Free economic zones have a positive effect on regional economies

28/11/2012

Free economic zones could be the key to the region's survival of the economic crisis and a gateway to stability.

By Aleksandar Pavlevski for Southeast European Times in Skopje -- 28/11/12

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Foreign investors in the zones are exempt from paying the 5 to 20 percent customs duties for the import of goods, raw materials and equipment. [AFP]

The majority of industrial production in the coming years will take place in free economic zones, which will affect the economy, economists said.

By creating jobs and boosting exports the free economic zones will increase domestic prosperity and will cut down on brain drain, Viktor Mizo, director of Free Economic Zones in Macedonia, told SETimes.

For Southeast Europe, which has about 10 of the specially taxed zones throughout Macedonia, Albania and Serbia, this could mean more regional stability.

"Economic zones in countries like Macedonia, Albania, Serbia [will gain] a lot, not only economically but also politically. [The zones] brought a lot of new jobs in the state, have [boosted] the construction sector … and will increase the overall positive trend [in the future]," Shenaj Hadzhimustafa, professor of public finance and macro-economics at the University of Southeastern Europe, told SETimes.

Macedonia currently has four technical industrial zones -- Zones 1 (Bunardzik) and TIRZ 2 in Skopje and one zone each in Stip and in Tetovo.

Investors in the free zones do not pay VAT, and are exempt from income tax and personal income tax for 10 years from their launch. The foreign investors in the zones are also fully exempt from paying the 5 to 20 percent customs duties for the import of goods, raw materials and equipment.

The total value of goods and services produced last year in Macedonia's free zones increased by 29.13 percent last year, reaching 1.3 million euros.

Currently, 1,150 people work in the factories in the four zones, but that number is expected to increase to 3,500 employees in the next four years, Mizo told SETimes.

"I got a job in the economic zone of Skopje. I was previously fired from a state company and I was 8 years without work. Now I can be calm because I have a secure job in one of the factories," Stevan Todorovski from Skopje, told SETimes.

Investors see the free economic zones as an investment haven where production is cheaper.

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"We see Macedonia as a growing centre. It connects the east and the west, and now Europe and the US," Philip Van Hall, CEO of the Van Hall company, which has a factory that produces buses in the Bunardzik zone. The 20 million-euro factory employs 400 to 500 people.

"The zones will be presented as successful projects [by] current authorities and it will be their weapon in the next elections. From here you can expect a kind of stabilisation of the whole society," Catherine Kostovska, a sociologist from Skopje, told SETimes.

According to the Macedonian Directorate for Technological Industrial Development Zones, the plan is to open seven more free economic zones in Prilep, Gevgelija, Strumica Kicevo Rankovce Struga and Radovis.

"Zones will contribute to future economic growth in countries. In the new zones, they will bring new technologies, and will modify the structure of exports, but also the countries where they export. With this change, they will no longer be dependent on the EU," Hadzhimustafa told SETimes.

This content was commissioned for SETimes.com.
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