SarajevoOctober 20th, 2011

Doing Business inBosnia and Herzegovina

Iva Hamel Private Sector Development Specialist, Indicator

Based Reform Advisory, World Bank-IFC

What does Doing Business measure?

Doing Business indicators: Focus on regulations relevant to the life

cycle of a small to medium-sized domestic business.

Are built on standardized case scenarios.

Are measured for the most populous city in each country.

Are focused on the formal sector.

DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.

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Doing Business indicators – 11 areas of business regulation (9 included in the DB2011 ranking; 10 in DB2012)

What's new in Doing Business 2012?

2007175 economies

2008178 economies

2009181 economies

2010183 economies

2011183 economies

2012 183 economies

· Starting a business

· Dealing with construction permits

· Employing workers

· Registering property

· Getting credit

· Protecting investors

·Paying taxes

· Trading across borders

· Enforcing contracts

· Resolving Insolvency (formerly Closing a business)

· Update of 2007

· Add 3 countries

· Reformer’s Club, and 16 case studies

· New “About DB” chapter

· Trends analysis DB04-DB09

· Most popular reforms

· Most effective reforms

· Lessons learned

· Add 3 new countries (Bahamas, Bahrain, Qatar)

· Methodology change in Getting Credit (Legal Rights)

· Business regulation and reform in the context of the global crisis

· EWI and social protection

· Worker Protection: Researching ILO core labor standards

· Piloting a new infrastructure indicator

· Add Cyprus, Kosovo

· New metric on 5-year change at country level

· Focus on reform results

· Getting Electricity: added 36 countries and indicator level ranking

· Methodology review for Employing Workers indicator

· Getting Electricity included in overall ranking· New metric on an economy’s distance to the frontier· New metric on an economy’s dispersion across indicators· Access to information data· 4 case studies on regulatory reform· E-chapters for indicators

· Threshold applied to the TTR in Paying Taxes

1. Singapore 16. Georgia2. Hong Kong SAR, China 17. Thailand3. New Zealand 18. Malaysia4. United States 19. Germany5. Denmark 20. Japan6. Norway 21. Latvia7. United Kingdom 22. Macedonia, FYR8. Korea, Rep. 23. Mauritius9. Iceland 24. Estonia10. Ireland 25. Taiwan, China11. Finland 26. Switzerland 12. Saudi Arabia 27. Lithuania13. Canada 28. Belgium14. Sweden 29. France15. Australia 30. Portugal

Top 30 economies for the ease of doing business in 2010/11

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Change in ranking DB11

to DB12

Starting a

Business

Dealing with construction

permits

Getting electricity

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across

borders

Enforcing contracts

Resolving insolvency

Morocco 11594 (-21) √ √ √

Moldova 9981 (-18) √ √ √ √

Macedonia, FYR 3422 (-12) √ √ √ √

São Tomé and Principe

174163 (-11) √ √ √ √

Latvia 3121 (-10) √ √ √ √

Cape Verde 129119 (-10) √ √ √

Sierra Leone 150141 (-9) √ √ √ √

Burundi 177169 (-8) √ √ √ √

Solomon islands 8174 (-7) √ √ √ √

Korea, Rep. 158 (-7) √ √ √

Armenia 6155 (-6) √ √ √ √ √

Colombia 4742 (-5) √ √ √

12 economies improving the most in the ease of doing business in 2010/11

- For 9 consecutive years, ECA has been the world’s most active region in improving business regulation for domestic firms. 21 out of 24 economies implemented 53 institutional and regulatory reforms

Eastern Europe and Central Asia (ECA) made the greatest strides in making business easier

Eastern Europe and Central Asia rankings on the ease of Doing Business 2010/11

UzbekistanUkraine

TajikistanBosnia and Herzegovina

Russian FederationKosovo

SerbiaAlbania

MoldovaCroatia

ECA averageRomania

TurkeyKyrgyz Republic

BelarusAzerbaijan

BulgariaMontenegro

ArmeniaKazakhstan

CyprusLithuania

Macedonia, FYRLatvia

Georgia

166 152 147 125 120 117 92 82 81 80 77 72 71 70 69 66 59 56 55 47 40 27 22 21 16

Eastern Europe and Central Asia economies score high in many areas of business regulation

