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October, 2009
From Macedonia you can more cost effectively serve Western and Central European customers while capitalizing on the surge in vehicle production in Turkey, Romania and Serbia. Moreover, your growth in Macedonia will not be constrained by skilled labor shortages. The recent decisions by Johnson Controls, Johnson Matthey, Montupet, Iskra, V.Orlandi and Borteknik Otomotiv substantiate this proposition.
Why Macedonia?
Competitive Location
Excellent Infrastructure
Competitive Workforce
Investment Incentives
LOCATION
International ports*:
- Thessalonica (Greece) : 250 km - Durres (Albania) : 300 km
Macedonias closeness to the rapidly growing automotive manufacturing base in Central and Eastern Europe and Turkey, makes it an ideal location . The geographical proximity to these markets allows low distribution costs and just-in-time product delivery from Macedonia.
Political, monetary and macroeconomic stability Strategically located for future 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 (re-elected in June 2008 with a 4 year term) Welcoming and decisive government ready to serve investors
Improved Business Climate Regulatory Guillotine Flagship project for improving the countrys business environment Silence is consent, Cutting red tape Reduced administration fees, time limits, documentation "One-Stop-Shop" system for company registration "One-Stop-Shop" for cross border trading Modernized electronic real estate cadastre Foreign companies and foreign citizens can directly own construction land in Macedonia Electronic payment of taxes A cut in social contributions Liberalization of visa 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 (Multilateral Investment Guarantee Agency) Investment protection treaties with numerous countries 100% foreign ownership of a company allowed No restrictions for repatriation of profits
Economic Indicators
REAL GDP GROWTH RATE (%)
INFLATION
5.9 4.1 2.8 Year 4.1 4.0 5.0
2003
2004
2005
2006
2007
2008
CURRENCY
3.9 3.4 1.7 2.0 2.4
1.4
Year
2007
424.2
2006
2007
2008
Accolades
BEST CONSECUTIVE REFORMER OVER THE LAST THREE YEARS IN SOUTH EASTERN EUROPE
Based on the World Banks Doing Business Report 2008 , 2009 and 2010
Utility and Construction Costs Utility prices for industry are among the lowest in Europe:
Electricity: 3.85/100 kWh Natural gas: 0.385/Nm3 Water: 1.07/m3 (Skopje area)
Construction Costs
The average cost of constructing a factory building shell is around 170-225 per m2 the sale price of state owned construction land for industrial and production facilities varies depending on the location, from 5 to 40 per m2.
Source: Kuehne-Nagel
32%
7.5%
1.4%
27.9%
16.5%
7%
1,2%
24.7%
15%
6%
1%
22%
Health insurance
Employment insurance
27.9% 33.5% 31.2% - 34.1% 37.2% 45% 48.6% 49% 40.4% - 53.3% 41.2% - 52.4%
LABOUR AVAILABILITY
6% of GDP spent on education Number of Graduates in High Schools in Technical Fields Number of Graduates in Colleges and Universities in Technical Fields
specialised engineering vocational secondary schools, currently enrolling over 22,000 students over 9,000 students studying automotive-related engineering branches on university level
Technical Education Centers
Source: Employment Service Agency of the Republic of Macedonia (data for 2008)
Existing engineering and manufacturing tradition Legacy of skills available to new investors Component production started 1960s to supply Zastava, Serbia State-sponsored customized training programs Companies primarily supplying aftermarket Most companies have ISO 9001/TS 16949 quality certification Markets are Europe, Russia, Turkey, Africa, etc. Strategic location to serve automotive plants in Central Europe and Turkey
PROJECT SCOPE $40m automotive components plant; 150 employees initially increasing to 500; First phase production mainly integrated circuits for German and French markets. CONSIDERED COUNTRIES Macedonia, Poland, Romania and Slovakia
WHY MACEDONIA The availability of skilled engineers; The increase in costs over the next couple of years will be significantly lower in Macedonia than in other CEE countries.; Macedonia offers the company just-in-time delivery and minimal freight costs.
Philippe Simon Johnson Controls' VP of global electronics
The Macedonian government has been extremely committed and I would like to thank its officials for their work in supporting this effort.
John Barth Chairman and CEO Johnson Controls
PROJECT SCOPE Up to 55m automotive components plant (in phase 1); 150 employees in phase 1. CONSIDERED COUNTRIES Reviewed: Bulgaria, Croatia, Estonia, Latvia, Lithuania, Slovenia, Romania, Ukraine, Czech, Poland, Hungary, Slovakia; Initial choice: Czech Republic.
WHY MACEDONIA Macedonia scores best for labour, slightly lower on logistics; Labour availability looking very good for Skopje; Our experience has been positive, Invest Macedonia, Ministry and others superb; This will be JMs mega-European plant and the largest ever single investment project.
Colin Jaffray, Director, Strategic Planning, Johnson Matthey PLC, Presentation Skopje June, 2007
Signing of the Memorandum of Cooperation between Mr.Jaffray, Director, Strategic Planning and Prime Minister Gruevski March 2007
Johnson Matthey
SIZE OF INVESTMENT
Upwards of 60M 10Ha parcel in TIDZ Skopje 1 500 employees Aluminum cylinder heads Supplier to: Ford, PSA, Renault
CONSIDERED COUNTRIES
Reviewed: Bulgaria, Romania, Czech Republic Initial choice: Bulgaria
Signing of the Memorandum of Understanding between Mr. Majus, CFO and Prime Minister Gruevski May 2008
WHY MACEDONIA
Available, qualified labour and stable competitive wages Tax benefits in TIDZ Skopje 1 and Government incentives Faster decision-making, less bureaucratic hassles Decisive Government willing to win!
