WASHINGTON, October 25, 2016 – Economies of the Europe and Central Asia region place among the top improvers in the World Bank Group’s ease of doing business report.
A total of 57 business reforms were carried out by the region’s economies in the past year, finds Doing Business 2017: Equal Opportunity for All, released today.
This year, Armenia is ranked 38 among 190 economies in Doing Business report 2017 and is 5 points up from last year’s Doing Business 2016 rank 43 (recalculated based on methodology changes and addition of one economy, Somalia). In Doing Business 2017, Armenia also shows 1.47 percentage points’ improvement in distance to frontier[1] score –73.63 compared to the previous year’s 72.16 percentage points.
Armenia made it easier to do business in two areas measured by the report, including Getting Credit and Enforcing Contracts. Specifically, Armenia strengthened access to credit by adopting a new law on secured transactions that establishes a modern and centralized collateral registry, and improved its credit information system by adopting a new law on personal data protection. Armenia also made enforcing contracts easier by introducing a consolidated chapter regulating voluntary mediation and by establishing financial incentives for the parties to attempt mediation.
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Four of the region’s economies, Kazakhstan (ranked 35th in DB17), Belarus (ranked 37th), Serbia (ranked 47th) and Georgia (ranked 16th), place among this year’s top 10 improvers, based on reforms undertaken. For a second consecutive year, Kazakhstan, with seven business reforms, led the world in the number of reforms implemented, together with Indonesia. In the region, Georgia and Belarus followed with five and four reforms, respectively. For example, Georgia strengthened minority investor protections by increasing shareholder rights and role in major corporate decisions and by clarifying ownership and control structures.
The top ranked economy in the region is the Former Yugoslav Republic of Macedonia, with a global ranking of 10. Thanks to past reforms it now takes an entrepreneur in FYR Macedonia only two days to start a business, which is significantly less than the regional average of 10 days.
Reforms implemented by economies in Europe and Central Asia continue to improve the business environment for entrepreneurs. For example, paying taxes in the region now involves 18 payments on average, which is less than half of the number of payments it took five years ago.
“Europe and Central Asia has consistently been the region with the highest average number of reforms per economy and it is moving towards having the same good practices in place as the high-income economies,” said Rita Ramalho, Manager of the Doing Business project.
In the past year, the region’s economies implemented the most reforms worldwide in the areas of Paying Taxes (with a total of 13 reforms), Getting Electricity (eight) and Protecting Minority Investors (seven). For example, Tajikistan introduced electronic invoices and allowed road taxes to be paid electronically. Due to these reforms, medium sized companies now make 12 payments per year, compared to 28 previously. Furthermore, although Turkey increased the rate of transaction tax applicable on checks, paying taxes was also made easier by introducing electronic invoicing and electronic bookkeeping. Now, a medium size company can prepare, file and pay taxes in 217 hours compared to 226 hours in the previous year.
Overall, the region’s economies perform well in the area of Protecting Minority Investors. The region also performs well in Registering Property where it takes on average 21 days to register a property transfer, compared with the global average of 51 days. The region underperforms in Getting Electricity. For example, in Tajikistan, there are many procedures needed to get connected to the electrical grid and the cost is over 740 percent of income per capita. Furthermore, in Kosovo, entrepreneurs endured 51 power outages in 2015.
This year’s report includes, for the first time, a gender dimension in three indicators: Starting a Business, Registering Property and Enforcing Contracts. Europe and Central Asia is the only region where there are no barriers against women in the areas measured by the report. For example, in every economy in the region, women can start a business in the same way as men.
The report also includes an expansion to the Paying Taxes indicator, which now covers post-filing processes, such as tax audits and VAT refunds. Economies in Europe and Central Asia perform well in these areas but there are exceptions. For example, in Bosnia and Herzegovina, compliance time for VAT refunds is high, as is tax audit compliance time in Turkey.
The full report and accompanying datasets are available at www.doingbusiness.org
[1] The distance to frontier score aids in assessing the absolute level of regulatory performance and how it improves over time. This measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. This allows users both to see the gap between a particular economy’s performance and the best performance at any point in time and to assess the absolute change in the economy’s regulatory environment over time as measured by Doing Business. An economy’s distance to frontier is reflected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier.
