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Cutting business red tape

Cutting business red tape. Viceminister of Economy Giedrius Kadziauskas 7th July 2011. Link to the National Reform Agenda. Improvement of business environment is among key structural reforms (National Reform Agenda) aimed at ensuring favourable conditions for economic growth.

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Cutting business red tape

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  1. Cutting business red tape Viceminister of Economy Giedrius Kadziauskas 7th July 2011

  2. Link to the National Reform Agenda • Improvement of business environment is among key structural reforms (National Reform Agenda) aimed at ensuring favourable conditions for economic growth

  3. Better Business Environment at MoE • I. RIA (systemic) • evaluating impact onSMEs • ex-anteand ex-postevaluationofimpacts (including onadmin burdens) • evaluatingimpacton 4 freedoms/EU marketoperation (pilotproject) • II. Better Regulation initiatives • reduction of admin burdens by 30%(informationobligations) • licensing reform – Services Directive and other sectors • “Doing Business” reports’ analysis (target to reach top-15) • III. Consultations with businesses (“Sunrise”) • ad-hocproposals from businesses • opinions on decisions in blocks I and II • IV. ReformofBusinessInspections • optimisationofsupervisionfunctions

  4. I. Regulatory Impact Assessment (RIA) Main problems: • Legal requirements are in place, however RIA often perceived as a formal procedural step • Lack of competence among line ministries to evaluate impacts from other fields, to find alternatives, to carry out cost-benefit analysis, to quantify impacts. Limited consultation with businesses • No RIA quality and compliance control mechanism (no external watchdog, etc.) • Lack of time for in-depth analysis • Often RIA is carried out after the decision to regulate and how to regulate is made  no real alternatives analyzed • Limited political demand for RIAs. Limited impact of RIAs on political decision making

  5. II. Reduction of administrative burdens • AB reduction target:30 %by 2012 in 7priority areas • Priority areas by number of informationobligations and business activity: • Transport (520) • Tax administration (163) • Labourrelations (129) • Statistics (83) • Environment protection (54) • Real estate operations (38) • Territory planning and construction (31) • In 2010, 150 legislativeactsreducingregulatoryburden (among it – AB) to businessesprepared (>120 adopted)

  6. Reduction of administrative burdens (II) Furtheractions to implementthe AB reductiontarget: • AB reduction action plan for 2011 approved by the Government encompasses 82 measures,~9% AB↓ in quantitative terms • Jun.’11, first AB measurement results in Tax, Empl., Construction areas • Evaluation of impact of all new draft legislation on AB to business Mainproblems: • Ministries havehighestlevelofexpertisebutlimitedknowledgeon AB and lowself-initiative.They also are runningoutof “lowhangingfruits” • Political pressure for more horizontal measures= more complex analysis and more e-solutions  time and money constraints • Additional input expected from externalconsultants up to Nov.’11, butslowpublicprocurementprocedures

  7. Licencing Reform Trigered by Services Directive: • About 800 legal acts revised in order to simplify legislation and reduce administrative burden for businessby abolishing discriminatory, disproportionate and unnecessary requirements; • 40 laws and more than 250 other legal acts (including local authorities) amended in order to comply with Services Directive; • 6 authorizations (licences, permits) abolished by the Parliament and 7 replaced by less stringent regulation; • Comparing the situation in Nordic/Baltic cluster, Lithuania has abolished more authorizations than Latvia, Estonia, Finland and Sweden. What's next: • Law on Services pre-empts introduction of new burdensome requirements; • The National Anti-corruption Program, adopted by the Parliament foresees screening of all licences, permits, etc. for 2011-2014

  8. DoingBusinessreform (I) LT achieved steady progress during 2009-2010 in DB reforms and moved from 26th to 23rd place among 183 economies. Further progress achieved during 2010-2011 in the areas of starting a business, dealing with construction permits, protecting investors, closing a business, getting credit, registering property, trading across borders and employing workers. Remaining bottlenecks include areas related to horizontal issues, including the abolishment of the requirement to use an official seal of the company (changes in around 100 leg. acts), legislative changes requiring approval in the Parliament (e.g. amendments in relation to changes in the Civil Code or the minimum capital requirements of the PLC).

  9. DoingBusinessreform (II) Examples of implemented measures: Online registration has been launched for Private limited companies with 2 and more shareholders speeding up the process and cutting costs for business start-ups Getting the construction permits has been simplified with considerably streamlined or slashed procedures speeding up the process by roughly on third from 162 to 107 days The improvements of electronic registration of property were made speeding up the timing for property registration from 3 to 1 day as a result of streamlined procedures. New legislation on Restructuring of Enterprisescame into force, opening wider possibilities for restructuring of an Enterprise.

  10. III. Sunrise Commission Sunrise Commission: • Ad hoc proposals on improving environment to businesses • Active in 2008-2010. Renewed activities in 2011 • Working groups in areas of Company Law, Labour Market Regulation, Competitiveness Law, Public Procurement, Territory Planning, Business Financing, Taxes, Bureaucratic Burden Reduction. • In 2009, 97 legal acts drafted, 64 adopted. • In 2010, 9 legal acts drafted, 3 adopted. Mainissues: • Narrowwindowofsuccesfull • Lack of drivers to implementation • Runninglowon proposals • Strong will to remain independent advisory body • Bottleneck at Parliament and Tripartite Council (esp. with regards to employment relations proposals on work time reg., etc.)

  11. IV. Reform of Business Inspections (I) • Goals: • “From punishment to advice”. • Reduce burden of inspections. • Three pillars: • Cooperation of inspections. • Better regulation (entry into force). • Improved methods of inspection (Attention to risk areas, checklists for inspectors)

  12. Reform of Business Inspections (II) • Three pillars: • Cooperation of inspections (joint work by inspectors  reduction of inspections) • Better regulation (more predictable - entry into force). • Improved methods of inspection (Attention to risk areas (planning inspections and objects, checklists for inspectors)

  13. Observations Difficulties to generate independent systemic approach Lack of representatite view of regulation burden Significant level of customary non-compliance with regulation Regulation is widely regarded as a tool to solve societal problems Unreformable areas – labour law, territorial planning

  14. Thank you for your attention.

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