Explainer: Understanding "Reform"

Moldova Needs a "Department of Don't do Dumb Sh*#"

Welcome back to Explainers at Moldova Matters! This is the first in a short series of Explainers on how reform looks at a grassroots level - what’s broken, how does it affect people’s lives, and, if possible, how can it be fixed? Subscribe to Moldova Matters to support the work we do bringing news about Moldova to the world. For just $5 / month, the price of a nice cup of coffee you can support all the work we do here!

This week we are going to start a short series of articles trying to ground the vague term “reform” in some specific and understandable concepts for our international audience. In future articles we will look at specific large scale problems like “E-Commerce” (or, why doesn’t Moldova have that?") and talk about policy choices. But today, we’re going to talk about the bureaucracy. No matter how good, or bad, the laws are in a society, the public servants that implement them will determine what kind of experience people will have when dealing with the state. Today we’re going to dive into this issue with some humorous anecdotes that highlight the mechanisms underlying Moldova’s extraordinarily bureaucratic state. Following these, we’ll look at what we can learn and try and take some lessons on what the challenges of reforming the bureaucracy are.

Quick Author’s Note: This article is written very much from my personal experience. As a small small business owner in Moldova I deal with state agencies very regularly and experience processes like those described here. What’s important to understand though is that whether we talk about business owners, employees, students, teachers, people seeking medical help or frankly anyone else dealing with state bodies, stories like this are the norm not the exception.

A Note on Corruption: For the purposes of this article, we are not discussing corruption at all. Normally when talking about abuses of bureaucrats we think of bribery and extortion - we have talked a lot about this at Moldova Matters before. Today though we are going to look at “normal” bureaucratic processes. In many cases, those implementing these processes are in no way “public servants” and behave more like Soviet Apparatchik’s. But in some cases, the government employees really tried to be helpful. This article isn’t about them, it’s about the systems and processes that they are trying to implement… and how they need to change.

The Saga of the Advertising Tax

The first anecdote we are going to look at is about the payment of a tax - the tax for advertising on company cars. All over the world, companies want to put their logos, advertisements or other information on their delivery cars. This could be as simple as the Coca-Cola logo on a delivery vans. In Moldova, this is generally not done by painting but by sticker decals. The rules around this are simple:

1. If you change the color of the car by more than 30% you need to re-register the car’s color scheme with the department of motor vehicles (DMV). If your stickers cover less than 30% you don’t need to do anything.

2. If you put a phone number, website or other call to action on the car - you need to notify the police inspectorate and pay a small tax.

In Moldova, I’m a partner with Labrewtory Brewing Company, maker of some of the finest craft beers in the country and soon the first mass market dry apple cider (shameless self promotion I know). Here’s our company van:

As you can see from the very detailed photos (more on that later), the graphics do not cover more than 30% of the white van so we’re good with #1. However, we do have a phone number so we need to account for #2 - police notification and tax payment.

Note: for those who don't know Moldova, a company "administrator" is a single person, usually one of the owners, who is empowered by law as the only person who may sign / stamp company documents. Other owners who are not the administrator cannot do this.

Firstly, the administrator (who is not me or the employee managing this process for our story) must go to the police academy well outside the city-center to pay the tax. At the police academy they have a special office for vehicle advertising taxes. Why this is located here is not clear as this is not a public office but part of a training center requiring ID and sign-in to a police compound.

At the academy office, you first give them your company information and they make you a payment order for the tax amount which your accountant must wire transfer to their account. When this is done (often next day because wires are slow) you must bring the following documents to the police academy office:

1. A written request from from the company Administrator. This form officially requests that you pay the tax. It must be signed and stamped by the company administrator.

2. A copy of the vehicle registration documents

3. If the administrator is not the one coming to the office, a power of attorney for the employee or partner who is there. This empowers the person to give the police officer the documents in this list.

