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Bitola, FYR Macedonia, July 14, 2008—The ease of doing business varies greatly among cities in South East Europe, according to a new report launched today by the World Bank Group. Doing Business in South East Europe 2008 covers 22 cities in seven economies: Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Montenegro, and Serbia. For the first time, Doing Business goes beyond the most populous city to compare cities in the same economy with each other and with other cities in the region. It benchmarks four areas of regulation that are subject to local jurisdiction and enforcement: starting a business, obtaining licenses, registering property, and enforcing contracts.
The report highlights that, while some economies achieved remarkable progress in improving their investment climate at the national level—Croatia and FYR Macedonia were among the top 10 reformers globally last year—there is scope to extend reforms to the local level. “South East Europe is reforming rapidly to improve the ease of doing business. This report provides city-level data that can inspire reforms at the national and local levels and add to the region’s reform momentum,” said Jane Armitage, World Bank Country Director.
Bitola in FYR Macedonia is the top-ranking city measured by the report. “We are pleased that a city here is the top performer,” said Patricia Rader, U.S. Agency for International Development Mission Director in Skopje. “Business reforms are critical for growth. Investors need predictability, good corporate governance, and contractual law; and the region needs investment to stimulate growth and create jobs.”
The report identifies reforms that can make cities more competitive by reducing the cost and risk of doing business. These include consolidating construction licenses through one-stop shops, introducing electronic business registries, and improving courts’ case management systems. Cities can learn about reform solutions from other cities in their own country or elsewhere in the region. If a city were to adopt all the best practices already in place in South East Europe, it would rank ninth among the 178 economies measured by Doing Business, comparable to the rankings for Ireland and Canada. This would mean adopting the good practices from Vlora, Albania (to start a business); Osijek, Croatia (to obtain construction licenses); Pljevlje, Montenegro (to register property); and Zrenjanin, Serbia (to enforce contracts).
In certain areas, Croatian cities perform better than cities in the region. The number of procedures it takes to register property is lowest in Zagreb (5 procedures) and the average cost to enforce a contract is 14% of the claim value as opposed to an average of 30% in the rest of South East Europe. After January 2008 -- cut-off date for this report, Croatian cities continued to reform. For example, Varaždin is improving business registration through depositing all documentation with Financial Agency (FINA) for registration at the Commercial Court. The Law on Spatial Planning and Construction streamlined the number of construction permits required for building a warehouse and introduced strict time limits for receiving necessary clearances by relevant authorities. Continuing with reforms is important because investors when deciding when to invest, focus not only on four areas studied in the report, but also whether the country is taking steps to improve the overall business environment.
Croatia is committed to reform and the continuous improvement of its business environment. All these factors, along with Croatia’s proximity to European markets and its candidacy for European Union membership, will help to attract investment from abroad and encourage local businesses growth and employment creation.
The report was directed by FIAS, a multidonor investment climate advisory service of the World Bank Group. It was produced with financial support from IFC, the U.S. Agency for International Development, and Switzerland’s State Secretariat for Economic Affairs (SECO). It is based on the efforts of more than 224 lawyers, accountants, architects, contractors, accountants, engineers, property specialists, and national and local public officials. For more information or to download the report, visit www.doingbusiness.org/SEE.
About the Doing Business Project
The Doing Business project ranks 178 economies on the ease of doing business. Rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. Since 2003, Doing Business has contributed to more than 100 reforms around the world. The Doing Business project is based on the efforts of more than 5,000 local experts who provide methodological support and review. For more information about the Doing Business project, visit www.doingbusiness.org.
Doing Business also publishes studies that measure business regulations in various cities of a specific economy or region. These focus on business regulations in areas covered by local jurisdiction and enforcement. They use the methodology of the global Doing Business report, thus making domestic and international comparisons possible. The data, methodology, and the names of contributors are available online at http://subnational.doingbusiness.org.
This is the first Doing Business regional report that allows comparisons among capitals and other cities, both within individual countries and across the region. Data for all economies in Southeast Europe are for January 2008. Data for all other economies are for June 2007.