Doing Business 2008in CROATIA

Presented byMichael U. Klein

Vice President, The World Bank& Chief Economist, IFC

2

Doing Business indicators

• Update of 2007

• Add 3 countries

• Reformer’s Club: 11 case studies

2007 2008

• Starting a business

• Dealing with licenses

• Employing workers

• Registering property

• Getting credit

• Protecting investors

• Paying taxes

• Trading across borders

• Enforcing contracts

• Closing a business

• Add Not paying bribes

• Add Using infrastructure

• Research program on regulation and business opportunities for women

2009

3

Focus on steps, time and cost is Doing Business basic methodology

Cost (%

of G

NI p

er c

ap

ita)T

ime (

Nu

mb

er

of

days)

Time (left axis)

Cost(right axis)

0

1

2

3

4

5

6

7

8

Register at theGUIDE

Apply forlicense, tax andstatistical IDs

Publish a noticein a daily

newspaper

File forms withthe National

Social SecurityFund

File for healthinsurance

0%

5%

10%

15%

20%

25%

Starting a Business in Madagascar

4

16.Switzerland17.Estonia18.Georgia 19.Belgium20.Germany21.Netherlands22.Latvia23.Saudi Arabia24.Malaysia25.Austria26.Lithuania27.Mauritius28.Puerto Rico29.Israel30.Korea

1. Singapore2. New Zealand3. United States4. Hong Kong, China5. Denmark6. United Kingdom7. Canada8. Ireland9. Australia10. Iceland11. Norway12. Japan 13. Finland14. Sweden15. Thailand

Top 30 on the ease of doing business, 2007

5

Top Reformers in 2006/2007

Economy Starting a business

Dealing with licenses

Employing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across borders

Enforcing contracts

Closing a business

Egypt

Croatia

Ghana

Macedonia, FYR

Georgia

Colombia

Saudi Arabia

Kenya

China

Bulgaria

6

Eastern Europe and Central Asia reformed the most …

78.6%

62.5% 62.5%58.8%

52.2%

45.8%

35.5%

E. Europe &Central Asia

South Asia OECD Middle East &N. Africa

Sub-SaharanAfrica

East Asia &Pacific

Latin America& Caribbean

Countries with at least one positive reform in 2006/2007 (%)

7

Eastern Europe surpasses East Asia in ease of doing business

22

76 7787

96107

136

Highincome:OECD

Europe &Central

Asia

East Asia& Pacific

LatinAmerica &Caribbean

MiddleEast &NorthAfrica

SouthAsia

Sub-Saharan

Africa

Average Rank, Ease of Doing Business

8

Ease of Doing Business in Eastern Europe

3245 46 48

55 56

74 7581 86

92 97 100 105 106 110

136

9

Croatia’s overall ranking: #97

Topic Croatia’s Rank

World’s best

Starting a business 93 Australia

Dealing with licenses

162St. Vincent & the

Grenadines

Employing workers 139 United States

Registering property 99 New Zealand

Getting credit 48 United Kingdom

Protecting investors 122 New Zealand

Paying taxes 43 Maldives

Trading across borders

96 Singapore

Enforcing contracts 45 Hong Kong, China

Closing a business 78 Japan

10

31

39

27

8

10

10

14

15

22

24

Starting a business

Paying taxes

Registering property

Trading across borders

Getting credit

Getting licenses

Enforcing contracts

Closing a business

Protecting investors

Employing Workers

Easier entry regulations, lower taxes, faster property transfers among the most popular reforms in the world (2006/2007)

Number of positive reforms

11

0

5

10

15

20

25

30

35

40

45

Depositdocuments and

pay fees atFINA

Notarize deeds Depositdocumentation

at FINA forregistration atCommercial

Court

Order officialseal and applyfor statisticalregistration

number

Open a bankaccount

Obtainmunicipalcertificate

Register for tax(VAT)

Register withhealth

insurance andpension

insurance fund

0%

2%

4%

6%

8%

10%

12%

14%

Croatia made it easier to start a business: it now takes 8 procedures and 40 days

Cost (%

of G

NI p

er c

ap

ita)T

ime (

Nu

mb

er

of

days)

Time (left axis)

Cost(right axis)

12

Easier access to credit : The more information available, the easier is it for banks to do risk assessment of borrowers.

2 big reforms in Croatia HROK – Croatian registry of credit

Fully operational from May 2007 Coverage of borrowers increased from 0 to 72%

New collateral registry In first 2 months EUR 1.4 billion in credit was

registered

13

It also became easier to register property

Croatia

Days in 2006Days in 2007

Registration at the Land Registry decreased from 399 to 174 days due to ongoing reforms at the Land Registry

14

Closing a business now takes less time

Amendments to Insolvency Law

introduced professional requirements for bankruptcy trustees

decreased timelines

15

Dealing with licenses: Consolidate procedures, cut number of procedures, lower costs

1. Preliminary fire approval

2. Preliminary electricity approval

3. Preliminary waste collection approval

4. Preliminary telecommunications approval

5. Preliminary water approval

6. Excerpt from the Land Registry

7. Possession list for subject and bordering lands

8. Copy of cadastre plan

9. Location permit

10. Project clearance from fire department

11.Project clearance from sewerage authority

12. Project clearance from telephone provider

13. Noise protection and work safety clearance 14. Sanitary conditions clearance

15. Obtain utilities decision

16.Obtain building permit

17.Obtain water and sewage connection

18.Obtain power connection

19.Obtain telephone connection

20.Apply for occupancy permit

21.Receive on-site inspection and signature of completion statement

22.Inform tax authority about new building

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

0%

100%

200%

300%

400%

500%

600%

700%

800%

16

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

-6 -4 -2 0 2 4 6 8 10 12

More reforms, higher equity returns

Number of reforms, 2003-2006

3-year shareholder returns

Venezuela

Egypt

Colombia

Sri Lanka India

Brazil

Poland

Source: Doing Business database, Morgan Stanley Capital International data

17

Business friendly regulation leads to more registered businesses and start-ups

Countries ranked by ease of doing business, quintiles

Easiest Most difficult

Source: Doing Business database

Business density (registered firms per capita)

Business entry (new firms in % of registered firms)

Most difficult Easiest

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…and higher shares of female entrepreneurs and women in the labor force

Countries ranked by ease of doing business, quintiles

Most difficult

Female Entrepreneurs(% of entrepreneurs)

Easiest

Source: Doing Business database, Enterprise Surveys, WDI

Female unemployment (% of male unemployment)

Most difficult

Easiest

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Doing Business website has many resourceswww.doingbusiness.org