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.

President Tadic and Michael Polt signing NALED declaration

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.

STRATEGIC GOALS OF THE ALLIANCE

IPromote legal reforms that support local economic development

IICreate an enabling environment for investments and business development

IIIEstablish dialogue between private, public and NGO sector

IVStrengthen municipal capacities through training and consulting services

VPublic private partnerships

MYTH # 1: DONOR-DRIVEN ORGANIZATIONS CANNOT BECOME SUSTAINABLE

90 MEMBERS

INDEPENDENT OPERATIONS

MEMBERSHIP FEES = OPERATIONAL COSTS

MYTH # 2: THERE IS NO CRISIS

OVERLY OPTIMISTIC BUDGET PROJECTIONS

NO PREPARATORY ACTIVITIES

LACK OF INSTITUTIONAL RESPONSE

GlobaleconomyCrisis detectionAnalyses & discussionof adequate measuresFirst reactions & mitigation measuresReview of effectsResponses and reactions to global financial crisisIV Q 07IV Q 08I Q 08II Q 08I Q 09III Q 08Serbian economyFollowing global trends and interpreting crisis as an investmentopportunity for Serbian economyDetection of crisis in SerbiaDelivery of initial assistance measuresSerbianagricultureSeeing a chance for Serbian AgricultureLack of interest to analyze and prevent effects of the crisis, followed by overlyoptimistic projections for Ag sector

MYTH # 3: CRISIS WILL AVOID SERBIA

CRISIS AS MODUS OPERANDI

CRISIS AS A WINDOW OF OPPORTUNITY

SERBIA TO EMERGE VICTORIOUS

MYTH # 4: CRISIS EFFECTS GLOBAL EFFECTS vs. LOCAL CONSEQUENCES Unemployment Less FDI Lack of financing

CRISIS good excuse top priority

CROSS-CUTTING EFFECTS

Favoritism in policy responseLower demandDrop in production Decreased buyer financingTightened credit for producers Growing unemployment Falling asset pricesDelayed reforms and EU integrationProtectionism

Lower credit capacityDrop in available inputsLess profitDrop in productionDrop inconsumptionDecreased financingIncreased pricesDrop in pricesDecreased competitiveness

NALED-REPORTED EFFECTS

NEGATIVE :

Increased taxes on deed contractsIncreased local fees and taxes imposed on businessesCut in intergovernmental transfersDrop in project activities (donor and business driven)Default clients and deferred payments

NALED-REPORTED EFFECTS

POSITIVE:

New mechanisms of financingLess local and central government employeesResponsible and cost-saving behavior Regional alliancesPublic private partnership

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

PROPOSED GOVERNMENT MEASURES Deliver information about the depth of the crisis and its effects, Offer exit and mitigation strategiesFollow consistent and foreseeable policy approachStimulate borrowing for productionProvide budget subsidies and investment supportDelay the drop in FDIFacilitate access to donor fundsDevelop capacity for IPA funding

NALED RESPONSE TO THE CRISIS

DIRECT

Partnership with the governmentSupport in delivery of mitigation measures

2. INDIRECT

Business-government encountersBusiness Friendly CertificationOut of the Maze

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 analysisof local governmentsInput by the business community

COUNTER THE CRISIS!

Out of the Maze

Partners

GoalCut red tape in Serbia

NALEDs GREY BOOK as a guide with proposed recommendations for removal of administrative barriers for business development in Serbia.

ResultsOne-stop shop for business registration

OUT OF THE CRISIS MAZE

Dialogue between public and private sector. Regulatory reform.Good governance.

NALEDZetska 4a/2, 11000 BelgradeT: +381 11 334 7634F: +381 11 334 7614naled@naled-serbia.org

***Goals of the Program (include but are not limited to):

- strengthening the capacities of local communities toward attracting investments- ensuring the stable and measurable business environment- identification of best practices - "step by step" guide for future improvements- business awareness of the opportunities and potentials of local communities - innovation of the approach in promoting opportunities- finding concrete solutions for an improved business environment.