4. A copy of the identity documents for the employee empowered to turn in these documents

5. A copy of the company registration information (Extras). The information contained in this document is publicly available for all companies in Moldova online on sites such as this. But state agencies require a recent (usually within the last 3 months) copy issued by the Public Services Agency ASP (which is signed and stamped, etc etc). If you don’t have one on hand there will be a fee and waiting period to get a new one. (this is being changed in a new e-governance reform that will allow agencies to get the information online)

6. A copy of the purchase contract for the vehicle

7. A set of 4 photos of the car showing the advertisement from various angles (example above)

8. A printed copy of the bank payment order to confirm that the tax was wired to the police account

Ok, that's a lot. But of course it isn't enough. You see, it's not enough to have the photos referenced in #7. These photos must be approved and stamped by the Public Services Agency (ASP). What does "approved" mean? Actually, just what it says. They do not check the vehicle. They do not check registration or company information. They just check the photo to make sure it's "clear" and stamp it. Here's what is required for this stamp:

First, you must go to the ASP office in the city center. In this big building there is a special office for the process of checking these photos. In this office, you go and get a payment order for the processing fee to stamp your photo. This fee is 240 lei ($12.50) for same day service. Of course, it's not same day. You need to take the payment order, send it to your accountant and have them wire the money. It's same day after the payment is received.

Once the money is wired you must go back to the ASP with the following documents to get your photo stamped:

1. Your photo of the vehicle

2. A printed copy of the bank payment order to confirm the wire was sent

3. If the person doing this monkey work is not the administrator of the company, the administrator must sign and stamp a power of attorney empowering the employee to turn these papers in and get the photo stamped (this is unique from the above power of attorney. Either it is a special document representing the right to do this specific action or another copy of a durable power of attorney because both offices keep their examples. Copies will not do).

4. A copy of the ID for the person picking up the papers

Once this has been accomplished, and you have a stamp on your picture, you may bring it back to the Police Academy in order to file all the paperwork to confirm you have paid your tax.

Once this is done, you will wait 10 days for them to issue you a document confirming that the tax has been paid - which you keep in your car to prove to the police that you have legally put your website or phone number on the side of the car.

By the way, the tax is 90 lei / year ($4.70)

So let's sum up this process:

1. Trip to Police Academy

2. Trip to Public Services Agency (ASP)

3. Second Trip to ASP

4. Second Trip to Police Academy

5. Wait 10 days

6. Third Trip to Police Academy

That assumes you get all of this right the first time. Since none of this information is easily accessible online this is highly unlikely and most business owners or employees wind up making more trips just to ask questions, get clarifications, etc.

Let’s summarize a few key facts here:

• Total Fees? $12.50

• Company working hours on this task - 20 hours by 3 employees over 4 days

• Number of state employees tasked specifically with this work - at least 8 (between ASP and Police Academy)

• Taxes paid at the end of the day: $4.70.

Note: Some in Moldova would say this isn’t a tax but a “service fee.” I would disagree with this as the police explicitly provide no service here. They do not check your phone number, website or anything else about the ad. They simple require payment for a permissive document that proves to the road police that you paid the yearly amount. This is a tax.

The Blue Medical Passport

Now, if you were thinking that problems like this only happen in the bureaucracy governing taxes and business prepare to be disabused of that notion. This is the story of the “Blue Medical Passport,” a mandatory health document required for all workers in “sanitary industries.” In Moldova this means anyone who could impact public health in the process of their work and includes, cooks, waiters, janitors, barbers, people who work in food industry factories, delivery workers and much much more.

For anyone who has worked internationally in such an industry, the Blue Medical Passport is basically Moldova’s version of the international “ServSafe certificate.”

Also, for anyone who would like to read a far snarkier version of this story - check out this post from my old Open Source Entrepreneurship blog entitled “5 things to know before applying to be a waiter (in Moldova).” Sadly, the blog is no longer live but the link goes to a pdf of the old post.

At its core, the story of the Blue Medical Passport is the same as the advertising tax. First you go to one office with your ID to get a printed passport with your name. Then you bring this to another office who will verify that you are you and your name is printed right and then they stamp it. You basically chase around office after office getting stamps to prove that you were at the last office like a strange game. The fact that it is formatted as a passport means you are collecting stamps from some of the most depressing “countries” around.

Outside of the simple bureaucracy, the passport basically certifies that you get the following checks and lessons each year.

