THE NETWORK FOR BUSINESS ENVIRONMENT PROMOTION

SUPPORT TO THE IMPROVEMENT OF BUSINESS CLIMATE IN SERBIA

Radio Beograd 1, 23. October 2007
Kosovkom Ognjenović interview

Invitation: Press conference, 19. October 2007

Standard, 19. October 2007
Life Above Abilities, PhD Mirosinka Dinkić

Ekonometar, October 2007
Slight Improvement of Business Climate, Ms Kosovka Ognjenovic

Poslovna politika, August-September 2007 b

Poslovna politika, August-September 2007 a

Standard, August 2007
Aleksandra Brankovic: Business Climate in Serbia

Poslovna politika, April 2007

Invitation: Press conference, 19 April 2007

Poslovna politika, February 2007
The Network for Business Environment Promotion, Olga Ilic

Poslovna politika, January 2007

The Network for Business Environment Promotion has been established to work towards the improvement of the business climate for companies in Serbia. The Founding Assembly of the Network, at which its Statute was adopted and the Steering Committee elected, was held in Sava Centar in Belgrade on February 8, 2007. The establishment of the Network was coordinated by Ineko from Bratislava and the Economic and Social Policy Institute (ESPI) from Belgrade. The Government of the Republic of Serbia will also support the work of this Network.

The Network will contribute to the improvement of the business climate primarily by establishing a competent dialogue between its members, which result should be specific and constructive comments and recommendations to state authorities at different levels. The Network, will, therefore, attempt to have proactive impact on the enhancement of regulatory and institutional elements of the business environment. Network’s regular activities shall comprise:

giving comments on relevant laws and other regulations;
defining positions regarding the announced economic policy measures;
giving proposals of specific measures that should improve business environment;
following companies’ attitudes regarding the improvement/deterioration of the business environment in Serbia, based on which the index of business environment will be calculated four times a year;
communication of Network’s positions and activities to the public.

Network’s competence will be ensured by the structure and quality of its members, given the fact that not only companies, but also media houses, business associations, research think-tanks and independent experts dealing with the issue in question will participate in its work.

Opening the Founding Assembly of the Network for Business Environment Promotion, Dr Mirosinka Dinkic, on behalf of the Economic and Social Policy Institute, said she was very happy to see such a great interest of employers and civil society to join the Network, stressing how important business environment in Serbia actually was, given the fact that the success of company’s operation depended on the quality of that environment. - Therefore is the idea to improve the business environment, everyone in their own field, through creating a partnership between the private, civil and public sector, through such alliances” – said Mrs. Dinkic, thanking on this occasion to partners from Slovakia for choosing ESPI Institute to be their partner in Serbia, as well as to the Government of the Slovak Republic which financially supported this project.

At the Founding Assembly of the Network for Business Environment Promotion, the Slovak partner – INEKO Institute from Bratislava was represented by Mr. Gabriel Sipos and Dr Eugen Jurzyca.

Welcoming the participants at this event, Dr Eugen Jurzyca, who on this occasion represented not only INEKO Institute, but also the Business Alliance of Slovakia, talked about reasons and goals of such an organization. He said:

“Firstly, why are we here? People can be divided according to different criteria, starting from gender, nationality, religion, but also by orientation, and thus there are those concerned only about their own, individual interests, but also those interested in and concerned about the whole of society. For this reason, our Business Alliance wishes to gather the latter, those interested in society, in business climate, into one association and empower it as much as possible.

This Network should gather together people who want and can contribute to the quality of the business environment, business climate, who are ready to invest effort, time and money into progress. Of course, we expect that organizers would provide management and that they, and not members, would deal with it, because the organization is one of the most important elements. When setting up such a network in Slovakia, we were surprised by great attention and great response from the media that started calling us daily, to ask our people for interviews in the media. The Government has become interested and the number of Alliance members is growing”.

Presenting the basic goals and guiding principles of the Network for Business Environment Promotion, Aleksandra Branković, Network Project Manager in Serbia, specially emphasized that it was the Slovak partners who initiated the Network, which one of the priorities in international economic relations is the very assistance to Serbia in transition, and thus INEKO thought it would be beneficial to try to implement here this idea which they had previously successfully carried out in Slovakia.

According to Ms. Branković, this Network is in no way an unfair competition to other, similar associations. Quite the opposite – “the idea is that the Network establishes partnership with everybody, so that the members of this Network could be the members of any other organization and that some smaller organizations act as separate members within the Network. Bearing in mind, as we already said, that the Slovak Government financially supports this project, in the first year of Network’s work, the membership will be free.

