IFC Investment Climate Advisory Services Project

1.1. Objectives of the intervention - The aim of the project «Belarus Competition Advisory» (activity period Mar. 2018 – Dec. 2021) is: «to increase the private sector’s opportunities by reducing regulatory compliance cost to do business and to trade, and facilitate specific steps, levelling the playing field for business entities to grow in Belarusian market and through international value chains» (reducing un-fair competition of dominant players, particularly state-owned enterprises (SOE)). The project aims to: --- «Reduce compliance costs for business» (Component 1) --- «Strengthen market competition» (Component 2) --- «Reduce private sector costs, related to conformity assessment, certification of goods traded internationally» (Component 3) 1.2. Summary of main results achieved The project has focused on reducing regulatory burden for business by establishing an e-permitting platform for up to 70 administrative procedures (APs), and making them available for on-line completion. This work is still in progress, but has been slowed down, due to the Corona situation. Once these APs are in place, it will substantially entail reduced bureaucracy and savings for business. The major project achievement, so far though, has been the project’s support to re-confirmation of Belarus’ membership status in European Organisation for Accreditation (EA), International Laboratory Accreditation Cooperation (ILAC), and International Accreditation Forum (IAF) in 5 areas of accreditation: testing, calibration, certification of products, personnel and management systems, as well as extending the scope of international recognition for 3 more areas: medical examination, inspection and proficiency testing. As a result, EU customs clearance is being facilitated, when exporting good to the EU area. - I. The following results achieved / activities implemented during first half of 2020 have been presented: - 1. Component 1: «Reduce compliance costs for business»: - 1.1. In the area of digitalisation: --- on reducing regulatory burden for business by establishing an e-permitting platform for up to 70 administrative procedures (APs), and making them available for on-line completion: ------ completed all APs on-line (www.rap.gov.by), after transfer in June 2020 of the e-registry to the National Centre of Electronic Services (NCES) ------ 10 pilot APs were selected and main findings presented to 25 Government officials, representing 13 state agencies, on 7 Feb. at a workshop, aiming at discussing an AP digitalisation roadmap for the next 2 years (analysis shows that digitalisation of a mere 10 APs would lead to potential savings of 8,700 person/hours per year for business - some APs could be entirely abolished or significantly simplified) ------ Ministry of Nature and Environment, and Department of Energy Efficiency at Gosstandard were selected to draft ToRs for selecting companies to digitalise these APs – however, as a consequence, the selection process was postponed, due to the epidemiologic situation in the country ------ Ministry of Communication and Informatisation developed a ToR by itself, but failed to select a vendor, due to insufficient pre-allocated budget funding ------ subsequently, the project initiated selection of up to 100 APs for subsequent digitalisation by state bodies, but this part of the work is not progressing as fast as planned, due to COVID-19 and lack of meetings with state agencies ------ completed road-maps of 10 business situations (sets of interrelated administrative procedures and other legal formalities, occurring during the lifespan of a typical company) - validation with private companies postponed, due to pandemic ------ completed road-maps of 3 gender-focused road-maps (women-run business entities and women would-be entrepreneurs) - validation conducted off-line in March 2020, and discussed at webinar in May-June 2020 ------ brainstorming event (Creathon), conducted on 12-13 May 2020, resulted in development of a portlet (design completed in June 2020) that might be integrated in any web-portal, which was piloted on www.Bel.Biz and www.ProWomen.by - 1.2. In the area of Regulatory Impact Assessment (RIA): --- on improving regulatory governance: ------ RIA workshops postponed, due to pandemic, at request of Ministry of Economy, presumably to the next reporting period ------ completed RIA pilot report of draft «Law on State Registration and Liquidation (Termination of Activity) of Economic Entities in Belarus», which was presented to and discussed with Ministry of Economy and Ministry of Justice ------ made a Gender Impact Assessment (GIA) with regard to the RIA pilot report (a project cross-cutting initiative), which concluded that adoption of the Law will affect the gender issue positively, by facilitating access to entrepreneurship opportunities for women, and minimising associated costs (GIA results were shared and discussed with Ministry of Economy, Ministry of Labour and Social Protection, National Centre of Legislation and Legal Research) - 1.3. In the area of surveys and studies: --- completed a report, entitled: «Women Entrepreneurship in Belarus»: ------ analyses gender-related findings of 4 most recent surveys, which were presented at National Council for Gender Policy under Ministry of Labour and Social Protection