PRIVATE MANDATORY PENSIONS FUNDS HOLD 248 MILLION EURO

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RUSSIA ANNOUNCES SOUTH STREAM DRAFT-AGREEMENT BY YEAR-END

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MORE PASSENGERS TRANSPORTED THROUGH MACEDONIAN AIRPORTS

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EUROPEAN AGRICULTURE POLICY SHOULD GUIDE THE MACEDONIAN FARMER

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No.112, vol.XI

M acEdonian businEss
NATIONAL BUDGET FOR 2012 PROJECTED AT 2.75 BILLION EURO
According to Finance Minister Zoran Stavreski, the budget is realistic and attainable considering the present circumstances, namely the economic situation in Europe and across the globe, adding that it incorporates all priorities of the Governments platform. More funds have been earmarked for the education, health care and infrastructure, including construction of free economic zone.

Monthly
E stablishEd 2001
of long-term government securities, five-year and seven-year securities which we expect to be bought by the pension funds, said Stavreski. Stavreski said that the budget is realistic and attainable considering the present circumstances, namely the economic situation in Europe and across the globe, adding that it incorporates all priorities of the Governments platform. More funds have been earmarked for the education, health care and infrastructure, including construction of free economic zone.

he budget for next year is projected at a level of 2.75 billion euro, revenues are projected at 2.59 billion euro while the budget deficit at 2.5 percent of the gross domestic product (GDP). The Government proposal envisages increase of the capital expenditures by 28 percent and more funds will be allocated for the education, health and infrastructure. The GDP growth is projected at 4.5 percent while the inflation rate is put on the level of 2.5 percent. According to Finance Minister Zoran Stavreski, the budget is realist and attainable. According to projections, the economic activity in 2012 should mainly be supported by larger investments, which should go up by 8.5 percent. In terms of the employment, a modest growth is expected and gradual drop of the unemployment rate. In regard to the stability of the currency rate, presumptions are made that it will be maintained at the same stable and adequate level of foreign exchange reserves, Stavreski said. The draft foresees a 28 percent rise in capital investments and more funds will be allocated for the education, health and infrastructure. This is linked to the governments previous policy on constant growth of capital investments aim-

ing to positively change the structure of the total budget and to increase the participation of capital expenditures, said Stavreski. The projects are from the sphere of road infrastructure where the launch of the realization of Corridor 10 is envisaged, the construction of the Demir Kapija-Smokvica highway, intensive realization of the regional and local roads, financed with money from the European Bank for Reconstruction and Development and the start and finish of other projects of local meaning, such as the local and regional roads. Investments for the reconstruction of Corridor 10 will be made as well as reconstruction of Corridor 8 followed by the construction of the railway track towards Bulgaria as part of the second phase. A series of other projects for reconstruction of hospitals and health institutions, prisons and projects in the education are also envisaged by using loans of the Council of Europes Development Bank, all elementary schools will be renovated and sport hall in many elementary schools will be built. The GDP growth is projected at 4.5 percent and the inflation at 2.5 percent. The budget deficit for 2012 is set at 2.5 percent from GDP which makes Macedonia once

again part of the countries with the lowest budget deficit. Macedonia remains a country with low level of budget deficit that will mainly be financed with external debt while at home, we predict further development of the securities market through regular three-month emissions

MACEDONIANS SAVING IN CRISIS TOO

On the World Savings Day, 31 October, bankers boasted statists that the household savings deposits reached 158 billion denars, or some 2.5 billion euros.

he crisis has not dissuaded Macedonian citizens from saving. Despite the high rate of poverty, towering unemployment and persistent uncertainty caused by the economic crisis in the world, bankers are satisfied savings deposits are rising although not at the same speed as previous years. On the World Savings Day, 31 October, bankers boasted statists that the household savings deposits reached 158 billion denars, or some 2.5 billion euros. The overall bank savings deposits are estimated at 3.67 billion euros. Deposits of citizens in October 2011 relative to the same month of 2010 went up 13 percent, with denar deposits rising by 17 percent and euro deposits going up by 9.5 percent.

The crisis has not stopped citizens from applying for credits either and so last year crediting of citizens went up 7 percent and crediting of firms increased 6.5 percent. Since the outbreak of the global crisis in 2008 by end September this year, savings deposits in Macedonia went up 50 percent, the only increase in Europe, National Bank Governor Dimitar Bogov said. Gjorgji Jancevski, chairman of the Banking Association at the Economic Chamber of Macedonia, said that the rise in savings deposits is a result of the stability of the banking system, and the trust in banks and the macroeconomic stability. In his view, by the end of this year, credit rates are not going to decline because of the market conditions.

No.112, vol.XI

BANKING

NATIONAL BANK REVEALS LOWER ECONOMIC GROWTH PROJECTION

According to the projections of the National Bank, the inflation rate will slow down next year to 2 percent and crediting will slow down to 8 percent, as against this years expectations that the crediting would reach 9.2 percent.

