Guide to doing Business and Investing in FYROM
Macedonian Business Monthly Bulletin 2010
Country Information
The Former Yugoslav Republic of Macedonia (FYROM) is situated in the central part of the Balkan Peninsula covering an area of 25,713 square kilometers. Its relief is characterized by large and high mountain massifs giving way to extensive, flat valleys and plains. The climate is classified as being transitory from continental climate to a Mediterranean climate. Summer temperature can rise as high as 40ºC, while winter temperatures can fall bellow minus 30ºC in some mountain areas.
The country is bordered by Serbia and Monte Negro to the North, Bulgaria to the East, Greece to the South and Albania to the West. It is a major transit way for shipment of goods from Greece, through the Balkans, towards Eastern, Western and Central Europe and through Bulgaria to the East.
The population of FYROM is slightly over 2 million people. The capital is Skopje (over 600,000 citizens). Other major cities are Bitola, Tetovo, Gostivar, Veles, Kumanovo, Ohrid and Stip.
FYROM has significant deposits of lead and zinc ores, copper, nickel, coal, decorative and architectural building stone, and non-metallic minerals, such as bentonite, fire-resistant clays, gypsum, quartz, opalite, and feldspar.
General economic indicators
Indicators | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 |
1. GDP, USD bln | 3,351 | 3,390 | 3,458 | 3,575 | 3,730 | 3,899 | 3,723 | 3,743 |
2. GDP per capita, USD | 1,705 | 1,709 | 1,732 | 1,781 | 1,848 | 1,924 | 1,830 | 1,835 |
3. Real GDP growth rate, % | -1.1 | 1.2 | 1.4 | 3.4 | 4.3 | 4.5 | -4.5 | 0.7 |
4. Industrial production growth rate, % | -11.0 | 4.0 | 4.9 | 4.5 | -2.6 | 3.5 | -3.1 | -5.3 |
5. Annual inflation rate, avrg % | 15.9 | 3.0 | 4.4 | 0.8 | -1.1 | 5.8 | 5.5 | 1.8 |
6. Annual unemployment rate, % | 35.6 | 31.9 | 36.0 | 34.5 | 32.4 | 32.1 | 30.5 | 31.9 |
7. Budget revenues, USD mln | 1,814.4 | 1,918.4 | 772.4 | 784.1 | 864.3 | 957.7 | 927.5 | 1,111.9 |
8. Budget expenditures, USD mln | 1,950.4 | 1,959.6 | 707.0 | 783.5 | 829.8 | 875.6 | 1,013.5 | 1.107,6 |
9. Current account balance, USD mln. | -298.91 | -339.85 | -286.14 | -269.29 | -32.46 | -75.28 | -235.43 | -324.48 |
10. Average monthly salary, USD | 225.8 | 220.4 | 182.0 | 172.4 | 169.1 | 154.7 | 155.1 | 174.2 |
11. Discount interest rate, % | - | - | 8.9 | 8.9 | 8.9 | 7.9 | 10.7 | 10.7* |
12. Total foreign debt, USD bln. ** | 1.44 | 1.17 | 1.13 | 1.47 | 1.49 | 1.49 | 1.48 | 1.55 |
13. Foreign currency reserves, USD mln. | 270 | 270 | 280 | 334 | 458 | 710 | 775.15 | 730 |
14. Exchange rate for 1 USD, end of year | 38.0 | 41.4 | 55.4 | 51.8 | 60.3 | 65.3 | 69.2 | 58.6 |
15. Exchange rate for 1 EUR, end of year | - | - | - | - | 60.6 | 60.8 | 61.0 | 61.1 |
* In March ’03, the discount interest rate was decreased on level 8%, and from April ’03 the rate is 6.5%**Up to 1997, total foreign debt included only medium and long-term credits. Since 1998, according to the new methodology suggested by the WB total foreign debt includes short, medium, and long-term credits.Source – National Bank of the Republic of Macedonia, Ministry of Finance and State Statistical Office of RM
Foreign trade regime and major regulations
Following the basic WTO principle to eliminate quantitative restrictions on trade, an extensive liberalisation of trade regimes has been implemented.
Macedonia officialy admitted the World Trade Organisation on April, 2003.
With the process of harmonisation of the WTO sectoral agreements on the level of the highest tariff rate and the bilateral and multilateral negotiation with the WTO members, the average tariff rate after the transitional period of WTO accession will be about 8%.
Customs regime, export and import quota and license systems, tariffs
With the adoption of the new Foreign Trade Law by the Parliament on 20 June, 2002 (Official Gazette of RM No. 45/2002) FROM has made a complete harmonization with the trade regime of the WTO rules. Article 5 of the Law determines free import and export of goods, i.e. complete liberalization of the foreign trade regime.
