Region is home to 2 of the world’s top 20 performers, one of top 10 most improved
WASHINGTON, Oct. 24, 2019—Economies in Europe and Central Asia accelerated an already strong momentum to improve their business climates, enacting 56 reforms and leading globally in reforms on paying taxes and enforcing contracts, the World Bank’s Doing Business 2020 study says.
Europe and Central Asia is home to two of the world’s top 20 best places to do business – Georgia (7th) and North Macedonia (17th). Tajikistan ranks among the top ten most improved economies globally in the 12-months to May 1. Azerbaijan, the Kyrgyz Republic, Kosovo, and Uzbekistan were among the top 20 most improved economies world-wide.
“The economies of Europe and Central Asia continue to make significant progress in enabling entrepreneurship and promoting economic growth,” said Santiago Croci Downes, Program Manager of the Doing Business Unit. “As the reform momentum builds, economies that lag behind can learn from the good practices adopted by their neighbors.”
Croatia has continued to improve its business regulations and is catching up with global regulatory best practices. This year, Croatia ranks 51 on the ease of doing business, compared to 58 last year. The country’s ease of doing business score (measured as the distance to the frontier) went up from 73.0 in the Doing Business 2019, to 73.6 in this year Doing Business 2020. The European Union’s top performer in the Doing Business report is Denmark, with a score of 85.3. This year Croatia ranks closer to other EU countries such as Belgium, Slovak Republic, Netherlands and Poland.
Croatia implemented three reforms. It made starting a business easier by abolishing the requirements to reserve the company name and obtain director signatures for company registration, and by reducing the paid-in minimum capital requirement. Dealing with construction permits has become less costly by reducing the water contribution for building a warehouse. Transfer of property has become easier by decreasing the real estate transfer tax and reducing the time to register property title transfers. But Croatia also made accessing credit information more difficult by ending the distribution of individual credit data.
“We are encouraged to see Croatia improving its business regulations and narrowing the gap with the global regulatory frontier. The Government chose to focus on easing doing business as one of its top priorities by establishing a working group under the Prime Minister’s watch and efforts made during the past year are reflected in this year’s improved ranking”, said Elisabetta Capannelli, World Bank Country Manager for Croatia. “We expect to see even stronger commitment this year in areas such as starting a company and the implementation in Zagreb and at local level, of the recently launched reforms in construction permits. The World Bank’s Justice for Business Project currently under preparation with the authorities will help support the government’s reform agenda to improve the business climate.”
The region implemented the most reforms world-wide in the areas of paying taxes (nine), as 22 economies in the region now allow electronic filing of taxes, and enforcing contracts (six), as Europe and Central Asian is the region with the most efficient commercial judicial system. Europe and Central Asian economies also stand out on the ease of registering property: it costs 2.7% of property value on average to transfer a property, less than the 4.2% average among OECD high-income economies.
The region underperformed in the areas of dealing with construction permits and getting electricity. Obtaining required construction permits takes 170 days on average in the region, compared to 152 days in OECD high-income economies. Similarly, connecting a new warehouse to the grid in Europe and Central Asia takes on average almost 100 days, 25 more days than among OECD high-income economies.
While most economies of the region continue to implement reforms at a steady pace, a few economies still lag. Bulgaria has implemented a single reform to improve its business climate in the past five years, while Bosnia and Herzegovina and Montenegro have implemented three and four reforms respectively over that period.