PRIVATE MANDATORY PENSIONS FUNDS HOLD 248 MILLION EURO

ational Bank Governor Dimitar Bogov is lesser optimist than the Government as regards the economic growth in 2012. The National Bank has projected an economic growth rate of 3 percent in 2012 as against the government more optimistic projection of 4.5 percent. The projection of the Central Bank is much closer to that of the World Bank, which forecasts a growth of 2.5 percent in 2012, than that of the Ministry of Finance. The National Bank believes that the growth rate would be driven by capital investments, expectations of new foreign investments and, to a smaller extent, personal consumption. However, in the latest projections of the National Bank it is said that there are risks caused by the uncertainty concerning the duration and severity of the debt crisis in the euro zone. According to the projections of the National Bank, the inflation rate will slow down next year to 2 percent and crediting will slow down to 8 percent, as against this years expectations that the crediting would reach 9.2 percent.

Governor Bogov reassures that the monetary policy will not be tightened up and for now there is no reason for raising the basic interest rate of 4 percent. He adds that the National Bank is preparing for all scenarios, yet says he does not expect the panic that spread in some European countries, where deposits have been massively withdrawn from banks, to spill over into Macedonia. The basic interest rate remains unchanged at four percent, taking into account expectations of a generally favorable ambiance for implementation of the monetary policy by the year-end, as well as 2012 expectations, although with enhanced negative risks due to the uncertainty over the euro zone debt crisis, stressed Bogov. The foreign currency reserves total 1.850 billion euros at the moment.

he managed net funds in the two mandatory pension funds totaled 15.26 billion denars (248 million euro) by the end of October which presents growth of 3.1 percent at a monthly level, show official data of the Agency for Supervision of Fully Funded Pension Insurance MAPAS. KB First Open Mandatory Pension Fund (KPBm) had net assets of 8.2 billion denars while the assets of NLB Open Mandatory Pension Fund (NLBm) amounted to 7.058 billion denars. KB First Open Pension Fund is in co-ownership of the Slovenian Skupina Prva DD with 51 percent stake and the Macedonian Komercijalna Bank with 49 percent. NLB Open Mandatory Pension Fund is owned by Nova Ljubljanska Bank with 51 percent share and its branch office in Macedonia NLB Tutunska Bank with 49 percent. Both

funds have similar structure in regards to the biggest investment instruments and they have invested around 60 percent of the funds in Macedonia government securities. NLBm holds 21.41 percent of the funds in deposits, 5.96 percent in foreign investments funds and 15.67 percent in deposits. KPBm has no investments in foreign shares. There are almost no investments made in domestic shares. NLBm has only 3.24 percent of such investments and KPBm 4.06 percent. These data show that the country, in its future investments, cannot count on much money from the pension funds because they hold many government securities.

he total profit of the banking sector in the first half of the year dropped by 28.2 percent relative to the same period of last year because of the lower interest rates and increased costs, says the report of the National Bank of Macedonia. The profit Macedonian banks made in that period totals 5.8 million euros, which is a decline of 2.3 million euros from last year. Nevertheless, the Macedonian banking system is assessed by the highest domestic and foreign institutions as stable and fully secure. Bankers say that profits declined in the first half of the year be-

BANKS STABLE, YET LESS PROFITABLE

cause their credit portfolio worsened, which made them set aside higher reservations. In the first six months of 2011, the number of banks working at a loss dropped to seven as against eight banks in the same period of last year. According to the National Bank of Macedonia, crediting next year is going to slow down because of the risks and the situation in Europe. Neither the Governor nor the banks expect a considerable increase in banking credits. The National Bank projected for 2012 an 8 percent credit growth as opposed to this years 9.5 percent.

racticing of good corporate management is a safe recommendation for the company when securing fresh and cheap capital through the issuance of new shares. Through the new emission of shares, the company becomes transparent, open for the general investment public, shareholders and parties concerned, said SEC president Marina Nakjeva-Kavrakova on workshop hosted by the Securities and Exchange Commission (SEC) and the International Finance Corporation (IFC). The workshop aims at helping companies in Macedonia, primarily reporting agencies, towards becoming a wanted partner of financial institutions through corporate management, as well

CORPORATE MANAGEMENT TO INCREASED VALUE OF COMPANIES

as give insight to investors over coming changes. According to Nakjeva-Kavrakova, experience has showed that transparency is not a strong trait of Macedonian companies, although it is a corporate principle of a modern economy. Ambassador of Switzerland to Macedonia Stefano Lazzarotto the workshops topic was important and well-timed. We compare the situation in Macedonia with other developed markets and ones in development. I believe that regulators, companies and businessmen in Macedonia have gained fresh confidence when it comes to creating a domestic system for corporate management in line with needs of the Macedonian market, said Lazzarotto.

