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Doing Business in South East Europe 2011

Author: Subnational Doing Business
Published: June 28, 2011
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Overview

Doing Business in South East Europe 2011—the second subnational report in the series following Doing Business in South East Europe 2008—compares the ease of doing business, both within a single economy and across the region, among 22 cities from: Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Moldova, Montenegro, and Serbia. The report focuses on national and local regulations that affect 4 stages in the life of a small to medium-size domestic firm: starting a business, dealing with construction permits, registering property and enforcing contracts.

Where is it easiest to do business in South East Europe?

Main Findings

  • It is easier to do business now in all cities, as compared to 2008 – all 19 cities measured for the second time show improvements in at least 1 of the 4 areas measured. Between January 2008 and January 2011, national and local governments carried out 48 reforms aimed at making it easier to start a business, strengthening property rights, rendering the process of dealing with construction permits more efficient, and improving the efficiency of commercial dispute resolution. As a result, the average cost to start a business across the region decreased from 23% to 13% of the average income per capita. Meanwhile, the average time to deal with construction permits and to register property decreased by more than one month.
  • Skopje (FYR Macedonia) and Banja Luka (Bosnia and Herzegovina) took top honors with the most improved business regulation in the past 3 years. They implemented business reforms in all 4 regulatory areas.
  • No single city outperforms the others across the board. Across the region, it is easiest to start a business in Skopje (FYR Macedonia), deal with construction permits in Niksic (Montenegro), transfer a property title in Balti and Chisinau (Moldova), and resolve a commercial dispute through the courts in Zrenjanin (Serbia). It is most difficult to start a business in Pristina (Kosovo), register property in Mostar (Bosnia and Herzegovina), and enforce a contract in Prizren (Kosovo). Dealing with construction permits is most burdensome in Belgrade (Serbia), while in Tirana (Albania) no permit has been issued since 2009.
  • The wide variation in business regulation across the region points to ample room for improvement. To comply with all requirements to build a warehouse, a construction company would spend 110% of income per capita (the equivalent of US$ 1,852) in Balti (Moldova). Compare this to a prohibitive 2,132% of income per capita (the equivalent of US$ 140,000) in Podgorica (Montenegro). An entrepreneur can set up a business in only 3 days in Skopje (FYR Macedonia). Business startup time is almost 2 months in Pristina (Kosovo) and Sarajevo (Bosnia and Herzegovina). The property transfer taxes entrepreneurs have to pay vary greatly among the 22 cities measured — from a fixed fee of EUR 150 (US$ 220) in Pristina (Kosovo) to 5% of the underlying property value in Mostar and Sarajevo (Bosnia and Herzegovina). It takes only 10 months to resolve a commercial dispute in Zrenjanin (Serbia). Meanwhile, in Mostar (Bosnia and Herzegovina), an entrepreneur has to wait more than 4 years to enforce a contract in court.

The report was produced with the financial support of the Government of Switzerland through the State Secretariat for Economic Affairs (SECO), the Government of Austria, and the United States Agency for International Development (USAID).





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