1. Republic of Macedonia BUSINESS CLIMATE AND INVESTMENT OPPORTUNITIES Occtober, 2013

2. 2 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Why Macedonia? Investment Incentives Competitive Workforce Excellent Infrastructure Investor - friendly Government Competitive Location Higher Profits & Increased Competitiveness

3. 3 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Location and Transport Infrastructure Two Pan-European corridors: –East-West Corridor 8 –North-South Corridor 10 Road network: 4,370 km Railway network: 925 km Two international airports: –Skopje –Ohrid International ports*: –Thessalonica (Greece): 80 km –Durres (Albania): 150 km * Distance from Border

4. 4 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Political, monetary and macroeconomic stability Strategically located for future business expansion First country in SEE to sign a SAA with the EU in 2001 EU and NATO candidate country FTAs with numerous countries Business oriented Government Welcoming and decisive government ready to serve investors Political and Economic Outlook

5. 5 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Foreign Investment Regime Macedonian Constitution guarantees fair treatment of foreign investors Complete protection of the ownership rights of foreign investors Republic of Macedonia is member of MIGA (Multilateral Investment Guarantee Agency) Investment protection treaties with numerous countries 100% foreign ownership of a company allowed No restrictions for repatriation of profits

6. 6 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com BEST CONSECUTIVE REFORMER OVER THE PAST THREE YEARS IN SOUTH EASTERN EUROPE Based on the World Bank’s Doing Business Reports in 2011, 2012 and 2013 BEST CONSECUTIVE REFORMER OVER THE PAST THREE YEARS IN SOUTH EASTERN EUROPE Based on the World Bank’s Doing Business Reports in 2011, 2012 and 2013 3 rd BEST REFORMER IN THE WORLD World Bank’s Doing Business 2010 Report 3 rd BEST REFORMER IN THE WORLD World Bank’s Doing Business 2010 Report 5 th BEST IN STARTING A BUSINESS RANKINGS World Bank’s Doing Business 2013 Report 5 th BEST IN STARTING A BUSINESS RANKINGS World Bank’s Doing Business 2013 Report 3 rd BEST REFORMER IN THE WORLD World Bank’s Doing Business 2012 Report 3 rd BEST REFORMER IN THE WORLD World Bank’s Doing Business 2012 Report 4 th IN TOTAL TAX RATE EASE OF PAYING TAXES 2012 PwC and World Bank Group Study 4 th IN TOTAL TAX RATE EASE OF PAYING TAXES 2012 PwC and World Bank Group Study

7. 7 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Ease of Doing Business 2013 Global Rank

8. 8 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Best Countries for Business 2012 Forbs Magazine Global Rankings

9. Republic of Macedonia

10. 10 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Ease of Paying Taxes 2012 Total Tax Rate World Rankings PwC and World Bank Group Study

11. Republic of Macedonia

12. 12 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Unbeatable Fiscal Benefits General VAT Rates * Flat rate Source: PricewaterhouseCoopers (Taxes at a glance 2012), National Investment Promotion Agencies 10% Corporate & Personal income tax (among the lowest in Europe) 0% Tax on retained earnings Double taxation treaties with many European countries 0% tax for operation in a Technological Industrial Development Zone Real estate taxes at 2% - 4% VAT at 18%, with 5% on specific items FTAs with EU, EFTA, CEFTA countries; Turkey and the Ukraine; providing access to over 650m customers Personal Income Tax

13. 13 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Social Security Contributions Comparison - Social Security Contributions Source: PricewaterhouseCoopers (Taxes at a glance 2012), National Investment Promotion Agencies 32.5% 28.4% 27.0% 26.4%

14. 14 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Source: The Vienna Institute for International Economic Studies (wiiw) Average gross monthly salary (€) in selected countries of Central and Eastern Europe in 2012 Average Gross Monthly Salary

15. 15 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Competitiveness for Investments in Macedonia Price Level Index for Construction Price Level Index for Investments Source: Eurostat, December 2012

16. 16 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Sustainable Work Force Supply 41.5% of population under 3041.5% of population under 30 High intellectual capitalHigh intellectual capital –95+% of high school graduates enrolled in universities in 2012 –Multiple vocational high schools in each city Tailor-made training programsTailor-made training programs through Vocational Schools or Universities 6% of GDP spent on education6% of GDP spent on education Number of enrolled students in Colleges and Universities Number of graduates in Colleges and Universities

