FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
MACEDONIAN STOCK EXCHANGE
greenfield investment in the country - a EUR 35
million plant in the free zone of Kavadarci that
will manufacture electronic installations and
cables for the car industry. A week before, in
the industrial zone in Bitola, construction began
on another significant German investment - a
EUR 20 million plant that will also produce
automotive parts. Major reinvestments by
companies from the United Kingdom and
United States are also under way in the car
electronics and catalytic convertors industries.
9. Restructuring of the railways sector is
ongoing. The institutional mechanisms for
the introduction of public service obligation
contracts and access charges are under
development. Over the past year the
government provided financial guarantees for
an IFI-funded loan to the national rail operator,
Makedonski Zeleznicki Transport. The funds will
be used to modernize the freight and passenger
fleet in order to improve the company’s
operational efficiency. Under the umbrella of the
project, technical assistance will be sought for
the development of a Business Segmentation
Strategy, which should result in a split of the
freight and passenger service into two separate
legal entities by 2017. In parallel, ambitious
plans for energy efficiency improvements have
been envisaged with both the national rail
operator and the infrastructure management
company.
10. Overall the financial sector remains less
competitive than in neighboring countries, but
pension fund assets have increased. The three
largest banks (Komercijalna Banka, Stopanska
Banka and NLB Tutunska Banka) still control 64
per cent of the market while the top five banks
account for 77 per cent of the total market. The
market is dominated by foreign banks, which
account for over 90 per cent of total banking
assets. However, banks have relied primarily
on domestic deposits to fund lending, so they
were not as exposed as those in regional peers
to deleveraging pressures during the crisis.
Non-performing loans have recently started to
increase again, reaching 10 per cent of total
loans in 2012, although they are more than 100
per cent provisioned. One of the three largest
banks - Stopanska Banka - is a subsidiary of
a Greek bank while NLB Tutunska Banka is
Slovenian owned. Spillover risks are limited,
however, because the bank has largely relied
on domestic deposits rather than parent bank
capital to finance lending.
11. Pension fund assets have risen sharply.
Past reforms in the pension system included the
setting up of a mandatory defined-contributions
pillar managed by private pension funds. Along
with the introduction of two voluntary funds,
this has led over the past year to a substantial
increase in pension fund assets, which have
reached over 3 per cent of GDP (up from 1.2
per cent in 2008).
Highlights of the past year and key priorities for
2013
• Efforts to improve the business environment
and attract foreign investment have been
stepped up. FYR Macedonia’s latest ranking
on the 2012 World Bank’s Doing Business
scores is impressive, and some major
investors are showing interest, but important
business climate issues such as judicial
reform and corruption remain to be fully
addressed.
Key Information Contacts
Central Securities Depository www.cdhv.org.mk
Securities & Exchange Commission www.sec.gov.mk
National Bank of the Republic of Macedonia www.nbrm.gov.mk
Ministry of Finance www.fin.gov.mk
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• Macroeconomic stability has been
preserved. Growth in 2011 was close to 3
per cent and inflation and the government
deficit were kept at low levels, but a clear
slow-down is evident in 2012.
• Reforms should be pushed forward in the
context of the new high-level dialogue with
the European Commission. This dialogue
offers an opportunity for the country to
advance on an EU-oriented reform path even
while formal accession talks cannot proceed
because of the name dispute.
• The provision of financial services should be
enhanced. Competition in the banking sector
is less vigorous than in some regional peers,
and there is scope to develop a greater
range of financial services than presently
available.