Major changes and turmoil at the planetary level, such as the COVID pandemic, war in Ukraine, ever-present inflation, but also global environmental problems, are challenges with effects that could be mitigated or overcome through priority reforms that NALED is actively working on implementing and will be engaged in during the following period
During this time when one global crisis is followed by the next, it is extremely important to select those reforms that will help preserve economic growth, jobs and steps that move the society closer to European integration. We discussed this issue with NALED Executive Director Violeta Jovanović.
What are, from your perspective, the most important topics that you’re dealing with today and to what extent has the current economic and political situation impacted on the order of priorities?
– Digitisation is one of the topics that inevitably weaves its way through different segments of our activities, and the pandemic has additionally highlighted its importance and effectiveness, first and foremost in the providing of public services to citizens and the economy. In that sense, the development of digital infrastructure and the popularisation of electronic services, the modernisation of healthcare and municipal services – through the introduction of advanced digital solutions – are activities that have been in our focus for a number of years and which we are working on with dedication in order to create opportunities for new economic activities, reductions in costs and improving the efficiency of the work of the public and the administration with the aim of accelerating development.
Rising inflation and reduced economic activity put pressure on legal business operations and prompt businesses to flee to the zone of the grey economy, so we are continuing the systemic fight against the grey economy that began in 2014 by now providing support to the government in this undertaking through our work on the proposal of a new programme to combat the grey economy and an accompanying action plan. We expect the adoption of this programme to be one of the first activities of the new government, as that’s a key strategic document in securing fair and equal market conditions.
At this time when environmental topics are gaining ever more significance and attracting increasing public attention, environmental protection and sustainable development represent an unavoidable sphere of our interest. Testimony to this is also provided by the fact that providing support for the implementation of the Green Agenda is one of the key reform priorities for the next three years. The collecting and recycling of various waste streams – such as batteries, light bulbs, glass and other packaging, food waste – and the implementation of smart deposit systems are projects with which we want to contribute to the establishing of sustainable systems for the collection and reuse of materials, as well as the establishment of a circular economy in our country.
By establishing a common regional standard for a business friendly environment, our desire is to secure improved living and work conditions for the 20 million citizens and 1,150,000 businesses in these lands
In an ever-more competitive race to attract investment, it is necessary for us to think about our region in the way investors see it, and that is as one market. That’s also why it’s important for us to work as much as possible to create a level playing field for doing business and on the procedures encountered by investors. The network for a business friendly environment (BFC SEE), which brings together six economies of our region, deserves the credit for having harmonised and improved conditions for doing business in more than 100 local governments that have passed, or are going through, the process of securing business friendly certification for their towns and municipalities.
We are witnessing progress being slowly achieved, particularly within the framework of the Berlin Process, on the construction of a single regional market. In this context, what is the role of NALED’s platform for a favourable business environment (BFE)?
– The Platform for a Favourable Business Environment (BFE) relies primarily on the successful results of the existing BFC SEE network, which has provided a significant contribution to improving the business environment in the municipalities of the countries participating in the network: Bosnia-Herzegovina, Croatia, Montenegro, North Macedonia and Serbia. Apart from this, the network has encouraged the exchange of high-quality reform solutions, such as the issuance of electronic building permits and simplified registration procedures for seasonal workers, the improvement of inspection oversight and digital fiscalization.
We intend to draw on these successful results through the future platform that we’re working on in cooperation with GIZ and partner institutions from the region, thereby ensuring a quality dialogue and the exchange of knowhow on the implementation of reform processes in the six economies of the Western Balkans, with the aim of encouraging economic development, the hiring of workers and faster integration into the European Union. This platform will be based on three pillars: encouraging local economic development; improving the business environment; and promoting partnerships and a public-private dialogue.
You are also focused on work in the domain of renewable energy sources and support for the development of innovation and the digital economy. To what extent can these sectors contribute today to the growth of the social product, which will be pretty modest this year?
Innovations are undoubtedly a very important driver of the economy and society as a whole. The countries that allocate significant funds for the development of innovation, and where work is constantly being done to improve the innovation ecosystem, have the highest GDP growth. When it comes to Serbia, our innovation ecosystem is developing at a good speed, the state has recognised its importance, just like the ministries and funds that invest increasingly in innovative businesses, but also large companies like Philip Morris, which has recognised the potential and decided to support the start-up community and innovators, through the StarTech project, by providing more than three million dollars in grants and support to improve the regulatory framework for innovation. We also call on other private companies to follow this example. The best indicator of the level of development we’ve reached when it comes to innovation is the Global Innovation Index, according to which Serbia is ranked in 55th place among 132 countries.
