Ana Brnabić, President of the Managing Board at NALED

Serbia Would Look Very Different Without NALED

In the last ten years of its existence, NALED has managed to launch numerous initiatives and suggest solutions that have directly resulted in a higher quality of life and work in Serbia. After successfully partnering with the Serbian government to boost the country's business ratings, NALED is now eager to continue cooperating with the new goverment in countering the shadow economy

Advocating efficient administration, cutting red tape and parafiscal burdens on the economy, and fair competition are NALED’s guiding principles, principles which have enabled this unique association of local self-governments, businesses and civil society organisations to become a reputable partner to the state in implementing reform. At the same time, this organisation, which is unique in the region, has been given the opportunity to implement its successful solutions, such as the certification of municipalities with a favourable business enviornment, in Montenegro, Croatia and Bosnia. “I believe that the foundation of our success comes from suggesting concrete solutions for all the problems that we indicate,” says Ana Brnabić, one of NALED’s founders and the President of Managing Board. In this interview, Ms Brnabić talks about NALED’s current plans, ongoing initiatives, and challenges in creating a favourable business environment in Serbia.

You are one of the Alliance’s founders and a member since the very beginning. Now, you are also the President of its Managing Board. What events in NALED’s ten-year history would you single out as crucial?

– The founding idea behind NALED – namely, bringing together local self-governments, businesses and civil society organisations under one roof – made this organisation unique and created a space for it to deal with crucial issues affecting all three segments of society, and, in turn, to manage the issues that affect the state and general well-being, rather than dealing with particular interests of the members or sectors. When I look back at NALED’s activities over the last decade, it seems to me that our development and growth were gradual and that every success was hard-earned. The first year was the most challenging since it required of us to be persistant and convincing enough in selling the idea of NALED to potential members. Then, in 2008, we entered our “adulthood” and parted ways with USAID, which had helped us to create NALED. And the third challenging moment came in late 2014, when we finally got the chance to cooperate directly with the Serbian government on devising and implementing important reform projects, like the building permit issuing system, improving Serbia’s rankings on the World Bank’s Doing Business List and countering the shadow economy.

Could you tell us about NALED’s organisational structure and membership criteria?

– NALED has over 220 members, and our aim is to increase this number to 250 by the year’s end. The main criteria is for a company, local selfgovernment or civil society organisation (CSO) wanting to join us because it wants to make Serbia and its regions better together, support NALED’s mission and its Code of Ethics and, at the same time, understand that no individual interests will be favored only because they are members of NALED.

The members make up NALED’s Assembly, which meets once a year to be presented with the operating and financial reports and to define reform priorities. Furthermore, NALED has an executive office that is engaged in everyday activities, while a nine-member Managing Board strategically manages the organisation. Every sector has proportionate member representation – business has five representatives, local self-governments three and civil society one. The Managing Board is convened once a month, and it monitors the work done by the Executive Office. NALED also has a Supervisory, Advisory and Executive Board and each of them performs a specific function in the organisation. Additionally, our members also come together in working bodies or alliances and, at this moment, we have the Fair Competition Alliance. We are in process of setting up the E-Governance Alliance and Food & Agriculture Alliance, and we are also contemplating forming a Healthcare Alliance.

I believe that Serbia and people who want to live and work here really need an organisation like NALED, with all of its experience and standards that we have been nurturing and upholding over a decade of dedicated work

How did NALED manage to position itself to be directly involved in implementing reforms and is an authority on what to do and how to proceed?

– Truth be told, it took us a little by surprise when, in December 2014, the Prime Minister asked us to help with implementing certain projects. I believe that the basis of our success is that we suggest concrete solutions for the problems we point out, and these solutions are good because they are devised in agreement with all interested parties. Since the very beginning it was clear to us that we can reach results in this segment, and this cooperation naturally progressed and spilled over into other areas too. Together with the Ministry of Construction we have worked on reforming the complete building permit issuing system and, in exactly one year, we managed to introduce an E-system. Now that we have demonstrated that the state administration, public enterprises and local self-governments are ready to change and can move into electronic systems, we are going to keep pushing this in 2016 too. E-governance will make the state more efficient, more transparent and safer for both the citizens and businesses.

What has been the previous government’s biggest reform success according to NALED’s standards and what expectations did the government fail to meet?

