Procurement pains worry investors

DEMOCRACY watchdogs, media and businesses who have often complained about the public procurement process in Slovakia, might have welcomed the news about the latest meeting of Prime Minister Robert Fico with representatives of the American Chamber of Commerce, where a centralised electronic public procurement system resonated as one of the topics.

DEMOCRACY watchdogs, media and businesses who have often complained about the public procurement process in Slovakia, might have welcomed the news about the latest meeting of Prime Minister Robert Fico with representatives of the American Chamber of Commerce, where a centralised electronic public procurement system resonated as one of the topics.

Fico visited AmCham and met its Board of Directors on March 23. Topics including business-academic cooperation and euro introduction were discussed. The prime minister appealed to the AmCham representatives to focus on improving the quality of university education in Slovakia and to assist the government in related areas.

However, the core of the meeting was devoted to areas of the Slovak business environment that foreign investors felt were lacking.

In the latest AmCham Foreign Investors Survey 2009, transparency and corruption were identified by responding foreign investors as directly impacting and having a harmful effect on their business activities.

At the meeting, members of the AmCham Board of Directors voiced these concerns directly to Fico.

“Based on the survey, board members raised concerns about the issues of better regulation and the related issue of public procurement,” Jake Slegers, the AmCham director, told The Slovak Spectator. “The ensuing discussion focused mainly on the transparency of public tenders and the issue of centralised electronic procurement.”

According to Slegers, the prime minister welcomed AmCham’s expertise on the issue, and promised to bring it to the attention of the Finance Ministry and to assist in organising a meeting with the minister on the issue.

Fico said he believes the introduction of centralised public procurement is a way to make procurement transparent, as it would eliminate certain opportunities for the mismanagement of public funds at individual ministries, the SITA newswire reported. He said he hoped the Chamber’s representatives would be involved in preparing the new system by contributing with their experience, which would allow the Finance Ministry to draw inspiration from them.

With the elections nearing, however, this would most likely be a task for the new government.

“I believe that new parties that will form a new ruling coalition will agree on centralised public procurement,” SITA quoted Fico as saying, adding that centralised public procurement can save millions of euros in public funds.

Slegers said that AmCham intends to intensify its activities within the AmCham Public Procurement Task Force and to prepare a proactive, concrete position on the public procurement situation in Slovakia.

“We have at our disposal a great variety of solid, invaluable expertise in our membership,” Slegers said. “We also plan to draw from the extensive experience and expertise of other domestic and international sources.”

In addition, AmCham plans to raise this issue with all relevant political party representatives that they will meet with in the upcoming months, before the June 2010 parliamentary elections.

At the meeting with Fico AmCham Board members also raised the issue of the lack of flexibility in state aid schemes.

“As the recent financial and economic crisis has negatively affected a large number of foreign investors working in Slovakia, many of them are challenged with fulfilling the specific criteria to receive the investment aid approved by the Slovak government,” Slegers said, adding that these companies have already invested in Slovakia and created thousands of jobs, which they are now maintaining, as well as being active in developing the business environment in Slovakia rather than moving to neighbouring countries offering more flexible state aid, such as Poland and Hungary.

“AmCham therefore requested the government to reassess the current legislation in order to promote continued investments in Slovakia,” Slegers said.

The topic of taxes was also mentioned at the meeting, with Fico saying that he believed the idea of a more progressive personal income tax was still alive and that he did not rule out reopening this topic in the coming months. Fico suggested that other taxpayers, including businesses, don’t need to worry.

“No one wants to toy with taxes,” SITA quoted Fico as saying. “The tax system will, in my opinion, remain untouched regarding the income tax of legal persons. There is no intention to impose any new kinds of tax either.”

Higher tax rates for private individuals who earn above-average income were among the objectives stipulated in the government’s program statement from August 2006. A year later, the government introduced the so-called millionaire tax, by progressively reducing the non-taxable part of the tax base.


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