Private Sector Investment in the Balkans
The guest speakers (in alphabetical order) at this panel discussion were: Mr. Nicolas Charalambous, Founder, Chairman of the Board and Chief Executive Officer of Hellenic Seaplanes S.A.; and Mr. Thomas Lubeck, Western Balkans Regional Manager at the International Finance Corporation, Member of the World Bank Group. (Vangelis Pterneas, founder of Lightbuzz Software, and Monika Ekstrom, Head of Sector at the EU Representation Office in Greece, who had been scheduled as speakers at this session, cancelled the day of the conference and one business day before the conference, respectively.)
For the benefit of the audience, the moderator presented an introduction to each of the Balkan private sector investment issues scheduled for discussion, and each introduction was followed by questions for the panel members. The introduction to each issue for discussion and the associated questions are set forth below while a video of the session is available here and on YouTube.
SUBJECT NUMBER 1: Foundation for Private Sector Investment
There are important elements that must be in place before an economy can be sustainably developed through private sector investment which relies upon public sector institutions that are responsible for the necessary infrastructure on which the private sector can build.
These elements, which influence the level of investor confidence that is needed to spur foreign and domestic investment, include such factors as: access to capital and open, competitive markets; the establishment and enforcement of laws that protect competition in an open market economy as well as contract and property rights including real, personal and intellectual property; the level of education, skills and training of the labour force; labour market flexibility; employment based exclusively on qualifications and merit; the extent and cost of administrative bureaucracy; the cost, availability and reliability of energy supplies, telecommunication services, transportation infrastructure, raw materials and construction services; the degree of transparency in business operations; judicial efficiency and independence from political interference; national government competence and stability; and the degree of regional cooperation especially concerning enterprises which rely on regional networks such as national customs, energy supplies, inter-state transportation of goods and Free Trade Zones.
- Among the elements that are pre-requisites to spurring private sector investment, what are the most important ones and why are they so important?
- Among all of these factors necessary to spur private sector investment, which ones require the most improvement in order to raise investor confidence in the Balkans?
Subject Number 2: Establishing an Enterprise
There are many parts of an organisation that must be assembled before a new enterprise can be successfully launched. These include feasibility studies; administrative requirements such as licencing and registration; the procurement of debt and/or equity financing; and the assurance of adequate transportation, telecommunication and energy infrastructure.
- What have been the three most difficult problems that you have encountered during the process of establishing your enterprise?
- What sources of debt and equity financing would you recommend that an entrepreneur explore for the start-up of an enterprise that represents a creative business model?
- What recommendations would you offer to the public sector in order to make it easier for start-up enterprises to establish and maintain their organisations in compliance with governmental administrative requirements?
- Is there any advice you would give to aspiring entrepreneurs before they begin to establish a new enterprise?
SUBJECT NUMBER 3: Advanced Technology
Telecommunications and computer technology, which have completely transformed domestic and global business operations, are advancing at lightning speed and they enable us to connect to any place in the world.
- Please explain, and give us some examples of, the latest innovations in technology that support the day to day operations and profitability of business enterprises across multiple business sectors of the economy.
- How important a role does advanced technology play in developing regional cooperation among Balkan states, and thereby regional socio-economic stability and security?
SUBJECT NUMBER 4: International Finance Corporation
Based on the International Finance Corporation projects that Mr. Lubeck has overseen in countries such as Ukraine, Georgia, Armenia and Azerbaijan along with his current project responsibilities in Serbia, Croatia, Kosovo, Albania, FYR Macedonia, Montenegro, Bosnia-Herzegovina and Slovenia, he has a unique perspective in that the International Finance Corporation (IFC) has financially and technically supported private as well as public sector investment projects in key economic sectors such as banking, manufacturing and energy development.
[Note: from the perspective of debt and/or equity financing procurement from the International Finance Corporation, a private sector enterprise should be commercially feasible, environmentally sustainable, and socially responsible regarding its adherence to all government, including labour, regulations and respect for the public welfare.]
- Please explain step-by-step, and give us some examples of, how the IFC operates in providing financing and business advisory services in support of private sector investment, including domestic entrepreneurship and foreign direct investment.
- Please provide some examples of IFC investment projects and programmes that illustrate the national infrastructure (e.g. energy, transport) and institutional (e.g. central banking, judicial) pre-requisites that must be in place in order to allow the growth of private sector investment?
- Considering the wide range of infrastructure, banking, manufacturing, energy and other types of IFC investments that you have coordinated during your career, what are some of the most common problems that each of you has encountered, including any that we can hopefully learn to avoid in the future?
SUBJECT NUMBER 5: Investor Protection
Among the factors that influence the decision to invest in the development or acquisition of an enterprise in a country, consideration is usually given to the existence and level of enforcement of laws pertaining to investor protection in the targeted country. These include laws (a) protecting contract and property rights (including real, personal and intellectual property), (b) protecting competition in an open market economy, and (c) prohibiting acts of nationalisation, expropriation or requisition, except in the event of superceding public interest.
- In your experience, how would you assess the importance of investor protection laws to foreign and domestic investors in the private sector?