Business Benchmarks in South East Europe: Achievements and Opportunities

1. Augusto Lopez Claros Director Global Indicators and Analysis Department World Bank Group June 28, Vienna

2. What does Doing Business measure? • Doing Business • Benchmarks 183 economies • Focuses on regulations relevant to the life cycle of a small to medium-sized domestic business in the largest business city • Is based on standardized case scenarios • The objective: efficient regulations, accessible to all, and simple to implement • Doing Business DOES NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.

3. 1 Diagnostic Tool 2 Reform Instrument 3 M&E Device What do subnational and regionalreports add? Diagnostic tool ► Expand the data beyondthe economy’s largest business city and/or focus on regions with similar legal and regulatory frameworks • Create a baseline • Pinpoint bottlenecks and provides information on good practices within the same economy and/or region that can easily be replicated • Capture reforms Reform instrument • Allow specific locations to compete locally and globally • Promote peer to peer learning • Motivate a reform process by engaging local governments and reforms stakeholders M&E device • Measure progress over time through repeated benchmarking • Create an incentive to maintain reform effort even when governments change

4. Doing Business in South East Europe 2011 • Doing Business in South East Europe 2008 • Created a baseline for 15 subnational cities in addition to the 7 cities representing their respective economies in the annual report • Doing Business in South East Europe 2011 • Updates benchmarks for 18 cities in 6 economies (all but Croatia) previously measured • Tracks business reforms in these cities • Adds a new economy (Moldova) and 4 new cities from Albania, FYR Macedonia and Moldova • Data is current as of January 2011 • Both reports cover 4 indicators • Starting a business • Dealing with construction permits • Registering property • Enforcing contracts

5. What locations does the report cover? MOLDOVA Chisinau* Balti MONTENEGRO Podgorica* Pljevlja Nikšić SERBIA Belgrade* Zrenjanin Kruševac Užice Vranje ► 7 economies and 22 cities ALBANIA Tirana* Shkodra Vlora Durres BOSNIA AND HERZEGOVINA Sarajevo* Banja Luka Mostar KOSOVO Pristina* Prizren FYR MACEDONIA Skopje* Bitola Tetovo * Largest business city New city

6. What are the key findings? • Remarkable progress in regulatory reform across the region results in significant time and cost savings for entrepreneurs • It is easier do to business in all cities previously measured • Skopje (FYR Macedonia) and Banja Luka (Bosnia and Herzegovina) most improved in the areas benchmarked • No single city or economy outperforms the others in all areas • The best overall improvement of the region is in the starting a business area • Dealing with construction permits remains expensive in the region • Cities can learn from existing good practices across the region to become more competitive nationally, regionally and globally

7. It is easier to do business in the 19 cities previously measured Number of cities that introduced or benefited from business reforms since 2008

8. Most improved—Banja Luka and Skopje Reforms in 4 DB areas resulted in significant time savings for domestic entrepreneurs Banja Luka (Bosnia and Herzegovina) Skopje (FYR Macedonia) Time (days) Time (days)

9. Good practices are found across South East European cities and economies

10. South East Europe’s business entry averages improved significantly SEE Average 2008 26 22.3 SEE Average 2011 17 15 13 10 8 EU Average 2011 6 5.7 3 Skopje (FYR Macedonia) 3 1.5 Pjevlja (Montenegro) Time (days) Cost (% of GNI pc) Procedures (number)

11. Starting a business: Consolidating requirements at OSS made starting a business much faster in Skopje

12. Dealing with construction permits is expensive • The number of procedures varies from 15 in Pljevlja and Skopje to 30 in Chisinau • Pre-construction clearances take up the most time • SEE is one of the most expensive regions in the world: the average cost is 1,134% of income per capita

13. Delays in property registration mainly due to land registries and cadastres Time

14. Fixed property transfer fees in Kosovo make registering property affordable Property transfer tax

15. Tetovo and Zrenjanin have the fastest commercial dispute resolutions

16. A city adopting regional best practices would rank 6th globally

17. Why does it matter? • Easier business entry means more new firms: evidence from empirical research • Mexico • Impact of the reduction of registration procedures through the introduction of One-Stop Shops and the elimination of federally required procedures • Increase in the number of new firms of about 6% • Increase in employment by 2.6% • Consumer Price Index decrease by 1% due to competitive pressures of new entrants • Colombia • Impact of the introduction of One-Stop Shops in 6 cities: • Increase of 5.2% in the number of new firms • India • Impact of the elimination of License Raj in 16 states over 64 industries: • Increase in the number of new firms by 6%

18. Thank you ! www.doingbusiness.org /SEE