[GPATS 2013] Ivo Ivanovski - Master Presentation of Macedonia

Republic of Macedonia

November, 2013

Why Macedonia?

Competitive
Location

Excellent
Infrastructure

Competitive
& Educated
Workforce

Investment
Incentives

Investor friendly
Government

Higher Profits & Increased Competitiveness

Agency for Foreign Investments
and Export Promotion

www.investinmacedonia.com

2

Location and Transport Infrastructure

• Two Pan-European corridors:
– East-West Corridor 8
– North-South Corridor 10

• Road network: 4,370 km
• Railway network: 925 km
• Two international airports:
– Skopje
– Ohrid

• International ports*:
– Thessalonica (Greece): 80 km
– Durres (Albania): 150 km
* Distance from Border


3

Political and Economic Outlook

• Political, monetary and macroeconomic
stability;
• Strategically located for future business
expansion;
• First country in SEE to sign a SAA with the EU
in 2001;

• EU and NATO candidate country;
• FTAs with numerous countries;
• Business oriented Government;
• Welcoming and decisive government ready to
serve investors.


4

Reference

5th BEST IN STARTING A
BUSINESS RANKINGS

3rd BEST REFORMER
IN THE WORLD

World Bank’s Doing Business 2013 Report


BEST CONSECUTIVE REFORMER
OVER THE PAST THREE YEARS IN SOUTH EASTERN EUROPE
Based on the World Bank’s Doing Business Reports in 2011, 2012 and 2013

3rd BEST REFORMER
IN THE WORLD


4th IN TOTAL TAX RATE
EASE OF PAYING TAXES 2012
PwC and World Bank Group Study


5

Ease of Doing Business 2013
Global Rank

126

23
Macedonia

35

Slovenia

46

51

54

55

Slovakia

Montenegro

Hungary

Poland


65

66

Czech
Republic

Bulgaria

71

72

Turkey

Romania

84

86

Croatia

Serbia

Bosnia and
Herzegovina


6

Best Countries for Business 2012
Forbs Magazine Global Rankings

85

37

38

41

43

45

46

47

49

52

90

60

23



7

2013 Index of Economic Freedom
World Rankings



8

Ease of Paying Taxes 2012
Total Tax Rate World Rankings

102

4

21

28

36

54

63

112

119

137

143

68

PwC and World Bank Group Study


9

Foreign Investment Regime
• Macedonian Constitution guarantees fair treatment of
foreign investors

• Complete protection of the ownership rights of foreign
investors
• Republic of Macedonia

is member of MIGA
• Investment protection treaties with numerous countries
• 100% foreign ownership of a company allowed
• No restrictions for repatriation of profits



10

Economic Indicators
GDP GROWTH(%)

INFLATION
Low inflation: average 2% annually over the last 4 years
2009:-0.8%; 2010:1.6%; 2011:3.9%; 2012:3.3%;

CURRENCY
Macedonian Denar pegged to the DM/€
EXPORT BY YEAR (US$ bn)

3.4

2007

for the last 15 years (€1= MKD 61.3)

2.7

2008

AVERAGE GROSS SALARY IN 2012

4.4

4.0

2009

3.3

3,9

2010

2011

€ 498 per month

2012

CREDIT RATINGS 2012

FDI BY YEAR (US$ m)

Standard & Poor’s: BB
Fitch: BB+

BUDGET DEFICIT & STATE DEBT

Budget Deficit, 2012: 3.3 % of GDP
State Debt,2012: 33.8 % of GDP

Source: National Bank of the Republic of Macedonia

11

Unbeatable Fiscal Benefits
• 10% Corporate & Personal income tax (among the lowest in Europe)
• 0% Tax on retained earnings
• Double taxation treaties with many European countries
• 0% tax for operation in a Technological Industrial Development Zone
• Real estate taxes at 2% - 4%
• VAT at 18%, with 5% on specific items
• FTAs with EU, EFTA, CEFTA countries; Turkey and the Ukraine; providing access
to over 650m customers
Corporate Income Tax
Macedonia*
Romania*

Personal Income Tax

General VAT Rates
Macedonia

16%

18%

Turkey

10%

18%

Czech Republic

19%

Czech Republic

20%

Hungary

19%

Slovakia

20%

Poland

19%

Ukraine

20%

Slovakia*

19%

Poland

Croatia

20%

Romania

Turkey

20%

Croatia

Ukraine

Hungary

21%

23%
24%
25%
27%

* Flat rate
Source: PricewaterhouseCoopers (Taxes at a glance 2012), National Investment Promotion Agencies


12

Social Security Contributions
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%

7.3%

18.0%

1.2% 0.5%

2010
18.0%

7.3%

27.0%

1.2% 0.5%

2011
7.3%

17.5%

2012
Pension Insurance

Health Insurance

27.0%

1.1% 0.5%

Employment Insurance

26.4%

Additional Health Insurance

Comparison - Social Security Contributions
Macedonia
Bulgaria

Poland
Montenegro
Croatia
Serbia
Ukraine
Romania
Czech Republic
Hungary
Slovakia

26.4%
30.7%
33.2%
33.8%
35.2%
35.8%
40.3%
44.3%
45.0%
45.5%
48.6%


Source: PricewaterhouseCoopers (Taxes at a glance 2012), National Investment Promotion Agencies

13

Average Gross Monthly Salary

Average gross monthly salary in selected
countries of Central and Eastern Europe in 2012
€1,525

€993

€660
€498

Serbia

€771

€800

Hungary

Slovakia

€889

€508

Macedonia

€727

€846

€1,048

Bosnia and Montenegro
Herzegovina

Poland

Estonia

Czech
Republic

Croatia

Slovenia

Source: The Vienna Institute for International Economic Studies (wiiw)



14

Competitiveness for Investments in Macedonia
Price Level Index for
Investments
81