– The approach that the Serbian government took for implementing the project of improving Serbia’s ranking on the World Bank’s Doing Business List demonstrated how efficiently and systematically the government can work. In December 2014, the Prime Minister invited NALED to work together with the government, and, soon after in January, we formed a joint working body with Deputy PM Zorana Mihajlović at its helm. By April, we had finished and sent the Reform Report to the World Bank. The Reform Report is a document which explains all regulatory changes and their practical implementation in the given year. In fewer than ten months, in October 2015, the 2016 Doing Business List was released with Serbia bumped up to the 59th place, the country’s best ranking in the past nine years. A day after the List came out, the Joint Working Body had a meeting at which they adopted the Reform Action Plan for next year. This work dynamic is very much that of the private sector, and it demonstrates an efficiency that is not customary in the state sector.

Important progress in implementing reforms was made with the adoption of the new Labour Law, making the labour market more dynamic, reforms of the building permit issuing system, the introduction of E-services in tax collection, starting the fight against the shadow economy, which was marked by the passing of the Law on Inspection Oversight and other similar moves.

There is still a lot of work to be done in terms of the quality of drafting, passing and implementing laws, which currently stand at only 40 per cent of the standards that we aim to reach. Two thirds of the laws important for businesses are still urgently adopted without an adequate public debate and a number of them do not even contain an analysis of the influence they will have on citizens and businesses. What is truly worrying is the fact that the average delay in the adoption of bylaws is 1,550 days (or over four years), preventing the full implementation of new laws. We hope that the new Serbian government will manage to resolve some of these problems.

Prior to the election, there had been speculation that the campaign and the time needed to form a new government could affect the reform pace and the overall business dynamic. Do you think that such assumptions proved to be true?

– It seems that the campaign did not affect the overall business dynamic, but it did affect certain reform processes. We are eager to meet the new government so that we can continue working on the implementation of the National Programme for Countering the Shadow Economy. Our aim is to reduce the share of the shadow economy in the national GDP from 30.1% to 26.7% over the next four years. This is a complex task, and although we are already working on implementing some of the 67 measures from the Action Plan, we need the government to be more dedicated in order to ensure success.

We have been constantly talking about public-private partnerships as the key for the development of local self-governments without plunging them further into debt and spending their own financial resources. These partnerships have to be implemented more in Serbia

Considering the election results, do you think that the new government will find it easier to continue with the reforms in a more decisive manner?

– Any government will find it much easier to start with serious reforms at the beginning of its term. This government has a fouryear- term ahead of it and a parliamentary majority so we expect it to use this in the best way possible.

What do you think should the government’s priorites be in terms of overall macroeconomic policy?

– It is absolutely vital to make business more transparent and, by that we primarily mean to reduce the financial burden which comes in the form of various fees that businesses have to pay. There should be a ceiling when it comes to business expenses in order to prevent them from skyrocketing. Furthermore, the state administration needs to be more professional enabling the public sector to be more efficient and responsible. It is important to launch core reforms in education and healthcare and boost production primarily through developing agriculture and IT sector. We see the latter as a potentially key sector for future development because there is a real need today for several thousand programmers. Our IT export is larger than the raspberry export, while the education sector lacks the capacity for delivering the needed work profiles to the business world. Last but not least, we have been constantly talking about public-private partnerships as the key for development of local self-governments without plunging them further into debt and spending their own financial resources. These partnerships have to be implemented more in Serbia.

Could you further elaborate on the five most important reform steps that NALED will suggest to the new Serbian government?

– Introducing E-governance through concrete E-services for citizens and businesses, countering the shadow economy, continuing to reform building permit issue process through further reform in the land registry, reforming the healthcare funding system to make it sustainable, reforming the education system to make it more compatible with business, further emphasis on improving Serbia’s ranking on the Doing Business List through reforming the judicial system, and more efficient implementation of contracts. We are going to work together with local self-governments on the certification of municipalities with favourable business environments both in Serbia and the region and on revitalising unused brownfield locations (primarily army assets, as well as cultural institutions, old industrial facilities and similar).

When do you expect adoption of the Law on Parafiscal Charges which the business community has been anticipating for a long time, considering that almost a year has gone by since the Government announced its adoption and nothing happened as yet?

– The work on the Law on Administrative Fees and Charges started during Ministar Krstić’s term so it is quite urgent for this law to be adopted and for the country finally to have a public non-tax levy registry which will regulate all the fees and charges both on state and local levels. We need this in order to introduce a ban on additional charges that are not in the registry, as well as finally to abolish those parafiscal charges or fees for which entrepreneurs and companies no longer are given any corresponding service. It is also important to prevent public enterprises from introducing their own charges.

The approach that the Serbian government took for implementing the project of improving Serbia’s ranking on the World Bank’s Doing Business List demonstrated how efficiently and systematically the government can work

How high is the adoption of this law on your list of priorities, considering that you are a coordinator of the interdepartmental government task force for improving Serbia’s ranking on the World Bank’s Doing Business List?

