Category: North Macedonia

North Macedonia’s new government is enacting a series of ambitious reforms focused on green energy, fair trade, and modern employment practices, including measures to stabilize electricity prices, incentivize energy efficiency, and regulate unfair trade practices, according to Bona Fide Law Firm Partner Aleksandar Kchev.

“Despite the current political situation in Europe, the new government in North Macedonia began its term this past summer with a strong focus on ambitious reform,” Kchev notes. “In recent months, it has passed several key laws related to inflation control, the energy sector, and other economic priorities, setting a proactive agenda for the near future.”

The government’s primary goal is a significant transition to green energy. “Some of the main updates include recent amendments to the energy law designed to prevent electricity price hikes,” Kchev says. “Notably, a draft proposal of the energy law was prepared last month to ensure alignment with the EU Clean Energy Package adopted by the Ministerial Council of the Energy Community, to which North Macedonia is a party. These changes are meant to respond to both global and local shifts in energy needs. Looking ahead, for 2024, the Ministry of Energy, Mining and Mineral Resources has also awarded vouchers for highly efficient air conditioner installations, reflecting an effort to promote energy-efficient consumer practices.”

Beyond the energy sector, Kchev highlights new legislation to combat unfair trade practices. “This law aims to curb activities that deviate from fair trade standards and will be enforced by authorities such as the Ministry of Economy and the Competition Agency.” He stresses that “while some legal professionals and private sector representatives are uncertain about how this law will be implemented, it is broadly seen as a positive move to protect suppliers, ensuring fair bargaining conditions when dealing with large buyers.”

Additionally, Kchev notes that “the government’s efforts to curb inflation also include trade regulations/decisions aimed at controlling prices, by providing maximum margins for wholesalers and retailers.”

Kchev also emphasizes that the legal community is preparing for long-awaited updates to employment law.”A major focus of this update is anticipated to be modernizing regulations to better address remote work and new employment trends,” he says. “An increase in the retirement age is also under discussion, aiming to balance the workforce as more people move abroad and the population of retired individuals grows. These changes seek to support both workers’ rights and create a clearer framework for employer-employee relations, as well as prepare the workforce for demographic shifts.”

Kchev also says that North Macedonia’s government is highly focused on energy transition. “This summer, it announced a significant new investment by Alcazar Energy, Luxemburg-based infrastructure fund, for the construction of wind farms, aiming to generate 1 terawatt-hour of power annually,” he says. “The construction is expected to begin next year, with production potentially starting by 2027.”

“Considering the new trends in investments, and partnership with private investors, it is fair to expect the support in drafting modern, tech-friendly laws,” Kchev continues. “This collaboration could help North Macedonia advance blockchain technology, digital infrastructure, and overall business law, aligning with fast-evolving global standards.” Currently, however, “outdated laws in these areas limit visibility and growth, and updates are essential to support the adoption of new technologies,” Kchev notes.

JPM Partners has announced its expansion into North Macedonia via the integration of Tosic & Jevtic into its regional network.

The announcement follows the announced partnership between the two firms at the beginning of the year (as reported by CEE Legal Matters on February 21, 2024).

Tosic & Jevtic is a law firm with a 13-year presence in the North Macedonian market. Following the integration, it will now operate under the JPM Partners brand. As part of the integration, Ana Tosic Chubrinovski and Ivica Jevtic will join JPM Partners as Senior Partners. This move follows the firm’s establishment in Montenegro last year (as reported by CEE Legal Matters on November 15, 2023).

“Last year, we refreshed our heritage Jankovic Popovic Mitic brand to JPM Partners,” a JPM Partners press statement explained. “This rebranding was aimed at facilitating regional expansion by integrating young and dynamic full-service local law firms with growing experience and aspirations. Now, as part of JPM Partners, these firms continue to grow and thrive as an integral part of our team.”

Before co-founding Tosic & Jevtic in 2012, both Tosic Chubrinovski and Jevtic were Junior Associates with Polenak, between 2009 and 2011.

Gecic Law, working with sole practitioner Branko Radojcic, has successfully represented Telekom Srbija before the Commission for Protection of Competition in North Macedonia.

According to Gecic Law, the commission has “delivered a decision, concluding that Telekom Srbija did not abuse a dominant market position. The commission’s decision confirms that there was no violation of competition laws and that no dominant position was established. This outcome effectively dismisses the allegations of Total TV, a member of United Group, which initiated the case.”

