Банкеръ Weekly

Briefs

THE (IM)POSSIBLE LOVE BETWEEN STATE AND BUSINESS

State and business are often associated as being entire opposites. For example, two main spheres existed in law even in Roman times - one referring to the state interests and another one - to the interests of individuals. Nowadays, nobody is even thinking of questioning the maxim that the state is a bad master, while the public sector of the economy is considered a heavy burden inherited from the centralized planned economy. Strangely enough, though, the partnership (an efficient one) between governments and private companies is quite possible. Recently the countries in the European Union (EU) have been showing a trend toward organizing conferences and forums in which discussions focus on the successful models of public and private partnerships. Bulgaria is not an exception from the trend. More and more politicians and large businessmen are talking about the need of economic symbiosis between power and business. The public and private partnership was the topic of the Sixth Southeast Europe Economic Forum held in Sofia on 2 and 3 November. It was the first time that the partnership between the state and the private sector was so widely discussed in Bulgaria. In fact, the nontraditional cooperation model in which participating sides negotiate for implementation of joint economic projects and share the costs was first applied on the territory of the United States in the distant 1652. The Boston-registered Water Works Company got concession from the British government for selling mineral water to the population.The schemes of public and private partnership are now particularly popular within the European Union. Pressed by the strict Maastricht criteria for restricting the budget deficits, EU country rulers often seek collaboration from private capitals (of course, in return to certain preferences) for the construction of big infrastructural projects such as highways, airports, bridges, etc.In Bulgaria, the public and private partnership is still more discussed than applied. Yet, it cannot be denied that through their participation in the Council for Economic Growth established in 2001 the representatives of several big employers organisations were let to take part in the making of the country's economic policy. In her speech to the participants in the economic forum, the Deputy Prime Minister and Minister of Economy Lidiya Shouleva described as successful the collaboration of her ministry with businessmen in the launching of the so called clusters in information technologies, textile industry, waste utilisation, and preservation of the environment. Besides, the Economic Ministry and the organisations presented to the Council for Economic Growth reached an agreement recently on the appointment of ten Bulgarian commercial attaches to some of the biggest European and world capitals. Expenses for their salaries will be shared by the treasury and the employers organisations. According to Minister Shouleva, public and private partnership may be extended in the future in the field of transport, infrastructure, home building, etc.However, her enthusiasm was partially cooled by Bozhidar Danev, Chairman of the Bulgarian Industrial Association. In one of the most biting statements made during the forum, Mr. Danev said he doubted the Government was willing to share the responsibilities in some spheres of the economy with the businessmen. He insisted on preparing a governmental strategy for public and private partnership that would become an integral part of the future plan for development of the country in the period 2007-2013.Assuming that Mr. Danev looked for an additional effect from his appearance in front of such a wide audience, we cannot deny a few of the things he said. Among them are the procedures for giving on concession the airports in Varna and Bourgas and the Hemus and Trakiya highways, and those for licensing private railway operators delayed for years. It sounds logical that the business insists on establishing a special public and private partnership fund with a BGN20MN initial capital as well as on accelerating the outsourcing process. The process means that the state transfers to the entrepreneurs activities previously typical for the administration. The notary proceedings were privatized in that scheme several years ago and the compulsory implementation as regulated by the civil procedure code is currently on the agenda. Among the proposals of the economic chamber that are worth noting is the one to entrust the auditing of traders VAT accounts to independent chartered accountants and not to the tax authorities.However, the BOT (Build-Operate-Transfer) and BOO (Build-Own-Operate) schemes of public and private partnership that are popular throughout the EU remain a taboo in Bulgaria. According to the first scheme, the state authorizes a private company to build certain sites and the executor usually provides part of the financing. Once the site is constructed, it remains property of the executor for a certain period of time and then is transferred to the state. The second scheme stipulates that the newly-built highways, airports, etc., are entirely financed by the entrepreneur and remain his property, while the state provides the investor with tax preferences and other incentives.

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