Economic Cooperation - Country Assistance Policy

December 2012

1. Relevance of Assistance

Since gaining independence in 1991, the Former Yugoslav Republic of Macedonia (hereinafter referred to as “Macedonia”) has promoted democratization and market-oriented economic reform, with support from the international community. As a result, its economy has already developed to the level of upper middle income countries (GNI per-capita for 2011: 4,730 US dollars). Nevertheless, the country suffers ethnic issues domestically, while facing various problems with neighboring Albania and Greece. Solving these problems at an early stage and achieving sustainable economic development is not only an issue for Macedonia, it is indispensable for ensuring peace and stability in the entire European region, as well as the Western Balkans.

At present, the development of environmental infrastructure is one of the major challenges for Macedonia, and Japan’s support utilizing its own advanced technology and knowledge in this field is significant for Macedonia and will also lead to increased awareness about Japan’s environmental technology.

At the Ministerial Conference on Peace Consolidation and Economic Development of the Western Balkans in 2004, the government of Japan confirmed the necessity to promote the European integration process of the Western Balkans for ensuring peace in the region. Furthermore, Japan and Macedonia have been maintaining a favorable cooperative relationship in international society, while Japanese companies have become more interested in Macedonia as a country with which they can build a good business relationship.

2. Basic Policy of Assistance: Promotion of Sustainable Economic Development

Macedonia has been focusing on administrative reform, human-resources, economic and regional development, while trying to balance economic growth and environmental preservation. Japan will offer support for Macedonia’s sustainable economic development, mainly in the fields where Japan has a comparative advantage and can utilize its advanced technology and rich knowledge.

3. Priority Areas

(1) Development of Environmental Infrastructure and Enhancement of the Management Capacity

Macedonia has so far prioritized the development of economic and social infrastructure, but falls behind in environmental measures. Environmental issues, such as waste management, water and sanitation management, and air pollution, constitute a matter of immediate concern. In order to promote sustainable economic development, the country needs to promote environmental measures simultaneously from now on. Japan will assist to strengthen efforts by Macedonia in the environmental field, making the most of its own advanced technology and knowledge.

(2) Development of the Private Sector

The development of the private sector holds the key to the economic development of Macedonia. Japan, while trying to generate a synergetic effect with the technological cooperation it has offered so far in this field, will further assist to improve the investment environment to make Macedonia’s economic development more sustainable, with a view to realizing the business expansion of Japanese companies to the country. Specifically, in such fields as productivity improvement, tourism development, and promotion of small and medium enterprises, Japan will utilize rich knowledge and support Macedonia’s initiative for developing human resources and the implementation system.

4. Points to be considered

Macedonians make up the majority in the country, but there have been tension and conflicts between them and Albanians. Therefore, when selecting target regions, it is necessary to consider the balance between ethnic groups.

It is also necessary to note the influence of the European economy on Macedonia.

Annex: Rolling Plan