Indicator World’s top ranked ECA’s top ranked Bosnia and Herzergovina

Starting a business New Zealand Macedonia, FYR (6) 162

Dealing with construction permits

Hong Kong SAR, China Georgia (4) 163

Registering property Saudi Arabia Georgia (1) 100

Getting credit Malaysia Latvia (4) 67

Protecting investors New Zealand Kazakhstan (10) 97

Paying taxes Maldives Kazakhstan (13) 110

Trading across borders Singapore Latvia (15) 108

Enforcing contracts Luxembourg Russian Federation (13) 125

Resolving Insolvency Japan Cyprus (23) 80

Getting Electricity Iceland Slovenia (27) 157

Bosnia and Herzegovina has reformed in 8 out of 10 areas of business regulation since DB 2005

DB Report Year

Starting a

business

Dealing with construction

permits

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across

borders

Enforcing contracts

Resolving Insolvency

Getting Electricity

2012 2011

2010 2009 2008

2007

2006 2005

Bosnia and Herzegovina has reformed its business environment

in at least one area every year

The pace of reforms was strongest in DB05 and DB09

Number of days

15

1

Application for uti-lization permit

Number of days

15

5

Application for company identification number

1) Application for utilization permit to the canton ministry of commerce: from 15 to 1 days

✔ Bosnia and Herzegovina made starting a business easier by replacing the required utilization permit with a simple notification of commencement of activities and by streamlining the process for obtaining a tax identification number. These reforms reduced the process by 24 days.

2) Apply for company identification number with the competent tax office: from 15 to 5 days

Bosnia and Herzegovina made great progress in reforming the process of starting a business

Bosnia and Herzegovina simplified the process of dealing with construction permits

✔ Dealing with construction permitsThe Land Administration Project, which began in 2006, was completed in early 2011. The main goal of the project was to provide business community and citizens with a prompt access to property and ownership related data. As a result, land registry and cadastre in Sarajevo have been fully digitalized.

This measure allows the Cadastre and Land Registry to check land related information much faster. Procedure to register the building into cadastre books at the municipal Cadastre Department was reduced from 89 to 15 days.

Sustaining the pace of reforms: Starting a business

• Eliminate minimum capital requirement

• Make use of notaries optional

• Eliminate the requirement to obtain a resolution on intended activities from the Municipality

• Eliminate the requirement to buy a company stamp

• Shift company registration from courts to a separate agency

• Consolidate government approvals at one access point

Sustaining the pace of reforms: Dealing with Construction Permits

• Consolidate issuance of pre-construction clearances by the utility providers

• Eliminate the requirement for Municipality to mark the land plot before construction

• Issue the certificate of completion of construction with the final inspection

• Reduce costs of compliance with building permit regulations

• Computerize the application process

• Consolidate the building permit approval process.

Findings from recent research on regulatory reform impact: business entry and collateral laws

Secured transactions and collateral regimes: Predictable priority system for creditors in cases of default: credit as percentage of GDP is

60% (compared to 30% where no predictability) Borrowers with collateral have 50% lower interest rates

DB’s unique global dataset enables empirical research on business regulation and private and financial sector development (>650 articles in peer-reviewed journals).

Business regulation reforms in business start up…. Reform Research finding

One stop shop for business registration in Mexico

5% increase in registered firms, 2.8% rise in employment (Bruhn, 2009)

One stop shop in Colombia 5.2% increase in firms registered (Cardenas and Rozo, 2009)

Reduction of entry procedures in India 6% increase in firms registered (Aghion, 2006)

One stop shop in Portugal 17% increase in firms registered (Branstetter et al, 2010)

Combined reforms: Entry reforms in Indian states with more flexible labor regulations

17.8% increase in output gains, larger than in states with less flexible regulations (Sharma, 2009)

World Economic Forum Competitiveness Index and Doing Business 2011

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WEF Global Competitiveness Rank and Doing Business Rank 2011

Doing Business Rank

WEF

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The positive correlation is statistically significant at the 95% level. Significance holds when controlling for income per capita.

Thank you. For more information: www.doingbusiness.org

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