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 Free
Economic Zones (hereinafter referred to as the "FEZ Law") on 21
July 1999, which was promulgated on 7 september 1999, and amend-
ed on 11 May 2000;

Having committed themselves to an accelerated program for direct
investment in the Republic of Macedonia by investors from the R-
epublic of China and other countries, as an important means to
stimulate job creation and sustained economic development in the
Republic 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; and

Following the signing of a Memorandum to this end on 7 August 19
99 in Skopje between representatives of the two Parties,
Have agreed as follows:

Article 1
AREA 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 2
DESIGNATION 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 3
TECHNICAL 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 free
economic zones.

Article 4
INCENTIVES 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 5
INCENTIVES 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 6
FACILITIES 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 7
FUTURE 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 8
PERIOD 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 Year
of 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 OF
THE REPUBLIC OF CHINA THE REPUBLIC OF MACEDONIA



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I-Cheng Loh Trojko Slaveski
Ambassador-at-Large Minister of Development