For our readers this interview may be the first introduction to Macedonia since it is a new investment destination. Within this framework can you give us your evaluation of the investment climate in Macedonia as compared to its neighboring countries?
When we talk about the opportunities to invest in the Republic of Macedonia, what is very often transmitted abroad is the wrong picture, especially concerning the Macedonian economy, the reforms which are carried out in the economic sphere, economic potentials and development opportunities. It offends us when we hear comparisons with countries, which are behind in their reform processes, and on lower technological development level and have a lack of personnel potentials. We are further away if we analyze the achievements in privatization; development; stability of the economic conditions; the level of liberalization of the legislation etc. The real situation is a strong advantage in our favor, for those interested in investing in our country. Let me tell you why?
First of all Macedonia is rich in natural potentials, has huge reserves of lead and zinc ore, and has un-estimable reserves of decorating stones - marble and granite. There are also potentials and some more than 200 years of tradition in producing gypsum, and also important capacities in the field of textile, metal and metal processing industry. Most of the production capacities have already implemented the ISO 9001 standards. There are areas with a highly specialized and qualified workforce.
Some of these production areas are in a crisis. From 1994-1998 with all the wars in the region, all the embargoes and crisis, Macedonia suffered a damage of more than 4billion US$, and these areas were not exploited. The damage had strong influence on the financial stability and the production/manufacturing within the country. That is the period when we lost pace with technological progress and development. That is also the period when most of the market deviations occurred. We'd lost Yugoslavian market, the markets of the Eastern Europe, but through enormous costs we succeeded to keep and even to extend our market presence in the countries of the EU and the US. So our total trades exchange with these countries in some years reached 44%. The US was one of our first five trade exchange partners with some 280 million USD.
I would like to tell you the strongest advantages Macedonia as compared to the neighboring countries. Even before adopting the market economy, the total of the land and live-stock was 84% privately owned, which means we didn't have the kind of problems that countries like Bulgaria and Albania had with returning land to people who had no idea what to do with it. The problem we had in this area was to somehow reduce the production because we lost the markets. There was the question of what to do with the products and as consequence we had to adjust to the new circumstances.
Another advantage is that we have also created a very strong, stable and solid system surrounding protection of foreign capital, while stimulating foreign investments by implementing minimum taxation on profits. If reinvested, the profit is not taxed.
So, these are the advantages that the Macedonian economy offers, advantages that have strong influence over the investment climate even in the circumstances when it was dangerous to invest in, to do business with Macedonia. Still, even in such periods of blockades and wars, there were investments by Coca Cola, Heineken, Greek and Swiss capital in the cement industry, and the huge investment of the German company KNAUFF in the gypsum industry. At this time we also had the investment of some American and Greek capital in the tobacco industry, as well as the one in the iron and steel industry (the Swiss "Duferco").
What is the strength of the Republic of Macedonia? The commitment to undertake reforms even in circumstances when due to economic and transport blockades we were fighting for survival. In that period we have started the privatization processes and as a result of it, the biggest part of the economy and the industry is privatized. Our evaluation is that we didn't make faster and complete privatization, because of the influence of politics over the economy. If we had done it, we would have had even better results in business efficiency.
We certainly won't find one single privatization process in the world that can be 100% just. Any concept of privatization opens many dilemmas when the just is concerned. But it is certain - that any kind of privatization is better in relation to continuance of a non-defined property status. It is important that such processes should come to an end, to open the opportunities for more efficient work and based on it to increase the reproduction and capital intensive ability of the entities, and through it to start with the development of new technologies and the realization of the small and medium businesses development policy.
More of the advantages of the Macedonian economy? The geographical location of Macedonia is at the center of the Balkans, with a very pleasant microclimate, strong water potentials, very well developed irrigation systems. We can realize the idea of Macedonia, and realize its natural, economic and human potentials. There is much more that a foreign investor can find here in Macedonia.
This theme has often been discussed as subject of my numerous presentations and analyses abroad, especially in the West-European countries. I ask all those interested to come to see at least, and then to make their own decision-whether they want to be present here or not. It is in the interest of all of us to come out proudly and present things sometimes better then they really are, but business is merciless, it does not recognize such improvisations. It does not require a chance to come and see in order to make ones own evaluations. That's why in the past we kept inviting people, especially from the western countries, to come and see, talk to us.
The Economic Chamber of Macedonia was created almost 80 years ago. Can you tell us the highpoints of development of this Chamber since its creation? What services do you provide to local or foreign investors?
