An investment of $400 million would create one of Europe's biggest textile factories.
By Biljana Lajmanovska and Menekse Tokyay for Southeast European Times in Skopje and Istanbul -- 20/05/14
Macedonia hopes to be home to Europe’s biggest integrated textile production facility. [AFP]
An investment announced by textile giant Weibo Group is the latest project funded by foreign companies who are expending resources in the Balkans and using EU-member aspirant countries as routes to reach European Union markets.
The $400 million investment will include construction of four facilities in Rankovce, in Macedonia's northeast, and create one of Europe's largest integrated textile production facilities.
Weibo, headquartered in Guangzhou, China, is financing the deal primarily with Turkish capital. It said it selected Macedonia for investment because of the country's low labour and production costs and its considerable experience in the textile industry.
The company chose Macedonia over Turkey because of its location and the company's ability to initiate such an investment there, said Selcuk Alperen, president of the Weibo Group.
"Macedonia is at the centre of Europe. It would be possible to reach European countries, Russia and even the US from this region," Alperen told Hurriyet.
Alperen also said the Macedonia facility will produce well-known global brands as well as the company's own brand.
The Weibo Group focuses on producing shirts, jackets, suits, coats and pants.
Officials said they plan to sell the products produced in Macedonia -- between $600 million and $800 million annually -- in Great Britain, France, Germany, Russia, Italy, Spain, China, South Korea, Japan and the US.
Macedonian officials said the government expects great returns on the investment.
The integrated production facility will provide employment opportunities and economic growth, and will have a positive impact on wages, said Vladimir Pesevski, deputy prime minister of Macedonia.
"When unemployment rates decrease in an area, the companies operating there are practically forced to offer higher wages to keep their employees," Pesevski told SETimes.
Weibo will create 5,000 jobs in Macedonia and an additional 2,000 in companies related to its work.
Another reason Weibo chose Macedonia is the country's excellent relations with Turkey, said Anastas Dzurovski, an economics professor at the State University in Bitola.
"Besides the cultural relations and traditional ties, Turkey's general policy is to focus on this region. Of course … lower labour costs, low or no taxes and a high level of investment protection also have made Macedonia attractive for Turkish investors," Dzurovski told SETimes.
Turkish businessmen have invested about 1 billion euros in Macedonia, primarily in the food, construction and services sectors.
The region has had many integrated textile facilities dating back to the 1970s, said Hasan Hosben, head of the Macedonian-Turkish Business Council under Turkey's Foreign Economic Relations Board (DEIK).
"Textile is a main manufacturing branch in Macedonia. Now, thanks to the free-trade agreements that it made with various countries, production in Macedonia has a potential to reach over 650 million people, especially in the near areas, within a very short timeframe," Hosben told SETimes.
Other Turkish entrepreneurs are active in Macedonia through small-scale textile boutiques.
How will foreign investment in the region help improve the region’s economy? Share your opinion in the comments space.