Free Zones Authority

O c t o b e r, 2 0 1 9
Why North Macedonia?

Investor -
Competitive Excellent Competitive Investment
friendly
Location Infrastructure Workforce Incentives
Government

Higher Profits & Increased Competitiveness

Location and Transport Infrastructure

NORWAY
SWEDEN

• Two Pan-European corridors: ESTONIA RUSSIA

LATVIA

– East-West Corridor 8 DENMARK

LITHUANIA

– North-South Corridor 10
BELARUS

• Road network: 9,205 km IRELAND

UNITED KINGDOM NETHERLANDS
POLAND

• Railway network: 900 km

GERMANY
BELGIUM
UKRAINE
LUXEMBOURG CZECH REPUBLIC

• Two international airports: SLOVAKIA

AUSTRIA MOLDOVA

– Skopje FRANCE SWITZERLAND

SLOVENIA
HUNGARY

ROMANIA

– Ohrid
CROATIA

BOSNIA
AND HERZ. SERBIA

• International ports*: ITALY MONTENEGRO

KOSOVO BULGARIA

N.MACEDONIA
– Thessalonica (Greece): 240 km SPAIN
ALBANIA

– Durres (Albania): 300 km PORTUGAL GREECE

TURKEY

* Distance from Skopje

AFRICA MALTA
Stable Macroeconomic Indicators
REAL GDP GROWTH RATE (%)
INFLATION
Low inflation: avg < 2% annually over
5,5
3,9
the last 16 years
3,4 3,6 3,5
2,9 2,8 2,7
2,3
-0,4 -0,5 0,2

CURRENCY
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
North Macedonian Denar pegged to the DM/€
EXPORT GROWTH RATE (%)
for the last 24 years (€1= MKD 61.5)

30,9 26,8
3,6 15,8 14,3 16,8 AVERAGE GROSS SALARY IN 2018
8,9 -2,8 9,1 7,4 9,2

€582 per month

-28,2
€466 per month in manufacturing

CREDIT RATINGS 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

FDI (% of GDP) Standard & Poor’s: BB-, Stable Outlook

Fitch: BB+, Stable Outlook
5,9
4,6
5,8
BUDGET DEFICIT IN 2018
3,1 3,5
2,1 2,3 2,4 2,4 1,8
1,5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget Deficit: 1.8% of GDP
Source: SSO and MoF
Free Trade Agreements

Free Trade Agreements provide access to markets in

41 countries with 650 million consumers

 EU – European Union (28 countries)

 EFTA – European Free Trade Association

(4 countries)

 CEFTA – Central European Free Trade Agreement

(7 countries)

 Bilateral Free Trade Agreements with:

Turkey and Ukraine
Continuous implementation of
Regulatory and Administrative Reforms

Regulatory reforms
 One-Stop-Shop: 4 hour company registration
 Regulatory Guillotine
 Electronic One-Stop-Shop for customs permits and licenses
 Single window: Improving interoperability between government institutions
Cadastre reforms
 Digital Cadastre covering 99% of the real estate in North Macedonia
 Notaries and land surveyors have access to land register through on-line system

Liberalization of real estate market

 Foreigners free to purchase real estate and construction land
 Construction permit procedures simplified from 21 to 3 steps

Liberalization of Labor Market

 Modern Labor Law
 Improved labor force flexibility

6
13 Years Continuously Among
the Best Reformers in the World
10th IN THE WORLD
5th BEST REFORMER
IN THE WORLD 2005-2013 4th IN EUROPE
World Bank’s Doing Business Report 2014
1st IN EASTERN EUROPE

Rank of North Macedonia on the Ease of Doing Business Indicator

Source: World Bank’s Doing Business Reports 2006-2019

 Ease of Doing Business 2019
Global Rank

109
89
71 77
53 54 58 59
48 52
40 42 43
33 35

10
North Poland Czech Slovenia Slovak Turkey Serbia Romania Hungary Mexico Croatia Bulgaria Ukraine India Bosnia Brazil
Macedonia Republic Republic and Herz.
 Paying Taxes 2019
World Rankings

