FOREIGN INVESTMENTS IN MACEDONIA: UNSUCCESSFUL "HUNT" FOR FOREIGNERS

AIM Skopje, 28 October, 1997

The latest analysis of the journal "Euromoney" a section of which was published in domestic media, revealed a shocking and bitter truth about the place of Macedonia on the list of countries in which investing is recommended. According to this analysis, a foreign investor, before deciding to invest his money in Macedonia, should previously try doing it in no less than 150 other countries!? Judging by the analysis of this journal, Macedonia ranks 151 on the list of countries worth investing in which is a new, even worse than the 107th place it held until recently. This discouraging truth for Macedonian economy is confirmed by the fact about only thirty odd million American dollars of foreign capital invested in the economy in the past six years since Macedonia has existed as an independent country. If this sum of money is compared, say, with investments in neighbouring Bulgaria, which is considered to be one of the least attractive countries for investors due to its "traumatic" transition, amounting to over one billion two hundred million dollars, the picture becomes even clearer, and nothing to say about other Eastern European countries in which foreign investments are measured by tens billion dollars.

Indeed, this unfavourable picture of foreign investments is obvious even "with the naked eye", since in whole of Macedonia (regardless of how small it is) it is almost impossible to see a single sign of a foreign firm. An illustration of how striking this is was the recent opening of the first McDonald's in Macedonia downtown Skopje. To great joice of a large number of on-lookers, especially foreigners, opening of the American fast food restaurant was attended by the entire polical elite of the country starting from the President of Macedonia to Church dignitaries. This example probably speaks best of the low level of attractiveness of Macedonia which cannot be improved even by personal intervention of the head of the state. And to make things even worse, except for Skopje beer, this McDonald's does not use any domestic raw-material, not even buns, although the domestic bakery Zito Lux still hopes it will get this "business deal of the century.

In the search for reasons of this catastrophic picture, economic analysts are completely in the dark. The "whipping boy", the Greek embargo, which was in the past few years the strongest "argument" for obtaining foreign aid, and at the same time serves as an excuse for economic failures, does not exist any more for almost two years. Membership in international organizations cannot be used as a pretext either, because Macedonia is nowadays a member of almost all significant international organizations and institutions which can in any way influence economic trends in the country.

Although it is done very "shyly", it is possible to hear admissions that the main reasons are "in ourselves", or more precisely in certain wrong evaluations of the government. Primarily, the economic legislature is implied, which considerably lags behind the "nation-building" part. In the hurry to complete the process of internal political organization of the country, it was almost "forgotten" that possible investors, before they invest their capital, want to know the "rules of the game". The example of the mentioned McDonald's, the ribbon of which was cut by the President of the state himself, who also ate the first hamburger, can again serve as an illustration of the lack of skill to attract foreign capital. Not a week after the exclusive gala opening, state inspectors simply sealed the entrance to the restaurant, which is the first such case in the extremely successful business history of this specific food industry of a world reputation. To make the affair even more absurd, the restaurant was re-opened by the same inspectors just a couple of days after it had been closed down, which in itself speaks best about the triteness of the intervention (although certain justifiableness cannot be eliminated) and even more about clumsiness in relations with the foreign investors. If the story about unsuccessful negotiations with Volkswagen is added to this, which as the ultimate goal had manufacturing of Audi A3 cars in Macedonia, the picture of Macedonian failures in attracting foreign investors becomes even more complete.

On the other hand, several business scandals, among which the scandal with the pyramidal savings-bank TAT from Bitolj worth over 100 million German marks blazes the trail, certainly cannot be the reason for attracting foreign investors. Especially not if numerous irregularities are taken into account, or to say the least, if "fishy business" concerning privatization of land are taken into account, and even more when one knows that the law on denationalization has not been passed yet. According to certain evaluations, this law is worth about 10 billion German marks of compensations to former owners, and a large part of this sum refers to enterprises which have been "privatized" without having previously clarified the question of ownership.

Although nobody wishes to admit it, one of the greatest reasons for putting Macedonia on the "black list" for investments, are undoubtedly internal relations, that is conflicts, especially interethnic ones (and again especially those among the Albanians and the Macedonians) which on several occasions resulted in human victims (always on the side of the Albanians). Warnings which the Macedonian administration has received from the international community because of inadequate use of police forces against ethnic Albanians, with no doubt played the key role in making the mentioned priority list of countries suitable for investments.

Probably this situation was one of the main motives for the recent "summit" organized by the President of Macedonian Kiro Gligorov which was attended by all significant parties in the country, including the non-parliamentary opposition VMRO-DPMNE. A joint declaration of all participants which refers mostly to main trends of relations of Macedonia with the international community was marked as the main result of this "summit". Evidently, one of the main objectives of this meeting was to convince the international community that there is no reason for fear of investing in Macedonia, and the fact that all political factors in the country have declared their commitment to Western integration is probably relied on as the main arguument that there even possible change of administration would not be a risk for investments. If this message will be interpreted as intended, and what is even more important, accepted as such, remains to be seen.

AIM Skopje

IBRAHIM MEHMETI