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.
Subscribe to the CIPE channel on YouTube to watch this and other CIPE videos and get regular updates on new postings about democratic development and market reform.