NEWSLETTER, JANUARY 2008

Index of Economic Freedom 2008
 
The Heritage Foundation conducted the traditional survey “Index of economic freedom” for 2008 in 162 countries. Below are the results for Macedonia in 10 relevant categories regarding the economic freedom.

Country: Macedonia
 
Year: 2008
 
Overall rank: 71
 
Overall score: 61,13
 
Business freedom: 65, 09
 
Trade freedom: 83, 4
 
Fiscal freedom: 88, 1
 
Government size: 61, 55
 
Monetary freedom: 85,48
 
Investment freedom: 50
 
Financial freedom: 60
 
Property rights: 30
 
Freedom from corruption: 27
 
Labour freedom: 60, 7
 

Commission proposes measures for more cross-border investment by venture capital funds

 
In order to finance and stimulate innovation of small and medium-sized enterprises (SMEs), the European Commission has proposed measures to boost cross-border investments of venture capital funds. Up to now venture capital funds, which are vitally important for the financing of growing innovative small companies, face too many problems to overcome different national regulations for cross-border fundraising and investment. For this reason they often don't reach the necessary critical mass. Therefore the European Commission advocates a broad partnership with and between Member States to work towards mutual recognition of the current national frameworks for venture capital funds.

 
Lead market initiative to unlock innovative markets


The European Commission is proposing to unlock market potential for innovative goods and services by lifting obstacles hindering innovation in a first batch of six important markets: eHealth, protective textiles, sustainable construction, recycling, bio-based products and renewable energies. These markets with high economic and societal value represent an annual turnover of more than EUR 120 billion and 1.9 million jobs in the EU. With this initiative they may increase to over EUR 300 billion and over 3 million jobs in the EU in 2020.

Europe must develop innovation friendly markets in a more targeted way, creating conditions to facilitate the marketing of innovative products and services. The Lead Market Initiative has identified promising emerging markets in which the European Union has the potential to become world leader and where coordinated action is urgently needed

The 'Lead Markets Initiative for Europe' (LMI) proposed by the Commission on January 7th, fostered the emergence of these markets by notably improving 
legislation, encouraging public procurement and developing interoperable standards. European enterprises would profit from fair and better chances of entering new fast growing world-wide markets with a competitive advantage as lead producers. LMI would also rapidly bring visible advantage for Europe's consumers in key domains for their welfare. 

European Parliament supports proposal to reduce paper work for 300.000 freight carriers, saving € 160 million

On January 16th the European Parliament has adopted the European Commission's proposal to remove unnecessary burdens for transport companies. Freight carriers will no longer have to carry separate transport documents, explaining e.g. frontier crossing points, routes to be taken or distance travelled. In addition, this action rationalises outdated reporting requirements dating from 1960, allowing information on intra community transport flows, such as name and address of the consignor, nature and weight of the goods and place at which the goods are to be delivered to be collected through other available means.

The reduction of administrative burdens is a key element to improve the business environment and meet the European Union's ambitious Lisbon objectives. The Commission therefore welcomes European Parliament's support for a quick adoption of its Fast Track Action removing unnecessary information requirements falling on some 300.000 European freight carriers, who will be saving 160 million Euro annually.

The proposal also aligns the remaining information requirements with provisions in existing international conventions, facilitating freight carriers' opportunities by allowing them to use simpler means of documentation. This simplification applies to more than 300.000 freight carriers across Europe, most of which are small and medium sized enterprises (SMEs). This is a Fast Track Action within an Action Programme which has the objective to cut administrative burdens on businesses in the EU by 25% by 2012.
 

First meeting of High Level Expert Group on administrative burdens chaired by Edmund Stoiber 

The High Level Expert Group on Administrative Burdens held its first meeting on January 17th. The group discussed how best to support the Commission in the implementation of the Action Programme to Reduce Administrative Burdens and decided on procedural aspects of its work.
The High Level Group (HLG) consists of 15 experts, chaired by Edmund Stoiber. The HLG will receive a progress report from the Commission on the work undertaken so far in this area notably:

The state of play in the implementation of the first package of so-called fast track actions adopted in 2007 and which aimed to reduce red tape by some 1.3 billion Euro. To date, five of the ten actions have already been formally adopted. The others are well under way and should be adopted in the coming months.
The progress of the work of the consortium that is currently completing the mapping and preparing the measurement of administrative burdens within the European Union.
Finally, the HLG also had a first exchange of views on the second fast track actions package to be proposed by the Commission in the course of 2008 and notably how best they can contribute their own experience to the preparation of this package as well as more generally how best to drive forward the ambitious programme. 
 
