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