Finland – Macedonia Business Seminar, Wednesday, June 6, 2012 The Business Seminar was organized on the occasion of the visit to Finland of H.E. Mr. Nikola Gruevski, Prime Minister, President of the Government of the Republic of Macedonia. Presentation by Vladimir Peshevski.

1. Republic of Macedonia
Deputy Prime Minister
for Economic Affairs
Vladimir Peshevski
Deputy Prime Minister
for Economic Affairs
Helsinki - 2012

2. Republic of Macedonia
Basic Facts Deputy Prime Minister
for Economic Affairs
• Population – 2.06 million
(41.5% under the age of 30)
• Land area – 25,220 sq.km
• GDP (2011) - $9,800 million
• GDP per capita - $4,750
• PPP GDP per capita - $10,400
• Main trading partners:
Germany, Greece, Serbia, Russia
• Main export industries: metallurgy and
metal processing, automotive, oil
industry, mining, food and food
processing
• Political status – Parliamentary
democracy
• EU and NATO candidate country

3. Republic of Macedonia
Economic Strategy Deputy Prime Minister
for Economic Affairs
Country Challenges Country Potential
• Small size and landlocked • Macroeconomic stability
• Volatile global economy • Strategic location and infrastructure
• Needs investments and technologies • Availability of natural resources
• Low visibility and region perception • Availability of intellectual capital
Pillars of the Strategy
• FTAs and infrastructure
• Create an outstanding climate for
investors - Free Economic Zones
• Develop a world class human capital
• Invest in the energy sector
• Rationally use the natural resources
• Attract FDI and promote Macedonia

4. Republic of Macedonia
Stable Macroeconomic Indicators Deputy Prime Minister
for Economic Affairs
REAL GDP GROWTH RATE (%)
INFLATION
Average inflation < 2% p.a. over the last 10y
2006: 3,2%; 2007: 2,3%; 2008: 8,3%; 2009: -0,8%; 2010: 1,6%
6,1
5,0 5,0
3,3
2,9
CURRENCY
-0,9
2006 2007 2008 2009 2010 2011 Macedonian Denar pegged to the DM/€
for the last 10 years (€1= MKD 61.3)
EXPORT BY YEAR (US$ bn)
AVERAGE GROSS SALARY IN 2011
4,0 4,4 € 497 per month
3,4 3,3
2,4 2,7
0
2006 2007 2008 2009 2010 2011 CREDIT RATINGS 2011-2012
2011-
No downgrading in the last two years
GOVERNMENT DEBT AS % OF GDP
28,2 Standard & Poor’s: BB; Fitch: BB+
24 23,9 24,6
20,6
BUDGET DEFICIT & STATE DEBT
Budget Deficit: 2,5% of GDP
2007 2008 2009 2010 2011
State Debt: 28,2% of GDP
Source: National Bank of the Republic of Macedonia

5. Republic of Macedonia
Financial System Deputy Prime Minister
for Economic Affairs
• Sound and stable financial system with
no spillover of the debt crisis
• Loans are financed predominantly by
local deposits (L/D ratio of 0,90)
• Financial system consists of 17 banks, 9
saving houses, 13 insurance companies
and 9 leasing companies
• Interest rates for companies in range of
5,5% up to 12,0% (CB rate of 4%)
• Foreign banks have 73% of the market
• Recently the following international
banks entered Macedonian market:
− French Societe Generale Bank
− Austrian Sparkasse Bank
− Turkish Halkbank

6. Republic of Macedonia
Improvements in the Business Climate Deputy Prime Minister
for Economic Affairs
Regulatory Reforms
Rank of Macedonia on the Ease of Doing
• 1-Stop-Shop: 4h Company Registration Business Indicator, World Bank "Doing Business"
Reports 2006-2012
22
• Regulatory Guillotine (“Silence is 32 34
Consent”, “Cutting Red Tape”)
69
• Electronic One-Stop-Shop for Customs 75
Permits and Licenses 92
94
• Simplification and reduction of taxes 2006 2007 2008 2009 2010 2011 2012
and custom procedures
Cadastre and Real Estate Reforms Rank of Macedonia among the Best
Countries for Business, Forbes Magazine
• Digital Cadastre accessible on-line 35
covering 99% of the Real Estate
• Foreigners free to purchase real 82
estate and construction land
• Construction permit in just 3 steps 2007 2011
• State land auctioned at 1 €/m2

