Nowadays, investing in Macedonia is convenient. The country is going through an important period of economic growth and the national government is encouraging both domestic growth and the attraction of foreign investments. In recent years many structural reforms have been implemented in all social spheres, strengthening institutions and general business environment.
Macedonia, today, is a country at the forefront of the artistic and cultural field and in 2014 – according to the Lonely Planet guide – was among the top ten countries in the world to visit, as well as being ranked 10th in New York Times “52 Places to Go in 2015” list.
Also, from the business point of view, the country is able to ensure highly competitive production costs (through the implementation of a series of business- friendly regulations), subsidies and a highly skilled and dynamic labour force.
The geographical location explains the strategic position of the country, which is an important crossroads between Europe and Asia.
In recent years, the government has more and more considered such feature as a strong point and has never lifted trade barriers between neighbouring countries such as Ukraine and Turkey, between Central and Western Europe, Middle East and North Africa. Such efforts have made it possible for about 650 million consumers to access free-trade regime through the conclusion of bilateral and multilateral agreements, as the Macedonian Ministry of Foreign Investments stated.
Operating costs – on average, about half of the Italian labour cost – are generally among the lowest in Europe. Furthermore, business culture is more and more increasing among new generations, also because of the strong constitutional guarantees protecting every form of investment.
Macroeconomic and political stability (low inflation, below 2% in the last 13 years, and 4% economic growth in the last two years) along with the increasing presence of modern infrastructures make Macedonia one of the pro-business countries among the most competitive in Europe.
In fact, the country is characterized by a very efficient railway and motorway network easily connected with all European countries and international ports.
Furthermore, there are two international airports in the country (in the capital city, Skopje, and in the city of Ohrid, in the South-western part of the country) which make Macedonia easily accessible – especially from Italy – and ensure the free movement of goods.
In order to attract foreign investors to the country, free-trade zones have been constituted as well as a number of different small areas with additional benefits located in different parts of the country.
The two major and most attractive free-trade zones are in Skopje because of their proximity to the international airport and to the main motorway of the country. In these regions, the tax burden on raw materials and on capital goods is “0” as well as the VAT rate, Corporation Tax and Personal Income Tax (for the latter two taxes, tax break applies to the first ten years of activity).
Incomes of natural person taxpayers are subject to a proportional tax of 10% (flat tax) which for residents is applied on a worldwide basis (that is, even on foreign income).
The incomes of companies and other entities with legal personality which conduct business activity are subject to corporation tax, which, like the previous one, is 10%. With the reform of the year 2015, the tax applies on all profits made in the reporting year and not only on the distributed years, moreover, it was also expected the reduction of the tax basis of the corporation tax with relation to the amount of investments made by the company in tangible and intangible assets, with the exception of expenses to purchase luxury goods (cars, furniture, audio-visual equipment and artwork).
As it often happens, at the base of a largely functioning and growing economy there are solid foundations in terms of workforce and education.
About 6% of GDP is invested in education and great attention is paid to the selection of the compulsory subjects to be studied such as, for example, “Innovations” in primary school and “Business and Entrepreneurship” in high school. The percentages of young people who earn high school diploma (99%) and of those who choose to pursue university studies (90%) are very encouraging. In Italy – according to Eurostat data – 64% of the population aged between 55 and 74 has achieved, at most, compulsory education.
Much attention is paid to the study of foreign languages: English is compulsory from kindergarten, so much so that most of the local job offer requires at least 15 years of linguistic experience. The study of another European language is compulsory for at least eight years in addition to English; moreover, in the country such languages as Croatian, Serbian, Turkish, Albanian and Bulgarian are widely spoken.
Besides, in the last few years the government has implemented several policies aimed at increasing educational programs offering training incentives.
In line with the most advanced economies, particular attention is paid to employment contracts aimed at training the new hires, with important benefits concerning recruitment of apprentices and trainees. Other structural reforms affected the social security system, security in the workplace and employment law litigation.
A business friendly environmet
Returning to the economic front, sectors related to export, business process outsourcing – mainly Call Centre and the branch of IT and CAD/CAM technology – are constantly growing.
Therefore, it is no coincidence that Macedonia is in the 10th place of the “Ease of doing business” ranking, compiled by the World Bank on the occasion of the publication of the “Doing Business 2017: Measuring Regulatory Quality and Efficiency”, and is in the 4th place of the “Ease of starting a business” rankings. The process of establishment and registration of a new company in Macedonia is easy and quick and the start-up phase is not hindered by any complex bureaucratic mechanism.
The formal establishment of a society brings with it immediate benefits for both companies and entrepreneurs, being it also a very fast process. In addition, such companies have free access to services and institutions such as courts and banks, and to the new markets.
Further benefits are also provided for the limited liability companies, for which the law – as in other jurisdictions – provides the complete separation between the assets of the shareholders and those of the company, in order to limit the liability of the members solely to their investment.
Therefore, as the analysis of the World Bank shows, Macedonia is a country strongly committed to guarantee the entry of foreign capital in its territory, through an extremely advantageous tax system and a particularly simple and efficient bureaucratic system.
Finally, with regard to trade relations with Italy, it is shown how such relations have been continually growing and evolving over the past 10 years.
In three years, from 2005 to 2008, the interchange value is doubled, reaching 711.6 million dollars and, after a short setback, in the year 2011 new signs of recovery were recorded when the value of the interchange has reached 708 million dollars (+ 26% compared to 2010), while at the end of 2014 it has exceeded the level of 2008, before the period of crisis, reaching 756.5 million dollars.
Italian products enjoy a very good reputation in Macedonia, especially with regard to consumer goods: food products (dairy, meat, dessert, pasta and condiment processing, canned products, and oil), cosmetic and personal care products, pharmaceutical and household cleaning products, clothing, furniture and white goods.
On the other hand, regarding capital goods of Italian origin, they consist almost exclusively of food and process manufacturing industries, in particular wine, dessert, canned vegetables and canned products, frozen foods and ice cream; however, the presence of Italian products can be expanded, especially in the field of woodworking and furniture manufacturing industry, construction, plastics, engineering and automotive industry.
In 2016, Italian exports to Macedonia amounted to over € 207,85 mln and according to the Macedonian Statistics Institute, Italy is in fifth place among the trading partners of the former Yugoslav Republic of Macedonia, just behind the United Kingdom, Germany, Greece and Serbia.
In conclusion, Macedonia is a country where the demand for “Made in Italy” is very high and constantly growing.
Ava. Stefano Rossi