Winter 2018 / Issue 56
AmCham News & Events
AmCham Comments on Macedonia’s
2018-2020 Economic Reform Program
The European Commission invites
all enlargement countries to prepare
annual Economic Reform Programmes
(ERPs); Macedonia, along with all other
Western Balkan countries and Turkey,
submitted its first ERP in January 2015.
This activity is meant to help candidate
countries and potential candidates to
enhance their economic policy and its
governance.
AmCham Macedonia was invited
to review and comment on a draft of
Macedonia’s 2018-2020 ERP. As was
the case with the previous year’s review,
AmCham members felt the proposed
program did not adequately address the
areas they felt were most relevant and
in most urgent need of reform attention.
Given the limited time we had to com-
ment on the Program, we have limited
our feedback to just two subsections
of the document (4.3.1 Public Finance
Management and 4.3.4: Business
Environment).
Comments on
Subsection 4.3.1: Public
Finance Management
Though not explicitly stated as a
desired goal of neither proposed reform
Measure 1 nor 2, we would welcome
any and all reforms aimed at increasing
the transparency of the payment prac-
tices of budget users toward its private
sector contractors, as well as their time-
liness. Late payment by budget users
toward companies here contributes
significantly to liquidity problems in the
country. The Law on Financial Discipline
applies fully to all budget users, however
there is no evidence that institutional
payment practices have improved.
Given the State’s obligation to monitor
itself in this process (up to and including
fines issued to the Minister of Finance
itself), transparency of public payment
practices is a key missing element that
needs to be addressed.
Another important reform along this
line would be to define a standardized
methodology in the Enforcement Law
by which municipalities’ reserved “oper-
ational funds” are to be calculated in
enforcement proceedings and introduce
other measures that prevent blatant and
long-term abuse of private contractors
who have delivered public works in
good faith. The current Enforcement Law lacks a methodology by which judges deter-
mine the minimum level of “operational funds” necessary for municipalities to continue
normal operations (Article 218). In practice, this means that private contractors who
have delivered public works and proven their right in court to be compensated for their
work, sometimes cannot realize this right. In essence, this exception allows municipali-
ties to operate above the law, avoid settling past debts and continue normal operations,
including issuing new tenders.
Comments on Subsection 4.3.4: Business Environment
and Reduction of the Informal Economy
We agree that Government efforts to reform various aspects of Macedonia’s business
environment in line with assessments of the Doing Business Report and, to a lesser
degree, the Global Competitiveness Report have raised the country’s visibility as an
FDI destination in the region. This is proven by an increase in Brownfield and Greenfield
foreign direct investment and increased employment in such newly established opera-
tions. A limited number of bureaucratic processes have been tangibly improved, which
has helped the businesses that utilize them.
Unfortunately, the measures included in the draft 2018-2020 Program are limited to
very small investment in a long talked-about e-government services portal. (. While we
would echo the need for continued investment in e-government systems these mea-
sures are insufficient and cannot be considered fundamental reforms.
Instead, concrete and tangible reform is needed in a number of fundamental areas
that would create positive change in the business environment overall. These reforms
should include measures to:
Foster real, open and systemic dialogue with industry via proper use of the
National Electronic Register of Regulations (ENER), placing a moratorium on the
use of the “short procedure” in Parliament and extending the standard public
comment period.
Reduce the grey economy by ensuring enforcement institutions’ responsibilities
are properly set, do not generally overlap with one another and that they are
properly trained, equipped and motivated to tackle this problem systematically,
throughout the territory of the entire country.
Reduce regulatory confusion by ensuring official, consolidated legal texts are
published more regularly, reducing conflicts between new laws and existing leg-
islation, and requiring enforcement institutions to publish official, legally-binding
guidance on the application of laws in concrete cases;
General alignment of the tax (Corporate Income Tax and Value Added Tax) leg-
islation with the requirements of the global digital transformation and alignment
with the global taxation. This would contribute to the ease of providing elec-
tronic services and doing e-commerce in Macedonia, as well as to the overall
transparency and revenue collection
Increase the predictability, consistency, fairness of inspections by increasing
the scope of the Inspections Council’s work, increasing the transparency of
all State institutions that carry out inspections; increasing the transparency of
fine issuance as well as instructional material to help companies increase their
compliance, and eliminating incentives for inspectors to increase collections;
Increase transparency and oversight of company appeal mechanisms; and
Ensure para-fiscal charges, taxation and penalty policies are rational and fair
For the full text visit AmCham Macedonia’s Website - Advocacy News Section.
AmCham Macedonia Magazine
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