Marco Mantovanelli, World Bank Country Manager for Bosnia and Herzegovina
Daily papers "Nezavisne novine" Banja Luka, Bosnia and Herzegovina
No. 3041/ pg 11, January 26, 2008
After the calming down of the political crisis that dominated the news in late 2007, I sincerely hope the citizens of BiH enjoyed a relaxed holiday season. : The country GDP has continued to grow strongly in 2007, the currency remains stable and unemployment, although still larger than elsewhere in SEE region, seems to be receding slightly. These are good news. However, the year 2008 is likely to bring challenging economic circumstances worldwide – food and oil prices are on the rise and financial markets are reacting like yo-yos to news of a possible recession in the US. Following global trends, prices are on the rise in BiH as well, and imports are again growing faster than exports. With a slow privatization pace, most state-owned firms continue to languish. In 2008 policy makers may discover the hard way how crucial improvements of the business environment are for sustainability of the country’s economy. The governments in BiH cannot allow themselves to relax on the basis of past performance of the economy. Price inflation is hardest on the poor, poverty is most often directly linked with unemployment, and creating a policy environment favorable to investment, business development and, ultimately, employment, is an even more pressing priority under such circumstances. While many changes are needed, any progress matters and should be recognized: with the implementation of the new business registration law, a new business can now complete court registration in just 4 days in Sarajevo or Bihac, under 3 days in Zenica and less than 2 days in Banja Luka. But the electronic registration system still needs to incorporate old company files, and more reform is needed to simplify other registration requirements. In other areas, much more work remains to improve the environment for business development. According to preliminary findings, the same new firm, after registering, will have to take 16 different steps to obtain construction licences and permits for a total of 467 days in Sarajevo, 306 days in Banja Luka and 542 days in Mostar. Registration of property takes 7 steps and 331 days in Sarajevo, 11 procedures and 145 days in Banja Luka and 8 steps and 157 days in Mostar. After our new firm starts operations, just staying current on tax obligations will require 51 payments and 368 hours of work every year. And when it becomes necessary to go to a court to enforce a non-performing contract, this new company will encounter 38 different procedures, which will take 595 days, on average, to resolve its claim. And each additional step is an opportunity for unscrupulous officials to extract a rent from the firm. These are only the hottest of many burning business environment issues which need to be resolved so that serious entrepreneurs can focus on what they do best: create new value. For themselves and their communities. The good news is that positive changes can happen in spite of politics. Amending laws and modernizing administrations is vital, but not sufficient: government agencies and public servants must also change their attitude towards business and improve their performance in serving this crucial category of clients. The whole economy would benefit from this. |
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