Doing Business Report: Moldova has medium cost of business regulation
September 7, 2006
06.09.2006
Moldova is a country with a medium cost of business regulation, being ranked the 88th place among 175 states in a standing on the ease of doing business, according to a new report by the World Bank released on Wednesday.
However, perspectives for next year are less optimistic, as external shocks will also affect business and Moldova will descend to the 103rd place. It will be ranked after Lithuania (the 16th place), Estonia (17th), Armenia (34th), Georgia (37th), Romania (49th), and Russia (96th) and before Ukraine (128th), Belarus (129th), and Uzbekistan (147th).
According to the report Doing Business 2007, Moldova registered progresses in 2005-2006 in two out of ten reforms and it ranks a leading place among reformers of licence and tax systems.
World Bank experts estimate that one of necessary reforms for any economy is the facilitation of the procedure of obtaining licences by firms or building permits. "Seventeen countries have simplified the procedures of obtaining licences. Most of reforms took place in rich countries Canada, France, Germany, Korea and Spain and in Eastern Europe and Central Asia - Armenia, Georgia, Latvia, Moldova, Romania and Ukraine," according to the WB report.
Chisinau ranks the 7th place in this top. The Moldovan authorities have reduced the number of permits required for commercial and business activities from 400 to 128, but the number of procedures (34) needed to obtain authorisations and the days needed to get them (158) are over the average.
Moldova is ranked the 84th place in the top of states where starting up a new business is easiest, depending on the number of procedures, necessary time, costs of the operation and minimum necessary capital. Those willing to start new business in Moldova must fulfil ten procedures and need 30 days. In Canada that ranks the 1st place in this standing those willing to start a new business need three days and must fulfil two procedures.
The Chisinau authorities have revised 1,130 normative acts, annulled 150 of them and modified another 400. Moldova opted for the Internet era and adopted the online registration of new firms in a close perspective.
Moldova is included among reformers of property registration along with Bulgaria and Romania.
As regards the taxation, the simplification of the regime through reduction of taxes and elimination of exemptions is the main modality of restraining the corruption in this field, according to the WB report, which ranks Moldova on the 119th spot. The corporate income tax was reduced from 20 percent in 2004 to 18 percent in 2005 and 15 percent in 2006.
Moldova ranks the best places (the 47th and 55th) for registration of property and honouring contracts and the worst place (the 128th) for personnel employment. It was rated 4.7 points out of 10 points and ranked the 99th place regarding protection of investors. Moldova was ranked the 78th place for closure of companies. The bankruptcy procedures are finished in 2.8 years on average, while costs are up of 9 percent of the value of property.
Moldovan exporters must fill up seven documents and they need 33 days for exportation. The cost of a container is 1,185 dollars. The number of necessary documents for import and export is similar, but 35 days are needed for imports and the cost of a container is 1,285 dollars.
The rankings track indicators of the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. They do not track variables such as market size, macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.
The Doing Business project is based on the efforts of more than 5,000 local experts – business consultants, lawyers, accountants, government officials, and leading academics around the world, who provided methodological support and review.
Private companies PricewaterhouseCoopers, Brodsky Uskov Looper Reed
& Partners, Turcan & Turcan, SRL Constructproject, BSMB Legal
Cousellors, Quehenberger-Hellmann, etc. participated in making the analysis and ratings for Moldova.
(BASA Press)