Commission Vice-President, Gunter Verheugen, responsible for enterprise and industry policy, said: “I am very pleased to kick off the work of this important group because it will play a decisive role in moving ahead the Action Programme on administrative burden reduction. The expertise of its members will allow the Commission to speed up its drive to make life easier for enterprises and ensure that we are focussing our efforts on those areas where the reduction of administrative burden can make a real difference.”

Edmund Stoiber, Chairman of the HLG, said: “The motto of administrative burden reduction has to be: As little legislation as possible. Europe has to give priority to ideas and innovation without bureaucratic stop signs. We will give economic growth in Europe a forward push if we manage to get on with this. “

Edmund Stoiber announced that the group will table courageous proposals regarding a fundamental limitation of bureaucracy in Europe. Administrative cost and time lost because of administrative burden in Europe will have to be reduced significantly, if Europe and its Member States want to keep up in a globalised economy.

Background

The Group has a three-year mandate. Its task is to advise the Commission on the implementation of the action plan on reducing administrative burden imposed by legislation in the Union. The ambitious programme presented by the European Commission last January and endorsed by the European Council of March 2007 aims to cut by 25% the administrative burdens of businesses in the EU by 2012. 

Foundation of the “European Club” in the Republic of Macedonia 

The European Business Association established the “European Club” in the Republic of Macedonia in 2008. The opening session of the “European Club” took place on 22 of January, starting at 19.00, in the Multi Business Center, Skopje Fair. On this occasion, on the discussion titled “Stony road to the EU, experiences and expectations”, the guest-speakers were Mr. Gerhard Bauer, Ph.D., Secretary General of the Austrian Organisation for EU Policy, Vienna and Mr. Christian Wehrschutz, correspondent for ORF, Belgrade. On the one hand, Mr. Bauer shared Austria’s experiences regarding the EU- membership and the fulfilment of the criteria. On the other hand, among the other issues, Mr. Wehrschutz analysed the events in the Balkans regarding the progress of each country on the road to the EU. 

The “European Club” in the Republic of Macedonia is open to the wide public. We hope that an interested and growing audience will visit our future events.

The main goal of the “European Club” is providing the participants with reliable information and increasing public awareness through fruitful discussions on relevant matters, essentially regarding Macedonia’s future membership. Respectively, at the opening session of the “European Club” in the Republic of Macedonia, there was an interactive discussion between the guest-speakers and the audience. The audience asked questions and was sharing opinions about this current issue.  

World Economic Forum Annual Meeting 2008


The Power of Collaborative Innovation
23-27 January, Davos, Switzerland

The annual meeting of the World Economic Forum in Davos brings together many of the world’s most powerful people in an informal setting. In 2008, the economic challenges facing the world dominate discussions. The programme was based on the following five conceptual pillars:

- competing while collaborating

- addressing economic insecurity

- aligning Interests across divides

- exploring nature’s new frontiers

- understanding future shifts

More than 2500 successful and influential people participated in the five- day annual meeting in the Swiss Alps. But this year, the forum’s glamour was shadowed by the predictions about the course of the global economy towards recession. 

Davos 2008 was opened by the address of the US Secretary of State Condoleezza Rice. Among the others who participated in the Forum, some of the participants were Al Gore, a Nobel laureate who combats the climate changes, Pervez Musharraf, a controversial president of Pakistan, the Secretary - General of the United Nations, Ban Ki – moon and the president of Microsoft Bill Gates. The organizers of the World Economic Forum vigorously deny that the Forum is only a gala event. They emphasize that the Forum is one of the rare occasions where the experts are discussing the best ways to tackle the issues.

The Forum’s spokesman Mark Adams notified that after the end of the discussions, the Forum’s decisions and conclusions are practically implemented. 