No.112, vol.XI

ENERGY

ADVISORS ON BOSKOV MOST AND LUKOVO POLE CHOSEN

acedonian state-owned power producer ELEM has picked a Swiss consortium to advice on the implementation of the Boskov Most hydro power plant project. The 58-month contract for advisory services, worth 3.4 million euro was signed with Swiss companies Stucky and AF Consult. The assignments of the consultants will be divided into several stages: preparation of final project documents; preparation of a tender for the supply of equipment and for selecting a contractor for the construction works and the site supervision; providing support in bringing the plant on stream. The construction of the 70 megawatt Boskov Most power

RUSSIA ANNOUNCES SOUTH STREAM DRAFT-AGREEMENT BY YEAR-END

station, which will be located near the western town of Debar, should start in the second quarter of 2012, Macedonias Finance Ministry said on Thursday. In the beginning of November, the European Bank for Reconstruction and Development (EBRD) agreed to lend 65 million euros to Macedonia for construction of the Boskov Most hydroelectric project. ELEM also recruited advisors on the Lukovo Pole Dam Civil Engineering Institute Makedonija to provide geological investigation services for the project whereas German Poyry Infra was chosen from among five bidders for the environmental and social assessment contract.

he 7-year research near the village of Ilovica in Bosilovo Municipality revealed that in near future one of the biggest copper and gold mines in Southeast Europe will be opened here. Most of the total of 28 digs, the deepest being 650 meters, determined deposits of copper and gold that are very favorable for economic exploitation considering the metal percentage in the ore and the steady increase in copper and gold prices in the world market of metals. The Canadian company Euromax, conducting the research, has recently issued the report with

MINE OF COPPER AND GOLD TO BE OPENED AT ILOVICA

the results. Samples of the ore at Ilovica were examined in Sofia, Bulgaria, in one of the most sophisticated laboratories for metals. Dr. Quinton Henning, technical advisor to the Canadian company, says they are satisfied with the results and hopes that the ownership issues will soon be resolved. Experts estimate that demand in copper and gold in addition to lead and zinc will be steadily rising on our planet. World experts predict that in 2017 copper will be sold at 17,000 dollars per ton and that the price of gold will be rising annually.

he draft-agreement over project South Stream, one fork of which is to pass through Macedonias territory, will be submitted to the countrys authorities by the year-end, said Deputy-Minister for Regional Development and co-chair of the inter-governmental commission for commercial-economic and scientific-technical cooperation Maxim Travnikov at meeting with Minister of Transport and Communications Mile Janakieski. The agreement stipulates Macedonias involvement in South Stream through increase of gas deliveries, i.e. enhancement of technical possibilities of the existing gas pipeline, as well as construction of new ones, in line with agreements concluded between Russian company Stroytrans-

gaz and the Macedonian Government. The agreement aims at meeting Macedonias gas needs, including future energy projects built in the country, said Travnikov. Minister Janakieski asked for closure of technical issues by December, followed by exchange of official documents and launching the construction of a national gas distribution network in Macedonia. It is realistic to expect a start of the networks construction next year, he stressed. The meeting also tackled the opening of direct air routes between Macedonia and Russia, with Travnikov saying he would raise the issue before several Russian companies over the possibility of opening such route.

PESEVSKI: POWER MARKET LIBERALIZATION TO AFFECT PRICE

Deputy Prime Minister Vladimir Pesevski believes that the liberalization of the energy market will bring about a price rise primarily for businesses. As for the heralded closure of certain firms, he said that the governments job was making the market as more efficient as possible. The fact that certain firms are being closed down is an integral part of the business. In the past we were also criticized for the sluggish closing down of businesses with blocked accounts and in receivership, Pesevski said. Some of the negative effects, he said, are a result of the global economic crisis and the slowing down of the economy globally. In recent years Macedonia demonstrated that it knows how to take care of its citizens. In the crisis years it proved it can maintain a controlled budget deficit not borrowing too much. Pesevski emphasized. Asked if measures were considered to help the population in the wake of the latest price increase, Pesevski said the Government was continuously carrying out policies that fostered economic development. There is an energy poverty program through which people living on dole are helped cover some of their energy costs, he explained.

No.112, vol.XI

TRANSPORT

MORE PASSENGERS TRANSPORTED THROUGH MACEDONIAN AIRPORTS IN PAST TWO MONTHS

Macedonian Government has decided to grant EUR 1.4 million in subventions to low-cost airlines and to that effect a procedure for amending the law on air traffic is already opened, Minister of Transport and Communications Mile Janakieski said.

he number of passengers transported through Skopje airport Alexander the Great and Ohrid -based St.Paul the Apostle in October has increased by 18.9 percent compared to the same month in 2010. A total of 74,703 passengers were transported this October compared to last years 62,876, said the Ministry of Transport and Communications. The same trend was registered in September, with the number of passengers rising by 25.4 percent compared to last year, i.e. 82,641 to 65,878. Macedonian Government has decided to grant EUR 1.4 million in subventions to low-cost airlines and to that effect a procedure for amending the law on air traffic

is already opened, Minister of Transport and Communications Mile Janakieski said. The aim is to attract more airlines to use the airports in Skopje and Ohrid, which are expected to introduce new destinations and cut the ticket prices, Janakieski said at the press conference on what his ministry has done for the 100 days since the making up of the new Government. The ministry worked on realizing the program that won the trust of the electorate, namely resuming the reforms for better infrastructure, safe transport, inflow of new investments and higher living standard for the citizens of Macedonia, Janakieski said. Listing the completed projects, he mentioned the reconstructed

Skopje Airport Alexander the Great - an EUR 100 million investment of the Turkish TAV, construction of the highway 7,6 km-long section Tabanovce - Ku-

manovo - EUR 15,5 million, legalization of illegal buildings, procurement of new low-floor and double decker buses.