on 20 Feb. 2020, and at a workshop: «PreZoomption: Women in Business», organised by SPP law firm on 25 June 2020 ------ conducted in-depth interviews in May-June 2020 with 35 women entrepreneurs, who run small business entities on COVID-19 consequences for their business activities - 2. Component 2: «Strengthening market competition»: - 2.1. In the area of OECD Product Market Regulation index (PMR): --- prepared a «Note on competition and government interventions», focusing on product market regulations and competitive neutrality (in cooperation with the global MTI team): ------ based on 2 studies: (i) state-owned enterprises (SOE) regulation and competitive neutrality framework; (ii) Belarus 2018 PMR results ------ covering: (i) laws and regulations at a national level; (ii) laws, regulations and market outcomes in key sectors (e-communication; electricity; gas; rail, road, maritime and air transport; retail; professional services); (iii) economy-wide policies (price control, anti-trust exemptions, quality standards) - 2.2. In the area of preparation of the National Competition Development Programme development: --- supported Ministry of Anti-monopoly Regulation and Trade (MART) in drafting the National Competition Development Programme 2020-2025, postponed until Dec. 2020, which includes recommendations to promote competition and remove regulatory constraints and implementation gaps, and focuses on developing competition in sectors, such as agriculture, forestry and wood-processing, insurance, telecommunications, energy, health, education, and professional services - 2.3. In the area of capacity-building activities for MART officials: --- organised a training for 45 MART officials in Jan. 2020, on topics, such as: identification and prevention of abuse of dominance position; price and non-price violations; control to ensure competition market structure, horizontal and vertical collusions ---- second training, planned for May-June 2020, postponed due to COVID19 pandemic, at MART’s request - 2.4. In the area of priority markets selection for in-depth advisory support: --- action plan on 2 priority sectors (insurance and wood-processing), preliminarily agreed upon with MART, based on what can realistically be done in Belarus (state priority, government champion, favourable context): ------ selected sectors included into draft National Competition Development Programme as priority areas for MART competition development - 3. Component 3: «Reduce private sector costs, related to conformity assessment, certification of goods traded internationally»: - 3.1. In the area of reducing compliance costs, related to conformity assessment for private sector companies: (major project achievement) --- supported Belarusian State Centre for Accreditation (BSCA) to eliminate inconsistencies, found by EA peer re-evaluation of BSCA on 11-15 Nov. 2019 ------ supported to re-confirm Belarus’ membership status in BSCA, European Organisation for Accreditation (EA), International Laboratory Accreditation Cooperation (ILAC), and International Accreditation Forum (IAF) in 5 areas of accreditation: testing, calibration, certification of products, personnel and management systems ------ extended scope of international recognition for 3 more areas: medical examination, inspection and proficiency testing ------ organised consultations and 5 webinars, to BSCA on: (i) implementing flexible accreditation (incl. laboratories) and remote audit of accredited bodies; (ii) trans-border accreditation; (iii) inter-laboratory comparison; (iv) improvement of data-base «Accreditation»; all of these supported maintaining international recognition ------ prepared a scenario for a video, aiming at increasing business awareness on benefits of international recognition for Belarusian exporters (video will be finalised and presented to target audience during the next reporting period) II. Factors, affecting project implementation Two factors have mainly affected project implementation. (i) As of March 2020, the Covid-19 situation has forced project management to take pro-active measures to mitigate the consequences of this. Hence, activities cannot be made physically, only virtually. In some cases, it has been possible to implement activities virtually, particularly - with regard to local business entities, but in other cases it has been difficult or not possible - with regard to government authorities. It can be assessed that the project management has done, whatever has been possible, in order to minimise consequences. (ii) In a letter, dated 21 Aug. 2020, Sida informed IFC on its decision to «freeze» Swedish funding to projects, where state actors play an active role. The freeze is currently in force, and will remain so, until there is a change in the political situation in Belarus. At the same time, the project continues implementation, using EU-funding, which is the major part of project funding. III.Overall assessment of project progress (i) On the overall, project progress can be assessed to have been well on track, until the Corona situation started. (ii) Some project results can already be seen, as stated above. (iii) Judging from the project management’s pro-active mitigation measures, implemented since March 2020, it can be assessed that consequences for the project will likely be minimised, to the extent possible.