56

59

62

63

66

70

Romania

Bulgaria

Serbia

Turkey

Croatia

88

Poland

Turkey

85

Czech
Republic

Slovenia

Slovakia

72

Macedonia

85

100

EU27
Average

Price Level Index for Construction
100
56

39

42

42

46

49

Macedonia

Serbia

Romania

Bulgaria

Turkey


61

Croatia

Hungary

73

74

74

Poland

Slovakia

Czech
Republic

Source: Eurostat, December 2012

80

Slovenia

EU27
Average


15

Sustainable Work Force Supply
• 41.5% of population under 30
• High intellectual capital
–

95+% of high school graduates enrolled in universities in 2012

–

Multiple vocational high schools in each city

• Tailor-made training programs through Vocational Schools or Universities
• 6% of GDP spent on education

Number of enrolled students
in Colleges and Universities

63.437

57.894

64.779

58.747

Number of graduates
in Colleges and Universities

11,197

10,839
56906

10,392

10,232
9,802

2008/2009

2009/2010

2010/2011


2011/2012

2012/2013

2008

2009

2010

2011


2012
16

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

99%

96.5%

French

0.6%

2.8%

German

0.3%

0.5%

Russian

0.1%

0.2%


Source: State Statistical Office of the Republic of Macedonia
(Education 2012/2013) and Ministry of Education and Science


17

Investment Opportunities
Target Sectors
Machine and Automotive components
ICT
Medical Devices and Pharmaceuticals

Agribusiness and Food Processing
Energy sector

Real Estate & Construction
Textile
Tourism
Filming


19

Machine and Automotive Components Industry
• Existing engineering and manufacturing
tradition

• Legacy of skills available to new investors
• Component production started in the 1960’s to
supply Zastava, Serbia
• Companies primarily supply the aftermarket
• Johnson Controls, Johnson Matthey, Kemet,
Teknohose, (Free Economic Zones), Kromberg
& Schubert, Hi-Tech to supply OEM’s, Van Hool
• Markets are Europe, Russia, Turkey, Africa,
USA
• Most companies have ISO 9001 / TS 16949
quality certification


20

ICT Sector

• 4-hour company registration
• Electronic fee payments for government
services
• Digital certificates for employers
• Legislation fully harmonized with the EU
• Free computer application training
VAT lowered from 18% to 5% on most IT products.
Analog to Digital TV switched of on June 1st 2013
Released the Digital Dividend on 800Mhz



21

ICT Sector
• Best telecommunication networks in
the region – the system is 100% digital
• Leading multinational hardware and
software suppliers (Microsoft, HP,
IBM) have local sales and support
services in Macedonia
• IT skills shortage in Western
economies and growing demand for
outsourcing services – Macedonia can
be your solution!
• Availability of well-educated staff at
competitive costs
• Quality assurance and standardization
procedure intitialized



22

Fixed Telephony Market Overview

Fixed telephony market shares by number of lines in Q1 2013



23

Fixed Telephony Market Overview

64.56% market share (by fixed lines in Q1 2013) of
Makedonski Telekom AD
15.72% market share of second largest fixed operator
(by fixed lines in Q1 2013)
75.73% market share (by traffic in Q1/2013) of
Makedonski Telekom AD
52.68 calls- average number of initiated monthly calls
per user(Q1 2012)
163.86,50 minutes- average monthly usage per
user(Q1 2012)
19.65 - Fixed lines per 100 population (404.799
active fixed lines - Q1 2013)
107.883 ported numbers until 31 of March 2013.



24

Mobile Market Overview – Q1 2013

Share of operators in the total number of active subscribers in Q1/2013



25

Broadband market overview – Q1/2013



26

Healthcare Sector, Medical Devices and Pharmaceuticals
• Existing pharmaceutical industry, exports to
over 30 countries worldwide
• Strong educational system, with an
abundance of medical and pharmacy
graduates
• Supportive regulatory environment
• Licensing arrangements in place with many
of world’s leading pharmaceutical
companies
• Available sites at industrial and free
economic zones
• Manufacturing tradition



27

Agribusiness and Food Processing Industry
• Unique combination of Continental and SubMediterranean climates
• Environment friendly production practices
• Technologies for food processing
• Excellent access to regional markets
• Strong reputation for quality food products
The greatest investment opportunities:

• fruits and vegetables – production, storage
distribution and processing industries (logistic
centers)
• wine production

• sheep and goat cheese production


28

Textile sector
• Esteemed reputation of Macedonian textile
producers on the European Union market
• High flexibility and readiness to adapt to the
demands of foreign markets
• Exceptional relation between product quality
and costs
• Modern equipment
• 1-2 days distance to European Union markets
• Foreign investment welcomed in the readymade clothing and knit production industries



29

Tourism
Summer Destinations
•Numerous tectonic, glacial and man-made
lakes, 50 in total
•Large natural lakes: Ohrid, Dojran and Prespa
•Water sports, archeological, wine, eco and
rural tourism
•In 2012, 7,3% increase of foreign tourists
compared with 2011

Winter Destinations
•Over 45 mountain peaks exceeding 2.000m
•70% of the territory is mountainous and many
locations have more than 100 days of snow

•Opportunities for development and
enhancements of hotels and spa resorts on
many locations


30

Tourism
Historical and Culture Heritage
• 4,293 archeological sites
• 992 churches and monasteries

• 23,000 icons (2nd most valuable
collection in the world)
• 228 mosques, inns, Turkish baths and old
bazaars,
• 47 towers and fortresses
Spa tourism
•

Territory rich with geothermal waters

•

More than 60 thermal springs

•

Identified locations for construction of
new spa centers and hotels


31

Filming industry
Macedonia geographically provides various types of landscapes on locations at very
short distances from each other.

With annual average of 280 sunny days, Macedonia is one of the best locations for
exteriors and locations filming.
INCENTIVES
A film producer interested in investing funds in Republic of
Macedonia for making a feature film, documentary, animation,
television film or television series, may acquire the right to refund
20% of direct eligible expenditures paid in Republic of Macedonia.

Eligible expenditures
1) Production services
2) Postproduction services
3) Animation services
4) Procurement of goods for film sets and the costumes needed for
production of the film/television project.