17. 17 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Excellent Language Skills Every child in Macedonia begins to learn English in the first grade of primary school Two foreign languages are mandatory in high school: English, and either German, French, or Russian English is also taught for two years at University level Regional languages (Serbian, Croatian, Bulgarian, Albanian and Greek) are widely spoken Source: State Statistical Office of the Republic of Macedonia (Education 2009/2010) and Ministry of Education and Science Foreign Languages Studied Students in Primary Schools, % of Total Students in Secondary Schools, % of Total English99%96.5% French0.6%2.8% German0.3%0.5% Russian0.1%0.2%

18. INVESTMENTOPPORTUNITIES

19. 19 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Machine and Automotive components ICT Medical Devices and Pharmaceuticals Agribusiness and Food Processing Energy sector Real Estate & Construction Textile Tourism Filming Investment Opportunities Target Sectors

20. 20 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Existing engineering and manufacturing tradition Legacy of skills available to new investors Component production started in the 1960’s to supply Zastava, Serbia Companies primarily supply the aftermarket Johnson Controls, Johnson Matthey, Kemet, Teknohose, (Free Economic Zones), Kromberg & Schubert, Hi-Tech to supply OEM’s Markets are Europe, Russia, Turkey, Africa Most companies have ISO 9001 / TS 16949 quality certification Investment Opportunities Machine and Automotive Components Industry

21. 21 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Best telecommunication networks in the region – the system is 100% digital Leading multinational hardware and software suppliers (Microsoft, HP, IBM) have local sales and support services in Macedonia IT skills shortage in Western economies and growing demand for outsourcing services – Macedonia can be your solution! Availability of well-educated staff at competitive costs Quality assurance and standardization procedure intitialized Investment Opportunities ICT Sector

22. 22 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Existing pharmaceutical industry exports to over 30 countries worldwide Strong educational system, with an abundance of medical and pharmacy graduates Supportive regulatory environment Licensing arrangements in place with many of world’s leading pharmaceutical companies Availability of serviced industrial sites Manufacturing tradition Investment Opportunities Healthcare Sector, Medical Devices and Pharmaceuticals

23. 23 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Unique combination of Continental and Sub- Mediterranean climates Environmentally friendly production practices Technologies for food processing Excellent access to regional markets Strong reputation for quality food products The greatest investment opportunities: fruits and vegetables – production, storage distribution and processing industries wine production sheep and goat cheese production Investment Opportunities Agribusiness and Food Processing Industry

24. 24 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Investment Opportunities Textile sector Esteemed reputation of Macedonian textile producers on the European Union market High flexibility and readiness to adapt to the demands of foreign markets Exceptional relation between product quality and costs Modern equipment 1-2 days distance to European Union markets Foreign investment welcomed in the ready- made clothing and knit production industries

25. 25 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Summer Destinations Numerous tectonic, glacial and man-made lakes, 50 in total Large Ohrid, Dojran and Prespa lakes Wartersports, archeological, wine, eco and rural tourism In 2012, 7,3% increase of foreign tourists compared with 2011 Winter Destinations Over 45 mountain peaks over 2.000m Around 70% of the territory is mountainous, many locations have more than 100 days of snow Opportunities for development and enhancements of hotels and resorts on many locations Investment Opportunities Tourism

26. 26 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Historical and Culture Heritage 4,293 archeological sites 992 churches and monasteries 23,000 icons (2nd most valuable collection in the world) 228 mosques, inns, Turkish baths and old bazaars, 47 towers and fortresses Spa tourism Territory rich with geothermal waters More than 60 thermal springs Identified locations for construction of new spa centers and hotels Investment Opportunities Tourism

27. 27 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Macedonia geographically provides various types of landscapes on locations at very short distances from each other. With annual average of 280 sunny days, Macedonia is one of the best locations for exteriors and locations filming. Investment Opportunities Filming industry INCENTIVES A film producer interested in investing funds in Republic of Macedonia for making a feature film, documentary, animation, television film or television series, may acquire the right to refund 20% of direct eligible expenditures paid in Republic of Macedonia. Eligible expenditures 1 ) Production services 2) Postproduction services 3) Animation services 4) Procurement of goods for film sets and the costumes needed for production of the film/television project.