AGREEMENT SIGNED FOR PREPARATION OF THIRD NATIONAL REPORT ON CLIMATE CHANGES

euros and will be implemented in 2012. Macedonia has made headway in tackling climate changes and in adapting the most vulnerable sectors, Ademi stated after signing the documents. The Environment Ministry, in its capacity as a national coordinator, incorporates the climate change issue in relevant strategic national documents, adopts legislation as stipulated by the UN Framework Convention on Climate Change and the Kyoto Protocol and fosters bilateral, regional and multilateral cooperation in connection to climate changes, the minister noted. The Ministry implements and is involved in many activities backed by the international community for cutting down greenhouse gas emissions and for combating climate changes. UNDPs Deirdre Boyd stated that climate changes and other risks related to the environment were vital challenges affecting everything that was surrounding us - water supply, eco systems and food production. Countries from all over the world are obliged to address climate change issues, according to her. The two projects, which will guide the government to take measures on the matter, pave the way towards establishing a national consensus to address issues related to climate changes in the short and long-term, Boyd noted.

AIR QUALITY MONITORING STATION IN SKOPJE DOWNTOWN

inister of Environment and Physical Planning Abdilaqim Ademi, Charg dAffairs of the EU Delegation to Macedonia, Robin Liddell, and Centar Municipality Mayor Vladimir Todorovic put into use an air quality monitoring station in Skopje downtown. According to Minister Ademi, the purpose of the monitoring stations is to follow the state of air quality. Similar station has been set in Karpos municipality, totaling 17 nationwide, whereas another three are planned in eastern Macedonia. The air quality depends on weather conditions, with indicators rising in autumn and winter, but within the normal limits, said Ademi, adding that cars and construction sites are the biggest polluters. EU official Liddell stressed the issue of environment protection is

important, but also a difficult one that cannot be solved overnight. This is a long-term effort in which we should all contribute. Lets not drive old vehicles that pollute, lets not smoke, lets do everything to protect the environment, said Liddell. He added that air quality monitoring and amendments to regulations move the country towards the highest European standards, whereas the activities involve the Government, the municipalities and all citizens. Mayor Todorovic said the air quality monitoring station means a lot in the environment protection field. If air pollution exceeds the allowed limit, the municipality and the Ministry of Environment can undertake measures of reducing the number of vehicles in the downtown, emphasized Todorovic.

inister of Environment and Physical Planning Abdilaqim Ademi and UNDP Resident Representative to Macedonia, Deirdre Boyd signed agreement for preparation of a third national report on climate changes and for using Bulgarias experience in monitoring, reporting and verification of greenhouse gas emissions, which is essential for the effective operation of the European Union Emissions Trading Scheme (EU ETS). The third national report on climate change should be drafted in the next couple of years with finances in amount of 500.000 dollars from the Global Environment Fund. Reports goal, according to Ademi, is to include the issue of climate changes in institutions, priorities to be established with a time-frame as well as necessary finances required by conditions stemming from future membership to EU to be determined. Preparing of national reports on climate changes is an obligation for Macedonia, being a member country into the UN Framework Convention on Climate Change, minister Ademi said, adding that the previous two reports had been drafted in 2003 and 2008. The project for using Bulgarias experience in monitoring, reporting and verification of greenhouse gas emission is funded by the Bulgarian government with 40.000

No.112, vol.XI

NEW MARKETS

ECONOMIC COOPERATION BETWEEN MACEDONIA AND RUSSIA ON THE RISE

he economic cooperation between the Republic of Macedonia and the Russian Federation slowly but certainly is on the rise. The trade exchange is close to US$600 million for only nine months of this year, Dejan Besliev, director of the Macedonian - Russian Economic Chamber said. - Prior to 2009 crisis, the trade exchange reached overall scope of US$960 million, although the ratio was absolutely in unbalance, Macedonian side participated only with US$30 million export. Afterwards world economic crisis followed which caused huge fall in scope of trade exchange. But in the past two years the cooperation is again on the right track and in just only nine months the trade exchange amounted US$600 million, Besliev said. He said that inter-governmental commission for trade-economic and scientific-technical coopera-