THE LOWEST
“TOTAL TAX RATE”
IN EUROPE
13.0%
184

139
116 121
86 89 92
79 80
69
45 48 49 54
41
31

North Slovenia Czech Slovak Romania Ukraine Poland Serbia Turkey Hungary Croatia Bulgaria Mexico India Bosnia Brazil
Macedonia Republic Republic and Herz.
OPERATING COSTS
and TAXES
Average Monthly Salary CEE Countries, 2018

Average Gross Monthly Salary

€ 1.682

€ 1.238
€ 1.111 € 1.138
€ 1.045 € 1.073
€ 981

€ 768
€ 701
€ 582 € 610 € 615

North Serbia* Bulgaria* Bosnia and Montenegro Romania Hungary Poland Slovakia Croatia Czech Slovenia
Macedonia Herzegovina Republic

* December 2018

Source: National Statistical Offices

Social Security Contributions

North Macedonia - Social Security Contributions

21,2% 9,2% 1,6% 0,5%

2008 32.5%
19,0% 7,5% 1,4% 0,5%

2009 28.4%
18,4% 7,4% 1,2% 0,5%

2019 27.5%
Pension Insurance Health Insurance Employment Insurance Additional Health Insurance

Comparison - Social Security Contributions

North
27,5%
Macedonia
Bulgaria 10,58% 14,82%

Serbia 19,9% 7,9% Source: International Social

Security Association (ISSA), 2019
Croatia 20,0% 17,2%

Slovenia 22,1% 16,1%

Ukraine 22,0%

Poland 13,7% 20,6%

Hungary 18,5% 19,5%

Czech
Republic
11,0% 34,0%

Slovakia 13,4% 35,2%

Romania 35,0% 10,0%

Breakdown of Monthly Gross Salary
Eligible for Subsidy by the Government
Net Salary
Total Contributions (27.5%)
Personal Income Tax (10%)

€ 20 0% up to 10 years

€ 123

Example of gross salary eligible

for 20% of the paid net subsidy
by the Government

€ 305

€ 448
Average Gross Monthly Salary

Average gross monthly salary in

manufacturing in North Macedonia
CAGR
3.32%
€ 466
€ 429
€ 393 € 404
€ 364 € 383
€ 362 € 374
€ 336 € 352

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Competitiveness for Investments in North Macedonia

Price level indices for investment 2016

EU-28=100

117
100
73 76 78 79
62 63 65 67 67 68
55 57

Turkey North Bosnia and Romania Bulgaria Serbia Croatia Hungary Poland Czech Slovenia Slovak EU28 Germany
Macedonia Herz. Republic Republic average

Price level indices for construction 2016

EU-28=100

137
100
63 64 66 69
43 46 49 52 53
38 40 41

Turkey North Bosnia and Romania Serbia Bulgaria Hungary Croatia Poland Czech Slovenia Slovak EU28 Germany
Macedonia Herz. Republic Republic average

Source: Eurostat, 2018

 European Cities and
Regions of the Future
TOP 10 SMALL EUROPEAN CITIES – TOP 10 SMALL EUROPEAN CITIES –
COST EFFECTIVENESS COST EFFECTIVENESS
Rank City Country Rank City Country
1 Skopje * N. Macedonia 1 Skopje N. Macedonia

TOP 10 SMALL EUROPEAN REGIONS TOP 10 SMALL EUROPEAN REGIONS

-COST EFFECTIVENESS -COST EFFECTIVENESS
Rank Region Country Rank Region Country
1 Skopje Region N. Macedonia 3 Skopje Region N. Macedonia

TOP 10 MICRO EUROPEAN CITIES – TOP 10 MICRO EUROPEAN CITIES –

COST EFFECTIVENESS COST EFFECTIVENESS
Rank City Country Rank City Country
1 Stip ** N. Macedonia 1 Stip N. Macedonia

* Skopje #6 in FDI STRATEGY amongst Small European Cities 2 Prilep N. Macedonia

** Stip #6 in FDI STRATEGY amongst Micro European Cities

• Average annual salary ($) for a semiskilled worker
• Average annual salary ($) for a skilled worker
• Annual rent for prime Grade A office space ($/m²)
• Annual rent for prime Grade A industrialspace ($/m²)
• 4*/5* hotel in city centre ($ per night)
• Minimum wage ($)
Judging Criteria
• Cost of establishing a business (absolute value using GNI)
• Cost of registering a property (% of property value)
• Cost of construction permits (absolute value using GNI)
• Cost of establishing an electricity connection (absolute
value using GNI)
• Petrol prices ($)
•Cost of electricity ($ per kwH)
• Cost to export ($ per container)
• Cost to import ($ per container)
• Corporation tax rate (%)
• VAT/common indirect tax rate (%)
• Total tax rate (% of profit)
• Country PPP rate
Excellent Infrastructure and
Competitive Transportation Costs