SIZE OF INVESTMENT
- 25M - 4.7he parcel in TIDZ Skopje 1 - 500 employees - Signed MoU with the Macedonian Government in the sphere of electronic automotive applications
Signing of the Memorandum of Understanding between Prime Minister Gruevski and Mr.Sesok, CEO May 2008
WHY MACEDONIA
- The measures the Macedonian Government took to improve the business climate - Excellent experience with the current administration
Signing of the Memorandum of Understanding between Mr.Machelin and Prime Minister Gruevski Mr.Machelin September 2008
WHY MACEDONIA
- attractive business environment, labour quality and low tax rates
WHY MACEDONIA
- benefits in the TIDZ Skopje 1 - competitive labour
Signing of the Memorandum of Understanding between Mr.Atik and Prime Minister Gruevski Mr.Atik September 2008
Investment Opportunities
Investment Opportunities
Investment Opportunities
0% 0%
0%
for the first 10 years
0% 0%
for 10 years
0%
Free connection to utilities Subsidy of up to 500,000 towards building costs 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
INVEST MACEDONIA
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!
Thank You
Nikola Vapcarov 7 1000 Skopje Republic of Macedonia Tel: ++ 389 2 3117 564 Fax: ++ 389 2 3122 098 e-mail: fdi@investinmacedonia.com web: www.investinmacedonia.com
APPENDIX
COMPANY
Aluminium and Zinc Foundry Resen Foundries MZT Learnica TCG LEARNICA AMAK SP SIPO Seat Belts and Seat Belt Parts VELMAKS EUROTEHNIKA PRUTEX BRAKO Buses and Minibuses and Vehicle Bodies Upgrade MLAZ Prikolki VIZABUS SANOS BUSKAR KGL Systems
CITY
Resen Skopje Ohrid Ohrid Ohrid Ohrid Ohrid Demir Hisar Veles Bogdanci Skopje Skopje Skopje Skopje
PRODUCTS
Aluminium pressure-die castings for the needs of automobile industry Clutch parts Brake components and anti-vibration products for OEM Seat belts and restraint systems, door latches and retention components, rear view mirrors, window regulators Seat belts and seat belts parts Seat belt parts Seat belt parts Textile for seat belts, aluminium and zinc parts used for seat belts, all kind of springs with diameter of wire up to 5 mm Cargo trailers Trailers, agricultural machines and freight vehicles Minibuses, bus seats and accessories Buses and coaches Buses and coaches Vehicle body upgrade
COMPANY
Johnson Controls HI-TECH Corporation EIN-SOF Elko Elektromehanika STD Other Automotive MZT Oprema za vozila Parts RUEN International Technologies SIGURNOSNO STAKLO (IZOSTAKLO) TE-TE PLAST VESNA SAP Machine Parts RDV Faber Alatnica "SVEMEK" Factory for railway vehicles "Veles" Railway MZT HEPOS Vehicles and Components MZT EKA Netcetera
CITY
Skopje Skopje Skopje Skopje Printed circuit board components
PRODUCTS
Multi-layer printed circuit boards for automotive, communication and electronics Automotive diagnostic software Auto electrics
Nov Dojran Shock absorbers for trucks and buses Skopje Kocani Prilep Skopje Probistip Skopje Skopje Veles Skopje Skopje Skopje Springs Clutches (clutch cover, clutch disk and release bearing), gears and gear elements for three types of vehicles: passenger cars, heavy duty (trucks and buses) and tractors Bent tempered and laminated glass for needs of automotive industry (all kinds of windscreens) Moulds and plastic parts Starter batteries Different kinds of tools and rear lights Pneumatic and hydraulic parts by design: cylinders, valves, screws, implants, and other machine parts Freight and passenger cars Pneumatic and brake systems for locomotives, freight and passenger cars Rail vehicle brake digital testing equipment, pressure and speed sensors Software for railway traffic management
Automotive OEMs are 1 day away from Macedonia, presenting profitable opportunities for Automotive suppliers
EU Border as of 2007
Macedonian FEZ Locations HMC-Kia, Zilina (2006) HMC-Hyundai, Novosice VW-Skoda, Mlada Boleslav Toyota/PSA, Kolin PSA, Trnava (2006) VW-Skoda, Bratislava LIAZ, Velki Krtis VW-Audi, Gyr, (Engines) Opel/GM Suzuki, Estergom Renault-N, Novo Mesto Ford, VW, Sarajevo Zastava, Kragujevac
MKD ALB GRC CZE SVK HUN MDA ROM UKR POL BRD BLR (2008) LTU LVA Source: Government research
EST
VW, Poznan GM, Zeran (Warsaw) GM, Gliwice Fiat, Tychy Daewoo, Uzhgorod ZAZ, Zaporozhje AutoVAZ, Kherson Renault-Nissan, Pitesti Ford, Craiova
BGR
12 50
AUS
SLO
km
HRV BIH
SER
7 5 0 km
Ford, Otosan, Glck Toyota, Sakarya Oyak-Renault , Beykoz Fiat Tofas, Bursa
Automotive Tier 1 suppliers are moving south-east in search of competitive locations in EEU
EST
EU Border as of 2007
UKR
Tier 1 Automotive suppliers are setting up operations in Macedonia: Johnson Controls and Johnson Matthey, with many others adding Macedonia to their country lists
Macedonia is viable and competitive alternative to typical EE countries for automotive manufacturers and suppliers offering respite from fiscal, labor and logistical pain points
12 50
AUS SLO
km
HRV BIH
SER
ALB GRC
7 5 0 km
MKD
ROM Electronic components Electrical components Mechanical components BGR Source: Mc Kinsey "Motorfactbook" and Govt research