PROMOTION OF ARGENTINEAN ECONOMY, MARKET IN MACEDONIA

he entrepreneur gets the opportunity to take part at the entire South American market by cooperating with Argentina. The country represents the door to the South American economic community MERCOSUR with a market of 298 million consumers, a GDP of US$ 3,3 trillion and US$ 11,018 per capita, said Guillermo Salvador Azrak, Sofia-based Ambassador of Argentina to Macedonia, at the Economic Chamber of Macedonia. Ambassador Azrak said MERCOSUR includes Argentina, Brazil, Uruguay and Paraguay as full-fledged members, as well as Bolivia, Chile, Colombia, Ecuador, Peru and Venezuela associate members. According to him, the Argentinean Embassy is always open for Macedonian businessmen. Relations and exchange between Macedonia and Argentina are currently limited, but I am convinced there is enormous room for enlargement of cooperation. There is a possibility for exchange of commodities, knowhow and resources, said Azrak prior to the presentation.

tion has crucial role in creation of conditions for cooperation. Besliev said that Macedonia has made significant progress in creation of conditions for attraction of investments. - Programme for attraction of foreign investments is giving results day after day which leads to increase the number of new investors. We want to encourage potential new investors to consider investing in Macedonia in tourism, wine and agriculture sector, energy and industrial production which has successful tradition in cooperation with Russian partners, Besliev said. Macedonian-Russian Economic Chamber was formed in 2005. The main difficulties that are facing with are continuous exchange of data with Russian partners in regard to law regulations, business demand and offer by companies in the two countries.

ECONOMY MINISTER SARAQINI AT 5. CEFTA JOINT COMMITTEE SESSION IN PARIS

as achievements with regards to business climate. This is demonstrated through Macedonias recent ranking at the World Banks Doing Business list (22) and the third spot as the worlds top reformer. The latest European Commission report represents another confirmation that the country is successfully coping with challenges of the current global economic situation, said Saraqini. The Economy Minister also stressed the positive aspect of the Multilateral Monitoring Framework over the elimination of non-tariff barriers, a project implemented by the Organisation for Economic Co-operation and Development (OECD), aimed at establishing a system for regular identification of nontariff barriers.

He stressed that Argentina is a leader in production of food products, whereas countrys enterprises would cooperate with Macedonian counterparts if the later show interest. There are also possibilities for cooperation in the energy field, since natural gas is used for vehicles and households in Argentina. This is a special technology that enables the gas distribution to places that have no pipelines. I believe there are already initiatives for use of such technology in Macedonia, added Azrak. Macedonia-Argentina trade exchange amounted to US$ 14,8 million in 2010, mostly in import of soybean and frozen fish, followed by corn, lemon and peanuts.

EFTA countries represent a significant trading partner for the Republic of Macedonia, whereas exchange with these states in 2011 amounted to approximately 28 percent of Macedonias total trade exchange, stressed Economy Minister Valon Saraqini at the 5. CEFTA Joint Committee session in Paris, chaired by the Republic of Kosovo. Saraqini informed that Macedonia ratified the Additional Protocol for agriculture liberalization in September, followed by its enforcement with Albania and Croatia as of November. Minister Saraqini presented Macedonias efforts in implementation of the Central European Free Trade Agreement (CEFTA), which should facilitate the countrys path to EU accession negotiations, as well

ONLY 5 PERCENT OF MACEDONIAN FIRMS EXPORT

Companies should put out innovative and competitive products, as managers should be more courageous in capturing new markets, even in the outcries with a higher economic growth, such as China, India, Korea, etc, said Economy Minister Valon Saraqini at the 7th conference on export promotion. Currently only 5 percent of the Macedonian firms are exporting their output, which is of relatively low value. However, in recent years there has been a positive export trend. Exports in the past three years went up 80 percent from the previous three years. Expectations are that by end 2011 exports will have increased by 21.2 percent and imports by 20.2 percent from last year, Minister Saraqini said. He encouraged the business sector to communicate with the authorities because, he said, in recent years most corporate recommendations have been incorporated in the government programs. The competitiveness of a country is measured by its export, said Deputy Prime Minister for Economic Affairs Vladimir Pesevski. In his view, the new promoters have already been trained and will be sent to a number of countries. The Federation of Economic Chambers suggests forming of a national body for fair promotion of small and medium businesses that have no capacity to participate in world fairs on their own. Some 40,000 micro and small businesses are incapable of capturing foreign markets and therefore have to team up and create an offer of good quality and quantity, the Federation says.

