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									Social Support Project, Field Operational Manual: Labor Redeployment Component




                               ANNEX I




                  Field Operational Manual




                SOCIAL SUPPORT PROJECT:
            LABOR REDEPLOYMENT COMPONENT




     FORMER YUGOSLAV REPUBLIC OF MACEDONIA
       Social Support Project, Field Operational Manual: Labor Redeployment Component



                                                 Table of Contents


                                                                                                                     Page
I.     Handbooks

       1.   Employment/Counseling and Relocation Service ........................................ 1
       2.   Retraining Services ...................................................................................... 10
       3.   Financing of Temporary Community Employment ..................................... 20
       4.   Small Business Assistance Program ............................................................ 25
       5.   Small Business Incubators ........................................................................... 33
       6.   Assistance for Regional Economic Development Planning ........................ 51
       7.   Loan Guarantee Program ............................................................................. 56


II.    Sample Agreements

       1. Employment Counseling and Relocation Service ........................................ 68
       2. Retraining Services
          2.1 Enterprise Training ................................................................................ 71
          2.2 Institutional Training.............................................................................. 74
       3. Financing of Temporary Community Employment ..................................... 77
       4. Small Business Assistance Program ............................................................ 80
       5. Small Business Incubator ............................................................................. 83
       6. Regional Economic Development Planning ................................................ 88
       7. Loan Guarantee Program ............................................................................. 91


III.   Monitoring of LRF Funds


       Attachments: Working Materials

       Program 1: Employment/Counseling and Relocation Service
       Program 2: Retraining Services
       Program 3: Temporary Community Employment
       Program 4: Small Business Assistance Program
       Program 5: Small Business Incubator
       Program 6: Regional Economic Development Planning
       Program 7: Loan Guarantee Program
Social Support Project, Field Operational Manual: Labor Redeployment Component




                        I.      HANDBOOKS
       Social Support Project, Field Operational Manual: Labor Redeployment Component

                                                                    Section I: Handbooks
                                                                    1. Employment Counseling


                1.   Employment/Counseling and Relocation Services
                                      A.      Overview


Aim:                        The objective of the Program is to provide a broadly based “all
                            around job“ assistance and counseling services to registered
                            unemployed persons in order to increase their chances in finding
                            jobs on the first labor market.
                            The consulting services shall cover all services that deal with job-
                            counseling, including broadly based and specific labor market
                            information, counseling services during the actual search for the
                            job and counseling related to employment bureau services.
                            The program contains the possibility of relocation in order to
                            increase the chances for finding a new job. Expenses for specific
                            counseling services and/or support in the relocation can be
                            reimbursed.
                            This program also includes social counseling services that might
                            be necessary in connection with unemployment and new
                            employment.
                            All activities that improve the workers' chances on the labor
                            market can be implemented through Job-Club-Programs.
Applicants:                 Local employment bureau offices; non governmental non-profit-
                            agencies (NGOs), private firms, and other labor organizations that
                            demonstrate minimum capabilities to provide services.

Participants:               -Registered unemployed workers with priority in the following
                            categories:
                                1. dismissed from MSOEs undergoing bankruptcy/labor
                                   restructuring,
                                1. dismissed following restructuring or liquidation of
                                   enterprises due to Kosovo conflict,
                                2. registered unemployed for more than 1 year,
                                3. first job seekers,
                            -Workers who are receiving unemployment benefits as well as
                            those who may have exhausted their benefits.

Costs Eligible for Reimbursement:

                             Personnel, transportation costs for interview, rent and utilities,
                             consumable materials and non-durable goods, depreciation of
                             capital equipment – 30 percent per year, relocation expenses (travel
                             of family and transportation of belongings) up tp US$ 500,00




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                                                                         Section I: Handbooks
                                                                         1. Employment Counseling


                                B.   Purpose and content of the program


Purpose of the program is:
1. To offer assistance and consultation services related to the search for a new job, with the aim
   to provide employment to the participants.
     Consulting services are all job-counseling services, including broadly based and specific labor
     market information, counseling services during the search for the job and counseling related
     with employment bureau services.
     This program also contains social counseling services that might be necessary in relation to
     the persons' unemployment and the new employment.
     All measures that improve the chances on the labor market can be carried out in Job-Club-
     Programs.
2. In order to improve the job finding activity of the unemployed person, this program contains
   the possibility of financial support in cases of relocation to acquire a new job in a different
   region. Specific counseling and assistance services can be financed under this program.
     In order to improve the chances of finding a new job including client transportation for job
     interviews and to encourage the flexibility of unemployed persons, this program offers a grant
     up to US$500 per family in order to compensate for relocation expenses, if new employment
     can be achieved through relocation.


              C.      Examples of concrete services in the framework of this program


Hereinafter, possible services that can be offered by a regional service provider, are listed:
1.      Counseling services
        Counseling services covered by this program include the following services for
        unemployed persons in the region:
        1.1        Job-counseling
        In order to improve the chances to find a new job, the unemployed persons should be
        counseled about training, qualification and retraining possibilities required, which of these
        already exist and are offered by service providers, and data about the service providers
        name, location, time schedule and curricula.
        1.2        Labor market information
        The unemployed persons should receive information about the names of local and regional
        firms who offer different kinds of jobs and information regarding the required
        qualifications for these jobs. Furthermore, the unemployed persons should receive
        information about developments of labor market policy, and based on that, the future
        development of the previously performed job.
        1.3        Job-search




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                                                                         1. Employment Counseling


     Active services can be offered to unemployed persons, that will improve the possibilities to
     find a job. The service provider has to create an available information system, providing
     data about the latest offered jobs in a region, to assist the unemployed person to have direct
     orientations during the job search. This job search should not only be restricted to
     searching for jobs similar to the previous job of the unemployed person, but should be also
     orientated to jobs not related to his/her profession.
     The information system should be organized to provide selective information according to
     the demanded levels of qualification, location of job offering institution / firm.
     This information system, and data about the job search, should provide the unemployed
     persons possibilities to find realistic job opportunities.


     1.4     Employment agency
     This service should offer concrete opportunities for job placement (derived from the job
     search). That means that the service provider will have to offer new jobs in its region as
     well as in other regions.


2.       Relocation Services
     In addition to the aforementioned services, if a relocation is necessary for the new job, the
     service provider would be required to provide the following specific services.
          support in the acquisition of a new job, such as finding and getting in contact with the
           job offering firms and, if necessary, the local and other offices of the Employment
           Bureaus,
          financial support of relocation (transportation of family members and household
           goods),
          assistance during the search for a new flat in the new locality;
          assistance during the liquidation of the old flat;
          assistance during the change of the residence


3.   General services
     3.1        Job-Club-Program
     Such Clubs should offer programs to all unemployed persons, in order to increase the
     chances of the unemployed persons in finding and securing a job. Such topics may include
     the following:
          exchange of knowledge and experience in general about the problems that might occur
           during the job search;
          specific topics about the labor market, that can be carried out in the form of discussions
           by skilled personnel from the Employment Offices and/or firms;
          introducing job seekers to the general principles and rules about applying for a job,
           carried out by skilled personnel;


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                                                                         1. Employment Counseling


            practical support during the job search, examples and practical exercises in
             presentation, employment interviews, as well as behavioral training in job application;
            organizing round table discussions, for example about development of profession
             perspectives, innovative aspects and the demand for certain professions, etc.;
            joint organization of an Information Exchange Market, where all relevant data about
             the job search and job placement could be gathered and offered to unemployed
             persons;
       3.2        Social counseling
       It is necessary that the person providing these kinds of services, should be a skilled
       professional. Social consulting services may include:
            general social counseling for unemployed persons and their families, that are in
             distress;
            providing specific suggestions for solving the burning social problems;




                                  D.      Review of program criteria
1.         General
Eligible service providers for the implementation of the counseling and relocation services are:
    local employment offices;
    non-government and non-profit agencies (NGOs);
    private firms,
    other labor organizations.
All potential service providers must demonstrate minimum capabilities to provide the services.
Additionally the service provider has to guarantee a minimum job placement rate of 15% of the
paticipants.


2.         Procedure


       2.1     The EAG announces publicly the availability of funds under this program and
               requests for applications.
       2.2     Verification of the service provider
               It is necessary that the service provider present his experience and qualifications to
               enable the EAG to evaluate and decide, whether the respective service provider is
               capable of performing acceptable services.
                  If the EAG considers the respective service provider acceptable for the
               performance of services, the service provider is permitted to offer his activities on
               the market. The service provider is obliged to offer his services only to persons that


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                                                                       1. Employment Counseling


            are dismissed (and persons, that are to be dismissed) from an MSOEs undergoing
            bankruptcy/labor restructuring, those dismissed due to the Kosovo conflict, long-
            term unemployed and first time job entrants and provide reporting to the EAG as
            requested..
            The service provider delivers a monthly invoice, where actual validated expenses are
            shown. The stipulated regulations, List No. 8 shall apply to the invoicing, payments
            and control.
      2.2   Direct project requests by the EAG
            If required, the EAG can make a direct project requests with an appropriate service
            provider after a public announcement of availability of project funds, for types of
            programs that are within the framework of the Counseling and Relocation Services.
            This requires a selection procedure in advance, and proof that the service provider is
            acceptable for the implementation of the services. The project request will be based
            on following criteria: experience with conducting training programs, training
            experience with the program „Counseling and Relocation Service“, qualification of
            the service providers’ trainees and his technical equipment needed for the
            implementation of the program. The EAG will develop a procedure for the
            evaluating the qualification of the Service Provider (see List No. 4).
            If the EAG makes a direct project request to the Service Provider, an agreement will
            be signed for the implementation of the program between the AP and the Service
            Provider. The settlement of accounts and the control shall be carried out according
            the regulations under No. 8 - 10 hereinafter.
            The EAG and the Service Provider will agree on a set date/time when the final report
            about the conducted activities and services would be presented.
      2.3   Direct project requests through tendering
            The EAG can announce an official tender for the implementation of certain
            programs, where the regional service providers are entitled to bid. The tender
            procedure contains an evaluation of the service provider’s qualification for the
            implementation of the services. Making a direct project request will be done
            according to an "Evaluation“ (Working Material-Lists No. 3). After that, a contract
            between the AP and the Service Provider will also be concluded. Accounting and
            monitoring will follow the regulations under No. 8 and 10 hereinafter.


3.    Cost of Services
      If the Service Provider proves his capability for conducting the services, he can receive the
      following remuneration for his expenses:
3.1   Counseling Services:
                  personnel cost,
                  rent, utilities,
                  non-durable equipment and materials,
                  depreciation of capital equipment up to 30% per year,


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                  client transportation for interview.


3.3   Relocation Services:
      In order to carry out the Relocation Services, the service provider will be reimbursed for
      the costs of transportation for job interviews and relocation expenses, including travel
      expenses of the family and transportation of personal belongings up to a maximum of
      US$500 per family.
3.4   Name of the relevant LRF Programs

                   Program 2: Retraining Services
                   Program 3: Temporary Community Employment
                   Program 4: Small Business Assistance Program
                   Program 5: Small Business Incubator Program


4.    Requirements to the regional Service Provider
The following requirements have to be fulfilled by the regional Service Providers in order to
apply to provide services described (see Section C):
4.1   Organizational criteria
      Regional service providers (eligible persons) can be:
              local employment bureau offices;
              non-government non-profit-agencies (NGOs);
              private firms;
              other labor organizations.
              they need to demonstrate minimum capabilities to provide services.
4.2   Professional Qualification
      All applicants have to present evidence that they possess the required skills to carry out the
      programs, including evidence of available skilled and experienced personnel, necessary
      financial resources, and the possibility to conduct the services. The applicant is required to
      describe the services he can offer and to demonstrate that his personnel and equipment are
      suitable. (See Working Material-List No. 6).
      The professional qualification will be evaluated by the EAG. The EAG has to determine,
      whether the service provider meets the requirements. The decision making and the
      selection of a service provider, by the EAG are described in the Working Material-Lists
      No. 3).
      As a part of the monitoring, the EAG has to prepare an official list of service providers
      with appropriate remarks. The evaluation has to be carried out based on the Working
      Material-Lists No. 1 and according the Working Material-Lists No. 3 - 4.




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                                                                       1. Employment Counseling


5.    Reimbursement of costs
The Service Provider charges the AP monthly for the delivered services. The evidence of the
services described in the points 3.1 - 3.3 will be prepared monthly (Working Lists No. 8 and 9),
as an attachment to the invoice. The evidence and the invoice will be forwarded to the EAG for
examination and payment by the AP. The payment will be arranged by the AP.


6.     Monitoring
The control and monitoring of all programs and the service providers have to be conducted in
close cooperation with the person in charge from the EAG. The EAG will monitor the procedure,
invoicing, methodology, information quality, benefit and the success of program implementation.
service providers must commit to a minimum job placement rate of 15% at the end of the
program.


             E.      Development and Implementation of the Program (Checklist)


As it was already mentioned, there are two ways of conducting the services under the program:
      1. Direct project requests by the EAG to a qualified service provider after public
      announcement of the availability of project funds.
      2. Direct project requests after tendering.
These various possibilities of organizing the services, are described in different flow charts. The
following flow charts can be used like checklists. The checklists contain references to Lists of the
Working Materials.


