economic crisis: impacts and responses by the business community kiev, june, 2009
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ECONOMIC CRISIS: ECONOMIC CRISIS:
IMPACTS AND IMPACTS AND RESPONSES BY THE RESPONSES BY THE
BUSINESS COMMUNITYBUSINESS COMMUNITY
Kiev, June, 2009Kiev, June, 2009
NALED was established in March 2006 NALED was established in March 2006 at the at the initiative of USAID/MEGA program as a unique initiative of USAID/MEGA program as a unique body that blends the influences of public, private body that blends the influences of public, private and civil sector in Serbiaand civil sector in Serbia..
President Tadic and Michael Polt signing NALED President Tadic and Michael Polt signing NALED declarationdeclaration
MISSIONMISSION
The primary mission of NALED is to The primary mission of NALED is to facilitate dialogue between local and facilitate dialogue between local and central government, institutions and central government, institutions and the private sector and thus create the private sector and thus create enabling environment for the growth enabling environment for the growth of business community in Serbia, of business community in Serbia, increased investments and enhanced increased investments and enhanced economic development.economic development.
STRATEGIC GOALS OF THE ALLIANCESTRATEGIC GOALS OF THE ALLIANCE
II Promote legal reforms that support Promote legal reforms that support local economic local economic development development
IIII Create an enabling environment for Create an enabling environment for investments and investments and business developmentbusiness development
IIIIII EstablishEstablish dialogue between private, dialogue between private, public and NGO public and NGO sectorsector
IVIV Strengthen municipal capacities Strengthen municipal capacities through training through training aand consulting servicesnd consulting services
VV Public private partnershipsPublic private partnerships
MYTH # 1: DONOR-DRIVEN MYTH # 1: DONOR-DRIVEN ORGANIZATIONS CANNOT BECOME ORGANIZATIONS CANNOT BECOME SUSTAINABLESUSTAINABLE
• 90 MEMBERS90 MEMBERS
• INDEPENDENT OPERATIONSINDEPENDENT OPERATIONS
• MEMBERSHIP FEES = OPERATIONAL COSTSMEMBERSHIP FEES = OPERATIONAL COSTS
MYTH # 2: THERE IS NO CRISISMYTH # 2: THERE IS NO CRISIS
• OVERLY OPTIMISTIC BUDGET PROJECTIONSOVERLY OPTIMISTIC BUDGET PROJECTIONS
• NO PREPARATORY ACTIVITIESNO PREPARATORY ACTIVITIES
• LACK OF INSTITUTIONAL RESPONSELACK OF INSTITUTIONAL RESPONSE
GlobalGlobaleconomyeconomy
Crisis Crisis detectiondetection
AnaAnalyses & lyses & discussiondiscussion
of adequate of adequate measuresmeasures
First First reactions & reactions & mitigation mitigation measuresmeasures
Review of effectsReview of effects
Responses and reactions to global financial crisisResponses and reactions to global financial crisis
IV Q 07IV Q 07 IV Q 08IV Q 08I Q 08I Q 08 II Q 08II Q 08 I Q 09I Q 09III Q 08III Q 08
Serbian Serbian economyeconomy
Following global trends and Following global trends and interpreting crisis as an investmentinterpreting crisis as an investment
opportunity for Serbian economyopportunity for Serbian economy
Detection of Detection of crisis in Serbiacrisis in Serbia
Delivery of initial Delivery of initial assistance measuresassistance measures
SerbianSerbianagriculturagricultur
ee
Seeing a chance for Serbian Seeing a chance for Serbian AgricultureAgriculture
Lack of interest to analyze and prevent Lack of interest to analyze and prevent effects of the crisis, followed by overlyeffects of the crisis, followed by overly
optimistic projections for Ag sectoroptimistic projections for Ag sector
MYTH # 3: CRISIS WILL AVOID MYTH # 3: CRISIS WILL AVOID SERBIASERBIA
