Serbia drops to 48th place on Doing Business List

Serbia has dropped to 48th place on the World Bank’s Ease of Doing Business List, in comparison to last year, when the country ranked 43rd.

The main reason for this decline in ranking is that other countries have made faster progress in regulating their business environment, the World Bank has said.

Of the former Yugoslav countries, Macedonia (10th place), and Slovenia (40) are ahead of Serbia, whereas Montenegro (50), Croatia (58) and Bosnia and Herzegovina (89) are behind.

“The reforms carried out by the government, in the partnership with business associations, benefit everybody – from enterprises, small and medium companies, to large domestic and foreign investors, enable the creation of new jobs and stimulate the further growth of the economy”,  says Stephen Ndegwa, World Bank Country Manager for Serbia.

He adds that Serbia’s ranking is not as strong this year, which can be explained by the quicker progress made by other countries.

Thomas Lubeck, Regional Manager for Central and Southeast Europe at the International Finance Corporation, says that Serbia has carried out an important reform which has facilitated the issuing of building permits.

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The total number of ease-of-doing-business points Serbia has increased from last year’s 73.32 to 73.49, Lubeck said.

As he explains, this means that, in the past year, Serbia has improved business regulations in an absolute sense, according to those indicators relevant to the Doing Business report, and that the country is narrowing the gap when it comes to the examples of the best practice of regulating the business environment in the world.

The Doing Business report captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with building permits, obtaining electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency, and it also measures features of labour market regulation.

On the new ranking list, Serbia has advanced in comparison to last year in the field of property registration and rose to the 55th place from the previous 57th and in the category of tax payments, where the country jumped from the 79th from the 82nd place.

In the area of business start-up, Serbia now occupies the 40th position (earlier 32nd), in obtaining building permits it is ranked 11th (earlier 10th), in obtaining electricity the country is at 104th place (previously 96th), in obtaining credit at the 60th place (earlier 55th) and in protecting minority shareholders it ranks 83rd (last year 76th).

In terms of the cross-border trade indicators, Serbia kept the same ranking as last year – 23rd, while in regard to executing contracts we dropped to 65th place (last year 60th). In the resolution of  bankruptcies we now rank 49th (earlier ranking 48th).

Reform activities in 2018

Amendments to the Law on Economic Companies, which came into force on October 1st, 2018, stipulate abolition of the obligatory use of company seals by businesses. In terms of state fees, the amendments to the Law on State Administrative Fees have increased the predictability and reduced the cost of obtaining a usage permit – a fee that was previously charged as a percentage, and now is charged as a fixed amount.

When it comes to one of the segments that Serbia fares the worst on the Doing Business List – connections to the electricity grid / obtaining electricity – the amendments to the by-laws now regulate the obligation that real estate developers, line state authorities and companies should exchange the relevant documentation electronically, which should reduce the required number of steps (for citizens obtaining electricity) from five to two.

The new Law on the Registration Procedure in Real Estate Cadastre, adopted in May 2018, now envisions the establishment of a single online procedure (e-salter) which will make it easier for citizens and businesses to register their properties.

There are also several reforms that the World Bank deemed as insufficient like the ones in the segment of execution of contractual obligations. The official statistics show that the average duration of the procedures in front of the Commercial Court in Belgrade was 215 days in 2016 and 2017 which is much longer than the 63 days that the World Bank has used as the constant in the last 12 reports.

Future lies in digitalization

Most of the results that Serbia has achieved in the past few years in terms of improving conditions for doing business are the result of digitalization of administrative procedures such as the creation of a single electronic register at the Serbian Business Register Agency (APR), a consolidated electronic procedure for obtaining building permits, and a combined collection of taxes and salary contributions. This has also resulted in lower costs for businesses and less time wasted on administrative procedures. For the public sector, this means easier processing of documentation and reduced opportunities for corruption.

(Blic, NALED, 31.10.2018)



This post is also available in: Italiano

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