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Privatization in Macedonia was initially introduced in 1989
with the Law on Social Capital of the former Yugoslav Federation. At that
time, the Government introduced the concept of privatization, according to
which internal shares were issued to all the employees of the socially
owned enterprises (SOEs). In this process, over 600 enterprises in
Macedonia were transformed into joint stock companies or limited liability
companies. Privatization,
however, did not gain momentum until the Law on Transformation
of Enterprises with Social Capital was adopted in June 1993. At the beginning of 1995 the
Law on the Special Restructuring Program mandated the restructuring and
privatization of 23 loss-making enterprises, including the state-owned
electric utility company and the railways. Privatization was expanded to
agricultural enterprises and cooperatives in April 1996,
including approximately 350 companies. In 1997 the scope of the privatization program
expanded to include the companies operating in the insurance sector.
By
mid-1998, half of the socially-owned agricultural enterprises had been
privatized, and the rest had privatization projects underway. However,
since 1998, as a result of political events and the Kosovo-related crisis,
little progress has been made on the resolution of the largest remaining
loss-making enterprises in the economy.
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The
institution responsible for administration and support of the process is the
Macedonian Privatization Agency (also known as the Agency of the Republic
of Macedonia for Transformation of Enterprises with Social Capital) established
in 1993 with the Law on Transformation of Enterprises with Social Capital. The Agency also holds the
unsold shares of privatized enterprises on behalf of the state. The Agency
is a governmental institution and is funded by proceeds from sales of
enterprises. The final decisions regarding the transformation of
enterprises is made by a Government Privatization Commission consisting of
nine ministerial level members.
The privatization process is governed by the Law on Transformation of
Socially Owned Enterprises, the Law on Privatization of
State Capital of Enterprises and the Law on Transformation of
Enterprises and Co-operatives Using Agricultural Land.The
Privatization Law provides for the same treatment of both domestic and
foreign investors, however, the inflow of FDI via privatization
was modest at the beginning. More recently, several foreign companies have
participated in large-scale privatizations.
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According
to the Privatization Status
Report (as of September 30, 2002), 1,688 companies had been privatized,
of which 1,097 are small enterprises. Foreign capital inflow through privatization
transactions totaled DM 192.6 million as of July 2001.
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