2000 Highlights
The major thematic priorities that have dominated
the work of the Economic Program in 2000 were:
- Promoting the core principles of
corporate governance in Bulgaria. The work on the Corporate
Governance Initiative (CGI) in 2000 got into its second phase. Its
main component was the project "Transforming Business Practice
through Corporate Governance".
- Promoting corporate governance in
Southeast Europe. CSD was actively involved in the organization of
the regional forum "Business Views on Corporate Governance:
Building New Structures in Emerging Markets", held in
Sofia.
- Enhancing the business
environment for foreign direct investments in Southeast Europe. CSD
provided support to the Applied Research and Communications Fund on
the project "Foreign Direct Investments in Balkan Countries:
Alternatives to Reduce Existing Barriers".
I. Facilitating the Implementation of Modern
Corporate Governance Principles: Corporate Governance Initiative
for Bulgaria
The activities of the Corporate Governance
Initiative (CGI), a coalition of Bulgarian NGOs working together to
facilitate the adoption of relevant corporate governance standards
and procedures ensuring transparency and accountability in economy
(www.csd. bg/cgi), focused in the year 2000 on the preparation of
the Corporate Governance Assessment Report and the public
endorsement of the Corporate Governance Guidelines for Bulgaria.
Serving as a secretariat of the CGI, the Center for the Study of
Democracy has been among the core actors in this initiative along
with such partners as the Association of Industrial Capital, the
Association of Voluntary Pension Funds, the Center for Economic
Development, the Investors' Union and the Securities Holders
Association.
1. Monitoring the Corporate Governance Reform in
Bulgaria
In order to track the progress of reform measures
and formulate relevant policy agenda on promoting corporate
governance, CGI engaged in a review of the current practices in
corporate governance and evaluation of the impact of the activities
undertaken so far. The first major issue in this respect was to
design and test policy-sensitive indicators for corporate
governance and to improve the quality of national corporate sector
data. A special task force, led by the member of the National
Securities Commission Bistra Boeva, Professor at the University of
National and World Economy, and including economists and
representatives of private business came up with a set of
indicators on the progress in reforming the legal framework for
corporate governance, the efficiency of the relevant institutions
and the corporate governance practices in Bulgaria and proposed the
structure for the Corporate Governance Assessment Report to include
analysis of the following problem areas: voting'rights and equal
treatment of all shareholders; board structure and the role of
managing bodies; and disclosure and transparency. Together with a
number of Bulgarian and foreign experts the CGI Task Force designed
the methodology for pilot monitoring which was completed in
November 2000.
2. Consensus and Coalition Building
CGI Steering Committee, composed of both
NGOs-founding organizations and government institutions, including
representatives of the Bulgarian Stock Exchange - Sofia, the
Council of Ministers, the Ministry of Industry and the Bulgarian
National Securities Commission, provided co-ordination of the
project activities and prepared the working plan for these
activities. At the meeting on July 11, 2000 it adopted the CGI
working program for 2000/2001.
The drafting of the Corporate Governance Guidelines
for Bulgaria started in the second half of 2000 involving CGI Task
force members and other experts. In line with the 1999 CGI Policy
Recommendation Paper, these guidelines focus on the following major
areas: a) responsibilities and motivation of boards; b) role of the
judiciary and improvement of judicial practice; c) promotion of
capital market development and role of institutional investors; and
d) residual state shareholding. The Guidelines also include
practical measures for the promotion of the culture compliance and
disclosure in the economy. The set of policy recommendations
targets the regulatory and enforcement levels; it also include
advocacy and education activities and involve experts from the
Securities Holders Association and other relevant business
associations.
3. Dissemination and Advocacy
In 2000 the CGI web site (www. csd.bg/cgi) actively
contributed to promoting project goals. The site has been updated
on a regular basis to cover current activities and events - it
contains the final version of the Policy Recommendation Paper,
legal and other documents on corporate governance, CSD and CGI
publications (summary reports, draft documents, press releases,
etc.). A subsection on the results of the Regional Corporate
Governance Forum has also been added to the site.
The CGI activities have received broad coverage in
the specialized media on business and finance. Both daily and
weekly newspapers published a number of articles on the Regional
Corporate Governance Forum; TV and radio stations broadcasted
interviews with CGI Task Force members and foreign participants in
the conference. Dr. Maria Prohaska's article entitled Corporate
Governance in Bulgaria - the Core Issues was published in the
International Risk Management (Europe) Newsletter on corporate
governance (No. 6, August 2000).
Another successful effort in the dissem-ination of
the recommendations of the regional conference was the CSD Reports
publication: Establishing Corporate Governance in an Emerging
Market: Bulgaria. It includes two studies analyzing the trends in
corporate governance in Bulgaria after the first wave of mass
privatization and the initial stages of concentration of ownership
focusing on the major principles of corporate governance and
control as well as the possible implications of corporate
governance reform in Bulgaria.
