Hans de Boer: It is important for Bulgaria to respect the rule of law
Hans de Boer visited Bulgaria with representatives of private Dutch companies in mid-April this year with a specific mission – to meet with the authorities and business partners at the Bulgarian Chamber of Commerce and Industry (BCCI), as well as establishing future partnerships with Bulgarian companies.
He gave an interview befor the Bulgarian eocnmic weekly magazine - Capital.bg
The Netherlands is one of the largest investors in Bulgaria. What is the big investment due to?
Investment flows come mainly from large corporations and companies in the financial sector. We see opportunities here and this is a good signal because it means that Bulgaria has a good economic basis. But we notice that we need to improve the relationships between entrepreneurs and smaller companies in the Netherlands and Bulgaria. That's why I'm here as president of the Dutch business community. Our mission is small - I am here with representatives of ten companies but each of them has concrete plans. We want to start on a relatively small scale and build on.
An entrepreneur has a completely different way of thinking compared to large companies because he works with his own funds and has limited resources. He wants to know if he invests in Bulgaria, what are the procedures, how the legal system works, whether it is stable. From statistics, we know that Bulgaria has a steady economic growth of 3-4% over a long period of time, and inflation is not too high. But we need to get to know you better from the point of view of the administrative and regulatory framework. That's why we're here with a little mission.
Last year, our Prime Minister told yours that a good, transparent and predictable legal system will pay off in the form of more investments.
Are there specific sectors in Bulgaria where you see potential?
Holland is a small country, but we have a big economy. Our population is twice as big as Bulgaria’s, but our territory is much smaller. We have specialized in several sectors - logistics, agriculture and horticulture, water management and everything related to marine infrastructure, high technologies.
From a Dutch perspective, I see potential in agricultural logistics in Bulgaria. You have space, fertile soil, good agricultural practices. Your agricultural sector is more traditional if I can say that while ours is high-tech and industrialized. So I believe that you can combine your space and practices with our needs. You have space, we do not. And agriculture is closely related to logistics.
Bulgaria also has young people with very good knowledge of information technologies. We must try to connect Bulgarian knowledge and talents with our industrialized and international companies.
These are my main priorities - agricultural logistics and high technologies.
Almost two decades have passed since the CEE countries joined the EU. How would you evaluate the progress of these countries so far?
I think countries like Bulgaria and neighboring countries who are already part of the EU have advanced significantly. There is convergence, but we are not yet where we want to be.
When I look at the young people, I see no difference between a young journalist here and one in the Netherlands. But between the people like me, the old generation who are from different times and cultures, the difference is more visible. I'm optimistic about the young, but it will take time for some of you to become a minister or become a successful businessman. I expect to reach this level in 10 years.
Countries like Poland, which joined the EU before Bulgaria, went through the same phases. Today, Poland is a respected, integral part of the European economy, if we exclude some political problems. Before that, many Poles came to the Netherlands, but now they are returning to their homeland because they already have a good economy. That is why I say it will take time to catch up with the other states, but we will get there.
It is important that the old generation in Europe does not fail the process. The West must have more patience with your countries [ed: the new members], and it is important for your country to respect the rule of law, the countries should become open and transparent. If we can get together along this path, the young generation will have a good base to build a true European Union.
'You have to show that you respect the rule of law, want an open and democratic society'
In the context of the negative developments in the rule of law in countries like Hungary, Poland, Romania, how does Dutch business see Bulgaria?
Bulgaria needs a better, more independent image among its Western partners. For example, in the minds of the Dutch, what we call Eastern Europe looks the same. This is not reality, but perception is such. There are problems in Hungary, Poland, perhaps in Romania, but the feeling is that it is the same in Bulgaria.
It is very important for Bulgaria to distinguish itself from this perception if it is wrong. You have to show that you respect the rule of law, want an open and democratic society, you are proud of your young people and within the next generation want to catch up with the Western European countries.
Bulgaria has long been a candidate for Schengen, but faces opposition from Western Europe, including the Netherlands. What do we need to do to convince Europe that the country is ready to join Schengen?
I am a businessman and president of a Dutch business community. In the Netherlands, businesses and the political community are two separate entities. The Schengen decision is political one. The business wants more open economies, a free flow of goods, services and people. The political community knows this, but it has to take care also of other aspects of society as a whole. And to be part of Schengen, Bulgaria has to convince us that everything is fine in terms of security, that there is no crime. Politicians are not convinced in this.
The Netherlands supported Bulgaria for EU membership. The second phase, Schengen, is a political decision, but the key is with your country. Bulgaria needs to convince politicians that it is ready to offer guarantees.