– It is high on our list of priorities for countering the shadow economy because parafiscal charges are one of the reasons why SMEs are drawn to the shadow economy. Together with increasing the scope of fiscalisation, this is one of the key reforms envisaged by the National Programme for Countering the Shadow Economy.

Realistically speaking, how high up could Serbia go on the Doing Business List, and what do you think are the main prerequisites for better ranking?

– We expect the biggest jump to be made in the segment of building permits following the implementation of software for online issuing, which will reduce the number of procedures, expedite the issuing of building permits, make the process more transparent and reduce the opportunities for corruption. Our position will primarily hinge on the efficiency with which building permits are issued in Belgrade rather than the Serbian average, since the World Bank uses our capital city as an indicator. We also expect progress to be made in tax collection following the application of the new E-filing system. Furthermore, we expect a better ranking as the result of amendments to the Law on State Survey and Cadastre and shorter deadlines for land registration. Together with certain reforms that were implemented in 2015, such as abolishing the land development fee for warehouses and other manufacturing facilities, we believe that we are going to jump between five and 10 places on the 2017 Doing Business List.

How would you compare NALED’s role to the role of other business associations like the Foreign Investors Council and Serbian Chamber of Commerce which have also been cooperating closely with the government on the reforms?

– NALED is quite a unique organisation compared to those which you mentioned because it brings businesses, local self-governments and civil society organisations together under one roof. NALED is a public-private alliance and, as such, is the largest in the region. This gives us an opportunity to focus on practical problems that are common to businesses, towns and municipalities, and citizens.

You held the first diplomatic symposium about the professional development of civil servants in collaboration with the Ministry of State Administration and Local Self-Government. What are your long-term goals in this segment?

– Our goal is to improve cooperation with the diplomatic offices of European and other countries which provide our citizens with an opportunity to attend training courses abroad at their expense. We would like to work with the new government on developing a platform for the continous education and development of civil servants in order to create a more efficient state administration. We are also hoping that a State Administration Academy will be formed soon. Devising a training manual for civil servants should be the first result of this diplomatic forum.

I believe that all of our members should be proud of the fact that, through our contribution as individuals and as members, be they companies, local self-governments or organisations, we support the reforms that NALED has been working dilligently on every day

In addressing your members, you said that you expect attacks on NALED to increase. What led you to such conclusion and where do you expect these attacks to come from?

– I believe that Serbia and people who want to live and work here really need an organisation like NALED, with all of its experience and standards that we have been nurturing and upholding over a decade of dedicated work. My message to our members is that Serbia would look very different without NALED. Hence, I believe that all of our members should be proud of the fact that, through our contribution as individuals and as members, be they companies, local self-governments or organisations, we support the reforms that NALED has been working dilligently on every day. Quite a few projects that NALED implements are funded solely by our members, and they can vouch for the fact that these funds have been spent on making Serbia more competitive and, in turn, making the business and life in Serbia better.

In 2015, NALED entered a new stage whereby we are now directly involved in conducting reforms and where the government consults us about what needs to be done and how the reforms should proceed. When you are in such position and when you demonstrate that you can implement change, you often attract unwanted attention. Not all people welcome the reforms, and they are not comfortable with transparency and the fight for fair living and working conditions. There are people and media in Serbia that think that only the government and the parliment should deal with amending laws and that nobody, least of all civil society organisations, has the right to ‘meddle,’ although democratic principles ensure that every individual citizen has a right and an obligation to control, supervise and direct the government, elected by us and which suits us.

You think that NALED needs integrity and stability the most right now. What are your priorities in terms of improving the organisation’s internal structure?

– My absolute priority, as the President of Managing Board, is communicating and networking with our membership. I think that it is very important for every member of NALED to be informed about what we are working on so that they can view all of our successes as their own, because that’s what they actually are. Our success would be impossible without our members and the inavluable people that work in our Executive Office who believe so much in what they are doing. When I meet a Slovenian MP in the European Parliament who tells me that an organisation like NALED should be replicated in Slovenia or when the Montenegrin government insists on being included in NALED’s programme for certification of municipalities with favourable business environments that we patented here and that we implement in local self-governments in Croatia, Macedonia and Bosnia, then you can truly believe that it is possible to create amazing things in Serbia, and that we are all a part of it.

How does NALED nurture its democratic decision making structure?

– Our members in the Assembly decide about NALED’s priorities. They also appoint the members of the Managing Board which has an obligation to implement these priorities together with the Executive Office. Our members are encouraged to attend the meetings of the Managing Board so that we can talk about ongoing topics and new initiatives as much as possible. NALED’s organisational structure is largely horizontal so members of the Managing Board or any other boards are easy to reach.