32

Tourism Development Zone
Dojran 1
Possible Planning Purposes :
• Tourist settlement with bungalows
• Small catering and commercial units
• Rehabilitation center for alternative treatment



34

Dojran 1
EVALUATION OF POSSIBLE SPACE FOR PLANNING PURPOSES (contents)
Project No.

1

P (ha)

12 hа

Relief CONDITIONS

The location is on flat terrain

ALTITUDE

~165 m

STRUCTURE OF
LOCATION IN RELATION
TO THE LAKE

The location is on the coast

CURRENT SITUATION

Institution in charge

TRAFFIC CONNECTIONS

THE LOCATION IS NEAR THE REGIONAL ROAD
R604 AND IS ACCESSIBLE)

Agency for Promotion and Support of Tourism

WATER PIPING
INFRASTRUCTURE

THERE IS WATER INFRASTRUCTURE AND
SEWERAGE INFRASTRUCTURE COLLECTOR

www.macedonia-timeless.com

ELECTRICAL
INFRASTRUCTURE

THERE IS ELECTRICAL INFRASTRUCTURE

Tourism Development Zones TDZ offer: tax incentives, training and education for new employees.


35

Dojran 2
• Tourist settlement with bungalows
• Small catering and commercial units
• Rehabilitation center for alternative treatment



36

Project No.

2

P (ha)

20 hа

Relief CONDITIONS


ALTITUDE

~170 m

STRUCTURE OF LOCATION
IN RELATION TO THE LAKE


CURRENT SITUATION


TRAFFIC CONNECTIONS

THE LOCATION IS NEAR THE REGIONAL ROAD
R604 AND IS ACCESSIBLE)


WATER PIPING
INFRASTRUCTURE



ELECTRICAL
INFRASTRUCTURE




37

Ohrid 1

• Hotels
• Trade units
• Sport and recreation



38

Ohrid 1
Project No.

3

P (ha)

60,56 hа

Relief CONDITIONS


ALTITUDE

~690 m

STRUCTURE OF
LOCATION IN RELATION
TO THE LAKE


CURRENT SITUATION


TRAFFIC CONNECTIONS

THE LOCATION IS 150 METERS AWAY
FROM THE REGIONAL ROAD R501


WATER PIPING
INFRASTRUCTURE



ELECTRICAL
INFRASTRUCTURE




39

Struga 1
Possible Planning Purposes:
· Small trade units
· Sport and recreation
· Motodrom



40

Struga 1
Project No.

4

P (ha)

16.26 hа

Relief CONDITIONS


ALTITUDE

~700 m

STRUCTURE OF LOCATION IN
RELATION TO THE LAKE


CURRENT SITUATION

TRAFFIC CONNECTIONS

THE LOCATION IS NEAR THE REGIONAL
ROAD R420 AND IS ACCESSIBLE

WATER PIPING INFRASTRUCTURE

THERE IS WATER INFRASTRUCTURE
AND SEWERAGE INFRASTRUCTURE
COLLECTOR

ELECTRICAL INFRASTRUCTURE



Agency for Promotion and Support of
Tourism


THERE IS ELECTRICAL
INFRASTRUCTURE


41

Spa Tourism

•
•
•

Region rich with geothermal waters
with healing effects
More than 60 thermal springs
Identified locations for construction
of new spa-wellness centers, hotels
and resorts



42

Spa Tourism
Locations with strong indications of geothermal water

• Raklis – Radovis
–

Borehole with yield of 2l/sec and temperature 25ºС

• Toplec and Nikolic – Dojran
–

Natural spring with temperature 40ºС

• Banjice – Tetovo
–

Natural springs with yield of 10l/sec and temperature
of 27-30ºС

• Proevci, Kumanovska Banja – Kumanovo
–

Estimates of up to 100ºС from the primary collector



43

Spa Tourism

• Sabota Voda – Veles
–

Borehole with yield 3.5 – 4.0l/sec and temperature of 3048ºС, estimates of up to 110ºС for the primary collector

• Mariovo – Prilep
–

Numerous spring appearances, temperature varies from
20-23ºС

• Kezhovica –Shtip
–

2 boreholes with yield 4.5 l/sec and temperature 63 ºС

• Majdan and Toplic – Kavadarci
–

No temperature available due to the mixture of hot and
cold water



44

Ski Centres in Macedonia

POPOVA
SAPKA

PONIKVA

MAVROVO

KRUSEVO

PELISTER

KOZU
F

GALICIC
A



45

Popova Sapka Ski Center
OVERVIEW

• Popova Sapka is situated in the northwestern part of Macedonia on 1,780
metres above the sea level, just 35
kilometres from the capital Skopje.
• Pre-feasibility
study
is
already
completed and four phases were
identified to complete this project



46

Current situation

•

Total ski terrain length of 55km

•

Currently there are 10 lifts

•

Capacity of 2900 skiers per day

•

Housing
• Hotels – 600 beds
• Private accommodation – 3000 beds
Parking space for 549 cars

•

•

Relatively dense and unstructured resort
village



47

PHASE 1: Existing area optimization

•

Build two new lifts (Pods 3 & 4) and
remove eight existing lifts

•

Keep lifts Sv. Ilija and Aerodrom

•

Total mountain capacity > 3400
skiers per day

•

Improvements needed in the base
area:
new parking area
increase of the quality of
the existing beds
new mountain restaurants/
skier services.


48

PHASE 2: Building new village

•

Start developing “Aerodrom flats” to
create a new village

•

As soon as beds are available at the
new village, build two new lifts (Pods 1
& 2) and remove Sv. Ilija and Aerodrom

•

Finally build lift in Pod 5

•

Total mountain capacity: 7130
skiers/day

•

A total of over 4000 new beds (3000
skier beds at least) and some additional
300 parking stalls



49

PHASE 3: New village completion

•

Complete Village and add new parking and
connecting lift

•

Two new lifts will be added.

•

The village will keep increasing in size to
almost build-out stage (nearing 6000 beds)

•

A new parking 3km before the existing
Popova Sapka needs to be developed to
accommodate all the skiers

•

A connecting lift from the new village to
the bottom of Pods 4 & 5 should be built

•

Total mountain capacity: 10190 skiers/day


50

PHASE 4: Build out

•

Two new lifts are to be built

•

A new lift coming from Tetovo city center
could be built, bringing the skiers and
pedestrians to the recently developed
village center.

