VMRO-DPMNE Leader Nikola Gruevski for 'Forbes" Magazine: Macedonia Headed in Right Direction After Crisis
US leading economic magazine "Forbes" published an interview with VMRO-DPMNE leader Nikola Gruevski dedicated to the political situation and Macedonia's success in attracting investment from leading US companies.
In the interview, "Forbes" announces that VMRO-DPMNE and Gruevski will win the upcoming elections. According to magazine, Macedonia managed to deal with the large migrant crisis, and it is now coming out of the political crisis.
The magazine's piece goes as follows:
Macedonia is yet another former Communist bloc nation inching its way towards open market reforms, and Western capitalism. Some U.S. manufacturers have taken notice and have opened up shop. An election on December 11 will likely show that – despite a recent bout with political instability – the ruling party will win. In a way, neither the 2015 migrant crisis, nor the political deadlock has crippled this small Balkan nation of two million people.
If the economy is so great, why is employment so high?
We decreased it to 24% from the previous 38%. Unemployment is a problem. But the government has taken measures to support the domestic economy, to bring in foreign capital, and to create a favorable business climate so employment is increasing even though we are not happy with what we have now. Low taxes are the key factor now. It is what makes corporate investors look closer at us when deciding where to expand. And we are decreasing the VAT in several sectors from 18% to 5%. This is only a drop in the ocean among the things, which were made to keep the economy afloat during the political crisis. These tax rates are what drives a lot of interest in Macedonia.
Investors actually like BB credit these days. But the opposition says new budget proposal threatens that rating.
The 2017 budget is based on the projection of 3% GDP growth. And I think it is a realistic projection because it incorporates slower global growth, the unknown effects from Brexit, and the resolution of the political crisis after December. The capital investments are planned to reach a record amount, yes, but priority is given to fiscal policy, important investments in infrastructure and to social programs like education and healthcare that everyone agrees we need. I don’t think we get a credit downgrade.
How has techonological-manufacturing tax free zones helped the economy during these twin crises of refugees from Asia and Africa, and the wiretapping scandal?
These free economic zones in 2015 were around a billion and half euros in trade, which is 36% of our export value, so these zones were very important to us and make exporting from Macedonia attractive. The latest info I have is from January to September and our exports increased by 19.2% compared to the same period last year. The companies in those zones really do stimulate the development of the local economy and enabled changes in the structure of what we export. About six years ago, in 2009, we were exporting about 22 million euros in goods overall but in 2015 we registered export of about 1.5 billion euros and this year we’re looking at 2 billion. Companies that build there and work from these technological industrial zones get exemptions on personal income tax and corporate taxes for 10 years. Plus we don’t charge fees for construction permits.
U.S. companies are moving there because of the tax rate. Who are some of the latest to set up shop?
U.S. corporate investments are mainly coming from the automotive industry. Johnson Controls built two factories in Macedonia in 2015. During the crisis. Kemet Electronics of South Carolina is also active in Macedonia and have a facility in Skopje. Key Safety Systems, a Michigan company that makes airbags, started working in the technological industrial development zone in Kichevo. Amphenol is Massachusetts based and they have two brownfield facilities, and invested in a new greenfield investment in the zone.
Top three trading partners today.
The most important this year for Macedonia has been Germany and the U.K. There are several German and British investments in Macedonia, which have led to that. Then third place is Serbia. Italy, Spain and U.S. are up there, too.
Where do Russia, China and the U.S. fit?
We are a small country so we have to be open to investments from everyone who wants to do business with us. From the U.S. corporate investors at present, the money is mostly coming from the automotive industry. China has a fund investing in central and eastern European countries, and we have seen some of those funds go to highway construction only so far. As far as the Russians go, we export agricultural goods and generic drugs. And, of course, we import Russian oil and gas.
Macedonia received a lot of press over the migrant crisis. What is the situation like today?
We have two million people and faced a migration problem which, from the beginning of the migration crisis in summer 2014 up to now, meant the transit of over 1 million people coming from Turkey and through Greece trying to reach the EU. It was a very serious problem for us, because we were not their final destination. They kept coming. And we had to take care of that. Right now, there is no longer a way for migrants to transit along the Western Balkan route into Greece, and that includes going through Macedonia.
What is the migrant crisis’ economic impact going forward. Is the crisis abating?
We had significant costs in dealing with the challenges of the migrant crisis. There was no serious or substantial help from abroad either. Macedonia is facing the consequences of this global problem; a problem we know we did not contribute to. I don’t know if it is abating. The only lasting solution is achieving peace, political and economic stability in the countries, where these migrants are coming from.
Where did the majority of migrants come from that used Macedonia as a route into the EU?
All over the Middle East and north Africa, but in September those that we trying to cross the Macedonian-Greek border illegally were mainly from Afghanistan, Syria and then Pakistan. Those are the top three. The rest are mainly from north Africa and Iraq.
What’s next for Macedonia?
December elections are next. Yes, we went through a bad crisis. It is not entirely over. But we did not give up working with the business community. Our economy still grew. We didn’t lose our credit rating and we are going to protect that rating. We convinced several new companies to start a business plan and to invest in Macedonia. It’s not going to be perfect, but I think the country is heading in a better direction now. Let’s see what voters say.
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