The support of the international financial organizations resulted in a heavy burden for entrepreneurs during the last few years as there were imposed new taxes. The National Employers Confederation of Moldova (CNPM) is organizing a forum of businessmen to present the constraints faced by businesses and to propose policies for overcoming them. The issue was developed by the CNPM chairman Leonid Cerescu in an interview for IPN.
----
– Mister Cerescu, how would you describe the business environment and what changes took place after Moldova announced its course to European integration?
– International financial organizations offered assistance in modernizing the country and supported the Europa course, but they imposed certain conditions on the Government. We, the businesspeople, found ourselves in a less advantageous situation. The tax on revenues was restored. The employers were obliged to pay for more days of temporary incapacity for work. There were taken other measures and the businesses perceived them as constraints. Furthermore, the world economic crisis also had an impact.
– Were there no positive effects in the period as for example the extension of the export markets?
– The steps were taken with the aim of strengthening the budget and resulted in a number of taxes, tax increases, actions aimed at ensuring the liquidity and functionality of the state. There was a crisis. The state struggled to survive and the authorities had to choose this way. Now the crisis has been overcome as the GDP grew by 4% and we ask ensuring advantageous development conditions for the businesspeople. We thank the authorities and the EU for the positive effects of the agreements reached with the Europeans. Based on these agreements, Moldova was able to export products to the EU. But export quotas were imposed on essential products, including wine. We didn’t use much these quotas as we have yet to work on the quality of products. But we think that the positive effects will appear after the signing of the Association Agreement with the EU. Until then, we must take steps to meet the European standards. Another positive moment is that the barriers to export were eliminated. The monopolists were removed and farmers started to make profit.
– However, the farmers say monopoly still exists in the area.
– Export was then liberalized and now we feel tectonic movements inside, which show that exports are again monopolized.
Let’s yet return to the positive effects. Projects and a lot of money came to the country. I can give as example the Road Fund, which rose from 400 million lei to over 1 billion.
– You said we still face problems as regards the quality of products. What should the economic entities do to deal with them?
– In order to export to the EU, we must meet the European requirements and standards. In the current situation, these requirements are much greater than those with which we can cope. The constraints experienced now by the Moldovan businesses prevent them from reaching these standards quickly. In order to meet these standards, we must be able to invest and have the necessary financing. But the fiscal pressure faced by the Moldovan companies prevents many of them from growing. The role of the state is to create attractive conditions for investments. We must have political stability and consistency. The budgetary-fiscal policy must also be stable. The investors should be able to design investment plans and to predict the situation so as to recoup the investments.
– The World Bank rankings published recently show that Moldova improved its rating as regards the business environment, lending and contract fulfillment. What influenced this improvement?
– Moldova climbed eight spots in the rankings, to the 78th from the 86th. The rankings are based on several criteria. We improved our position according to some of them, but fell according to other criteria. As regards lending, we went up 27 spots. We also climbed 21 spots as regards the payment of taxes and 12 spots in starting a business. But we slipped three spots in property registration, two positions as concerns insolvency situations and another two positions in the area of crossborder trade and customs regulations. Even if we improved our rating, we are anyway below the regional average. We are among the last as regards the obtaining of construction authorizations – 174th out of 189 countries. This area is very bureaucratized. A lot of time and money are needed for every signature and certificate. In comparison with other years, we have moved up, but very slowly. We didn’t make spectacular jumps as Georgia or Lithuania.
– A study of the major constraints faced by Moldovan businessmen was made on the initiative of the employers. Why did you commission such a study?
– We analyzed the relations with the Government and the social dialogue and established that dialogue exists on a number of platforms, but the final result is often not in favor of the business sector. When we speak with the authorities, they say that this is our view, but we do not have plausible arguments. We looked for financial resources and commissioned this study that identified the constraints affecting the business sector. Some of the constraints surprised us. For example, 8 in 10 companies consider that the periods of political instability affect the activity of the economic entities. Colleagues from other countries said such periods in their states have positive effects on businesses as the politicians struggle between them and do not become involved in business. The situation in our country is different.
– Is there an explanation for this?
– There is only a perception. When the politicians are busy with the political struggles, the functionaries who are lower in rank carry out excessive inspections and do what they want as they know that nobody is supervising them.
A finding is that 2 in 3 companies believe that corruption is a major obstacle to doing business. We know a case when an inspector examined a company owned by a foreign investor and identified no violations, but in the end asked for money at least for fuel. The investor was astounded.
Another finding is that two thirds of the companies think that political relations are necessary in order to benefit from the government’s support. Thus, one should have political ties in order to become prosperous. What is protectionism? It is when you are not inspected even if you work in the underground economy. When one wants to develop the business, inspections follow one after another.
– What policies should be implemented for these constraints to be removed?
– We want corporate governance to be introduced. We also want personal and institutional responsibility when abuses are committed against businesses, when the response and document issuing terms are not respected, etc. We do not have something like this now. The policies we will propose are centered on seven essential constraints. We worked out policies that will help eliminate them. We hope the decision makers will take them into consideration.
– You intend to stage a forum of businessmen on November 12. What will you propose to the authorities?
– We drafted a memorandum of understanding between the legal businesses of Moldova and decision makers concerning methods of dealing with the problems experienced in the business sector. We formulated proposals and pledge to honor particular obligations. We also want to make a call to the Moldovan businesspeople who want their work conditions to be improved to take part in the forum and not to remain indifferent. We also have another message: There is not much power where there are few people, but the power increases when there are many people! We call on the businesspeople to join forces so as to cooperate efficiently.
Mariana Galben, IPN