•

Total mountain capacity of 13,010
skiers/day



51

PROJECT DETAILS

•

Currently ski center Popova Sapka is
managed by ELEM, a state company
producing electricity.

•

They are seeking a partner to
develop Popova Sapka using PPP
model.



52

National Park Galicica
- Recognized as National Park in 1958
- Encloses an area of 25.000 hectares

Ski center
PROJECT OVERVIEW

- Bordered by Lake Ohrid (695 m), Lake
Prespa (850 m), with the highest peak
Magaro (2255 m)

•
•

Ski slopes start at 1600 m up to 2200 m
(5 km of ski lifts and 12 km of ski slopes)
Capacity of 5000 skiers per day

- Balkan Lynx (indigenous specie)

•

Land concession 7,290,000 m²

•

Project will be developed in 4 phases
(Possibilities for PPP or private investor)

Tourism opportunities:
- Lake tourism
- Leisure tourism
- Medical tourism

DEVELOPED INFRASTRUCTURE
•

40 km from the airport to the ski center

•

Existing hotels 7 km away from the ski
slopes

Proximity to City of
Ohrid with 250.000
tourists per year



53

National Park Ponikva
- 1560 meters above sea level
- Winter and summer recreational and tourist
center
- Tourism potentials of the Osogovo region
(locations for construction of accommodation
and tourist service facilities)

Ski center summer activities
Winter and
Skiing, mountaineering, paragliding
• 2 ski lifts
• Peaks
Ponikva – 1560 m
Retki buki – 1760 m

- Hunting:

Sultan Tepe (King’s top) – 2085 m

Lodges and famous
hunting grounds (deer,
mouflon, wild pig, doe,
etc.)

Ruen – 2250 m

• Tourist recreational trails

- Nature and Food:
Intact beauty and
high quality,
authentic ecologically
clean food


54

National Park Mavrovo
New locations for construction of additional commercial premises and hotels
Ski center
Planned expansion of the ski-resort

National Park Mavrovo

Existing Capacities

Recognized as a National Park in 1949
The largest in Macedonia (over 73,000 ha)
Tourist resort at the foothill of Mount Bistra
70 cm average snow cover (November-April)

Alpine & Nordic Skiing
- From beginner to expert slopes
-30 km trail length
(“Peaceful Valley”–7.5 km)

3 chair lifts & 11 ski lifts with total length of
5,700 meters and capacity of 11,100 skiers/hour
The highest ski lift tops at 1,860 meters
15 km ski trails & Night skiing

Hiking & Biking
- 52 peaks over 2000 m
- 500 km new trails with
maps and guides

Hunting & Fishing
- Mavrovo Lake (rich in
famous lake trout)
- Hunting grounds

Paragliding
Kayaking
- Radika river


55

INVESTMENT PROJECTS
ENERGY SECTOR
•

Government strongly committed to developing the
energy sector through public and private investments

•

National strategy based on diversifying the sources and
types of energy use

•

Focus on completing the strategy for the exploitation
of renewable sources of energy

Energy Sector Strategic Projects
Gas Transmission System
• Complete feasibility study for expanding the national
gas transmission system
• Rapid investment in completing the national gas
transmission system with support from international
financial institutions – €250 – €350 M
• Strong commitment to supporting the development of
regional gas transmission pipelines
• Focus on diversifying the source of gas available to
consumers in the country



57

Gasification of the Republic of Macedonia
Planned routes and possible connections for construction

Existing condition of pipeline in the Republic
of Macedonia
•Total length of pipeline - 98 km pipe, Ø 530 mm and of 54 bar;
• Capacity 800 million m3 per year up to 1000 million m3 per year;
• Connected cities – Kriva Palanka, Kratovo, Kumanovo and Skopje.

Total potential consumption in 2020 approximately 1300
million m3/year
Potential consumption
• in households, service sector and industry in 2020 - 500 million
m3/year
• in energy sector in 2020 - 800 million m3/year

Potential consumption in households, service sector and
industry in the cities
· 2017
· 2040

170 million m3/year
1.136 million m3/year

Planned Activities – Gas Transmission System
Phase I - priority sections with lengths
Kavadarci-Prilep-Bitola – 97 km
• Stip-Radovis-Hamzali-Strumica-R. Greece – 110 km
•

Skopje-Tetovo-Gostivar branch to Kicevo – 110 km


Phase II - priority sections with lengths
• Gostivar-Kicevo-Ohrid-Struga-Kafasan – 114 km
• Bitola-Ohrid – 64 km
•

Hamzali-Novo Selo-border of R. Bulgaria – 25 km and other
small sections in length of 250 km


58

Gas transmission (distribution) system
Existing gas transmission (distribution) system
• Kumanovo
• Strumica

Planned gas transmission (distribution) system

SKOPJE

PRILEP

GOSTIVAR

TETOVO

STIP

BITOLA

2015
80 million m3/year

2015
7 million m3/year

2015
3 million m3/year

2015
6 million m3/year

2015
2 million m3/year

2015
7 million m3/year

2040
500 million m3/year

2040
48 million m3/year

2040
23 million m3/year

2040
42 million m3/year

2040
24 million m3/year

2040
47 million m3/year

€80M

€27M

€21M

€26M

€18M

€31M



59

INVESTMENT PROJECTS
ENERGY SECTOR
HYDRO POWER PLANTS

Hydro Power Plants
• PPP with PE “ELEM” for the construction of a combined
cycle heat and power plant (investment value ≈ €250M) –
CHP Energetika
• An ongoing tender procedure – under the auspices of the
IFC advisory services for HPP “ Cebren and Galiste ”
(investment value ≈ €600M)
• HPP “Boskov Most” (investment value ≈ €90M)
• Vardar Valley system of HPPs along the Vardar river
(investment value ≈ €1.5B)
CHP ENERGETIKA
300MW(e),150MW
(h)
2.000 GWh(e),
500 GWh(h)
€250M

