Transcript Political and Economic Outlook

BILL PAVLESKI
MINISTER FOR FOREIGN INVESTMENTS
[email protected]
[email protected]
November , 2012
Challenges of global companies
• Time Delivery
• Transportation
• Lack of qualified work force
• Taxation
Political and Economic Outlook
• Political, monetary and macro-economic stability
• Strategically located for future expansion
• Business oriented Government ready to serve investors
• First country in South East Europe to sign a
Stabilisation and Association Act with the EU in 2001
• EU and NATO candidate country
• Free Trade Agreements with numerous countries
Key Macroeconomic Indicators
INFLATION
REAL GDP GROWTH RATE (%)
Low inflation: avg < 2% annually over the last 10 years
5.0
6.1
5.0
1.8
2006
2007
2008
-0.9
2009
2010
4.1
Q1-Q3
2011
EXPORT GROWTH RATE (%)
2003=1.2%; 2004=-0.4%; 2005=0.5%;
2006=3.2%; 2007=2.3%; 2008=8.3%;
2009=-0.8%; 2010=1.6%; 2011=3.9%.
CURRENCY
Macedonian Denar pegged to the DM/€
16.5
29.2
29.0
28.0
8.9
-28.2
2006
2007
2008
2009
CREDIT RATINGS 2011
2010
2011
FDI (% of GDP)
6.6
2006
8.5
2007
for the last 10 years (€1= MKD 61.3)
- Standard & Poor’s: BB, Stable Outlook
- Fitch: BB+, Stable Outlook
- Japan Credit Rating Agency: BB+, Stable
Outlook
AVERAGE GROSS SALARY IN 2011
6.0
2008
3.9
2.2
2.3
2009
2010
Source: National Bank of the Republic of Macedonia
I-XI 2011
€ 498 (gross) per month
GDP Structure, 2010
Public
administration
15.9%
Agriculture
11.3%
Industry
21.0%
Financial services
19.1%
Transport and
Communications
8.8%
Hotels and
Restaurants
1.2%
Construction
6.9%
Trade
15.9%
Source: State Statistical Office
Largest share:
- Industry 21.0% (main sectors: Production of metals and non-metalic mineral products,
Apparel and Textile, Food processing and beverages, Tobacco, Electrical equipment),
- Financial Services 19.1%,
- Trade 15.9% and
- Agriculture 11.3%
5
Financial System
 Sound and stable Financial System
 No spillover of the world financial crisis on Macedonia
 Banking system consists of:
 17 banks and
 8 saving houses
 Banks account for 90% of total financial system assets
 73% is the share of foreign in total bank capital
 Most recently the following international banks entered the Macedonian
banking system:
 French Societe Generale Bank,
 Austrian Sparkasse Bank and
 Dutch-Turkish Halk Bank.
Prudent Fiscal Policies
Moderate size of Government and Fiscal Policy that supports economic growth
 Total revenues in 2011
30.1% of GDP
 Total expenditures in 2011
32.6% of GDP
 Budget balance in 2011
-2.5% of GDP
As % of
GDP
Total
Revenues
Total
Expenditures
Budget
balance
2007
32.8
32.2
0.6
2008
33.1
34.1
-0.9
2009
31.3
33.9
-2.7
2010
31.1
33.6
-2.5
2011
30.1
32.6
-2.5
General Government debt (% of GDP)
Sustainable public finances
35%
28.2%
30%
 Low level of General
Government Debt: 26.2% of GDP
25%
24.0%
