Author Archives: Natalia Otel Belan

World Bank Study Highlights Voice of CIPE Partners in Moldova

Moldova NBA logo

 

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.

CONTINUE READING

Improving Transparency and Integrity in Kosovo’s Public Procurement

Panelists at a Riinvest public procurement conference in 2011. (Photo: CIPE)

Panelists at a Riinvest public procurement conference in 2012. (Photo: Riinvest)

In February this year, Kosovo celebrated  five years since its declaration of independence. The new country is working to establish a viable democracy with well-governed institutions conducive to economic development and prosperity. Persistent corruption, weak rule of law, and poor quality of public institutions have undermined Kosovo’s reform efforts and sewn distrust in the government among citizens. Much of this is due to the political system that condones patronage relationships between politicians and business cronies who rely on weak institutions to secure control of the economy.

At the core of the problem is lack of accountability within government agencies and limited mechanisms for oversight by civil society and the private sector. Public procurement tenders, for instance, are awarded based on privilege and political loyalty rather than free and fair competition. Furthermore, government employees in charge of managing public tenders are left unaccountable for their flawed decisions and the resultant inefficiencies and corruption. In order to dismantle this crony system, Kosovo’s civil society and private sector need to take action to bring greater transparency and accountability to the public procurement process.

Since public tenders make up roughly one fifth of Kosovo’s GDP, it is crucial to strengthen the management of public funds and build a transparent and accountable implementation system that guarantees fair competition for everyone in the private sector. CIPE and its partner, the Riinvest Institute for Development Research, a leading think tank in Kosovo, have been working since 2011 to address the weaknesses in the public procurement process.

CONTINUE READING

Albanian Business Community Unites Against Tax Barriers

A representative of the Albanian Association of Meat Processors, Alban Zusi, speaks about tax challenges at the Consultative Forum on June 29, 2012, in Tirana. (Photo: Carmen Stanila/CIPE)

Engaging the business community in an open debate not only contributes to better economic policy, but also creates space for the private sector to participate in democracy. Public-private dialogue is an excellent tool for the private sector to discuss the challenges they face in a transparent manner and debate possible solutions from the business point of view, as well as highlighting issues the government may have overlooked.

To be successful, representatives of the private sector need to unite around common priorities and agree on the solutions for reform. Consultations with as many businesses and entrepreneurs as possible are therefore critical to maintaining a “reality check” on the process and achieving credibility with government officials.

On June 29, representatives of the Albanian business community met at a Consultative Forum in Tirana to discuss the current tax barriers they face and propose solutions that would improve the overall business climate in the country. About 30 representatives from various business associations discussed the proposals that emerged from a series of focus groups with businesspeople around the country. In the months leading up to the event, CIPE partner the Albanian Center for Economic Research (ACER) conducted the consultations in the towns of Shkodra, Korca, Vlora and Saranda.

CONTINUE READING

Democracy and the Role of Private Sector

Russians voted in parliametary elections earlier this month. (Photo: AFP/Getty Images)

When the Soviet Union ceased to exist twenty years ago, fifteen separate countries emerged from the fall, each embarking on its own path to democracy and a market economy. The expectations were high that the transition period would be relatively short since these countries had the freedom to choose their leaders and policies.

After the Fall: 20 Years of Post-Soviet Reform

Twenty years later, citizens of many post-Soviet countries question the benefits of democracy, as they feel it has not delivered a better life and equal opportunities. These countries suffer from weak institutions that are unable to protect citizens’ rights (including property rights), widespread corruption, and the concentration of economic power in the hands of elites.

According to Transparency International’s 2010 Corruption Perception Index, citizens in most of these countries depict a rather gloomy picture, with Kazakhstan and Moldova ranking at 105, while Russia, Tajikistan, Kyrgyzstan, Turkmenistan and Uzbekistan rank between 154 and 172 out of 178 countries in the survey.

As experience in Central Europe, including the Baltic states, has shown, strong grassroots participation in the decision-making process is necessary to achieve long-lasting political and economic reform. The private sector, including representatives of  small and medium businesses, needs to join forces to push for change.

The World Bank’s Doing Business Survey reveals that in Latvia, Estonia, and Lithuania where the private sector is active, important reforms to reduce barriers to economic and business development took place, with these countries ranking between 21 and 27 out of 183 countries surveyed. Kazakhstan, Armenia, Azerbaijan, Belarus, Kyrgyzstan and Moldova, where the private sector is in its initial stages of engagement in policymaking, made moderate progress, ranking between 47 and 81. Russia, Ukraine, Tajikistan and Uzbekistan still have a long way to go to make it easier for businesses to operate, ranking between 120 and 166.

The private sector, through independent business associations and chambers of commerce, is slowly realizing its role and taken the lead to promote rule-of-law, transparency in policymaking, and government accountability. CIPE has helped build the voice of business in Armenia through a Business Advocacy Network uniting 25 associations; in Moldova through a National Business Agenda Network of over 30 organizations; in Kyrgyzstan through a National Alliance of Business Associations uniting 33 organizations, and other countries across the region.

The private sector’s collective action has started to make inroads in reducing corruption by improving legislation and clarifying regulations affecting business in Moldova, Ukraine, Belarus, Armenia, and Russia. Associations across the region that engaged in an open policy dialogue provided a public platform to discuss the need to improve property rights and reduce administrative barriers to small business.

Looking forward, there is a continuous need to strengthen the capacities of associations throughout the region to become strong advocates for their business members. They also need to focus more efforts on increasing government accountability and closing the “reality gap” between adopted laws and actual implementation, thus further reducing corruption risks for business.