                                    Flow Chart Direct Placement
1.   Description of services by the EAG                                                                O
2.   Evaluation and Registration of the Service Provider (working material-lists 3-6)                  O
3.   Direct project requests; contract AP/ Service Provider                                            O
4.   Monthly report and evidence of service by the service provider (working material-list 9)          O
5.   Request for reimbursement of expenses from the AP (working material-list 8)                       O
6.   Appendices (working material-list 5)                                                              O
7.   Comments to the final report (working material-list 11)                                           O


                                           Flow Chart Tender
1.   Description of services by the EAG                                                                O
2.   Direct project requests through tendering (working material list 2)                               O
3.   Evaluation and Selection of suitable service providers (working material-lists 3-4)               O
4.   Registration of the Service Provider (working material-list5)                                     O


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                                                                     1. Employment Counseling


5.   Contract AP/Service Provider                                                               O
6.   Request for reimbursement of expenses from the AP (working material-list 8)                O
7.   Monthly report and evidence of service by the service provider (working material-list 9)   O
8.   Monitoring of finance (working material-list 10)                                           O
9.   Comments to the final report (working material-list 11)                                    O
10. Appendices (working material-list 5)                                                        O




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                                                                 1. Employment Counseling




                           F.      List of Working Materials


List-No.                                       Materials

 List 1     Project Description
 List 2     Tender
 List 3     Evaluation of Tender
 List 4     Evaluation of Tender Ranking Overview
 List 5     Registration and Experience of Service Providers
 List 6     Profile Service Provider
 List 7     List of Participants and Evidence of Job Placement
 List 8     Request for Reimbursement
 List 9     Report from Service Provider
List 10     Monitoring Flow of Funds
List 11     Comments to Final Report
List 12     Monitoring of Job Placement




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                                                                      Section I: Handbooks
                                                                      2. Retraining Services

                                2.      Retraining Services

                                       A.         Overview


Aim:                      The objective of the program is, to provide qualification and training
                          to all unemployed persons with priority to following groups of
                          unemployed:
                             dismissed     from       MSOEs     undergoing      bankruptcy/labor
                              restructuring
                             dismissed following restructuring or liquidation of enterprises due
                              to Kosovo conflict
                             registered unemployed for more than 1 year
                             first job seekers
                          The maximum length of training is six months.


Applicants:
                             Private training institutions
                             Public training institutions
                             Potential employers


Participants:             All unemployed persons with priority given to the following group of
                          unemployed: dismissed from MSOEs undergoing bankruptcy/labor
                          restructuring; dismissed following restructuring or liquidation of
                          enterprises due to Kosovo conflict; registered unemployed for more
                          than 1 year, first job seekers.


Eligible costs:           1.Training providers will be reimbursed for: staff and administrative
                          personnel costs, rent, and utilities, non-durable equipment and
                          material, trainee transportation, depreciation of capital equipment
                          purchased limited to 20% per year. Maximum length of training is
                          6 months.
                          2. When enterprises provide training for new employees, they would
                          be eligible for reimbursement for:
                             half of the total unit costs, or
                             instructor costs, participant transportation, non-durable costs not
                              to exceed 20% of staff costs, which ever is less.




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                                                                        2. Retraining Services

                              B.        Purpose and Content of the Program


The purpose of the program is:
1.      To improve the professional knowledge and capabilities of the participants to increase
their chances for new employment or small business entrepreneurship. Training courses would
provide training to improve technical skills, improve professional experience and qualification,
and range from technical training to language training.
For those participants, who are interested in the foundation of small scale businesses, there is the
possibility to participate in training courses qualifying for the management of such enterprises.
The training courses may be conducted by the company itself, private institutions or public
institutions. The proposed training courses have to be approved by EAG.
2.      To achieve a high job placement rate. For all training courses, a job placement rate for
the participants will be included in the contract, to ensure that the courses follow the demand of
the labor market, and the participants reach employment after the courses. A contract can be
signed for individual persons and for groups of participants. If necessary, the provider of the
training course will have to provide these placement services.
3.    The following three charts demonstrate the relationship between training possibilities,
remunerative costs and job placement rates:


Chart 1 demonstrates:
1. the training possibilities of
       private/public training institutions,
       enterprises, if they train for new employees;
2. the participants,
3. relation to training possibilities


Chart 2 demonstrates: which costs of the training courses are remunerable.


Chart 3 demonstrates: a summary matrix for each training program, remunerable costs and the
ratio for the negotiation of job placement rates.




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                                                                   2. Retraining Services



                                 Chart 1: Training Possibilities


Training Course      Description / Type of Training                      Participants
   Character


      1                     Enterprise trains           dismissed from MSOEs undergoing
                                                        bankruptcy/labor restructuring; dismissed
                        without Service Provider
                                                        following restructuring or liquidation of
                                                        enterprises due to Kosovo conflict;
                                                        registered unemployed for more than 1
                                                        year, first job seekers.


      2                     Enterprise trains           dismissed from MSOEs undergoing
                                                        bankruptcy/labor restructuring; dismissed
                        with a Service Provider
                                                        following restructuring or liquidation of
                                                        enterprises due to Kosovo conflict;
                                                        registered unemployed for more than 1
                                                        year, first job seekers.


      3.                 Service Provider trains        dismissed from MSOEs undergoing
                                                        bankruptcy/labor restructuring; dismissed
                           without enterprise
                                                        following restructuring or liquidation of
                             - institutional -          enterprises due to Kosovo conflict;
                                                        registered unemployed for more than 1
                                                        year, first job seekers.


      4.                  Managerial training           Manager or managerial team of enterprises
                                                        restructuring due to Kosovo conflict
                        that would secure further
                      development of the enterprise




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                                                             Section I: Handbooks
                                                             2. Retraining Services


                           Chart 2: Remuneration of Costs


Cost No.                              Description of Remunerable Costs


                       staff and administrative personnel costs
   1.                  rent and utilities
                       non durable equipment purchased, limited to 20% of staff costs


  2. 1                 half of the total unit costs
                       instructor costs
  2.2                  participants transportation
                       material cost not to exceed 20% of staff costs




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                                                                       2. Retraining Services



    Chart 3: Summary Matrix for Training Programs, Remunerable Costs and the Different Job
                                       Placement Rates




Training       Description of Training                 Participants              Remuneration Placement
 Course                                                                                        Rate %
Character
     1         enterprise trains without   dismissed from MSOEs                    2.1 / 2.2*    >80
                   Service Provider        undergoing bankruptcy/labor
                                           restructuring; dismissed following
                                           restructuring or liquidation of
                                           enterprises due to Kosovo conflict;
                                           registered unemployed for more
                                           than 1 year, first job seekers.
     2          enterprise trains with     dismissed from MSOEs                    2.1 / 2.2*    >80
                  Service Provider         undergoing bankruptcy/labor
                                           restructuring; dismissed following
                                           restructuring or liquidation of
                                           enterprises due to Kosovo conflict;
                                           registered unemployed for more
                                           than 1 year, first job seekers.
     3          Service Provider trains    dismissed from MSOEs                       1.         >50
                  without enterprise       undergoing bankruptcy/labor
                                           restructuring; dismissed following
                                           restructuring or liquidation of
                                           enterprises due to Kosovo conflict;
                                           registered unemployed for more
                                           than 1 year, first job seekers.
     4           Managerial training       Manager or managerial team of              1.
                                           enterprises restructuring due to
                                           Kosovo conflict.
*        the lower amount will apply




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                                                                        Section I: Handbooks
                                                                        2. Retraining Services

                    C.      Examples for Training Courses under this Program


Training courses under this program could include:
                  professional courses that provide theoretical and/or practical skills (i.e.,
                   construction, mechanics, electrical, etc.)
                  professional courses oriented on the actual necessities of the enterprise,
                   including literacy skills
                  managerial courses which provide experience in management techniques,
                   marketing, finances, etc.
                  professional courses to prepare unemployed workers for entrepreneurship.


                                      D.      Program Criteria


1. Applicants:
                  Enterprises interested in training and employing personnel
                  Private training institutions
                  Public training institutions


2. Job Placement Rate:
                  If the training is conducted by an enterprise, the enterprise will have to
                   guarantee the employment of all training participants (>80%).
                  If participants are trained in companies for specific purposes, these enterprises
                   will have to take over all participants after the training course (>80%).
                  If the training courses are offered not in relation to specific demands in
                   companies and the courses are conducted by a service provider, the placement
                   rate is 50%. The service provider is required to guarantee (in the contract) that
                   the agreed job placement rate will be achieved after the training course, after a
                   period of no more than a month.
                  In all training courses, 20% of total cost is to be paid only after achievement
                   and documentation of placement rate.
                  If the agreed job placement rate has not been achieved three months after the
                   training course ends, the service provider can propose qualified measures to
                   improve the placement rate.
                  The service provider, independently offers the training courses. He has to
                   provide evidence, that the participants and the courses are conducted according
                   to the program.




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                                                                       2. Retraining Services

                The service provider has to provide evidence that the agreed placement rate
                 has been achieved at the end of the training program, and on a sample of at
                 least 25% of trainees 3 months after program completion.
3. Eligible Costs:
                Private and public training institutions will be reimbursed for: staff and
                 administrative personal costs, rent, and utilities, non-durable equipment and
                 material, trainee transportation, depreciation of capital equipment purchased
                 limited to 20% per year.
                Enterprises, (when they provide training for their own workers), would be
                 eligible for reimbursement for:
                                half of the total unit costs, or
                                instructor costs, participants transportation, non-durable costs
                                 not to exceed 20% of staff costs, which ever is less.
4. Monitoring and Evaluation
                Depending on the regional possibilities, where the training courses are
                 conducted, different procedures have to be established in order to ensure the
                 quality of the program:
                                Quality of training courses
                                Success in job placement
                                Monitoring
                                Finances
                                Selection of participants
                The attached forms should be utilized as checklists, which are related to the
                 working lists, to assist in carrying out the program.


                      1. Procedure: Enterprise trains without Service Provider
   No.                               Characterization                          Working Material
                                                                                         List No.
     1       Proposal to EAG
                      Description                                                              1
                      Cost, Duration, etc.                                                     1
                      Participants                                                             7
                      Proposal/evidence: job placement rate                                    7

                      Registration of service provider, evidence of                            5
                       qualification and evidence of viability of the project
     2       Examination of the proposal by EAG




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                                                                 2. Retraining Services

3         Contract: Service Provider/AP
6         Implementation of training project
7         Request for reimbursement of expenses                                           8

8         Monthly reporting by the service provider                                       9
9         Monitoring of funds: monitoring of monthly flow of funds                     10
10        Monitoring of job placement                                                  12
11        Comments to Final Report                                                     11
          2. Procedure: Enterprise trains with a Regional Service Provider (Tender)
No.                              Characterization                           Working Material
                                                                                   List No.
1         Proposal to EAG
                  Description                                                            1
                  Cost, Duration, etc.                                                   1
                  Participants                                                           7
                  Proposal/evidence: job placement rate                                  7

                  Registration of service provider                                       5

2         Examination of the proposal by EAG
3         Procedure of tender:
                  example of a tender document                                           2
                  evaluation of tender and criteria                                      3
                  evaluation of service provider                                         4
4         Contract: Service Provider/AP
5         Implementation of training project
6         Request for reimbursement of expenses                                           8
7         Monthly Report                                                                  9
8         Monitoring of monthly flow of funds                                          10
9         Monitoring of job placement                                                  12
10        Comments to Final Report                                                     11
           3. Procedure: Service Provider trains without Enterprise (Institutional)
No.                               Characterization                            Working Material
                                                                                   List No.
1         Proposal to EAG




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                                                                   2. Retraining Services

                  Description                                                              1
                  Cost, Duration, etc.                                                     1
                  Participants                                                             7
                  Proposal/evidence: job placement rate                                    7

                  Registration of service provider, evidence of                            5
                   qualification and evidence of viability of the project
2         Examination of the proposal by EAG
3         Contract: Service Provider/AP
4         Implementation of training project
5         Request for reimbursement of expenses                                             8
6         Monthly Report                                                                    9
7         Monitoring of monthly flow of funds                                           10
8         Monitoring of job placement                                                   12
9         Comments to Final Report                                                      11
                              4. Procedure: Managerial training
No.                               Characterization                              Working Material
                                                                                     List No.
1         Proposal to EAG
                  Description                                                              1
                  Cost, Duration, etc.                                                     1
                  Participants                                                             7
                  Proposal/evidence: job placement rate                                    7

                  Registration of service provider, evidence of                            5
                   qualification and evidence of viability of the project
2         Examination of the proposal by EAG
3         Contract: Service Provider/AP
4         Implementation of training project
5         Request for reimbursement of expenses                                             8
6         Monthly Report                                                                    9
7         Monitoring of monthly flow of funds                                           10
8         Comments to Final Report                                                      11




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                                                                 2. Retraining Services




                                  E. List of Working Materials


List-No.                                          Materials

 List 1     Project Description
 List 2     Tender
 List 3     Evaluation of Tender
 List 4     Evaluation of Tender Ranking Overview
 List 5     Registration and Experience of Service Providers
 List 6     Profile Service Provider
 List 7     List of Participants and Evidence of Job Placement
 List 8     Request for Reimbursement
 List 9     Report from Service Provider
List 10     Monitoring Flow of Funds
List 11     Comments to Final Report
List 12     Monitoring of Job Placement




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                                                                      Section I: Handbooks
                                                                      3. Temporary Community Employment



                 3. Financing of Temporary Community Employment
                               Handbook for local service providers
                                    A.           General principles


Objective:     Development of regional temporary community employment projects in order to
create new jobs in the short - run, thereby improving the overall situation on the regional labor
market.
Eligible communities:                    All communities
Eligible Service Providers:              Private enterprises, NGOs, with the endorsement of local
                                         government agencies
Eligible individuals:                    -Registered unemployed workers with priority in the
                                         following categories:
                                         (i)        dismissed from MSOEs undergoing
                                                    bankruptcy/labor restructuring,
                                         (ii)       dismissed following restructuring or liquidation of
                                                    enterprises due to Kosovo conflict,
                                         (iii)      registered unemployed for more than 1 year.

                                         -Workers who are receiving unemployment benefits as
                                         well as those who may have exhausted their benefits.

                                         Maximum duration of projects is 6 months.
Reimbursement of costs:                  up to US$50,000 per project (supervisory and workers
                                         personnel costs, workers transportation, utilities,
                                         consumable material and non-durable goods (limited to
                                         20% of total project cost).
Procedure:                               Contract between the Community and the Agency for
                                         Privatization of the Republic of Macedonia (AP) and with
                                         subcontractor (Service Provider).


                              B.     Program objectives and content
1. Objectives:


The objective of the project is to develop and implement temporary community employment
projects that will create new jobs in the short - run and improve the regional labor market
situation.
The Labor Redeployment Fund (LRF) can partially reimburse the costs for temporary community
employment projects, which decreases the unemployment in the short - run.




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                                                               3. Temporary Community Employment


The aim of these projects is to carry out temporary community employment which do not
displace normal employment, with an opportunity for unemployed persons to work up to six
months. The projects may be conducted for no more than six months.


