Tag Archives: Moldova

Advancing Economic Development through Public-Private Dialogue: Moldova Case Study

Chisinau_City_Gate

When the public and private sectors work together to implement necessary economic reforms, entrepreneurs, businesses and citizens benefit from a more prosperous and vibrant democracy. Businesses possess the know-how and detailed knowledge of economic conditions, obstacles, and opportunities for growth, while governments have the means to pass business-friendly legislation. Public-private dialogue helps these two groups work together to arrive at effective policy solution.

Moldova’s National Business Agenda Network (NBA), comprised of more than 30 business associations and chambers of commerce from across the country, positioned itself as a key stakeholder in policymaking. With CIPE’s support, the Institute for Development and Social Initiatives (IDSI) institutionalized a culture of public-private dialogue where it did not exist before and encouraged greater transparency and inclusiveness in setting reform priorities in the areas of tax and customs law.

Find out how the Moldovan business community successfully built an advocacy coalition to work with the government on reform priorities in the recently-released case study “Public-Private Dialogue in Moldova”, part of a forthcoming case collection Strategies for Policy Reform.

Teodora Mihaylova is a Research Assistant at CIPE.

Public Private Dialogue: How Business Promotes Economic Development and Democratic Governance

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The private sector is a key actor in efforts to promote economic growth, reform the business climate and strengthen democratic policymaking worldwide. Dialogue is a key part of the Busan process, which recognizes that the for-profit private sector is a central driver of development and emphasizes the importance of inclusive dialogue for building a policy environment conducive to sustainable development.” Businesses possess the know-how of economic conditions, obstacles and opportunities for growth, while governments have the means to pass business-friendly legislation.

From a democratic point of view, a vibrant private contribution to dialogue expands participation in policymaking by creating space for civic engagement in governance, improves the quality of business representation and supplements the performance of democratic institutions.

Building upon its longstanding experience in the field, CIPE has been invited to participate in the 7th Annual Public Private Dialogue Global Workshop organized by the World Bank, BMZ-The German Federal Ministry for Economic Cooperation and Development, and GIZ in Frankfurt, Germany.

Senior Knowledge Manager Kim Bettcher will moderate a session on long term public private dialogue sustainability and the role of chambers of commerce and business associations. Director of Multiregional Programs Anna Nadgrodkiewicz will make a presentation on a new initiative between the CIPE, the World Bank Institute, and development partners on building an open and collaborative platform for public private dialogue resources.

CIPE has extensive experience in advancing policy dialogue around the world and supports market-oriented reform and private sector development by mobilizing representative business associations and strengthening their capacity to advocate for policy solutions. CIPE also invests in business association development that enables effective dialogue. Some regional success stories in public private dialogue are outlined in more detail below.

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10 Lessons from CIPE’s Webinar on Public-Private Dialogue

A public-private dialogue session with Senegalese President Macky Sall.

A public-private dialogue session with President Macky Sall in Senegal. CIPE partners organize such sessions in countries around the world.

In a webinar on July 11, Elias M. Dewah, former Executive Director of the Botswana Confederation of Commerce, Industry, and Manpower (BOCCIM), and other panelists shared prominent lessons from their experience with public-private dialogue initiatives in Africa and Eastern Europe and the Caucasus. Here are some of the highlights, addressed to private sector participants in advocacy.

  1. Be consistent and persistent in advocacy and dialogue to overcome government inertia.
  2. Remain independent from government but work with officials in an advocacy capacity.
  3. Be proactive and constructive. Don’t just criticize but offer alternative policy solutions.
  4. Come to the table with well-researched evidence. Link up with independent think tanks as needed.
  5. Be representative and inclusive of various sectors, not just a few elite businesses.
  6. Speak with one voice at all times.
  7. Move from issues involving transactions to systemic change.
  8. Make use of existing legal frameworks that provide for transparency and consultation.
  9. Find the most effective point of engagement in the legislative process – this could be in the drafting stage.
  10. Evaluate the impact. Look beyond dialogue processes at what is actually achieved.

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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.

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Anatomy of a Reform: Implementing the Presumption of Innocence in Moldovan Tax Administration

Participants at a roundtable on the National Business Agenda Monitoring Report, held on December 4th, 2012 in Chișinău, Moldova.

Participants at a roundtable on the National Business Agenda Monitoring Report, held on December 4th, 2012 in Chișinău, Moldova.

In a distant corner of Eastern Europe, Moldova’s economy is struggling amidst Europe’s recent recession. The economy grew at a rate of just 0.5% in 2012 and The Economist predicts that the economy will grow at an annualized rate of 3.3% between 2013 and 2017.

Such a growth rate is not sufficient to lift Europe’s poorest country, in terms of price-adjusted GDP per capita, out of poverty. The government’s regulatory policies are oriented towards attracting foreign investment and appeasing European donors instead of promoting local business development and capacity building.

Although for this reason Moldova has shot up the World Bank’s “Doing Business” rankings, the business community complains that the business environment is worsening. Moldova’s business community needs tax and customs reforms for the country to prosper.  The fragmentation of the business community has stymied previous appeals to the government, which has accused the business community of incompetence.

CIPE and its Moldovan partner, the Institute for Development and Social Initiatives, a leading think tank, are striving to foster public-private dialogue to improve the business environment by strengthening the institutions of the Moldovan business community. Through the National Business Agenda mechanism, business associations from around Moldova have formed a national coalition to advocate for vital reforms to the tax code and customs regulations. One crucial reform they are advocating for is establishing the presumption of innocence in tax disputes — which could have important effects on the ability of Moldovan businesses to grow and prosper.

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Lessons from Moldova’s transition

Dr. Veaceslav Ionita, Head of Moldova's Parliamentary Committee on Economy, Budget and Finance (Photo: CIPE)

In April 2009, flawed elections in Moldova triggered the so-called “Twitter revolution,” a wave of youth-driven public protests. The people who took to the streets were outraged not only by the manipulated results of the election but also by Moldova’s ineffective economic transition nearly two decades after the fall of the Soviet Union and the country’s independence. The protests led to an early parliamentary election after which four parties formed a reform-oriented coalition, The Alliance for European Integration (AEI).

With the new leadership came a new way of engaging the public in the policymaking process. The coalition’s priority has been to improve the quality of regulations and to reduce bureaucratic inefficiencies. In order to do that, the government actively engaged with different civil society groups, including private sector organizations. Earlier this year, for instance, more than 30 business associations and chambers of commerce from across Moldova presented to the government their priorities for reform outlined in a National Business Agenda for 2012-2013. The conference was attended by various officials, including the Head of the Parliamentary Committee on Economy, Budget and Finance, Dr. Veaceslav Ionita.

In this CIPE Feature Service article, he talks about Moldova’s path to reforms and the importance of transparent public-private dialogue to democratic development. He notes that “Democracy is not only words; democracy is an instrument that fosters public pressure on different government agencies to perform in a transparent and accountable way. Democratic institutions can thus ensure the basis for economic development and increase security for investors.”

Article at a Glance

  • Strengthening democratic institutions in transition countries is crucial not only for their democratic development but also economic success.
  • Public debate on economic and regulatory issues encourages transparency and weakens systemic corruption.
  • By transparently involving broad-based private sector in the policymaking process Moldova is on a path to building a new, competitive economy.

You can read the full article here: http://www.cipe.org/publications/fs/pdf/123011.pdf

Moldova’s Business Community Puts Democracy into Action

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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.