Pursuant to Article XX of GATT 1994 the Law stipulates import and export licenses related to environment protection, protection of the human health, protection of animals and plants, protection of the historic heritage and trade with military arms.
The Law defines and regulates conditions under which measures could be taken for protection of the domestic production from increased import, antidumping measures and measures against subsidized import.
The Law on Customs Tariff (Official Gazette of RM No. 23/03) provides competes accordance to the Harmonized system of the World Custom Organization and the Combined Nomenclature of the European Union.
Exports and imports
Over 80% of the trade exchange of Macedonia is being realised under preferential conditions from the concluded bilateral and multilateral Free Trade Agreements.
Import and export statistics (USD bln)
Indicators | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 |
Exports FOB | 1.18 | 1.32 | 1.19 | 1.32 | 1.16 | 1.11 |
Imports CIF | 1.75 | 1.91 | 1.80 | 2.08 | 1.68 | 1.96 |
Source: State Statistical Office of FYROM
Structure of foreign trade by regions in 2002 (USD mln)
Countries | Export % | Import % | ||
1. Developed countries | 689 | 62.0 | 1.081 | 55.1 |
1.1 European Union | 564 | 50.8 | 888 | 45.3 |
1.2 EFTA countries | 30 | 2.7 | 29 | 1.5 |
1.3 Other developed countries | 94 | 8.5 | 163 | 8.3 |
2. Developing countries | 17 | 1.5 | 112 | 5.8 |
3.Central Eastern European countries | 59 | 5.3 | 381 | 19.5 |
4. Countries of former Yugoslavia | 344 | 31.0 | 383 | 19.5 |
5. Other countries | 1 | 0.1 | 2 | 0.1 |
TOTAL | 1,112 | 100 | 1,962 | 100 |
Source: State Statistical Office of FYROM
Biggest trade partners of FYROM in 2002 (USDmln)
Bulgaria | 21 | 1.88 | 128 | 6.52 |
Croatia | 59 | 5.30 | 55 | 2.80 |
Germany | 233 | 20.95 | 281 | 14.32 |
Greece | 116 | 10.43 | 237 | 12.07 |
Holland | 44 | 3.95 | 51 | 2.59 |
Italy | 79 | 7.10 | 118 | 6.01 |
Russia | 14 | 1.25 | 103 | 5.24 |
Serbia and Montenegro | 245 | 22.03 | 184 | 9.37 |
Slovenia | 22 | 1.97 | 129 | 6.57 |
Ukraine | 0.4 | 0.03 | 72 | 3.66 |
USA | 77 | 6.92 | 58 | 2.95 |
TOTAL | 1,112 | 100 | 1,962 | 100 |
Structure of foreign trade by commodities in 2002 (USD mln.)
Product | Export | Import |
Food products | 74.66 | 245.98 |
Beverages and tobacco | 124.83 | 17.97 |
Crude materials, except fuels | 35.38 | 50.02 |
Mineral fuels, lubricants and related materials | 25.06 | 240.59 |
Animal and vegetables oils and fats | 2.65 | 19.92 |
Chemicals and related products | 69.30 | 210.87 |
Manufactured goods classified mainly by material | 315.04 | 264.10 |
Machinery and transport equipment | 73.75 | 406.90 |
Miscellaneous manufactured articles | 388.32 | 112.40 |
Special transactions and commodities not classified according to kind | 3.76 | 393.37 |
TOTAL | 1,112.73 | 1,962.12 |
Source: State Statistical Office of FYROM
Major bilateral and multilateral trade agreements
FYROM has signed and is implementing Free Trade Agreements (FTAs) with the following countries: Slovenia, Croatia, Serbia and Montenegro, Bulgaria, Turkey, EFTA countries, Ukraine, Bosnia and Herzegovina, Albania and Romania.
FYROM has concluded a Stabilization and Association Agreement with the EU. An integral part of this Agreement is the Interim Agreement on Trade and Trade Related Matters, between FYROM and the EU, has been applied since 01.07.2001.
Under this Agreement the industrial products originating from FYROM are granted free export to the EU member countries. At the same time under the Interim Agreement EU grants to FYROM high quotas related to the export of agricultural and food products. The import in FYROM of goods originating from the EU member countries is subject to liberalization in 10-year transition period.
The potential market of the RM through signed FTA with abovementioned countries, EFTA countries as well as Interim Agreement on Trade and Trade Issues with EU is over 500 million consumers.