In the first wave of the crisis, it is certain that the measures of the Government of Serbia were crucial in preventing the collapse of the private sector. These measures were unexpectedly generous and easy to implement. At the same time, doing business during Covid-19 showed us how important it is to automate procedures and transition to electronic systems, which we will continue to support in the future.
The availability of cheaper loans for liquidity, a sector-specific approach and support for development will be crucial in the period ahead, says NALED Executive Director Violeta Jovanović. These kinds of measures would be a logical continuation of the first package of state measures exceeding five billion euros, which exceeded the expectations of businesspeople, says our interlocutor. “That was much-needed help for many companies whose operations were disrupted by the Coronavirus outbreak.”
“The area of the economy gathered within NALED is satisfied that state measures included three of our key recommendations for the recovery of companies: postponing the payment of taxes and contributions to earnings during the state of emergency; securing favourable credit for liquidity and paying financial support to entrepreneurs and SMEs and their employees, alongside a previously adopted moratorium on loan repayments. These are also convincingly the most significant measures envisaged by almost all European countries,” says NALED’s executive director.
“Our package is unexpectedly generous and, with an 11% share of GDP, is almost four times larger than the packages envisaged by Croatia or Bosnia-Hercegovina, whose measures account for three per cent of their GDP. We are also satisfied that the measures were adopted in a relatively short period of time and that they were easily administratively implementable.
“On the other hand, the measures were completely linear and targeted support subsequently arrived. The government recently adopted a regulatory framework to provide businesses in the fields of tourism, hospitality and passenger transport with liquidity and working capital from the Development Fund. We will see what the result will be like, but we already have hints that interested in these loans among companies is high.”
How does the situation look now that the economy is slowly returning to normal? Where do companies face the greatest challenges?
That depends a lot on the sector, on whether it relates to a large, medium-sized or small company. For example, hoteliers face a significantly reduced turnover of guests compared to the same period last year and will need more time to return to the 2019 level of operations. Tourism, but also passenger transport and craft services, were initially forced to completely suspend operations and they will need time to make up for that which they’ve lost.
Serbia’s aid package to the economy was unexpectedly generous and, at an 11% share of GDP, is almost four times higher than the packages envisaged by Croatia or Bosnia-Herzegovina, whose measures account for three per cent of their GDP
NALED conducted a survey on the eve of the adoption of the measures that showed, among other things, that 63 per cent of companies operating in the sectors of tourism, hospitality, transport, environmental protection and agriculture expect their income to be halved due to the crisis. This is not easy to compensate for and I believe that companies are faced with finding a new development strategy and ensuring the continuity of work, which NALED will support them in doing. One of the biggest challenges is also to prepare for a possible second wave and maintain operations until the threat of the virus has passed completely.
Which other measures are needed to help the economy return to a growth trajectory as of next year?
NALED will advocate for future recovery programmes to encompass:
• Measures that improve the competitiveness of the domestic economy – administrative relief, predictability and the reduction of taxes, contributions, fees and charges;
• Measures that stimulate the transformation of business (from conservative to innovative), promote flexible operations, e-commerce, e-payments, the use of new technologies, R&D, improving postal services and transport and delivery services;
• Measures that aim to establish models for flexible forms of employment and engagement (seasonal work, part-time work, working from home and away from the premises of an employer, new forms of self-employment – work across platforms).
We are certainly monitoring the situation, listening to the voice of the economy and municipalities, and proposing concrete new measures to support local development and basic services for citizens at the local level.
A common opinion is that the pandemic has encouraged many companies to undertake the digitalisation process much faster. What are your insights? How good are existing measures aimed at encouraging digitalisation?
We are satisfied with the existing measures, and NALED will continue to advocate for the automation of procedures and the transition to electronic systems wherever that makes sense. The pandemic has brought digitalisation to the fore. Numerous companies have switched to an electronic method of doing business if they need to register workers, conclude contracts, send and receive e-invoices and submit requests and reports electronically.
It is now clearer than ever to everyone how important it is to have up-to-date databases, that the possibility exists to reliably deliver electronically and that information systems are secure. One of the good examples that came to life well before the crisis is the introduction of e-Counters because businesspeople who deal with cadastral records can monitor the status of their cases online, send an online application for registration and get an updated excerpt from the register. A good example is the Tax Administration, which has digitised most tax returns, among other things, enabling those who pay in lump sums to receive a decision on their annual tax at the beginning of the year, online in the tax postbox. They previously waited months for a decision, making it difficult for those paying in lump sums to plan their business.