7. Republic of Macedonia
Doing Business in Macedonia Deputy Prime Minister
for Economic Affairs
22nd BEST COUNTRY FOR 35th BEST COUNTRY FOR
BUSINESS IN THE WORLD BUSINESS IN THE WORLD
World Bank’s Doing Business 2012 Report Forbes Magazine
Forbes
3rd BEST REFORMER 5th IN THE EASE OF PAYING
IN THE WORLD TAXES
World Bank’s Doing Business 2010 Report PwC and World Bank Group Study
Ease of
Dealing with Trading
Doing Starting a Getting Registering Getting Protecting Paying Enforcing Resolving
Construction Across
Business Business Electricity Property Credit Investors Taxes Contracts Insolvency
Permits Borders
Rank
Germany 19 98 15 2 77 24 97 89 12 8 36
Macedonia 22 6 61 121 49 24 17 26 67 60 55
Austria 32 134 76 21 35 24 133 82 25 9 21

8. Republic of Macedonia
Education and ICT Deputy Prime Minister
for Economic Affairs
Investments in Education
• Education Budget 5-6% of GDP
• Textbooks from top 10 world universities
• 5 state owned and 14 private universities
(over 60,000 university students per year)
• English introduced in the 1st grade el.sch.
• Opened two new universities, over 50 new
R&D laboratories, international scholarships
Information Technology
• One Computer per Child policy
• ICT Development Index – 51st out of 159
• Internet penetration rate - EU average
• Migration of government services on-line
(taxes, health, customs, employment, etc.)

9. Republic of Macedonia
ICT Structure Deputy Prime Minister
for Economic Affairs
Workforce and Infrastructure Structure of the workforce
• Rising supply of well-educated IT experts Programming/Software engineers 30%
• Among the lowest labor costs in the Technical support - call centers 17%
region Database design & development 12%
• About 800 IT graduates are produced
IT sales & marketing 12%
annually in the Universities.
• A software engineer with 1 to 2 years System analysis & integration 11%
experience costs €400 to €500 per month Network design & administration 9%
• The best telecommunication Digital media specialists 2%
infrastructure in the region Other fields 6%

10. Republic of Macedonia
Enhancements in Infrastructure Deputy Prime Minister
for Economic Affairs
Completion of Coridor X and VIII
• Corridor X is to be completed on full
motor highway standard by 2016,
with financing already secured
• Concession model to be offered for
three more sections on Corridor VIII
• Preparations started for completion
of railway connection to Bulgaria
New Airports built in Skopje and Ohrid
• Capacity 4 million passengers
• Terminal building – 40.000 m2 and
Cargo hangar with 40.000 t.
• Successfully negotiated as a concession
with Turkish concessionaire
• In the first year, traffic is up by 30%

11. Republic of Macedonia
Agribusiness Opportunities Deputy Prime Minister
for Economic Affairs
• Lease of land for agricultural (at the
moment 4000 ha available)
• Good climate and soil (280 sunny days)
• Food processing opportunities with 28
locations for purchasing centers
• Abudance of watter and irrigation
• Financial subsidies for enhancing
productivity and quality (3 year plan)
• Foreign investors already present

12. Republic of Macedonia
New Investments in Energy Sector Deputy Prime Minister
for Economic Affairs
• Construction of national gas transport system (value ≈ €350mn)
• Opening of lignite mines for electricity production (value ≈ €200mn)
• PPP with the National Power Producer “Elem” for the construction
of a combined cycle heat and power plant (value ≈ €250mn)
• An ongoing tender – under the auspices of the IFC advisory services
for two large HPP “Cebren and Galiste” (value ≈ €600mn)
• Rehabilitation of the existing hydropower plants (value ≈ €100mn)
• HPP “Boskov Most” and “Lukovo Pole” (value ≈ €200mn)
• Privatization of the minority share (up to 49%) of the state owned
electricity generation company ELEM (book value ≈ €1.2bln)
• Construction of three new 400 kV overhead lines (value ≈ €60mn)
• New SCADA, (re)construction of more than 200 km of numerous 110
kV overhead lines (value ≈ €45mn)

13. Republic of Macedonia
ELEM – Macedonian Power Plants Deputy Prime Minister
for Economic Affairs
Overview
• ELEM is a 100 % state owned Joint Stock Company for electricity generation
• It contributes to more than 90% of the entire domestic electricity production
• The Government of Macedonia is preparing the company for a partial
privatisation with a strategic investor
• The strategic partner would provide additional capital to ELEM in a form of
equity and acquire 25-49% of the ownership in the company
Technical specs Some Financial Indicators (in US$ million)
• 1.328 MW Installed Capacity
Revenues Net Profit Investments
• 6 TWh Annual Production 2009 312.3 4.0 48.0
• 2 TPP- 800 MW / 60 % of total 2010 339.7 5.2 71.0
2011 345.3 1.0 79.8
• 7 HPP- 528 MW / 40 % of total
• 4.000 Employees
Invest Macedonia - Agency for Foreign Investments

