COVER STORY standard , which will be translated into government policy following a public debate . So far , the new Government has announced that their growth promotion measures will be based on three sets of measures , including those to :
Fall 2017 / Issue 55
COVER STORY standard , which will be translated into government policy following a public debate . So far , the new Government has announced that their growth promotion measures will be based on three sets of measures , including those to :
1 . Support greenfield investments and increase competitiveness through support of ( a ) greenfield and brownfield investments , ( b ) targeted investments , ( c ) support of existing companies , and ( d ) support of companies that have purchased assets from bankrupt or insolvent companies or that invest in the reorganization of such companies ; 2 . Increase exports ; and 3 . Support small and medium-sized enterprises .
Obviously , FDI promotion efforts should still feature certain government incentives , but the new Government ’ s approach aims to further link and develop the local economy in partnership with the companies working within the country ’ s Technological Industrial Development Zones (“ TIDZ ”). By decreasing the State incentives gap between domestic and foreign investors , the aim is to further reduce unemployment and move away from an FDI attraction model centered on offering foreign companies “ cheap labor ”. The new Government has made it clear that foreign investors who have already received subsidies will not be able to apply for any new measures .
Financial subsidies for greenfield and brownfield investments are linked to creating new jobs and particularly high paying jobs , provided that the new employees were either unemployed for certain time or had just completed their education prior to being hired . The Government announced that these incentives will apply to all new investors ( foreign or domestic ) and that they will be designed to stimulate increases in net salaries .
Some measures will still only be offered to FDIs . Namely , FDIs will be able to apply for subsidies if they ( i ) permanently establish business cooperation with domestic companies , or ( ii ) transfer or establish research and development centers ( including branch offices for technological development and research ) in the country . The Government will likely pay special attention to the IT sector ( e . g ., software development , hardware assembling , digital recording , computer chips ), scientific research activities and new technologies with high environmental standards , for which additional benefits are envisaged in the TIDZs .
These measures are aimed at responding to complaints from local companies about unfair treatment and to increase the transparency of State aid overall . They should also help local businesses develop faster and encourage knowledge transfer . Finally , they aim to reduce brain drain and increase the prospects of local industries while maintaining the country ’ s attractiveness to FDIs .
Concurrently with the promotion of these governmental policies , the Government made a decision to declassify State aid contracts concluded with the foreign investors and make them available to the general public . This approach may adversely affect the perception of the country ’ s political risk . Namely , foreign investors who already benefit from State aid now face full disclosure of their business relationship with the Government as a contractual party This could easily worry the investor community , as many of the existing foreign investors ’ companies with State aid contracts in Macedonia are multinational companies , some listed on the world ’ s most prominent stock exchanges . Irrespective of the good intentions , the Government must balance the public interest and the interests of the foreign investors . In this way , any new government ensures the stability and perpetuity of the system .
Ultimately , the general definition of country risk includes legal certainty . Frequent changes of laws - particularly changes to the tax regime - even when they are aimed at improving the business climate or social equality , undermine legal certainty and hinder long-term business planning . Moreover , frequent changes leave no time for institutions and companies to create practice in implementing the new rules . Given that the country has already received a reputation for weak rule of law , it is particularly important that we do all we can to improve our image . Therefore , any future changes of laws and regulations should be performed very cautiously , weighing all pros and cons and consider the impact on the image of the country as a good investment destination .
AmCham Macedonia Magazine 7