2. Examples of specific projects:
      Cleaning up streets, parks, official buildings etc.;
      Maintenance of dilapidated public buildings in good condition;
      Maintenance of parks, malls, forests etc.;
      Technical maintenance of community infrastructure facilities;
      Support to the staff in public institutions like swimming pools, kindergartens, libraries,
       hospitals etc.;
      Development and/or support of recycling programs.


                                 C.      Project Implementation
1. General
The communities should develop temporary community employment projects. Eligible service
providers could be selected via tender or by direct order to one suitable service provider. In order
to implement such projects, participants will be unemployed persons from the region, previously
agreed to be assigned to the service provider by the Labor Office. The decision to award the
contract to the selected service provider will be made in coordination with the EAG/AP.
Criteria for use of LRF will be determined in thecontract between AP and community. The
community opens a local commercial Bank account to receive LRF funds as specified in the
agreement.
The community establishes sub-contracts with local private or NGO service providers for labor
redeployment services consistent with this Contract (until otherwise agreed with the Agency all
sub-contracts must be reviewed and endorsed by the EAG/AP staff before they are valid. Only
after that, the Agency would forward an initial deposit to the community local commercial
account.
Projects which are supplemented with additional in-kind support by the community or other
organizations/enterprises will be given higher priority.
Community sub-contractors deliver services and invoice the community each month and agree to
a minimum job placement rate of 15% at the end of the program.


2. Selection procedure
According to the agreement between AP and community, there are two ways of selecting the
local service providers:




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                                                                3. Temporary Community Employment


a) the community announces the tender for a specific project on which all potential service
providers are entitled to bid;
The tender form is provided in List No.2. Within 14 days to four weeks (depending on project's
size and difficulty to be implemented), the service providers should submit their proposals to the
community. The community makes the final decision in keeping with the following criteria:
project contents, qualifications, costs, guarantee for delivery of services, time component etc., as
outlined in the contract with the AP.
The criteria and selection procedure are shown in the Lists 3 and 4. The reimbursement of the
service provider will be made monthly. The first part, which amounts to 1/5 of the total project
value, will be reimbursed after beginning of project activities. Payments will occur on monthly
invoices and delivery of the progress report. The down payment will be deducted in equal parts
from the monthly invoices based on the project period. The final payment follows after project
completion, but the AP retains 20% of the project amount. Reimbursement of these 20% occurs
after delivery of the final report and approval from the AP.


b) by giving exclusive right to one service provider for delivering of services. Payment
procedures will be the same as described under (a).


3. Costs to be reimbursed
A part of the project costs will be reimbursed to the service provider.
It has to be considered that:
(a) the supervisory person has to be assigned by the community. Depending on the project size,
several persons can be needed for such activities. Their costs can be included in the overall
project cost.

The supervisor (is the fulltime professional appointed by the Community who administers the
program) will initiate sub-contracts with service providers, and provide monitoring and auditing
of services being provided by sub-contractors to ensure that services meet the agreed criteria.

(b) The project participants will not receive unemployment benefits from the Labor Office, while
participating in temporary community employment projects.
These workers would receive a salary based the minimum wage including minimum income tax
and workmen's compensation but excluding other taxes.


(c) Food and transportation allowances may be included as part of the total project cost.


(d) The consumable materials and the non-durable goods are limited to 20% of total project
costs.




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                                                               3. Temporary Community Employment


4. Project organization
The Community will assign necessary staff (i.e. a full time professional staff person) to provide
monitoring and auditing of services being provided by sub-contractors (Service Providers) to
ensure that services meet the agreed criteria.
The Service provider is obliged to deliver monthly reports to the Community and the AP(List 9).
The Community has to determine the existence of eventual time and content deviations from
what was agreed in the contract.


                                 D.     Detailed program criteria


1. Eligible individuals/institutions

LRF resources will only be available through the communities to Service Providers which can
either be a public enterprise or a private enterprise.


2. Project implementation
For purposes of project implementation, following procedures will apply (lists included in the
attachment):
1. Development of the project proposal by the community
2. AP decision for the implementation of the project proposal
3. Project description, objectives, tasks, contents and costs (List No.1)
4. Project approval by AP and signing of contract between the community and AP
5. Tender procedure (List No.2)
6. Procedure for evaluation of the service provider (Lists No.3)
7. Decision on the winner of tender (List No.4)
8. Signing of contract between the community and local service provider
9. Verification and approval of the sub-contract by AP
10. Selection of participants (List7)
11. Reimbursement of expenses (monthly) from AP (List No.8)
12. Start of project implementation
13. Monthly reports from service provider to community and AP (List No.9)
14. Monitor and audit flow of the funds (monthly), (List No.10)
15. Output presentation (Final Report), (List No.11)
16. Monitoring of job placement (List 12)


                                         E. Working Lists


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                                                            3. Temporary Community Employment




List-No.                                        Materials

 List 1     Project Description
 List 2     Tender
 List 3     Evaluation of Tender
 List 4     Evaluation of Tender Ranking Overview
 List 5     Registration and Experience of Service Providers
 List 6     Profile Service Provider
 List 7     List of Participants and Evidence of Job Placement
 List 8     Request for Reimbursement
 List 9     Report from Service Provider
List 10     Monitoring Flow of Funds
List 11     Comments to Final Report
List 12     Monitoring of Job Placement




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                                                                  4. Small Business Assistance Program



                           4. Small Business Assistance Program

                                           A.      Overview

Aim:              The objective of the program is to provide the registered unemployed workers
                  the following services:

                     to provide support to start an enterprise (new business),
                     to provide support to protect the newly founded businesses of unemployed
                      workers who are in the first year of operation (year of foundation),
                     to encourage and ease enterpreneurship and to consolidate those firms who
                      are in the year of foundation.


Applicants:                   Private agencies, autonomous public organizations, statutory
                              occupational labor/employer organizations, associations, and other
                              NGOs.

Participants:                 Registered unemployed workers with priority in the following
                              categories:
                                    dismissed from MSOEs undergoing bankruptcy/labor
                                     restructuring ,
                                    dismissed following restructuring or liquidation of enterprises
                                     due to Kosovo conflict,
                                    registered unemployed for more than 1 year.
                                    first job seekers.

                              Those who are in the first year of operation of small businesses, or
                              who want to establish a new business.
Eligible costs:               The regional service provider receives reimbursement for the
                              following costs for services: personnel, client transportation, utilities
                              and rent, consumable and non-durable goods, maximum 20%
                              depreciation per year on durable goods.


                            B.       Purpose and content of the program


The purpose is, primarily, to assist the dismissed workers of the above-mentioned categories:


1. with support to establish their own enterprise (new business), i.e. to provide advice and
assistance during the start-up phase of the new business,


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                                                                 4. Small Business Assistance Program




2. in consolidating the previously founded new businesses during their first year of operation, i.e.
to provide advice and assistance during consolidation phase.


During the phases of new business establishment and consolidation, the costs of the local service
provider will be covered for providing advice and assistance to the new entrepreneurs for:
   the necessary technical support services,
   the financial audit and control services for the participants,
   the development and implementation of the contractual forms and regulations.


The EAG, authorizes a local service provider to render advice and assistance to the unemployed
MSOE-workers, who intend to start a new business, or are in the first year of operating small
businesses.
The remuneration for the services will be provided following the EAG approval of the different
proposed services.
Service providers must guarantee a minimum small business start-up rate of 15% for participants.


                          C.      Procedures to obtain program services


1. Relationship participant/service provider


The participant requests a reliable service provider in the region, who will prepare a proposal for
services in accordance with this program.
Vice versa the potential service provider, places his proposal for services directly to the founders
of new business or to those persons, who are in the first year of operation.
Between the participants and the regional service provider a market oriented relation for the
provision of consulting service could be developed, whereby the participant is the claimant and
the regional service provider is the supplier of business consulting services.


2. Evaluation of proposal and concept; conclusion of contract by AP


If there is congruence between participant and service provider, about the necessary support and
grants for utilizing services of this program, a proposal for the support should be prepared. This
proposal will be evaluated by the EAG.
The short project description (Working Material List 1) needs to be completed and should
describe all the relevant aspects of proposed project implementation.




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                                                                4. Small Business Assistance Program


The proposal will be evaluated by the EAG. After approval and contracting with AP, the
participant/ service provider can begin implementation.
The participant/service provider is obliged to abide by the monitoring system (Working Material-
Lists 8, 9, 10).


3. Direct project requests by the EAG


The EAG may take the initiative and offer assistance to the participants.


3.1 Tender
The EAG, opens a project tender to all regional service providers, for the assistance projects
developed by them, or by the participants.
If the projects are proposed by the participants, agreement regarding the substance of the project
is required between the EAG and participants, before opening of the tender. In this way, the EAG
looks for a service provider with the capacity to implement the consulting project, together with
and on behalf of the participant.


3.2 Direct project requests by the EAG
The EAG may request projects directly from a regional service provider after a public
announcement of availability of project funds. These projects may be developed by the EAG or
by the participant. Also, here a substantial agreement is required before a project request is
made.
For all kinds of project requests, the following criteria must be met:
the service provider has to prove his qualification to implement the services. The EAG counter
checks the details according to the delivered working materials.


                              D.      Examples of concrete services
Examples for possible consulting services in the two phases (new business establishment and
consolidation) could be:


1. For founders of new businesses
   Seminars for founders of new businesses
   preparation and checking of concepts for founding new business
   marketing studies for preparing of new business
   preparation of financial plans (capital requirements, capital spending plan, liquidity planning,
    equity capital)




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                                                                 4. Small Business Assistance Program


   preparation/implementation of financial services who are indispensable in the phases of
    foundation and consolidation
   attending and supporting in the phases of foundation and consolidation
   preparation and implementation of an marketing conception
   organization (legal form and corporate structures)
   technical advice (products, ideas, production sequences, production engineering, structure of
    machines)


2. For those enterprises which are in the first year of operation


   analysis of potential trouble spots in parts of the enterprise and/or overall.
   suggestions for modifications and improvements (if needed) to consolidate and strengthen the
    young enterprise.
This would involve an analysis of: finances, products, market, sale, costs, production, production
sequences, production engineering, personnel, concrete training programs, product strategies,
development/appointment of the enterprise strategies, etc.


                                     E.      Project-Operation


1. Project organization


The assignment and the job description are part of the contract between the Service Provider and
AP. The service provider is obliged to give a monthly report to the EAG/AP. This is part of the
project monitoring. Beside this, the EAG has to document any deviation from the time schedule
and the content of the tender. This reporting system is the basis for the monthly invoice of the
service provider, and the payment by the AP.
The form of reporting is found in the Working Material-List 9.


2. Costs to be reimbursed


The following project costs will be reimbursed to the service provider: personnel, client
transportation, utilities and rent, consumable and non-durable goods, maximum 20%
depreciation per year on durable goods.
All payments will be maintained through a local commercial Bank account. The AP signs the
contract with the local service provider. Only after this the finances will be appropriated by AP.




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                                                               4. Small Business Assistance Program


An initial payment may be agreed upon up to 20% of the estimated project costs. From the last
invoice 20% of the estimated total project costs will be retained until the service provider submits
evidence that 15% of the participants have established their new enterprise.


3. The local service provider


Eligible local service providers :
   private firms, excluding government agencies
   autonomous public organizations
   statutory occupational/employer organizations
   foundations
   associations
   non-profit NGOs.
Every service provider has to demonstrate his capabilities to provide the requested services.
Therefore, evidence of existence of available skilled personnel, financial resources for the
realization of the projects, and the ability to carry out the services, have to be documented.
The proof of service provider qualifications has to be stated in the proposal, and becomes an
essential part of the contract between the AP/service provider.


4. Standards for project description


For the development of an open tender, the project has to be described sufficiently in detail to
develop the tendering materials for the potential local service providers.
The proposal forms the basis of the sub-contract, and serves as foundation for the evaluation and
monitoring of the project, and for the evidence of the invoices.
In cases when the description of the project is developed by the participant or a service provider,
a proposal has to be developed as a basis for the contract.


5. Monitoring
The evaluation and monitoring of the projects and the service providers, has to be maintained in
close cooperation with the person in charge at the EAG/AP.
Subject of the evaluation and monitoring will be the procedure, invoicing, method, information,
quality, benefit and the success of the project implementation.
The basic regulations about the monitoring of finances are provided in the Working Material-List
10).
In order to obtain a high quality level of service providers, the procedures in the following lists
are to be observed.


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                                                                 4. Small Business Assistance Program


The comprehensive evaluation of the service provider at the tendering, is presented in the
Working Material-Lists 3 and 4. The individual presentation of the service provider is provided
in the Working Material-List 3.
The application of the service provider will have to be based on his specialization and
qualification
The final report, the quality and the presentation of the final report are part of the evaluation.


                                F.       Review of program criteria
1. Applicants
Primarily applicants should include registered unemployed workers of the following categories:

   dismissed from MSOEs undergoing bankruptcy/labor restructuring,
   dismissed following restructuring in enterprises due to Kosovo conflict,
   registered unemployed for more than 1 year
   first time job seekers.

In addition, applicants may be former unemployed workers of these categories, who are in the
first year of operation of small businesses.

2. Implementation of projects


Section C describes three different ways of making direct project requests :
1. the applicant/service provider has developed a project, and it is approved by the EAG/AP.
2. Announcing a tender by the EAG
3. Direct project requests with a regional service provider, after a public announcement of
availability of project funds.


These various possibilities of providing services are presented into various flow charts. The
following flow charts will be used as checklists. The checklists contain remarks to the Working
Material-Lists.




