Efim Koval: "We might need to pass emergency legislation"

Efim Koval, a Moldovan member of PMR's Parliament, wants independence and a stronger economy for Pridnestrovie

TIRASPOL (Tiraspol Times) - The Chairman of PMR's Parliamentary Committee for industry, agrarian policy and natural resources, Efim Koval, says that if "challenges of an external character" appears in the coming months, parliament will be forced to pass emergency laws to protect the local economy.

Efim Koval, a farm boy from Moldova, is a PMR citizen and a member of the unrecognized country's ethnic Moldovan minority. Unlike most other PMR-Moldovans, he is not local born but an "immigrant" from Moldova / Bessarabia. He was born in a small village in the Rîşcani region of northern Moldova, when it was part of the now-dissolved Moldavian SSR (MSSR), itself a piece of the former Soviet Union.

Today, living in Pridnestrovie, the Moldovan-born Koval is married, has three local born children, and is a stong opponent of unification with Moldova. He is in favor of liberalizing the economy and strengthening it in the face of Moldovan attempts at economic warfare and blockade. In this interview by the parliamentary press service, he explains what his committee is doing to bring market reforms to the economy in an open and transparent way.

What does your Committee plan to accomplish this year?

" - Under the 2007 work program the members of the Committee are to draft bills according to the general work program of Parliament. The Retail Markets Bill is to be considered first to regulate relations between a consumer and a retailer as well as market administration.

The Commodity Exchange Bill is to be scrutinized next. It has been drafted by our Committee and approved by MPs entitled to initiate laws. The Bill is to be laid before Parliament soon. I hope it will be signed into law this year. There’s a need for a new law for a great number of private companies have emerged lately. There is still no market agency to regulate price policy, import and export policy. It is not within the state’s competence. Every company settles the issue on its own. The commodities market will regulate import and export operations, prices at home markets, advocate interests of producers and consumers. The issue on establishment of the commodity market will become rather topical due to a glut of particular goods on the market.

We also plan amendments to the land legislation since lots of land issues have arisen. The procedure for the land lease (a long term use) should be simplified. We’ll also focus on Grain and Grain Products Bill; it’s a product of social importance. Bread-baking plants are currently privately owned. This law’s aim is to regulate the relations between the owners of the bread-baking plants and grain producers who have no grain-storage systems. We also plan to pass Personal Subsidiary Plots Bill, which will affect both urban and rural population. Personal plots owners supply lots of agricultural products to home markets.

Amendments are to be introduced to 27 bills. Much work on the 2008 budget is ahead. The Committee members, in particular, have proposals to overhaul tax legislation especially relating to the agrarian sector.

The work should be done within the set timescale to avoid emergency rush while passing the key financial document of the year, which should be well-balanced. It must have a positive impact on “the economic constitution”, functioning of industrial and agrarian companies. We hope that tax legislation will be amended during this session before a parliamentary recess, because the amendments are to be published three months before the beginning of the next financial year.

It is not inconceivable that we'll be forced to alter our timeframe for legislation in case we need to address challenges, most of which are of an external character, and we’ll pass emergency bills."

Parliament held hearings on the industrial sector and its future prospects. What was the outcome?

" - The hearings were initiated by Members of Parliament who are the presidents of industrial companies. Many petitions have been filed with Parliament and our Committee in particular, by directors. We had a preliminary discussion on crucial issues during the meeting of the Union of industrial and agricultural producers with the industry minister Peter Stepanov.

Participants of parliamentary hearings have raised the most important issues, first of all, on fulfillment of terms of the purchase contract by investors. It was badly affected by economic sanctions imposed on our economic actors by Kishinev and Kiev and resulted in the loss of outlets. The focus of the parliamentary hearings was also on staff training, deficit and brain-drain. These negative social phenomena arise due to low wages. Industrial producers also advocate an equal system of taxation of all companies.

Restoration of rail traffic still remains a difficult problem. our companies have to transport goods from Levada station, it raise the nominal value of goods, which are then less competitive on domestic and foreign markets. Transport companies of Pridnestrovie suffer from the lack of opportunity to transport freight by car (registration in Moldova is required for this).

Producers have lots of complaints against the customs procedures. They demand exemption from customs fees for technical equipment supplied to the republic on an interim basis; registration of contracts at the location of legal entities; a straightforward procedure for confirming a use of imported raw materials exempt from customs fees. They also spoke about high fees for customs services. Economic agents have to pay double customs clearance charges that enter the budgets of Pridnestrovie and Moldova.

Industrial producers propose to reduce time limits for preliminary electricity payments, to increase timescale for repatriation of foreign currency proceeds up to 210 days (currently 120 days), to annul 100% customs tariff for goods imported from Moldova.
Considering different opinions law-makers could make appropriate amendments to customs and tax legislation, current time limits for repatriation of foreign currency proceeds. The amendments are of great importance to encourage producers for the state’s budget revenue depends largely on tax payments made by industrial enterprises.

