Washington, D.C., October 29, 2014—A new World Bank Group report finds that 85 percent of economies in Europe and Central Asia implemented at least one regulatory reform aimed at making it easier for local entrepreneurs to do business in 2013/14, a larger percentage than in any other region.
Doing Business 2015: Going Beyond Efficiency shows that in the past year, economies in Europe and Central Asia further improved the regulatory environment for local entrepreneurs, adding to the gains recorded in the past decade. For example, 10 years ago, starting a new business took a Macedonian entrepreneur 48 days. Today, the process can be completed in 2 days.
“Economies in Europe and Central Asia have consistently led the world in the pace of regulatory reform,” said Rita Ramalho, Doing Business report lead author, World Bank Group. “Governments’ commitment to improving the regulatory environment for entrepreneurs has allowed them to close the gap with the top performers in some areas. For example, the average time to register property in the region has fallen by 14 days since 2010, making the process faster than in OECD high-income economies.”
Doing Business finds that Azerbaijan and Tajikistan were among the top improvers worldwide in 2013/14 in the areas of business regulation measured by the report. Challenges continue in both countries, however. For example, obtaining an electricity connection takes longer for entrepreneurs in these two countries than it does for their counterparts in most other economies in Europe and Central Asia.
Challenges persist across the region’s economies even as the regulatory framework for entrepreneurs continues to improve, emphasizing the need for further regulatory reforms. This is particularly so in such areas as construction permitting, getting electricity, and trading across borders, all areas in which the region’s economies are in the bottom half of the global ranking on average.
This year, for the first time, Doing Business collected data for a second city in the 11 economies with a population of more than 100 million. In the Russian Federation, the report now analyzes business regulations in both Moscow and St. Petersburg. Differences between cities are common in indicators measuring the steps, time, and cost to complete regulatory transactions where local agencies play a larger role, finds the report.
The report this year expands the data for three of the 10 topics covered, and there are plans to do so for five more topics next year. In addition, the ease of doing business ranking is now based on the distance to frontier score. This measure shows how close each economy is to global best practices in business regulation. A higher score indicates a more efficient business environment and stronger legal institutions.
The report finds that Singapore tops the global ranking on the ease of doing business. Joining it on the list of the top 10 economies with the most business-friendly regulatory environments are New Zealand; Hong Kong SAR, China; Denmark; the Republic of Korea; Norway; the United States; the United Kingdom; Finland; and Australia.
Serbia’s ranking in Doing Business 2015 dropped from 77 to 91 - taking into account data revisions and methodology changes. Serbia recorded no reforms easing the regulatory framework in 2013/14. In addition, it made transferring property more difficult. Given that 65% of the economies worldwide recorded reforms making business easier in 2013/14, other countries overtook Serbia on the ease of doing business. The complete data for Serbia is in the annex.
Across indicators, Serbia’s rankings did not change much compared to Doing Business 2014, taking into account data revisions and methodology changes, except for registering property where the country’s rank went from 48 to 72. This is largely due to the elimination of the expedited procedure for registering a property transfer.
Compared to the publish rankings in Doing Business 2014 (93), there is a slight improvement in the ranking for Serbia (91) compared to the previous year. The expansion of several indicators this year (resolving insolvency, protecting minority investors and getting credit) had a considerable positive impact on the ranking for Serbia, which was partially offset by the way the ranking is now computed. Serbia performs better in the new areas being measured than in the old ones and for that reason the ranking under the new methodology improved.
Since 2005, Serbia has undertaken a total of 18 reforms easing business regulations – in comparison to a global average of 12 reforms per economy during that timeframe. Moreover, Serbia has reformed in all the areas covered by Doing Business – save for protecting minority investors and getting electricity.
In the past decade, Serbia’s reforms have targeted both legal institutions and the complexity of regulatory processes. This has translated into considerable time gains for entrepreneurs in Serbia.
- Starting a business took 56 days for a budding entrepreneur in Serbia 10 years ago; now that process requires just 12 days—less than in Finland.
- Less than five years ago, a Serbian entrepreneur seeking a loan could not review his own financial historical data, and could therefore not assess properly his financial options. Today, thanks to a Law passed in 2008 on personal data protection that guarantees that borrowers can review their own data, Serbian businesses can now access their information.
- In 2005, it took 33 days for a Serbian entrepreneur to export her goods overseas. Today, this time has been cut to 12 days – just one more day than in Japan.
While we see that Serbia continues to improve regulatory practices, the fact that the country’s ranking is 91 highlights that there is still work to be done. For instance, the cost of obtaining construction permits (26% of the value of the warehouse that is built) is the highest in all of Europe & Central Asia. Similarly for paying taxes, Serbian entrepreneurs face a total of 67 payments per year to comply with tax regulations, the most in all of Europe.
About the Doing Business report series
The annual World Bank Group flagship Doing Business report analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. The aggregate ease of doing business rankings are based on the distance to frontier scores for 10 topics and cover 189 economies. Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure the quality of fiscal management, other aspects of macroeconomic stability, the level of skills in the labor force, or the resilience of financial systems. Its findings have stimulated policy debates worldwide and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies. Each year the report team works to improve the methodology and to enhance their data collection, analysis and output. The project has benefited from feedback from many stakeholders over the years. With a key goal to provide an objective basis for understanding and improving the local regulatory environment for business around the world, the project goes through rigorous reviews to ensure its quality and effectiveness. This year’s report marks the 12th edition of the global Doing Business report series. For more information about the Doing Business reports, please visit doingbusiness.org and join us on doingbusiness.org/Facebook.
About the World Bank Group
The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org.