1. Physical Checkup - You go to your Family Doctor (GP) and get a physical. They affirm your health in the passport with a stamp.

2. Chest X-Ray - You go to a hospital for a chest x-ray to test for Tuberculosis. This is confirmed with a passport stamp.

3. Anal Swab - Just what it sounds like. A nurse in a government office drops your pants with blinding speed (and little warning), tells you to bend over, and said “spread your cheeks.” This is confirmed with a passport stamp.

4. STI Test - Also what it sounds like. It’s what I colloquially call the “stick up the dick” test for men, and Pap smear for women. This is confirmed with a passport stamp.

5. Health and Safety Class - This is a 7 hour long class. We will go into detail below.

6. Health and Safety Test - A test on the classroom content.

Now, anyone who has a ServSafe certificate, or has worked in food service outside Moldova, will note that there are a few items on that list that are “unexpected.” I can assure you they were equally unexpected in real time.

So let’s talk about the class. The class is 7 hours long and it is given in the Soviet education style - no handouts, no visual aids, no books, no discussion and no interruptions. Just a teacher speaking from memory at incredible speed for hours. Students scramble to write notes as fast as they can.

The class is loosely broken into 3 parts:

1. Fines and Legal Consequences - The “teacher” reads a list of the many legal infractions you may commit while working in a sanitary business. These are explained simply as listed infractions “failing to present a certificate,” etc with no context. They are listed based on the responsible party and what the fine is. E.g. “If you do X you will pay 5000 lei. If your employer told you to do it, they will pay 50,000 lei. If your supplier gave you X and you didn’t do it yourself it will be 30,000 lei.” This goes on for around an hour and a half.

2. Basic Health - Essentially this is a high school “Health Class” curriculum crammed into the next 3.5 hours. Everything from “wash your hands” to basic germ theory to “smoking causes cancer” is covered at blinding speed.

3. Kitchen and Restaurant Rules - This section does not focus so much on safety but on “rules.” You must have 9 cutting board for various types of food. If you want 2 boards for meat, you must multiply the whole section by 2 because even if you don’t serve fish you need the same number of boards - multiples of 9. Basically things like this. The worst section is on cleaning with chlorine where the instructor reads chlorine dilution tables for 20 minutes. When asked “can’t we just buy cleaning supplies from the store instead?” she said “yes!” but then proceeded to keep reading.

Once all this is done you take the test, get a stamp proving you have passed it and you are good to go!

Conclusion: How can you fix this?

Let’s start by what you don’t want to do - you don’t want parliament to take up these reforms one by one. Legislators have a lot on their plate and micromanaging regulatory agencies can’t be the job of elected officials. In many cases laws *do* have to change, but these changes can’t be imposed on unwilling bureaucrats or they most likely won’t be implemented well.

The second thing we need to address is about “public servants” in general. Almost anyone who has interacted with the state in a process like this knows that in Moldova they are dealing with “bureaucrats” who do not at all see themselves as "public servants.” These are functionaries following a set of rules or regulations and almost never do you find someone who sees things from the shoes of the general public and wants to help. That doesn’t mean everyone is mean and abusive. Many are, maybe most. But many are well meaning - for example, the Police Academy staff are very helpful. The problem is that they are following a process that makes no sense at all. It’s also worth noting that all of these officially are radically underpaid - a problem that leads both to problems of motivation and to corruption.

New Leadership in Agencies

The first step to solving these issues is not legislative reform but changing the leadership of these agencies. In most cases, the people responsible for these agencies have been around for 10 or even 20+ years. New blood is needed. When there is new leadership, the key element they must focus on is simple - “what is our mission?”

A mission driven approach necessarily creates a culture of public service at all ranks in an agency. This is because it is critical to have public buy-in to implement the mission. Health safety in business? Companies are a key element of that. Paying taxes? People need to know how and where to pay. Public - private relationships need to be about getting something accomplished not simply rote process. This is often part of the institutional culture of an agency.

