Support for domestic enterprises
One of the Government priorities will be development of domestic enterprises, primarily small and medium enterprises. It will create vibrant and predictable business climate, free of political pressure and repressions. Special attention will be directed to linking domestic enterprises with foreign companies operating in the technological and industrial zones. Our goal is to secure a 5% average growth rate of the economy over our 4-year term.
In this regards, the Government will increase state support of entrepreneurship stimulating growth of production of domestic enterprises to 20 million EUR in the first year of the term, hoping to reach 50 million EUR by the last year of the term. These funds will be supplemented by foreign credit lines.
Domestic enterprises have been challenged by problems of unsettled state obligations on grounds of invoices and VAT returns. Business chamber estimates of debt levels are frightening, confirming that the Macedonian economy is in dire condition. In the first 100 days, the Government will publicly reveal all accumulated state arrears. It will immediately put forth a detailed plan for payment of arrears with clear deadlines. The Government will also promote policies for timely payment of arrears. Fiscal discipline from enterprises and citizens cannot be expected if the State fails to abide by it.
The Government will promote a favorable business climate by supporting policies of cooperation with the business sector, non-discrimination, increased efficiency and transparency of institutions and full respect of rule of law. Among else, it implies:
- Introduction of regular communication channels between the business community and the Government. The Cabinet and the business community will regularly communicate and consult before the amendment and adoption of new legislation. Systemic and open dialogue with the business community will imply comprehensive use of the National Electronic Register of Regulations (ENER). Additionally, we will increase the minimum days required for consultations from 20 to 30 days.
- Short parliamentary procedures in adoption of laws create legal insecurity and regulatory burden for enterprises. They will be regulated by exemptions and special limitations. Amendment of laws will include periods for adaptation of enterprises, especially small and medium enterprises. On suggestion of NGOs, trade unions and chambers, the Parliament will prepare consolidated versions of legal texts.
- Reform the regulatory impact assessment mechanism (ex post) with compulsory participation of NGOs and the business community.
- Key institutions involved in and influencing the business climate will start publishing official and legally-binding instructions for implementation of laws pertaining to their area. They will be obliged to publish all relevant laws, by-laws and internal procedures on their webpages.
- Elimination of all unnecessary documents requested by institutions in administrative procedures in view of decreasing additional costs. The total cost of services must be clearly indicated. Institutions will previously consult the business community regarding procedures causing biggest problems or longest procedures.
- Electronic issuing of 50 most commonly used documents, and for each procedure the steps and the designated public officers will be published.
The Government will change its approach to penal policies and insist that all actions must be founded on prevention. Inspection services will not be used as instruments of reprisal or political pressure. The selection of legal entities to undergo control will be done by random choice or following tip-offs based on strong evidence. In view of eliminating or reducing the level of subjectivity in carrying out inspection control, the Government will establish a public registry of inspection controls carried out by state bodies and inspections. Notices for misdemeanors will be handed out first. Only upon repetition will the institutions issue penalties. Penalties will be proportional to the revenues and size of business entities.
The Government will support the development of domestic enterprises, especially small and medium enterprises with the following measures:
- Strengthen the financial and human resources of the Agency for Support of Entrepreneurship in view of better delegation of rights and duties for coordination of SME development policy implementation.
- The Macedonian Development Support Bank (MBPR) will be subjected to recapitalization in view of increasing its credit support and its capacity to implement sound guarantee schemes.
- Establishment of inter-ministerial council comprised of ministries responsible for small and medium enterprises. The Council will be responsible for coordination of activities geared toward upgrading SMEs
- Providing measures for faster launching of bankruptcy procedures.
- Establishment of a Credit Ombudsman tasked to improve dialogue between small and medium enterprises and credit institutions
- Setting up genuine control of imported goods in view of preventing unfair competition and ending the retailers’ practice of issuing pro forma certificate compatibility statements.
- Reduction of the enterprise tax for businesses employing less than 5 people in view of reducing their operational costs and incite new business start-ups.
- Direct consulting support via the Agency for Support of Entrepreneurship of the Republic of Macedonia, which should grow into genuine service of small businesses.
- Establishment of an appropriate guarantee scheme via MBPR for investment and revolving credits for small and medium enterprises.
- Introduction of micro credit lines for support of start-ups and micro companies, as well as credit lines for the “Franchise” and “Mixed investment” projects.