HPP BOSKOV MOST
H=44.4 m
68.2 MW
117.55 GWh
€107M

VARDAR VALLEY
200 MW (e)
€1.5B


61

HPP Cebren
Technical parameters:
Average discharge:26.00m3/s
Average production:840/786 GWh
Installed flow:231/208m3/s
Number of units:3
Installed capacity:333/347 MW
Construction period:6 years
Project Project costs:€340M
HPP Galiste
Average discharge:28.90m3/s
Average production:262.50 GWh
Installed flow:180m3/s
Number of units:3
Installed capacity:193.50 MW
Construction period:7 years
Project Project costs:€200M



62

Small Hydro Power Plants

•

Potential for construction of 400 SHPPs with total installed
capacity of 250 MW and average annual electricity production of
1200 GWh

•

Completed tender procedure and signed 68 concession contracts
for production of electricity from SHPPs with total installed
capacity of 58 MW
Expected annual production of 227 GWh and projected
investment value of €103M

•



63

INVESTMENT PROJECTS
ENERGY SECTOR
Thermal Power Plants

TPP Bitola
•

The Thermal Power Plant Bitola is located 8 km east of the city of Bitola and about 15 km
north from the Greek border. The total installed capacity is 675 MWel and the power plant
is the country’s major energy source. About 70% of the total energy produced in the
Country, is generated in TPP Bitola

•

The Power Plant with the 3 units has been operate for 20 years (each unit has a capacity
of 225 MWel and consumes about 2 mil.t of lignite annually)

The Project consists of three phase:
Revitalization and modernization of the turbines, generators and automation in TPP Bitola
Investment costs: €56.83M
Revitalization and modernization of the boilers and lowering of the NOx in TPP Bitola
and modernization of the cooling towers
Investment costs:€97.5M
Revitalization and modernization of TPP Bitola with lowering of SОx and dust
Investment costs:€154.25M



65


Combined heat power plants
CHP Energetika-installed power 300 MW (e),
150 MW (h) - consumption 300-450 million m3
Project costs:€44M
TEC Negotino - installed power 210 MW (e) consumption 300-450 million m3

TEC Oslomej - installed capacity 125 MW (e)
- consumption 200 million m3
Project costs:€300M

Small combined heat plants - Opportunity to invest in small combined heat plants by building a
pipeline network in the Republic of Macedonia



66

TPP Mariovo

TECHNICAL PARAMETERS

•
•
•

Installed capacity-electricity 300 MW
Electricity generation

2.000 GWh

Project cost : €350M

Fuel domestic coal
Geological reserves

111 mil. t

Heating value

7800 KJ/kg

Humidity

42 %

Ash

21 %



67

INVESTMENT PROJECTS
ENERGY SECTOR
MINES

Coal Deposit Mariovo
Coal (lignite) deposit located south of the city of
Prilep.
• Extensive
investigations
and
technical
documentation was prepared during 19651985
• The latest investigations in 2010 presented 97
mil. t of coal in total
• Approximately 62 mil. t are exploitable with
underground exploitation, according to the
latest ongoing project for opening of this
mine
• Planned capacity: 2,000,000 t coal annually
• Quality: LHV= 8300 kJ/kg (1982 Kcal/kg)
• This project in combination with new TPP
would meet the increasing needs of installed
capacity and energy
Project cost : €126M



69

Coal Deposit Suvodol
•

The deposit is situated in the exploitation field of mine Suvodol and it spreads over
approximately 3 km2 respectively 1/3 of the entire area affected with main coal
seam (10 km2).

•

About 70% of the total electricity generation in Republic of Macedonia is provided
by TPP Bitola, operates on base of the determined coal reserves located in the
Suvodol mine. Simultaneous opening of the Deep underlying seam Suvodol and Open
pit mine Brod-Gneotino will provide coal reserves for extension of working life of
TPP Bitola until 2030.

Geological reserve:55 mil.t
Exploitation reserve:50mil.t
Heating value:7542KJ/kg
Humidity:44.49%
Ash :19.72%
Project cost:€41.55M


70

Coal Deposit Zivojno
•

•

•

Ongoing investigations on this coal site, in their final
stage. It is expected to yield on this Ongoing investigation
of this coal site, is in the final stages. It is expected to
yield final accurate parameters regarding the coal and
the surrounding road strata.
According the Techno-economical Elaborate from January
2013 there are certain possibilities for coal excavation
with deep exploitation, with excavation of 1 million ton
of coal annually.
The estimated total geological coal reserves in the
Zivojno deposit, the possibility for their exploitation, and
the vicinity of MPC Bitola (approximately 20km) or
construction of a new appropriate TP capacity, justifies
the efforts for its usage over a longer time period.

Quantity: ≈100,000,000t coal (total geological reserves old estimates)
Heating value: 7452KJ/kg
Humidity:46.5%
Ash:19,14%

Project cost:€103.5M


71

Coal Deposit Popovjani
• TPP Oslomej is located near Kichevo, with an installed capacity of 125 MW,
using coal as a basic fuel from open pit mine Oslomej, located near the power
plant
• The coal deposit Popovjani could be used for the extending life cycle of the
existing TPP Oslomej
• With exploitation of this coal deposit, a 10-year prolongation of the TPP
Oslomej's operating life cycle could be achieved
Geological reserves : 11.4 mil.t
Exploitation reserves : 9 mil.t
Heating value : 6159 KJ/kg
Humidity : 57.09%
Ash : 12.39%
Project cost:€40 M



72

INVESTMENT PROJECTS
Renewable Energy
•

Measurement of wind potential; Preparation of a feasibility study

•

Study for Reliability of the Power System and Connection of Wind
Power Plants

•

Solar potential: the annual solar radiation is 1385 kWh/m2

•

Climate characteristics - continental climate with hot and dry
summers, and high intensity of solar radiation

Wind Park-Bogdanci

First phase:
construction of access road, substation and 36.8 MW of
installed capacity of wind-turbine and secondary annual
production of 100 GWh
Installed capacity of 32-40MW
The necessary area needed for installation of the total
capacity is up to 90 ha
Expected costs: €55.5M