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                                                               4. Small Business Assistance Program




                 Flow chart Project Proposal by Service Provider or Participant
1.   Presentation of the project proposal (offer) by the participant / service provider (Working      O
     Material-List 1)
2.   Invitation/delivery of the service providers profile (Working Material-List 6)                   O
3.   Description of project, aim, task, content and costs etc. (Working Material-List 1)              O
4.   Checking and decision about project requests, decision about the final report                    O
                                         Flow chart Tender
1.   Development of project proposal (Working Material-List 1)                                        O
2.   Invitation/delivery of the service providers profile (Working Material-List 6)                   O
3.   Implementation of the tendering, evaluation of tender (Working Material-Lists 2,3)               O
4.   Ranking of provided proposals (Working Material-List 4)                                          O
                                    Flow chart Direct Placement
1.   Development of project proposal (Working Material-List 1)                                        O
2.   Invitation/delivery of the service providers profile (Working Material-List 6)                   O
4.   Show-cases for the evaluation (Working Material-List 3)                                          O
                        Flow chart Continuation for All Types of Proposals
5.   Contract AP/service provider                                                                     O
6.   Request for reimbursement of expenses from AP (Working Material-List 8)                          O
7.   Implementation                                                                                   O
8.   Reporting: Service provider/EAG (Working Material-List 9)
9.   Monitoring of finances (Working Material-Lists 10)                                               O
10. Final report, if stipulated (Working Material-List 11)                                            O
11. Evaluate/monitor small business starts (Working Material List 12)                                 O




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                           G.      List of Working Materials




List-No.                                        Materials

 List 1     Project Description
 List 2     Tender
 List 3     Evaluation of Tender
 List 4     Evaluation of Tender Ranking Overview
 List 5     Registration and Experience of Service Providers
 List 6     Profile Service Provider
 List 7     List of Participants and Evidence of Job Placement
 List 8     Request for Reimbursement
 List 9     Report from Service Provider
List 10     Monitoring Flow of Funds
List 11     Comments to Final Report
List 12     Monitoring of Job Placement




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                                                                       5. Small Business Incubator


                              5.        Small Business Incubator


A.        Overview of the Program

B.        Principles of the Incubator

1.               Functions of the Incubator
2.               Tasks of the Incubator
3.               Objectives of the Incubator
4.               Who can be the Founder of an Incubator?
5.               Requirements of Founders
6.               Possible Contributions of Founders
7.               Legal Form of the Incubator
8.               Legal Position
9.               Participants of the Incubator
10.              Duration of Participation in the Incubator
11.              Rights of Controlling and Examination
12.              Dissolution of the Incubator
12.1                    Dissolution by AP
12.2                    Termination by the Contractor of the Incubator
12.3                    Dissolution due to Mature Duration of a Temporarily Incubator
12.4                    Dissolution due to Failure
12.4.1                           During the Initial Three Years
12.4.1                           After the Initial Three Years
12.5                    Procedures of Dissolution


C.        Establishment of the Incubator

1.               Proposal for the Acquisition of Founding Members
2.               Structure of an Incubator
3.               Description of the Organizational Structure, Responsibilities, and Personnel
                 Requirements
3.1              Governing Board (I)
3.2              Management (II)
3.2.1                            Personnel Requirements
3.3                     Portfolio „Administration“ (III)
3.3.1                            Personnel Requirements
3.4                     Portfolio „Services“ (IV)
3.4.1                            Differentiation between Program 4 and 5
3.4.2                            Consultancy Services (IV.1)
3.4.2.1                                  Personnel Requirements


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                                                                       5. Small Business Incubator


3.4.3                            Coaching (IV.2)
3.4.3.1                                  Personnel Requirements
3.4.4                    Services (IV.3)
3.4.4.1                          Group 1: Production- and Office space
3.4.4.2                          Group 2: Machines and Facilities
3.4.4.3                          Group 3: Equipment
3.4.4.4                          Group 4: Services
3.4.4.5                          Personnel Requirements
3.4.5                    Credits; Allocation and Administration of Starting Capital (V.4)

D.        Financing of the Incubator

1.               Financial Sources of the Incubator during the First Two Years
2.               Financing after the First Two Years of Existence
3.               Co-operation Rights of Participants

E.        Allocation of Credits, Repayment etc.

1.               Advantages to the Newly Founded Enterprises Participating in the Incubator
1.1                    The „Technical Advantages“
1.2                    The „Financial Advantages“, Starting capital
1.2.1                           The Conditions for the Qualification for the Credit
1.2.2                           Economical Examination of the Business plan
1.2.3                           Conclusion of the Credit Contract
1.3                    Remarks

F.        Legal Relations between the Incubator and the Founders

Agreements, Contracts, Calculations (Rent, Services, Consulting)




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                                                                       5. Small Business Incubator


                                    A. Overview of the Program


The program has to accomplish labor market and economic policy functions. Under this program
incubators will be established in the FYR Macedonia. The incubator system shall facilitate the
foundation of new enterprises and help to initiate new jobs in the regions where the incubators
have been established.
The Communities, the MSOEs, and interested experienced private and public institutions may
participate in the foundation of the incubators. A broad participation of founders increases the
chance for a comprehensive wave of establishment of different enterprises from many
economical sectors, which could lead to medium term secured jobs.


                                   B. Principles of the Incubator



1. Functions of the Incubator


Key elements in the establishment and coaching of new enterprises:

           Allocation of starting capital
           Consulting and coaching during the phase of foundation and establishment of the
            enterprise
           Offering different services
           Availability of office and/or production space
           Possibility of sharing and renting equipment for office and production
           Considerable reduction of the foundation and investment costs for founders
            participating in the incubator
           The prices of the incubator for services and rent have to be economically efficient,
            thus the more founders of enterprises participate in the incubator the multi- fold and
            favorable the services can be offered.


The professional establishment and management of the incubator will not only provide positive
results but initiate new foundations of enterprises and thereby help to create new jobs.


2. Tasks of the Incubator

       Offering qualified assistance and advise in the business establishment consulting, in the
        foundation of new enterprises and establishment of enterprises,
       Allocation of starting capital as foundation credits,
       Availability of office and production space for rent,


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                                                                       5. Small Business Incubator


      Offering basic equipment (orientated on the regional economical structure) for rent
      Provision of comprehensive administrative and technical (telephone, copy machine etc.)
       services for founders,
      Achieving a high occupation rate with founders of enterprises in the incubator by
       continuous acquisition (continuous revolving of new entrepreneurs),
      Development of the incubator towards an economically viable institution within two
       years,
      Professional development and management of the incubator,
      Connection to the existing program 4 „Small Business Assistance“,
      Services and rents have to be calculated, that a cost advantage exists for enterprises
       inside the incubator.


3. Aims of the Incubator

      The objective of the incubator is to guide and secure the economic development and
       establishment of new enterprises during their participation in the incubator, to survive as
       an enterprise and to prosper after leaving the incubator,
      To acquire additional founders of enterprises and incorporate them in the incubator, to
       initiate additional economic development in the four regions,
      The incubators shall be developed as business foundation centers, where economical
       and technical know-how is collected, extended and improved to maximize in the
       assistance to the new enterprises.


4. Who can be Founder of an Incubator?
      Private agencies and enterprises
      Autonomous public organizations and institutions
      NGOs
      Statutory labor organizations, foundations, associations.


5. Requirements of Founders for an Incubator

The founders of the incubator must provide evidence of the following qualities and
characteristics:
      Availability of facilities/equipment which can be contributed to the incubator
       (equipment- which is repairable),
      Sufficient qualification for the management of the incubator,
      Relationship to small scale enterprises and SME organizations,



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       Relationship to financial institutions and experience in credit programs,
       Financial and administrative ability to conduct the tasks of the incubator,
       Experience in the foundation of enterprises.


6. Possible Contributions of Founders

       Equipment, machinery related to business expected to be in the incubator,
       Buildings for production and offices which are in good condition or can be renovated,
       Vehicles
       Communication equipment
       Computer equipment
       Furniture
       Office equipment


7. Legal Status of the Incubator

The incubator should have the status of a legal entity. The founding members will hold the shares
according to their contributions or in equal parts.


8. Legal Position

For the foundation of the incubator a General Contractor (Company) is required. This general
contractor will sign all necessary legal documents of the foundation and the allocation of funds
with the AP. Required funds will be provided through the LRF.
The legal relationship between the incubator(Company) and the founders of new enterprises
(participants) will be contracted directly. The master form of these contracts would need an
approval by the AP.


9. Participants of the Incubator
Anyone who establishes a new small scale enterprise may become participant of the incubator.
The foundation of businesses may be in the trading, service, production or crafts sectors.
The participation is regulated by a contract with the incubator (Company).


10. Duration of Participation in the Incubator

The founders of enterprises must be able to operate in the incubator for a minimum of two years.
Within this period disbursed working capital credits have to be redeemed.




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11. Rights of Controlling and Examination

The organizational structure of the incubator has to be developed according to the aims and tasks
to allow for a comprehensive monitoring and controlling system.


The responsibility for financing and the successful establishment of new businesses in the
incubator require the cooperation and combined determination of all involved partners. This has
to be considered and included in the contracts between the founders of the incubator (Company)
and businesses entering the incubator (participants).


12. Termination of the Incubator

The termination of the incubator can occur in the following cases:


12.1 Dissolution by the AP
The AP can dissolve the incubator for the following important reasons: dissolution due to lack of
accomplishment of tasks, of financial and/or political reasons, etc.


12.2 Termination by the Contractor of the Incubator (Company)
The contractor of the incubator may terminate the contract due to important reasons such as a
conflict of interest etc. In these cases the contractor shall be substituted by a new one. If no new
contractor can be found, the incubator would be dissolved.


12.3 Dissolution due to Mature Duration of a Temporary Incubator
This concerns only those incubators who had been purposely founded for a limited period. After
the agreed period, the incubator would be dissolved.


12.4 Dissolution because of Failure
An incubator may be dissolved due to failure if one of the following characteristics occur and the
partners of the incubator decided in favor of the dissolution.


12.4.1 During the Initial Two Years
During the initial two years of the establishment of the incubator, it may be dissolved if one or
more of the following reasons occur:
       expected economic failure,
       insufficient number of participants,
       insufficient services,
       no achievement of aims and tasks can be expected


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12.4.2 After the Initial Two Years
After the initial two years the incubator may be dissolved for the following reasons:
       economic failure,
       insufficient financing through its services,
       investments are not or insufficiently provided according to the needs and requirements
        of the participants,
       inadequate administration/management.


12.5 Procedures for Dissolution/Closure
Provisions have to be arranged to allow the participants to continue their new small scale
enterprises under similar favorable conditions. Furthermore, it has to be considered, that
agreement concerning the credit schemes will continue accordingly.
If an incubator is to be dissolved, the possibility has to be examined, whether the participants can
be organized in a holding structure. The AP will have to decide on this. This holding structure
will have to guarantee to take over the incubator participants for similar conditions.




                                C. Establishment of the Incubator


1. Proposal for the Acquisition of Founding Members

A persons would be appointed, with the relevant comprehensive regional and economical
experience, to conduct a search for potential founders of incubators. This person shall have the
competence and knowledge to contact prospective public and private institutions and enterprises
and attract founders.
An experienced person shall moderate the set up of the incubator until the legal and
organizational structures of the incubator are established and the foundation of the incubator has
been finalized.


2. Structure of the Incubator

The incubator will be founded and established jointly with the General Contractor (Company)
and the EAG/AP according to the following legal and organizational structure:




                                          Governing Board (I.)
                                            Management (II.)


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                                      Portfolios of Operation (III.+IV.)
Administration         Consulting            Coaching              Services              Credits /
                                                                                         Allocation
                                                                                         (working capital)
           III.                IV.1                  IV.2                  IV.3                 V.4
Logistic               Consulting            Follow up after the   offer of different    Examination and
                       assistance for        activities of the     services in the       allocation of
Planning
                       establishment of      consulting            sectors economy,      working capital
Organization/ED        enterprises           division,             techniques, law,      credits
Accounting             (according to                               etc.
                                                                                  Administration of
                       program 4)
Controlling                                Coaching, contact offering services in credits
                       Development of      partner during the administration,
Marketing              business plans,     participation in the communication,
Investments            studies, advice and incubator             relation and
                       assistance in                             connection to
Finances                                   others:
                       specific fields                           partners, etc.
                                           Supervision,
Acquisition                                Seminars, training,
General                                    collection of
administration                             business ideas, etc..


This description of the different divisions of operation will be detailed in the following sections
and include detailed tasks and qualification requirements of personnel.
It should be noted here, that the individual activities in the incubator do not have to necessarily to
be conducted by incubator staff. It is possible and advisable to have external qualified partners
(i.e. program 4) be engaged in these activities.
The decision for this needs to be based on economic reasons. On the other hand it may be
advisable to train and qualify incubator staff, who may later on establish their own enterprises. It
would be advisable to have a mixture of highly qualified incubator personnel and external
consultants who could exchange their experience. This additional qualification could lead to
further foundations of new enterprises.


3. Description of        the   Organizational      Structure, Responsibilities and Personnel
Requirements


3.1     Governing Board (Division I.)
3.1.1   Members
All shareholders will delegate one representative each. Additionally, the communities, the
entrepreneur’s association and the unions may delegate each one representative, if they are not
yet shareholders.
The maximum number of participants of the governing board will not exceed 7 persons.



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Local important institutions or organizations may be incorporated in an advisory board.


3.1.2 Tasks
The governing board will develop and decide, after the approval of the AP, about the statutes of
the incubator to regulate the managerial tasks of the management and the required approvals of
the board.
The board will have to set the policy guidelines of the incubator.
All decisions will be based on a majority.


3.2 Management (Division II.)
Development and establishment of the incubator is expected to lead towards an economically
independent institution within two years. The Division would also be responsible for planning,
steering and management of the incubator.


3.2.1 Staff Requirements
The qualifications and experience of management staff of the incubator include:
       comprehensive experience and knowledge in the management of service enterprises,
        utilization of modern management tools,
       experience in the establishment of new enterprises,
       additional qualifications required in:
                finances and financial institutions,
                national public and private professional organizations,
                marketing, development of field services
                creativity for the further development of the incubator.


3.3    Portfolio Administration (Division III.)
This Division sets requirements for services which are available to the founders of enterprises
and the incubator can be continuously monitored and steered towards a solid economic
development.
The main task is of the Division is to organize and administer the incubator according to the
guidelines set by the all the partners. It has to be ensured that the necessary equipment and
services are available at the disposal of the participants. Additional principles for the
organization and conduct of acquisition have to be developed.
To steer and manage the incubator, modern techniques have to be employed (planning, operative
and strategic controlling, accounting, etc.).
An adequate accounting system should be set up to ensure monitoring of the individual services
and the overall economical condition of the incubator.


