INTERVIEW: JASMIN HALEBIĆ, FINANCE MINISTER OF SARAJEVO CANTON
By: Hamed IBIŠEVIĆ
SARAJEVO, June 23 (ONASA) – Finance Minister of Sarajevo Canton Jasmin Halebić, in an interview for ONASA News Agency, talks about the current situation and the state of economy of Sarajevo Canton in the past and this year, the reasons that led to today’s gloomy economic picture in the Sarajevo Canton, plans for improving the business environment and opportunities for attracting both domestic and foreign investors, debts of concessionaires, planned allocations for agricultural production, financing development of tourism, and other topics.
ONASA: What activities will the Ministry of Finance label as priorities this year, and from a financial standpoint, could we give a positive mark to the current state of the economy in KS?
HALEBIĆ: If we compare the state of KS economy in 2014 with the balance of 2013, through tax revenues or more precisely income tax of individuals and companies, we can notice the improvement of the situation in 2014 over the prior year. Data clearly show that, in 2014 compared to 2013, there was growth of this kind of revenue of 13.3 percent, or BAM 44,580,033 in the 2013 to BAM 50,505,028 in 2014.
Of course, it is not the purpose or objective of the economic subjects to merely fill the budget. On the contrary, the goal of economic subjects is to make profit. To use the funds that are collected on the basis of laws dealing with income generation, in order to enable further improvement of the business environment and, in general, the exercise of the constitutional jurisdiction of the cantons, is only an indirect objective. The data I cited above show that even in this burdened economic situation individual businesses realize positive business results and that, on this basis, the whole community experiences positive effects through the payment of income tax.
The task of the executive and legislative authorities in KS is to place such economic entities in the top of the priority list when it comes to legislation and other forms of support. In this regard, the Ministry of Finance will certainly be a partner to the relevant ministry of the economy to improve the business environment through various forms of support to economic entities.
ONASA: What are the main generators of today’s economic picture and what concrete moves should the Ministry of Finance take to change the situation?
HALEBIĆ: Ministry of Finance, as part of the KS Government, participates in discussions with companies but also with other ministries within the KS, which in the context of their activities treat certain challenges that face taxpayers and businessmen in KS. General economic picture is not satisfactory and it needs constant repair. The biggest problem in economic terms of KS is high unemployment. This problem, on the one hand, is a consequences of certain things, while on the other hand it is a cause for some other phenomena and trends.
Unemployment is the consequence of numerous and complex causes. I will mention some of them. The first is the collapse of the former economic system in which companies operated and the loss of the former markets. Then, the transition of the system and creating new market institutions, which is a process that is not performed optimally throughout BiH, including in KS. Furthermore, the processes of privatization and weak effects of privatization. To this we can add harsh business environment and difficult business conditions, as well as the lack of specific knowledge of entrepreneurs on how the market system functions. And finally – although this short list is by no means final – undeveloped entrepreneurial culture among the citizens, in terms of the existence of consciousness that individuals, to the greatest extent, are responsible for their own economic destiny. Responsibility of course also exists with the public authorities that collect and dispose of public funds.
Unemployment, seen as the cause of other social phenomena, is also important and it should be dealt with because unemployment leads to poverty, low living standards, increase in crime rates, feelings of hopelessness among young people, emigration from BiH… Both aspects of high unemployment are very present in KS and it is what the Ministry of Finance, as part of the Government of KS, wants to work on throughout the mandate period.
One of the concrete steps which we are contemplating is the establishment of a Credit Guarantee Fund that will support fast-growing companies in KS, which contribute to raising the level of employment in KS.
Furthermore, the responsible ministry is also preparing a law that treats support to small economy in KS which provides a range of measures to support entrepreneurs. The funds that are planned to be directed towards small businesses within this law range from 0.5 percent to 2 percent of the KS Budget.
ONASA: Does KS Ministry of Finance at this point have any concrete plans for improvement of the business environment, and with that the opportunities to attract both domestic and foreign investors?
HALEBIĆ: There are measures to simplify the business environment, which individual cantons and municipalities throughout BiH conducted and through which they achieved positive effects. In this sense, an example of good practice that KS could follow is relieving economic entities in the area of payment of administrative fees and charges. Economic theory and policy confirms the effectiveness of such measures given that it reduces the overall operating costs of business entities and increases their efficiency and profitability. Moreover, there have been positive effects on the increase in employment, thanks to which, in financial terms, part of the resources that are reduced in fees and charges could be recouped through increased funds from income tax, so the overall effect on the budget would be neutral, while the measure would stimulate employment. Such enterprises would thus improve their competitiveness which certainly improves their export capacity.
ONASA: As in many other fields, in KS as well there are economic subjects and individuals who are in debt. How high are the combined debts of concessionaires in KS?
HALEBIĆ: The Ministry of Finance of KS has insight into revenues that arise from giving the right to exploit natural resources. In 2012, these revenues were realized in the amount of BAM 341,644 and are distributed between the cantons and municipalities in the percent ratio of 60/40. In 2014, this item, compared to 2012, increased to BAM 863,862. For the period January-April 2015 about BAM 234,000 was collected, so in this year we also expect charges of that type of income at the level of the previous year.
ONASA: Over the last couple of years there is a lot talk about agricultural prodution, which, according to some, should be one of the fields for development of economy and which would enable many household at least some kind of income. How much is planned to be invested this year in incentives for farmers and will these funds be enough?
HALEBIĆ: In Sarajevo Canton Budget for 2015 funds for agriculture are envisaged within the Ministry of Economy, for instance for the development of agriculture 200 thousand BAM to support the advancement of animal health, 3.245 million BAM in cash incentives in the primary agricultural production, supporting eco fairs – festivals of organically produced agricultural products ten thousand BAM, for a total of 3,455 million BAM.
Best answer on whether the funds for this purpose are sufficient or not can be given by farmers. I personally believe that they are not enough and that they should be higher. Given that the food security of the population is a strategic issue in any country, this topic should be in the focus of decision-makers at all levels.
In the agricultural sector it is also possible to pursue contacts with international donors and to look for favorable financial assets in this way. Associations of farmers and individual agricultural producers of course need to take every opportunity for improvement of their business, because sometimes we can also see insufficient effort on their part or lack of information in this field.
ONASA: One of the industrial drivers should be tourism. What concrete steps will the Ministry of Finance take together with associated services and ministries to significantly develop this branch of economy?
HALEBIĆ: This question is more in the domain of the directorate for tourism within the Ministry of Economy, because this office proposes measures for the development of tourism. The Ministry of Finance is, of course, willing to support this and as part of the KS Government to get engaged in the financing of development of tourism. (end)