The main quality of this association should be the fact that its members are above all companies, that is, Serbia’s business. However, Network members could also be research institutions, such as ESPI Institute, nongovernmental organizations dealing with some of the problems of the business environment, as well as eminent domestic experts – university professors who could give a great contribution with their knowledge and experience to the work of the Network. The key quality should be the fact that, by connecting all specialization fields, directly business-related and expertise in the area of economic policy implementation, knowing laws and ways in which an idea may be developed into a concrete proposal, we may give a constructive contribution to the improvement of the business environment” – said Ms. Branković. Pointing to an extensive experience of the Economic and Social Policy Institute in work on similar projects in the past, when certain problems in the relationship company-government, i.e. company-government institutions, laws etc. were pointed to, Ms. Branković invited companies which were faced with certain problems in practice or had an idea how to solve certain situations to contact the Institute, which would “see, as the coordinator of this entire project, in the constellation with other economic policy measures and with existing regulations and draft regulations, how it can be best formulated, and then, with members’ approval, such proposal would be made public i.e. it would be submitted to the government above all”, she said.

After presenting the Statute of the Network for Business Environment Promotion to the participants, which was also done by Ms. Branković, and the acceptance of certain suggestions and proposals that could be heard during the discussion, the Statute was unanimously adopted and the Steering Committee of the Network was elected.

As far as further activities of the Network for Business Environment Promotion are concerned, it should be said that after the Network has been officially registered with competent state authority, the website of the Network, which construction is already underway, should be released. This is the place where all significant information on membership, goals and activities of this association could be found, all suggestions, communications, announcements, reports from various events, etc.

All future activities in this first year of work, as Ms. Branković stressed, were designed in such a way so as to promote the Network both towards public and government institutions. Chronologically, the first activity is the organization of an essay competition for students. These activities are in particular focused on the labor market and problems pertaining to employment, taxes and contributions, layoffs and the like, and therefore, the topic for the essay competition will probably be related to the labor market, employment opportunities…Besides some other activities which the readers of “Poslovna politika” will be timely informed about, let us mention that a conference on the labor market situation is foreseen for the autumn – September or October,, with attendance of eminent experts from our country, business people, partners from Slovakia. This will be an opportunity to exchange experiences, give certain suggestions for overcoming problems, bearing in mind that large unemployment is really a serious problem in Serbia.

SLOVAK EXPERIENCE

Thanks to the readiness and a wish for “Poslovna politika” to get actively involved into and support the work of the Network as one of the founders from the very beginning, we had the honor and pleasure to meet and talk with the representatives of the Slovak INEKO Institute on the occasion of their visit to Belgrade. Here is a short interview which Dr Eugen Jurzyca, who represented, besides INEKO Institute, also the Business Alliance of Slovakia at this event, gave to us.

- Mr. Jurzyca, first of all, thank you for your time. Could you please say a few words about INEKO and the Business Alliance of Slovakia on whose behalf you are participating at the Founding Assembly of the Network for Business Environment Promotion in Belgrade?

INEKO Institute is an NGO that works on the promotion of economic and social reforms in Slovakia. The Institute was founded in 1999 and grew out of the Centre for Economic Development (founded in 1993). Therefore, it has emerged in a similar fashion as the ESPI Institute, that is, it grew out of another organization. We are dealing with all these issues which solving may contribute to the improvement of the situation in Slovakia and make the life of the citizens of Slovakia better.

During the late 1990s, we realized that an obstacle to good reforms is the fact that companies above all protect their own interests. This is all right, but at the same time, it is necessary to take care and protect the interests of the business environment. For this reason, we invited several thousands of companies to associate and help improving the business environment through the activities of the Business Alliance. As opposed to other associations, we are not focused on specific interests of companies or towns, but our whole attention is centered on general interest. Hence, this is an organization which targets general business environment. For example, there are associations of companies operating in the specific line of business, e.g. cement factories or chemical industry, which fight for lower prices of energy sources and do not deal with any other issue whatsoever, such as bankruptcy legislation, private ownership, the judiciary, social system. They are interested only in specific issues that are relevant for them.

One of the more important projects of the Business Alliance of Slovakia that I would like to mention on this occasion referred to the improvement of the labor market reform. That reform was rated by the World Bank as the best labor market reform.

It is interesting that, besides membership fee which companies pay and which makes it possible for the Alliance to work at all, very important also is the assistance which companies provide through their experts. Thus, in the mentioned labor market reform, besides people from the Alliance, we also had experts from big Slovak companies, who knew very well what kind of problems they encountered in the labor market.

- Bearing in mind that such an alliance, embodied in the Network for Business Environment Promotion, is about to come into life in our country, could you tell us something about the effects of the work of the Business Alliance of Slovakia so far? Has it lived up to expectations?

Since the Alliance really helps in the improvement of the business environment and does not deal with particular interests, I may say that we are very satisfied. However, there are still many reforms that are not over yet.

From the beginning of its work, the Alliance has participated in and helped the reform of the tax system, the pension system, the mentioned reform of the labor market, fiscal decentralization. Finally, the Slovak Republic records GDP growth of 8%, while unemployment rate is now slightly over 10%, while five years ago, for example, it stood at nearly 20%.

- How do you cooperate with the Government and other institutions, that is, are the ideas, opinions and propositions coming from the Alliance well received?

