Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
Selling to government entities in North Macedonia is not an easy process. North Macedonia has a decentralized public procurement system, with each government entity carrying out its own procurements.
A new Law on Public Procurement entered into force on April 1, 2019, regulating public procurement in North Macedonia. The central government, municipalities, and any entity receiving public funds must follow public procurement procedures outlined in that law. The law guarantees equal treatment to local and foreign economic operators in public procurement; only a handful of tenders (especially in defense) are restricted to domestic companies.
The law authorizes different types of public procurement procedures: open procedure, restricted procedure, competitive dialogue, negotiated procedure (with or without prior publication of a contract notice), and simplified competitive procedure. A simple tender, a two-phase tender, a silent auction, or negotiations with three or more potential contractors (one in exceptional cases) must precede an award, and the law mandates the use of electronic auctions. The award procedure is divided. There is a simplified procedure for small value procurements, up to €10,000 ($11,800) or €20,000 ($23,600) for construction projects. A separate, more complex procedure applies to goods valued up to €70,000 ($82,600) and for construction projects up to €500,000 ($590,000.) The law does not specifically address other project values.
The law mandates that the main criterion for award decisions is the most economically advantageous tender, rather than the lowest bid. U.S. companies producing higher quality, and initially more expensive, products (e.g., medical equipment) should benefit from this model. The Public Procurement Bureau within the Ministry of Finance operates the e-procurement system. Prior registration with the electronic system for public procurement (ESPP) is mandatory to participate in public tenders. Economic operators can appeal procurement decisions with the State Committee for Appeals of Public Procurement Procedures.
North Macedonia’s lack of transparency, political favoritism, corruption, and mismanagement are historically serious obstacles for companies bidding on public tenders. Some local and foreign companies report that some government tenders were clearly written with a specific, politically connected company in mind and that those politically connected firms sometimes tried to deter competitors from bidding. Businesses also reported late payments by the central and municipal governments for works, goods, and services. While the European Union’s October 2020 report recommended that member states open accession negotiations with North Macedonia, it also stated that the country did not fully implement the Commission’s 2019 recommendations on public procurement, and stressed the need to increase efforts to prevent irregularities and corruption in the procurement cycle and to ensure a more effective public procurement system, following the principles of transparency, equal treatment, free competition, and non-discrimination.
North Macedonia’s public procurement suffers from low competition and frequent annulments of tenders. Any bidder can contest the bid evaluation process. The Second Instance Commission reviews prospective tenders to ensure contracting authorities were not reducing competition through technical specifications. This has made public procurements slower and more expensive for contracting authorities without increasing competition.
Many governments finance public works projects through borrowing from Multilateral Development Banks. Tenders financed by international financial institutions such as the World Bank must be conducted pursuant to the organization’s procurement guidelines. The U.S. Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the World Bank and the European Bank for Reconstruction and Development.
Requests for assistance regarding World Bank and EBRD tendering processes can be addressed to those liaison offices.
North Macedonia is in the process of acceding to the WTO’s Government Procurement Agreement (GPA).
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.”
Financing of Projects
Financing and insurance for exports, investment, and development projects are possible through U.S. agencies such as the U.S. Trade and Development Agency (USTDA), the U.S. Export-Import Bank (EX-IM), the U.S. International Development Finance Corporation (DFC), the European Bank for Reconstruction and Development (EBRD), the International Bank for Reconstruction and Development (World Bank), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the Southeast Europe Equity Fund (SEEF).
Most major project funding is achieved through co-financing agreements, especially for transportation, telecommunication, and energy projects.
Mltilateral Development Banks and Financing Government Sales. Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks (PDF). The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Learn more by contacting the:
-Commercial Liaison Office to the European Bank for Reconstruction and Development
-Commercial Liaison Office to the World Bank.