Promote International Investment for
Mutual Benefit and Win for All

Ladies and Gentlemen,

 

Respectable Entrepreneurs and businessmen,

 

Honourable Guests,

 

As a Deputy Prime Minister of the Macedonian Government in charge of Economic Affairs, it is my honour and pleasure to address you

 

on the 11th China International Fair for Investment and Trade (CIFIT) together with many reputable participants and to convey a

genuine and important message about the Mutual Benefits of Promotion of International Investments and Win-Win Cooperation.

 

Please allow me to greet all of you present and to congratulate the Chinese Ministry of Commerce for the excellent organisation of this event which in the past decade promoted international cooperation in investment and trade.

 

 

Beside being the most important national trade and investment fair in China, with the support of the international organisations for promoting economic cooperation UNCTAD, UNIDO, OECD, IFC and WAIPA it has also become one of the most reputable international events for promotion of international investments.

 

After one decade of outstanding results in promoting international cooperation in investment and trade, I would like to wish success to the 11th CIFIT Fair in generating new investments in China as well as realisation of outward investments from expanding Chinese companies.

 

I consider this event a great opportunity to address this important topic and at the same time present the economic program of the Macedonian Government aimed at accelerating economic growth through private sector development and attraction of foreign

investments in front of such an audience of high government officials, diplomats and businessmen.

 

It is well known that FDI is a major catalyst for integration of developing countries in the global economy. It brings significant economic benefits to the recipient economies and facilitate: expansion of productive capacities, growth of the industrial base, transfer of technologies, enhancement in management and marketing skills as well as creation of employment opportunities and improving access to new international markets. Unquestionably these benefits are important factors for sustained economic growth and development of many transitional and developing countries and strong stimulus for Governments to put in place policies which aim to mobilise higher levels of investment.

 

On the other hand, outward investment from domicile enterprises results in improved access to new markets allowing home economies to harvest the benefits of their comparative advantages. The final outcome is a Win for All cooperation between countries in an increasingly globalised and expanding world economy.

 

Experience from developed countries shows that the most important factors for their economic development is the high level of private and foreign capital in their economies. Following this example many countries in the world are focusing their efforts in setting mechanisms and conditions for attraction of FDI. Beside profit being the main driver for investing in a foreign country, other factors that determine investors’ decisions are the political and macroeconomic stability, access to markets and geographical location of the host countries, transparent legislative framework and skilled and competitive labour.

 

Furthermore, economies agree that in order to improve the business climate most countries focus on conducting reforms in the following areas: Trade and Tax Policy, Regulatory Reform, Investment Promotion and Facilitation, Human Resource Development, Infrastructure and Financial Sector Development as well as Improving Competitiveness. The challenge for the policy makers is to find ways to successfully direct these policies to meet the investors’ expectations while safeguarding national, social and environmental interests.

 

In a landscape increasingly characterized by strong competition for new Greenfield FDI, countries have to work diligently in implementing policies that reduce investors’ costs and perceived risks as well as increase their countries’ abilities to absorb foreign capital. One way for increasing the absorption capacity is through realization of public-private partnerships particularly for infrastructure projects which generate large investments.

 

Many studies and surveys show that the outlook for FDI in the coming years is optimistic as expectations for macroeconomic conditions are positive in most developed countries, structural efforts are continuing in emerging economies and low inflationary environment has helped maintain low interest rates. In such enabling environment, profit generation will continue to promote international investments resulting in mutual benefits and win for all players both in private and public sector.

 

The global environment regarding international investments is evolving quickly. Large developing and transitional economies are emerging as significant and important outward investors. China is one example. According to the 2006 World Investment Report, while China remained the top recipient of FDI inflows in South, East and South-East Asia in 2005 with more than US $72 billion at the same time it moved from 8th to 2nd position  as a source of FDI outflows with Chinese enterprises increasing outward investments more then five fold to US $11 billion. This further proves the fact that economic growth of developing countries such as China not only benefits the Chinese people but also provides the world with more investment opportunities.

 

While developing countries in South, East and South-East Asia remained main magnet for FDI inflows, there is significant increase of FDI in South East Europe and the Commonwealth of Independent States. The Western Balkan region is considered as the next business destination with considerable potential for growth by many existing and potential investors. This is supported with the fact that Western Balkan markets are growing and provide access to markets of 650 million consumers through an expanded network of bilateral and multilateral free trade agreements including the EU. The region provides price competitiveness including low labour costs, strong working ethics, local access to raw and intermediate inputs, rapid improvement of the business climate, strong Government determination for supporting FDI and competitive fiscal policies and investment incentives.

 

Attraction of foreign direct investments is a top priority of the Macedonian Government for increasing the economic growth of the country. Today, Macedonia as a small and open economy is very close to EU and NATO integration which provides clear signal to foreign investors for the existence of political and economic stability, good quality of institutions and functioning market economy, developing of the democratic processes and access to expanded market, all of which are important factors in investors’ decision-making process.

 

International investors are guaranteed free transfer and repatriation of investment capital and profits.

 

The reform agenda of the Government is focused on improvement of the living standards, reduction of unemployment, minimizing corruption, strengthening the interethnic relations, and accelerating judiciary and other reforms related to EU and NATO integration.

 

The Economic agenda contains a complex set of reform measures in the tax area, regulatory guillotine, property rights and other areas. The realization of the program in the past twelve months has been completed within the anticipated deadlines, and in some areas, especially those related to EU and NATO integration, well in advance of the predetermined deadlines. As a result of these measures, economic activity has achieved robust growth of 7% in the first quarter of 2007.

 

For successful implementation of the reform agenda, we are applying a participatory approach, which implies broad inclusion of all relevant stakeholders: private sector through their business associations, non-governmental organizations, media, trade unions etc. We have established regular dialogue with all of them discussing the design and implementation of specific reform measures, which is key to their successful implementation.

 

The Government is also investing much more in the infrastructure (transport, energy sector and telecommunications services), as well as in the human capital which are key elements of the development process. Let me stress that we have recently introduced mandatory high school education, computerization of schools through the so called “computer for every child” project, introduced

English and another major foreign language as mandatory, increased the state quota for IT students and other technical skills.

 

At the same time, we have designed a comprehensive strategy for attracting FDI. We have a unique set up of Invest Macedonia Agency for attracting foreign investments supported by 2 FDI ministers on promotion of foreign investments and providing full services to prospective investors. 

 

Relative to the new EU member states, Macedonia is currently in the most favourable stage in terms of the interest of foreign investors. On one hand, it is in a well advanced stage in the process of integration into EU and NATO ensuring quality of policies and regulations which are harmonized with European standards and directives. On the other, it is a few years away from full EU integration, which gives the country a greater flexibility in the creation and implementation of economic policies, to make it more attractive for the foreign investors.

 

Entrepreneurs from regional countries including Austria, Greece and Slovenia have recognized the investment opportunities and are already present in Macedonia in numerous industrial and service sectors. In 2007, Trans-National Corporations (TNCs) such as Societte General from France, Johnson Controls from the US and Johnson Matthey from the UK have all made their decisions to invest in Macedonia.

 

We invite all Chinese enterprises to consider the comparative advantages and explore opportunities for investing in Macedonia and make it their hub for access to the wider European region and markets.

 

Thank you again for your invitation to participate in this important international Fair.