Second phase:
construction and the installation of the remaining windturbine of about 10-20 MW

Average wind speed:7.1m/sec
Rotor diameter:80-95m
Voltage level:110kV



74

Solar Power Plant

•
•
•

•

•

Possible sites for placing the Solar Field : Near coal
depot in TPP Bitola,with total area of 390.000 m2
Total annual generation – 25Gwth(el)
Planned technology:
1. Parabolic Trough or
2. Linear Fresnel
Envisaged Variants:
1. Solar system (without auxiliary fuel) (≈45
MWth)
2. Hybrid system (integration with 2 units in TPP
Bitola)
The Project will be realized during the period of
2014 – 2016

Expected costs ≈ €30M



75

Ongoing projects
•

Rehabilitation of 400 kV substations
Skopje 4, Skopje 5, Bitola 2 and Dubrovo
(loan from EBRD) €6.5M

•

2x110 kV OHTL HEC Vrutok – SS Tetovo 1
(loan from EIB) €3M

•

Procurement of high voltage equipment for 400 kV and 110 kV level

•

New SCADA/EMS and backup national dispatching center (EBRD loan saving and MEPSO funds)

•

Project for development of transmission network (loan from IBRD) €20.7M
–

New 2x110 kV OHTL SS Bitola 3 – Bitola 4

–

Rehabilitation of 110 kV OHTL SS Skopje 1 – SS Tetovo 1

–

Project i.e. unbinding of the substation and rehabilitation 110 kV SSs

–

Project for telecommunication – procurement and installation of OPGW



76

76

INVESTMENT PROJECTS

INFRASTRUCTURE &
REAL-ESTATE

Infrastructure Strategic Projects
Motorway - Corridor 8

Package 1
•Total length of road sections to be
constructed is 138 km
•Concession project includes building,
maintenance, collection of tolls and
management of road sections.

•Total cost of Concession Project is
estimated at €434mn



78

Motorway - Corridor 8

Package 2
• Total length of road sections to be
constructed is 141 km
• Concession
project
includes
building, maintenance, collection of
tolls and management of road
sections
• Total cost of Concession Project is
estimated at €558M



79

Railroad - Corridor 8

Package 3
• Construction of
toward Bulgaria

the

railroad

• Total cost of Concession Project
is estimated at €420M



80

The Project includes
Sections Gostivar – Tetovo - Skopje
(М4), Gostivar - Kafasan (border with R.
Albania) and Kriva Palanka – Romanovce
(towards border with R. Bulgaria) which
are part of the pan – European Corridor
VIII.

Section Stenkovec – Blace which is
defined as Route 6a (SEETO Project
Code MACRD031) in the South East
Europe Core Regional Transport Network
Development Plan 2011

Connection with the following cross border projects
Motorway on Route 6a - Kosovo (under UNSCR 1244/99);
Upgrade of the Corridor VIII - Republic of Albania and Republic of Bulgaria.

Length and approximate costs for construction
Road Sections

Length
(Kms)

Cost
(€m)

Road Sections

Length
(Kms)

Cost
(€m)

Road Section: Stenkovec-Blace

13 km

€ 69.1

Road Section: Kriva Palanka-Romanovce

60 km

€272.7

Road Section: Kafasan(Albanian Border) and
Trebenishte-Ohrid and Podmolje-Struga

128 km

€ 489.4

Road Section: Kochani-Shtip

28 km

€ 56.3

Road Section: Miladinovci-Shtip

50 km

€ 104.6

Existing Section Gostivar-Tetovo-Skopje (M4)

55 km

0

Existing Section: Skopje Bypass

26.5 km

0

TOTAL

196 km

€ 558.5

Existing Section: Miladinovci-Skopje

11 km

0

(Hipodrom)

TOTAL

177.5 km

€ 433.6
81

Privatization of Macedonia Post

• Liberalization and development of the postal
market (a new Law on Post Services was adopted
in compliance with EU directives).
• A study for defining the privatization model of AD
“ Makedonska posta ” with determined scope
(percentage) of the privatization and the
timeframe for its realization is being prepared.
• The future minority shareholder (49%) would
manage AD “Makedonska posta”



82

Real Estate & Construction

Real estate project

City

Skopje

Skyscrapers
Hotels (3 hotels in the center of the city; 1 hotel near to the airport)

Shopping and business centers, including golf terrain
Sport and recreational center
Business center
Locations available as a result of land transformation of army barracks
(commercial and business centers and residential areas)

Ohrid

Hotels (along the lake cost)



83

Real Estate Opportunities

Skopje
The Second Best City For Real
Estate Investment In Europe
• Area: 13,710 m2

• Short proximity to city center
• Possible Planning Purposes:
–

Hotels

–

Residential buildings

–

Commercial buildings

–

Sports and recreation facilities



84

Privatization Projects
JSC “OHIS” – Skopje
•

75.6% of shares owned by the state

•

Each interested investor must have sales revenues in 2009 and 2010 that exceeds

€2,000,000 for each year and the structure of the criteria for evaluation are:
- Offered price (starting price of the share):10% .
- Reputation/creditworthiness of the bidder): 30 %,
- Business plan in the first 5 years: 60% (Investments in the first 5 years: 30% and number of
additional new employments in the first 3 years:30 %)
• Is based in an industrial zone within Skopje (occupies 74,1 ha)
•

Largest local chemical producer (detergents, soaps, chemicals, etc.)

•

Locally available skilled workforce

•

Strong brand recognition of chemical products on regional markets

•

The nature of the industry compels significant improvements in the environmental
conditions and standards

•

897 employees



86


TKP “Prilep”

•

84% of common and 100% of preferred shares owned by the state

•

1183 employees

•

Strong tradition in producing cigarettes since 1875

•

Production capacity of 4.65 billion sticks per year

•

Producer of cigarettes with local and regional brands with internal management of all stages
of production (production, fermentation, processing, packaging)

•

Local supply of tobacco with over 6000 contractors

•

Cooperation with BAT, Phillip Morris, SOCOTAB, Japan Tobacco etc.



