Big Strides in Improving Business Climate in Europe and Central Asia
This year Serbia ranks at 59 in the 2016 overall ease of Doing Business ranking. The main reasons behind the rise with respect to the previously published ranking (91) are: the improvements in Serbia’s business regulatory environment and the methodology changes included in this year’s report.
In 2014/15, the Doing Business acknowledged the following reforms that improved the business regulatory environment in Serbia:
- Serbia made Dealing with Construction Permits less costly by eliminating the land development tax for warehouses. On the other hand, it also introduced a mandatory inspection of foundation works.
- Serbia made Paying Taxes easier for companies by introducing an electronic system for filing and paying VAT and social security contributions as well as by abolishing the urban land usage fee. On the other hand, Serbia increased the property tax and environmental tax rates.
In addition to the reforms that were acknowledged in the current report, certain reforms that were implemented in 2014/15 might be captured in the future reports:
- Improvements in the procedure for obtaining building permits that were implemented during 2015 through the introduction of one stop shop (unified procedure) will be monitored by the Doing Business team, and if verified by the private sector contributors will be reflected in the Doing Business 2017 report.
- The Paying Taxes indicator in the current report assesses taxation in the calendar year 2014 (January 1, 2014 – December 31, 2014). Since several reforms related to the paying taxes indicator entered into force after January 1, 2015, its impact will be assessed and reflected in the future Doing Business reports.
Serbia ranks 65 in Starting a Business indicator, 59 in Getting Credit indicator, 23 in Trading Across Borders indicator, 50 at Resolving Insolvency indicator, 139 in Dealing with Construction Permits indicator, 63 in Getting Electricity indicator, 73 in Registering Property indicator, 81 in Protecting Minority Investors indicator, 143 in Paying Taxes indicator and 73 in Enforcing Contracts indicator.
The changes in the methodology done since the last Doing Business Report have impacted Serbia in various ways, across a number of indicators, including the Getting Electricity, Enforcing Contracts, Dealing with Construction Permits and Trading Across Borders indicators.
On the comparable metric after all adjustments have been made to the Doing Business 2015 data, the ranking last year would have been 68.
On the distance to frontier (DTF) metric, Serbia’s score went up from 65.25 last year to 68.41 this year, using a comparable methodology. In other words, Serbia’s business environment as captured by all of the Doing Business indicators improved last year in absolute terms, as the country narrowed the distance to the frontier of best practice. Serbia’s improvement of 3.16 percentage points in the DTF metric is among the top 15 in the world.
Serbia is among 90 percent of economies in the Europe and Central Asia region which implemented reforms to improve their business climate during the past year, finds the World Bank Group’s annual ease of doing business measurement.
Doing Business 2016: Measuring Regulatory Quality and Efficiency, released today, records 58 reforms implemented in 23 of the region’s 25 economies.
Kazakhstan, with a global ranking of 41, implemented the most reforms in the world, with seven improvements to its business regulations during the past year, followed by Russia (ranked 51) and Cyprus (47), which implemented five reforms each.
Notable improvements in Kazakhstan included the elimination of a number of superfluous bureaucratic impediments in several areas, including Starting a Business, Registering Property, and Enforcing Contracts. Russia ranks in the world’s top 10 for Registering Property and gets a perfect score for reliability of electricity supply and transparency of electricity tariffs. Cyprus, meanwhile, made substantial improvements on resolving insolvency.
The reforms implemented in Europe and Central Asia accounted for 25 percent of the 231 reforms implemented worldwide during the past year. The region also boasted three of the world’s top 10 improvers, i.e. countries that implemented at least three reforms and moved up on the global rankings scale, with Cyprus, Kazakhstan, and Uzbekistan.
“It is commendable that almost every single economy in Europe and Central Asia implemented at least one reform in the last year to improve the business environment,” said Rita Ramalho, Manager of the Doing Business project. “The political commitment and hard work involved in implementing these reforms has allowed the region’s economies to break into top performers on most of the indicators measured by the report.”
This year’s Doing Business report completes a two-year effort to expand benchmarks that measure the quality of regulation, as well as the efficiency of the business regulatory framework, in order to better capture the reality on the ground. On the five indicators that saw changes in this report – Dealing with Construction Permits, Getting Electricity, Enforcing Contracts, Registering Property and Trading Across Borders – Europe and Central Asia economies have performed well, which has positively impacted their overall global rankings.
The region stands out, globally, on the Registering Property indicator. The cost of registering property is the lowest globally – at an average of 2.6 percent of the property value. And, as in the high-income Organization for Economic Cooperation and Development (OECD) economies, it only takes 22 days to register property in the Europe and Central Asia region – the lowest time globally.
One of the biggest struggles for the region is the time it takes to get connected to the electrical grid. On average, this takes 119 days, compared to the average of 78 days in the OECD economies. But the region performs well on quality of electricity supply, with few outages and disruptions.
The region also does not perform well on the Dealing with Construction Permits indicator, with excessive time-consuming procedures involved. In Tajikistan, for example, it takes 27 procedures and 242 days to complete all requirements for obtaining a construction permit. But the region performs well on the quality benchmarks for construction. For instance, a post-construction final inspection is required by law in all economies of the Europe and Central Asia region.
FYR Macedonia is the region’s highest ranking economy, with a global ranking of 12 out of 189 economies from around the world. The country excels in several areas of the ease of doing business, and also undertook reforms in the past year. For example, FYR Macedonia further simplified the process of starting a business by introducing compulsory online registration. As a result, the country is now the second best performer globally in the area of Starting a Business.
Lithuania and Latvia are the second and third highest ranking economies in the region, with a global ranking of 20 and 22, respectively.
In the global ranking stakes, Singapore retains its top spot. Joining it on the list of the top 10 economies with the most business-friendly regulatory environments are New Zealand, in second place; Denmark (3); Republic of Korea (4); Hong Kong SAR, China (5); United Kingdom (6); United States (7); Sweden (8); Norway (9); and Finland (10).
Southeast European economies are ranked in this order: FYR Macedonia (12), Slovenia (29), Romania (37), Bulgaria (38), Croatia (40), Montenegro (46), Serbia (59), Kosovo (66), Bosnia and Herzegovina (79) and Albania (97).
The world’s top 10 improvers, i.e. economies that implemented at least three reforms during the past year and moved up the rankings scale, are Costa Rica, Uganda, Kenya, Cyprus, Mauritania, Uzbekistan, Kazakhstan, Jamaica, Senegal, and Benin.
The full report and accompanying datasets are available at http://www.doingbusiness.org/