1. 1 PUBLIC ADMINISTRATION REFORM AND ECONOMIC DEVELOPMENT SIGMA Regional Workshop on Public Administration Reform and EU Integration Budva, 4-6 December 2005

2. 2 Progress and Challenges in Regulatory Reform

3. 3 Regulatory reform is a key factor in increasing Foreign Direct Investment (FDI) Evolution of the Investment Environment in the SEE Region

4. 4 SEE countries are increasingly aware of the importance of regulatory reform Progress and Challenges in Regulatory Reform At the 2003 Ministerial Meeting, SEE Ministers of Economy adopted the statement “Pushing ahead with reform: Removing obstacles to FDI ” Recent reports have highlighted progress and challenges for the region:  EBRD BEEPS 2005;  World Bank “Cost of Doing Business”;  Investment Compact “Regulatory Governance Initiative”;  Investment Compact “Enterprise Policy Performance Assessments”;  “White Books” by Foreign Investors Councils at national and regional level.

5. 5 Main areas of concern for business Company registration and de-registration; Enforcement of contracts, commercial courts; Fair and efficient tax administration; Licenses, permits and other administrative procedures result in a “time tax” of considerable importance. Progress and Challenges in Regulatory Reform The regulatory environment should be stable, transparent and predictable in order to ensure low costs of compliance

6. 6 Regulatory reform is a continuous process, that needs constant attention E.g. in Montenegro a limited liability company can be registered for 1€, within four working days, and by submitting three documents The one-stop-shop approach and the principle “silence is consent” are being implemented in many countries of the region Reforms have been recently implemented also in Bulgaria, Serbia, and Macedonia Progress and Challenges in Regulatory Reform For example, all SEE countries have reviewed and simplified their business registration procedures…

7. 7 …but further work is still needed in order to simplify procedures for licenses and permits Administrative steps required to build a standardized warehouse Progress and Challenges in Regulatory Reform Source: Cost of Doing Business 2006 (data for 2005) Country Time (days) Procedures (number) Cost (% of income per capita) Moldova12220215.0 Serbia and Montenegro212212,195.0 Bulgaria21224325.1 Macedonia, FYR2141867.5 Croatia278281,236.7 Romania29115187.7 Albania34422227.4 Bosnia and Herzegovina476178,735.4 AVERAGE SEE region268.620.61,648.7 OECD146.914.175.1 Regulatory reform is a continuous process, that needs constant attention

8. 8 Challenges ahead All SEE countries have started the simplification of their laws and regulations (e.g. Moldova, Bulgaria, Serbia) The Regulatory Impact Analysis (RIA) should be implemented and regularly applied as a tool to prevent the adoption of new regulations implying unnecessary burdens to business Access to export markets is severely hindered by the inadequacy of product standards and of certification Progress and Challenges in Regulatory Reform

9. 9 The implementation of reforms relating to the investment climate are monitored though a detailed index (IRI) IC’s Experience in Supporting the Reform Process IRI Dimensions 1.Investment policy 2.Investment promotion 3.Tax policy 4.Anti-corruption 5.Competition policy 6.Trade policy 7.Public administration 8.Financial institutions and infrastructure 9.SME support 10.Human capital

10. 10 Contacts Antonio Fanelli Deputy Head of SEE Investment Compact 2, rue André Pascal 75775 Paris Cedex 16 - France tel: +33 1 45 24 97 07 fax:+33 1 45 24 93 35 antonio.fanelli@oecd.org Anthony O'Sullivan Head of SEE Investment Compact 2, rue André Pascal 75775 Paris Cedex 16 - France tel: +33 1 45 24 97 01 fax:+33 1 45 24 93 35 anthony.osullivan@oecd.org SIGMA 2, rue André Pascal 75775 Paris Cedex 16 - France tel: +33 1 45 24 13 99/83 58 fax:+33 1 45 24 13 05 www.sigmaweb.org