We have very specific features in our work. From 1921 to 1941 we had operated in circumstances of a market economy. The members of the Chamber had been small industrialists and traders. We can prove that even at that time our Chambers organization had its influence over the development of the Macedonian economy. But, Macedonia did not exist then as independent state; we'd been a part of the Kingdom of Yugoslavia, under the domination of Serbia; afterwards during the 4 years of occupation during the World War II we were under the jurisdiction of Bulgaria. As of 1945 we are the Economic Chamber of Macedonia. We had the task to help in supplying the population and to help raise the economy, to help in restructuring, rebuilding the economy and the industry of Macedonia, which was completely destroyed.
The whole post-war period, until the 90`s, this Chamber had legal authorization, better to say assignment to work on the development, on the plan of connecting our economy with those of the republics of the former Yugoslavia. Ever since, we have been working on promoting our economy through overseas visits.
Since 1992 the Economic Chamber of Macedonia had started the processes of its own transformation and work in accordance to the market principles. We have accepted the Austro-German model of chambers organization and activity. We have determined to act as a non-governmental and non-political organization. Such commitment creates problems with the authorities, but, we have the support of our members and we must not allow the parties interests influence on our work. We are business organization where people are talking about mutual interests for cooperation, development and profit. Such commitment provide us good position and reputation among our members and broader in the business of the region where we belong.
How many members do you have and what is your relation with them?
We use the German model of structure. The membership in the Economic Chamber is mandatory - meaning any registered company is automatically a member of the Chamber, so we have some more than 28,000 members, as many as there are companies in Macedonia. There are the operating ones, with the presumption that the other 20,000 that are registered but do not operate, they also are members of our Chamber. Besides the mandatory membership, for some 5-6 years we're applying a policy by which 50% of our income is earned through the membership fee and the other 50% is earned through the services we provide. That gives a status and reputation of public and legal institution, similarly to the Chambers of the West European countries. We are a business oriented, professional organization; often but with no argument we are considered part of the Government. Sometimes, when we find it necessary, we act towards changing laws and regulations. | We are maybe the only institution that has real analysis with indicators for influence over the economy, and our proposals are oriented towards gradually creating an atmosphere of economic stability. That's the policy for the transition period: our goal is completing privatization as soon as possible, creating a system, which won't be changing daily and creating an atmosphere for foreign investors that guarantees long term stability; a system where the politics will be separated from economics.
We often say the politics and economy are two different things having the same target. Both have as their goal the economic stability as a precondition for the political one. But that's not how it is understood. Politics is strongly present in the economy, however it concerns more our domestic business than foreign.
The Economic Chamber is the key tool to expose Macedonia to the region and the international business community. How do you think Macedonia's image will evolve during the next 10 years?
The policy of the Government of the Republic of Macedonia is to spur the liberal relations in the foreign trade exchange with many states in the region and broader. We signed free trade agreements with Slovenia, Croatia, Bulgaria, Yugoslavia, Turkey and Ukraine, and we are negotiating with Albania, Romania and Bosnia & Herzegovina. Free trade Agreement between EFTA and the Republic of Macedonia was signed in June 2000 and will be put into effect in 2001. We have interest to become members of CEFTA. Our ultimate objective is the membership in the European Union. This year we will sign the Stabilization and Association Agreement with the EU. It should be a sign for foreign investors that the Republic of Macedonia is not any more a market of two million consumers, but much bigger from that we had before.
The important fact for the foreign investors is that the situation in the region starts to stabilize, especially after the democratic changes in Yugoslavia. The real opportunities are opened for faster transport and more acceptable economic cooperation with the countries of the Western, Central and Eastern Europe. Due to the problems imposed by the circumstances of the past, the Macedonian economy lost so much by the minimized trade and economic cooperation with Hungary, Romania, Czech Republic, Slovak Republic, etc. One of the significant advantages that should increase the foreign investors interest for Macedonia is the skilled potential. In the previous years we have lost a great number of young and highly capable people who have left the country and went to overseas states. You will agree that it is a great loss, as it's the most costly investment for each country.
I would like to emphasize also our strong potentials in producing ecological food. They are important, but minimally used. In some regions of the Republic of Macedonia there are almost no industry, and they have strong potentials for production of healthy food. That is where we need funds for new investments. If we focus our attention towards foreign investors in this field, they could realize significant investments.