Gecic Law reports that the legal proceedings spanned nearly six years: “The process began in December 2018, when Total TV filed a complaint with the Commission in December 2018. They alleged that Telekom had abused a dominant position in the relevant market. They also claimed that the distribution agreement between Telekom and Radio-Television of Serbia constituted a restrictive agreement. Total TV specifically claimed that Telekom had engaged in unjustified price discrimination. This allegation related to the distribution of RTS TV channels in the Republic of North Macedonia across different platforms (DTH, cable, and IPTV).”

In 2023, Gecic Law advised Telekom Srbija on a scholarship MoU with the College of Europe (as reported by CEE Legal Matters on December 8, 2023) and successfully represented MTS in a telecommunications dispute in Kosovo (as reported by CEE Legal Matters on September 29, 2023).

The Gecic Law team included Partner Bogdan Gecic, Senior Associate Vuk Lekovic, and Associate Vasilije Boskovic.

The Proposal for the Law on Litigation Procedure has recently been reintroduced for review by the Assembly of the Republic of North Macedonia. As of September 2, 2024, it is now on the agenda of the Commission for Political System and Inter-Community Relations, according to the Ministry of Justice.

Namely, the Draft Law proposes amendments to the Law on Litigation Procedure, which regulates the rules of the procedure on the basis of which the court deliberates and decides disputes about the rights and obligations of citizens for personal and family relationships of citizens, such as labor, commercial, property and other civil-legal disputes. 

The primary objective of the Draft Law is to address and resolve issues that have arisen over the years in practice, which have posed challenges or obstacles in the application of the Law on Litigation Procedure.

An important proposal is the introduction of provisions that allow filing of collective lawsuits i.e a procedure for protection of collective interests and rights, allowing associations, foundations, institutions, or other legally established organizations, which are involved in the protection of collective interests and rights as part of their registered or legally defined activities, to file a lawsuit for the protection of those interests and rights, provided they are expressly authorized to do so. This collective lawsuit can be filed against a natural or legal person who, by performing a specific activity or by his/her actions, i.e. omission, seriously injures or seriously threatens such collective interests and rights.

According to the Draft Law, it is also possible to hold public hearings in the litigation procedure electronically, at the court’s discretion, in case there is a risk of delay or when there are legal or real obstacles. In a specific case, the court may decide to hold the hearing remotely, using means that provide two-way electronic communication and enable sound and visual display in real time. This may be one of the most significant changes in favor of the principle of efficiency and economy of the litigation procedure. 

Furthermore, legal solutions are foreseen in a direction of speeding up the implementation of the special procedure in disputes of small value. Under the applicable provisions at the moment, this litigation procedure features shorter deadlines and structure compared to the regular one. However, despite the shorter deadlines and different procedural rules, the case law shows that small value disputes still experience delays, contrary to the intended quicker resolution. This Draft Law now aims to introduce new measures to significantly expedite these procedures.

Certainly, the Draft Law includes other noteworthy changes, such as foresees a reduction in the amount of the fine for the participants in the procedure, in accordance with the general determination of the Government to reduce the fines. In addition, the electronic delivery is simplified in accordance with the relevant legal provisions for electronic operations in the country, and the submission in electronic form is harmonized.

The proposed law is also harmonized with the law on free legal aid, which specifies that the costs of the procedure of the party beneficiary of secondary legal aid, who succeeded in the dispute, are paid to the account of the Budget of the Republic of North Macedonia.

In summary, significant changes to procedural law are currently under consideration. These proposed modifications are expected to introduce notable innovations in legal practice. However, the true impact and potential benefits of these changes will only become evident through their practical implementation. As these new provisions are applied in real-world cases, they will reveal their effectiveness and the extent to which they enhance procedural efficiency and justice.

By Ivana Ilieska Kocoski, Attorney At Law, Lalicic & Boskoski Law Office

North Macedonia currently lacks AI-specific regulations, lagging behind neighbouring countries that have implemented guidelines or laws. Although the Macedonian Fund for Innovation and Technology Development (FITD) and the government initiated efforts in 2021 to create a National Strategy for AI (National Strategy), progress has been slow due to challenges such as insufficient data, human resources, and technical capabilities. Despite this, there is a strong commitment, supported by organisations like the World Bank and UNDP, to develop a comprehensive AI strategy aligned with European Union (EU) standards.

AI development, support for startups and ethical guidelines

While formal AI regulation is still pending, FITD has been active in promoting AI development through subsidies for startups with innovative AI solutions, including the creation of “ADA”, the first Macedonian AI-based digital public administration assistant. The IT sector in North Macedonia is keen on advancing AI technologies, supported by competitive labour costs, high-quality output and government initiatives.

