Macedonia 2018
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Macedonia 2018 1 Table of Contents Doing Business in Macedonia ________________________________________ 5 Market Overview ______________________________________________________________ 5 Market Challenges _____________________________________________________________ 5 Market Opportunities ___________________________________________________________ 5 Market Entry Strategy __________________________________________________________ 6 Political Environment _______________________________________________ 7 Political Environment __________________________________________________________ 7 Selling U.S. Products & Services ______________________________________ 8 Using an Agent to Sell U.S. Products and Services __________________________________ 8 Establishing an Office __________________________________________________________ 8 Franchising __________________________________________________________________ 8 Direct Marketing _______________________________________________________________ 8 Joint Ventures/Licensing _______________________________________________________ 9 Selling to the Government ______________________________________________________ 9 Distribution & Sales Channels __________________________________________________ 10 Express Delivery _____________________________________________________________ 10 Selling Factors & Techniques ___________________________________________________ 10 eCommerce _________________________________________________________________ 11 Trade Promotion & Advertising _________________________________________________ 13 Pricing ______________________________________________________________________ 14 Sales Service/Customer Support ________________________________________________ 14 Protecting Intellectual Property _________________________________________________ 14 Due Diligence ________________________________________________________________ 15 Local Professional Services ____________________________________________________ 15 Principle Business Associations ________________________________________________ 16 Limitations on Selling US Products and Services __________________________________ 16 Web Resources ______________________________________________________________ 16 Leading Sectors for US Exports & Investments _________________________ 18 Energy ______________________________________________________________________ 18 Transportation _______________________________________________________________ 20 Computers and Information Technology Equipment ________________________________ 21 Construction and Building Materials _____________________________________________ 22 Hotel and Restaurant Equipment / Tourism _______________________________________ 23 Agricultural Sector ___________________________________________________________ 23 Customs, Regulations & Standards ___________________________________ 26 Trade Barriers _______________________________________________________________ 26 Import Tariff _________________________________________________________________ 27 Import Requirements & Documentation __________________________________________ 27 Labeling/Marking Requirements ________________________________________________ 28 U.S. Export Controls __________________________________________________________ 28 Temporary Entry _____________________________________________________________ 28 Prohibited & Restricted Imports _________________________________________________ 28 Customs Regulations _________________________________________________________ 28 Standards for Trade ___________________________________________________________ 29 Trade Agreements ____________________________________________________________ 30 Licensing Requirements for Professional Services _________________________________ 30 Web Resources ______________________________________________________________ 30 Investment Climate Statement _______________________________________ 31 Executive Summary ___________________________________________________________ 31 Trade & Project Financing __________________________________________ 32 Methods of Payment __________________________________________________________ 32 Banking Systems _____________________________________________________________ 32 Foreign Exchange Controls ____________________________________________________ 34 US Banks & Local Correspondent Banks _________________________________________ 34 Project Financing _____________________________________________________________ 35 Multilateral Development Banks: ________________________________________________ 36 Financing Web Resources _____________________________________________________ 36 Business Travel ___________________________________________________ 37 Business Customs____________________________________________________________ 37 Travel Advisory ______________________________________________________________ 37 Visa Requirements ___________________________________________________________ 37 Currency ____________________________________________________________________ 37 Telecommunications/Electronics ________________________________________________ 38 Transportation _______________________________________________________________ 38 Language ___________________________________________________________________ 40 Health ______________________________________________________________________ 40 Local Time, Business Hours and Holidays ________________________________________ 40 Temporary Entry of Materials or Personal Belongings ______________________________ 41 Travel Related Web Resources _________________________________________________ 41 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2018. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. Doing Business in Macedonia Market Overview The Republic of Macedonia is an emerging market. With a population of less than 2 million, this small, land- locked economy in South Eastern Europe has made great strides in reforming its economy over the past two decades, but remains one of Europe’s poorest countries. EU and NATO candidate Ranked 11th best by the World Bank’s Doing Business 2018 report Open economy that welcomes foreign direct investment and trade Middle-income country with per capita income of $5,474 in 2017 Sound macroeconomic fundamentals Stable currency pegged to the euro Low inflation (1.4 percent in 2017) GDP stagnated at zero percent in 2017 Unemployment rate of 21.6 percent; youth unemployment of 44.3 percent Competitive wages (average monthly salary of $421 in 2017) English-speaking workforce Low taxes: 10 percent rate on personal and corporate income Largest sources of FDI are Austria (12.4 percent of total), the Netherlands (11.4 percent), Germany (10.8 percent), Slovenia (10.0 percent), and Greece (8.3 percent) Total 2017 trade (imports plus exports) of $13.4 billion, or 118.1 percent of GDP Largest trading partners in 2017 were Germany (26.7 percent of total trade), UK (6.4 percent) Greece (6.1 percent), Serbia (6.0 percent), and Bulgaria (5.0 percent) In 2017, the United States was Macedonia’s 16th largest trading partner. U.S.- Macedonia trade totaled $232 million, of which U.S. exports were $176 million (Government of Macedonia statistics) In 2017, U.S.-Macedonia trade totaled $297 million, of which U.S. exports were $41 million (U.S. Government statistics) Member of European Free Trade Agreement (EFTA) and Central European Free Trade Agreement (CEFTA); bilateral Free Trade Agreements with Turkey and Ukraine. Market Challenges Weak rule of law and corruption Political interference in the economy Slow moving judicial system Legislative and regulatory contradictions Inefficient bureaucracy Opaque tendering process Inconsistent enforcement of intellectual property rights Delays in collecting payments from both public and private sector entities Need for improvements in transport infrastructure Market Opportunities The most successful U.S. trade products during 2017 in Macedonia were engine and engine parts, parts and accessories of vehicles, pharmaceutical preparations, chemicals, industrial machines, meat and poultry, and computer hardware and software.Energy – The government has privatized some energy assets and is providing concessions for other energy opportunities. The private electricity distribution company continues to make substantial infrastructure investments. Transportation – As Macedonia upgrades its transportation infrastructure, there are opportunities in this sector. Information Technology and Computers – This growing sector continues to provide opportunities for U.S. companies. Construction – There are both export and investment opportunities available for U.S. companies in the construction and building materials sector. Tourism – The country’s geographical location, scenic areas, and historic and religious sites provide opportunities for tourism industry investment, development, and management. Agriculture – Agriculture is an important segment of the economy, and there are opportunities for trade and investment in agriculture and food processing equipment. Market Entry Strategy The best strategy to enter the market varies according to the product, service, industry, and company’s long-term strategy. Visiting the country to determine the best market entry strategy is recommended. Before choosing local agents or distributors, due diligence is crucial. Maintaining close contact with them is also important. Establishing qualified local legal services for contract negotiations