WASHINGTON, October 31, 2018 – Economies in the Europe and Central Asia region stepped up the pace of reforms to improve the ease of doing business for domestic small and medium-sized enterprises, says the World Bank Group’s report Doing Business 2019: Training for Reform, released today.
The region hosts two of this year’s top 10 ranked economies, measured by the Doing Business report, with Georgia moving up to 6th place, and FYR Macedonia edging up one spot to 10th place. The region also hosts two of this year’s top improvers, Azerbaijan and Turkey.
“Once again, the economies of Europe and Central Asia have demonstrated a very strong commitment to the reform agenda, which is aimed at fostering the development of the private sector and boosting organic economic growth and prosperity,” said Santiago Croci Downes, Program Manager of the Doing Business Unit.
Croatia has continued to improve its business regulations and is catching up with global regulatory best practices. This is reflected in the ease of doing business score which improved from 71.06 in Doing Business 2018 to 71.40 in Doing Business 2019. The European Union’s top performer in the Doing Business report is Denmark, with a score of 84.64..
Croatia has made improvements in registering property by reducing the time needed to register a title transfer at the Land Registry Court due to the digitization of its land registry. Getting electricity was simplified by removing the procedure for signing the supply agreement. Paying taxes was made easier by excluding the the time that taxpayers have to appeal the final decision from the time recorded for the tax authority to issue the final tax audit report.
On the other hand, doing business, in some areas, was made more cumbersome, including in dealing with construction permits, where four procedures were added before applying for a building permit. In starting a business, the time recorded for reserving the company’s name and for registering the company with the Commercial Court was increased. Similarly, regulations have become more cumbersome in protecting minority investors.
These factors, a better data collection methodology implemented by the World Bank team, and the fact that other countries registered more robust improvements in their business regulatory environments, contributed to a drop in Croatia’s ranking, from 51 in the Doing Business 2018 report to 58 in the Doing Business 2019.
“We are encouraged that, overall, Croatia is improving its business regulations and is narrowing the gap with the global regulatory frontier. On the other hand, it is evident that the reform momentum, in areas such as the judiciary, is contributing to the drop in the doing business ranking. Also, comparator countries are making bigger strides in improving their regulatory environments”, said Elisabetta Capannelli, World Bank Country Manager for Croatia and Slovenia. “The World Bank will continue to support and work closely with the authorities on improving the overall business climate. Some of the critical reforms are in the National Reform Programme and it would be important to see their faster implementation. The scope of reforms can also be broadened to appeal to the companies’ lifecycle by addressing multiple issues simultaneously.”
Collectively, Europe and Central Asia’s economies focused their reform efforts in the past year on improvements in trading across borders and paying taxes, with nine and eight reforms, respectively. A total of 54 business reforms were carried out in the region during the past year, compared with 43 reforms the year before. Nearly all of the region’s 23 economies carried out reforms that help create jobs and stimulate private enterprise.
The region’s economies perform best with regard to registering property and protecting minority investors. On average, it takes 20 days to complete all procedures required for transferring property, at a cost of 2.6 percent of the property value, compared to 4.2 percent in high-income OECD economies for the same amount of time.
However, the region continues to underperform with regard to getting electricity. On average, it costs 325 percent of income per capita for a business to obtain an electricity connection, compared with 64 percent in high-income OECD economies.
Since Doing Business first began in 2003, starting a business and paying taxes are the areas that have seen the most reforms in Europe and Central Asia. As a result, the average time to start a business in the region has been slashed to 14 days, from 44 days in 2003, and the cost has been significantly reduced from 21 percent of the income per capita in 2003 to 3.6 percent today. The time needed for a company to prepare, file and pay taxes has been halved to 227 hours, from 483 hours in 2005 (when Doing Business began tracking the collection of taxes).
This year, Doing Business collected data on training provided to both public officials and users of business and land registries. A case study in the report, which analyzes this data, finds that mandatory and annual training for relevant officials is associated with higher business and land registry efficiency. In Europe and Central Asia, 55 percent of business registries and 41 percent of land registries use pilot testing. By using pilot testing to convey regulatory changes, business and land registries can identify and address potential challenges before the full implementation of new processes.
A second study, on enforcing contracts and resolving insolvency, examines the education and training that judges receive worldwide. It features initiatives from the European Union and the International Organization for Judicial Training. Two other case studies focus on the benefits of accrediting electricians and training customs clearance officials.
The full report and its datasets are available at www.doingbusiness.org