We also intend to regulate by law the frequency of inspections to be carried out by different supervisory agencies, to limit charges for their services. For instance, the charge for inspection and accreditation of a building crane comes to 50, 000 rubles. Such charges obviously do not correspond to the work of supervisory officers.

While making laws parliamentarians have to keep balance and to observe the mean between the interests of those who pay taxes to the budget and those who are funded from the budget. It is not easy for members of Parliament as statesmen despite their wish to support the producers should remember that budget-sector workers, pensioners, children, the disabled need social support. Due to a population decline proves the necessity of cuts in government staff because one producer supports four people. It’s a heavy burden on the industrial sector.

The state’s priority in industrial and agrarian policy is to create favourable environment for all manufacturers irrespective of organizational legal structure and type of ownership. High tax rates might entail unpredictable consequences, stoppages at enterprises and even social unease. The efforts of both executive and legislative branches must be aimed at working out an optimal tax system."

What is the current situation of the agro-industrial sector? And how can it be improved?

" - Agrobusiness is rather diverse – there are collective, state-run companies as well as private companies and farms. As for the dynamics of agribusiness, there is an increase in grain corns. It requires minimum expenses and labour and grain is marketable product that is always in demand. The fruit and vegetable growing is far more problematic for it requires processing capacities that our republic doesn’t have now and considerable workforce. Only several private agricultural companies can cope with it.

The agro-industrial sector is now facing lots of problems. The main problem is outdated assets (buildings, machinery, fruit trees, vineyards). New land users buy new machinery and apply modern cultivation technologies. Of course, new machinery surpass the outdated one, which we in old manner call domestic, in reliability, quality, output, efficiency. Such investments to capital assets prove to be efficient.

The application of modern equipment will allow to reach a new level of labour productivity for the manual labour is replaced with technological processes. The machinery could be leased to agrarians.

The village has always lacked staff. Rural communities are also facing social problems – hospitals and drugstores, houses of culture and kindergartens are closed. For the lack of staff there’s a decline in fruit and vegetable growing.

The current situation in the agro-industrial complex in our agrarian republic with its potential and fruitful lands is painful. The members of Parliament drafted agrarian legislation. The law regulates all land matters but there’s no practical mechanism to implement it since there are no instructions and regulations. My firm belief is that there should be the ministry of agriculture in the agrarian republic to coordinate all efforts.

The critical situation in the agro-industrial complex poses a threat to food security of the republic for we can provide grain and oilseeds only. The state should render real support to cattle-breeding, poultry keeping and other branches. The support includes exemption of particular sectors from land tax as it is practiced in other states, from customs duties on importing agricultural machinery and spare parts, maneuvering of milk and meat prices, extra payments for pedigree cattle breeders, establishment of the Financial Support Fund for the agro-industrial complex. Besides, the state should practice protectionism towards agricultural producers by raising tax rates for imported foodstuffs supplied by domestic manufacturers. The foreign currency so hardly earned goes to foreign producers. Of course, it’s hard to support agricultural producers due to the budget shortfall. Nevertheless, over the few last years the state cut refinancing rates of loans given to agricultural producers by commercial banks, allotted one million rubles for phytosanitary and veterinary control, exemption of pesticides, fertilizers, seeds that are not grown in the republic.

Gardens and vine-yards are the most promising directions in this area, though requiring considerable investments. The members of our Committee are sure that laws should be drafted to give a boost to fruit and vine growing. Appropriate bills have already been drafted. They must be accompanied by programs implemented successfully by our neighbours where the state earmarks funds after an agricultural producer has planted a certain number of hectares of gardens and vineyards. It’s of great help to agrarians resolving strategic tasks. It’s the beginning of a full production cycle starting from growing crops and up to exporting products. The money could be allocated from the special fund; the proceeds from sales of fruit and vegetables or alcohol will enter the fund. Due to such a scheme, for instance, Ukraine planted 10,000 hectares of plants and 8, 500 hectares of vineyards last year. Isn’t it a good example to follow? 10, 000 – 12, 000 hectares of vineyards and 20, 000 – 25, 000 hectares of gardens will be enough for our republic."

You advocated financial benefits to farmers?

" - Unfortunately, in the course of the 2007 budget sequestering the funding of the veterinary and sanitary control have been cut (1 million PMR rubles, approximately $120,000) as well as the refinancing rate (4,5 million PMR rubles, approx. $540,000).

But we managed to enforce the Financial Recovery of Agricultural Companies Act signed by the President in April of 2006. This law sets out standards for selection of agricultural companies entitled to writing off the debts, delaying payoffs. At first there were 15 companies. If the budget sequestering had affected this law, all companies would have lost a privilege to pay by installments; anyway, no money would have entered the budget because there is no money in fact.

I have to admit that there are state companies in this sector that can’t be operated profitably today. They should be declared bankrupt and we should look for investors who would be ready to recover them."

See also:
» Ethnic Moldovans in Pridnestrovie prefer independence over unification with Moldova