No.112, vol.XI

INTERVIEW: Excerpts of PM Gruevskis Interview with Kapital Weekly

or the last five years Macedonia has registered the highest annual GDP growth and foreign investments inflow in spite of the most serious global economic crisis. Prime Minister Nikola Gruevski says in an interview with the weekly Kapital. Macedonias Government has been doing its best to bolster the economic development. In the first half of 2011 the GDP growth was at 5,2 percent, which means that Macedonia is returning to the pre-crisis level of economic growth. Maybe the results could have been better, but considering the circumstances on the ground, we should be satisfied. Regardless of the imposed name problem, we shall keep applying our policies and realizing the projects we have promised to citizens, which will certainly contribute to higher growth rates and better living standard of citizens, Gruevski says. The reforms produce results, recognized also by the World Banks Doing Business report, which ranks Macedonia on the 22nd place and putting it in the company of countries with highly developed economic, market structure, the PM says. For several years Macedonia has been a leader in the SEE region, but the last report put 19 EU and many other developed countries behind us, the PM says. The results are also confirmed by the inflow of direct foreign investments for the first seven months of 2011 - EUR 167 million - more than the total FDI amount in 2010 - EUR 159 million. For the last three months only about five-six large Greenfield investments of US, Indian, Russian and Italian companies have been launched in the free economic zones. They will boost the production, export and open thousands of new jobs, Gruevski says. Referring to the budget structure, Gruevski says that funds for capital investments have been

MACEDONIA RETURNS TO THE PRE-CRISIS LEVEL OF ECONOMIC GROWTH

gradually increased. In the 2011 budget they have been higher for 30 percent in comparison to the previous year. Few years ago the Government has launched a large investing cycle, allocating finally more funds for construction of local, regional roads, water supplying, sewerage systems, clinics, schools and cultural projects. Gruevski is satisfied with the relations between the Government and the private sector. The Government is aware that the private sector is vital for the functioning of the state, so it is very important for it to be powerful and in good shape. Commenting the developments in Europe, Gruevski says he is moderately optimistic due to the clear commitment of the European leaders to the survival of the monetary union. Macedonia cannot influence on developments in Europe, but the Government has been closely monitoring the situation, being ready in every moment to take the necessary measures for mitigating the negative consequences. The Government has thus far demonstrated its capacity to deal with crisis situations by designing and implementing appropriate economic policies. In this respect I am in particular referring to the four packages of anti-crisis measures, which helped Macedonias economy to successfully surpass the consequences of the global economic crisis, the PM says. Referring to the name dispute, Gruevski said it was an issue which was being approached by state officials with commitment and accountability. Facts suggest that despite our sincere intention and willingness to overcome this challenge, at the moment the southern neighbor (Greece) shows no interest to tackle the issue. I understand why up to a point - they are facing major issues, financial crisis, nationwide strikes, state bankruptcy, riots, the situation is very tense.

What I cannot understand are countrys accusations that Macedonia isnt trying hard enough to solve the challenge. This is incorrect, lacks principles and hinders the establishment of trust. Pressure is also being exerted within European Union structures making the Union to take measures which are not welcomed by the people in Macedonia, the PM says urging stereotypes to be overcome and neighborly ties to be formed with enthusiasm, rationality and courage. He stressed that in EUs history; most of the countries accessing the organization have faced an issue with a country member. In most cases, talks aiming at solving an issue and membership negotiations had been held at the same time. This practice has always yielded positive results with successfully concluding both of the processes, Gruevski says. Unfortunately, the EU has changed its approach in relation to Macedonias case after being pressed by Greece. Contrary to what has been applied before, progress in the two parallel lines has been hampered. Nevertheless, well keep on making utmost efforts to find a solution, even though we are facing obvious injustice on daily basis, the PM notes. Premier Gruevski underlines that Macedonias strategic goal is EU and NATO membership, which is being affirmed by actions and facts. The proofs for this are the reforms that are being implemented, but mostly of all the European values, which

are being nourished. These values equally belong to the citizens of Europe, including Macedonians, Gruevski states. Allegedly, Macedonia is seeking new alternative (in terms of EUNATO integration). If this was true, we would have presented our arguments... My reaction after the European Commission progress report on Macedonia was presented with the omission of the adjective Macedonian, intended to defend the dignity of the nation, the state and national interest. Macedonias entire society reacted afterwards, which means it is just. The EU tackles internal criticism and opens dialogue on various issues. Thus I find it a little bit odd that some structures in Macedonia tend to translate every criticism or different point of view into new state policy or strategic plan, being some kind of heresy to have an opinion that differs from that of an EU official. This, the PM adds, limits the ability to voice ones own stance, which was habitual for a past era, which has hopefully ended with the establishment of democracy and multi-partisan regime. Unfortunately, socialism is over, but its spirit is deeply rooted within us. There is a popular proverb dating back from the Ottoman era - a bowed head cannot be cut off by a sword. To this day many people apply this approach, which limits the countrys progress, creates hurdles, frustration, social conflicts... I believe that a sword can cut off a bowed head, PM Nikola Gruevski says in an interview with the weekly.

No.112, vol.XI

TOURISM

GROWING NUMBER OF HOTELS IN MACEDONIA BUT DECLINING NUMBER OF ROOMS AND BEDS
Tourists prefer the hotel accommodation than other tourist capacities. If the hotels own only 22 percent of the overall capacity of rooms and 18.9 percent of beds, as much as 33 percent of tourists would stay in hotels.

