It was clear to us back in March that the BH economy will face tremendous hardship when the emergency caused by the COVID-19 virus ends. People in BH are currently in a state of tension due to possible illness, care for their loved ones, fear due to inadequate health care system, and under increased adrenaline, we have not yet faced the fact that the BH economy is facing entropy. Offered programs to mitigate the economic consequences came in a form of so-called “Corona law” and include (1) deferral or subsidy for taxes and contributions payments, (2) creation of special funds that have not yet been activated, and (3) the moratorium on loans. Given that we live in a time of global crisis, we can certainly look at what other economies are doing and follow the good practices to offer better and long-term sustainable programs that will revive the BH economy after the adrenaline decreases and we begin to worry about the long-term consequences. It is these structural measures that will enable the economy to survive the COVID and post-COVID crisis.
In the three rounds of Economic pulse research conducted by UNDP, first one in April 2020 (with 1.023 respondents), the second one in June (with 379 respondents), and the third one in October (with 544 business respondents) it is obvious that the existing measures are not sufficiently used. Thus, in April companies in RS were more active in using the measures (22% compared to 14% of companies in FBiH), however, the companies from the Federation of BH caught up with this pace in June and took the lead in October (28% in FBiH and only 10 % in RS). Nevertheless, it is devastating that 54% of companies did not use any measures to mitigate the economic consequences. These same companies consider the measures to be inadequate, but when asked what would they propose, they respond with the same, already existing measures, i.e. primarily the deferral or subsidy for taxes and contributions payments, reduction of fiscal and parafiscal levies and the like. Some proposals are in the domain of “science fiction”, ranging from the complete abolition of all taxes (from VAT to contributions), non-refundable financial incentives and reduction of overhead costs, to rewarding those who operate successfully in those difficult times.
All those measures are urgent and in the service of basic survival. Thinking ahead and aiming for long-term sustainability, structural post-COVID measures for economic recovery are desperately needed. Therefore, one should analyze what others have done. Aware of the fundamental change in the work conditions, the focus is on the digital transformation. Hence, Austria offers telecommunication services for SMEs free of charge for three months, so that it is easier to work from home. In Italy, the “Digital Solidarity” project has been established, where companies can access all digital services (smart business, video conferencing, mobile internet, cloud space, etc.) at no additional costs, which will make it easier for them to work in extraordinary circumstances. A digital transformation support program has been developed in neighbouring Serbia, and of course, there is special support for companies, for example in China and Japan, that are developing new digital solutions to current problems (online shopping, online treatments, online education, digital entertainment, etc.). The respondents in Economic pulse survey also tackled this issue, so they suggest:
- Use of electronic signature;
- Given the same priority to electronic business as to the analog one;
- Digitization and e-government, because now we have more costs, and it is more difficult to do the business;
- Increasing public investment in the IT sector for the needs of digital transformation.
The second set of structural measures can be characterized as export support. China insists that large companies help small exporters by enabling them to use their distribution and supply channels. Germany and Slovenia have provided special financial incentives for exporters, Switzerland participates in the costs of promoting companies in foreign markets, while Italy takes over the costs of participating in international fairs. There is also intensive promotion at various virtual fairs, as organized in BiH within the European Entrepreneurship Network – e.g. Security Summit 2020 in November, Match and Furnish 2020 in October, Virtual NANO 2020 in August and others (more at www.een.ba). Respondents had similar suggestions on this topic:
- Providing free participation and promotion at all international fairs for a period of 365 days from the date of termination of special conditions;
- A more agile approach of the Ministry of Foreign Affairs, in order to enable access to foreign markets.
And finally, the third set of measures goes in the direction of improving the skills and knowledge of workers or retraining workers who have lost their jobs. China provides free access to all online learning platforms, Finland and Germany offer subsidies for hiring consultants for companies, and Greece provides vouchers of 600 Euros for attending training in certain areas. Most offer free re-training for unemployed workers, especially in scarce areas.
When adopting post-COVID measures, special attention must be paid to the segment of micro-enterprises and crafts, because they are most exposed to the negative consequences of the crisis. These companies often do not meet the requirements of financial loans and are oriented towards microcredit organizations and unfavourable financial arrangements. Consideration should be given to setting up direct financial assistance for these companies, or providing them with bank guarantees for loans (as in the Netherlands), or involving private capital, following China’s example so that large companies jointly provide their infrastructure for micro-companies. At the end of the day, it seems that there are some new possibilities that would prevent the complete entropy of the BH economy. However, these measures must be treated as urgent, smart, and efficient.
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