87


JSC “EMO” – Ohrid
•

65 % of the shares are owned by the Government of the Republic of Macedonia

•

1419 employees

•

Established in 1972 and for the last 30 years has been a leading Macedonian manufacturer
and supplier of electro-mechanical components and systems with design, manufacturing,
and installation capability

•

Strong brand name in the region, Middle East, Africa, and Russia with 45% of sales for
export

•

Locally available highly qualified workforce



88


JSC “Eurokompozit” – Prilep
•

100% of the shares are owned by the Government of the Republic of Macedonia

•

373 employees on 30.06.2013

•

Extensive expertise and experience in production of special purpose products since 1952

•

Civilian production program [wound products, spare parts for locomotives, honey comb, molding
composites]

•

Military production program [rocket launchers, ballistic helmets and vests, mortar shells, bayonet,
upgrades of military vehicles]

•

Partners include Hyundai Heavy Industries, Haeffly Test AG, Passoni – Villa, Koncar, etc.

•

Eurokompozit is ISO 9001 certified and its product are UL approved

•

Total sales revenue (2012): €2.382M

•

Net Profit/Loss (2012): €822,786

•

Liabilities (31.12.2012): €978,1996



89

•

Agribusiness is one of the fastest growing sectors with more than 10% increase over the
past three years

•

More than 400.000 people make whole or part of their income from agriculture
activities

•

Sector comprises 16% of national GDP

•

For the last three years (2010, 2011 and 2012) there has been an increase of
exports for 10,2 % in average.

•

In 2012 the export of processed agricultural products was 40.5 thousand tons or
46.1 million EUR

•

Excellent supply

•

297 agricultural enterprises

•

192 082 family owned agricultural holdings

•

EU Standards applied



91


Industrial Crops
•

Tobacco
Largest agribusiness export contributor - €85M (in 2011)
27 332t produced in 2012
Mainly production of oriental aromatic tobacco

•

Poppy
Production in accordance with international agreements
200t produced in 2011

•

Sunflower
4 765 t produced in 2012
1 270 ha production area in 2012
Satisfied only 10% of domestic consumption of edible oil



92


Vegetables
•

Harvesting area of more than 50,000ha

•

More than 900,000t annual production

•

30% growth of exports in 2011

Production of vegetables (2012)
TOMATOES
Area in ha: 5,614
Production in tons:145,818

WATERMELONS
Area in ha: 5,691
Production in tons: 127,592

POTATOES
Area in ha: 13, 204
Production in tons:168,859

PEPPERS
Area in ha: 8, 626

BEANS
Area in ha: 9, 080
Production in tons: 5, 849

CABBAGE
Area in ha: 3,734



93


Fruits
Total exports for fruit in 2012 has been estimated up to 104.845 tons daily flow of
26.2 million EUR.
Annual production of fruits in 2012 was 150,489 tons
14,000 ha of orchards

Grapes
240,461t annual production of grapes in 2012
33,400ha of vineyards in 2012)
€12,3M of exports in 2012



94


Wine Production
•

Winegrowing and wine production accounts for ~20% of total agricultural GDP

•

More than 80 existing wineries
–
–

Total capacity: 250 million litters
Production: 100,000,000l

•

Domestic cellars purchased 126,857,000kg wine grapes in 2012

•

Domestic consumption of ~15l per inhabitant

•

Major export markets: Germany, Slovenia, Serbia, USA, Russia, China



95


Project 150 new wineries
Criteria
The following criteria have been taken into consideration for
providing land locations that would be adequate for
construction of new wineries:
• Proximity of the wine grapes production regions
• Accessibility to the road infrastructure
• Presence of sufficient quantities of wine grape production



96


Project 150 new wineries
• 66 available locations in 6 municipalities
• Starting bidding price of €1/m²

Municipality
Negotino

21

Kavadarci

12

• Starting bidding price of €0.1/m² for 99
Rosoman
year lease
• Average location size: 3000m² – 4000m²

No. of
Locations

Resava

8
8

• State aid in the form of co-financing
Ohrid
available

9

Bitola

8



97

Purchasing and Distribution Centers

Criteria
The following criteria have been taken into consideration for providing land
locations that would be adequate for construction of purchasing and distribution
centers for agricultural products:
•

Proximity of the agricultural production regions

•

Accessibility to the road infrastructure

•

Presence of sufficient quantities of agricultural production

Locations
•

East region: Sveti Nikole and Radovis

•

Tikves region: Negotino

•

South-east region: Valandovo, Gevgelija, Demir Kapija and Bogdanci

•

South-west region: Resen and Bitola

•

Skopje region: Kjojlija


98

East region
1.Sveti Nikole
Size

Initial price
per m2

15 ha

1 EUR

• Climatic conditions of the East region are favorable
for the production of garden and fruit crops,
especially due to the presence of natural geothermal water springs.
• The most produced agricultural crops in the East
region are the following:

2.Radovis

60,000
m2

1 EUR

–

Peppers: ~9,000t

–

Tomatoes: ~5,000t

–

Plums: ~5,500t

–

Size

Initial price
per m2

Sour cherries: ~about 2,000t



99

Tikves region
3.Negotino
Size

Initial price per m2

9 ha

1 EUR

• Large number of sunny days and fertile soil
in the Tikves region play an especially
significant role in the production of grapes
and fruits with high quality
• Production in Tikves region:
–
–

Peaches: ~5,500t

–


Grapes: ~72,000t

Plums: 14,800t


100

South-east region
4.Valandovo
Size


6.8 ha

1 EUR

5. Gevgelija
Size


9 ha

1 EUR

• South-east region is qualified as a south –
warm region which is adequate for
production of early vegetables
• The most produced agricultural crops in
this region are the following:
–

Tomatoes: ~80,000t (production during
winter and summer periods)

–

Cucumbers/gherkins: ~30,000t

–

Peppers: 70,000t

–

Cabbage: 50,000t

–

Melons: 30,000t

6.Bogdanci
Size


2.3 ha

1 EUR

7.Demir Kapija
Size

Initial price per
m2

4 ha

1 EUR



101


8. Kjojlija
Size

Initial price per
m2

500,000m2

1 EUR

Skopje region
• West region is characterized by cooler climatic
conditions and lower temperatures, therefore the
crops ripe later than in the south part of the
state.
• The most produced agricultural crops in the West
region are the following:
−
−
−
−


Peppers: ~1,7000t
Tomatoes: 13,600t
Potatoes: 39,600t
Apples: ~8,000t


102


South-west region

9. Bitola
Size


9 ha

1 EUR

10. Resen

• South-west region (Ohrid, Prespa, Pelagonia)
is characterized by a more moderate climate
compared to the North part of the state.