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The controlling/monitopring system has to be adapted to this demand.
The acquisition of new participants is an important component. The successful performance of
the incubator and the utilization rate for equipment facilities and services depend on the degree of
utilization of its capacity by the participants.
The investment sector has to be managed carefully, because of the strategic character the
decisions for investments have on the development, the economical performance and the type of
participants in the incubator.
The organizational structure has to be developed and established to maximize on the synergy
effects as much as possible.
To achieve a high utilization of capacity in the incubator, marketing means and methods shall be
employed.
A central importance of the portfolio Administration is the financing of the incubator. Section IV
„Financing of the Incubator“ is the central element of the financial system of the incubator during
the first two years.


3.3.1 Personnel Requirements
During the establishment phase, a well experienced manager should be employed. It may be
possible, that during the first phase, this person would be the same as the general manager. Based
on developments and needs, the administration division may be expanded to include short-term
specialists in the fields of planning, administration, finances, marketing etc. However, extensions
of staff contracts should be reviewed and granted on a selective basis.


3.4     Portfolio Services (Division IV.)


3.4.1 Differentiation between Program 4 and 5
The Portfolio Consulting division can also render the services to those founders of new
enterprises who are outside the incubator. The consulting services are not exclusively restricted
to participants of the incubator.
It is even possible to establish the Portfolio Consulting division as a separate Small Business
Assistance Center.
3.4.2   Consulting (Division IV.1)
In this section the technical consulting services according to program 4 (Small Business
Assistance) shall be provided to the founders of new enterprises. Decisions have to be made
about the foundation of enterprises, feasibility of business plans, necessary improvements and
procedures of foundation. All relevant measures and support in relation to the business plan and
start of the new enterprise shall be conducted.
These services are required if participants have not drawn from the support of program 4 and
intend to become members in the incubator.




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Consulting services include the development of business plans, feasibility studies for the
foundation of the enterprise and the comprehensive advice, assistance and training in economical
and technical aspects:
         development of financial planning (capital requirements, investment and cash flow
          planning, capital stock, credits; etc.) under the consideration of a participation in the
          incubator and a comparison with the implication of non participation.
         seminars about the foundation of enterprises under the consideration of the advantages
          of a participation in the incubator,
         comparison of the enterprise development in the incubator in relation to outside
          establishment,
         marketing studies in preparation of the foundation,
         planning and realization of all financial services relevant for the foundation of
          enterprises and consideration of the credit scheme of the incubator,


3.4.2.1 Personnel Requirements
Priority in the assignment will have persons experienced in the foundation of enterprises
equipped with the required economic know-how to execute the consulting services within and/or
outside of the incubator: an economist with emphasis on planning, finances, cost calculation,
marketing, personnel with experience in consulting.


3.4.3     Coaching (Division IV.2)
The task of this division is to attend to the participants in the incubator during the entire
establishment of their enterprise.
Typical coaching activities are the monitoring and controlling of the effect of the consulting
services in the enterprises. Observed necessary adjustments and modifications are possible.
Additional advice and assistance will be offered in cases of a problematic development of
business.
Such services should consider the development of the entire enterprise:
         extension/modification/adaptation of the strategies for the enterprise, the marketing, the
          accounting system to changing conditions
         comprehensive economic and technical implementation of recommendations
         economic and technical assistance in the improvement of production, new products,
          investments, etc.
         courses about specific problems during the establishment of enterprises,
         assistance in the solution of questions regarding personnel (search, employment,
          qualification, motivation, dismissal, etc.)
         development of enterprise related strategies




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3.4.3.1 Personnel Requirements
the same as in paragraph 3.4.2.1


3.4.4       Services (Division IV.3)
This Division is responsible for the provision of services and equipment, which are required by
the participants. The rent/lease rate should be calculated favorably for the participant to have
obvious financial and cost advantages compared to enterprises not participating in the incubator.
The establishment and the operation of this service determines the successful establishment and
functioning of the incubator and is of critical importance for the development of the enterprises.
The provided services are demonstrated in an exemplary way and may be supplemented or vary
related to requirements and the development of the incubator.


3.4.4.1 Group 1: Production- and Office space
Adequate production and /or office space should be provided to the participants according to
their needs and the business plan of their enterprise. The decision about the relevant space will be
taken by the incubator based on the economical judgments of the enterprise and the incubator.


3.4.4.2 Group 2: Machines and Facilities
The utilization of machines for the concerned production of the enterprises should be secured.
The procurement and availability of machines in the incubator will be based on an economical
utilization. The procurement will be decided by the incubator.


3.4.4.3 Group 3: Equipment
Based on economic criteria the incubator may provide equipment which can be leased by the
participants for the production and administration of their enterprise. This could be i.e.
computers, furniture, office machines, etc. The participants decision about the utilization should
take synergy effects of group 4 into consideration.


3.4.4.4 Group 4: Services
Services shall be developed for business proceedings, which may be used by most of the
participants and the incubator itself. The elements and units of services should be concentrated
and offered in such as way as to benefit all or most participants. This aspect of the program is one
of the most important advantages for the participation in the incubator.


Services which would benefit all participants of the incubator:
             association in communication and administration (telephone, telex, copy machines,
              computers, reception, etc.)
             marketing for the incubator and participants



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             development and implementation of marketing measures for participants and
              incubator
             accounting for participants and incubator with central computer system
             joint purchase of machines and equipment
             joint utilization of vehicles
             joint repair and service system
             joint data processing system


3.4.4.5 Personnel Requirements
Controller and organizer, who is able to identify mutually beneficial aspects of the program and
implement and optimize relevant services.


3.4.5       Credits, Allocation and Administration of Working Capital (Division V.4)
Purpose of this division is to provide the working capital to the business founders in the
incubator, if they intend to take the credit or are obliged to.
The working capital credit scheme should be available at interest rates lower than rates found in
the commercial financial market. The interest rate will be calculated on a reasonable profit
margin to cover the administrative expenses of the incubator.
The type of credits, the criteria, etc. are specified under Section E. In this chapter only the tasks
are described, which are relevant for the credit scheme.
The division has two major tasks:
             to solve all questions related to the provision of starting capital,
             to administer the credit scheme
The first part concerns:
         development of a financial business plan
         determination of capital requirements
         determination of capital resources, credits
         calculation and determination of the required capital provided by the starting capital
          fund
         determination of credit modalities (credit amount, interest rates, maturity, repayment
          scheme, etc.)
         conclusion of the credit contract, availability of funds at the agreed date.


The second part concerns:
         establishment of an adequate accounting and monitoring system for the provided credits



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       administration of credits
       monitoring system
       controlling of repayment dates
       assistance if problems occur with the repayment
       statistics about credit scheme


3.4.5.1 Staff Requirements
Specialist with experience in finances and banking


                                 D. Financing of the Incubator


1. Financial Sources of the Incubator during the First Two Years

The incubator will receive funds from the LRF. The recurrent expenditures will be only
reimbursed during the first two years. During these two years the reimbursement will be
gradually reduced to reach a zero reimbursement after the two years.
This offers the opportunity to the management of the incubator to plan the required investments
carefully. The higher number of participants in the year of establishment of the incubator, the
better the chances to have all necessary expenditures reimbursed. This can be considered as an
incentive for a proper acquisition of participants and a well planned investments in the incubator
in the first year.


The following costs can be reimbursed:

       refurbishment of facilities
       rent
       equipment
       limited staff/administrative costs
       start up capital for the revolving fund (US$50,000)
       consumable supplies
       operating expenses


2. Financing after the first Two Years of Existence

After the first two years the incubator has to be financially independent, meaning the revenues
have to cover the expenditures and provide finances for future investments to secure the
existence of the incubator.



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To achieve this the incubator has to gain revenue from the sale of services (Section C):
           revenue from consulting services to participants and customers outside the incubator,
           revenue from coaching the participants and customers outside the incubator
           revenue from the provision of services to the participants
           revenue from the interest rates of the starting capital to participants.
           additional revenue from the development of new business sectors.


After the first two years the incubator has to be an economically viable enterprise. If this aim is
not achieved, the continued existence of the incubator, and therefore, the assistance to founders
of new enterprises is endangered.
These conditions demand a high degree of responsibility of the management and the employees
of the incubator.


3. Co-operation Rights of the Participants

The necessity that the incubator reaches financial independence after the second year and the
degree of responsibility on the management of the incubator demand a broad co-operation to
allow controlling, monitoring and correction of decisions. Only in this way the incubator can
fulfill the labor market and economic policy challenges and requirements.
To meet these challenges the different contracts have to include this co-operation explicitly, even
the foundation document of the incubator and the contracts between the founding partners should
emphasize this.
The incubator has to be established in its organizational structure to allow for a comprehensive
monitoring and controlling system.


                             E. Allocation of Credits, Repayment, etc.


1. Advantages to the newly founded enterprises participating in the Incubator
1.1 Technical Advantages

The advantages for the participation of founder of new enterprises in the incubator are in the
initial and establishment phase of the enterprise:
           all necessary assistance and support for the establishment of the new enterprise is at
            moderate rates in house available
           economy priced coaching during the establishment
           economy priced rent for production or office space
           lease/rent of machinery and equipment
           use of all other available services


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           minimizing the costs during the establishment of the enterprise
           the debt rate of the enterprise will be minimized during the establishment compared to
            foundations outside the incubator.
The above-listed technical advantages lead to financial advantages through the reduction of
initial and operating costs for the participants in the incubator.


1.2 Financial Advantages „Working Capital Credit“

Beside the technical advantages, the availability of working capital for participants in the
incubator is of great support for the foundation of enterprises.
The working capital credit will be available on interest rates lower than those of commercial
banks, but must be positive with respect to the annual rate of inflation. The interest rates will be
calculated on a reasonable profit margin to cover the administrative expenses of the incubator.


1.2.1 Conditions for the Qualification for the Credit

The fundamental conditions for the qualification for the starting capital credit are:
           foundation of an enterprise
           participation in the incubator
           minimum participation period two years
           participation in the incubator until the credit is redeemed


1.2.2 Economic Examination of the Business Plan

If the basic conditions of 1.1 are met, the following procedures will be employed for the
allocation of the starting capital by the incubator:
           examination of the business plan following the criteria: idea, objective, ingenuity,
            chance of success
           examination of financial plans (required capital, investment capital, cash flow, credit)
           calculation of financial requirements with resulting interest and repayment rates
            including the starting capital credit
           Compiling all necessary documents for the application for credits under consideration
            of the participation in the incubator


1.2.3 Conclusion of Credit Contract

If the preconditions of 1.2.1 and 1.2.2 and the additional requirements are met for the
participation in the incubator, the credit contract will be concluded between the incubator
(Company) and the founders of the new enterprise (participants).



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1.3 Remarks

Finally it has to be mentioned, that a participation in the incubator does not necessarily require
the utilization of the starting capital credit by the participant. The credit scheme is considered as
an additional step to pave the way of the foundation and the establishment of new enterprises in
the incubator.


                  F. Legal Relations between the Incubator and the Founders


1. Short - description of the essential contracts
For the foundation of the incubator different legal steps have to be considered:
       In the first step, a founding organization has to be formed. This founding organization
        will be a general contractor (Company) for the foundation of the incubator and will be
        the responsible body for the implementation of the foundation and the performance of
        the incubator.
       In the second step, the foundation of the incubator is implemented through a contract
        between the founding organization and the AP for the implementation of the incubator.
       After the foundation of the incubator, contracts will be developed for the employment of
        management and additional staff.
       A contract package has to be developed for the participation of business founders in the
        incubator for: participation, rent and lease, for the utilization of space and equipment,
        consulting, coaching and other services.
       Credit contract for the use of the starting capital scheme
       Contracts for the reinsurance of the starting capital credits


The regulations concerning the principles of the incubator (Section B) and the establishment of
the incubator (Section C) have to be considered in order that objectives and tasks of the incubator
become achievable.
2. Overview of the essential contracts
The following summary presents the essential contracts for the incubator:




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          Description            Contract between           and                Nature of Contract
Establishment of founding       Founding partners    Founding partners     Contract for the foundation
organization for the foundation                                            of the responsible body
of the incubator as responsible
body for the incubator
Foundation of the incubator     Founding partners    Founding partners Contract for the foundation
                                                                       of the incubator, Statute
Relation responsible body and       AP               Responsible body  General contract about the
AP/EAG/Company                                                         relation between AP and
                                                                       responsible body
Legal relations between the         Incubator        Founders of new   contracts for participation
incubator and participants                           enterprises       Rent/lease contracts
                                                                       Service, consulting
                                                                       contracts, credit contracts
Employment contracts                Incubator        management/employ Employment contracts
                                                     ees, etc.
Contract with external persons      Incubator        Service Providers Service contracts
or organizations (for Services)                      (third parties)
Purchase, rent, lease of            Incubator        Third Parties     Purchase, rent, lease
equipment, space, etc. by the                                          contracts
incubator
Credit contracts for the starting   Incubator        Participant           credit contract
capital
Reinsurance contracts for the       Incubator        AP                    Indemnity bond
starting capital credits




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                                                               6. Regional Development Planning



       6.        Assistance for regional/local economic development planning

                                         A.      Overview


Purpose:               Development of regional/local proposals, plans, feasibility studies (for
                       improvement of the regional labor market and economical structure).


Applicants:            Large communities, smaller communities may apply; if these form a
                       cooperation with neighboring communities to cover a larger region.


Finances:              up to US$50,000 per region


Filing procedure:      Contract between the Community and the Agency for Privatization of the
                       Republic of Macedonia (AP) and with subcontractor (Service Provider).


                             B.      Program objectives and content


1. Objectives:


Allowances can be granted from the LRF for regional development of proposals, plans, studies
and capital projects for improving the regional labor market and economical structure. Examples
are presented below for such possible projects:
1.1 Planning for projects to improve the regional economic structure
   Recording structural economy data that are needed for identifying gaps in the market, needs
    and new business possibilities;
   Identification of existing enterprises (production, services, crafts) in the region, number of
    employed persons, professional training, flow of commodities (input-output), input and sales
    markets, description of structural problems, preparation/implementation of analysis,
    development of proposals to introduce improvements, expenditure and project studies;
   Search for possible innovative activity areas (ex. recycling, alternative energy projects) based
    on existing regional possibilities and resources in order to develop innovative investment
    projects.