North-South & East-West Highways

2 Brand New Int’l Airports
-Int’l Airport Skopje
(Capacity 4 million passengers, 23
check-in desks, 6 passenger
boarding gates, Cargo hangar with
40,000 tons)

Large pool of logistic companies

provide competitive transportation All of Europe in
BELARUS

costs and delivery times 2-3 days Via • Pan-Europian Highway Corridor X RUSSIA
POLAND
Highway completed in April 2018
UNITED KINGDOM BELGIUM GERMANY
Connections • Two new highways
UKRAINE under construction
LUXEMBOURG
CZECH REPUBLIC • New railway connection to Bulgaria
SLOVAKIA

AUSTRIA MOLDOVA
HUNGARY
FRANCE SWITZERLAND
SLOVENIA ROMANIA
CROATIA

BOSNIA
AND HERZ. SERBIA

ITALY MONTENEGRO BULGARIA

KOSOVO
2.5 hours to Port
N.MACEDONIA of Thessaloniki TURKEY
ALBANIA
SPAIN

PORTUGAL GREECE
35 days or less inbound
container ships from China
 LABOR
AVAILABILITY
Sustainable Work Force Supply

• 40% of population under the age of 30

• High intellectual capital
– Multiple vocational high schools in each city
– 85% of high school graduates enroll in universities
– In relation to 1991, the total number of university graduates in 2015 was 211% higher
– New universities, focused on R&D and cooperating with the top 100 world universities
• Tailor-made training programs through Vocational Schools or Universities (e.g. JCI Case)
• 6% of GDP spent on education
• € 60 million investment for 200 new laboratories in technical universities

Number of enrolled students in colleges

and universities (2017/2018) 57.000
Average number of graduates in
colleges and universities each year 10.000
Expert Engineering Academic Base

Labor Availability

• Specialised engineering vocational secondary schools, currently

enrolling over 22,000 students
• Over 10,000 students studying engineering branches at university level

Technical Education Centres

Source: Ministry of Education and Science of the Republic of North Macedonia

Dual Vocational Training Program

• In April 2017 the Delegation of German Chambers

of Commerce and Industry in North Macedonia
started the implementation of the Dual Vocational
Training Program “Skills Expert”
• The program is a combination of theory and
practice, with a particular emphasis on practical
training at the companies

A new 4-year educational program for Mechatronic Technicians and Industrial Machinery
Technicians has been implemented with partner companies in the following cities:
– Ohrid (Kostal Group, ODW Elektrik, and LTH Castings)
– Kavadarci (Dräxlmaier Group)
– Bitola (Kromberg & Schubert)
– Veles (Marquardt and Brako)
– Prilep (Gentherm, Vitaminka, and WIK)

The Ministry of Education and Science is working on implementing a program for dual
vocational education encompassing the whole territory of the Republic of North Macedonia.
Major recent investors in Greenfield sites
Plant 1: €80M; 350 employees;
Exhaust catalyst manufacturer;
The biggest exporter from
Macedonia
Plant 2: €65M; 550+ employees;
€15M; 400 employees;
Production of airbag inflators
€10M; 200 employees;
Global leader in paper surface
treatments and polymeric films
€6M; Up to 300 people;
Production of wiring harness
and cables
Ramp-up of up to 300 employees;
Production of wiring harness
and cables
€15M; 500+ employees;
Production of electronic and
safety components
Phase 1: R&D centre;
Phase 2: Production electric
motors and components
500 employees; Production of
lightweight aluminum exterior
trim and roof rail systems
€20M; 300 employees;
Production of sophisticated
electrical components
Plant 1: €25M; 800 employees;
Production of buses and coaches
for the US and EU markets;
Second investment stage: €15M;
450+ employees
€30M; 500 employees;
Production of electrical capacitors
Plant 1: €10M; 150 employees;
Production of armored high-
pressure rubber hoses;
Plant 2: €11M; 150 employees;
€30M+; 400 employees;
Packaging for the pharmaceutical
and cosmetics industry
€5M; Up to 200 people;
Production of sensors, encoders,
and measuring instruments.
Major recent investors in Greenfield sites