How prepared were we institutionally for the mass transition to online operations: how ready were government services, the banking system and our communications infrastructure to withstand such a transition? What lessons have we learned?
The banking sector, together with the Treasury and the Tax Administration, had a significant role in the administration of fiscal benefits and direct payments, and this passed without major problems and delays. Moreover, telecommunications operators had a 50% increase in voice traffic in the first weeks and they withstood that without major problems.
When it comes to lessons learned, what the crisis taught us is to appreciate digital solutions and we are now mature for e-government as a society. That’s why we should be consistent in implementing the priorities set by the Government, confirmed and recently adopted by the eGovernment Development Programme, which we have developed over the past year together with all relevant institutions. The eGovernment Development Programme 2020-2022 envisages that as many as 300 eGovernment services will be available in the next two and a half years, which will be used regularly by at least 1.5 million citizens and businesspeople.
How many of you local government members were in a position to maintain contacts with potential foreign investors? What do you expect to happen in the area of foreign investment at the local level, considering the economic changes globally?
We’ve seen that several investors have realised their plans in the previous period in that sense, but the fact is that the state of emergency slowed down numerous processes, including this one. Local governments are awaited by a big job in interesting investors in the coming period, because I believe that all European countries and regions will activate additionally on this issue, in order to stimulate economic growth. What NALED advises is to work on improving their business environment, in order to attract investors long-term in the best high-quality way.
We are not abandoning our 10 priorities that we will deal with in 2020, because that’s important for everyone who employs in Serbia to have better conditions for doing business
NALED can provide them with particular support by including them in the Programme of Certification for Municipalities with a Favourable Business Environment in Southeast Europe (BFC SEE). Municipalities that have acquired this title have an advantage because they have developed a more efficient administration by going through this demanding exercise.
What are the priorities of the work of NALED in the coming period?
When we presented our Grey Book of Bureaucratic Procedures, no one could have presumed that the world would be hit by an unprecedented health crisis that has no economic basis but does have ramifications for the economy. We then singled out 10 priorities that we will deal within 2020, and we are not abandoning that, because it is important in order for everyone who employs in Serbia to have better conditions for doing business.
The priorities are reducing taxes and contributions on earnings, improving and expanding the fiscalisation system, establishing a public register of non-tax charges, expanding the scope of the law on seasonal workers, developing the eAgrar system for the electronic registration of agricultural holdings and granting of subsidies, and abolishing the obligation to prove transportation costs. These are the essential changes for which we are advocating. However, in these changed circumstances that no one expected, we will follow the further development of the situation, and if there is a second wave of the coronavirus, NALED will again be the first organisation to propose adequate measures.
How much have your members contributed to Serbia coping more easily with the pandemic?
NALED is an organisation that brings together more than 300 members from the public, private and civil sectors. We are satisfied that our members, each in their own domain, have given their contribution to overcoming the consequences of the pandemic as soon as possible. We launched a comprehensive dialogue in order to support the state in a timely manner, and through the proposed measures to combat Covid-19 we acted as the voice of the economy and municipalities.
Local governments have faced reduced revenues from taxes, fees and charges. That’s why one of NALED’s proposals was the formation of a special fund that would support the easier overcoming of the crisis locally.
Furthermore, NALED launched an online donation platform in early April for the most endangered local governments. The goal was for us to connect and unify our members and partners in the fight against Covid-19, primarily those municipalities that need help, with companies and international organisations that are able to provide that help. To date, there have been donations of food, medical supplies, protective and IT equipment provided through the platform for 41 municipalities, worth a total of more than 250,000 euros. When you add up how much socially responsible companies gathered within NALED have donated since the outbreak of the pandemic, directly and in cooperation with philanthropic organisations, that figure exceeds two million euros, and the money has mainly been used to procure urgently needed medical equipment.
companies are faced with finding a new development strategy and ensuring the continuity of work, which NALED will support them in doing
The crisis taught us to appreciate digital solutions and we are now mature for e-government as a society
Socially responsible companies gathered within NALED have donated, directly and in cooperation with philanthropic organisations, more than two million euros