Regional CompetitivenessAnnual Forum – Bucharest Nov. 1-3, 2006

Regional Trade Challenges / Constraints - a Competitiveness Perspective

Peter LampesisUSAID, Macedonia

Diagrams are copyright © 2005 by Openworld, Inc.)

Contents

• Reflections and thoughts

• Regional challenges and constraints

• Issues and resolutions

• Business imperatives

• Going forward - choosing a path

Reflections and Thoughts• Regional Competitive Initiative is designed to help solve

regional development challenges with stakeholders of like interest.

• For us to be effective, there’s a need to collaborate on crafting creative solutions in solving industry challenges.

• Challenges for small producer’s today are daunting.• The way we conducted business yesterday may not be the

way we need to conduct business today or tomorrow.• Markets tend to be brutally efficient, and its important to

have a pulse on the direction they are going.• Given today's market dynamics, change is less an option

than it is a business imperative.

Reflections and Thoughts cont.

• We are all limited by knowing what we know.• There’s a limit to the amount of information we can

sift through and process.• Don’t let information overload lead to inaction.• Time is a scarce and valuable resource, use it

wisely.• In the words of the Cherokee, “Don’t let yesterday

use up too much of today.”• Remember, risks and challenges bring

opportunities, solutions, and rewards.

Regional Challenges and ConstraintsRegional Trade & Competitiveness inhibited by:

• High cost of communications • High transportation costs• Infrastructure challenges –

• roads, • more border crossing points• stability of electricity supply, • communications (internet access),

• Low level of ICT integration (PC/Internet penetration low)• High cost of clearing goods at border• Lack of capital in the market• Low level of skilled Management • Unresolved land ownership• Small disparate growers

Constraints to Overcome

• Technical issues and non-tariff barriers inhibit trade:• Lack of coordination at border control agencies impede border

crossings and impose serious additional time/cost to companies.

• Technical standards are not yet in line with EU / international standards but can also act as barriers to entry.

• Custom inspection – often doing 100 percent check of the containers at the border – urgent need for employing risk analysis techniques.

• Veterinary inspection – often does not apply risk analysis in its operation, all goods are still being inspected at the Terminal; limited working hours cause long border delays

• Phytosanitary inspection – laboratory facilities need upgrading and are unable to meet the industry requirements; limited working hrs has negative impact on risk cost of doing business.

Constraints to Overcome • Technical issues and non-tariff barriers inhibit trade:

• Food inspection – working hours limited to 4 pm.

• Market inspection – verifies that all goods are properly labeled in Macedonian – (inspections are tedious and cause border delays, could be done at retail locations)

• All border points are not integrated - inhibits transit of goods

• Border Police, Customs officers and others lack systems interoperability and standardization.

• Lack of integration between Macedonian and neighboring countries’ border crossing points – limited flow of electronic information causes excessive delays.

• EU requires that all inspections are moved away from the customs premises. Until this happens, inspections should be operational 24 hrs.

Constraints to Overcome • Access to capital is very limited and expensive:

• Banks require high collateral for issuing loans, usually real estate or cash

• Financial services are not tailored to meet today's needs of small producers

• Need for financial institutions to adopt risk analysis techniques• Interest rates remain high• Long delays in VAT reimbursement

As a result, companies face liquidity problems – lack of capital in the market and little catalyst for economic growth

Issues and Resolutions

• In order to solve the issues and provide resolutions, you need to understand and grasp today’s market dynamics in order to overcome the challenges and constraints.

• Growing good quality tomatoes and peppers is not enough.

• What happened to the good old days?

Issues• Critical need for “access” to enable interaction

and exchange among people , businesses, and ideas.

• Transportation and logistics and supply chain are the future of Ag.

• Power shifted from makers to consumers (bar code)

• Do you have what it takes to get your products efficiently on market shelves?

• Branding and niche markets matter• ITC is an important component to the future of

your business• Commitments and quality assurance matter• Need for access to affordable capital• Risk Mitigation 1st

Resolutions• USAID – RCI – knowledge sharing• USAID improved business environment and

competitiveness activities• Fixing the regulatory and legal issues • Work with industry sectors to improve their competitive position• Nurture public private partnerships• Innovative funding schemes (factoring, DCA, etc.)

• USAID and other donors promoting Ag competitiveness• Strengthening value chains to promote economic

opportunities and job creation.• IFC – supply chain management• World Bank TTFSE – reduce non-tariff trade costs to

trade and transport and reduce corruption.

Resolutions

• USAID CEED, developing and strengthening entrepreneurial skills

• USAID – improving access to finance, Development Credit, SME Fund, SEAF

• PPP’s - USAID GDA• Stability Pact – improving conditions for cross

border trade

Business Imperatives• Be Ready for business change & global competition

– Create an adaptive and agile management and organizational culture

– Become Technically & Tactically proficient• Internet and information systems integration and

deployment– Benchmark for quality effectiveness

• Adopting quality and benchmarking techniques as a competitive strategy

– Balance costs, inventory, & customer service• Create value by striking the right balance

Challenges Open Doors to Opportunity

• Do you have the necessary skills and knowledge to compete in today's global economy?

www.dreamstime.com/index.php

Which door do you choose?

http://www.dreamstime.com

Peter LampesisUSAID

plampesis@usaid.gov