AGREEMENT BETWEEN THE REPUBLIC OF CHINA AND THE REPUBLIC OF MACEDONIA ON THE ESTABLISHMENT OF THE FREE ECONOMIC ZONE IN SKOPJE-1

The Govenment of the Republic of China and the Government of Re-public of Macedonia (hereinafter referred to respectively as the”ROC” and the “ROM”, and jointly as the “parties “),Noticing that the Macedonian Parliament enacted the Law on FreeEconomic Zones (hereinafter referred to as the “FEZ Law”) on 21July 1999, which was promulgated on 7 september 1999, and amend-ed on 11 May 2000;Having committed themselves to an accelerated program for directinvestment in the Republic of Macedonia by investors from the R-epublic of China and other countries, as an important means tostimulate job creation and sustained economic development in theRepublic of Macedonia;Believing that the establishment of the Free Economic Zone in S-kopje (hereinafter referred to as the “SFEZ”) will facilitate g-reatly their shared purpose of further strengthening closer eco-nomic relations between the Parties; andFollowing the signing of a Memorandum to this end on 7 August 1999 in Skopje between representatives of the two Parties,Have agreed as follows:Article 1AREA AND LOCATION of SFEZ (1) An area of Thirty Hectares (30 Ha) located at Bunardzik sha- ll be made available to a company from the ROC designated u- nder Article 2 of this Agreement, representing the first ph- ase development of SFEZ.(2) The exact area and location of the SFEZ shall be delineated in a map to be furnished to the ROC by the Ditectorate for Free Economic Zones (hereinafter referred to as the “DFEZ”) or, before its establishment, by the Macedonian Ministry of Development (hereinafter referred to as the MOD”, which is the agency authorized by the FEZ Law in charge of all matte- rs relating to free economic zones. The SFEZ at Bunardzik shall consist of two parts: the larger part which is to be used for factories, warehouses and other commercial and industrial buildings, for approved activities in the SFEZ; and the smaller part which is to be used for b- uildings to house investors, managers, engineers of the SFEZ and their families.Article 2DESIGNATION OF DEVELOPER & USER (1) The Parties agree to designate the Skopje Development and M- anagemint Company as the developer of the first phase of the SFEZ (hereinafter referred to as the “Developer”), under Ar- ticle 1 of this Agreement. The ROM shall render all possible convenience and assistance to the Developer, including expe- diting the process of application and registration under the FEZ Law, and afterwards in the urgent task of speedy constr- uction and development ofthe SFEZ.(2) The ROC designates the International Commercial Bank of Chi- na (hereinafter referred to as the “ICBC”), a private bank with shares listed on the Taiwan Stock Exchange, as the ban- king agent for the SFEZ. The ICBC shall be a SFEZ User in r- elation to the Developer, to serve the banking needs of pro- spective investors from the Republic of China within the SF- EZ. The ROM shall render all possible assistance to the ICBC including, inter alia, its application to the National Bank of the Republic of Macedonia for a banking license to open a branch in Skopje, in order to facilitate the financing of e- xport and import of goods and services into and out of the SFEZ. Upon the licensing of ICBC, the ROM shall accord to I- CBC treatment no less favorable than that it accords to its own banks in all matters.(3) The ROC shall be entitled to purchase or rent a commercial building in downtown Skopje to be called the “Taiwan Commer- cial Center” (hereinafter referred to as the (“TCC”), to pr- ovide service and assistance to the Developer and Users as defined in the FEZ Law, and other prospective investors in the SFEZ, who must deal with various agencies of the ROM. T- he ROC shall designate the Overseas Investment & Development Corporation, a private company, to be responsible for the d- evelopment of the TCC.Article 3TECHNICAL ASSISTANCE TO ROM The ROC shall provide technical assistance to the ROM in all ma-tters relating to the setting up, training and operation of freeeconomic zones.Article 4INCENTIVES FOR DEVELOPER (1) In view of the considerable amoumt of initial investment for the establishment of the SFEZ, the ROM agrees, under Article 27 of the FEZ Law, to lease the 30 hectares of land located at Bunardzik to the Developer at the symbolic rent of One D- enar per year. The lease shall remain effective for Fifty (5 0) years, with a possible extension of Twenty-Five (25) yea- rs under the same terms, as provided in Article 27 of the F- EZ Law.