Indian Plant Buys Macedonia's Investment Hopes

The Indian company SMG signeed cooperation agreement with the government | Photo by: Macedonian Government

Despite efforts to lure foreign companies and so help curb a staggering 31 per cent unemployment rate, Macedonia has seen only modest foreign investment over the last three years, which officials blame on the global economic downturn.

But “things have started moving in a positive direction”, Prime Minister Nikola Gruevski said on Wednesday, attending a groundbreaking ceremony for a new car parts factory owned by India's Samvardhana Motherson Group, SMG. The company is investing 12 million euro in the plant, which is set to employ 140 people in the Bunardzik free economic zone near the capital, Skopje.

The Bunardzik zone, seen as one of the most important for the country’s development, until recently had only two big international companies operating there, the electrical parts manufacturer Johnson Controls and the London-based specialty chemicals company Johnson Matthey. The two companies arrived in 2007.

But this July the US-based electronic components manufacturer KEMET started building its own factory in Bunardzik. Estimated at 25 million US dollars, the factory should employ 500 workers.

Earlier this month Russia's Prodis, part of the pharmaceutical giant Protek Group, also kicked off a 5-million-euro investment, promising to employ 300 people.

In the past few years Macedonia enacted a set of measures to kick-start foreign direct investment, FDI. These included flat-rate taxes, faster company registration procedures and special benefits for those investing in special development zones.

In 2007 FDI reached a record 506 million euro.

But after this initial success, the start of the global economic crisis proved devastating, slicing FDI in half to 399 million euro in 2008. The drop continued in 2009 when the country registered a humble 180 million euro in investment.

 In 2010 FDI started to climb back up, reaching 222 million euro. Data for the first quarter of this year sound promising, with over 100 million euro already in the bag.

The latest investments are seen by the government as a good sign of what might come.

Gruevski earlier this month announced the imminent entry of “two big multinationals” in the country that may create thousands of jobs in the central town of Stip.

“Two big companies are interested in Stip and are close to a decision to invest,” Gruevski said.

Media reports speculate that Johnson Controls plans to build a second factory in Stip, producing car seats. The economic newspaper “Kapital” cited unnamed sources from the company as saying that the new factory may create some 1,500 jobs.