• Climatic conditions in this part are favorable for
the development of orcharding.

Size


6.2 ha

1 EUR

• The following agricultural crops are the most
produced in the South-west region:

–
–

Sweet cherries: ~1,200t

–


Apples: 90,000t

Sour cherries: ~1,700t


103


8
1

2
3
7

4
6
5

10


9


104

Technological Industrial Development
Zones - TIDZs

Free Zones
Free Zone Rankovce
Area Size: 40 ha;
Corridor 8

Free Zones Skopje 1 &
2
Area Size: 145 + 95 ha;
E-75 Highway;
Next to the Int’l Airport

Free Zone Tetovo
Free Zone Stip

Area Size: 95 ha;
Distance from Skopje - 35 km

Area Size: 208 ha;
The largest Free Zone;
Excellent logistic support

Free Zone
Radovis
Area Size: 10 ha;
Main Road M6

Free Zone
Strumica
Area Size: 23 ha;

Free Zone Kicevo
Area Size: 30 ha

Free Zone Gevgelija
Area Size: 50 ha;
85 km from the port of
Thessaloniki

Free Zone Struga
Area Size: 30 ha;
Next to the Int’l Airport;;
170 km from Durres port

Free Zone Prilep
Area Size: 68 ha;
Between Prilep and Bitola
(4th and 2nd largest city)



106

Technological Industrial Development Zones - TIDZs

Infrastructure Benefits
• Electrical grid outlet, new power substation in place
• Telecommunications network
• Central heating
• Lighting
• Fire safety system - Airport Fire Department minutes away

• Security monitoring system
• Water, sewage and waste treatment plant
• Gas pipeline



107

Technological Industrial Development Zones - TIDZs
Fiscal Benefits
TAX RATES

TAX

TIDZs
0%

Corporate tax

10%
10%

for the first 10 years

Personal income tax
Value added tax

Outside TIDZs

0%
for the first 10 years

0%
0.1% - 0.2%
0%

TIDZs

Outside TIDZs

Raw materials

0%

Up to 15%

Equipment

0%

5% - 20%

0.1% - 0.2%

Excise taxes

CUSTOMS DUTY

18%

Property tax

PRODUCT

5% - 62%

•
•
•
•
•
•

Management of existing (established) Free Zone
Development of planned Free Zone
Subsidy of up to €500,000 towards building costs
Incentives in line with EU regulation
Green Customs Channel available at border for rapid export from Zone to EU countries
Land in a TIDZ in Macedonia is available under long-term lease for a period of up to 99
years


108

TIDZ “Skopje 1”

• €55mn investment
• over 500 employees
• catalyst production

JOHNSON MATTHEY

TEKNOHOSE Foreign Investments
Agency for
ANNOUNCING BEGINNING OF
CONSTRUCTION WORK IN TIDZ “SKOPJE 1”

• $40mn automotive components plant;
• 150 employees initially – increasing to 500;
• Integrated circuits

JOHNSON CONTROLS

PRODIS GROUP
ANNOUNCING BEGINNING OF
CONSTRUCTION WORK IN TIDZ “SKOPJE 1”

KEMET
SIGNING OF THE AGREEMENT

VAN HOOL
SIGNING OF THE AGREEMENT

109

TIDZ “Stip”
FORTUNE 100 COMPANY
$40B Turnover

PROJECT SCOPE
• 2nd project in Macedonia
• $20M Investment
• 1400 employees
• Construction of cut & trim plant
for car seats

“Macedonia was chosen because
of its international competitiveness,
because of our positive existing
corporate experience here and above
all because of the support and
professionalism that we have received
from all Government institutions
during the analysis process.”
Steven Meylemans
Project Manager
Johnson Controls

CONSIDERED COUNTRIES
• Macedonia, Moldova and Tunisia


110

Investment Projects outside of TIDZs

SIZE OF INVESTMENT

SIZE OF INVESTMENT

• €20M

• over $4M

• 2000 employees

• 150 new full time jobs +
300/350 new seasonal jobs

• Production of cable
installations
• Start of operations Q2 2012

• Tobacco facility in Kavadarci
• Fortune 500 company

“ We are very satisfied with the support
provided by the Macedonian Government and
its institutions and Bitola municipality. The
decision for investment in Macedonia
represents an important step in our expansion
as part of the strategy for international
output.”
Martin Passern
Managing Director
Kromberg & Schubert


111

Testimonials

“Macedonia offers the company just-in-time delivery and minimal freight costs.”
Philippe Simon
VP of Global Electronics
Johnson Controls

“This will be JM’s ‘mega-European plant’ and the largest ever single investment project.”
Colin Jaffray,
Director, Strategic Planning
Johnson Matthey PLC



112

Invest Macedonia at Your Service…
• One-stop shop and project management approach
• VIP Investment tour
• Locations

• HR Companies, construction, real estate, tax advisory and
consulting
• Universities and Reference Company visits
• Creating linkages with local and central Governments
• Navigate the legal requirements
• Ensure success!



113

Thank You!
AGENCY FOR FOREIGN INVESTMENTS
AND EXPORT PROMOTION
OF THE REPUBLIC OF MACEDONIA

ul.Nikola Vapcarov br. 7
1000, Skopje
Republic of Macedonia
Tel.: + 389 2 3100 111
Fax: + 389 2 3122 098
fdi@investinmacedonia.com


[GPATS 2013] Ivo Ivanovski - Master Presentation of Macedonia

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