Slavica Penev Andreja Maru šić 27.09.2011.

1. The Significance of Inspection Reforms for the Improvement of the Business Environment in Serbia SlavicaPenevAndrejaMarušić 27.09.2011.

2. The nature of inspections • Inspections are a key enforcement mechanism within regulatory reform • Purpose of inspections is to ensure compliance with regulations and governmental requirements • They are important for enforcing regulations to protect public health, safety, and the environment and to carry out economic functions

3. Inspections and competitiveness • In a broader perspective effective inspections are important for an overall improvement of competitiveness • Many inspections are creating heavy burden • Increase of the competitiveness of the private sector can be achieved by decreasing the administrative burdens businesses face

4. Minimum criteria of awell designed inspection system • Clear compliance rules and a clear mandate for the inspections; • Reduction of regulatory risks for businesses; • Instruments for fighting corruption; • The system does not create unnecessary burdens and costs to businesses • Transparency – businesses can access all relevant information about inspections easily • Cost-effectiveness - limited enforcement budget is maximized through risk based controls

5. Promoting compliance – spectrum of measures

6. Models of inspections reforms

7. Examples of comprehensive inspections reforms implemented

8. Inspection Reforms - where is Serbia so far? • Regulatory Reform in Serbia was one of the transition priorities during the previous decade • The only area in regulatory reform which was neglected was the area of inspections • The last comprehensive diagnostic study related to inspections in Serbia was in 2003 – World Bank Admin. Barriers Study

9. Inspection Reforms - where is Serbia so far? • Inspections in Serbia are numerous and decentralized - 31differentinspections within the competence of 10 different ministries • Inspections reforms are ad hoc implemented as individual reforms of specific inspections • There is no framework inspections law • There is no coordination body guiding inspection reforms • There is no formal communication and coordination between inspections

13. Example of EU Driven Reform of Inspection - Environmental Inspection • Reform initiated in parallel with the EU accession process of Serbia (early 2000’s) • Cover one of the priority EU harmonization areas • Significant and intensive cooperation with the international community (EU, OEBS, EAR, SIDA, BERCEN, IMPEL) • Intensive legislative activities – adoption of “green package” of laws (17) and related by-laws (207) • Procedures governed by check lists based on the EU regulations • Continuous training and building capacities activities supported by international community

14. Improvement of Accountability in the work of Market Inspection - Internally driven reform • Software for the improvement of the statistics of work of market inspectors enables the heads of departments to monitor inspectors • Internal procedures for specific inspection controls have been defined • Professional exam for market inspectors in addition to the State Exam • Call center for complaints against inspectors

15. Public availability of information on inspections • Annual reports of environmental, urban planning, construction and market inspection are comprehensive and available on-line; • Legislation related to the inspection area are available on-line; • Procedures and check lists are used internally and are not available on-line • the on-line availability of clear and comprehensive procedures and check lists would facilitate compliance of inspected subjects

16. Jointly recognized areas for improvement in the work of inspections • Framework inspections law • Need for data sharing and coordination among inspection • Coordination body for inspections to initiate and implement joint reform efforts • More intensive external support in capacity building and EU harmonization process

17. Areas of opposition to the reform of inspections • Reluctance to consider the idea of merging inspections and reducing their number (31 inspections within 10 ministries) • Opposition among inspectors to introducing new procedures which ensure accountability • Resistance to reforms limiting certain authorities and powers of inspectors • Unwillingness to operate transparently and share information with businesses

18. How businesses perceive inspections • Frequent legislative changes: “not even experienced accountants can manage the forest of regulations “ • Regulations are unclear and require interpretations. Interpretations issued by ministries are not mandatory, they are often inconsistent and conflicting. • In performing inspection controls, inspectors often invoke regulations or internal rules which have not been published • As a rule, inspection controls are unannounced • Inspections are uncoordinated and lenghty and often differnet inspections request from businesses the same data and documents • The informal economy is practically not controlled, while only the legal businesses which have the capacity to pay penalties are controlled – i.e. Potentially the most vital part of the conomy suffers • The focus of inspections is on penalizing businesses and not supervision and prevention

19. Conclusions? That’s our job today! we are looking forward to your discussion