I don’t know how it will be with the new Government, since it has been on the scene only since the autumn, but we had very good cooperation with the former Government. The Government was taking into consideration our propositions and inviting our experts to participate in the work of advisory bodies. It even funded one of our projects – the project pertaining to the measurement of the quality of business environment in different regions of the Slovak Republic. The outcome of that was the Map of the Slovak Republic, from which anyone could see which region had better and which one had worse business environment. We measured, among other things, regional taxes (since some taxes are determined at a municipal level), the level of bureaucracy, infrastructure, education (education level) of people in each of those regions. All in all, there were many parameters which altogether illustrate the situation of the business environment. Every year, we create and publish the Report on the situation of the business environment in the Slovak Republic, which contains, besides the analysis of the situation, also recommendations to the Government on what should be done. Many of these recommendations are accepted.

- Do you have any information on the existence and work of similar alliances in other countries? What is their experience? Also, is Serbia the first country in which the Slovak Government financially supports such a project and have INEKO Institute and the Business Alliance of Slovak been already involved in that respect?

We have already worked on some international projects. We have recently worked with Bulgaria and Romania and with some other countries, even with the countries in Western Europe. The reason for which we decided to launch this program in Serbia is that we think that the improvement of the business environment is helpful for starting and for finishing some reforms. I couldn’t now speak in the name of the government, but I may say in the name of my organization that business environment is important for a successful Europe. And successful Serbia is important for successful Europe, too.

- Since we are talking about transition, Slovakia has passed much longer path in that respect than Serbia. Could you tell us something about some of your transition experiences which could be useful for us?

I would say that in some segments Serbia already has better business environment parameters than Slovakia. Slovakia has started earlier, while Serbia was burdened with certain historical events. However, Serbia is now catching up and for us, it is important to exchange experiences. Labor market reform in Slovakia was very successful; flat taxation; pension system reform. However, on the second place, right behind the labor market reform I would put fiscal decentralization and now towns and villages are competing to attract companies by reducing taxes, administrative burdens, they are much nicer to companies as they are trying to attract them to come and work in their territories.

- While it is still uncertain when Serbia would find its place in the European Union, the Slovak Republic is already a EU Member State. What are your experiences so far and how do you personally feel about it, that is, what has changed?

That date of accession is usually mentioned. But to be honest, the greatest changes took place during the 1990s because the Slovak Republic signed an agreement with Brussels already in 1992 (back then we were still Czechoslovakia) and thus all changes were carried out then. Thanks to that, when we officially acceded the European Union, nothing changed much. As for my personal impressions, that is different. For example, as opposed to you in former Yugoslavia, we in Slovakia could not travel that freely earlier. I lived in the vicinity of the Austrian border and I was always looking at that fence that could not be passed. Now we do not have that fence any longer and I feel much more free and comfortable. However, this is more of my personal impression than it could be said for the labor market.

- In which areas, in you opinion, it is possible to further broaden and enhance cooperation between our two countries, Serbia and Slovakia?

As far as trade, export and import are concerned, it is more of a concern of private companies. But NGOs and governments should exchange best experiences when we talk about governance, and in that respect, Slovakia could export its experiences in reforms I talked about, and what it can import from Serbia is experience in the reform of the education system.

- And for the end, do you have any message for Serbian businesspeople?

The main message would be that very important is a strong initiative from society; politicians cannot be successful without support from society. Therefore, there is no good business environment without businesses. If we make a comparison between a dirty and a clean village, the only difference between them is that the clean village saw a critical number of people who assumed responsibility to put things in order. For example, in the early 1990s, it was possible for politicians to come to power and than take certain steps, such as price liberalization, privatization, opening borders. And now, this cannot be done without support by these groups. For example, you cannot pursue the reform of the health system or the education system or the business environment. In Slovakia, doctors say “we are doctors, we have our job, politicians should do that and not that we carry out reforms”. On the other hand, politicians might have just come to power and know nothing about these reforms. Hence, it is why it is important that there is the initiative and support from the inside.

Olga Ilić

THE 2008 SUMMER SCHOOL OF ECONOMICS: Vienna and Chicago: Two Schools of Free-Market Economics. July 14th – July 25th 2008. Application Deadline: June 20th 2008.
Labour Market Reform in Serbia and Slovakia: The study "Labour Market Reform in Serbia and Slovakia" was published in January 2008. This paper was created within framework of the project "Founding reform coalition among representatives of business sector, NGOs and leading media in Serbia".
Students’ Essay Competition: The best student essays selected
Public announcement 19 July 2007: Proposal of priorities related to the Business Environment Promotion to be tackled by the new Serbian government during its time in office
Students’ Essay Competition: The best three essays will be awarded (awards fund of 100 thousand dinars gross) and published. Deadline for application June 30, 2007
Index of Business Climate: The analysis of the Index of Business Climate for the first quarter of 2007 released.
Press Release from the Press Conference Held on April 19, 2007: The Founding Assembly took place on February 8, 2007, with participation of the Network members and guests.