1.2 Planning for projects to improve the regional social structure
   Recording structural social data that are needed to identify social problems and social care
    below the required standards and norms;



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    Subject of research can be social structures such as hospitals, medical care by doctors, nurses
    and health care personnel, kindergartens etc., and issues of accessibility and supply related to
    these services.
    The objective is to prepare an analysis of the existing social situation, and based on this, to
    develop studies and proposals in form of projects aimed to improve the social situation,
    including finding suitable approaches for problem-solving.


1.3 Planning for projects to improve the regional cultural structure
   Recording regional structural culture data that will serve as a basis for an analysis of the
    situation with possibilities of making changes through projects in the culture area.
    Subject of research can be public swimming pools, libraries, educational programs and
    institutions, leisure time programs, etc.


1.4 Planning for projects to improve the regional labor market structure
Development of possible employment projects, that will derive from regulations in No. 1 to 3
hereinafter.
The development of these projects should indicate the following: to furnish proof of new
employment creation, search for and designate interested parties willing to carry out those
projects, description of costs and financing, search for further investment possibilities.


1.5 Planning for projects, in which investment can be done immediately


There can be projects that do not require any preliminary studies. Such projects also have to
include an expenditure/cost list, finance possibilities, search and designation of interested parties
for project implementation, a description of the project objectives and benefits as well as a
description of the development of new jobs.


                                 C.      Project Implementation
1. The community as a contractual party
The application for financial assistance is to be submitted to the AP. The AP shall conclude a
contract with the Community about the use of the LRF assistance.
In order to have the requested financial assistance approved, the applicant has to open a
commercial account in one of the local banks, to which the funds shall be transferred by the AP.
For purposes of project implementation, the Community has to conclude a subcontract with local
service providers. The subcontract is to be examined and approved by the AP, after which, the
subcontract is valid. Then, financial aims have to be approved and allocated to an appropriate
account by the AP.


2. Selection procedure


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                                                                6. Regional Development Planning


The applicant makes an official write-out, so that all relevant regional service providers can make
their proposal. The write-out form is given in list 2 of the working materials hereinafter. After a
write-out period of 14 days to 4 weeks (depending on project size and difficulty level), the
service providers have to deliver their proposal to the program applicant. The applicant makes
the placement in accordance with the criteria: contents, capabilities, costs, delivery guarantee,
time component, accounting mode etc. The criteria and the selection procedure are shown in Lists
No. 3 and 4.
The disbursement to the service provider shall be made in three parts. The first payment will be
made to the service provider after the beginning of implementation of activities in an amount of
1/3 of the total project amount. Depending on the project progress, another third of the project
amount shall be transferred to the service provider. The final payment is to be done after project
completion, although the AP retains 10% of the project amount. The final payment (20%-
retention) to the service provider is to be made after delivery of the final report, a public
presentation of the results and after acceptance of the project through the Community and the AP.


3. General criteria for project organization
The Community will assign a person who will be responsible for monitoring organizational
activities and project implementation. The assignment of this person and his responsibilities
would be part of the Contract that shall be concluded with between the Community and the AP.
The activities of this person will be financed during the entire project time.
The service provider is obliged to give a monthly report to the Community. The Community has
to determine eventual project duration and content deviations in view of the proposal. On the
other hand, the applicant will give a monthly report to the AP. The form of the report is
represented in Working Materials List No. 9.


                                 D.      Detailed program criteria
1. Persons entitled to apply
Entities entitled to make an application include large communities or small communities; they
can also cooperate in this program with neighboring communities to cover a larger region.


2. Filing procedure and project implementation
In order to receive the financial assistance and to carry out the project, following procedures have
to be followed (the list given hereinafter refer to the working materials from Part E):
   Submission of project proposals by the applicant
   Decision by the AP if the project proposal will be implemented
   Project description, objectives, tasks, contents and expenditures (list No. 1)
   Project approval by the AP
   Conclusion of a contract between the Community and AP
   Carrying out the write-out, collecting and appraisal of the delivered write-outs by the
    applicant (List No. 2)


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   Selection procedure for direct project requests for an appropriate sub-contractor (list No. 3
    and 4)
   Conclusion of a subcontract between the Community and service provider
   Request for reimbursing the expenses from AP (list No. 8)
   Provision of finances by the AP
   Beginning with project implementation
   Monthly reports from the service provider to the Community and AP (List No. 9)
   Monitoring of payments and the final accounts (List No. 10)
   Comments on the final report (List 11)


3. Financial Assistance


The community may receive a total financial assistance up to US$50,000 for the following
services performed by the local service provider:
   local consultant salaries and taxes;
   local travel costs per day (in accordance with law regulations);
   provable expenditures for non-durable consumables, supplies and materials.
   eventual deliveries.


4. Requirements to the service providers


Service providers can be:
 local governmental agency;
 local Chambers of Commerce
 non-profit NGOs
 private enterprises
and have to satisfy the following conditions:
   to have/prove professional skills/qualifications that are required for the project
    implementation;
   to have employees with appropriate professional qualifications;
   to prove the indispensable financial solvency;
   to be able to provide appropriate space, and technical and material capability to implement
    the project.




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                                                                 6. Regional Development Planning


The service providers have to state in written form together with the proposal, that they satisfy
these conditions. This statement is a part of the sub-contract with the Community.


5. Project Requirements
The project has to be described adequately, that a tender can be made for eventual service
providers that will be able to make an offer on that basis. The offer represents a basis of the sub-
contract and serves for project management and evaluation as well as auditing the accounts and
the final account of the service provider.


6. Monitoring
The monitoring and supervision of the whole project takes place in tight cooperation between the
responsible person of the Community and the AP/EAG. Subject of this monitoring is the
procedure, method, benefit and the successful project implementation.
Basic regulations about the monitoring are shown in the Working-Material Lists No. 10.


                                E.      List of Working Materials

   List-No.                                          Materials

    List 1      Project Description
    List 2      Tender
    List 3      Evaluation of Tender
    List 4      Evaluation of Tender Ranking Overview
    List 5      Registration and Experience of Service Providers
    List 6      Profile Service Provider
    List 7      List of Participants and Evidence of Job Placement
    List 8      Request for Reimbursement
    List 9      Report from Service Provider
   List 10      Monitoring Flow of Funds
   List 11      Comments to Final Report
   List 12      Monitoring of Job Placement




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                                                                    7. Loan Guarantee Program



                           7.      Loan Guarantee Program

                                      A. Beneficiaries

Small and medium size enterprises with maximum 25 employees at the time when applying
for the loan guarantee. No sectoral limitation are imposed.


                                       B. Objectives

The Loan Guarantee Fund aims at the following general objectives:

          assistance to the development and establishment of SMEs
          ease the access to the acquisition of financing,
          assistance in the creation of new working places.

The specific objective is to establish regional Loan Guarantee Funds to support SMEs in
overcoming their collateral problems in financing.


                                         C. Criteria

1. Eligible Goods and Services

Facilities, equipment, reimbursement of guarantees undertaken.

Qualifying individuals and entities are small to medium scale businesses with a maximum of
25 employees at the time of application.

2. Eligible Service Providers

Service providers for the establishment and implementation of the fund can be banks, non-
governmental-organizations, foundations and other entities with the expressed purpose of
operating a credit guarantee fund for the benefit of small and medium scale businesses who
lack collateral to back their intended obligations solely from their own strength.

Preference will be given to mutual guarantee organizations where 20% or more of the starting
capital is from individual SMEs and to those organizations that have links with Business
Support Centers or Incubators.

Service providers must prove their capabilities to appraise the guarantee requests. Therefore,
the service provider must have a satisfactory legal structure and founding members.

Service providers will be judged on matching capital contributions from participating banks,
communities or other organizations.


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                                                                     7. Loan Guarantee Program


Applicants must prove the qualification of the managerial staff, relations with existing small
business organizations and administrative and financial capabilities as well as experience
with the small business sector.

3. Eligible Costs

The operating costs during the first year of operation are eligible: rent, non-durable materials,
transportation, personnel, utilities, 20% depreciation per year of capital equipment.

Start up capital for the Loan Guarantee Fund matching the capital contributions from banks or
other commercial entities in the ratio 1:1, for contributions from local agencies' budgets in the
ratio 3:1.


                                    D. General Principles

1. Demand

Services provided would be demand driven and based on requests from small scale
businesses.

2. Eligible Entities

Only non-governmental entities can become service providers as long as they have been
established and are directly supported through capital contributions by local authorities,
companies, institutions or individuals that are directly or indirectly linked with the small
business sector and that regard that sector a major creator of new employment.

3. Costs of Services

The guarantee fund should be entirely self-sustaining. Revenue may be generated from fee
income from the guarantees extended and from investment income from their capital.
Financial assistance for the establishment and operational support is limited to the first year
of operation.

4. Evaluation of Services

The evaluation and on-going monitoring of the business operation and the flow of funds will
be conducted by the EAG of the Agency for Privatization.

In case that other legal regulations have stipulated additional evaluations, evaluations or on-
going monitoring will have to be additionally exercised by the legally required body.




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                                                                   7. Loan Guarantee Program


                            E. Goal of the Loan Guarantee Fund

The main objective of the Loan Guarantee Fund is to support small scale businesses in
obtaining credits for investment and as working capital. The ultimate goal is to create new
employment by assisting the development of small enterprises.

               F. Proposal for the Foundation of the Loan Guarantee Fund

1. Business Plan

The proposed business plan for the Loan Guarantee Fund will provide detailed information
about the following issues of establishment and operation:

(a)    Principles of the Loan Guarantee Fund

i.     Aims of the Loan Guarantee Fund
ii.    Founders of the Fund
iii.   Contributions of Founders
iv.    Affiliation of Founders with Small Scale Enterprises
v.     Legal Form of the Fund
vi.    Controlling and examination Instruments


(b)    Operation of the Loan Guarantee Fund

i.     Types of guarantees to be extended
               by economic sector
               by type of enterprise
               by type of credit to be supported

ii.    Criteria for the selection of clients

iii.   Criteria for the extension of guarantees to any client

iv.    Structure and Organization of the Fund
               Management, Personnel
               Administration
               Facilities
               Equipment

v.     Financing
                  Expected conditions, including fees for guarantees extended,
                  expected numbers and amounts of guarantees during the first three years,
                  Investments,
                  Operational Costs,



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                                                                    7. Loan Guarantee Program


                  Cashflow estimation for three years including all costs and revenues

vi.    Marketing
              Promotion of available type of Loan Guaranties
              Addressing potential clients

                                  G. Expected Deliverables

1. Guaranteed Loans

The maximum amount of funds per service provider is US$ 400.000,00. It is anticipated that
the average credit guarantee per client will be approximately US$12.000.However, the
maximum credit guarantee available per client is US$20.000,00.

It is expected that the Loan Guarantee Fund will provide 20 guarantees within the first year of
operation.

2. Reporting

The individual Guarantee Fund will be obliged to submit quarterly reports to the founders and
the Agency for Privatization containing at least the following information:

          guarantee activities carried out showing accepted and rejected guarantee requests,
          a summary income statement,
          a summary balance sheet,
          summary minutes of board meeting where guarantee requests were discussed and
           voted on,

In addition to the periodic reports the Agency for Privatization may request specific reports
and information.

The obligatory Annual Report will include the evaluation of the operations and experiences of
the fund. In addition, the report will provide a critical analysis of the major problems
encountered and a prognosis of operations over the next year.

                                       H. Procedures

1. Contracts

After the founders sign a contract of the foundation of the Loan Guarantee Fund, the Fund
will apply for the general contact with the Agency for Privatization.

The Agency for Privatization executes all contracts of the Loan Guarantee Fund. All
contracts will have to be negotiated with the EAG before they are endorsed for signing by the
parties.



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                                                                     7. Loan Guarantee Program


2.     Payments to the Guarantee Fund

The Guarantee Fund will maintain two bank accounts:

       a. Bank account for operational expenses and revenues;
       b. Bank account for the guarantee funds.

Operational Costs

If agreed in the contract the fund can receive an advance payment for the operational costs
covered by the LRF of 20% of the total amount.

The fund will provide monthly invoices to the Agency to recover the agreed expenditures
including the deduction for the advance payment. Incurred expenses have to be validated.

Guarantee Fund

A specific bank account will have to be opened for the Guarantee Fund and maintained for all
payments of the guarantee funds. An initial deposit of 30% of the agreed amount of the Fund
will be transferred to the bank account.

As soon as the initial deposit of the fund drops to remaining 10% the total amount of the
Fund, the Fund may apply for the next deposit of 30% into the Fund. Evidence of the use of
finances and payments have to be submitted together with the application for additional
finances.


3. Monitoring and Evaluation

In addition to the reports the Fund must be ready to accept unplanned visits from the
EAG/Agency for Privatization and the World Bank.


4. Liquidation

If the Loan Guarantee Fund has not started the extension of guarantees to clients within the
first 6 months after foundation, the Agency for Privatization may terminate the contract.

If the quarterly and yearly reports show substantial shortfall or substantial excess costs as
compared with the business plan, which is part of the contract, the Agency for Privatization
has the right to request the termination of the contract and the liquidation of the Fund with the
view to recover as much as possible funds disbursed under the contract.


                         Basic Concept of the Loan Guarantee Fund



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                                                                  7. Loan Guarantee Program




                          Principles of the Loan Guarantee Fund

Aims, Functions and Tasks of the Loan Guarantee Fund




Founders of an Loan Guarantee Fund




Possible Contributions of Founders (Finances, In - Kind)




Legal Status of the Loan Guarantee Fund




Affiliation of Founders with Small Scale Enterprises




Controlling and Examination Instruments




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                                                                   7. Loan Guarantee Program


                           Operation of the Loan Guarantee Fund

Types of Guarantees to be Extended: by Economic Sector




by Type of Enterprise:




by Type of Credit to be Supported




Criteria for the Selection of Clients




Criteria for the Extension of Guarantees to any Client




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                                                                   7. Loan Guarantee Program


Structure of the Loan Guarantee Fund




Description of the Organizational Structure, Responsibilities:




Management, Personnel



Administration




Facilities




Equipment




Marketing: Promotion of Types of Loan Guarantees




Addressing Potential Clients




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                                                                   7. Loan Guarantee Program


                          Financing of the Loan Guarantee Fund

Financial Sources of the Loan Guarantee Fund during the First Three Years




Financing after the First Three Years of Existence




Investments




Operational Costs




Cashflow Estimation for Three Years




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                II.     SAMPLE AGREEMENTS




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                                                                                               1. Employment Counseling




                                                     AGREEMENT FOR
                                                    Employment Counseling


Signed on .............................. in ..................