Don’t Do Stupid Shit

Secondly, every new leader of a state agency should start approaching their processes asking “is this dumb?” Not as a subjective question but in terms of the mission of the organization and the purpose that the process is intended to accomplish. Let’s take our examples:

Example 1: Car Advertising Tax

This process is designed to collect a tax of $4.70 / year. Let’s assess the effectiveness simply in terms of the state budget revenue in 2 parts:

1. Costs to the State - Collecting this tax requires 2 policemen at the academy who sit in an office all day processing paperwork. It requires an additional accountant to process the required Fiscal Invoices (more on that in a future article). At the ASP there is a special office for this *filled* with binders of paperwork outlining every car from every company in Chisinau that has an advertisement on it. Further, there are binders and binders of the power of attorney documents empowering some poor employee to turn these pictures in - these must be parsed by staff to make sure they are legally correct. Finally, there is another office that I didn’t see where they “analyze” the photos and make sure they show the car correctly after which they apply their stamp saying “yes, this is a good photo.” Minimally we are talking about 8 full time employees working on this problem for the Chisinau region. That’s a lot of cost for this tax of $4.70 / year.

2. Costs to the Company - Spending 20+ hours of paid employee time costs companies. It also prevents them from using that time to sell products, provide services or otherwise participate in the economy. While not doing that, these companies are not paying taxes on their productivity to the state. This alone dwarfs $4.70 / year.

So let’s assume we have confirmed it - this is “dumb.” What do you do? Well, it’s about mission orientation. What is the goal of this tax? If it’s to collect a “tax” then this can be simple - have the company pay to a government account and print out the receipt to carry in the car. Done. If the goal is that companies should not be allowed to print some things on the car (aka there are rules about the printing), then this should be a law or regulation - “don’t put lewd stuff on your car.” And then have the police pull over cars that don’t comply and ticket them. Done. No pre-approval needed. No time wasted. Just a tax or a law enforced. The key thing is “enforcement” not “pre-approval.”

Heads of agencies need to be laser focused on finding opportunities like this. Every “dumb thing” eliminated adds to state budget, focuses employees on the mission, and improves relations with the public.

Example 2: Blue Medical Passport

So why is this one dumb? I’m afraid anything I write about the wisdom of mandatory anal-swabs or STD tests for janitors would only sound glib. Let’s suffice to say it doesn’t seem like the best use of state workers time.

Once again though, we need to look to the mission - keeping customers and employees safe in a business or workplace. This is clearly important. And clearly has nothing to do with someone reading a list of punishments for 1.5 hours or chlorine dilution tables. This one is simple, Moldova should implement ServSafe or a similar international standard training. It could be localized by the government as an online training OR licensed to local companies who conduct trainings to businesses. In either case, the goal would be to focus on outcomes not process.

If the current process does not keep people safe, costs time and money, and heaps indignities on average people who had no real reason to be told to “bend over and spread their cheeks” then it is not fit for purpose and can be designated “dumb.“

In conclusion, Moldovan agencies can beat back the majority of harmful bureaucracy and play a key role in implementing really impactful reform by simply looking at their own processes and asking “is this dumb?” and if the answer is yes, casting about for a new solution that fits the organizations mission. And let’s not kid ourselves, these missions are important. Health departments, Fire Departments, Consumer Protection Bureaus, and more are critical to a well functioning society. The problem is that for them to play that role they themselves need to function well. And for that, we need reform - not always in parliament, but in the bureaucracy itself.

Final Note - The purpose of this article is to introduce to people who have never experienced Moldovan bureaucracy to “what does reform look like on the ground?” It is not meant to comment on the current government’s actions in this area. In reality, there are good actions happening right now - mostly around staffing these agencies. This progress is slow and we won’t know what the outcomes are for some time as personnel reform trickles down. In some cases, legislative actions are underway - for example there are proposed tax simplifications that eliminate or consolidate small taxes like the advertising tax. Parliamentary intervention is good, but at the same time, the main point holds strong - it is critical to reform the bureaucracy itself. If this is done well, Moldova will have mission-driven agencies that themselves ask for legislative reform in pursuit of their mission and in order to eliminate processes that are simply “dumb.”

Thanks for reading!! Consider becoming a paid subscriber to support our work at Moldova matters. For just $5 / month, the price of a nice coffee, you can support this work and help us expand into even better content!