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Serbia Ranked Number One Business Reformer

Also available in: Serbian

Doing Business picture1Belgrade, Serbia and Montenegro, 22 September 2005 - Serbia is this year’s leading reformer, according to the report Doing Business in 2006: Creating Jobs, cosponsored by the World Bank and the International Finance Corporation, the private sector arm of the World Bank Group.

Serbia improved its ranking on eight out of 10 indicators monitored in the Doing Business report.

One of Serbia’s biggest improvements is in the area of starting a new business. The time required to start a new business was cut from 51 to 15 days and the minimum capital required was reduced from 5,000 Euros to 500 Euros. The introduction of value added tax also led to a better tax collection.

 DB cover

Presentation of the report by Simeon
Djankov, Doing Business Project. 
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Serbian translation of the
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Order Report On-line

In spite of significant achievements, there is room for further improvements. Though the number of days required for enforcing contracts was reduced by almost 40 % (from 1028 to 635), this still remains an area where Serbia lags behind.

The report also found out that Serbia has lengthy and costly procedures for dealing with licenses or trading across borders. These reforms, while often simple, can create many new jobs, which is crucial in a country with high unemployment rate.

Jobs are a priority for every country, and especially the poorest countries. Doing more to improve regulation and help entrepreneurs is key to creating more jobs--and more growth. It is also a key to fighting poverty. Women, who make up three quarters of the work force in some developing economies, will be big beneficiaries. So will young people looking for their first job. The past year's diverse range of successful reformers—from Serbia to Rwanda—is showing the way forward. We can all learn from their experience,” said Paul Wolfowitz, President of the World Bank Group.

The annual report, which for the first time provides a global ranking of 155 nations on key business regulations and reforms, finds that every country in Eastern Europe improved at least one aspect of the business environment—the highest rate of reform of any region. Countries such as Serbia and Montenegro, Slovakia, Romania, and Latvia topped the global rankings for most reforms enacted.

The report tracks a set of regulatory indicators related to business startup, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. It does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

Overall, European nations were the most active in enacting reforms. The top 12 reformers in the past year, in order, were Serbia and Montenegro, Georgia, Vietnam, Slovakia, Germany, Egypt, Finland, Romania, Latvia, Pakistan, Rwanda, and the Netherlands.

Among the notable reforms in Eastern Europe and the Baltic countries in the past year:

• Serbia and Montenegro moved startup registrations from its courts to a new administrative registry. Entrepreneurs can register online. A company can start operating in 15 days rather than 51.
• Slovakia imposed time limits on the issuing of trade licenses. A unified tax number for income and value-added taxes made tax registration simpler.  Starting a business now takes 25 days, 80 days less than in 2003.
• Poland was the most active reformer of business licensing in the world, with the passing of the Freedom of Economic Activity Act. 
• Serbia and Montenegro, and FYR Macedonia adopted new labor laws, making regulation more flexible.
• Slovakia abolished its 3 percent property transfer tax, placing the country in the top 10 in the world on the ease of registering property. The cost of registering property fell to only 0.1percent of the property value.
• Three new private credit bureaus kicked off operations, in Lithuania, Romania, and Slovakia, making it easier for lenders to assess creditworthiness.
• The Bulgarian public credit registry launched an online system, cutting the time to retrieve data from 3 days to seconds. The registry also scrapped the minimum loan cutoff, expanding the coverage of borrowers nine-fold.
• Four countries made it easier to create and enforce collateral agreements:  Bosnia and Herzegovina, Croatia, Romania, and Serbia and Montenegro.
• Romania introduced a 16 percent flat tax and cut payroll taxes. Albania, Bulgaria, the Czech Republic, Estonia, Latvia, and Poland cut corporate taxes.
• Hungary introduced electronic filing of customs documents, reducing time for approval to 10 minutes.
• Serbia and Montenegro reduced the time to enforce a simple contract in the courts, which went from 1,028 days to 635.
• The Czech Republic, Latvia, Poland, and Slovenia reduced delays in the courts.

Doing Business in 2006 updates the work of last year’s report on seven sets of business environment indicators: starting a business, hiring and firing workers, enforcing contracts, registering property, getting credit, protecting investors, and closing a business. It expands the research to 155 countries and adds three new indicators: dealing with business licenses, trading across borders, and paying taxes.

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