I Contracting parties

1. Agency of the Republic of Macedonia for Privatization, Nikola Vapcarov 7, Skopje, represented
by ...................................................................................
( here and after: Agency ) and
2. Service Provider.............................................. no...........,
represented by.................................................................................( here and after: Service Provider).


II Contract’s outline

                                                                 Article 1

The objective of this Agreement is to regulate the conduct of services for the provision of
counseling services for registered unemployed workers from the listed bankruptcy MSOE's or the
listed Kosovo affected enterprises or first job seekers or long-term unemployed (more than 1 year),
as a component of LRF as part of the technical and social assistance of the Social Support Project
(SSP).


III Obligations of the Agency

                                                                 Article 2

The Agency, based on monthly reports and invoices, will reimburse the Service Provider's costs of
delivering counseling services to the members of the defined groups of unemployed persons.

Reimbursement will refer only to the services actually performed that meet the criteria defined in
this Agreement and the accepted Project Proposal.

The Service Provider will provide evidence, that the number of participants equals the eligible
individuals specified.


                                                                 Article 3

The Agency will monitor and audit the operation and the performance of delivered services
according the Service Provider's program for counseling, aiming to providing support in the re-
employment of workers.

IV Obligations of the Service Provider


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                                                                        1. Employment Counseling




                                              Article 4

The Service Provider according to the needs and possibilities for the employment will support the
workers to increase their chances for re-employment.

The Service Provider will provide services for the dismissed workers, organizing meetings and
seminars, and consulting support.

The agreed project proposal becomes part of the contract.


                                              Article 5

The Service Provider is obliged, once a month, to submit reports, lists of participants and invoices,
to the Agency about the delivered services for every individual worker and the number of employed
participants.

The Service Provider is obliged, to submit a detailed final report to the Agency at the end of the
program and on a 25% sample of participants three months after the provided services and the
termination of the project with proof of the formal employment and wages of the participants.

Until then the Agency will withhold 20% of the total project costs. After the acceptance of the final
report this withhold will be released.

After completing the services the Service Provider will submit to the Agency the filled
questionnaires of the recipients of the services.



V Flow of funds and reimbursement procedures


                                              Article 6

The Service Provider is supposed to provide details of a local commercial bank account to receive
any LRF funds.


                                              Article 7

The Agency will divide the payments for the project according the number of participants/months.
All payments will be based on monthly reports and invoices to the commercial bank account. A
withhold of 20% of the total reimbursement will be retained until final documentation of the project
is provided. The service providers guarantee a job placement rate of (minimum 15% percent).

VI Cancellation and amendment of this agreement



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                                                                           1. Employment Counseling


                                               Article 8

If the Agency notices any kind of contradiction between the performance and the agreement or the
program, the Agency will inform the Service Provider in written form to remove it in reasonable
time. If the Service Provider does not solve the problem in due time the Agency may cancel the
agreement effective immediately.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:

"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.

VII General provisions

                                               Article 9

The contract parties are obliged to seek a mutually satisfactory solution for all cases of dispute. In
the case of a dispute, if the parties cannot find an acceptable solution for both sides , they will go to
the court of jurisdiction in the FYR Macedonia.


                                               Article 10

Amendments to the agreement may be initiated at any time by either party.


                                               Article 11

These agreement is produced in 4 (four) examples, 2 (two) for both sides.


  Agency for Privatization                                  Service Provider
  Former Yugoslav Republic of Macedonia

  Director                                                  Director




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                                                                                                   2.1 Enterprise Training

                                                       AGREEMENT FOR
                                                       Enterprise Training

Signed on .............................. in ..................


I Contracting parties

           1. Agency of the Republic of Macedonia for Privatization, Nikola Vapcarov 7, Skopje,
           represented by ...................................................................................
           ( here and after : Agency ) and
           2. Enterprise.............................................. no. ..........., represented by
           ................................................................................... ( here and after: Service Provider).

II Contract’s outline

                                                                 Article 1

The objective of this Agreement is to regulate the conduct of services for training registered
unemployed workers from the listed bankruptcy MSOEs or the listed Kosovo affected enterprises or
first job seekers or long-term unemployed (more than 1 year) for additional qualifications as a
component of LRF as part of the technical and social assistance of the Social Support Project (SSP).


III Obligations of the Agency

                                                                 Article 2

The Agency, based on monthly reports and invoices, will reimburse the Service Provider's costs of
delivering training services, leading to the employment of these.

Reimbursement will refer only to the services actually performed that meet the criteria defined in
this Agreement and the accepted Project Proposal.

                                                                 Article 3

The Agency will monitor and audit the operation and the performance of delivered services
according the Service Provider's program for training, aiming to providing employment of these
workers.


IV Obligations of the Service Provider
                                                                 Article 4

The Service Provider, according to the needs and possibilities for employment, will retrain workers
to gain additional qualification to increase their chances for employment.

The agreed project proposal becomes part of the contract.
                                             Article 5


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                                                                             2.1 Enterprise Training



The Service Provider is obliged, once a month, to submit reports and invoices, to the Agency about
the delivered services for training of workers.

The Service Provider is obliged, to submit reports to the Agency at the end of the program and on a
25% sample of participants three months after the training as proof of the formal employment and
the wages of the participants.

The Service Provider guarantees a formal employment rate of a minimum of 80% of the number of
participants. In case the Service Provider does not achieve the agreed formal employment rate the
Agency will reduce the reimbursement of costs by a minimum of 20%. This withhold will be
released as soon as the proof of the agreed formal employment rate is produced.


V Flow of funds and reimbursement procedures


                                                 Article 6

The Service Provider is supposed to provide details of a local commercial bank account to receive
any LRF funds.

                                                 Article 7

The Agency will divide payments for the project according the number of months of training. All
payments will be based on monthly reports and invoices to the commercial bank account. 20% of
the total reimbursement will be retained until evidence of formal employment is provided.


VI Cancellation and amendment of this agreement

                                                 Article 8

If the Agency notices any kind of contradiction between the performance and the agreement or the
program, the Agency will inform the Service Provider in written form to remove it in reasonable time. If the
Service Provider does not solve the problem in due time the Agency may cancel the agreement effective
immediately.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:

"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.

VII General provisions


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                                                                           2.1 Enterprise Training



                                               Article 9

The contract parties are obliged to seek a mutually satisfactory solution for all cases of dispute. In
the case of a dispute, if the parties cannot find an acceptable solution for both sides , they will go to
the court of jurisdiction in the FYR Macedonia.

                                               Article10

Amendments to the agreement may be initiated at any time by either party.


                                               Article 11

These agreement is produced in 4 (four) examples, 2 (two) for both sides.


  Agency for Privatization                                  Service Provider
  Former Yugoslav Republic of Macedonia

  Director                                                  Director




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                                                                                                   2.2 Institutional Training

                                                        AGREEMENT FOR
                                                       Institutional Training

Signed on .............................. in ..................


I Contracting parties

           1. Agency of the Republic of Macedonia for Privatization, Nikola Vapcarov 7, Skopje,
           represented by ...................................................................................
           ( here and after : Agency ) and
           2. Training Institution.............................................. no. ..........., represented               by
           ................................................................................... ( here and after: Service Provider).

II Contract’s outline

                                                                 Article 1

The objective of this Agreement is to regulate the conduct of services for training of registered
unemployed workers from the listed bankruptcy MSOEs or the listed Kosovo affected enterprises or
first job seekers or long-term unemployed (more than 1 year) for additional qualifications and/or to
provide small business assistance in the establishment of small scale enterprises as a component of
LRF as part of the technical and social assistance of the Social Support Project (SSP).


III Obligations of the Agency

                                                                 Article 2

The Agency, based on monthly reports and invoices, will reimburse the Service Provider’s costs of
delivering training services, leading to the employment of these workers or their establishment of
small businesses.

Reimbursement will refer only to the services actually performed that meet the criteria defined in
this Agreement and the accepted Project Proposal.


                                                                 Article 3

The Agency will monitor and audit the operation and the performance of delivered services
according to the Service Provider’s program of training, with the aim to provide employment of
these workers or small business establishment.




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                                                                       2.2 Institutional Training



IV Obligations of the Institute

                                             Article 4

The Service Provider according to the needs and possibilities for employment will retrain workers
to gain additional qualification to increase their chances for employment or the establishment of a
business.

The Service Provider will provide services for small business assistance, organizing meetings and
seminars, and consulting support.

The agreed project proposal becomes part of the contract.


                                             Article 5

The Service Provider is obliged, once a month, to submit reports and invoices, to the Agency about
the delivered services for training per worker, number of employment's and small business services.

The Service Provider is obliged, to submit reports to the Agency at the end of the training program
and on a sample of 25% of participants three months after the training as proof of the formal
employment and the wages of the participants.

The Service Provider guarantees a formal employment rate of a minimum of 50% of the number of
participants. In case the Service Provider does not achieve the agreed formal employment rate the
Agency will reduce the reimbursement of costs by a minimum of 20%. This withheld amount will
be released as soon as the proof of the agreed formal employment rate is provided.


V Flow of funds and reimbursement procedures

                                             Article 6

The Service Provider is supposed to provide details of a local commercial bank account to receive
any LRF funds.


                                             Article 7

The Agency will divide the payments for the project according the number of months of training.
All payments will be based on monthly reports and invoices to the commercial bank account. 20%
of the total reimbursement will be retained until evidence of formal employment is provided.

                                             Article 8

The Agency will reimburse costs for providing services of small business assistance based on the
submitted and approved program by the Agency according the agreed payment regime.



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VI Cancellation and amendment of this agreement

                                                Article9

If the Agency notices any kind of contradiction between the performance and the agreement or the
program, the Agency will inform the Service Provider in written form to remove it in reasonable
time. If the Service Provider does not solve the problem in due time the Agency may cancel the
agreement effective immediately.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:

"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.


VII General provisions

                                               Article 10

The contract parties are obliged to seek an amenable solution for all cases of dispute. In the case of
a dispute, if the parties cannot find a solution acceptable for both sides, they will go to the court of
jurisdiction in the FYR Macedonia.

                                               Article11

Amendments to the agreement may be initiated at any time by either party.


                                               Article 12

These agreement is produced in 4 (four) examples, 2 (two) for both sides.


  Agency for Privatization                                  Service Provider
  Former Yugoslav Republic of Macedonia

  Director                                                  Director




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                                                                                  3. Temporary community employment



                                              AGREEMENT FOR
                                    Temporary Community Employment Projects



Signed on .............................. in ..................


I Contracting parties

           1. Agency of the Republic of Macedonia for Privatization, Nikola Vapcarov 7, Skopje,
           represented by ...................................................................................
           ( here and after : Agency ) and
           2. Community.............................................. no. ..........., represented by
           ................................................................................... ( here and after: Community).

II Contract’s outline

                                                                 Article 1

The objective of this Agreement is to regulate the conduct of services for the implementation of the
temporary community employment project employing registered unemployed workers from the
listed bankruptcy MSOEs or the listed Kosovo affected enterprises or first job seekers or long-term
unemployed (more than 1 year) as a component of LRF as part of the technical and social assistance
of the Social Support Project (SSP).


III Obligations of the Agency

                                                                 Article 2

The Agency, based on monthly reports and invoices, will reimburse the Community costs for the
implementation of the temporary community employment project.

Reimbursement will refer only to the services actually performed that meet the criteria defined in
this Agreement and the accepted Project Proposal.

The Community will provide evidence, that the participants equal the eligible individuals specified.

                                                                 Article 3

The Agency will monitor and audit the operation and the performance of delivered services
according the Community program for the implementation of the temporary community
employment project.



IV Obligations of the Community


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                                                               3. Temporary community employment



                                              Article 4

The Community, according to the needs and possibilities for the implementation of the temporary
community employment project, will employ the workers for the duration of the project.

The agreed project proposal becomes part of the contract.

                                              Article 5

The Community is obliged, once a month, to submit reports, lists of participants and invoices, to the
Agency about the delivered services and the status of the implementation of the project.

The Community is obliged, to submit the final report to the Agency at the end of the training
program and on a 25% sample of participants three months after the provided services verifying the
implementation of the project, number of participants, number of formal employed and wages.

The Agency will reduce the reimbursement of costs by a minimum of 20% until the final report is
produced.


V Flow of funds and reimbursement procedures

                                              Article 6

The Community is supposed to provide details of a local commercial bank account to receive any
LRF funds.


                                              Article 7

The Agency will divide the payments for the project according the number of participants/ months.
All payments will be based on monthly reports and invoices to the commercial bank account. 20%
of the total reimbursement will be retained until final documentation of the project is provided. The
service providers guarantee a job placement rate of minimum of 15%.


VI Cancellation and amendment of this agreement

                                              Article8

If the Agency notices any kind of contradiction between the performance and the agreement or the
program, the Agency will inform the Community in written form to remove it in reasonable time. If
the Community does not solve the problem in due time the Agency may cancel the agreement
effective immediately.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:


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                                                                 3. Temporary community employment



"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.


VII General provisions

                                               Article 9

The contract parties are obliged to seek an amenable solution for all cases of dispute. In the case of
a dispute, if the parties cannot find a solution acceptable for both sides, they will go to the court of
jurisdiction in the FYR Macedonia.

                                               Article10

Amendments to the agreement may be initiated at any time by either party.


                                              Article 11

These agreement is produced in 4 (four) examples, 2 (two) for both sides.



  Agency for Privatization                                 Community
  Former Yugoslav Republic of Macedonia

  Director                                                 Director




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                                                                                        Section II: Sample Agreements
                                                                                        4. Small Business Assistance Program

                                                   AGREEMENT FOR
                                            Small Business Assistance Program


Signed on .............................. in ..................


