CEIBG taps members’ practical experience to battle shadow economy

By Raina Lazarova

Ognian Donev, Chairman of CEIBG, www.ceibg.bg

Ognian Donev, Chairman of CEIBG, www.ceibg.bg


Q: At the end of September, the IMF downgraded its growth forecast for the Bulgarian economy to 2.5% for 2011 and 3.0% for 2012. What do you think about this revision?

A: Reality once again proved there is more to it than forecasts. The developments in other countries, especially the mounting fears about the fate of Greece and its eurozone membership, have raised concerns across global markets and have taken their toll on the pace of growth.
The IMF’s revised forecast seems logical but everything depends on the events affecting the countries that surround Bulgaria. It is not possible to say that if Greece eventually defaults on its debt, which will most probably happen, it will not affect in any way the Bulgarian economy. We cannot predict the exact impact it will have, but it will certainly affect us.

Q: What are the measures that CEIBG has included in the new package of proposals it has prepared for the government in its role as an employers’ organisation?

A: CEIBG is proposing measures and ideas stemming from the practical experience of our members. The state does not have to pay anything for them.
We are only drawing the attention of the administration to some serious problems, which we can tackle together and achieve a better result. The package includes measures against the shadow economy and unfair business practices. However, in the meantime, it is not a bad idea to encourage those that play by the rules.
The government once had an idea, which never came to life, about a register of good taxpayers who would get VIP treatment.
Other measures include increased control over suspicious sectors, where industry officials themselves warn that there is a possibility of non-compliance with the laws of the country, which might include concealing economic data or underreporting income in a bid to avoid paying insurance contributions. These are the two mechanisms that generate resources for the flourishing of unfair competition, which all our members oppose.
This package of measures is an open system, which I hope will be extended with the help of individual industries that have their CEIBG representatives.
This actually covers all industries of the Bulgarian economy. After that we will discuss the measures with the Ministry of Finance and the National Revenue Agency so that we can see which of them are workable and also easy to implement.
An example of a measure we can consider successful so far is linking up in real-time the local filling stations and pharmacies with the system of the National Revenue Agency. We knew it would create severe backlash. Some were forecasting company bankruptcies but it became obvious that it was all just a lot of noise made in an attempt to postpone these measures.

Q: What is your comment on the state of foreign direct investment in Bulgaria?

A: The decline in foreign direct investment is a trend across Europe.
This is just the way things stand right now. You can see that all investors have become more cautious when it comes to macroeconomic trends. Every industry has its own view on the level of risk and the investments it can afford to make at this moment. But we are all a lot more careful because no one knows what the extent to which the turmoil in the eurozone can affect the micro trends in the near future is. Businesses are looking to cut back on spending in order to build a financial buffer.
It is true that there is an outflow of investment but this is just one side of the coin. There is also another side and it is that the quality of investment is much higher than during the years of the construction boom. Back then there were mainly financial investments and investments in construction in Bulgaria, which did not provide permanent jobs. While now, amidst the crisis, there are mainly investments in manufacturing, which is a positive development.

Q: What goals has CEIBG set for itself in its role as an employers’ organisation?

A: Our main goal is to draw up criteria which would be used to prepare a count of the trade-union and employers’ organisations. We support the idea of making it clear who represents whom.
Otherwise the dialogue between the three main pillars – trade unions, government and employers – is watered down. This is the tripartite commission which discuses all the important issues related to the development of the country. We don’t think it is normal to have six recognised employers’ organisations as is currently the case.