foster inconsistent procedures that encourage corruption.
• Forming a general view of all laws and rules that apply to a certain activity can be extremely difficult and foreign investors are therefore advised to obtain local assistance and advice and reminded to conduct due diligence when working with facilitating local agents.
• Although an anti-corruption strategy has been agreed upon in 2009, the appointment the head of the new Agency for Corruption Prevention and the Coordination of the Fight Against Corruption has yet to be completed.