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.
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.
With general elections in Pakistan just around the corner, the ruling coalition, headed by the Pakistan People’s Party’s (PPP), and the other main political parties are increasingly considering the country’s economic revival as key to securing voters’ loyalties. This process is taking place against the backdrop of both high levels of corruption and a weak economy. According to Transparency International, over the past four years, the country has seen levels of corruption reaching Rs 8500 billion ($90 billion), with the National Accountability Bureau (NAB) putting the figure even higher, at Rs 2.9 trillion per year, or Rs 11.6 trillion — about $122 billion — over four years.
In response to the economic situation, three major political parties — the Muttahida Quami Movement, Pakistan’s third-largest party; the Pakistan Muslim League (N), currently the second largest party in Parliament; and the Pakistan Muslim League (Q) – have presented their economic reform agendas to the business community ahead of the elections, helping to bring economic issues to the forefront of the campaign.
On August 24 a fourth party, Pakistan Tehrik –e-Insaf (PTI), presented its own, especially detailed agenda. This agenda is based in part on the National Business Agenda for Pakistan, which was developed by the Pakistan Business Council (PBC) in 2010. Asad Umar, a key figure in PTI, previously served as Chairman of the PBC. The PBC’s National Business Agenda, which was designed to represent the priorities of Pakistan’s business communtiy as a whole, covered four critical reform areas: the consolidation of industry in Pakistan, creating a level playing field for industry, broadening the tax base, and the development of human capital.
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
A new video has been added to CIPE’s YouTube channel. It features an interview with Igor Munteanu, Executive Director of the Institute for Development and Social Initiatives IDIS Viitorul in Moldova. His organization has been working with CIPE on creating a National Business Agenda (NBA), the first such document drafted by the Moldovan private sector. NBA is a vital tool for the business community to encourage investment and stimulate business activity and economic growth. Developing an agenda mobilizes the business community to use its skills to effect public policy reform by setting legislative and regulatory priorities and clearly communicating them to policymakers. NBAs identify laws and regulations that hinder business activity. They also offer concrete recommendations and reforms to remove these barriers and improve the business climate. For more information see CIPE’s National Business Agenda Guidebook.
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