“The Government of the Republic of Serbia is fully committed to its fight against the shadow economy and continues its work on improving Serbia’s ranking on the Doing Business list”, says Aleksandar Vućič, Serbian Prime Minister.
“The exceptionally positive results, measurable both through budget revenues and through Serbia’s rating on a list that is highly respected by investors, were achieved by interdepartmental cooperation and clear action plans. We now want to apply this positive experience to solving other economic problems.”
At the end of 2014, the Serbian Government and NALED established two joint bodies – the Expert Group for the National Program for Countering the Shadow Economy and the Joint Group for Improving Serbia’s Position on the World Bank’s Doing Business List. How do you assess the results of this cooperation, bearing in mind that both groups quickly developed institutional guidelines both for combating illegal business operations and for improving the procedures that are assessed by the World Bank and of interest to potential investors?
The Government of the Republic of Serbia is fully committed to its fight against the shadow economy as one of its priorities. We have now become effective in creating measures for solving concrete problems. It took us one year to develop and adopt the National Program for Countering the Shadow Economy with 68 measures aimed at establishing better control over illicit payments, encouraging companies to do business using legal payments, improving the fiscal system and raising the awareness of citizens on the harmful effects of the shadow economy.
We have a concrete action plan that distributes the roles clearly and above all gathers various institutions in a team that is now working together on the task. It is exactly this that has provided the basis to apply the positive experience from this interdepartmental cooperation on solving other economic problems.
The results are evident – in the last year’s final quarter, unregistered work had decreased by 5% compared to the previous year, each month we record another 15% of newly registered entrepreneurs and a lot of illegally traded excise goods have been seized. The results were confirmed in the latest Fiscal Council report which projected that the fight against the grey zone will bring an additional 40 billion dinars to this year’s budget. We continue to apply the National Programme, the first task force meetings were held, and by the end of the year, we can expect the beginning of a large public awareness-raising campaign, to be followed by a fiscal bill lottery.
The same applies to the Joint Group for Improving Serbia’s Position in the World Bank’s Doing Business List. Last year Serbia jumped 32 places to 59th position, and this year we continued improving and came among the top 50 out of 189 listed countries, in 47th place, which is a recognition of the reforms we are enacting. We advanced most by introducing the issue of electronic building permits, in the field of property registration and starting a business.
In the final quarter of last year, unregistered work decreased by 5% compared to the previous year. Each month we record another 15% of newly registered entrepreneurs. These are only some of the positive results recognized by the Fiscal Council in its report
Why did you decide to include NALED in policy making? What encouraged you to choose NALED when there are many organisations in Serbia that offer suggestions and think their solutions are the best?
This Government wants broader cooperation with the civil sector, we want as many professionals as possible to take part and contribute to the common good. The suggestions that we received from NALED were followed by concrete proposals for solutions, amendments to regulations and the time frame within which such measures could be put in place. This was what we needed because the ministries do not always have the capacity to tackle all issues. They pointed out problems and practical examples that are more easily identified by businesses and local government than by the central administration, and this exchange of information and experience certainly helps the Serbian Government to make its measures even more effective. The civil sector must think and operate in this way because this will be of great help in making reforms quicker and more effective.
The National Program for Countering the Shadow Economy demands joint and coordinated work from a great number of state institutions. How can we motivate these bodies to actively work for a long period of time on implementing the proposed measures? Where do you see the window for the private and civil sectors to help so that the National Program can effectively be applied this year? Are you certain that the National Program will achieve one of the objectives, to return a billion euros to legal payments within five years?
To coordinate the activities aimed at curbing the shadow economy we have appointed a team in the Government responsible exclusively for that task. When it comes to results, this year we have 80 billion dinars more in tax revenues than planned, a good part of which is due to our fight against the grey economy. Our goal is to reduce the grey economy’s part in Serbia’s GDP to 26.5%.
Moreover, we have established a Coordinating Body led by Dušan Vujović, the Minister of Finance, and it is exactly this body that, with support from the Task Force, will make sure that the everyone involved continues to work actively on implementing the programme, and I will be the one to increase their tempo if necessary.
We have devised a regular reporting mechanism on the implementation status of the National Program so we can have a high-quality way of keeping track of our efforts.
Businesses and the civil sector are here to make suggestions and provide field data once we start changing the regulations, and this will contribute to our ability to make those regulations really applicable in practice. Presenting new solutions to the wider business community and the public may also be helpful in better understanding of why we change regulations and what those changes will bring.
This Government wants a broader cooperation with the civil sector, and with as many professionals as possible. NALED’s suggestions were followed by proposals for concrete solutions. This was of great help to us because ministries do not always have the capacity to tackle all the issues
You invited two people from NALED’s Managing Board to the Government of Serbia – Ana Brnabić and Branislav Nedimović, which was seen by NALED as a positive signal from Nemanjina Street that there is a willingness to let the voice of other sectors of society be heard. What motivated you to appoint these people as minsters?
The results achieved by Ana Brnabić and Branislav Nedimović in their careers are respectable and incontestable. They have proved themselves to be operational in implementing their ideas and above all proved their creativity, which is something that we need in the Serbian Government. I wanted to give them the opportunity to prove that the solutions they advocated issues that they criticized us for are really applicable. If they succeed in doing so, I am certain that this will motivate many other people from various spheres of our society, who may have hesitated to take part in politics and reforms, to do so in future. This is the message that I want to send out. The public administration is not a closed system that cannot be changed and where nothing can be done. Quite the opposite.
I wanted to give the opportunity to Ana Brnabić and Branislav Nedimović, who were members of NALED, to work in the government and demonstrate that the solutions they advocated are really applicable. If they succeed in doing so, I am certain this will motivate many other people from various spheres of our society to take part in politics and implementing reforms
In your exposé, NALED recognised a large number of initiatives that it has been advocating for years – the development of e-administration, relieving the administrative and para-fiscal burden, establishing a public administration academy, introducing a more predictable funding system for local government, developing a registry of public procedures, improving the analysis of the effects of laws etc. Does the public administration have the capacity to implement all these ideas, or has the time come to task the civil sector with some of the tasks and reforms so that the process can be accelerated?
It is up to ministries to make the final decision on the public interest of amending certain regulations and dispel doubts over whether this is a matter of general or someone’s personal interest, but certainly, in some cases, the civil sector can be included in the work and unburden the administration. This is the trend in the developed world, and if we want to come closer to the largest European countries, we must use their positive experience. NALED too is a positive example, having developed the e-permit software with help from donors and then handed it over to the state. This was a great help and other organisations are certainly able to contribute to the common good in the same way.
What other reforms have been planned where you expect other sectors to make an active contribution and in which you would include them through task forces that have demonstrated the value of dialogue between stakeholders?
One of the large reforms needed for us to become more competitive and make the lives and work of our citizens and entrepreneurs easier is the development of e-administration. We have a basis to start from and now is the time roll up our sleeves with help from the business community and the IT sector in particular and provide as many services as can be delivered electronically and that do not need your presence at the counter.