23.9%
24.6%
2009
2010
26.2%
20.6%
20%
15%
10%
5%
0%
2007
Invest Macedonia - Agency for Foreign Investments
2008
2011
I-2012
7
Lowest taxes in Europe
Reduction of Social Contributions
Lowest Flat Tax on Profit 10%
Total rate of 26.5% in 2012
Lowest Flat Tax on Income 10%
Pension and disability insurance 18%
Health insurance 7.3%
Unemployment insurance 1.2%
Tax on Undistributed Profit 0%
Corporate Tax is only paid when
dividends and profits are distributed,
effectively making the CT rate 0%
Social Contributions have been
reduced from 32% to 26.5%
Additional incentives in the
Free Economic Zones
- On-line Payment of Taxes and
- Simple Tax Administration Procedures
8
Significant improvement on the world leading indicators
measuring business climate and competitiveness
Macedonia
improved:
Rank of Macedonia on the Ease of Doing Business Indicator,
World Bank "Doing Business" Reports 2006-2012
22
72 places – “Ease of Doing Business
Indicator”, WB Report.
Macedonia is among the 4 case
studies in DB 2012 report (with
S.Korea, UK and Mexico)
32
34
2010
2011
69
75
92
94
2006
2007
2008
2009
Rank of Macedonia among the Best
Countries for Business, Forbes Magazine
2012
Rank of Macedonia on the Global
Competitiveness Index, World Economic
Forum Report
2007
94
2011
47 places –“Best Countries for
Business”,
Forbes Magazine
43
79
35
82
Heritage Foundation: Index of economic
freedom (rank)
2007
89
2011
15 places–“Global
Competitiveness Index”,
WEF Report
2007
2012
46 places–“Index of economic
freedom”,
Heritage Foundation
6 years continuously among the Best Reformers
nd IN THE WORLD ON THE
22
3rd BEST
REFORMER
rd
3 BEST REFORMER
OVERALL INDICATOR
IN THE IN
WORLD
THE WORLD
World
Bank’s
World Bank’s
Doing
Business 2010 & 2012“EASE
Report OF DOING BUINESS”
Doing Business 2010 & 2012 Reports
Doing Business 2012 Report
- 6th IN THE WORLD
IN THE EASE OF
STARTING A BUSINESS
- 17th IN THE WORLD
IN PROTECTING INVESTORS
Doing Business 2012 Report
4th IN THE WORLD
WITH LOWEST TOTAL
TAX RATE LEVEL
PWC and World Bank Group 2012 Study
35th BEST COUNTRY FOR
BUSINESS IN THE WORLD
Forbes Magazine
Foreign Investment Climate
• Macedonian Constitution guarantees fair treatment of foreign
investors;
• 100% foreign ownership of a company allowed;
• Complete protection of the ownership rights of foreign investors;
• The Company Law (the primary law regulating business activity in
Macedonia) offers foreign investors the same treatment as local
companies.
• In Doing Business 2012 Report, Macedonia stands at 17 in the ranking
of 183 economies on the strength of investor protection index;
• Republic of Macedonia is member of MIGA (Multilateral Investment
Guarantee Agency);
• Investment protection treaties with numerous countries;
• No restrictions for repatriation of profits;
Current Trade in Macedonia
Free Trade Agreements

