Can we learn from an ex-communist state?

(Business community reacts to new prime minister)

In a recent dinner hosted by a businessman-friend, the conversation turned to the recent elections in Bulgaria: “I did not vote for him but it is amazing what he has done in just one month in office . . . If the elections were held today I would vote for him, absolutely”.

Bulgaria’s new prime minister took office July – the former Mayor of Sofia, the capital, was not a real favorite, but won after the then incumbent socialist prime minister made a couple of mistakes (hubristic statements that turned enough voters against him?) weeks prior to the elections. The country is in a recession; and what is surprising the business community is the swift action and positive direction he has taken. (Bulgaria is a poor country but since embracing free-market economy, its GDP per person has risen to 4X that of the Philippines. Their Act II will be more challenging – raise GDP another 4-fold – to attain developed country status.)

12 years ago they thought they elected the right prime minister but he populated his administration with politicians and corruption became commonplace. This time, the new prime minister put experienced businesspersons and trained professionals in key posts. And he purged agencies known to have been led by corrupt officials – and where imprisonment was called for, facilitated their incarceration.

The prime minster hit the ground running and focused on balancing the budget: The assessment was that government bureaucracy was only 15% to 25% efficient; and so he set a goal of raising efficiency to 55% as a first step. For instance, he ensured that excise taxes from liquor products were realized, 100% – mandating all producers to move from black or grey to white; the Customs bureau and all tax assessment points were tapped into one and the same database as the country’s internal revenue agency, where analysts were tasked to match tax assessments against collections; minutes of government meetings and deliberations were posted in dedicated websites within a couple of weeks, starting with his cabinet meetings.

He is likewise fast-tracking the construction of 3 major highways that will connect the country to their neighbors and western Europe as well as the plans for 2 more, all supported by the EU: the 3 will be completed within his 4-year term and the other 2 will be funded even though the project timelines extend beyond his term. His mantra, on top of demanding transparency and swift action is: “no more maybe(s) or probably(s), only absolutely(s)” – he does not hedge like a typical politician.

And so the type of cabinet officials he chose had proven track records, e.g., a top economist who was with the World Bank for 18 years, a general manager of a German energy company, the general manager of the country’s premier business park, among others.

The business community is so gung-ho that they maintain an ongoing dialogue with the administration; and the 3 priority items they said they would monitor to assess the performance of the government were: (1) eliminate organized crime, (2) eliminate corruption and (3) make Bulgaria among the top 10 business-friendly countries for foreign (and that is not a typo) and local investors.

Will they succeed – they have yet to learn the Protestant work ethic? Who knows, but they are focused, the country’s leadership is working with the people, and they are gearing up to be competitive globally – leveraging their membership in the EU.