Macedonian Privatisation Agency
Currently, one of the main objectives of the Macedonian development policy is to attract foreign capital into the country. The legal environment has been designed to provide national treatment to foreign investors, as well as tax and duties incentives for foreign investors in the Republic of Macedonia. There is no restriction for the industry in which the foreign capital can be invested, nor for the percentage of the company's equity the foreigner can possess. The foreign investor can freely decide whether to retain or transfer the profits out of the country.
The Republic of Macedonia and its Government have been very decisive in carrying out thorough and daring reforms. It has had high performance in all four fundamental elements of the reforms: institutional, macroeconomic, microeconomic and structural reforms. It has undergone a massive activity of change, of essential social reforms that the Macedonian state has continuously conveyed since the beginning of the 1990s. The Government of the Republic of Macedonia has been implementing stabilisation macroeconomic policy during the period of the last four years, with the monetary policy holding one of the central places. The result of such a policy was the decreasing trend of the inflation rate (from 25 per cent in 1992 to two per cent in 1996), with a stable denar exchange rate. Monetary reforms were oriented to further growth of the monetary independence of the Central Bank, as well as to reform instruments for monetary regulation, in respect of more efficient control on money supply in the national economy. A mutual feature of the tax reforms is the simplicity of the system, having eliminated a large number of tax allowances for many tax payers (and allocating them to reinvested profits, to profits in companies with foreign ownership etc), as well as having reduced a large number of different tax rates to single tax rates. After independence a massive liberalisation of export and import regimes were implemented, following the basic World Trade Organisation (WTO) principle to eliminate quantitative restrictions to trade. In the import regime, limited protection is affixed only to the products which are more significant for Macedonia, such as the agricultural products, ferrous alloys, vehicles, chemicals, etc.
Macedonia has a complex geological structure and a large number of ore deposits, including reserves of lead-zinc, copper, nickel, decorative and architectural building stone, and non-metallic materials. Marble is the most significant stone, whose quality and variety of colours make it famous all over the world. Four-fifths of energy needs are satisfied by domestic production of thermo and hydro-electric power, and the deficit is imported from FR Yugoslavia and Bulgaria. There is a good network of road, railway and air transportation communications. The non-expensive and well-educated human resources are among the strongest standpoints of the country's competitiveness.
The privatisation process in the Republic of Macedonia is approaching the end of the first phase1. It should be emphasised that the privatisation of the Macedonian economy occurred with the entry of new private enterprises in the Macedonian market. On the basis of the financial reports of the enterprises for mid-1997, an assessment of the significance of the private sector in the Macedonian economy was made. Both privatised and originally private enterprises (by the end of June 1997) account for more than 73.5 per cent of gross revenues in the economy. Approximately 62.4 per cent of the employees work in private enterprises and they generate 76.3 per cent of all the profits in the economy. This assessment shows that the private sector has become the most significant factor in the Macedonian economy. The process of privatisation has obviously approached the end of the first phase defined with the existing Law. The Republic of Macedonia is now entering new privatisation projects, such as the privatisation of agricultural enterprises and the privatisation of other industries primarily excluded from privatisation with the existing privatisation law. It has also started making strong post-privatisation efforts. One most recent privatisation decision is the Macedonian Telecom. This privatisation is scheduled to ended by mid-1998. The Government is planning to offer some investment opportunities in the infrastructure industries, such as some BOT projects in road construction, hydro-plant and similar projects.
Some of the main advantages of the Macedonian site for investment are the following:
On the other hand, the Republic of Macedonia still has some weaknesses:
Business sectors which can be the focal points for creating clusters are considered:
This focusing on business sectors is not intended to discriminate in any way, since the overall policy approach for promoting FDI is project driven (any profitable project is appreciated). Instead it is more a target indication.