€7M initial investment; 350 €15M+; Ramp-up of up to 3,000 €35M; 750 employees; Production €30M+; Rump-up to 2,500
employees; Production of bus seats employees; of PCBs, plastic and molded employees; Production of
Production of seat covers containers and final assembly interconnect products

Over €15M; 2,000 employees;

Production of airbag cushions
and modules €15M; 500 employees;
Production of industrial woven
fabrics (insulating materials)

€70M+; 1,000 employees;

Production of mechatronic and
electronic products €40M; 250 employees;
Production of of wall-hung boiler
components

€15M; 1,200 employees;

Production of automotive cables,
solenoids and mechatronics
Cut&trim plants for seat covers
Plant 1, Free Zone Stip:
€20M; 2,100+ employees
Plant 2, Fre Zone Strumica:
€20M ; 2,000 employees; €20M; 1,500 employees
Production of seat and steering
wheel climate technologies

€12M; Up to 1,200 employees; €25M+; 6,200 employees; €35M; 6,000+ employees;

€3M+; 250 employees; Plastic Production of electrical appliances Production of wires and cables; Production of wiring harness and
injection molding of car parts and devices Second phase expansion electrical management systems
TECHNOLOGICAL INDUSTRIAL
DEVELOPMENT ZONES (TIDZ’s)
– FREE ZONES
Financial Times/fDi Magazine
Latest Rankings
Investment Opportunities
Free Zones

Free Zones Skopje 1, 2 & 3

Area Size: 140+ 97+ 44 ha;
E-75 Highway;
Next to the Int’l Airport

Free Zone Tetovo (PPP)

Area Size: 95 ha;
Distance from Skopje - 35 km
Free Zone Stip
Area Size: 206 ha;
The largest Free Zone;
Excellent logistic support

Free Zone Strumica

Area Size: 25 ha;

Free Zone Kicevo

Area Size: 30 ha

Free Zone Prilep

Free Zone Struga Area Size: 67.5 ha;
Between Prilep and Bitola
Area Size: 30 ha;
(4th and 2nd largest city)
Next to the Int’l Airport;
170 km from Durres port
Investment Opportunities
Free Zones

Infrastructure Benefits
• Electrical grid outlet
• Telecommunications network
• Lighting
• Fire safety system
• Security monitoring system
• Water and sewage network
• Gas pipeline (only in the Skopje 1 & 2 free zones)
Investment Opportunities
Free Zones
Fiscal Benefits
TAX RATES CUSTOMS DUTY
TAX PRODUCT
TIDZs Outside TIDZs TIDZs Outside TIDZs

0% Equipment 0% 5% - 20%
Corporate tax 10%
Up to 10 years

0%
Personal income tax 10-18%
Up to 10 years

Value added tax 0% 18% All incentives are in line

with EU regulations

• Connection to utilities, complete infrastructure is available

• No municipal utility tax
• Customs outpost in the zones
• 10% return of investment costs in new machines and equipment, or
investment in buildings and land
• Land in the free zones is available under long-term lease for a period of up
to 99 years
• Job creation grant
The Free Zone Authority at Your Service…

University linkages
Identification of project
Reference company linkages
specific location factors
Business Creating Recruitment agencies
Cost analysis opportunities linkages linkages
Identification of supplier analysis
Organization of meetings
base
with legal advisors and
Detailed due diligence financial partners

Our
Locations, operational costs Labor availability, HR
and competitiveness companies and consulting

One-stop-shop and project

management approach
Services Ensure success!

Design and infrastructure

approvals Support with relevant tax
and customs issues
Issuing building and
operational permits Assistance in acquiring
One-stop-shop Aftercare visas/work permits
Customs outpost in the
Zone Coordination and support
in contacts with other
Zone infrastructure
state and local authorities
maintenance and upgrade
 DIRECTORATE FOR TECHNOLOGICAL
INDUSTRIAL DEVELOPMENT ZONES
Partizanski Odredi 2, PO Box 311
1000 Skopje, Republic of North Macedonia
Tel.: + 389 2 3111 166
Email: info@fez.gov.mk
Website: www.fez.gov.mk

Thank You