• CRISIS AS MODUS OPERANDI CRISIS AS MODUS OPERANDI
• CRISIS AS A WINDOW OF OPPORTUNITYCRISIS AS A WINDOW OF OPPORTUNITY
• SERBIA TO EMERGE VICTORIOUSSERBIA TO EMERGE VICTORIOUS
MYTH # 4: CRISIS EFFECTSMYTH # 4: CRISIS EFFECTS • GLOBAL EFFECTS vs. LOCAL GLOBAL EFFECTS vs. LOCAL CONSEQUENCESCONSEQUENCES• UnemploymentUnemployment• Less FDILess FDI• Lack of financingLack of financing
• CRISIS – good excuseCRISIS – good excuse – – top prioritytop priority
CROSS-CUTTING EFFECTS
Favoritism in policy responseLower demandDrop in production Decreased buyer financingTightened credit for producers Growing unemployment Falling asset pricesDelayed reforms and EU integrationProtectionism
Lower credit Lower credit capacitycapacity
Drop in Drop in available inputsavailable inputs
Less profitLess profit Drop in Drop in productionproduction
Drop inDrop inconsumptionconsumption
Decreased Decreased financingfinancing
IncreasedIncreasedpricesprices
Drop in pricesDrop in prices Decreased Decreased competitivenesscompetitiveness
NALED-REPORTED EFFECTS
NEGATIVE :
Increased taxes on deed contractsIncreased local fees and taxes imposed on businessesCut in intergovernmental transfersDrop in project activities (donor and business driven)Default clients and deferred payments
NALED-REPORTED EFFECTS
POSITIVE:
New mechanisms of financingLess local and central government employeesResponsible and cost-saving behavior Regional alliancesPublic private partnership
MYTH # 5: CRISIS IS MYTH # 5: CRISIS IS RESPONSIBILITY OF THE RESPONSIBILITY OF THE GOVERNMENTGOVERNMENT
• TRUE! TRUE! But no government can do it aloneBut no government can do it alone
• LOCAL AND REGIONAL STRATEGIESLOCAL AND REGIONAL STRATEGIES
• SUPPORT FROM PRIVATE AND CIVIL SUPPORT FROM PRIVATE AND CIVIL SECTORSECTOR
PROPOSED GOVERNMENT MEASURES
Deliver information about the depth of the crisis Deliver information about the depth of the crisis and its effects, Offer exit and mitigation and its effects, Offer exit and mitigation strategiesstrategiesFollow consistent and foreseeable policy Follow consistent and foreseeable policy approachapproachStimulate borrowing for productionStimulate borrowing for productionProvide budget subsidies and investment supportProvide budget subsidies and investment supportDelay the drop in FDIDelay the drop in FDIFacilitate access to donor fundsFacilitate access to donor fundsDevelop capacity for IPA fundingDevelop capacity for IPA funding
NALED – RESPONSE TO THE CRISIS
1.DIRECT
Partnership with the governmentSupport in delivery of mitigation measures
2. INDIRECT
Business-government encountersBusiness Friendly CertificationOut of the Maze
Certification of Business Friendly Municipalities
Partners:USAID, Ministry of economy, SIEPA,Provincial Secretariat for local government
Municipalities in evaluation process:Vranje, Subotica, Prokuplje,Uzice, Leskovac
Status:Three holders of certificates: Loznica, Kragujevac, Indjija
DetaDetailed analysisiled analysisof local governmentsof local governments
Input by the Input by the business communitybusiness community
COUNTER THE CRISIS!COUNTER THE CRISIS!
Out of the MazeOut of the MazePartners
GoalCut red tape in Serbia
NALED’s GREY BOOK as a guide with proposed recommendations for removal of administrative barriers for business development in Serbia.
ResultsOne-stop shop for business registration
OUT OF THE CRISIS MAZEOUT OF THE CRISIS MAZE
Dialogue between public and private sector. Regulatory reform.Good governance.
NALEDNALEDZetska 4a/2Zetska 4a/2, 11000 Belgrade, 11000 Belgrade
T: +381 11 334 7634T: +381 11 334 7634F: +381 11 334 7614F: +381 11 334 7614
naled@naled-serbia.org
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