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Important22 March 2023 12:28

Oleg Braga: Besides mitigating the consequences of pandemic, economic crisis and war, the main challenge of the new Government must be to fight the shadow economy

Interview by InfoMarket Agency

In the last two years, Moldova has been hit by several crises, which have seriously affected the country’s economy. Although efforts are being made to reduce inflation and speed up economic processes, things are not moving at the desired speed. Informaket Agency undertook to talk to a number of experts about Moldova’s development, prospects and solutions. Today’s interview is with businessman Oleg Braga, a financial manager with almost 30 years of experience in several large private and state-owned companies, Chairman of the Commission on State Examinations, Faculty of Business Management and Administration of the Academy of Economic Studies of Moldova (ASEM), for almost 20 years.

InfoMarket: Mr Braga, you are known not only as a businessman but also as a visionary who sees things in all their complexity. That’s why we’d like to ask you: What do you think should be the main concern of the new government from an economic perspective?

Oleg BRAGA: It’s good that you specified that it’s about economic concerns, because in the current period, it’s clear that the biggest challenges are in the area of security and stability. But that doesn’t mean that the economic challenges are any less important. It is well known that the whole national economy was hit hard initially by the COVID-19 pandemic and the economic crisis it caused, and subsequently by the war in the neighbouring country. But, apart from mitigating the consequences of the pandemic, the economic crisis and the war, my opinion is that the main challenge of the new Government must be to combat the shadow economy, and the honest representatives of business should be the main partners of the Executive in this process.

Today, the shadow economy is one of the main, if not the main, brake on the country’s development. Double accounting does not allow the state to receive its due taxes, thus reducing the Government’s ability to deal with social, humanitarian and infrastructure problems. Moreover, economic agents who carry out shady activities seriously affect the business environment, the conditions of competition, and this is already affecting honest businessmen. Instead of doing business that would allow them to pay more taxes, honest economic agents waste time and money trying to cope with unfair competition imposed by economic agents operating ‘in the shadows’.

The problem is that this phenomenon has become so widespread over the years that it takes a long time to combat it. This is not just an isssue of administrative or legal measures, but also of mentality.

That is why I believe that action in this direction should be taken as soon as possible, because only then will we be able to talk about fair conditions for business and real premises for the further development of the country.

InfoMarket: Apart from fighting the shadow economy, which aspect should the new Government pay attention to in order to ensure good conditions for business development?

Oleg BRAGA: I would say that concrete measures are needed here in two directions at the same time: continuous improvement of the regulatory framework for entrepreneurial activity and reduction of the level of bureaucracy. In the first case, an interdepartmental commission should be set up, which would include representatives of the business sector, and which would carry out a broad assessment of the regulatory framework and then come up with concrete proposals for improving it. In the second case, a broad analysis is also needed, leading to concrete actions. I will give you just one example: for those doing business in the Republic of Moldova, one of the biggest headaches is the excessive number of statistical reports that have to be submitted to the National Bureau of Statistics. Let’s say it openly (anyway, all those concerned know it) some of these reports are irrelevant for the business activity and do not improve the country’s statistics at all but only burden it and those who represent the business environment. This is an old problem, which has been brought to the attention of the authorities on various occasions, but for some reason no action has been taken to resolve it. I believe that the time has now come to move in this direction as well.

InfoMarket: Generally speaking, what role should the state play in making the economy more dynamic?

Oleg BRAGA: Many people think that the state should be an active player in the economy, but I think that this approach is not correct. The state, through the responsible bodies, must create a level playing field and ensure that these rules are strictly observed, and when deviations occur, intervene to counteract them. If you like, the state should be a kind of referee, leaving competition to the economic players. It is only through free competition and under favourable conditions that economic agents will develop, ensuring the advancement of the entire national economy.

