Article 3 in the Law Amending the Law on Construction Land (144/2012) eliminates deadlines for obtaining building permits and finishing construction projects on state-owned land.
- North Macedonia
- Construction & urbanism
Description of the law
Article 3 in the Law Amending the Law on Construction Land (144/2012) eliminates deadlines for obtaining building permits and finishing construction projects on state-owned land. These deadlines were previously part of direct agreements between the state and companies that wanted to buy construction rights. Article 3 amends Article 19 in the Law on Construction from 2011, which established time limits for obtaining permits and completing construction, based on the type of building. According to Article 19, if a company did not meet the deadlines it had to return the land to the state.
The elimination of deadlines described in Article 3 means that private constructors can work on state-owned land for an unlimited period of time. This amendment was introduced in 2012 when the Develop Group company was struggling to meet its deadline for building Hotel Marriot in Skopje. As a result of the amendment, Hotel Marriot could be finished three years after the original deadline without any penalties.
Hotel Marriot is part of the Skopje 2014 project, financed by the then government of the conservative VMRO-DPMNE party (see here, here and here). One of the main owners of Develop Group is Aleksandar Ivanovski, a businessman close to the VMRO-DPMNE party, which had a majority in Parliament at the time. Since June 2018, the former director of the Administration for Security and Counterintelligence, Saso Mijalkov’s family, has owned one-third of Develop Group. Mijalkov was a high official in the VMRO-DPMNE party during their term of office from 2008 to 2016.
Article 3 applies to building rights obtained through direct agreements but not through public bidding. In 2007 and 2008, Develop Group bought 30 per cent of the land where the Hotel Marriot would be built. In 2009, that qualified the group to buy the right to build on the rest of the land through a direct agreement with the government. As part of the agreement, the Develop Group had to obtain a building permit within six months and build the hotel in a maximum of three years, otherwise the state would take back the land. The hotel was supposed to be finished by 2013.
However, in 2012 the construction was far from finished and the deadline could not be met. The hotel eventually opened in May 2016. Despite the delay, the government did not terminate the contract or recover the land. The amendment to the law in 2012 was followed by an agreement in 2013 between Develop Group and the then Minister of Transport and Communications Mile Janakieski to cancel the original deadline, so that the company could continue to construct the hotel with no obstacles.
Act of Parliament
Scope of application
- Substantive: conditions for buying construction rights on state land through direct agreements with the government
- Personal: buyers of rights to build on state land by direct agreement, Ministry of Transport and Communications
- Territorial: national
- Temporal: until abrogated
Time of adoption and entering to force
Published on 15 November 2012
Entered into force eight days after publication
Who drafted it
Ministry of Transport and Communications
Who submitted it to Parliament or other collective body, such local council
Ministry of Transport and Communications
Relevant developments in the process of adoption that show signs it is tailor-made
Members of parliament from the Social Democratic Union of Macedonia (SDSM) party submitted amendments to delete Article 3, but they were not accepted by the parliamentary majority of VMRO-DPMNE. In his speech at the 26 plenary session on 6 April 2012, member of parliament Jani Makraduli from SDSM stated that Article 3 meant that aspects in the public interest defined by direct agreement are no longer controlled. He added that only the Minister or Ministry of Transport and Communications as the body implementing the immediate agreement and as a contracting party would control whether something was being built and whether something was being done. VMRO-DPMNE’s response to Makraduli’s remarks was that the existing law was flawed regarding deadlines and that this created an additional burden for the parties involved (see here).
At the same plenary session, member of parliament Izet Zekiri from the National Democratic Revival (RDK) party criticised the dynamics for dealing with building land. He indicated that the companies in half of 995 agreements had not started their construction projects and the government, instead of cancelling the agreements and recovering the land, was changing the law and giving them unlimited time.
In discussions on the draft law in Parliament, opposition members of parliament from SDSM complained about the low prices of construction rights sold by public bidding or through direct agreements. They interpreted the amendment as a government attempt to protect clients who had bought construction rights for state land. Members of parliament from VMRO-DPMNE answered that rights to build on state land could only be bought by those who already owned 30 per cent of the plot and those who were already building on the plots without permits and without paying fees for the land use, in an attempt to legalise the situation. However, this is what opposition members of parliament found criminal and discriminative.
The law was adopted with 46 votes for, 17 against and no abstentions.
Who adopted it
The Parliament of the Republic of North Macedonia
Initiatives to challenge it and their outcomes
The opposition members of parliament suggested many amendments, but they were rejected by the majority in Parliament.
Construction and urbanism
Direct beneficiaries and related networks
Direct beneficiaries are those eligible for a direct agreement with the government. They include owners of 30 per cent of the building land in question or constructors building on state land illegally. The amendment has benefited Develop Group, the company that built Hotel Marriott in Skopje. The owner of two-thirds of Develop Group is Aleksandar Ivanovski. Since June 2018, one-third of the company has belonged to the family of Sasho Mijalkov, former director of the Administration for Security and Counterintelligence (UBK). Ivanovski is thought to have been closely connected with the business interests of VMRO-DPMNE. At the time of the Amendment of the Law on Construction Land in 2012, VMRO-DPMNE had a majority in Parliament.
In addition, reports reveal that Develop Group bought the land from the government by direct agreement for €110 per square meter (below the market value). It is believed that the government has sold similar plots for up to €3000 in public bidding processes.
The state is potentially a victim because the lack of measures to ensure accountability in building agreements might result in losing public income due to potential abuse of the right to build. The elimination of time constraints brought about by Article 3 applies to building rights obtained through direct agreement but not to those obtained in public bidding processes. This creates unequal conditions among investors who are eligible for direct agreements and those who are not.
Potentially, the amendment brought about by Article 3 might have a socioeconomic impact through misuse of public land if building projects are not delivered but the land resource is still occupied, blocking it from other uses. In addition, selling the right to build on state land to buyers close to the government for prices below the market value has an impact on public finances, and erodes social trust in the government’s commitment to the public good.
Impact on rule of Law
The Law Amending the Law on Construction Land is contrary to the Law on Local Government. It allows central government to sell state land in local municipalities without consulting the Association of the Units of Local Self-Government of Macedonia and without local government councils’ agreement on the value of the construction for local public interests. Hence, the amendment is against the constitutional provisions for self-government and against the principle of decentralisation in general.
Is there any corruption case that is linked to the tailor made law?