Would you say the same about the Euro zone and the ERM II currency mechanism? Potential adoption of the euro and membership in the Banking Union would have positive effects on Bulgaria's business relations with other Euro zone countries ...
If I were in the place of Bulgaria, I would not be so sure that I want to join the Euro zone. The point is to choose the right moment. Monetary and Banking Unions require very strict discipline. As a result, a country loses many of the economic control mechanisms it has before its membership. If I were you, I would have set the Eurozone as a goal, but I would not be in a hurry.
What challenges do you see currently in the Euro zone, that would make a country hesitate?
I see the southern part of the Eurozone - countries such as Italy, Portugal, Greece. Strict discipline is needed, which can lead to tension in society. If I were you, I would have waited for the young generation to come to power, making the country an even more open society, uncompromisingly keeping the rule of law. Then it would be the time.
Do you think that the whole process of the enlargement of the Euro zone should be postponed?
What is already being heard in Western and North-Western Europe is that we have been too much in a hurry the Euro and the Monetary Union. Perhaps it had to start with fewer countries, but with similar economic characteristics and growth rates. And then the alliance expand gradually.
If the accession of new Member States is accelerated, people may lose confidence in Europe. On our part, it is important to control the process and not be in a rush. You must be aware that Western Europe needs more time, but perhaps Bulgaria also needs more time. Put it as a goal, work in this direction, but do not force the process.
The port of Rotterdam is the largest in Europe. How do the negotiations about Brexit influence the business there and what effects do you expect from the UK's exit of the union?
Our business is strongly tied to the UK. If a hard Brexit happens, the initial shock will cost the Netherlands 2% of national income, from the employment. That's why we do not want a hard Brexit. My organization has been conducting many campaigns in the Netherlands in partnership with the government under the motto "Work for the best, get ready for the worst."
The best option is for Britain to remain a part of the internal market or at least the customs union, and the worst is the hard Brexit. Our companies are already very well prepared for the second option. But we still have hope that good conditions will be achieved and Britain will remain at least in the customs union. Perhaps there is even a chance for a second referendum, but personally I do not think so. The British have chosen to leave the EU and I expect they will do so, but it has to be in an orderly way.
Aging is a big problem in Bulgaria, as is the case in the Netherlands and in Europe as a whole. How does business deal with this challenge in the Netherlands?
There are two solutions to achieve growth of the economy with an aging population. One is immigration and the other is technology and productivity improvements. In the Netherlands, we are working in both directions.
We are still at the very beginning in terms of technology. For example, companies such as Philips are already focusing on healthcare technology, where we expect the Netherlands to develop rapidly. I believe that in ten years the sector will be radically different, and we are currently investing in this development. There are also social consequences. For example, a nurse will, for example, be an IT specialist and will not work so hard with her hands. Which means that the education system needs to change. We also need social policies for all people who do not have such qualifications.
The other solution is immigration. In Western Europe, wages and social security are higher than Eastern countries. That is why people come from Bulgaria, Romania, Poland and receive higher wages than in their home countries. This is not sustainable. The big issue, however, is immigration from non-EU countries - people from the Middle East and Africa. This process must be controlled, but in a fair way. Establishing of such a temporary but fair system is one of the great challenges Europe is facing in the long run.
What other challenges faces the EU?
The great challenge is to preserve the European way of life. I am talking about an open, democratic society that draws strength from its diversity. Which is difficult to achieve from the inside, but nowadays we are witnessing a geopolitical tension between Russia, the United States, China. On this scene, Europe must set an example.
And do you think that the European institutions are moving successfully towards this goal?
We're almost there. The young generation is already on a level with regard to the manner of thinking. Now the old generation must make sure that it does not interfere with you, but to prepare the ground for you. I am optimistic that we will reach the goal.
Background
Hans de Boer is the president of the largest employers' organization in the Netherlands - VNO-NCW, with over 160 industry associations and more than 185,000 companies. The organization represents the interests of almost all sectors of the economy, 80% of small and medium-sized enterprises in the Netherlands and almost all large companies.
Hans de Boer is a former entrepreneur and has been director and consultant to a number of organizations before taking the position of VNO-NCW president. Among the positions he has occupied are the Chairman of the Board of Sperwer Group, the parent company of supermarkets PLUS and Spar, as well as the company for health services and safe working conditions ArboNed. He was also Managing Director at Siemens and Greenport Development Company. He has a degree in economics and has specialised econometrics and public finances at the Vrije Universiteit Amsterdam.Hans de Boer visited Bulgaria with representatives of private Dutch companies in mid-April this year with a specific mission – to meet with the authorities and business partners at the Bulgarian Chamber of Commerce and Industry (BCCI), as well as establishing future partnerships with Bulgarian companies.