“We gave computers to 50.000 pupils in Jordan. We did the same for 2,5 million children in Egypt, we supplied with electricity a few African villages, we have an ongoing project against the AIDS in China.”  

The way in which all of this is accomplished is unique for Davos, according to Adams. The World Economic Forum brings together the governments which need help and the companies which enable this help through the production of medicaments, computers etc.

 “I think that the people are not realizing that Davos is an annual meeting of an organization that is active throughout the whole year by implementing initiatives in the area of health, education and energy.”

This year, except the world stock market problems, main issue was the water, respectively how to use the water resources on the Planet properly and economically.

“Davos is a great hope in this respect, because we resolve the financial issue. We encourage the ministers to realize the advantages from investing in the technologies for better water use.”

 
The export volume to the CEFTA member- states has doubled

The export volume of Macedonian products to the CEFTA member – states has doubled compared to the previous year and reached a sum of 900 million $, 300 million more compared to 2006. The trade exchange displays a surplus from over 350 million $. After entering CEFTA, the market to which domestic goods could be delivered without customs limitations is by 15 times increased and it has more than 30 million consumers. To the markets of the CEFTA member – states, the Macedonian economy mostly exports agricultural, chemical and textile products, oil derivatives as well as non-metals.      

CEFTA is a step ahead for Macedonia regarding the regional cooperation and the Euro - Atlantic processes. By adjusting to the regional markets, the Macedonian companies are practically preparing for the European market, which is highly demanding. Macedonia as a small economy, should strive for greater liberalisation, because that is in the interest of the domestic companies. Before entering CEFTA, the Macedonian economy was afraid of the competition in the region, but that fear was unfounded. Still, some problems should be overcome, like the product certification. The experts consider that in order the current problems to be overcome, a modern logistics is necessary, especially in the customs area. The customs services have to be connected electronically, and electronic data processing is also essential. CEFTA imposes the need from more efficient customs services cooperation in all countries, which signed the agreement. The Economic chamber of Macedonia claims that Macedonia should not be afraid from integration within CEFTA and that creation of a common market in the region is a real necessity for the economy.

The previous year the Macedonian economy launched over 1/3 from the over-all export volume to the West Balkans countries, and imported less than 12 %. Serbia has a lead regarding the effectuated surplus with the greatest exchange volume from 974 million $. The export volume amounts 573 million $ and the import 400 million $. The surplus amounts to 173 million $.

A significant trade partner for our country is Kosovo. The previous year Macedonia effectuated 214 million euros from export to Kosovo, which is 15,8 % from the total import of the province. Kosovo distributed 14,8 million euros to Macedonia or 11, 07 % from the total export.    

 

Macedonia will receive 280 million $ from the World Bank in the next four years

Macedonia and the World Bank have agreed that in the course of 2008 four new projects would be carried out in total amount of 175 million $. The largest project will be the one for local and regional road construction, which is 100 million $ worth and presents the biggest investment in the regional and local infrastructure in the Macedonian history. “25 million $ are predicted for the projects for conditional cash transfers, for development policies and for strengthening of the municipality capacities”, stated the deputy prime minister Zoran Stavreski after the meeting with Jane Armitage, director of the World Bank, and regional coordinator for South-Eastern Europe.   

According to Stavreski, with the conditional cash transfers project in the first phase is predicted a cash support for the Macedonian families that receive welfare for sending their children to secondary school, and in the second phase from the project support for the regular health examinations of the school-age and preschool-age children. Predicted receivers of the financial means from this project are the mothers in the families. “It is expected that until the end of May this year the World Bank Board of Directors should endorse the loan, and for the next year a realisation of projects with World Bank is predicted for the energy sector development, stated Stavreski.    

Jane Armitage, highlighted that in the next four- year period loans that amount to 220 million $ and which could be increased for another 60 million $ are predicted for Macedonia. The loans, she said, are with a certain grace period, refund period from 15 to 16 years and interests.

“Macedonia is ranked from the World Bank among the ten best countries concerning the investment and business climate. We want to support Macedonia in its intention to become EU member- state, but currently we are focusing on helping the country through improvement of the investment climate and the poverty reduction”, said Armitage.