In addition to the National Strategy, there is growing demand for establishing ethical guidelines for AI development and use. These guidelines, though non-binding, are essential for ensuring transparency, fairness and accountability in AI systems. The implementation of such guidelines is expected to foster responsible AI innovation and build public trust.

Education, IT sector growth and public services modernisation

A significant challenge in AI development is the shortage of skilled professionals, exacerbated by the emigration of young talent. The government, in collaboration with FITD, is encouraged to implement strategies to retain and train talent in AI-related fields. FITD’s educational programs, offering free AI education to high school students, are a step towards building a sustainable talent pool.

The IT sector in North Macedonia is a key driver of AI development, with initiatives supported by FITD and the Macedonian ICT Chamber of Commerce (MASIT). However, the lack of a clear AI framework may deter investors despite favourable conditions. Additionally, the modernisation and digitisation of public services, exemplified by the development of “ADA”, will require updates to laws such as the General Administrative Procedure Act to ensure legal stability.

Data privacy and intellectual property concerns

Data privacy is a major concern in AI development, given the technology’s ability to process vast amounts of data. While the Macedonian Data Protection Act aligns with the EU GDPR, it may not sufficiently address privacy challenges posed by AI. Future amendments are expected to align Macedonian laws with the EU AI Act, ensuring comprehensive privacy protection.

Intellectual property (IP) issues related to AI remain unresolved in North Macedonia. The current legal framework does not recognise AI-generated works as copyrightable, as human input is required. Moreover, the use of datasets for AI learning raises potential IP infringement concerns. Future legal developments will likely draw from international frameworks to address these challenges.

Future Directions

North Macedonia’s future in AI hinges on developing the necessary infrastructure for AI education, fostering innovation and adopting a National Strategy along with ethical guidelines. Without these foundational elements, the country risks falling behind in AI advancement, despite its strong IT sector and investment appeal. The drafting of AI-related legal frameworks must balance global trends with the country’s specific needs to ensure effective regulation tailored to North Macedonia’s context.

It is important to highlight that North Macedonia elected a new government in 2024, which has placed comprehensive digitalisation at the forefront of its agenda. This commitment encompasses both public administrative services and the infrastructure supporting the private sector. The government’s proactive approach to digitalisation not only lays the groundwork for AI development but also signals a strong willingness to allocate resources and collaborate with experts to advance AI regulation and the related legal framework in the country.

By Andrea Radonjanin, Partner, and Andrea Lazarevska, Filip Srbinoski, Attorneys at law, Schoenherr

In the wake of a recently concluded election cycle in North Macedonia, businesses and investors are closely monitoring the new government’s policy directions, according to Papazoski and Mishev Law Firm’s Attorney at Law Ivan Mishev.

“The most crucial issue following the recent elections is what will be the first steps after the change in government,” Mishev begins. “With the new structure coming into power, we expect significant changes in policy and personnel.” According to him, “one of the primary focus points is attracting foreign direct investments and the overall business climate.” The business community is keenly observing whether the new policies will be positive or negative for investment and growth and Mishev shares that “the overall M&A market has been relatively slow, with many investors possibly waiting to see the post-election landscape before making significant moves.”

As for the most dynamic sectors in North Macedonia right now, Mishev underlines energy and IT. “In the energy sector, foreign investors are particularly active, with many acquiring ready-to-build energy construction projects, especially renewables, such as solar panels and wind farms. In the IT sector, there is a trend of local IT companies being acquired by foreign entities,” he reports. “We also anticipate some acquisitions in the finance sector, particularly with minor banks, though nothing has materialized yet.”

Additionally, Mishev reports that there hasn’t been much legislative activity lately either, on account of the wake of the election cycle. “The parliament wasn’t functioning fully, and the new government was only established a couple of weeks ago. However, there was a significant development last year with the introduction of new legislation in the e-payments sector, allowing non-bank entities to provide payment services,” Mishev says. “This could potentially lead to more companies entering the market this year.”

Moreover, Mishev reports that there was a recent “announcement about potentially allowing a third telecom operator to enter the market, which currently has only two major players.” According to him, this move is aimed at increasing competition in the sector.

Furthermore, Mishev reports the establishment of a dedicated Ministry of Energy and Mining, a major organizational development for the government of North Macedonia. “The establishment of a dedicated Ministry of Energy and Mining, separate from the larger Ministry of Economy, is a noteworthy development indeed. The new minister is a non-partisan expert who has been vocal about implementing reforms in the energy sector,” Mishev reports. “While it’s too early to see an impact, the separation and the appointment of an expert figure suggest a focused and potentially more effective approach to energy policy,” he says.