EU – European Union (27 countries)

EFTA – European Free Trade Association
(4 countries)

CEFTA – Central European Free Trade
Agreement
(8 countries)

Bilateral Free Trade Agreements with:
Turkey and Ukraine
Agreement Benefits
Free Trade Agreements provide access to markets in 41
country with 650 million consumers
- Increased competitiveness of Macedonian export
- Global trade benefits through WTO principles
- Enhancing intra-regional cooperation
‘Free trade agreements’ trade
2007
2008
2009
2010
2011 (1/4)
2010 (1/4)
($)
($)
($)
($)
($)
($)
4.839.900
5.691.433
4.178.569
4.922.166
2.057.121
1.388.387
129.899
315.090
146.928
121.151
64.256
36.840
1.605.423
2.176.455
1.600.785
1.646.434
578.334
452.334
TURKEY
252.238
303.696
294.171
311.220
129.014
86.929
UKRAINE
104.973
205.933
94.582
137.871
95.594
37.704
EU
EFTA
CEFTA
Government Investments
•
Education
•
Motorways
•
Railways
•
Airports
•
Energy Sector
•
Exploitation of Minerals
Education
• 41.5% of population under 30
• High intellectual capital
–
65% increase in total number of undergraduate degrees in 2009 compared to 2006
–
85+% of high school graduates enrolled in universities in 2008
–
Multiple vocational high schools in each city
• Tailor-made training programs through Vocational Schools or Universities
• For the period 2009/2010 there where around 15.000 students enrolled in the
Faculties of Technical, Natural Sciences and Mathematics
Number of enrolled students
in Colleges and Universities
48,368
57,011
64,254
63,437
Number of graduates
in Colleges and Universities
57,894
10,839
10,232
2008
2009
8,360
6,213
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2006
2007
Percentage of enrolled students per scientific
field
Technical and Natural
Sciences and
Mathematics
Social Sciences
53%
12%
Medical Sciences
27%
6%
2%
Biotechnical sciences
Arts
Education
• ~5 - 6% of GDP spent on Education, doubled since 2006;
• 60 millions investment in technical university laboratories;
• Free textbooks for students in elementary and high schools
(both are mandatory);
• International schools;
• Opened two new public universities, over 50 new R&D
laboratories, textbooks from top 100
world universities;
• Scholarships for studying at European
and world top - level universities;
• Vocational Training Programs;
Excellent Language Skills
• Every child in Macedonia begins to learn English in the first grade of
primary school
• Two foreign languages are mandatory in high school: English, and
either German, French, or Russian
• English is also taught for two years at University level
• Regional languages (Serbian, Croatian, Bulgarian, Albanian and
Greek) are widely spoken
Foreign Languages
Studied
Students in Primary
Schools, % of Total
Students in Secondary
Schools, % of Total
English
98%
96%
French
18%
32%
German
6%
21%
Italian
-
2%
Russian
1%
2%
Turkish
3%
2%
Source: State Statistical Office of the Republic of Macedonia (Education 2009/2010) and Ministry of Education and Science
New investments in Motorways
Priority Motorways
 Connection to Kosovo
(estimated Construction Cost €150mn)
 Part of Western section of
Corridor 8 (50km)
(estimated Construction Cost €250mn)
 Motorway connecting Eastern
Macedonia with Skopje (50km)
(estimated Construction Cost €280mn)
New Investments in Railways
Corridor 8 – Eastern Section:
 Construction of the railroad
section towards Bulgaria
 Total construction cost estimated
at €420mn
 Feasibility Study underway,
financing to be provided by IFIs
 Estimated time of the public call
for Engineering, Procurement and
Construction (EPC) contract:
second half of 2012
 Option to give this particular
railroad via concession model is
not excluded
Modernization of the Airports in
Macedonia in 2011
Alexander the Great Airport
•Capacity 4 million passengers
•Terminal building – 40.000 m2
•23 check-in desks
•6 passengers boarding gates
•Cargo hangar with 40.000 t.
•Successfully negotiated by the
government team as a concession
with Turkish company TAV
•In the first year, number of
passengers increased by 30%
•Total value of the project together
with Ohrid airport: €120 million
New Investments in Energy Sector
• Construction of national gas transport system (value ≈ €350mn)
• Opening of lignite mines for electricity production (value ≈ €200mn)
• PPP with the National Power Producer “Elem” for the construction
of a combined cycle heat and power plant (value ≈ €250mn)
• An ongoing tender – under the auspices of the IFC advisory services
for two large HPP “Cebren and Galiste” (value ≈ €600mn)
• Rehabilitation of the existing hydropower plants (value ≈ €100mn)
• Privatization of the minority share (up to 49%) of the state owned
electricity generation company ELEM (book value ≈ €1.2bln)
• Construction of three new 400 kV overhead lines (value ≈ €60mn)
• New SCADA, (re)construction of more than 200 km of numerous 110
kV overhead lines (value ≈ €45mn)
Exploitation of Minerals
• Macedonia has deposits of lead, zinc,
copper, silver, nickel, marble
• Detailed Geo Research Concession is
awarded for up to six years
• Exploitation concession for mineral
resources awarded for up to 30 years
• For the metallic minerals, the fee is 2% of
the market value (London Metals Exchange)
of metal in the concentrate
• For decoration stones, the concession fee
depends on the type:
- marble €15 per cubic meter;
- granite €9 per cubic meter;
- onyx, travertine €6,5 per cubic meter.
• For minerals for construction industry, the
fee is 0,15 EUR per tone
Thank You
CABINET OF THE MINISTER FOR FOREIGN INVESTMENTS OF
THE REPUBLIC OF MACEDONIA
Bul Ilinden 02
1000 Skopje
Republic of Macedonia
Tel.: + 389 2 3230 201
Fax: + 389 2 3227 108
e-mail: [email protected]