in South East Europe 2008 Pierre Guislain Director, Investment Climate Department and General Manager FIAS July 14 th, 2008 Bitola

Doing Business project Update of 2008 Research program on regulation and business opportunities for women FDI indicator Starting a business Dealing with licenses Employing workers Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business 2009 Update of 2007 Add 3 countries Reformer’s Club: 11 case studies

South East Europe countries among the world’s top reformers in DB 2008

Expands Doing Business indicators beyond the most populous city 2. Reform instrument 1. Diagnostic tool 3. M&E device Creates baseline Allows local and global benchmarking Puts regulatory reform on political agenda Links national and local reform efforts 1. Diagnostic tool Comparisons within cities are strong drivers of reform Uncovers bottlenecks and local good practices Promotes peer to peer learning Actively involves local governments and other reform stakeholders 2. Reform instrument 3. M&E device Measures progress over time Creates an incentive to maintain reform effort even when governments change High media appeal Subnational Doing Business project

Doing Business in South East Europe *Under UN Security Council Resolution 1244 (1999), Kosovo is administered by the United Nations Interim Administration Mission in Kosovo (UNMIK). Indicators: Starting a Business Registering Property Construction Licenses Enforcing Contracts Zrenjanin Kruševac Užice Vranje Belgrade Pljevlja Nikšić Podgorica Bitola Skopje Šibenik Osijek Varaždin Zagreb Shkodra Vlora Tirana Banja Luka Mostar Sarajevo Prizren Priština * 22 cities covered, 6 of which are also covered by the global Doing Business report

Where is it easiest doing business in South East Europe? 1. Bitola, Macedonia, FYR (easiest) 2. Zrenjanin, Serbia 3. Shkodra, Albania 4. Pljevlje, Montenegro 5. Krusevac, Serbia 6. Vlora, Albania 7. Osijek, Croatia 8. Prizren, Kosovo 9. Skopje, Macedonia, FYR 10. Uzice, Serbia 11. Tirana, Albania 12. Pristina, Kosovo 13. Belgrade, Serbia 14. Vranje, Serbia 15. Varazdin, Croatia 16. Sibenik, Croatia 17. Niksic, Montenegro 18. Podgorica, Montenegro 19. Zagreb, Croatia 20. Banja Luka, Bosnia and Herzegovina 21. Sarajevo, Bosnia and Herzegovina 22. Mostar, Bosnia and Herzegovina

Starting a business in Albania takes 6 procedures and 7 days 18 2 ✘ 13 0 September 2007 October 2007

Time to start a business (days) Denmark (6 days) Slovakia (25 days) Slovenia (60 days)

Days to deal with construction licenses United States (40 days) Ukraine (429 days) OECD average (153 days)

High number of pre-construction procedures across SEE Total

100 days 307 days Mostar 8 procedures, 145 days Sarajevo 7 procedures, 331 days Time to register property in Bosnia and Herzegovina (days) Land registries- main bottleneck to registering property Apply for registration at the land registry Others

Days to enforce a contract World’s best Hong Kong- 211 days World’s slowest Timor Leste days SEE Average Regional average 573 days to enforce a contract

Latin America (31%) Uganda (45%) Germany (12%) Cost to enforce a contract (% of the claim) Regional average

A hypothetical city “Zlatnic” would rank 9 th out of 178 economies if regional best practices were adopted Indicator Best performing city Global rank (178 economies) Best practice Days to open a businessShkodra/ Vlora, Albania127 days Cost to enforce a contractZagreb, Croatia1713.8% Days to build a warehouseBitola, Macedonia FYR1994 days Cost to register propertyPrizren, Montenegro200.8% Days to enforce a contractZrenjanin, Serbia22300 days Procedures to start a businessShkodra / Vlora, Albania246 Cost to open a businessBitola, Macedonia FYR243.9% Days to register propertyPljevlje, Montenegro2817 days Procedures to build a warehouseOsijek, Croatia2913 Procedures to register propertyZagreb, Croatia425 Cost to build a warehouseTirana, Albania119461%

Great initial impact: Political support for reform efforts has continued even after two rounds of local elections and one presidential election since first benchmark. Doing Business in Mexico 2006, 2007 and 2008: sustained development results

Priorities for Reform in South East Europe Business Registration Eliminate minimum capital requirement Allow business start-up online Property Registration Introduce fixed fees Make registries electronic Construction Licensing Consolidate project clearances Make licensing applications and processing electronic Contract Enforcement Introduce/improve case management system Improve enforcement

Business entry reforms = more businesses Countries ranked by ease of doing business, quintiles Business Density (registered firms per capita) Business Entry (new firms in % of registered firms) Source: Doing Business database Easiest Most difficult Easiest

…Which means more formal employment Source: Doing Business database, WDI Informal Sector (% of GDP) Unemployment (% of labor force) Easiest Most difficult Easiest Countries ranked by ease of doing business, quintiles

World Bank Group supports reforms in areas covered by the Subnational Doing Business Project S-N DB Indicators Albania Bosnia and Herzegovina Croatia FYR Macedonia MontenegroSerbia Starting Business  Licensing   Registering property Contract enforcement  World Bank ● FIAS/IFC Advisory Services

Building on our sub-national competitiveness work Ongoing Institutionalizing reform Streamlining procedures and regulatory reform process Building capacity of sustainable implementation within municipalities Network of policy makers Building constituencies for reform Facilitating peer-to-peer learning Capacity building and introduction of good practice discussion Linking with the networks outside the region Planned Possible scale-up and roll-out Second round of municipalities New countries as interests grows across the region

Thank you/ Hvala/ Faleminderit/ Blagodaram Doing Business

Extra Slides.

Top 30 on the Ease of Doing Business — Singapore16. Switzerland 2. New Zealand17. Estonia 3. United States18. Georgia 4. Hong Kong, China19. Belgium 5. Denmark20. Germany 6. United Kingdom21. Netherlands 7. Canada22. Latvia 8. Ireland23. Saudi Arabia 9. Australia24. Malaysia 10. Iceland25. Austria 11. Norway26. Lithuania 12. Japan27. Mauritius 13. Finland28. Puerto Rico 14. Sweden29. Israel 15. Thailand30. Korea 75. Macedonia, FYR 81. Montenegro 86. Serbia 97. Croatia 105. Bosnia and Herzegovina 136. Albania

Subnational Doing Business has projects all around the globe Countries: 32 Cities: 230

Cost to register property (% of property value) Slovenia (2%) Italy (0.6%)

Potential for improvement in ranking within the region After adopting all best practices Global Rank: 9 South East Europe ranks: Poland – 74 Russia – 106 Ukraine – 139 Canada – 7 Ireland – 8 Australia – 9 DB 2008 ranking

Doing Business subnational series Doing Business