(2) The ROC shall make credit available to the Developer, enabl- ing it to begin construction immediately of the first stage development of the SFEZ. The construction work shall include , inter alia, the roads, enclosure, power and telephonic co- nnections, water supply and sewage lines, administrative and standard factory buildings within the zone, and other neces- sary infrastructures.(3) The ROC shall provide additional incentives to the Developer in the form of tax reduction benefits under its relevant la- ws and regulations.(4) Except for the provisions of Article 26 of the SFEZ Law, ta- xes existing in the Macedonian tax laws shall not apply to the ROC employees within the SFEZ. The Developer and users are obliged to withhold all taxes and contributions of local employees and report them to the ROM.(5) All government fees and duties regarding financial transact- ions shall be exempted in SFEZ.Article 5INCENTIVES FOR USERS (1) The ROM shall facilitate the application process of prospec- tive SFEZ Users regardless of their tationality, and award them the tax incentives provided for under tbe FEZ Law with- out undue delay.(2) The Developer shall welcome all prospective SFEZ Users, reg- ardless of their nationality. Those who are not from the Re- public of China shall receive fair and equal treatment from the Developer under Article 24, paragraph 3 of the FEZ Law, except for special incentives in Paragraphs (3) and (4) of this Article, which shall be available to citizens and jur- idical persons from the Republic of China.(3) For prospective investors from the Republic of China who i- ntend to invest in the SFlEZ, the ROC shall make available the following financing opportunities: (a) Utilizing export loan programs of the Export-Import Bank of China; (b) Utilizing the proposed US$12 million “Macedonia Reconstruc- tion Equity Fund” of the European Bank for Reconstruction and Development (EBRD); (C) Utilizing the credit guarantee provided by the Internation- al Cooperation and Development Fund (ICDF).(4) In addition, the ROC shall, on a case by case basis, provide one of the following subsidies to prospective investors from the Republic of China who intend to invest in the SFEZ: (a) Wage subsidy for their employing Macedonian workers in the SFEZ; (b) Rent subsidy for their leasing standard factory buildings within the SFEZ from the Developer; or (c) Interest subsidy for their borrowing capital from banks in the Republic of China to finance their investments in the SFEZ as described in the previous paragraph.Article 6FACILITIES RELATING TO THE SFEZ (1) The ROM agrees that all necessary imfrastructute outside of, and leading up to, the border of SFEZ, including electricity , water supply, sewage system, gas line, drainage system, t- elecommunications, railway tracks, and highway interchange of the SFEZ, shall be installed or constructed at its own c- ost, and completed in time for the staged development of the SFEZ.(2) The ROM agrees that recurrent public utility rates to be ch- arged the Developer and Users of the SFEZ, including water, natural gas, electricity, and telecommunication charges, wh- ether in effect at present or to be connected in the future, shall be calculated on the basis of sound pricing practice and not be higher than the same rates charged to firms oper- ating outside the SFEZ in the territory of the ROM.Article 7FUTURE AMENDMENTS & ADJUSTMENTS (1) The ROM agrees that all concessions and privileges granted to the Developer and Users of the SFEZ shall not be reduced within ten years of the lease period for the SFEZ.(2) Should the Macedonia Parliament decide to amend the FEZ Law in the future, such amendments shall not ax post facto affe- ct the provisions of this Agreement.Article 8PERIOD OF VALIDITY & SETTLEMENT OF DISPUTE (1) This Agreement shall enter into force on the date of signat- ure and remain valid until the end of the lease and future extensions for the SFEZ.(2) Any dispute arising from interpretation of this Agreement s- hall be settled by consultation between the Parties through normal diplomatic channels.IN WITNESS WHEREOF, the Undersigned, being duly authorized by t-heir respective Governments, have signed this Agreement.Done in Skopje on the twelfth day of May in the year two thousa-nd by Gregorian calendar, corresponding to the Eighty-Ninth Yearof the Republic of China, in duplicate in the Chinese, Macedoni-an and English languages, all three texts being equally authent-ic. In case of divergence of interpretation, the English text s-hall prevail.FOR THE GOVERNMENT OF FOR TEE GOVERNMENT OFTHE REPUBLIC OF CHINA THE REPUBLIC OF MACEDONIA ─────────── ───────────I-Cheng Loh Trojko SlaveskiAmbassador-at-Large Minister of Development