Provided it is more successful than Croatian in reforms, Bulgaria could overtake Croatia in the World Bank’s Doing Business Rankings, warns the most recent analysis of business climate prepared by the Croatian Chamber of Commerce (HGK), reports Jutarnji List on January 8, 2019.
The HGK analysis is based on international competitiveness and business conditions research, especially the World Bank’s Doing Business. The Chamber is particularly concerned about the slow and costly administrative procedures encountered by entrepreneurs in Croatia.
The most critical point of doing business in Croatia is the issuing of building permits. Croatia is the weakest member of the EU on this indicator, and at the global level, there are just 31 countries worse than Croatia. The progress that has been achieved over the years in this area is slow, and in some years, according to the HGK, there has even been deterioration. The number of procedures needed (22) has not changed since 2011, while the number of days required to be issued a building permit (146) has remained the same since 2015. It should be noted that the time needed to receive a building permit differs from town to town, and the Doing Business rankings are based on Zagreb.
“Obviously, here the most critical issue is cost, although we need to reduce the number of procedures as well. In Croatia, there are costs connected with 14 out of 22 procedures, while in Malta there are costs for 6 out of 14 procedures. The utility fee represents close to 70 percent of all the costs associated with obtaining a building permit,” said the Croatian Chamber of Commerce. In Malta, the cost of issuing building permits is two percent of the investment value, while in Croatia it reaches 10.9 percent.
The area of issuing building permits is one of those which substantially affect the ease of doing business, and many countries have implemented reforms during the last year. Their efforts involved speeding up procedures, shortening the time needed to collect documents, reducing costs, and digitalisation. On the other hand, Croatia is still waiting for the real reforms in this area.
Another critical point is paying taxes. The tax payment procedures and the time it takes to pay taxes in Croatia are still among the longest and most complicated among comparable countries. For example, businesses in Croatia pay taxes 34 times a year, which takes 206 hours. In comparison, in Hong Kong, which is ranked the best in the world by this indicator, tax payments are made just three times a year, and businesses spend only 34.5 hours. In Riga, the capital of Latvia, which is the best rated among the new EU members, taxes are paid seven times a year.
Croatia is lagging when it comes to starting a business as well. For example, to establish a company in Zagreb, it is necessary to perform eight procedures in 22.5 days. On the other hand, in Auckland, New Zealand, which is the best in the world by this indicator, just one step is needed. In Tallinn, the capital of Estonia, people spend only three and a half days executing the three procedures required to start a business.
These are all areas where there is the most significant room for improvement and which should see accelerated reforms that will improve the business climate in the country and strengthen the competitiveness of the Croatian economy, concluded the HGK analysis.
More news on doing business in Croatia can be found in our Business section.
Translated from Jutarnji List (reported by Adriano Milovan).