|The foreign investors spent almost one-seventh of the announced amount. Photo: MIA|
Had all the foreign investments announced by the Macedonian authorities in the last ten years been realized, the country would have at least 138 new factories and other manufacturing or service facilities today, worth 3.8 billion euros and employing 62,701 people.
However, several months’ research by BIRN, entitled “Foreign investments uncovered”, reveals the inaccuracy of the perception fostered by the authorities that in the past ten years Macedonia has attracted many foreign investors, which have built a new factory and created jobs almost every month.
Of the 138 announced foreign investments included in the database, it appears that 51 foreign companies built factories, plants, hotels or other facilities while another 44 investments are ongoing. Most of these were announced in the last two years, and their outcome is still impossible to predict, though some have begun to invest and factories are still being built.
However, the research also showed that 43 foreign investments were not realized at all, or failed, which is almost a third of the total number of investments included in the “Foreign investment under scrutiny” database.
BIRN’s data from the Central Registry show the high level of non-current assets of the foreign companies, including the value of all the land, buildings, equipment, which most precisely reveal the disappointing amount of money investors actually invested.
The survey shows that the analysed foreign investors invested a total of 579.64 million euros in the last ten years in Macedonia, which is almost one-seventh of the amount (3,79 billion euros) announced by the investors themselves or by government officials.
Moreover, this amount also includes money that the state approved for investors in a form of assistance.
A total of 26 foreign companies have received this state assistance. But the amount that citizens have paid in taxes and other public duties to finance the entrance of investors is not known. In the decisions issued by the Commission for the Protection of Competition, those amounts are marked “XXX”.
BIRN’s research reveals an enigma surrounding the number of new jobs opened in the factories built by the foreign investors.
Data obtained by BIRN concerning the number of employees in the foreign companies, included in the database to the end of 2016, show only 20,246 new jobs were created, which is one-third of the announced number of 62,701 jobs.
The low realization of foreign investments – seven times less money invested than the sums announced and three times fewer jobs than promised, shows that far fewer factories were built and people employed than the government’s PR people announced.
In fact, research by BIRN showed that the government PR worked so intensively on promoting foreign investments, fuelling public expectations that new factories and jobs would open constantly, that one investment was promoted several times over, often with different figures concerning the size of the investment and the number of jobs that would be created.
Investments timed for elections
|Britain’s Johnson Matthey invested the largest sum compared to all the other investors. Photo: MIA|
Analysis of the timeframe for the promotion of these investments, whether it was signing a memorandum of cooperation, laying the cornerstones or cutting red tapes for completed factories, shows these PR activities intensified around elections.
Thus, talk of new investments heightened in the last two years, as Macedonia’s political crisis escalated, and over a period when the date of the early parliamentary elections was repeatedly postponed.
In 2016, for example, 26 investments were announced. This practice of announcing investments became particularly frequent immediately before the election, when almost representatives of the ruling VMRO DPMNE party, especially the party leader Nikola Gruevski, almost daily announced a new foreign investment and promised people new jobs in those factories at rallies and on social networks.
In 2015, the authorities announced 21 investments. But a record number of 30 investments was announced in 2014, when parliamentary and presidential elections were held. Earlier, in 2013, when there were local elections, 16 investments were promoted, mostly in regions outside Skopje.
If we rank the investments based on the sums announced by the investors, the biggest investment in the country, which is still ongoing, is by the company Euromak resources.
This firm announced it would invest 500 million dollars [406 million euros] in excavating precious metals in a village near Strumica, called Ilovica. The announcement of this investment dates back to 2007 and the concession agreement was signed five years later.
The second largest investment is by the Turkish company Limak, which is also under implementation.
This company bought construction land near the old railway station back in February 2012 for the purpose of building hotels, business and shopping centres and restaurants. However, its investment of 250 million euros, following a break of four years, was reaffirmed last October on the eve of parliamentary elections.
Among the biggest announced investments are several that were never realized at all.
These include one by Weibo Group, a Turkish company that planned to construct a textile centre in the industrial zone of Rankovce near Kriva Palanka worth 315 million euros.
Another was by US company DuPont and Irish company Ethanol Europe Revenues, which were supposed to invest 250 million euros by 2016 in a factory producing cellulosic bioethanol in the Pelagonia region.
Another failed investment was by the Indian billionaire Subrata Roy who visited Macedonia several times and together with the authorities pledged to invest at least 200 million euros. In the end he vanished, together with the plans.
Britain’s Johnson Matthey invested the largest sum compared to all the other investors who built factories in the country.
According to the balance sheet for 2015, it has non-current assets of nearly 100 million euros. However, according to the Directorate for Technological Industrial Development Zones, the company was supposed to invest 145 million euros.
Analysis of the data from the database shows that only four foreign companies that built factories in Macedonia invested as much money as they promised, or more.
Germany’s Kromberg & Schubert exceeded expectations the most. It announced it would invest 20 million euros. According to the non-current assets from the balance sheet for 2015, the actual amount has totalled about 29 million euros.
Germany’s Taurus Farms, which announced that it will invest 5 million euros in a distribution centre and in apple plantations in Bogdanci, has almost twice as much in non-current assets, about 9.6 million euros.
The Dutch company Anthura also invested more than the promised 6 million in a factory in Kocani, while Style Con, which is also Dutch, invested 4.1 million euros in Staro Nagoricane, which is around 600,000 euros more than the sum announced.
When it comes to opening new jobs, the largest employer among the foreign investors is Draxlmaie, which employed 5,507 people by 2016, followed by Kromberg & Schubert, with 3,116 employees, Adient Seating, former Johnson Controls, in Stip, with 1,756 employees, Amphenol with 1,135 employees and Van Hool with 820.
Data obtained by BIRN on the number of employees also reveal huge variations between 2016 and 2015.
Most investors who have already opened factories or are implementing their investments increased the number of employees in the past year.
First on the list is the company Kromberg & Schubert, which created 851 new jobs in the year, followed by companies that started production in 2016; Key Safety Systems opened 627 new jobs, Amphenol opened 620, Lear, 437, and Gentherm, 346.
However, many foreign companies whose factories or facilities are already in operation reduced their workforces in 2016.
TAV cut its workforce most, by 236, followed by Draxlmaier, which had 223 fewer workers, Visteon, which laid off 194 people, Agrofruktis, whose staff fell from 152 to nine employees, and Prodis, where staff numbers fell from 72 to five.
IT firms promised millions, invested thousands
|The IT sector saw the greatest failure rate in terms of the actual invested amount compared to the sum announced. Photo: MIA|
In terms of industries, most foreign investments announced in the last ten years come from the automotive industry – 24 companies. Ten of these were realized, seven are ongoing and seven were not realized.
The second most common type of investments was in the IT sector, where 15 were announced and ten realized.
At the same time, this sector saw the greatest failure rate in terms of the actual invested amount compared to the sum announced.
Musala Soft announced an investment of 20 million euros but non-current assets of the company show an investment of only 14,000 euros.
Allocate Software announced an investment of 7.5 million euros but actually invested around 93,000 euros. The firm 6 PM announced 5 million euros but only invested 44,000.
Among other industries, ten investments were in the textile industry, nine in agriculture and eight in manufacturing rubber and plastics.
Analysis of the countries of origin of the foreign investors shows Turkey was the biggest foreign investor in Macedonia followed by Germany, the United States, Britain and Italy.