Simplified procedures net savings of more than €5 million annually in Serbia

At the end of May, an EU-funded project to create a more favorable, transparent and efficient business environment in Serbia delivered its final report outlining the numerous governmental reforms implemented and achievements made over the last three years in key business-related areas such as building permits, inspection oversight, labour legislation, taxes, and public procurement for SMEs.

As part of efforts to support the Government of Serbia’s programme to improve conditions for doing business, 424 administrative procedures under the jurisdiction of 41 different institutions were simplified, resulting in more than €5 million in annual savings.  

“In terms of improvements proposed in the four areas of business environment ‒ taxes, construction permits, inspections, and public procurement ‒ all of the project teams recommendations have been adopted by the Government and already incorporated into legislation by the Parliament. Changes proposed in the tax regime, construction permits legal framework, and public procurement will significantly improve the overall business environment in Serbia,” said Team Leader Jasminka Varnalieva.

In a consortium with WYG and KPMG, NIRAS managed the €2.3 million project ‒ EU Support for Improving Business Environment ‒ which aimed for governmental reforms, simplification of administrative procedures and the establishment of a unified public register of regulations and other business conditions. Implemented in cooperation with the Ministry of Finance, the Sector for Contracting and Financing Programmes from the EU Funds and the Ministry of Economy, the project’s end goal was to establish a business-friendly environment, where there is stability and certainty when it comes to strategic direction, laws and public administration institutions, services and procedures.

Making it easier to do business in Serbia

Although the system of public administration in Serbia had gone through a number of reforms, prior to the project it remained very complex due to the number of administrative procedures and the fact that some were not fully defined, long-term or transparent. The project was divided into three inter-related components:

• Enhancing the effectiveness of the implementation of administrative procedures;
• Establishing a regulatory framework that stimulates the business environment; and
• Improving the regulation and public policy adoption process.

Working with the Government of Serbia, the project team analysed and revised the e-inventory of 2491 administrative procedures and other requirements related to the private sector and implemented at the state level. Of these, 776 were identified for simplification and processed, and 424 were fully harmonized with EU law. Simplifying these 424 administrative procedures, which fall under the jurisdiction of 41 different institutions, will provide savings of €5,147,240.96 annually.

In addition to the legislative reforms, the team helped draft a law that will regulate the establishment of a unified public register of administrative procedures and other business conditions. In cooperation with the Ministry of Economy, a working version of the Electronic Records of Business Licenses has been prepared, which covers 1301 administrative procedures, and a proposal for a sustainable and more favourable tax regime was drafted based on study of tax burdens for business.

Almost 1000 participants attended 35 training and workshop events on various topics such as knowing your rights during business inspections and SME participation in public procurement. The project established a strong relationship with the newly established National Academy for Public Administration (NAPA) and ensured that all its trainings will become integral part of NAPA’s general programme.

Getting construction permits is a very important element of a conducive business environment. In cooperation with the Ministry of Transport and Infrastructure Construction, the team prepared a draft law on amendments to the Planning and Construction Act, as well as a set of secondary legislation that aims to create a unified procedure for issuing building permits. Working with the Ministry of State Administration and Local Self-Government and the Coordination Commission for Inspection Supervision, guidelines were prepared on the rights and obligations of business entities during the process of inspection supervision. Inspectors were also trained on the new inspection oversight legal framework.

For SMEs and the self-employed, the team prepared two studies, one on labour and tax implications for entrepreneurs and freelancers and another assessing SME participation in public procurements.  Given the very low success of micro, small and medium businesses in public procurement, the team identified the main obstacles. Their proposed measures for their increased participation of these businesses in the public procurement process was incorporated in a new law on public procurement adopted by the Parliament in December 2019.

Improved regulatory and public policy adoption process

One of the project’s objectives was to improve the consultative process by increasing the participation of enterprises in the adoption of relevant regulations and public policies. To this end an online platform was established to collect citizens' and industry's recommendations on how to reduce administrative burdens. The team also supported the establishment of a mechanism for improving the quality and extending the scope of the analysis of the effects of regulations. An “SME impact test” was piloted to help state administration authorities identify the key effects of proposed regulations on SMEs. The mechanism encourages the formulation of the most optimal solutions that will stimulate the business environment while creating the conditions for removing market barriers.