28. Investment Opportunities Technological Industrial Development Zones - TIDZs

29. 29 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Free Zone Tetovo Area Size: 95 ha; Distance from Skopje - 35 km Free Zone Tetovo Area Size: 95 ha; Distance from Skopje - 35 km Free Zones Skopje 1 & 2 Area Size: 145 + 95 ha; E-75 Highway; Next to the Int’l Airport Free Zone Stip Area Size: 208 ha; The largest Free Zone; Excellent logistic support Free Zone Radovis Area Size: 10 ha; Main Road M6 Free Zone Strumica Area Size: 23 ha; Free Zone Gevgelija Area Size: 50 ha; 85 km from the port of Thessaloniki Free Zone Prilep Area Size: 68 ha; Between Prilep and Bitola (4 th and 2 nd largest city) Free Zone Struga Area Size: 30 ha; Next to the Int’l Airport; 170 km from Durres port Free Zone Kicevo Area Size: 30 ha Free Zone Rankovce Area Size: 40 ha; Corridor 8 Investment Opportunities Technological Industrial Development Zones - TIDZs

30. 30 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Infrastructure Benefits Electrical grid outlet, new power substation in place Telecommunications network Central heating Lighting Fire safety system - Airport Fire Department minutes away Security monitoring system Water, sewage and waste treatment plant Gas pipeline, etc. Investment Opportunities Technological Industrial Development Zones - TIDZs

31. 31 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Free connection to utilities Subsidy of up to €500,000 towards building costs Green Customs Channel available at border for rapid export from Zone to EU countries Land in a TIDZ in Macedonia is available under long-term lease for a period of up to 99 years Investment Opportunities Technological Industrial Development Zones - TIDZs TAX TAX RATES TIDZs Outside TIDZs Corporate tax 0% for the first 10 years 10% Personal income tax 0% for the first 10 years 10% Value added tax0%18% Property tax 0.1% - 0.2% Excise taxes0%5% - 62% PRODUCT CUSTOMS DUTY TIDZs Outside TIDZs Raw materials0%Up to 15% Equipment0%5% - 20% Fiscal Benefits

32. 32 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com TIDZ “Skopje 1” JOHNSON CONTROLS $40mn automotive components plant; 150 employees initially – increasing to 500; Integrated circuits JOHNSON MATTHEY €55mn investment over 500 employees catalyst production TEKNOHOSE ANNOUNCING BEGINNING OF CONSTRUCTION WORK IN TIDZ “SKOPJE 1” KEMET SIGNING OF THE AGREEMENT PRODIS GROUP ANNOUNCING BEGINNING OF CONSTRUCTION WORK IN TIDZ “SKOPJE 1” VAN HOOL ANNOUNCING BEGINNING OF CONSTRUCTION WORK IN TIDZ “SKOPJE 2”

33. 33 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com TIDZ “Stip” PROJECT SCOPE 2 nd project in Macedonia2 nd project in Macedonia $20M Investment$20M Investment 1400 employees1400 employees Construction of cut & trim plant for car seats CONSIDERED COUNTRIES Macedonia, Moldova and TunisiaMacedonia, Moldova and Tunisia

34. 34 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com Investment Projects outside of TIDZs SIZE OF INVESTMENT €20M 2000 employees Production of cable installations Start of operations Q2 2012 SIZE OF INVESTMENT over $4M 150 new full time jobs + 300/350 new seasonal jobs Tobacco facility in Kavadarci

35. 35 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com “Macedonia offers the company just-in-time delivery and minimal freight costs.” Philippe Simon VP of Global Electronics Johnson Controls “We are very satisfied with the support provided by the Macedonian Government and its institutions and Bitola municipality. The decision for investment in Macedonia represents an important step in our expansion as part of the strategy for international output.” Martin Passern Managing Director Kromberg & Schubert “This will be JM’s ‘mega-European plant’ and the largest ever single investment project.” Colin Jaffray, Director, Strategic Planning Johnson Matthey PLC “Macedonia was chosen because of its international competitiveness, because of our positive existing corporate experience here and above all because of the support and professionalism that we have received from all Government institutions during the analysis process.” Steven Meylemans Project Manager Johnson Controls What They Said

36. AT YOUR SERVICE

37. 37 Agency for Foreign Investments and Export Promotion www.investinmacedonia.com One-stop shop and project management approach VIP Investment tour Locations HR Companies, construction, real estate, tax advisory and consulting Universities and Reference Company visits Creating linkages with local and central Governments Navigate the legal requirements Ensure success! Invest Macedonia at Your Service…

38. Thank You! AGENCY FOR FOREIGN INVESTMENTS AND EXPORT PROMOTION OF THE REPUBLIC OF MACEDONIA ul.Nikola Vapcarov br. 7 1000, Skopje Republic of Macedonia Tel.: + 389 2 3100 111 Fax: + 389 2 3122 098 fdi@investinmacedonia.com www.investinmacedonia.com