In the absence of adequate domestic savings, foreign investments provide an important avenue for the development of North Macedonia’s economy. According to UNCTAD's 2022 World Investment Report, net FDI flows to North Macedonia increased significantly and reached USD 606 million in 2021, compared to USD 230 million a year earlier; while the total stock of FDI was estimated at USD 7.2 billion, around 52.2% of the country’s GDP. According to figures by the Central Bank, the main investing countries in terms of stocks are Austria and the UK (EUR 913 million and 652 million, respectively), followed by Greece (EUR 612 million), the Netherlands (EUR 503 million) and Germany (EUR 471 million). Manufacturing is the sector that attracts the most FDI (34.8% of the total stock), ahead of financial and insurance activities (21.6%).
In 2022, total net inflows from direct investments in the country stood at EUR 753.8 million, as a result of registered net inflows based on intercompany lending (EUR 457.6 million) and equity (EUR 307.2 million) amid decreased reinvestment of earnings (EUR 11 million – data Central Bank). The majority of inflows arrived in the fourth quarter of the year (EUR 246 million).
North Macedonia’s legal and regulatory framework is generally favourable to foreign investors and provides numerous incentives to attract them. Moreover, the country adopted a new law to create more advantageous conditions for strategic investments. Both the Law on Technological Industrial Development Zones (TIDZ) and the Law on Financial Support of Investments offer incentives to investors, including a ten-year tax exemption on personal and corporate income, free access to public services, job creation and capital investment subsidies, and financial support to exporters. Labour costs are low, but on the other hand, there is often a shortage of skilled labour. For sectors such as banking, financial services, insurance, and energy, investors must meet certain licensing requirements (which are the same for domestic and foreign investors), while the country does not have a national investment screening mechanism in line with international standards. The country has made significant efforts to harmonise its legal framework with the criteria, standards and practices of the European Union. The sector of digitalization and green energy have been identified as strategic by the government: according to data by fDi Markets, renewable energy projects contributed most to FDI in North Macedonia between January 2017 and July 2022, totalling USD 739 million, ahead of the real estate sector (USD 409 million) and software and IT (USD 381 million). A number of challenges remain nonetheless, including corruption, lack of transparency, poor customer service, excessive bureaucracy, political interference in the judiciary, lack of government capacity, communication difficulties and shortcomings in the rule of law and contract enforcement. North Macedonia ranks 85th out of 180 economies on the 2022 Corruption Perception Index and 55th out of 176 in the 2023 Index of Economic Freedom.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Number of Greenfield Investments*
|Value of Greenfield Investments (million USD)
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
- High structural unemployment and training deficit;
- Important size of informal economy;
- Inadequate transport infrastructure;
- Significant indebtedness of the private sector (93% of GDP at the end of 2014);
- Conflicting political landscape;
- Tensions between the Slavic majority and the Albanian minority.
The North Macedonian Constitution stipulates that foreign persons (legal entities, individuals or civil partnerships registered in a foreign country) must enjoy equal rights with local persons when conducting economic activities in North Macedonia except where otherwise provided by the law (“national treatment”). This principle covers the entire range of economic and legal forms used for business activity.
The North Macedonia has a flat tax rate of 10% for corporate and personal income tax purposes. Investors are eligible for reduction in the profit tax base by the amount of prior profit reinvested in tangible assets (such as real estate, facilities and equipment) and intangible assets (such as computer software and patents) used for expanding the business activities of the entity.
The Law on Technological Industrial Development Zones provides for a special tax treatment for any investor who invests in the appointed zones.
The legal framework also includes the One-Stop-Shop system that aims to tackle some of the administrative barriers of entry into the business life in North Macedonia. According to the Law of the One-Stop-Shop system, all types of trade companies are registered within 4 hours of submission. Another important feature of the One-Stop-Shop is the electronic distribution service that allows any potential investor or third party to obtain complete electronic information about the operations of companies in the country.
To learn more about the goverment measures to encourage FDI in North Macedonia, please visit Invest in North Macedonia website.
To learn more please visit Invest in North Macedonia website.
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Latest Update: December 2023