ALBANIAN TOUR OPERATORS VISITING MACEDONIA

avrovo and Popova Sapka are attractive destinations for tourists from neighboring Albania. Some 30 journalists and tour operators from Albanian are on a visit to these winter resorts. The goal of their visit is promoting home winter tourism. At the moment, Albania lacks winter resorts, such as Mavrovo and Popova Sapka, which boast excellent conditions for winter tourism, that is the main reason why we have come, said Sokol Kongoli from the national tourism agency of Albania. We are considering creating a joint tourist product between

n the period between 1999 and 2010, the number of hotels in Macedonia went up by 51.2 percent, from 82 to 124. However, the number of hotel rooms during the same period dropped by 4.5 percent, from 5,916 to 5,651 while the number of beds dropped by 13 percent, from14,564 to 12,734. This is part of the statistical analysis of the work entitled Macedonian hotels in times of changes by Ramadan Ismaili from Tetovos State University, Faculty of Economicsdepartment of tourism and Mitre Avramoski from the Ohrid-based Faculty of Tourism. They say that the reason for this is the chaotic transition and the closing of many hotels built in former Yugoslavia and the construction or closing of many smaller hotels, as result of the changes in the tourist demand. The thing which shows that the hotels coped poorly in the transition is the fact that the hotel rooms in the overall hotel accommodation in the country only participated with 22 percent last year. Namely, while there were only 5, 651 hotel rooms last year in the country in all categories of hotels, rooms in other types of accommodation capacities (private, mountain homes, hostels, holiday resorts, health resorts) totaled as much as 20,538. The difference is even bigger with the beds since the hotels only had

12, 734 beds last year while the other capacities as much as 56, 368 beds, which means that the hotel industry only participates with 18.9 percent in the total number of available beds. However, tourists prefer the hotel accommodation than other tourist capacities. If the hotels own only 22 percent of the overall capacity of rooms and 18.9 percent of beds, as much as 33 percent of tourists would stay in hotels. Nevertheless, over 458 foreign tourists that visited Macedonia last year stayed in hotels and only somewhat above 100 thousand in other accommodation capacities. The situation is reverse with the Macedonian tourists as 229,000 of them stayed in hotels while 1.23 million in other accommodation capacities. The hotels are, however, facing a different problem that has been getting worse over the last few years the poor utilization of the capacities. In 1999, it totaled 19.3 percent while in 2007, it totaled just 12.2 percent. Authors say that the lack of hotels of renowned hotel chains shows that we have a fragmented hotel industry in Macedonia without chances for consolidation, which, according to them, increases the role of the country in attracting foreign investments in this sector in order to solve the problem with the lack of branded hotels.
No. 112, Vol. XI, November 2011

Macedonia and Albania, said Economy Minister Valon Saraqini. We believe that Albania has plenty to offer as far summer tourism is concerned and we can offer winter tourism to the vast market in Albania and therefore this project is being realized ahead of the new winter season, said Vele Trpevski, Macedonian Ambassador to Albania. In order to promote tourism, the government considered the possibility of subsidizing ten municipalities for drafting strategies for development of eco and alternative tourism.

TOURISTS FROM THE NETHERLANDS AND BELGIUM REVISIT OHRID

n spring, new tourists from the Netherlands and Belgium will visit Macedonia through Ohrid-based tourist agency General Tourist Ohrid. The traditional tourists from the Netherlands will be arriving to Ohrid two times a week from Amsterdam to Ohrid with charter flights of airline Arkefly TUI, starting from 27 April 2012, said Ana Cukalevska from tourist agency General Tourist Ohrid. Belgian tourists will also be arriving two times a week with JetAirFly TUI.

General Tourist Ohrid announces that there will be greater offers of hotel capacities in order for the foreign tourists to enjoy better quality services.

MACEDONIAN BUSINESS MONTHLY

Editor: Sonja Kiridzievska; Contributor: Sonja Efremova; Chief translation: Marina Efremovska

Macedonian Information Centre

Director: Dragan Antonov; Editor-in-Chief: Mircela Dzuvalekovska - Casule Address: Naum Naumovski Borce 73, 1000 Skopje, Republic of Macedonia Phone/Fax: +389 2 311-78-76 +389 2 311-78-34 Internet: www.micnews.com.mk contact@micnews.com.mk mic@micnews.com.mk

ELECTRONIC TOLL COLLECTION BOOTHS TO BE BUILT ALONG CORRIDOR 10

struction of the first of four new toll collection points at Tabanovce near the border with Serbia. The second stage includes construction of the remaining three new collection points. The tender procedure is expected to begin in the first quarter of 2012. In the draft budget 2012, the Government allocated 7.5 billion denars, or 122 million euros, for the road and rail infrastructure.