Ultimately, Mishev’s immediate outlook for the business climate of the country is one of cautious optimism. “Much depends on the new government’s policies and their ability to create a favorable environment for FDIs. The sectors of energy and IT are poised for growth, and if reforms are implemented effectively, we could see significant advancements,” he says in conclusion.

The recent elections in North Macedonia marked a shift in government, as reported by Lalicic & Boskoski Partner Angela Andonova, with the transition including the establishment of new ministries and a restructuring of current ones, setting the stage for upcoming legislative actions.

“Recently, in May 2024, elections were held in North Macedonia,” Andonova begins. “Following the pre-election quiet period, there was a significant shift in government. The party that had previously been in opposition won the election and took over the reins of government.”

Andonova highlights that on June 8, the first law was adopted since the change of government. “The parliament passed new amendments to the Law on the Organization and Work of the State Administration Bodies, introducing significant changes with the establishment of four entirely new ministries. This marks the seventh amendment to the law, arguably the most substantial one yet, as it alters the current operational framework. With the addition of these four new ministries, the total count now stands at 20.”

These new ministries, according to Andonova, “include those dedicated to 1) energy, mining, and mineral resources, 2) digital transformation, 3) public administration, and 4) sports. The most notable changes are observed within the Ministry of Economy, which now excludes the area of energy law and mineral resources.”

Additionally, the changes propose merging the labor sector, which has been part of the Ministry of Labor and Social Policy, with the Ministry of Economy.

Furthermore, “the Ministry of Labor and Social Policy has undergone restructuring, transforming into the Ministry of Social Policy, Demography, and Youth, aimed at retaining and repatriating North Macedonian youth and professionals working abroad,” Andonova reports. Additionally, the previous agency for youth and sports will cease operations, and a separate Ministry of Sports will be introduced. Andonova also highlights that “the Secretariat for EU Affairs is transformed into the Ministry of European Affairs.”

Andonova stresses that the changes are quite substantive: “The Ministry of Economy, previously bore responsibilities spanning various sectors, many of which have now been reallocated – for instance, tourism has shifted to the Ministry of Culture, resulting in the establishment of the Ministry of Culture and Tourism. Moreover, the anticipated scope of the Ministry of Mining and Resources is substantial, as the Ministry of Economy was previously burdened with numerous responsibilities, including those related to this sector.”

These changes, according to Andonova, “are intended to streamline operations, clarify responsibilities, and establish a more efficient administrative structure. However, the practical implications of these changes are yet to be fully realized and remain somewhat ambiguous.” Andonova underlines that “the appointment of new ministers is still pending and expected to occur within the next two months.”

Currently, Andonova says, “progress is slow due to the recent elections, leading to the delay of significant changes. Expectations are high for the introduction of new laws soon. However, the operational details remain uncertain. Typically, when a new government comes into power, there’s a tendency to revise the legislative framework, especially given the focus on retaining young people in the country to address immigration issues.”

Finally, Andonova says that in the past few months, deal-making has slowed down as a result of the elections. “Regarding transactions, there hasn’t been much movement. While there are signs of activity picking up, it’s happening slowly.”

North Macedonia faces an increasing interest and need to attract foreign workers to fill low-skilled job positions. The existing regulatory framework, however, poses significant barriers to employing foreign nationals. This article will outline the benefits of simplifying these procedures, the pressing need for reform, and how changes could align Macedonia with broader European Union trends.

Current Challenges in Employing Foreign Workers

The current legal framework in North Macedonia, designed to protect local workers, now hampers the ability of businesses to address labor shortages. Employers face multiple bureaucratic hurdles, including proving the necessity of hiring a foreign worker over a Macedonian, dealing with complex qualification verifications, and navigating the intricate approval processes involving multiple government agencies.

The Ministry of Internal Affairs (MIA) and the Employment Agency are key players in this process. The MIA assesses security risks, while the Employment Agency verifies qualifications and market needs. For low-skilled positions, this bureaucratic approach often results in unnecessary delays and rejections, stifling business growth or rejection of the application.

But, simplifying employment procedures for foreign workers could provide a significant boost to Macedonia’s economy. The benefits include:

Addressing Labor Shortages: Many sectors, particularly those requiring low-skilled labor, face severe workforce deficits. Easing restrictions would allow businesses to fill these gaps more efficiently.

Enhancing Competitiveness: By streamlining processes, Macedonia could attract more foreign investment, as companies would be more confident in their ability to meet labor needs.

Economic Growth: A steady influx of workers can contribute to increased productivity and economic output, fostering overall economic stability and growth.