Of course, I cannot overlook two other important moments in terms of the dynamic development of the national economy – stability and predictability. But, unfortunately, in the current conditions, not everything depends on the state. We hope that the difficult period we are going through will pass as quickly as possible and that we will be able to speak of stability and predictability in much clearer terms.

InfoMarket: In your opinion, what should be the communication between the Government and business representatives?

Oleg BRAGA: Permanent, useful and consistent, and based on the premise that Government and business are partners who deliver results for the benefit of citizens, of the country. In no case should the perception be allowed that government and business are on different sides of the fence, that they are engaged in some kind of battle, with diametrically opposed interests. Now, with the swearing in of a new Government, we are waiting for the concrete steps that would define the framework for communication between the Government and business. The Executive has quite a lot of room for manoeuvre here: it can opt for a permanent framework for dialogue, it can opt for a framework for dialogue based on concrete situations that arise, etc. The same goes for the level of dialogue: it can be at central level or at departmental level. But these moments are less important – the important thing is that there is this communication, because only through dialogue can the best solutions for all be identified.

InfoMarket: But don’t you fear that if the government takes too many steps to welcome business, this could arouse public disapproval? Let’s be honest and say openly that business people are not really loved by ordinary people.

Oleg BRAGA: I know that there is a misperception that businessmen are a privileged caste, who make money by the bucketload (they can’t even count it), which they spend on their own pleasures without caring about the country, the citizens, the vast majority of whom live on the edge of poverty. But this is not the case at all.

As I said earlier, everyone should understand that businessmen are the partners of state structures, first and foremost the Government, in the process of running the country. Where does the Government get money for roads, hospitals, schools, kindergartens, etc.? From taxes. Who pays the taxes? Of course, individuals pay them, but most of them come from business. They are taxes and duties levied on import-export operations, taxes related to entrepreneurial activity, taxes related to the payment of employees’ salaries, etc. All these taxes and duties supplement the state budget, the state social insurance budget, the budget of compulsory health insurance funds, the budgets of administrative-territorial units. Without the money paid by economic agents, the authorities would not be able to pay pensions, salaries, infrastructure projects, etc.

Another important mission of business is to contribute to the well-being of citizens. How does this happen? Firstly, by creating jobs. A person who has a well-paid job in normal conditions here in Moldova will not go abroad to work, but will stay at home and contribute to the development of his/her community, country. Secondly, it is the social mission of the business environment, which usually manifests itself through philanthropic actions, support for certain public actions, culture, art, literature, etc.

I believe that the Government is aware that a developed business environment is a first step towards a developed state and that concrete actions in this direction will follow from the Executive. And we, the representatives of the business environment, must understand that the Government’s actions in this direction will have a commensurate impact. So, from this point of view, we even have a certain duty. That is, creating better conditions for business must result in more jobs and more taxes to the budget. Only by acting together, business and Government, will we have a developed state with a high standard of living for its citizens.

InfoMarket: In your opinion, to what extent should business people be interested in politics?

Oleg BRAGA: As a rule, it is considered that business people are not interested in politics and not even in elections. This is a misperception because they confuse totally different things – interest in politics and involvement in politics. The vast majority of business people really prefer to stay as far away from politics as possible, avoid expressing opinions that could be treated politically, but follow the political and electoral processes very closely, because they are directly related to their work.

For example, I follow all political events carefully, trying to intuit to what extent they can affect the business activity, how they can affect or improve the business climate, what impact they can have on investment processes. And I know that other business people take the same approach. That is why I think it is fair to say that we, as business people, are only interested in politics in relation to the activities we carry out. We are interested in politics as a process, but not as involvement, because it is one thing to follow something closely and quite another to be part of it.

InfoMarket: Do you have any expectations for the coming period?

Oleg BRAGA: Like any businessman, like any citizen, I want the war in the neighbouring country to end as soon as possible. This will bring not only peace but also more stability. And with stability, we will be able to return to normality faster – both in business and in everyday life. //22.03.2023 – InfoMarket.


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