You will agree with me that one of the basic preconditions for the foreign investor presence is the stability of the region, because the business people would first consider the security of the investments. For reasons of risk, we have had terrible losses in the tourism - a reality that lasts 10 years. We have lost tourists that were visiting us constantly for decades. The tourist season is very short, and as a result of the circumstances we have stagnation in the development of this field. Macedonia has important potentials for the development of the winter and summer lake tourism, and we are also rich with cultural and historical inheritance. We are well known by our hospitality, felt by many guests from Western Europe. In this field we are opened for foreign investors also. The companies are ready to talk with the interested ones. There are investments in this field, but they are minimal (a hotel capacity that entered in the Holiday Inn chain and the investments in winter sports tourism).
The Economic Chamber of Macedonia is striving mostly to connect the business interests of our country with the foreign ones. Within the Chamber we have established 8 Business Councils (with US, Canada, Russian Federation, Turkey, Romania, Ukraine and Albania), 6 Joint Chambers and over 50 bilateral cooperation agreements. We collaborate successfully with all these states through our partners, whether they are chambers organizations or other associations. Our goal is to present our potentials, to attract the foreign investors attention and to contribute for the increasing of our foreign cooperation.
Considering the fact that the bigger part of our own capital for financing of reproduction and development has been lost during the wars in the region and economic and transport blockades, the Macedonian economy evaluates that its perspective should be sought in bigger participation of the foreign capital. If we succeed, we should gain much in technological development, marketing and overcoming the markets problems. Our attention will be turned to the production organization. I consider that we have capabilities to attain significant results in our work and profitability. We posses the natural, economic and human potentials, we have the skill, that is confirmed in the past. You will agree that in the new conditions for doing business, when we are open towards the European markets and we carry out the liberalization, it's much easier for us to contribute for our own perspective. The regulations and principles of the market regularity must be obeyed. We must improve the working conditions, to act with responsibility when our obligations are concerned and to create real criteria for the individual's capability. We should not allow the smuggling and speculations to be criteria for the capability of the people engaged in the business.
All the above mentioned is a strong advantage of the Republic of Macedonia. For a longer period of time we are maintaining a minimal economic stability, in spite of a complex working conditions. It is confirmed by the confidence we have from the international financial organizations - World Bank, IMF, European Bank. I would like to stress that we are a state of two million inhabitants, who have potentials to provide food for two states this size, not to mention the other natural potentials. It would be a shame not to put all these potentials for development and economy stability. I am optimist when our perspectives in economy are concerned. I have worked 29 years on issues of economics, and for almost 11 years as President of the Economic Chamber of Macedonia. My optimism results from that experience. Our perspectives are real and could be realized in a very short period, if we spur the interest of the foreign investors.
The Economic Chamber of Macedonia is a stable and reputable business and professional organization. The confirmation of our reputation is our presiding of the Association of the Balkan Chambers in 1998. I can say that it is not good that our organization and transformation, which serves as example to more, due to our commitment to be non-political and non-governmental organization to be often represented differently in our own country. But such views would be surpassed when the transformation will be completed, when the politics will be divided from economy and when the conditions will be created the business to take over the responsibility over its work. We are transformed to be the service of the economy. Therefore, we have established The Agency for Legal and Financial Consulting, The Quality Improvement Center and The Small and Medium Enterprises Development Center, and a special attention we dedicate to the improvement of the Information Center, which is a component part of the Information System of CEI and the Association of the Balkan Chambers and Balkan Centre for Trade Promotion, and is also connected with many other information centers. We have our WEB site and we publish a lot of publications, videocassettes, CD ROMs and we have established a strong cooperation with well-known international institutions for certification of ISO 9001, ISO 9002 and ISO 14000 standards and with those that have tradition and reputation in personnel education.
Our congratulations for your achievements and we hope you will stay again a few years as President of the Economic Chamber, as it seems to be successful so far.
My successes are successes of all my team. I always say that the reputation and success of each and every company starts at the reception desk and ends with the top. For one to be successful, he needs a good team of activists that will follow him, keeping pace with the concepts of the leader. I feel a lot of gratitude towards this institution; my affirmation happened here, I made many friends here, I think this is an exquisite opportunity for professional work, and wherever I am I will always see and contribute all that I can for this institution to have only more reputation and success.
Thank you for the honor to come in our institution. I am sincere in saying that we highly respect the representatives of the press. At a New Years press conference we had 75 media present; while the political party in power at an equivalent press conference had only half of that number. That shows we know how to be open and to respect the people. |
V.I.P. INTERVIEWS 