Aligning with EU Trends

The European Union is aggressively revising its regulations to attract foreign workers, recognizing the economic advantages of a flexible labor market. North Macedonia must align with these trends to remain competitive. Adopting more straightforward, transparent procedures for employing foreign workers would help Macedonia integrate more closely with the EU labor market standards and practices.

Policy Recommendations

Simplified Visa Procedures: Introduce a streamlined visa application process specifically for low-skilled workers, reducing the administrative burden on both businesses and applicants.

Qualification Flexibility: Allow businesses greater autonomy in determining the qualifications required for specific positions, particularly for roles that do not necessitate formal education.

Single-Window Clearance: Establish a single-window system where businesses can complete all necessary paperwork and approvals in one place, minimizing delays and confusion.

Periodic Review of Labor Needs: Regularly assess the labor market to identify and address specific shortages, ensuring that policy adjustments are timely and relevant.

For North Macedonia to thrive economically, it is crucial to adapt its labor laws to the realities of a globalized workforce. By simplifying the employment procedures for foreign workers, particularly interested candidates from Asian countries, North Macedonia can address critical labor shortages, enhance its competitive edge, and align with broader EU regulatory trends. The new government must prioritize these reforms to foster economic growth and stability.

By Martin Boskoski, Founding Partner, Lalicic & Boskoski Law Office

Schoenherr has advised the owners of ITgma on the sale of a majority ownership stake to Modirum.

According to the firm, headquartered in Skopje, “ITgma Group is one of the most important software service providers in South-East Europe, with a focus on the telco, banking, and finance sectors. With delivery centers in Macedonia, Serbia, and the UAE, ITgma serves clients worldwide.”

Modirum is a multinational company specializing in delivering technology solutions to customers across diverse industries, including global fintech, security, governments, and more.

The Schoenherr team was led by Partner Luka Lopicic and included Partner Andrea Radonjanin and Attorneys and Law Andrea Lazarevska and Margareta Krsteska.

The firm did not respond to our request for additional details.

North Macedonia faces a temporary slowdown in economic activity as it gears up for presidential and parliamentary elections set for late April and early May, according to Law Office Serdjuk Managing Partner Petar Serdjuk, while the post-election period holds promise of revitalizing key sectors such as construction and infrastructure through long-awaited public procurement projects.

“North Macedonia is currently in the midst of an election process with presidential elections scheduled for April 24 and parliamentary elections in early May,” Serdjuk begins. “This has temporarily stalled many business activities as the government is restricted from using budget funds for new projects during this period. We are eagerly anticipating the post-election period as it typically brings a surge in business activities, especially in public procurements and tenders, which have seen delays over the past year,” he explains.

Focusing on specific projects expected to move ahead following the election period, Serdjuk mentions that there are several significant ones on the horizon: “Most notably, we expect advancements in major public procurement projects, particularly in infrastructure. Key areas include highway and railway projects, renewable energy initiatives like solar and wind, as well as the development of dams, and, possibly, enhancements in the public healthcare sector,” he says, adding that these projects present substantial opportunities for foreign investments and PPP.

And, speaking of investments, Serdjuk goes on to say the renewable energy sector appears to be “particularly attractive to foreign direct investments. Given the global shift towards sustainable energy sources, our country’s initiatives to expand capacity in solar and wind energy have garnered significant attention,” he says. “This aligns with a broader interest in infrastructure, where the scale of projects often translates to larger investment and revenue opportunities for international firms.”

Additionally, Serdjuk reports that there have been interesting legislative changes concerning financial technologies. “Recently, there was significant progress with the implementation of the new Law on Payment Services and Payment systems which transposes the PSD2, which aims to enhance online payment security and market competition. This includes stronger customer authentication processes, new licensing requirements, and broader data access for fintech companies,” he reports. According to him, these changes are paving the way for “innovative financial services in North Macedonia, such as institutions for electronic money, payment initiation services providers (PISPs), and account information service providers (AISPs) previously unavailable.”

On the flip side, these changes pose certain challenges as well. “With these innovations, there is an inherently increased risk of cybercrime, which necessitates robust cybersecurity measures. Thankfully, the new law also includes stringent security protocols,” Serdjuk says. “Service providers have clear deadlines to comply with these new standards, with most needing to update their systems by October 1, 2024, and 2026 for payment institutions that provide transactions at a distance to ensure enhanced security measures are in place.”

Finally, Serdjuk reports that the legal field in the country is changing. “We’re seeing a decrease in the number of students pursuing law, caused by an overproduction of attorneys in the past, which has led to heightened competition and increased demand,” he reports. “Law firms are actively headhunting qualified candidates from competitors, which is a trend that we expect to continue as the market adjusts to these new dynamics.”