Stability Pact: WTII Environment Task Force Document

Business Advisory Council

The Business Advisory Council (BAC) and its role within the Stability Pact (SP)

1. BAC: Mandate > Focus: Support Efforts to Improve Investment Conditions

The BAC is an independent advisory body to the Stability Pact for South Eastern Europe. Constituted of up to 20 high-level business representatives from the region and from major donor countries. The BAC provides advice to the Stability Pact on business- and investment-related matters. Based on their collective experience and using their diverse background, BAC members present governments with evidence as to why investors do or do not invest in a certain country and propose concrete options to the governments and to international organizations involved in the Stability Pact.


2. Private Investment: Importance > Inv. Climate > OECD’s Investment Compact

Given the current global competition for investment capital, a set of attractive investment measures must be developed for the SEE countries to succeed in bringing in the necessary investment capital to rejuvenate their economy. Under the umbrella of the Stability Pact, the OECD has developed the Investment Compact, a document that provides country-tailored recommendations in this regard. We, as business community members provide input with regard to that exercise.

3. Investment Climate: Political Environment >Macro-, Micro-economic Stability

One of the first factors investors take into consideration is the existence of a stable and sustainable political environment. This provides business with a comfort level to make decisions based on predictable government policies, including macroeconomic stability (policies that lead to sound liberalization, privatization, monetary/fiscal policy, labor and social legislation) and micro-economic stability (protection of investment, no foreign ownership restrictions, international banking, etc.) Such a set of measures will also lead to increased security (personal safety and security of property), another key factor in investment decisions.

4. Investment Climate: No Trade Barriers > Interconnected, Bigger Markets
Removal of trade barriers at the national and at the regional level will create additional markets for SEE countries’ output and exports. Eventually the creation of a Free Trade Area within the region may be achieved. All this would lead to closer trade relations with the European Union and the WTO—all key factors for investors. Of course, interconnected and bigger markets help develop economies of scale, for certain industries a knock-out criteria in strategic investment decisions.

5. Investment Climate: Rule of Law > Judicial System / Effective Administration
An established rule of law, a fair and effective judicial system (with impartial and reliable administration of justice, fairness and predictability), as well as freedom of expression, provides investors with the security that they and their investments will be treated in a fair manner. In the same vein, effectiveness, transparency and predictability of the national administration, without corruption or discriminatory treatment, will attract investors and ensure that resources are spent in a way to maximize their effectiveness.

6. Investment Climate: Adequate Infrastructure
Adequate infrastructure (transportation, telecommunication, energy and water systems) to support business’s day-to-day operations and transactions are the lifeblood of the economies. Privatization of the infrastructure, access to financing, and a transparent and fair procurement system will ensure that the necessary infrastructure can be developed and upgraded at the national and regional level.

7. Investment Climate: Human Resources> Education, Vocational Training, Skills
Initiatives in the field of good governance (OECD guidelines) and efforts to improve management skills of local officials and business leaders shall be undertaken. Investments in education and vocational training are recommended to improve the economic potential of the workforce and the productivity. This entices potential investors to locate facilities that require skilled labor and result in higher wages.

8. Investment Climate: Prospects of Attractive Investment Climate / Outlook

We sincerely believe the above steps will help not only attract foreign investors but also support creation of jobs and development of a strong domestic private sector.