14. Republic of Macedonia
Opportunities in Tourism Deputy Prime Minister
for Economic Affairs
General Policies
• Free Tourist Zones, with opportunities
for hotel and resort development
• Subsidies for tour operators of 25 Euros
per tourist
• Over 50 projects to improve the offer
• In 2011, increase in overnight stays of
tourists from EU of 38%
Summer and Winter Destination
• Over 50 tectonic and glacial lakes and
45 mountain peaks over 2.000m
• Large Ohrid, Dojran and Prespa lakes
• Country is 70% mountainous, many
locations with over 100 days of snow
• Wartersports, archeological, wine, eco
and rural tourism

15. Republic of Macedonia
Opportunities in Tourism Deputy Prime Minister
for Economic Affairs
Historical and Culture Heritage
• 4,293 archeological sites
• 992 churches and monasteries
• 23,000 icons (2nd most valuable
collection in the world)
• 228 mosques, inns, Turkish baths and
old bazaars
• Birthplace of Cyrillic alphabet
• Home country of Mother Theresa
Spa tourism
• Territory rich with geothermal waters
• More than 60 thermal springs
• Identified locations for construction
of new spa centers and hotels

16. Republic of Macedonia
Opportunities in Tourism Deputy Prime Minister
for Economic Affairs
Tourist Development Zones
• Eight new tourist development zones are
to be created
• Each zone would have hotels,
restaurants, spa center etc., per the
design of the investor
• Located nearby the natural lakes with
opportunities for hotel and resort
development
• Exemption of personal income tax for a
period of 10 years
• Land purchase with at public auctions -
starting price of 1 Euro per m2
• Initial investment is a subject of VAT
exemption on construction materials
• Infrastructure the border of the property

17. Republic of Macedonia
Popova Shapka Ski Center Deputy Prime Minister
for Economic Affairs
Location
• Popova Sapka is situated in the north-western part
of Macedonia on 1,780 metres above the sea level,
just 35 kilometres from the capital Skopje.
Current Situation
• Currently there are 10 lifts
• Total piste length of 55km
• Capacity of 2.900 skiers per day
• Hotels – 600 beds
• Private accommodation – 3000 beds
• Parking space for 549 cars
• Relatively dense and unstructured resort village
• Pre-feasibility study is already completed and four
phases were identified to complete this project
Invest Macedonia - Agency for Foreign Investments

18. Republic of Macedonia
Popova Shapka Ski Center Deputy Prime Minister
for Economic Affairs
Key Elements of the Project
• Build six to eight new lifts and remove some of the old ones
• Construct new parking areas, new mountain restaurants/skier services.
• Creation of a new village with over 4.000 new beds
• Capacity of 13.000 skiers per day
• Total investment of around US$ 50-60 million, over four year period
Invest Macedonia - Agency for Foreign Investments

19. Republic of Macedonia
Amusement Park in Skopje Deputy Prime Minister
for Economic Affairs
Project background
• The current amusement park is owned and
operated by the City of Skopje,
• Total area of 25,000 m2 with 20 attractions and
other facilities such as restaurant, night club, etc.
Project objectives
• Design completely new and modern amusement
park via PPP structure
• 30 years concession – DBOT Model
• Feasibility Study is available
• The park would include:
− 7 family rides
− 4 teen rides
− 6 rides for children
− A Theatre
• Total investment of US$ 15 million
Invest Macedonia - Agency for Foreign Investments

20. Republic of Macedonia
Exploitation of Minerals Deputy Prime Minister
for Economic Affairs
• Macedonia has deposits of lead, zinc,
copper, silver, nickel, marble
• Detailed Geo Research Concession is
awarded for up to six years
• Exploitation concession for mineral
resources awarded for up to 30 years
• For the metallic minerals, the fee is 2%
of the market value (London Metals
Exchange) of metal in the concentrate
• For decoration stones, the concession
fee depends on the type:
- marble €15 per cubic meter;
- granite €9 per cubic meter;
- onyx, travertine €6,5 per cubic meter.
• For minerals for construction industry,
the fee is 0,15 EUR per tone

21. Republic of Macedonia
Why Macedonia? Deputy Prime Minister
for Economic Affairs
• Free Trade Agreements with European
countries with market of 660 mil+
• Strategically located for light
manufacturing and logistics companies
• Macroeconomic Stability
• Exceptional track record in reforms
• Attractive Tax Policies
• Incentives in Free Economic Zones
• Available and competitive work force
(41.5% of the population under 30)
• Commitment to education
• Excellent ICT infrastructure
• Business friendly Government, willing
to work hand-in-hand with you

22. Republic of Macedonia
Deputy Prime Minister
for Economic Affairs
Thank you for your
attention!