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ECONOMIC CRISIS: IMPACTS AND RESPONSES BY THE BUSINESS COMMUNITY Kiev, June, 2009

ECONOMIC CRISIS: IMPACTS AND RESPONSES BY THE BUSINESS COMMUNITY Kiev, June, 2009. NALED was established in March 2006 at the initiative of USAID/MEGA program as a unique body that blends the influences of public, private and civil sector in Serbia .

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ECONOMIC CRISIS: IMPACTS AND RESPONSES BY THE BUSINESS COMMUNITY Kiev, June, 2009

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  1. ECONOMIC CRISIS: IMPACTS AND RESPONSES BY THE BUSINESS COMMUNITY Kiev, June, 2009

  2. NALED was established in March 2006 at the initiative of USAID/MEGA program as a unique body that blends the influences of public, private and civil sector in Serbia. President Tadic and Michael Polt signing NALED declaration

  3. MISSION The primary mission of NALED is to facilitate dialogue between local and central government, institutions and the private sector and thus create enabling environment for the growth of business community in Serbia, increased investments and enhanced economic development.

  4. STRATEGIC GOALS OF THE ALLIANCE I Promote legal reforms that support local economic development II Create an enabling environment for investments and business development III Establishdialogue between private, public and NGO sector IV Strengthen municipal capacities through training and consulting services V Public private partnerships

  5. MYTH # 1: DONOR-DRIVEN ORGANIZATIONS CANNOT BECOME SUSTAINABLE • 90 MEMBERS • INDEPENDENT OPERATIONS • MEMBERSHIP FEES = OPERATIONAL COSTS

  6. MYTH # 2: THERE IS NO CRISIS • OVERLY OPTIMISTIC BUDGET PROJECTIONS • NO PREPARATORY ACTIVITIES • LACK OF INSTITUTIONAL RESPONSE

  7. Responses and reactions to global financial crisis IV Q 07 I Q 08 II Q 08 III Q 08 IV Q 08 I Q 09 Analyses & discussion of adequate measures Global economy First reactions & mitigation measures Crisis detection Review of effects Serbian economy Following global trends and interpreting crisis as an investment opportunity for Serbian economy Detection of crisis in Serbia Delivery of initial assistance measures Lack of interest to analyze and prevent effects of the crisis, followed by overly optimistic projections for Ag sector Serbian agriculture Seeing a chance for Serbian Agriculture

  8. MYTH # 3: CRISIS WILL AVOID SERBIA • CRISIS AS MODUS OPERANDI • CRISIS AS A WINDOW OF OPPORTUNITY • SERBIA TO EMERGE VICTORIOUS

  9. MYTH # 4: CRISIS EFFECTS • GLOBAL EFFECTS vs. LOCAL CONSEQUENCES • Unemployment • Less FDI • Lack of financing • CRISIS – good excuse • – top priority

  10. CROSS-CUTTING EFFECTS • Favoritism in policy response • Lower demand • Drop in production • Decreased buyer financing • Tightened credit for producers • Growing unemployment • Falling asset prices • Delayed reforms and EU integration • Protectionism

  11. Decreased financing Lower credit capacity Drop in available inputs Less profit Drop in production Drop in prices Decreased competitiveness Increasedprices Drop in consumption

  12. NALED-REPORTED EFFECTS NEGATIVE : Increased taxes on deed contracts Increased local fees and taxes imposed on businesses Cut in intergovernmental transfers Drop in project activities (donor and business driven) Default clients and deferred payments

  13. NALED-REPORTED EFFECTS POSITIVE: New mechanisms of financing Less local and central government employees Responsible and cost-saving behavior Regional alliances Public private partnership

  14. MYTH # 5: CRISIS IS RESPONSIBILITY OF THE GOVERNMENT • TRUE! • But no government can do it alone • LOCAL AND REGIONAL STRATEGIES • SUPPORT FROM PRIVATE AND CIVIL SECTOR

  15. PROPOSED GOVERNMENT MEASURES • Deliver information about the depth of the crisis and its effects, Offer exit and mitigation strategies • Follow consistent and foreseeable policy approach • Stimulate borrowing for production • Provide budget subsidies and investment support • Delay the drop in FDI • Facilitate access to donor funds • Develop capacity for IPA funding

  16. NALED – RESPONSE TO THE CRISIS • DIRECT • Partnership with the government • Support in delivery of mitigation measures • 2. INDIRECT • Business-government encounters • Business Friendly Certification • Out of the Maze

  17. 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 Detailed analysis of local governments Input by the business community

  18. COUNTER THE CRISIS!

  19. Out of the Maze Partners Goal Cut red tape in Serbia NALED’s GREY BOOK as a guide with proposed recommendations for removal of administrative barriers for business development in Serbia. Results One-stop shop for business registration

  20. OUT OF THE CRISIS MAZE Dialogue between public and private sector. Regulatory reform. Good governance.

  21. NALED Zetska 4a/2, 11000 Belgrade T: +381 11 334 7634 F: +381 11 334 7614 naled@naled-serbia.org

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