CIPE is working with coalitions in 18 regions in Russia to develop methodologies for assessing the quality of government services to citizens and businesses. In Moldova, CIPE is supporting a network of business associations to monitor government implementation of their policy proposals put forward in an annual National Business Agenda.

While there is tremendous work to be done to realize the dreams of 1991, one lesson is clear: the private sector has a stake in the process, as democratic systems are more likely to refrain from arbitrary seizure of property, receive input on economic reform, and strive for a prosperous economy for all.

This post is part of a series on the fall of the Soviet Union, the 20 years of reforms that followed, and the challenges that lie ahead.

Read all of the blogs in this series:

20 Years of Corruption

Democracy in Ukraine: 20 Years Later

Helping Business Find its Voice in the Former Soviet Union

Entrepreneurial Development in Russia

Democracy and the role of the Private Sector

Twenty Years After the USSR, Still Waiting for Freedom

Moldova’s Business Community Puts Democracy into Action

2011 NBA conference

Moldovan Business Associations present the 2012-2013 National Business Agenda to government. (Source: IDSI)

Last week, more than 30 business associations and chambers of commerce from across Moldova presented to the government their priorities for reform outlined in the third National Business Agenda for 2012-2013. The more than 70 participants included representatives of the NBA network and its coordinating council, government officials, media, civil society, and donor organizations. The conference was attended by the Minister of Finance, Veaceslav Negruta, the Head of the Parliamentary Committee on Economy, Budget and Finance, Veaceslav Ionita, the Economic Adviser of the Prime Minister, Constanta Popescu-Mereacre, and the Head of Entrepreneurship Department at the Ministry of Economy, Cezar Ilias.

Representatives of the coordinating council presented two key priorities: reforming tax collection and customs administration. While speaking about these two problem areas, they focused mostly on explaining their 13 proposals that included specific solutions, among which were the following:
• preparation of an official interpretation of the Tax Code to eliminate arbitrary interpretation by various officials;
• clarification of specific functions of state agencies in charge of inspecting business activities;
• increasing transparency of and providing access to information in regards to all import-export transactions by publishing all customs requirements and regulations on the website of the Customs Service;
• simplification of import-export procedures through official amendments to the Customs Code rather than through internal documents that are not accessible to business; and
• creation of a one-stop shop for all customs processing.

At the same time, the conference discussions were centered on reviewing the results of the proposals from 2010 NBA which also focused on the tax and customs reform. Out of 17 proposals, two are already being implemented, three are partially implemented, while the remaining 12 proposals are still to be adopted and implemented.

To prepare the new proposals and monitor the implementation of the 2010 NBA proposals, the NBA network created separate working groups that the Institute for Development and Social Initiatives, CIPE’s partner in this program, helped facilitate and provide technical and analytical support for. What is interesting is that the working group on monitoring the 2010 NBA proposals was the most active working group with the most members (about 12) from various associations. This shows that the private sector is much more eager to see what happens with their proposals and ensure that relevant government agencies respond to their proposals and implement the proposed changes.

Igor Crapivca, head of the Business Club “Timpul” and one of the members of the network’s coordinating council, said that the private sector provides significantly higher contributions to the national budget then the inflows from the International Monetary Fund and the World Bank; therefore, the government needs to listen to the views of its business community. Since the business sector is the largest taxpayer, the government needs to provide a sound climate for economic activities. The head of the Parliamentary Committee for Economy, Budget and Finance, Viaceslav Ionita, said that starting in December 2011 the Parliament will introduce an information system through which the parliament will be able to communicate directly with the business community in regards to the economic legislation under discussion. The head of Entrepreneurship Department at the Ministry of Economy, Cezar Ilias, mentioned that at the end of December his Ministry will create a working group in charge of communication with the business community. Tatiana Lariusin, IDIS’s Senior Economist who is coordinating the NBA program together with CIPE, said that the dialogue between business and government needs to be continuous and transparent, not in the corridors of the parliament or government buildings that can be detrimental to both.

The last session of the conference focused on next steps for the NBA network and how to make the public-private dialogue more effective. The conclusions were that the network needs to disseminate more information about the working groups’ activities and the process the private sectors goes through to prepare and monitor the NBAs. When the proposals are put forward to government, the network also needs to explain the process behind the NBA proposals: how the network consulted with their business members from various associations across the country, how they conducted the analysis of the priorities, and what the discussion process was to come to consensus on the proposals and solutions. The representatives of the NBA network also agreed to launch a media campaign to ensure that there is broad public support and understanding of the reform proposals under the NBA process.

Kyiv Conference: Highlights of Day 1

Despite the H1N1 fears, the majority of those that registered for the conference were in Kyiv today. We were very glad to welcome about 70 people from 20 countries this morning. Today was quite exciting with three panels engaged in very lively discussions on lessons from successful and unsuccessful transition, anti-corruption strategies, and corporate governance.

John Sullivan, CIPE executive director, set the tone for the two days with the remark that each country travels its own path; it is important that the reform process is built up from the grassroots to identify issues that are important locally and turn them into an agenda for reform.

CONTINUE READING

Countdown to Kyiv Conference

Three more days till CIPE’s Kyiv conference marking 20 years after the fall of the Berlin Wall! While many around the world have commemorated the fall of the Wall this week by looking back at the economic and political developments during the transition, this conference will focus on the future of reform across the region. A key constraint to consolidating democracy and market economies in the post-communist countries is a lack of knowledge about effective strategies for reform. At this two-day conference, CIPE and about 70 past and current partners will be cataloging first-hand lessons from successful and unsuccessful transitions and will devise strategies to address the remaining challenges to democratic and economic reform.

CONTINUE READING