I Contracting parties

           1. Agency of the Republic of Macedonia for Privatization, Nikola Vapcarov 7, Skopje,
           represented by ...................................................................................
           ( here and after : Agency ) and
           2. Service Provider.............................................. no. ..........., represented by
           ................................................................................... ( here and after: Service Provider).


II Contract’s outline

                                                                 Article 1

The objective of this Agreement is to regulate the conduct of services for the establishment of small
businesses of registered unemployed workers from the listed bankruptcy MSOEs or the listed
Kosovo affected enterprises or first job seekers or long-term unemployed (more than 1 year) with
starting entrepreneur potential or possibilities or in their first year of establishment of their own
business as a component of LRF as part of the technical and social assistance of the Social Support
Project (SSP).


III Obligations of the Agency

                                                                 Article 2

The Agency, based on monthly reports and invoices, will reimburse the Service Provider's costs of
delivering consultancy services, leading to the establishment of small businesses.

Reimbursement will refer only to the services actually performed that meet the criteria defined in
this Agreement and the accepted Project Proposal.

The Service Provider will provide evidence, that the participants equal the eligible individuals
specified.


                                                                 Article 3

The Agency will monitor and audit the operation and the performance of delivered services
according the Service Provider's program for consulting, aiming to providing support in the
establishment of small businesses.

IV Obligations of the Service Provider


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                                              Article 4

The Service Provider according to the needs and possibilities for the establishment of small
businesses will provide support to the workers to increase their chances in the establishment of a
business.

The Service Provider will provide services for small business assistance, organizing meetings and
seminars, and consulting support.

The agreed project proposal becomes part of the contract.


                                              Article 5

The Service Provider is obliged, once a month, to submit reports, lists of participants and invoices,
to the Agency about the delivered services for every individual worker and the small businesses.

The Service Provider is obliged, to submit reports to the Agency three months after the provided
services with proof of the formal establishment of the participants enterprise.

The Service Provider guarantees a formal enterprise establishment rate of a minimum of 15% of the
number of total participants. In case the Service Provider does not achieve the agreed formal
enterprise establishment rate the Agency will reduce the reimbursement of costs by a minimum of
30%. This withheld amount will be released as soon as the proof of the agreed formal enterprise
establishment rate is produced.

After completing the services the Service Provider will submit to the Agency the filled-in
questionnaires of the service recipients.


V Flow of funds and reimbursement procedures

                                              Article 6

The Service Provider is supposed to provide details of a local commercial bank account to receive
any LRF funds.


                                              Article 7

The Agency will divide the payments for the project according the number of participants/
enterprises. All payments will be based on monthly reports and invoices to the commercial bank
account. 30% of the total reimbursement will be retained until evidence of formal enterprise
establishment is provided.


                                              Article 8



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                                                                  4. Small Business Assistance Program

The Agency will reimburse costs for providing services of small business assistance based on the
submitted and approved program by the Agency according the agreed payment regime.

VI Cancellation and amendment of this agreement

                                               Article 9

If the Agency notices any kind of contradiction between the performance and the agreement or the
program, the Agency will inform the Service Provider in written form to remove it in reasonable
time. If the Service Provider does not solve the problem in due time the Agency may cancel the
agreement effective immediately.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:

"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.


VII General provisions

                                              Article 10

The contract parties are obliged to seek an amenable solution for all cases of dispute. In the case of
a dispute, if the parties cannot find a solution acceptable for both sides, they will go to the court of
jurisdiction in the FYR Macedonia.


                                               Article11

Amendments to the agreement may be initiated at any time by either party.

                                              Article 12

These agreement is produced in 4 (four) examples, 2 (two) for both sides.



  Agency for Privatization                                 Service Provider
  Former Yugoslav Republic of Macedonia

  Director                                                 Director




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                                                   4. Small Business Assistance Program




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                                                                                         Section II: Sample Agreements
                                                                                         5. Small Business Incubator

                                              AGREEMENT FOR
                                Technical and Financial Support of the Incubator


Signed on.....................in...........................


I Contracting parties


1. Agency of the Republic of Macedonia for Transformation of Enterprises with Social Capital-
Dame Gruev 14 Skopje, represented by
..............................................................................................................................
( here and after : Agency ) and

2. ............................................................................................/incubator/
..................................................../address/ represented by
.................................................................................. (here and after : Company).



II Contract’s outline

                                                                Article 1

The object of this agreement is to provide limited technical and financial support to the Company as
Business Incubator, in the frame of the LRF of the Social Support Project (SSP) with the aim to
support the development of small enterprises.


III Obligations of the Agency

                                                                Article 2

The Agency, based on the submitted and approved Program for the foundation of the Business
Incubator by the founder/s....................................................... including the financial calculation as
attachment of this agreement, will reimburse the costs to the Company:
- for renovation of the facilities for providing activities of the incubator
- for equipment necessary for the incubator
- monthly running costs from the working of the Company
- delivering services for small business assistance
for two years starting with the day the company is registered in the court.

                                                                Article 3

The Agency will reimburse the costs for the renovation of the facilities and the purchase of basic
equipment for the functioning of the Company, based on reports and invoices according the
Program for foundation of the Business Incubator and the approved financial calculation.



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                                                               5. Small Business Incubator

                                             Article 4

The Agency will reimburse monthly operating costs, based on monthly financial calculations,
approved by the Agency:
1. material costs /electricity, water, etc.
2. salaries for employee in the company as determined in the Program for foundation of Business
Incubator
3. other costs approved by the Agency
The reimbursement of these costs will be based on monthly reports, on list's attached to this
agreement, and invoices based on evidence of expenditure.
The reimbursement of the cost from this article will be for a two years period starting with the
day of registration the Company in the court as follows:
     100% of total operative costs in first year of working
     50% of total operative costs in second year of working

                                             Article 5

The Agency will reimburse the costs for delivered services in Small Business Assistance
Program according the criteria of LRF- Program for small business assistance and directions for
providing services in the small business assistance attached to this agreement.

                                             Article 6

The Agency will reimburse the foundation capital of US$50,000 for the working capital
revolving fund, .............days after the Company's registration in the court. The use of the
working capital revolving fund is regulated by the criteria for the credit capital attached to this
agreement.

                                             Article 7

The Agency will provide technical support to the Company and the participants with the aim to
support the development of the Company.

                                             Article 8

The Agency will permanently control and supervise the working of the Company.


IV Obligations of the Company

                                             Article 9

The Company is obliged to support, follow and secure the economic development of new
enterprises as users of their services.

The Company is obliged to acquire additional founders of enterprises and incorporate them in the
incubator with the aim to develop their own economic successes and to support the establishment
of the small enterprises.



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                                                               5. Small Business Incubator

The Company is obliged to maintain the equipment and capital according to the function
established and outlined in the Program and Agreement for the foundation of the incubator.

                                            Article 10

The Company will provide in 10/tenyears period from the registration day:
 qualified assistance and advise in the business establishment,
 consulting in the foundation of new enterprises and establishment of enterprises
 allocation of working capital as credits according the Criteria for using credit capital
 available office and production space for rent according the needs of participants
 provide comprehensive administrative and technical services for participants
 achieve a high occupation rate with founders of enterprises in the incubator by continuous
   acquisition of new entrepreneurs
 develop towards an economical viable institution within two years
 provide services from Program 4 (Small Business Assistance)
 reinvest all profits in projects for the development of the incubator as agreed and approved by
   the Agency

                                            Article 11

The Company will renovate the facilities and provide basic equipment for normal function and
tenants service, according the financial and time calculation as part of the program for foundation
of the incubator.

The Agency will reimburse expenses based on reports and invoices after evidence of expenditure.

                                            Article 12

The Company is obliged to inform the Agency of any deviations of the financial and the time
frame.

If the Company is guilty of a deviation, all costs will be reimbursed by the Company.

                                            Article 13

The Company is obliged to deliver monthly reports to the Agency approved by the founders until
the 10th of the following month.

                                            Article 14

The Company is obliged to deliver to the Agency reports and invoices for services from the
Program for Small business assistance separately for the participants in the incubator and
participants out of the incubator.
                                        Article 15

The manager of the Company is responsible for providing the orders from this agreement.




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                                                                  5. Small Business Incubator

V Supervising of the agreement

                                              Article 16

The Agency and the founders will supervise the realization of this agreement.



VI Duration of the agreement

                                              Article 17

This agreement is valid for 10/tenyears starting from the day of registration of the Company in
the court.

                                              Article 18

This agreement can be prolonged after the duration with both parities agree.

VII Cancellation and amendments of this agreement

                                              Article 19

The Agency will terminate this agreement if the Company works against the stipulations of this
agreement and the Program for the foundation of an incubator.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:

"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.


                                              Article 20

The Agency will inform the Company to remove defaults in a determined time, if any default
occurs in providing of this agreement.

If the Company does not remove the default the Agency can terminate this agreement effective
immediately.

The Agency will terminate this agreement if the Company does not provide the services as
described or follow the orders of this agreement.



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                                                                 Section II: Sample Agreements
                                                                 5. Small Business Incubator

The Company is obliged to return the money for renovation of the facilities, for the equipment
and working capital fund, invested by the Agency, in the case of 1,2 or 3 of this article.




VIII General provisions

                                              Article 22

In the case of a dispute if both parties do not find a mutually satisfactory solution, they will go to
the court of jurisdiction in the FYR Macedonia.

                                              Article 23

Amendments to this agreement could be made in any time if both parties agreed.

                                              Article 24

This agreement is in 4/four/copies/ for each party 2/two/.



  Agency for Privatization                                 Company
  Former Yugoslav Republic of Macedonia

  Director                                                 Director




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                                                                             Section II: Sample Agreements
                                                                             6. Regional Economic Development Planning


                                                  AGREEMENT FOR
                                       Regional Economic Development Planning


Signed on .............................. in ..................


I Contracting parties

1. Agency of the Republic of Macedonia for Privatization, Nikola Vapcarov 7, Skopje, represented
by ..............................................................................
( here and after : Agency ) and
2. Community.............................................. no. ..........., represented by
................................................................................... ( here and after: Community).

II Contract’s outline

                                                                 Article 1

The objective of this Agreement is to regulate the conduct of services for the development of a
Regional Economical Development Planning Study as part of the technical and social assistance of
the Social Support Project (SSP).


III Obligations of the Agency

                                                                 Article 2

The Agency, based on monthly reports, the development status of the study and invoices, will
reimburse the Community's costs of delivering consultant services, leading to the Regional
Economical Development Planning Study.

Reimbursement will refer only to the services actually performed that meet the criteria defined in
this Agreement and the accepted Project Proposal.

                                                                 Article 3

The Agency will monitor and audit the operation and the performance of delivered services
according the Community's program for consulting, aiming to providing the Regional Economical
Development Planning Study.

IV Obligations of the Community

                                                                 Article 4

The Community will develop the Regional Economical Development Planning Study and present
the final version to the public after acceptance by the community and the Agency.
The agreed project proposal and time schedule becomes part of the contract.


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                                                           6. Regional Economic Development Planning




                                               Article 5

The Community is obliged, once a month, to submit reports to the Agency about the status of the
study.

The Agency will reduce the reimbursement of costs by a minimum of 20% until the final version of
the Regional Economical Development Planning Study has been accepted.


V Flow of funds and reimbursement procedures

                                               Article 6

The Community is supposed to provide details of a local commercial bank account to receive any
LRF funds.

                                               Article 7

The Agency will divide the payments for the project according the status of development of the
study. All payments will be based on monthly reports and invoices to the commercial bank account.
20% of the total reimbursement will be retained until the final version of the Regional Economical
Development Planning Study is provided.


VI Cancellation and amendment of this agreement

                                               Article 8

If the Agency notices any kind of contradiction between the performance and the agreement or the
program, the Agency will inform the Community in written to remove it in reasonable time. If the
Community will not solve the problem in due time the Agency may cancel the agreement
immediately.

The Agency will terminate the contract, if the Service Provider in the judgement of the Agency, has
engaged in corrupt or fraudulent practices in competing for or in executing the contract. For the
purpose of this clause:

"corrupt practice" means the offering, giving, receiving or soliciting of anything of value to
influence the action of a public official in the selection process or in contract execution.
"fraudulent practice" means a misrepresentation of facts in order to influence a selection process or
the execution of a contract to the detriment of the Agency, and includes collusive practice among
service providers (prior to or after submission of proposals) designed to establish prices at artificial
non-competitive levels and to deprive the Agency of the benefits of free and open competition.


VII General provisions



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                                                            6. Regional Economic Development Planning


                                               Article 9

The contract parties are obliged to seek an amenable solution for all cases of dispute. In the case of
a dispute, if the parties cannot find an acceptable solution for both sides, they will go to the court of
jurisdiction in the FYR Macedonia.

                                               Article10

Amendments to the agreement may be initiated at any time by either party.

                                               Article 11

These agreement is produced in 4 (four) examples, 2 (two) for both sides.

  Agency for Privatization                                   Community
  Former Yugoslav Republic of Macedonia

  Director                                                   Director




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                                                           7. Loan Guarantee Program


                                  AGREEMENT FOR
                                Loan Guarantee Program


To be completed




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                                                    Section III: Monitoring of LRF Funds




           III. MONITORING OF LRF FUNDS




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                     Attachments:           Working Materials


Program 1.   Employment Counseling and Relocation Service

                     (Workmat1.xls)

Program 2.   Retraining Services

                     (Workmat2.xls)

Program 3.   Financing of Temporary Community Employment

                     (Workmat3.xls)
                     (Mat3Lists.doc)

Program 4.   Small Business Assistance Program

                     (Workmat4.xls)
                     (Mat4List4.doc)

Program 5.   Small Business Incubators

                     (Workmat5.doc)
                     (Mat5List2.doc)

Program 6.   Regional Economic Development Planning

                     (Workmat6.xls)
                     (Mat6list2.doc)

Program 7:   Loan Guarantee Program

                     (Workmat7.xls)


Examples of Tender Documents/Comments on the Final Report for all programs

                     (Workmat8.doc)




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