We have conducted analysis of the taxation system that we will soon present to the public, and we will propose possible directions of reform that would benefit both employees and employers
There is room for improvement, primarily in the area of cooperation between science and business, private sector investments in research and development, access to alternative sources of funding, as well as in the area of the development of clusters. When we deal with it in an authentic way, we can expect the knowledge economy to come to represent one of our greatest development potentials. On the topic of renewable energy sources, important things have been launched. NALED contributed to the work of the Ministry of Mining and Energy on the adoption of the legal framework governing this area, as well as the important regulation on the balance of responsibility, on which active work was done during this year and which represents a prerequisite to be able to conclude the financial structure for numerous projects in the field of renewables.
As of 1st January 2023, eAgrar will be launched, which you worked on developing together with the Ministry of Agriculture. What will this great stride forward in digitisation mean for the agricultural sector?
– This is an electronic platform that will enable more than 400,000 farmsteads to register and submit applications for subsidies online. This kind of practise brings numerous benefits, both to farmers and the state authorities that are responsible for these issues. The registration method to date required farmers to set aside their own time and collect more than 90 pieces of data in 10 different documents, with 70% of that information being superfluous, such as proof of land ownership, as that information already exists in the databases of various state bodies. Moreover, they were also required to pay fees for various statements and certificates worth two million euros annually. With the help of eAgrar, the pre-existing procedure will be shortened as much as fourfold, while the costs of application will be reduced by 80%.
We have already noted that the global economic situation is increasingly difficult and that this will certainly also be reflected in Serbia. Would the fiscal unburdening of earnings help the economy in the situation in which we currently find ourselves?
– Reducing taxes and contributions on salaries is one of the recommendations that has appeared in NALED’s Grey Book for the longest time. We believe that such a measure would contribute significantly to reducing the volume of the grey economy and stimulate employers to engage workers through legal channels. Judging by this year’s survey of the stances of businesses with regard to the grey economy, most businesspeople (49%) cited high taxes and contributions as the biggest problem they face and the key reason tax obligations are avoided. We have conducted analysis of the taxation system that we will soon present to the public, and we will propose possible directions of reform that would benefit both employees and employers.
It is primarily necessary to focus on tax reliefs for the lowest salaries and the minimum earnings, which is earned in Serbia by between 350,000 and 400,000 people and is highly taxed compared to other countries – this expenditure last year amounted to 18,200 dinars on “minimum earnings” of 32,000 dinars, or around 57%. More significant changes to the taxation model are needed to further unburden taxpayers. One of the possible solutions is to increase the non-taxable part of the salary at the level of minimum earnings, reforming healthcare contributions, while there are other potential solutions on the table that should be considered.
When it comes to considering the reform of contributions, NALED also proposes the possibility of abolishing healthcare contributions and switching to the financing of healthcare from universal taxes.
You are among the pioneers of public-private dialogue. Is there enough of that kind of dialogue today, when it is necessary to wisely choose the moves that will enable the preserving of economic activity?
– The fact that NALED internally brings together all three sectors of society – private, public and civil – that have been working together for years on the improving of the business environment and the implementing of reforms in various areas, indicates unequivocally that such a dialogue exists and has continuity. It is also certain that there should be more of it and that it should be of a higher quality. The conclusion is that it functions significantly more successfully when the institutions sit opposite an interlocutor that takes the form of an association that expertly represents the interested public, and not the interests of individuals.
Some forms of public-private dialogue have improved significantly compared to previous years, as is shown by the Regulatory Index of Serbia, which analyses comprehensively the manner and quality of adopting regulations. According to the latest data available for 2021/2022, public hearings were held for more than 90% of laws that are important to the functioning of the economy, there has been a reduction in the share of laws that are adopted under urgent procedures to only 6%, while three quarters of ministries satisfy criteria in terms of the informing of the public about their work. However, further room for improvement certainly exists.
The European Union represents an inexhaustible source of best practices in practically all areas that are of importance to the operations of NALED, which we also endeavour to apply in the domestic environment
We want to improve the way independent energy producers, so-called prosumers, are taxed, in order to increase interest in turning to cleaner sources among citizens and businesses
In an ever-more competitive race to attract investment, it is necessary for us to think about our region in the way investors see it, and that is as one market