FYR of Macedonia Profile

by Kamil Kolacek, Center for International Trade Develoment, July 31, 2003

   

      The Former Yugoslav Republic of Macedonia (FYROM) in the last decade has gone through monumental changes

      and turmoil that the ancient Hellenic conqueror of the historic Macedonia- Alexander the Great, could sympathize

      with. The conflicts in Serbia and Kosovo, the dissolution of Yugoslavia, UN sanctions, political bouts with Greece,

      economic meltdown, and ethnic Albanian revolts in 2001, all entangled the FYROM in a messy web of instability that

      has spanned a turbulent decade in the wake of socialisms demise.

 

     Yet the country today is determined to jumpstart on a path towards growth. The Government of Macedonia (GOM)  

     has enacted an ambitious plan of reforms and liberalizations in the country’s transitional state. In April 2003 Macedonia became a member of the WTO, has hopes for eventual EU and NATO accession, and has signed bilateral trade agreements with 27 nations. The GOM is privatizing state-owned assets, emphasizing fiscal and monetary stability, and actively courting foreign investment. After the unrest of 2001, the country is once again returning to growth, inflation has fallen from near 2000% to around 2%, interest rates have stabilized, and external debt is at just 1.3% of GDP. Additionally, the UN ban of exports to the former Yugoslav Republics has been lifted, relations with Greece have restored, and ethnic violence is cooling dramatically.

 

The FYR of Macedonia is finally now emerging into a time of relative tranquility from the Balkans troubled past. Thus the GOM is making all attempts to take advantage of the precious peace to lay the solid foundations for a flexible market economy.  

 

The government’s dedication to reform and liberalization are apparent in its determined steps to woo foreign investors. These market friendly strides include the following:   

 

Profit Tax exemptions for FDI in Four areas:

 

  • Profits generated in the first 3 years of operation in proportion to the amount invested
  • Profits reinvested in company (max. 25% of tax base)
  • Profits invested in environment protection
  • Profits invested in ‘underdeveloped regions’ (max. 50% of tax base)

 

Additional liberalizing measures enacted by the Government of Macedonia include:

 

  • Foreign investors are exempt from customs duties for the first three years after registration of a company that has foreign investment totaling at least 20% of its share capital.
  • There are no requirements for foreign investors to purchase from local sources or to export a certain percentage of output.
  • There are also no requirements for the state to be a partner in the business.
  • There are no requirements for reducing foreign equity over time or transferring technology.
  • All policies regarding foreign investors are nondiscriminatory
  • Rights to private ownership are guaranteed by the Constitution of Macedonia
  • The development of SME (small and medium sized enterprises is one of the governments major priorities).

 

Consequently, Macedonia is determined to become a powerful economic member in the area of South Eastern European Countries (SEEM). It fervently consults with major US institutional agencies and international donors such as the EBRD and IMF and implements open market based economic policies. Through measures such as those above, it is resolute in gaining global investor confidence and reinvigorating the private sector after decades of state interference. Areas most promising for future private investment include; food and beverage, tourism, telecommunications, and virtually all forms of infrastructure. 

 

Thus the story of the FYR of Macedonia is definitely one of complicated transition. Yet based on its extensive efforts of reform, it is arguably one of the most dedicated of the SEEM countries to transforming into a contemporary market economy. So as it looks to shake the ghost of the Balkans recent past with a prosperous and calm future, another ghost, that of the great Alexander’s, surely looks on and champions his former homeland in whatever state it is in; war, peace or transition. Yet, most of us lesser mortals vie for peace…and the prosperity that can result.