- Setting up an investment fund for investment in start-ups and SMEs with minority state-owned shares, i.e. companies with 51% privately owned capital by interested private entities.
- Introduction of support mechanisms for domestically-owned investment projects amounting to maximum 25% of total investment costs and the gross costs of every newly added job. The support will be directed through two channels: a) direct support ranging between 1,000 EUR and 2,000 EUR in Denars, based on the remuneration levels of every newly added job, in cases where employers pledge to give gross salaries over a 2-year period; and b) profit and property tax exemptions over 5 consecutive years.
- Facilitating the work of small and medium enterprises in rural areas by financing infrastructure projects.
The Government will draft a strategy for development of active tourism due to its high local economic development and new, well-paid job creation potential. To this end, we will implement the Law on Spatial Planning to guarantee the protection of attractive natural resources necessary for this branch of tourism; support clean-up activities in tourist sites; regulate property relations and put children camps and mountain houses in use.
Entrepreneurial development will be incited by opening Government-sponsored business start-up centers in all larger municipalities. The Government pledges to provide free-of-charge business space for multiple newly-created companies, including the supporting infrastructure and common services (maintenance, archive work, accounting, etc.).
Opportunities for establishing special businesses with minimum capital fund of 1 EUR. These companies will bear specific, clearly-marked signs, so everyone doing business with them will know their capital fund was only 1 EUR.
Firms planning to invest, but hindered due to lack of space, will be given tenure over unused lots of publicly owned land. The number of lots given to a single company will depend on the conditions met by each individual entity (size of investment and number of newly created jobs).
The Government will propose lifting import taxes on equipment intended for new projects engaging workforce in under-developed municipalities, as well as activities piled up in clusters. In addition, it will provide direct financial support for processing of primary agricultural productions. It will stimulate the association of primary producers as well as processing companies investing in facilities and equipment for production of home-grown raw material produce.
The State will support the development of domestic enterprises by launching an appropriate public procurement reform. It will increase their transparency and eliminate pre-arranged tenders for favored companies. Additionally:
- Before opening tenders, public institutions will pre-analyze the existing market. In cases where there are products and services offered by domestic companies that can satisfy their needs, the tender will prefer these products and companies.
- Put an end to the practice of favoring selected companies that undermine competitions. In this light, the Government will ease the basic criterion (annual turnover) as prerequisite for participation, especially as it was applied for eliminating competition.
- Whenever possible, big tenders will be divided in multiple lots available to SMEs, provided it does not undermine the quality of the procurement. Concurrently, the number of lots any given company can apply to will be limited.
- Application of the value for money principle. Lowest bidding prices will no longer be accepted as a rule of the thumb.
- Reduction of the information asymmetry affecting SMEs by simplifying application procedures and fast information flow.
Economic growth depends on investments in R&D and development of new technologies and industries with high return of investments. To this end, the Government will finance at least 10 research projects annually that have been developed by scientific institutions and accepted by chambers of commerce in Macedonia.
We will support value-added services (IT companies, telecommunications, architecture, etc.) by covering 50% of equipment costs necessary for new investment, amounting to a maximum 50,000 EUR. The Government will provide tax relief for all software-and-services-exporting ICT companies and lower the IT profit tax to 5%. These measures should propel new employment, increased foreign account inflow and the set-up of new IT companies.
In cooperation with the Macedonian ICT community, the Government will finance innovative solutions to increase the effectiveness of 1) agricultural, 2) educational and 3) internal affairs policies.
The Government will support the establishment of a technology and development research center in view of determining the advantages of Macedonian small and medium enterprises vis-à-vis their European counterparts, especially in terms of eliminating the lagging segments, such as wrapping, marketing, delivery deadlines, quality levels, consistent management techniques, etc. We will increase the use of technical support foreign aid, as well as all funds available to domestic enterprises for introduction of new technological processes, productivity increase, etc. The Government will provide financial support lines to help companies launch new products and production design, introduce modern production and quality control methods, modern logistics and distribution, as well as attainment of quality and home produce promotion certificates.
The Government will lead active and transparent policies for attracting foreign direct investments. It will stimulate high value-added investments and link them with domestic companies. In addition, the Government will publish a detailed cost-benefit analysis of foreign investments and gains made in the past, especially those benefiting state support.
The Government will provide tax relief to Macedonian expats interested in investing in the country. To this end, it will rely on the funds foreseen in the SME and start-ups investment fund, as well as MBPR’s guarantee scheme.