Taiwan wrestles with Macedonia over investment

Savo Klimovski, president of Macedonia's assembly, said yesterday a planned joint investment project between the European country and Taiwan would strengthen economic and political links between the two.

But a leading Taiwanese diplomat cast doubt on the success of the economic cooperation, saying -- often in blunt words -- that Macedonia's banking system and government regulations were cumbersome and would discourage Taiwanese investment.

Earlier this month, Taiwan and Macedonia agreed to establish a US$110 million export processing zone on the outskirts of the capital Skopje. The project -- to be funded largely by an unspecified amount of Taiwanese capital -- will be "decisive in terms of the success of the economic and political links between the two countries," Klimovski said.

Klimovski, who was speaking at the first-ever economic forum between the two nations in Taipei yesterday, also said he hoped Taiwan would encourage private sector investment in his country, which he described as a "gateway to the European market."

But Taiwanese Ambassador-at-large Loh I-cheng (陸以正), who traveled to Macedonia to sign the agreement earlier this month, didn't mince his words in telling Klimovksi that some big changes need to take place if his country expects to see greater private Taiwanese investment.

Since accepting the Ministry of Economic Affair's (經濟部) request to help promote ties between Taiwan and Macedonia, Loh said he has heard an "earful of complaints" from businessmen attempting to engage in commerce with the developing nation.

The major obstacle, Loh said, "is the utter lack of understanding of how international trade is conducted."

He cited the example of one Taiwan businessman whose letter of credit was refused. Instead, the businessman was asked by his Macedonian partners to pay in cash.

And if Taiwan businessmen manage to get their money into the country, it costs a fortune to get it out, Loh said. Macedonian banks charge transfer fees of 1.3 percent of the total amount to be moved, meaning transfers of large sums of money would result in fees amounting in the tens of thousands of US dollars.

In addition to these disincentives, the relatively high cost of labor due to high taxes made Macedonia less competitive compared to other developing nations, such as Indonesia, Vietnam and China.

"It is necessary for Macedonia to modernize its banking system and streamline its administrative procedures," Loh said. "Unless we take a realistic, pragmatic attitude towards promoting economic cooperation ... then talk will remain talk."

Klimovski attempted to dispel the concerns, saying change was on the way within the next few months.

"Macedonia will adopt important legislation, making way for thorough reform of the banking and taxation systems and completing the process of privatization," he said. "[T]he basic premises will be put in place for the functioning of a new economic system in our country."