II. Regional Conference on Corporate
Governance
CSD could hardly accomplish much in promoting
corporate governance reform in Bulgaria over the past years without
the continuous support and active involvement of the Center for
International Private Enterprise (CIPE). In the year 2000 it was
CSD who helped CIPE organize a regional forum on corporate
governance for Southeast Europe entitled "Business Views on
Corporate Governance: Building New Structures in Emerging Markets"
and held on September 22-23 in Sofia. The main objective of the
Forum was to promote a creative dialogue in which representatives
of the business community, various market participants and
think-tanks form their own approaches to corporate governance. By
focusing on building local demand for corporate governance reform,
the Forum also brought together a network of practitioners from the
region. Over 100 participants from 20 countries, including
representatives of the business community, international aid donor
organizations, Bulgarian policy makers and senior government
officials, attended the conference.
The major topics discussed included corporate
governance as an antidote to corruption, corporate ownership
patterns in emerging democracies, transparency of financial
institutions and corporate infrastructure, local policy
implementation and defining corporate governance strategies. The
participants shared their experience and views and highlighted
successful approaches to policy, advocacy and implementation in
three plenary sessions devoted to: a) creating demand for corporate
governance; b) market participants and supply side links to
corporate governance, and c) pillars of the reform -governance
institutions, corporate codes and institutional investors. Working
in four groups of 20 people the participants also discussed and
identified relevant corporate governance measures with debates
focusing on the specific implications for the region and the
possible future paths for corporate governance reform. At the
conference CSD shared its own accomplishments in the field and
gained exposure to the experience of other institutions from
Central and Eastern Europe.
III. Foreign Direct Investments in Balkan
Countries: Alternatives to Reduce Existing Barriers
Since the beginning of its existence CSD has had a
solid track record in promoting foreign investment in Bulgaria. In
1991 CSD initiated periodic surveys of public opinion on foreign
investments; in 1993 it came up with a Policy Recommendation Paper
on Privatization and Foreign Direct Investments (FDI); in 1994 it
carried out a series of case studies on success in foreign
investments. A Debt Conversion Program was proposed by CSD in 1995
aiming at a transformation of certain holders of Bulgarian debt
into equity investors in the course of the coming process of
privatization. Publications on foreign investments in the mass
media by CSD staff and associates made a substantial contribution
to raising the public awareness of the opportunities and the
existing problems in the course of the past decade. In 1997 CSD
participated in the public discussion on the new law on foreign
investments.
CSD is currently involved in another foreign direct
investment project, this one having a regional dimension. It is
assisting the Applied Research and Communication Fund on a
comparative study of foreign direct investments in Albania,
Bulgaria and Macedonia; the Fund is a partner of the Institute for
Development Research and Alternatives and the Institute for
Comparative Studies in Tirana and the Forum -Center for Strategic
Research and Alternatives in Skopje in this matter.
The project aims at proposing policy measures for
reduction of the existing barriers to foreign investments and
initiating a process of standardizing and benchmarking the
measurement of foreign direct investments in Central and Eastern
Europe. At the initial stage of the project CSD provided support
for the research on the FDI inflows over the last decade and the
review of the legal, institutional and macroeconomic environment
for FDI in Bulgaria. A survey of Bulgarian companies with FDI was
conducted by Vitosha Research/CSD evaluating the existing barriers
to foreign investment and the company responses to them. A policy
workshop and a regional conference on foreign direct investments in
Balkan countries to be convened in the year 2001 are expected to
come up with policy recommendations for all actors involved, aiming
at a better understanding of the existing barriers and coordinating
of the measures for stimulation of foreign direct investment.
IV. International Business Club Meetings
The International Business Club, hosted by CSD,
encourages business contacts and aims at popularization of business
opportunities and promotion of trade and foreign investments in
Bulgaria. It provides a valuable opportunity for high-ranking
public officials and policy makers met with senior foreign
diplomats, trade envoys and representatives of the international
business community.
- On April 11, 2000 Mr. Antoni
Slavinski, Minister of Transport and Communications, addressed the
Business Club. He discussed the government's policy in these
fields, emphasizing the current priorities, namely, harmonization
of the national legislation with that of the European Union,
further development of the transport infrastructure, achieving
partnership" between the public and private sector, creating
competitive environment and attracting foreign investments. Mr.
Thomas O'Brien, Resident Representative of the World Bank, spoke of
the need for the government to attract additional foreign
investments in the course of the divestiture of companies from the
public sector. He pointed out that these goals could be served by
improvement of the existing legislation, greater transparency of
the procedures and limiting corrupt practices. He also noted the
importance of the introduction of news forms of private ownership,
the regulation of public/private interaction, the partnership of
local and foreign companies in financing projects in Bulgaria for
the success of the economic reforms in the country.
- On July 7, 2000 Dr. liko
Semerdzhiev, Minister of Health, spoke the characteristics and
perspectives of the healthcare reform in Bulgaria. The discussion
touched upon the financing of the healthcare sector, the provision
of emergency medical services, medical research and education. A
special emphasis was put on the new role of healthcare
professionals, especially that of physicians on general practice.
Dr. Semerdzhiev also noted the need for transformation of the
currently state-owned hospitals into corporate entities which could
be privatized in the future.
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