USAID's Business Enabling Project Quarterly Report: Fourth Quarter 2011

The purpose of the Project is to help the Government of Serbia improve the competitiveness of the Serbian economy and its private sector businesses. The Project provides technical assistance, training, and other support to improve the business enabling environment, maintain macroeconomic stability, and further develop financial markets. The Project is demand driven, with all activities based on the priorities of the private sector and the Government of Serbia. The Business Enabling Project consists of four major components: Component 1, Business Regulation and Economic Governance, will streamline laws, regulations, and institutions; improve regulators' capacity to implement laws; and improve analysis and public-private dialogue. Component 2, Macroeconomic Policy and Public Financial Management, will help the Government implement new budget and fiscal responsibility laws, improve budgeting, increase public disclosure and transparency, strengthen public debt management, and improve economic analysis and forecasting. Component 3, Financial Market Development, will improve regulatory frameworks for non-bank institutions, develop capacity to strengthen and expand capital markets, and improve conditions for debt market development. Component 4, Business-Education Partnerships, is currently on hold pending further instructions from USAID. The project's approach to achieving reforms is to help the Government of Serbia work closely with the private sector and outside experts to make reforms that improve business competitiveness. The reforms will reduce the time and money spent by Serbian businesses to comply with laws and regulations and will help the Government to be more efficient. The reforms will also enable businesses to attract necessary investment at an appropriate cost. As a result, Serbian businesses will have a better chance to be competitive in the global economy, leading to export-led economic growth and increased employment. During the fourth quarter of 2011, the Business Enabling Project completed and publicized the Standard Cost Model Study and Survey of Businesses. The study showed that Government-mandated administrative requirements cost Serbian businesses €1.35 billion, which is 4.2 percent of Serbia's Gross Domestic Product (GDP). The Business Survey of 913 businesses is the first large-scale business survey in Serbia to focus on business environment issues and will be repeated annually. The project presented the results to all major Serbian business associations and to Government of Serbia representatives prior to public release of the results, and both the business associations and the Government agreed to use the results to develop short-term and medium-term priorities for reforms. The project also implemented mechanisms to distribute current project information to stakeholders and spur dialogue on policy issues. The project launched www.policycafe.rs, an interactive website to disseminate research, data, and analysis on policy issues and provide a forum for online dialogue between stakeholders and experts on the issues. The project website (www.bep.rs) is constantly updated with news about the project, grant opportunities, and other information. It has seen increasing traffic, with 167,924 hits during the quarter, up from 105,224 hits in the third quarter. The project also has a monthly newsletter that is sent by email to over 500 addresses. The newsletter has spurred interest in the project and the project has received many contacts from partners and from other donors who are interested in specific activities mentioned in the newsletter. The project organized Access to Finance Roundtables in Novi Pazar, Nis, Subotica, and Sabac. The main goal of the series of roundtables is to understand the problems that SMEs are facing in obtaining finance, and to provide businesses with more information on less-used financing products that are available at the market. The roundtables also provide valuable inputs from the businesses on the commonly used collateral, other sources of financing, technical capacity in financial planning, financial risk, and transaction costs. Businesses cited several obstacles including high collateral requirements, short loan repayment periods, required bank guarantees, long loan approval periods, banks' poor understanding of business specifics, and liquidity problems. The project helped the Securities Commission develop and enact bylaws for implementation of the Capital Markets Law. The bylaws address Investment Firms, Prospectus, Transparency and Disclosure, Market Abuse, and Investor Protection Fund, among other important issues. The Securities Commission and the project developed the bylaws in compliance with the deadlines set forth in the Law on Capital Markets, and they were discussed with interested stakeholders. The project helped the Securities Commission in its consultation with the Ministry of Finance, and the Ministry approved the bylaws. The Ministry of Finance issued the opinion that there are no objections regarding the constitutionality and legality of those bylaws, and they entered into force on December 3, 2011. The project provided the Fiscal Council with technical assistance to develop a methodology for assessing the impact of fiscal policies on the business environment. The project also helped the Fiscal Council in its consultation with the Ministry of Finance, and the Ministry approved the methodology. The project provided technical assistance to the Ministry of Finance to develop a methodology for assessing the impact of fiscal policies on the business environment. The project also helped the Ministry of Finance in its consultation with the Fiscal Council, and the Fiscal