Prishtina, September 24, 2019 – Continuation of the doing business reforms, which would enable the strengthening of the private sector and attracting of foreign direct investments, should be a priority for the new Government of Kosovo. Members of the American Chamber of Commerce in Kosovo believe that improved rule of law, addressing of the workforce gap, and the transportation and energy infrastructure gap should be at the heart of this reform. Meanwhile, a national strategy for economic development should be the starting point for the reform, and all Kosovo’s economic governance decisions.
The new government of Kosovo should demonstrate its commitment for an accelerated economic development, by guaranteeing a free market economy as the basis of the economic regulation of Republic of Kosovo, thus engaging all the capacities of domestic and foreign enterprises for a sustainable economic development. A national strategy for economic development should be among the first documents to be drafted by the new Government, following a thorough and comprehensive study of country’s capacities and opportunities, including the strategic sectors upon which country’s sustainable development should be based. In this regard, business associations and the private sector can play a significant role through formal mechanisms of dialogue, which should be maintained and strengthened in the future.
Members of the American Chamber of Commerce in Kosovo believe that proper implementation of the legal framework is the most important factor in doing business, whereas the establishment of a separate commercial court should be prioritized by the new Government, thus offering an efficient mechanism for businesses to dispute resolutions. The Government of the Republic of Kosovo should guarantee equal treatment of all enterprises and sectors. A precondition for guaranteeing the latter is the efficiency of the bodies responsible for protecting competition, avoiding measures and decisions that favor a particular sector, combating the informal economy and eradicating corruption.
The regulation of multiple inspection bodies, as well as their discretion and powers, is vital to facilitating the operations of the businesses, and avoiding interference in the private sector. The legal basis governing market operations, both internal and external, should be in line with Kosovo’s constitutional provisions, as well as with country’s orientation for a market economy, which is also in the spirit of the international arrangements that the country had undertaken, including the Stabilization and Association Agreement. In order to measure the impact and efficiency of the new legal initiatives on the private sector and other areas of life, the new Government should continuously implement Regulatory Impact Assessment as an instrumental practice in EU countries. This practice presents a system for critically evaluating the positive and negative effects of the proposed acts, thus forming an evidence-based policy-making approach.
The Government should pay a special consideration to advancing the implementation of harmonized financial reporting standards, for large corporations, as well as small and medium-sized enterprises, which in turn would enable greater efficiency and transparency. These standards would also enable greater opportunity to identify market needs, decent policymaking that takes into account the needs of the private sector, better information, increased partnerships between domestic and foreign investors, and further reduction of the cost of capital. In order for this to happen, the National Council for Financial Reporting should undertake periodic processing of electronic data.
The new government should continue to support the development of transport infrastructure in place, with a strong emphasis on modernizing and expanding the railway network, but also the functionalization of Gjakova’s Airport, whereas investments in new roads should precede careful feasibility studies. When it comes to bridging of the energy gap in the country, the new Government should support the development of new electricity generation capacities but also the diversification of energy sources in Kosovo. In this regard, the American Chamber of Commerce supports the construction of the “New Kosovo” power plant, but also promotes initiatives for development of alternative energy capacities. In addition, construction of natural gas capacities, including the connection to international gas pipelines, are of utter importance.
Significant attention by the new Government should be devoted to the development of human capital, starting with an education system reform at all levels, starting at pre-school, with purpose of promoting entrepreneurship among future generations, but also improving the relationship between supply and demand in the labor market. The government should refrain from actions that further increase the pay gap between the public and private sectors, by further raising public sector wages, thus reducing labor force availbility within the private sector, which is unable to follow the payment trends. On the other hand, labor legislation should be in line with the economic development of the country, without aggravating the relations between employers and employees.
Educational programs should reflect the needs of the labor market and various industries in Kosovo, providing solutions to the problems of these industries, in particular for the manufacturing sector in Kosovo. Proper staffing would support country’s goals of developing an Internet-based economy, or digital economy, having in mind the benefits Kosovo can have in this regard.
The development of human capital is also an important component in the implementation of international standards for financial reporting. In order to properly address issues related to human capital, the cooperation of educational institutions, including those of higher education, with the private sector should be raised to the highest possible level, focusing on analyzing the current situation and future trends, but also in structuring practical work programs, so that students in Kosovo can harmonize their practical and theoretical knowledge. Important in this regard is the promotion of vocational education among young people, but also the proper career orientation from an early age.In addition to the aforementioned, members of the American Chamber of Commerce in Kosovo recommend continuation of the fiscal reforms, including the rapid adoption of tax laws, such as the one on value-added tax, which would bring new incentives for businesses. Fiscal incentives, including tax holidays, should support young entrepreneurs, especially women, as well as strengthen the capacity of companies in the digital economy, but also attract foreign investors; in particular, those whom the country intends to encourage for investing in special economic zones, such as the American one in Gjakova. For young entrepreneurs, and more particularly for the producers, further facilitation of access to finance is needed, by expanding the support from the Kosovo Credit Guarantee Fund.
Finally, the American Chamber of Commerce believes that the new Government should complete the country’s legal base in areas in which innovation and business advancement is stiffened, such as the case with electronic transactions, with clear reference to the national strategy of economic development, which should be drafted from the very beginning of the Government term.