World Bank Study Highlights Voice of CIPE Partners in Moldova

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On June 11 the World Bankreleased a report titled, “Moldova: Policy Priorities for Private Sector Development.” The report highlights business constraints and proposals for reform in five key areas: customs administration, tax administration, business regulation (licenses, authorizations, permits, and inspections), competition framework, and access to finance. These priorities are in line with the National Business Agenda (NBA) prepared by CIPE partners in Moldova. In fact, the World Bank report makes multiple references to the 2012-2013 NBA document, citing it as “reflecting the views of a broad range of private sector stakeholders.”

The NBA is not only a document. To prepare it, a network of over 30 business associations and chambers of commerce from across Moldova go through a well-structured process that includes building broad consensus on priorities, analyzing the legal framework for each issue, and developing joint proposals for reform. Using this methodology, the chambers and associations utilize the NBA framework to prepare for a constructive dialogue with government. CIPE has partnered with leading Moldovan think tank Institute for Development and Social Initiative (IDSI) to build the capacity of NBA members to jointly articulate not only the key barriers businesses face, but also concrete proposals to overcome them.

In addition, CIPE and IDSI have been providing assistance to the NBA member organizations to create a private sector platform. Today this platform is well-known among policymakers, the broader business community, and civil society as the NBA network. The member organizations are committed to developing a partnership with government through public-private dialogue. The goal is to work together on improving the economy, creating more jobs, and improving the climate for doing business. The voice of the NBA network is especially important in the reform process as it represents the views of the small and medium-sized domestic enterprises that comprise a majority of the Moldovan private companies.

While both the NBA document and the World Bank study acknowledge the reforms that the government has already accomplished, they also stress the need to ensure full implementation of the adopted reforms. Therefore, the NBA provides significant value in the reform process since it provides a “reality check” on the quality of implementation of the business-related legislation and regulations – reflecting the actual experiences of private sector companies.

For example, in the World Bank’s report, the section on customs administration highlights how the NBA pointed out the lack of transparency in the methodology for determining the amounts of customs payments as well as procedures and documents required. This creates uncertainly and increases transaction costs for businesses. The study then supports the NBA’s proposal for the need to improve transparency and predictability of customs procedures so that enterprises know ahead of time the procedures, cost, and documents needed to comply with the law.

To address many of the barriers faced by the private sector, the World Bank report put forward an important recommendation to the Moldovan government: improve public-private dialogue. Such a recommendation fully supports CIPE’s long-term strategy in Moldova which is to build the capacity of the private sector to become meaningful stakeholders in the public-private dialogue.

The World Bank is not the first authority to give serious consideration to the views of the NBA network; several Moldovan government agencies have also recognized the value of NBA recommendations. Last December, the State Tax Inspectorate organized public consultations for the first time to discuss its five-year reform plan. The NBA network was invited to represent the private sector in these discussions. Earlier this year, the Ministry of Economy requested the NBA network to sign a memorandum of understanding that outlines the network’s role in providing the ministry with an independent assessment of the government’s economic reform initiatives. Most recently, the office of the newly appointed Prime Minister has requested meetings with the NBA network to discuss their proposals for the new government’s economic reform agenda.

When the private sector, through the NBA network, has a voice in the decision making process, it helps bridge the gap between policy and practice. Healthy communication between the Moldovan government and the business representatives will also help institutionalize a democratic culture of dialogue based on a transparent and constructive process.

Natalia Otel Belan is a Program Officer for Eastern Europe & Eurasia at CIPE.

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