2011 MIC, All rights reserved. No parts of this publication may be reproduced in any form without permission form the Macedonian Information Centre. The content published in the Macedonian Business Monthly do not necessarily represent the views of the publisher. The publisher is not liable for errors.

he state road agency intends to use part of the loan from the EBRD for reconstruction of the existing and mounting of new electronic toll collection points along Corridor 10, the Bank said. The project, which has two stages, is expected to cost 17 million euros. The first stage is going to cover the reconstruction of 5 existing toll collection booths and the con-

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AGRICULTURE

THE EUROPEAN AGRICULTURE POLICY MOLDAVIA INTERESTED IN THE SHOULD GUIDE THE MACEDONIAN FARMER MACEDONIA WINE SECTOR
he Republic of Macedonia in the following 12 months is to preside with the meetings of the Ministers of Agriculture from South-Eastern Europe (SEE) which is particularly important for the Macedonian agriculture; said Minister Ljupco Dimovski at this years meeting of the Ministers of Agriculture from SEE. According to him, this is regional coordination of the countries in the agricultural politics in context to the directions on the EU common agricultural policy. We must accept the policy of the EU in the sphere of using the IPARD-funds, said Dimovski. He voiced content that the European Commission accepted our recommendation in the part of extending the list of measures for the Macedonian agriculture. The created agricultural policy, he said, is very close to the EU common agricultural policy. A new five-year policy is being passed at the moment in Brussels and as a membercandidate, we must accept all of these changes and implement them and build standards that

are required of us for successful promotion on the agricultural markets, Dimovski said. Agriculture Minister of Montenegro, Tarzan Milosevic, assessed that such forums in the region could help promote the agricultural cooperation and development. Friedrich Wacker from Germanys Ministry of Agriculture emphasized that the importance to improve the competitiveness of this region is major. Dean of the Faculty of Agricultural Science and Food, Dragan Dimitrievski, says that this meeting is quite important because the new policy for 2014-1020 was presented at the highest level. A policy that will be implemented in the EU and that should guide the Macedonian farmer. The politics of the countries from the region that will adjust in order to join the EU should do this because always when the agricultural policy is created for countries that are EU candidates, their policies need to be built according to those policies that are being implemented in the EU, said Dimitrievski.

he Republic of Macedonia has ideal conditions for development of the rural tourism, the kind of tourism that Israel developed twenty years ago up to the present, say Israeli rural tourism experts. They say that it is indispensable for the government, nongovernmental sector and farmers need to work together on the concept for development of the rural tourism. This strategy helped the Israeli farmers two decades ago to successfully overcome the economic crisis. Macedonia does not have great experience in the development of the rural tourism and therefore, according to Agriculture Minister Ljupco Dimovski, any help and support is especially important to us.

PROFESSIONAL ISRAELI ASSISTANCE FOR MACEDONIAS RURAL TOURISM

In Dimovskis view, the rural development is one of the Governments priorities. Twenty million euro of support is planned for next year. Most of the funds will be used for promotion of the infrastructure in the rural areas as the basis for preventing people from leaving the villages as well as development of the alternative tourism. The wine tourism is especially important to us. The Republic of Macedonia is a traditional producer of great and quality amounts of grapes and therefore, the wine tourism is one of our priorities too. This concept is now successfully realized through the wine routes in which few greater wineries are involved in, concludes Agriculture Minister Dimovski.

he trade exchange of agricultural food products between the Republic of Macedonia and Moldavia is low, said Minister Ljupco Dimovski following the meeting with Moldavian Minister of Agriculture Viorel Gutu. Moldavian Deputy Minister Gutu pointed out that Moldavia has an excellent team of experts involved in the process of consolidation that began ten years ago and that it could help simplifying this process in the Republic of Macedonia. The Republic of Macedonia is more advanced in the harmonization of the EU regulative and we could use your experiences, Gutu said. His assessment is that the Republic of Macedonia had made huge advancement in the wine sector too.

Minister Dimovski said that the Macedonian Government backs the wine sector. It is excellent news that we succeed to promote the wine on foreign markets even in times of global wine crisis. We are especially proud that despite the traditional markets, we also conquer new markets such as the Japanese where the first greater amounts of Macedonian wine were recently promoted, said Dimovski. One of the conditions for reducing the wine reserves is to cancel the excises and the wine to be put on the list of food and not alcoholic products, Dimovski said. A campaign for sale on foreign markets is indispensable which will secure sale of larger quantities of wine but it is of crucial importance for producers of grapes and wine to cooperate.

ayment of subsidies is regular, in line with the regulations, and taking into account submitted applications by farmers, said Minister of Agriculture, Forestry and Water Economy Ljupco Dimovski. A number of farmers associations and unions have requested an extension of the deadlines for submission of applications. We have managed to shorten the timeframe for controls as much as possible, so that they get the funds as soon as possible, Minister Dimovski told journalists after todays press conference on the ministrys activities in the past 100 days since the Governments composition.

DIMOVSKI: PAYMENT OF SUBSIDIES IS REGULAR

He said EUR 130 million of the 2012 draft-budget are allocated for agriculture subsidies, of which EUR 20-25 million for financial support of rural development, whereas the remaining for financial support of agriculture. Dimovski expects the payment of subsidies for this year to be completed within the legal timeframe - June 2012. This is a common practice in all EU member-states. We have harmonized our legislation with the Union law in numerous acts, including these deadlines, underlined Agriculture Minister Dimovski.

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