Financial Crime World

# Macedonia’s Business Landscape: Corruption and Administrative Challenges

Updated: Thursday, November 5, 2020

Macedonia’s business environment presents complex challenges, particularly those related to corruption and bureaucratic inefficiency, for foreign investors.

Challenges for Businesses

Judiciary

  • The Macedonian judicial system is considered one of the most corrupt, with significant political interference and numerous reports of bribery and irregular payments in exchange for favorable decisions.
  • Almost half of the population perceives the judiciary as corrupt (Global Corruption Report 2015-2016).
  • International investors express concerns over politicians’ influence on court cases and slow, inefficient legal proceedings.
  • Reforms aimed at improving the judiciary face setbacks due to continued political interference (European Commission 2016).

Public Services and Bureaucracy

  • Macedonia’s public services sector is marked by corruption, inefficient bureaucracy, and a lack of transparency.
  • Companies report occasional requests for bribes from public officials while expediting administrative procedures, despite these being uncommon.
  • Businesses face pressure from public officials to offer bribes and have reported retaliation for opposition political affiliation.

Public Procurement

  • Corruption in public procurement and contracting is a significant concern, particularly for foreign investors in various industries.
  • Bribery and favoritism often influence contract and license awards.
  • Small companies, primarily those outside the Technological Industrial Development Zones (TIDZs), have faced challenges with public procurement during recent government tenures.
  • Many tenders lack transparency, potentially leading to direct awarding and limited competition.

Combatting Corruption

  • Legal framework includes the Law on Prevention of Corruption and the Criminal Code.
  • Criminalizes individuals and companies for corrupt practices.
  • Macedonia is a signatory of international conventions, such as the New York Convention of 1958, and is a party to the International Center for the Settlement of Investment Disputes (ICSID).

Recommendations

  • Companies are advised to employ comprehensive anti-corruption due diligence measures while operating in Macedonia.
  • Transparency International provides recommendations for businesses on anti-corruption measures and compliance practices.